Management & Organizational Behavior

Introduction to Management

Management is a universal phenomenon. It is a very popular and widely used term. All organizations -
business, political, cultural or social are involved in management because it is the management which
helps and directs the various efforts towards a definite purpose.

Definition: “Management is known exactly what you want men to do and then seeing that they do it
the best and cheapest ways”.
-F.W.Taylor
“Management is an art of getting things done through and with the people in formally organized
groups. It is an art of creating an environment in which people can perform and individuals and can co-
operate towards attainment of group goals”.
Koontz nd O’Donell

History of Management:

Every country undergoes industrialisation. It occurred in the United Kingdom in the mid-19th century. British
people who immigrated to Australia then brought their knowledge with them. This sparked a similar industrial
revolution in Australia.
Why is this relevant to modern management?
The industrial revolution allowed companies to grow far larger than ever before. Management no longer
involved overseeing a few dozen employees directly. Massive corporations with hundreds or thousands of
employees sprouted up from this era. It’s a key turning point in the history of management that led to many of
the theories that we use today.
The industrial revolution led to the creation of several different concepts of management. Many came about in
the years that followed. Though these concepts evolve, they’re still relevant in the modern age.
Let’s dive into the history of management and look at six theories. These all form the basis of modern
management theory.
Principles of Management

1. Principles of Management are Universal

● Management principles are applicable to all kinds of organizations - business & non
business.
● They are applicable to all levels of management.
● Every organization must make best possible use by the use of management principles.
● Therefore, they are universal or all pervasive.
2. Principles of Management are Flexible
● Management principles are dynamic guidelines and not static rules.
● There is sufficient room for managerial discretion i.e. they can be modified as per the
requirements of the situation.
● Modification & improvement is a continuous phenomenon in case of principles of
management.
3. Principles of Management have a Cause & Effect Relationship
● Principles of management indicate cause and effect relationship between related
variables.
 ● They indicate what will be the consequence or result of certain actions. Therefore, if one
is known, the other can be traced.
4. Principles of Management - Aims at Influencing Human Behavior
● Human behavior is complex and unpredictable.
● Management principles are directed towards regulating human behavior so that people
can give their best to the organization.
● Management is concerned with integrating efforts and harmonizing them towards a
goal.
● But in certain situations, even these principles fail to understand human behavior.
5. Principles of Management are of Equal Importance
●All management principles are equally important.
● No particular principle has greater importance than the other.
● They are all required together for the achievement of organizational goals.
FUNCTIONS OF MANAGEMENT

According to Henry Fayol, “To manage is to forecast and plan, to organize, to command, & to control”.
Whereas Luther Gullick has given a keyword ’POSDCORB’ where P stands for Planning, O for Organizing,
S for Staffing, D for Directing, Co for Co-ordination, R for reporting & B for Budgeting. But the most
widely accepted are functions of management given by KOONTZ and O’DONNEL i.e., Planning,
Organizing, Staffing, Directing and Controlling.
 1. Planning

It is the basic function of management. It deals with chalking out a future course of action & deciding in
advance the most appropriate course of actions for achievement of pre-determined goals. According to
KOONTZ, “Planning is deciding in advance - what to do, when to do & how to do. It bridges the gap from
where we are & where we want to be”. A plan is a future course of actions. It is an exercise in problem
solving & decision making. Planning is determination of courses of action to achieve desired goals. Thus,
planning is a systematic thinking about ways & means for accomplishment of pre-determined goals.
Planning is necessary to ensure proper utilization of human & non-human resources. It is all pervasive, it
is an intellectual activity and it also helps in avoiding confusion, uncertainties, risks, wastages etc.

2. Organizing

It is the process of bringing together physical, financial and human resources and developing productive
relationship amongst them for achievement of organizational goals. According to Henry Fayol, “To
organize a business is to provide it with everything useful or its functioning
i.e., raw material, tools, capital and personnel’s”. To organize a business involves determining &
providing human and non-human resources to the organizational structure. Organizing as a process
involves:

⮚ Identification of activities.
⮚ Classification of grouping of activities.
⮚ Assignment of duties.
⮚ Delegation of authority and creation of responsibility.
⮚ Coordinating authority and responsibility relationships.

3. Staffing

It is the function of manning the organization structure and keeping it manned. Staffing has assumed
greater importance in the recent years due to advancement of technology, increase in size of business,
complexity of human behavior etc. The main purpose o staffing is to put right man on right job i.e.
square pegs in square holes and round pegs in round holes. According to Kootz & O’Donell, “Managerial
function of staffing involves manning the organization structure through proper and effective selection,
appraisal & development of personnel to fill the roles designed un the structure”. Staffing involves:
⮚ Manpower Planning (estimating man power in terms of searching, choose the person and giving
the right place).
⮚ Recruitment, Selection & Placement.
⮚ Training & Development.
 ⮚ Remuneration.
⮚ Performance Appraisal.
⮚ Promotions & Transfer.

4. Directing

It is that part of managerial function which actuates the organizational methods to work efficiently for
achievement of organizational purposes. It is considered life-spark of the enterprise which sets it in
motion the action of people because planning, organizing and staffing are the mere preparations for
doing the work. Direction is that inert-personnel aspect of management which deals directly with
influencing, guiding, supervising, motivating sub-ordinate for the achievement of organizational goals.
Direction has following elements:

⮚ Supervision
⮚ Motivation
⮚ Leadership
⮚ Communication

Supervision- implies overseeing the work of subordinates by their superiors. It is the act of watching &
directing work & workers.

Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive,
negative, monetary, non-monetary incentives may be used for this purpose.

Leadership- may be defined as a process by which manager guides and influences the work of
subordinates in desired direction.

Communications- is the process of passing information, experience, opinion etc from one person to
another. It is a bridge of understanding.

5. Controlling

It implies measurement of accomplishment against the standards and correction of deviation if any to
ensure achievement of organizational goals. The purpose of controlling is to ensure that everything
occurs in conformities with the standards. An efficient system of control helps to predict deviations
before they actually occur. According to Theo Haimann, “Controlling is the process of checking whether
or not proper progress is being made towards the objectives and goals and acting if necessary, to correct
any deviation”. According to Koontz & O’Donell “Controlling is the measurement & correction of
performance activities of subordinates in order to make sure that the enterprise objectives and plans
desired to obtain them as being accomplished”. Therefore, controlling has following steps:
 ⮚ Establishment of standard performance.
⮚ Measurement of actual performance.
⮚ Comparison of actual performance with the standards and finding out deviation if any.
⮚ Corrective action.

Levels of Management

The term “Levels of Management’ refers to a line of demarcation between various managerial positions
in an organization. The number of levels in management increases when the size of the business and
work force increases and vice versa. The level of management determines a chain of command, the
amount of authority & status enjoyed by any managerial position. The levels of management can be
classified in three broad categories:

1. Top level / Administrative level

2. Middle level / Executory
3. Low level / Supervisory / Operative / First-line managers

Managers at all these levels perform different functions. The role of managers at all the three levels is
discussed below:

LEVELS OF MANAGEMENT

Top Level of Management

It consists of board of directors, chief executive or managing director. The top management is the
ultimate source of authority and it manages goals and policies for an enterprise. It devotes more time on
planning and coordinating functions.

The role of the top management can be summarized as follows -

 ⮚ Top management lays down the objectives and broad policies of the enterprise.
⮚ It issues necessary instructions for preparation of department budgets, procedures, schedules
etc.
⮚ It prepares strategic plans & policies for the enterprise.
⮚ It appoints the executive for middle level i.e. departmental managers.
⮚ It controls & coordinates the activities of all the departments.
⮚ It is also responsible for maintaining a contact with the outside world.
⮚ It provides guidance and direction.
⮚ The top management is also responsible towards the shareholders for the performance of the
enterprise.

Middle Level of Management

The branch managers and departmental managers constitute middle level. They are responsible to the
top management for the functioning of their department. They devote more time to organizational and
directional functions. In small organization, there is only one layer of middle level of management but in
big enterprises, there may be senior and junior middle level management. Their role can be emphasized
as -

⮚ They execute the plans of the organization in accordance with the policies and directives of the
top management.
⮚ They make plans for the sub-units of the organization.
⮚ They participate in employment & training of lower-level management.
⮚ They interpret and explain policies from top level management to lower level.
⮚ They are responsible for coordinating the activities within the division or department.
⮚ It also sends important reports and other important data to top level management.
⮚ They evaluate performance of junior managers.
⮚ They are also responsible for inspiring lower-level managers towards better performance.

Lower Level of Management

Lower level is also known as supervisory / operative level of management. It consists of supervisors,
foreman, section officers, superintendent etc. According to R.C. Davis, “Supervisory management refers
to those executives whose work has to be largely with personal oversight and direction of operative
employees”. In other words, they are concerned with direction and controlling function of management.
Their activities include -

⮚ Assigning of jobs and tasks to various workers.

⮚ They guide and instruct workers for day-to-day activities.
⮚ They are responsible for the quality as well as quantity of production.
 ⮚ They are also entrusted with the responsibility of maintaining good relation in the organization.
⮚ They communicate workers problems, suggestions, and recommendatory appeals etc to the
higher level and higher-level goals and objectives to the workers.
⮚ They help to solve the grievances of the workers.
⮚ They supervise & guide the sub-ordinates.
⮚ They are responsible for providing training to the workers.
⮚ They arrange necessary materials, machines, tools etc for getting the things done.
⮚ They prepare periodical reports about the performance of the workers.
⮚ They ensure discipline in the enterprise.
⮚ They motivate workers.
⮚ They are the image builders of the enterprise because they are in direct contact with the
workers.

Classical theory of Management

1. Scientific Management

1. Development of Science for each part of men’s job (replacement of rule of thumb)
a. This principle suggests that work assigned to any employee should be observed,
analyzed with respect to each and every element and part and time involved in it.
b. This means replacement of odd rule of thumb by the use of method of enquiry,
investigation, data collection, analysis and framing of rules.
c. Under scientific management, decisions are made on the basis of facts and by the
application of scientific decisions.
2. Scientific Selection, Training & Development of Workers
a. There should be scientifically designed procedure for the selection of workers.
b. Physical, mental & other requirement should be specified for each and every job.
c. Workers should be selected & trained to make them fit for the job.
d. The management has to provide opportunities for development of workers having
better capabilities.
e. According to Taylor efforts should be made to develop each employee to his greatest
level and efficiency & prosperity.
3. Co-operation between Management & workers or Harmony not discord
a. Taylor believed in co-operation and not individualism.
b. It is only through co-operation that the goals of the enterprise can be achieved
efficiently.
c. There should be no conflict between managers & workers.
d. Taylor believed that interest of employer & employees should be fully harmonized so as
to secure mutually understanding relations between them.
 4. Division of Responsibility
a. This principle determines the concrete nature of roles to be played by different level of
managers & workers.
b. The management should assume the responsibility of planning the work whereas
workers should be concerned with execution of task.
c. Thus, planning is to be separated from execution.
5. Mental Revolution
a. The workers and managers should have a complete change of outlook towards their
mutual relation and work effort.
b. It requires that management should create suitable working condition and solve all
problems scientifically.
c. Similarly, workers should attend their jobs with utmost attention, devotion and
carefulness. They should not waste the resources of enterprise.
d. Handsome remuneration should be provided to workers to boost up their moral.
e. It will create a sense of belongingness among worker.
f. They will be disciplined, loyal and sincere in fulfilling the task assigned to them.
g. There will be more production and economic growth at a faster rate.
6. Maximum Prosperity for Employer & Employees
a. The aim of scientific management is to see maximum prosperity for employer and
employees.
b. It is important only when there is opportunity for each worker to attain his highest
efficiency.
c. Maximum output & optimum utilization of resources will bring higher profits for the
employer & better wages for the workers.
d. There should be maximum output in place of restricted output.
e. Both managers & workers should be paid handsomely.

Administrative Theory

In the last century, organizations already had to deal with management in practice. In the early 1900s,
large organizations, such as production factories, had to be managed too. At the time there were only
few (external) tools, models and methods available. Thanks to scientists like Henri Fayol (1841-1925) the
first foundations were laid for modern management.

These first concepts, also called principles are the underlying factors for successful management. Henri
Fayol explored this comprehensively and, as a result, he synthesized the 14 principles of management.
Henri Fayol ‘s principles of management and research were published in the book ‘ General and
Industrial Management’ (1916).
 14 Principles of management

14 principles of management are statements that are based on a fundamental truth. These principles
serve as a guideline for decision-making and management actions. They are drawn up by means of
observations and analyses of events that managers encounter in practice. Henri Fayol was able to
synthesize 14 principles of management after years of study, namely:

1. Division of Work In practice, employees are specialized in different areas and they have different
skills. Different levels of expertise can be distinguished within the knowledge areas (from generalist to
specialist). Personal and professional developments support this. According to Henri Fayol specialization
promotes efficiency of the workforce and increases productivity. In addition, the specialization of the
workforce increases their accuracy and speed. This management principle of the 14 principles of
management is applicable to both technical and managerial activities.

2. Authority and Responsibility In order to get things done in an organization, management has the
authority to give orders to the employees. Of course, with this authority comes responsibility. According
to Henri Fayol, the accompanying power or authority gives the management the right to give orders to
the subordinates. The responsibility can be traced back from performance and it is therefore necessary
to make agreements about this. In other words, authority and responsibility go together and they are
two sides of the same coin.

3. Discipline This third principle of the 14 principles of management is about obedience. It is often a
part of the core values of a mission and vision in the form of good conduct and respectful interactions.
This management principle is essential and is seen as the oil to make the engine of an organization run
smoothly.

4. Unity of Command The management principle ‘Unity of command’ means that an individual
employee should receive orders from one manager and that the employee is answerable to that
manager. If tasks and related responsibilities are given to the employee by more than one manager, this
may lead to confusion which may lead to possible conflicts for employees. By using this principle, the
responsibility for mistakes can be established more easily.

5. Unity of Direction This management principle of the 14 principles of management is all about focus
and unity. All employees deliver the same activities that can be linked to the same objectives. All
activities must be carried out by one group that forms a team. These activities must be described in a
plan of action. The manager is ultimately responsible for this plan and he monitors the progress of the
defined and planned activities. Focus areas are the efforts made by the employees and coordination.
6. Subordination of Individual Interest There are always all kinds of interests in an organization. In
order to have an organization function well, Henri Fayol indicated that personal interests are
subordinate to the interests of the organization (ethics). The primary focus is on the organizational
objectives and not on those of the individual. This applies to all levels of the entire organization,
including the managers.

7. Remuneration Motivation and productivity are close to one another as far as the smooth running of
an organization is concerned. This management principle of the 14 principles of management argues
that the remuneration should be sufficient to keep employees motivated and productive. There are two
types of remuneration namely non-monetary (a compliment, more responsibilities, credits) and
monetary (compensation, bonus or other financial compensation). Ultimately, it is about rewarding the
efforts that have been made.

8. The Degree of Centralization Management and authority for decision-making process must be
properly balanced in an organization. This depends on the volume and size of an organization including
its hierarchy. Centralization implies the concentration of decision-making authority at the top
management (executive board). Sharing of authorities for the decision-making process with lower levels
(middle and lower management), is referred to as decentralization by Fayol. Henri Fayol indicated that
an organization should strive for a good balance in this.

9. Scalar Chain Hierarchy presents itself in any given organization. This varies from senior management
(executive board) to the lowest levels in the organization. Henri Fayol ’s “hierarchy” management
principle states that there should be a clear line in the area of authority (from top to bottom and all
managers at all levels). This can be seen as a type of management structure. Each employee can contact
a manager or a superior in an emergency situation without challenging the hierarchy. Especially, when it
concerns reports about calamities to the immediate managers/superiors.

10. Order According to this principle of the 14 principles of management, employees in an organization
must have the right resources at their disposal so that they can function properly in an organization. In
addition to social order (responsibility of the managers) the work environment must be safe, clean and
tidy.

11. Equity The management principle of equity often occurs in the core values of an organization.
According to Henri Fayol, employees must be treated kindly and equally. Employees must be in the right
place in the organization to do things right. Managers should supervise and monitor this process and
they should treat employees fairly and impartially.

12. Stability of Tenure of Personnel This management principle of the 14 principles of management
represents deployment and managing of personnel and this should be in balance with the service that is
provided from the organization. Management strives to minimize
 employee turnover and to have the right staff in the right place. Focus areas such as frequent change
of position and sufficient development must be managed well.

13. Initiative Henri Fayol argued that with this management principles, employees should be allowed to
express new ideas. This encourages interest and involvement and creates added value for the company.
Employee initiatives are a source of strength for the organization according to Henri Fayol. This
encourages the employees to be involved and interested.

14. Esprit de Corps The management principle ‘esprit de corps’ of the 14 principles of management
stands for striving for the involvement and unity of the employees. Managers are responsible for the
development of morale in the workplace; individually and in the area of communication. Esprit de corps
contributes to the development of the culture and creates an atmosphere of mutual trust and
understanding.

Max Weber Bureaucracy Theory

Max Weber, a German scientist, defines bureaucracy as a highly structured, formalized, and also an impersonal
organization.

He also instituted the belief that an organization must have a defined hierarchical structure and clear
rules, regulations, and lines of authority which govern it. Max Weber bureaucracy ideally has the following
characteristics:

● Specialization of labor

● A formal set of rules and regulations

● Well-defined hierarchy within the organization

● Impersonality in the application of rules

Bureaucratic organizations evolved from traditional structures due to the following changes:

● In traditional structures, the leader delegates duties and can change them at any time. However,
over time, this changed and there was a clear specification of jurisdiction areas along with a
distribution of activities as official duties.

● In a bureaucratic organization, the subordinates follow the order of superiors but can appeal if they
feel the need. On the other hand, in traditional structures, the authority was diffused.

● Rules are exhaustive, stable, and employees can learn them easily. Further, the organization records
them in permanent files.

● Personal property is separate from the office property. Also, the means of production or
administration belong to the office.

● The selection of officials is based on technical qualification and appointment and not an election.
Further, officials receive a salary as compensation for their work.
 ● The official is taken in for a trial period and then offered a permanent position with the
organization. This protects him from arbitrary dismissal.
Max Weber’s Bureaucratic Form – 6 Major Principles

Max Weber listed six major principles of the bureaucratic form as follows:

1. A formal hierarchical structure – In a bureaucratic organization, each level controls the level below
it. Also, the level above it controls it. A formal hierarchy is the basis of central planning and
centralized decision-making.

2. Rules-based Management – The organization uses rules to exert control. Therefore, the lower
levels seamlessly execute the decisions made at higher levels.

3. Functional Specialty organization – Specialists do the work. Also, the organization divides
employees into units based on the type of work they do or the skills they possess.

4. Up-focused or In-focused Mission – If the mission of the organization is to serve the stockholders,
board, or any other agency that empowered it, then it is up-focused. On the other hand, if the
mission is to serve the organization itself and those within it (like generating profits, etc.), then it is
in-focused.

5. Impersonal – Bureaucratic organizations treat all employees equally. They also treat all customers
equally and do not allow individual differences to influence them.

6. Employment-based on Technical Qualifications – Selection as well as the promotion of employees

is based on technical qualifications and skills.
While these rules have received criticisms from many corners, the bureaucratic form of the organization
continues to live on.

Why is a Bureaucratic Organization criticized?

Here are some reasons:

● The rules are inflexible and rigid. Further, there is too much emphasis on these rules and
regulations.

● Informal groups do not receive any importance. In current times, informal groups play a huge role in
most business organizations.

● Typically, bureaucracy involves a lot of paperwork which leads to a waste of time, money, and also
effort.

● The rules and formalities lead to an unnecessary delay in the decision-making process.

● While Government organizations can benefit from a bureaucratic structure, business organization
need quick decision-making and flexibility in procedures. Therefore, it is not suitable for the latter.

● While the technical qualifications of the employee is an important aspect of his promotion, a
bureaucratic organization does not consider the employee’s commitment and dedication.

● There is limited scope for Human Resource management.

● Coordinating and communicating is difficult.

 MODERN APPROACH
1. System Approach to Management

What are the Systems Approach to Management?

The Systems Approach to management theory, commonly viewed as the foundation of organizational
development, views the organization as an open system made up of interrelated and inter-dependent parts that
interact as sub-systems. 
Thus, the organization comprises a unified singular system made up of these subsystems. For example, a firm is a
system that may be composed of sub-systems such as production, marketing, finance, accounting and so on. As
such, the various sub-systems should be studied in their inter- relationships rather, than in isolation from each
other. 
The system as a whole is affected by internal elements (aspects of the sub-units) and external elements. It is
responsive to forces from the external environment. 
The system is considered open, as organizations receive varied forms of inputs from other systems. For example,
a company receives supplies, information, raw materials, etc. These inputs are converted to outputs that affect
other systems. 
Generally, the systems approach assesses the overall effectiveness of the system rather than the effectiveness of
the sub-systems. This allows for the application of system concepts, across organizational levels in the
organization - rather than only focusing upon the objectives and performances of different departments
(subsystems). 
Organizational success depends upon interaction and interdependence between the subsystems, synergy
between the sub-systems, and interaction between internal components (closed system) and external
components (internal system). 
The systems approach implies that decisions and actions in one organizational area will affect other areas. For
example, if the purchasing department does not acquire the right quantity and quality of inputs, the production
department won’t be able to do its job. 
This approach recognizes that an organization relies on the environment for essential inputs. Further, the
environment serves an outlet for its outputs.
What are the primary Characteristics of an Organizational System?
The following are the chief characteristics of the System Approach:
● Sub-Systems - Each organization is a system made up of a combination of many sub-systems. These sub-
systems are inter-related.
● Holism - Each sub-system works together to make up a single whole system. Decisions made in any
subsystem affect the entire system.
● Synergy - The collective output of the whole system is greater than the sum of output of its sub-systems.
● Closed and Open Systems - The whole organization is an open system made up of a combination of open
and closed sub-systems.
● System Boundary - The organization is separate from the external environment made up of other
systems.
What are the components of an Organizational System? 
The system approach envisions the organization as made up five components:
● Inputs - Raw Materials, Human Resources, Capital, Information, Technology
● A Transformational Process - Employee Work Activities, Management Activities, Operations Methods
● Outputs - Products or Services, Financial Results, Information, Human Results
 ● Feedback - Results from outputs influence inputs.
● The Environment - These components make up internal and external factors that affect the system.
What are Closed and Open Management Systems?
An organization is made up of closed systems and open systems. 
Closed systems are the internal sub-units of the organization that do not interact with the external environment. 
Open systems are internal sub-units that interact with other systems (or sub-units within other systems) that are
outside of the organization. In effect, all organizations are open systems.

The advantages of the systems approach include:

● It assists in studying the functions of complex organizations

● It is probabilistic rather than deterministic.
● It has been utilized as the base for the new kinds of organizations like project management organization.
● It is possible to bring out the inter-relations in various functions like planning, organizing, directing and
controlling.
Contingency Approach of Management A contingency approach to management is based on the theory
that management effectiveness is contingent, or dependent, upon the interplay between the application
of management behaviors and specific situations. In other words, the way you manage should change
depending on the circumstances. One size does not fit all.

Features of Contingency Theory:

 Management is situational in nature. The technique of management depends on complexity of

the situation.

 Management principles are not universal in nature as there is no best style of management.
Management is situational and managerial actions depend upon the environmental
circumstances.
 It helps in understanding the complex organisations as it focuses on multivariate nature of
organisations. It helps an organisation to operate under different environmental conditions.
Rather than having a specific solution to solve problems, it provides a framework where every
solution depends upon the environmental conditions. Same problem can have different
solutions at different points of time and different problems can have same solution at the same
point of time.
 It provides insight into organisation’s adaptability to both internal and external environment. It
is a matter of fitting the internal environment to its external environment.

Planning and Decision Making

PLANNING

Planning is the process used by managers to identify and select goals and courses of action for the
organization.

⮚ Planning is deciding in advance what to do, how to do it, when to do it and who is to do
it.
 ⮚ Planning bridges, the gap from between where we are to where we want to go.

Planning is an important managerial function in that there is no choice between planning and no
planning. The choice is only in regard to the method and techniques used to plan. It is anybody’s
knowledge that we plan many things in our day to day lives. We plan to go on a holiday trip, plan our
careers, and plan our investments and so on. Organizations are no exception. Lot of planning is done by
managers at all levels. Planning is the basic process by which we use to select our goals and determine
the means to achieve them. Lot of information has to be gathered and processed before a plan is
formulated. In other words, a plan is like a jigsaw puzzle. All the pieces have to be put together properly,
so that they make sense.

Planning is necessarily forward looking. It is looking into the future. It bridges the gap between where
we are and where we want to go. It involves visualizing a future course of action and putting it in a
logical way.

Let us look at the following observations about planning.

⮚ Failure to plan is planning to fail.

⮚ Planning is outlining a future course of action in order to achieve objective
⮚ Planning is looking ahead.
⮚ Planning is getting ready to do something tomorrow.
⮚ Plan is a trap laid down to capture the future.

Purpose of Planning

It is no exaggeration that in the absence of planning events are left to chance. In such a case, you as a
manager are depending on luck. You may, as a result, in all probability end up in frustration.
Organizations often fail not because of lack of resources, but because of poor planning. Whatever the
resources you have, in the absences of systematic planning, the resources may not help you in achieving
the objectives. The following factors further highlight the importance of planning; a. To achieve
objectives
While developing a plan, you have to ask yourself a few questions. Why am I making this plan?
What am I trying to accomplish?

What resources do I need to execute the plan?

a. Objectives are the ends sought to be achieved by the organizations. The above questions, if
properly answered provide lot of clarity to the objectives. In other words, they force you to be
clear about the objectives, the time frame required to achieve them and the resources
required. It forces you to visualize the future in an organized manner.

The saying that “when a man doesn’t know what harbour he is making for, no wind is the
right wind” is quite appropriate in the case of planning.

Systematic planning, thus, starts with a clear statement of objectives. All the important inputs
necessary to achieve the objectives are carefully thought of.

The uncertainties of the future, if any, are also taken into consideration.

b. Plans make the things happen Effective managers anticipate future and prepare themselves
to meet the challenges of the future. They are rather pro-active. They influence the outcome of
the events in a significant way. In any modern business, the interests of many people are
involved. The shareholders, employees, creditors, consumers and the Government are the
major interest groups in any organization. Further, the interests and expectations of all these
groups are varied and at times are in conflict. That apart, they constantly change in a dynamic
business environment. In the light of the uncertainties involved in the environment, your job, as
a manager, is to foresee the future and predict the consequences of actions. In other words,
you have to look down the road into future and prepare yourself to meet the uncertainties
ahead. A well thought out plan solves many of the problems associated with the future.

c. Plans help to cope with change Organizations are products of environment. The ability to
deal with the environment has enabled many an organization to survive, despite other
weaknesses. Alert managements continually tune in to the environmental forces. On the other
hand, managements which fail to adapt would eventually fall on the way side. Therefore, in the
managerial job, you have to constantly analyze the impending changes in the environment and
assess their impact on your business. For instance, the liberalization policies pursued by the
government have, of late, brought in too many changes. Markets are shifting due to increased
competition. Pressure on the existing resources is increasing. Expectations of the employees as
well as the consumers are changing. Product life cycles are becoming shorter due to rapid
technological changes. All these changes exert a tremendous pressure on the management.

d. Plans double up as tools to control the events Planning and control are often described as
the ‘Siamese’ twins of management. When you plan the events, you make them happen in a
particular way.
The specific objectives decided in advance themselves become the standards. Therefore, it goes
without saying that plans provide mechanism to know whether the events are happening in the
way expected.

Planning ensures the events to conform to plans. Thus, if you do not plan (no clear objectives),
you do not know what to control. Control assumes significance in a dynamic environment as of
today, where several forces push you away from reaching the goal. Appropriate control devices
help you to check the course from time to time, so that you will be able to take the appropriate
corrective measures.

Principles of Planning

Systematic planning is essential for the success and survival of any organization. Organizations
fail not because they don’t plan, but because they don’t plan in an effective way. An
understanding of the following principles helps one to achieve effectiveness in planning, so that
you can guard yourself against the possible mistakes that are often committed by managers.

i. Take Time to Plan

As the plan is a decision regarding a future course of action, it specifies the sequence of events
to be performed. It involves the commitment of organizational resources in a particular way.
Therefore, if a plan is not conceived well, the resources would be put to wrong use. It becomes
a wasteful exercise resulting in agony and frustration. To avoid such unpleasant outcomes,
several probing questions have to be asked. Planning in haste with incorrect information,
unsound assumptions and inadequate analysis of the environment has to be avoided by all
means. Otherwise, you may save some time in quickly developing a plan, but in the event of
things going wrong, you are hard pressed for time and resources to correct yourself. It not only
lands you in trouble, but the organization as well.

ii. Planning can be top down and bottom up

Normally in any organization major enterprise plans are developed by the top management.
These plans are wider in scope and provide the direction to the whole organization. They spell
out what the organization wants to achieve over the years. The overall plan thus formulated by
the top management is split into departmental plans. Accordingly, plans for production,
marketing, finance, personnel and so on, stem from the basic plan of the organization. The
other operational plans at various levels down the organization flow from the departmental
plans. This approach is called top-down approach to planning.

In contrast, bottom-up approach involves information emanating from the lower levels – that is,
top management collects information from lower levels. On the basis of such information, plans
are formulated. The underlying assumption is that people at the operational level are closer to
the action and they possess valuable information. In this approach, the initiative for planning
comes from the lower levels in the organization. This approach makes use of the rich
experience of the subordinates. It also helps to motivate the people and elicit commitment
 from them. However, the choice of the method depends on the size of the organization, the
organizational culture, the preferred leadership style of the executive and the urgency of the
plan.

iii. Involve and communicate with all those concerned Modern business organizations are so
complex that various operations are highly interrelated. Such an interrelation of activities
requires the involvement of all the people concerned with the achievement of goals. For
instance, a plan to improve the quality of the products (Quality control plan) may require the
cooperation of the people in the production. Such participation helps in instilling a sense of
commitment among the people. They also in turn gain a sense of pride for having been a party
in deciding the plan. Such an involvement makes possible the process of sharing information. If
concerned people are not involved, there may be unnecessary gaps in the execution because of
lack of understanding of the plans.

iv. Plans must be flexible and dynamic Your managerial career indeed would be a “bed of
roses” if there are no unexpected changes in the environment. Day in and day out, you are
confronted with too many changes forcing you into so many dilemmas or problems. Most of
such problems are caused by unexpected events in the environment. If the plan is rigid with less
scope for modifications as required by the changes in the environment, the organization would
ultimately sink. In a static environment, of course, there may not be a problem with a rigid plan.
But in a dynamic environment, to meet the unexpected changes, adequate flexibility has to be
built into the plan. Otherwise, the plan itself becomes a limiting factor.

v. Evaluate and revise- While building into the plans the required flexibility, you should not
lose sight of the additional costs involved to buy such flexibility. You must also remember that
flexibility in plans may not be possible always. For example, a plan for a petroleum refinery may
not offer any flexibility because the machinery can hardly be used for any other purpose.
Evaluation of the plan at regular intervals is necessary to make sure that it is contributing to the
objectives. Like a pilot, who in the high skies checks the course to make sure that he is flying in
the right direction and at the right altitude, the manager has to evaluate and review the plan.
Such an exercise enables to initiate the corrective measures at the right time before it is too
late. This depends on the accuracy of the information systems in the organization.

Planning Process & Goal Setting

If you plan to be successful in business, you need a business plan to follow. A large part of the business
plan is identifying your goals and detailing how you plan to reach them. When you set out on the
business planning process, put the plan on paper. Simply writing or printing out the goals and being able
to see them on a daily basis can keep you more focused on your plan than only knowing what your goals
are in your mind. When setting goals, rely on the SMART goal-setting process. SMART stands for Specific,
Measurable, Agreed to, Realistic and Timely.

1
Set specific goals. Without specificity, you do not know what you are reaching for or when you have
achieved your goal. Instead of writing “Increase sales of the business,” a specific goal would read,
“Increase gross sales by 15 percent by December 31 of this year.” This tells you exactly what you are
going after in the planning process. A specific goal makes it easier to plan the objectives you need to
reach in order to achieve it.
2
Develop goals that can be measured. If a goal cannot be measured, it is impossible to monitor how well
you are doing in reaching your goal. In the above example, a 15-percent increase in sales is measurable.
A business owner can easily look at sales reports and income data to determine if sales have increased
by 15 percent at year-end. When setting measurable goals, it may be helpful to set mini-goals with it.
With our example, a business may also implement quarterly increases that would be needed to reach
the overall 15 percent increase in sales for the year. This can ensure the business remains on target
through the year.
3
Implement business goals that are attainable by the business and its employees. If you have a brand-
new business, becoming number one worldwide in your industry in the next year is likely not an
attainable goal. It is important that the goals you set can actually be reached based on the current
resources of your business. If unattainable goals are set, it is only setting up your business and your
employees for failure. Do not set unreachable goals as a way to motivate. Give employees goals they can
reach, so when each mini-goal is achieved, that in itself will be a motivator.
4
Establish relevancy when planning and setting goals. Some business owners will go overboard in setting
goals for the business. The goals will focus on areas of the business that are not important or will not
have a great impact on the overall direction of the business. Decide what is the most important thing
your business must achieve during this period. This item should be something that if you were only able
to accomplish this one goal, you would be proud of your business. Then set secondary goals that support
it. This will ensure they are relevant to the success of your business.
5
Attach deadlines to your goals. Without time lines, goals are useless. In our first example about
increasing sales, “Increase business sales” is not a timely goal. However, our specific goal gives a
deadline of December 31 of this year to increase sales. This provides a deadline for the goal. It gives a
time when the goal should be measured to determine whether the objectives have been achieved. All
goals that are set should have a time line attached so that you can measure and track your successes,
and conversely, see where you might need to improve.
Facts About Goals & Goal Setting
All of us have things we want to achieve, but it is often easier to achieve goals when they are clearly
articulated. This is because a specific goal has a much better chance of being achieved than a goal that is
too general to define. Small-business owners can also benefit from setting goals that are SMART:
specific, measurable, attainable, realistic and time-sensitive.

Specific
Setting a specific goal means establishing some criteria on which to measure your progress. Measuring
your progress toward a goal can help you stay on track and meet deadlines, and it will give you a sense
of accomplishment when you've reached a milestone. To make your personal and professional goals as
specific as possible, ask yourself the following questions: 1. What do I want to achieve in the next week,
month and year? 2. How will I measure my progress toward the goal? 3. How will I know when it is
accomplished? If your goal is to increase sales of a particular product, the answers to these questions
might be: "I want to sell 50 units in the next 30 days. I will know I have achieved my goal when I have
sold the units, shipped them to customers and received payment."
Measurable
Measuring a goal is part and parcel of creating a specific goal. Here you can expand on the questions you
asked yourself above by including the five W's and one H: who, what, where, why, when and how.
Who will benefit by achieving this goal? What do I hope to accomplish for myself or my business? Where
will I work on achieving this goal? Why am I doing this? When will I find the time? How will I measure my
success and reward myself?
Attainable
In addition to setting goals that are specific and measurable, it is important that your goals are
attainable. While it is always nice to aim high, attainable goals are rooted in a positive attitude about
what you hope to accomplish. Do you have the charisma, persistence and perseverance to work toward
attaining a goal? If not, you may find it extremely difficult to reach your goal. These are personality traits
that can be developed, but more important you have to want to achieve the end result for it to become
attainable.
Realistic
Closely linked to attainability, goals must also be realistic. To be realistic, the goal you set must be
reasonable and able to be measured. If your goal is just a dream that can never become reality given
your current business or personal situation, then you should think about setting smaller goals that can
be measured and attained in order to take tiny steps toward the bigger goal. Feeling as if you've
accomplished something is the best form of encouragement to do more, so set goals that are realistic
and which force you to motivate yourself to achieve them.
Time-Sensitive
As mentioned, goals should be time-sensitive. A goal that has an expiration date of 10 years from now
will be extremely hard to manage. More often than not, you'll want to set goals that can be measured
within a reasonable time frame of between several weeks to several months. You might have goals for
your business over the next year or so, but these will probably include smaller goals that help you get to
the big one. The important part about setting time-sensitive goals is that you stick to the self-imposed
deadlines. Having the pressure to finish something by a given date will encourage you to work hard to
attain it, and rewarding yourself when you've finished will make it all worthwhile.

Vision

A vision articulates the position that an organization would like to attain in the
distant future. It helps in creating a common identity and a shared sense of purpose.
A good vision is one which foster risk taking and experimentation. It answers the
question: ‘What will success look like?’

The vision of an organization must possess the following characteristics:

 It is created by consensus.
 It forms a company’s future mental image.
 It forms the basis for formulating the mission
statement.

A good vision possesses the following features:

 It should be inspiring.
 It should foster long term thinking.
 It should be original and unique.
 It should be competitive.
 It should be

realistic.

Examples:

Company Vision
Walt Make people happy
Disney
Stokes Our vision is to take care of your vision
Eye Clinic
Infosys To be a globally respected organization that
provides best of breed business solutions,
leveraging technology, delivered by best-in-class
people.

Mission

Mission refers to the purpose of an organization. Mission states the business reason
for the organization's existence. It relates the organization to the society. The
mission of an organization should aim high and at the same time it must be realistic.
It should provide a strategic direction for the organization.

“Mission is the fundamental work given by the society to an organization”.

By Koontz & Q’ Ponnell

“The company mission is defined as the fundamental unique purpose that sets a
business apart from other firms of its type & identifies the scope of its operations in
product & market terms”.

By Pearce & Robinson

In order to be effective, a mission statement should possess the following
characteristics:
(i) A mission statement should be realistic and achievable. Impossible statements
do not motivate people.

(ii) It should neither be too broad not be too narrow. If it is broad, it will become
meaningless. A narrower mission statement restricts the activities of organization.
The mission statement should be precise.

(iii) A mission statement should not be ambiguous. It must be clear for action.
Highly philosophical statements do not give clarity.

(iv) A mission statement should be distinct. If it is not distinct, it will not have any
impact. Copied mission statements do not create any impression.

(v) It should have societal linkage. Linking the organization to society will build long
term perspective in a better way.

(vi) It should not be static. To cope up with ever changing environment, dynamic
aspects should be considered.

(vii) It should be motivating for members of the organization and of society. The
employees of the organization may enthuse themselves with mission statement.

(viii) The mission statement should indicate the process of accomplishing

objectives. The clues to achieve the mission will be the motivating factor.

Examples:

Company Mission Statement

May To inspire hope and contribute to health and well-
o being by providing the best care to every patient
Clini through integrated clinical practice, education and
c research.
The Bank We strive to be the acknowledged global leader and
of preferred partner in helping our clients succeed in
the world’s rapidly evolving financial markets.
New York
NIKE Inc. To Bring Inspiration and innovation to every athlete
in the world.

There are diverse issues which need to be covered while framing the mission
statement of a company. The various components of a well framed mission
statement are stated as follows:

● Product or service
● Customers
● Technology
● Survival, growth and profitability
● Company philosophy
● Public image

✔ Check your
progress Exercise 1
Suppose you are appointed as the head of the strategy planning department of a
automobile company dealing in luxury segment cars. Frame a vision and mission
statement for the company. Make necessary assumptions.

…………………………………………………………………………………
……………….....................................................................................................
.............................................................................................................................
.............................................................................................................................
.................................................................................................................

Objective

Objectives are the end results of a planned activity. They are stated in quantifiable
terms. Objectives are stated differently at various levels of management. Objectives
play a very important role in enhancing the efficiency and effectiveness of an
organization. The following characteristics must be present in fairly framed
objectives:

 They should be specific and unambiguous.

 They should have a particular time horizon within which it is expected to be
achieved.
 They should be flexible enough so that if changes are required, they may be
incorporated easily.
 They should be attainable.
 They should be measurable.
 They should be understandable
 They should help in the achievement of the organization’s mission and
vision.
 They should be challenging.
There are many factors which have an impact on the formulation of objectives in an
organization. These factors are kept in mind before making objectives. These factors
are mentioned as below:

 Size of the organization.

 Level of management
 Organization culture
 Social responsiveness

Objectives are the milestones expressed in specific terms which a person plan to
achieve in a limited time period. Following are a few examples:

Basis Objectives
Financial Objectives To achieve 10% growth in
earnings per share.
Market Coverage To have 900
million subscriber
bases in the
country by 2020.

Objectives may be of various types. Some of these are explained as below:

Profit Objective – It is the most important objective for any business enterprise. In
order to earn a profit, an enterprise has to set multiple objectives in key result areas
such as market share, new product development, quality of service etc. These may
also be termed as performance objectives.

Marketing Objective may be expressed in terms of percentage increase or decrease

in market share. They are related to a functional area.

Productivity Objective may be expressed in terms of ratio of input to output. This

objective may also be stated in terms of cost per unit of production.

Product Objective may be expressed in terms of product development, product

diversification, branding etc.

Social Objective may be described in terms of social orientation. It may be tree

plantation or provision of drinking water or development of parks.

Financial Objective relate to cash flow, debt equity ratio, working capital, new
issues, stock exchange operations, collection periods, debt instruments etc.

Human resources objective may be described in terms of absenteeism, turnover,

number of grievances, strikes and lockouts etc. For example: the objective may be
to decrease the rate of absenteeism.
 Goal

Goals are an intermediate result which is expected to be achieved by a certain span

of time. It is a target which an organization wishes to achieve in long term. It
provides the basis for judging the performance of the organization. Goals may be
classified into two categories:

 Financial goals: They are related to the return on investment or growth in

revenues.
 Strategic goals: They focus on the achievement of the competitive
advantage in the industry.

Goals should be well constructed and realistic in nature. Following are the examples
of well framed goals:

Basis Goals
Customer service Provide quality service to
the customers at least at
par
with the highest standard
in the industry.
Community service Provide job opportunities
which promote a higher
standard of living for all
the citizens.

✔ Check your
progress Exercise 2
Assuming yourself the marketing manager of a luxury chain hotel. Frame the
marketing objectives.

…………………………………………………………………………………
……………….....................................................................................................
.............................................................................................................................
.............................................................................................................................
.............................................................................................................................

Organizational Planning
Organizational planning is like charting your company’s path on a map. You need to know what direction
you’re headed to stay competitive.

But what exactly is organizational planning and how do you do it effectively?

 What is Organizational Planning?
Organizational planning is the process of defining a company’s reason for existing, setting goals aimed at
realizing full potential, and creating increasingly discrete tasks to meet those goals.

Each phase of planning is a subset of the prior, with strategic planning being the foremost

There are four phases of a proper organizational plan: strategic, tactical, operational, and contingency.
Each phase of planning is a subset of the prior, with strategic planning being the foremost.

Types of Organizational Planning

Strategic
A strategic plan is the company’s big picture. It defines the company’s goals for a set period of time,
whether that’s one year or ten, and ensures that those goals align with the company’s mission, vision,
and values. Strategic planning usually involves top managers, although some smaller companies choose
to bring all of their employees along when defining their mission, vision, and values.
Tactical
The tactical strategy describes how a company will implement its strategic plan. A tactical plan is
composed of several short-term goals, typically carried out within one year, that support the strategic
plan. Generally, it’s the responsibility of middle managers to set and oversee tactical strategies, like
planning and executing a marketing campaign.

Operational
Operational plans encompass what needs to happen continually, on a day-to-day basis, in order to
execute tactical plans. Operational plans could include work schedules, policies, rules, or regulations
that set standards for employees, as well as specific task assignments that relate to goals within the
tactical strategy, such as a protocol for documenting and addressing work absences.

Contingency
Contingency plans wait in the wings in case of a crisis or unforeseen event. Contingency plans cover a
range of possible scenarios and appropriate responses for issues varying from personnel planning to
advanced preparation for outside occurrences that could negatively impact the business. Companies
may have contingency plans for things like how to respond to a natural disaster, malfunctioning
software, or the sudden departure of a C-level executive.

Management of companies is essential for the systematic growth and development

of the company. The management strategies are formulated on the basis of
company mission and vision. In line with them, the goals and objectives are set for
the company. The vision and mission statements play a significant role in the
development of strategies by providing a basis for screening the strategic options.
Thus, understanding the concept of mission, vision, goals, objectives and related
concepts is essential for implementing successful strategic management.
The 5 Process Steps of Organizational Planning
The organizational planning process includes five phases that, ideally, form a cycle.
Strategic, tactical, operational, and contingency planning fall within these five stages.

1. Develop the strategic plan

Steps in this initial stage include:

● Review your mission, vision, and values

● Gather data about your company, like performance-indicating metrics from your sales
department
● Perform a SWOT analysis; take stock of your company’s strengths, weaknesses, opportunities,
and threats
● Set big picture goals that take your mission, vision, values, data, and SWOT analysis into account

2. Translate the strategic plan into tactical steps

At this point, it’s time to create tactical plans. Bring in middle managers to help do the following:

● Define short-term goals—quarterly goals are common—that support the strategic plan for each
department, such as setting a quota for the sales team so the company can meet its strategic
revenue goal
 ● Develop processes for reviewing goal achievement to make sure strategic and tactical goals are
being met, like running a CRM report every quarter and submitting it to the Chief Revenue
Officer to check that the sales department is hitting its quota
● Develop contingency plans, like what to do in case the sales team’s CRM malfunctions or there’s
a data breach

3. Plan daily operations

Operational plans, or the processes that determine how individual employees spend their day, are
largely the responsibility of middle managers and the employees that report to them. For example, the
process that a sales rep follows to find, nurture, and convert a lead into a customer is an operational
plan. Work schedules, customer service workflows, or GDPR policies that protect prospective customers’
information all aid a sales department in reaching its tactical goal—in this case, a sales quota—so they
fall under the umbrella of operational plans.

This stage should include setting goals and targets that individual employees should hit during a set
period.

Managers may choose to set some plans, such as work schedules, themselves. On the other hand,
individual tasks that make up a sales plan may require the input of the entire team. This stage should
also include setting goals and targets that individual employees should hit during a set period.

4. Execute the plans

It’s time to put plans into action. Theoretically, activities carried out on a day-to-day basis (defined by
the operational plan) should help reach tactical goals, which in turn supports the overall strategic plan.

5. Monitor progress and adjust plans

No plan is complete without periods of reflection and adjustment. At the end of each quarter or the
short-term goal period, middle managers should review whether or not they hit the benchmarks
established in step two, then submit data-backed reports to C-level executives. For example, this is
when the manager of the sales department would run a report analyzing whether or not a new process
for managing the sales pipeline helped the team reach its quota. A marketing team, on the other hand,
might analyze whether or not their efforts to optimize advertising and landing pages succeeded in
generating a certain number of leads for the sales department.

Depending on the outcome of those reviews, your org may wish to adjust parts of its strategic, tactical,
or operational plans. For example, if the sales team didn’t meet their quota their manager may decide to
make changes to their sales pipeline operational plan.

Approaches to Planning
All organizations plan; the only difference is their approach. Prior to starting a new strategic planning
process, it will be necessary to access the past planning approach that has been used within the
organization and determine how the organization's culture may have been affected. Addressing these
cultural issues is critical to the success of the current planning process.
The four possible approaches to planning are:
 1. Reactive - past oriented
Reactive planning is an active attempt to turn back the clock to the past. The past, no matter
how bad, is preferable to the present. And definitely better than the future will be. The past is
romanticized and there is a desire to return to the "good old days." These people seek to undo
the change that has created the present, and they fear the future, which they attempt to
prevent.
2. Inactive - present oriented
Inactive planning is an attempt to preserve the present, which is preferable to both the past and
the future. While the present may have problems, it is better than the past. The expectation is
that things are as good as they are likely to get and the future will only be worse. Any additional
change is likely to be for the worse and should therefore be avoided.
3. Preactive - predict the future
Preactive planning is an attempt to predict the future and then to plan for that predicted future.
Technological change is seen as the driving force bringing about the future, which will be better
than the present or the past. The planning process will seek to position the organization to take
advantage of the change that is happening around them.
4. Proactive - create the future
Proactive planning involves designing a desired future and then inventing ways to create that
future state. Not only is the future a preferred state, but the organization can actively control
the outcome. Planners actively shape the future, rather than just trying to get ahead of events
outside of their control. The predicted changes of the preactive planner are seen not as absolute
constraints, but as obstacles that can be addressed and overcome.

Planning in Dynamic Environment

Stop me if you’ve heard this one before: You’re mid-way through the fiscal year when you’re presented
with a fantastic opportunity. Unfortunately, you’re forced to pass it up because it wasn’t in the budget.
This probably sounds familiar, doesn’t it?
If your company is like most others, you spend seemingly endless hours in annual planning meetings
discussing spreadsheets, crunching numbers, prioritizing line items, trying to predict what opportunities
might arise and estimate just how much the year ahead will cost.
Traditional strategic planning looks at long-term history in attempts to plan for long-term future.
That may be the way things have gotten done in businesses around the world for generations, but in a
world where technology moves faster than business, annual planning is becoming archaic.
It’s static planning for a dynamic world.
It’s time to step away from tradition and into a new way of planning–one that invests more time in
maximizing productivity and flexibility.

One that doesn’t make you waste time trying to pin down every little detail only to pin yourself down by
a plan that doesn’t allow any breathing room.

As an article in the Wall Street Journal puts it, “Organizations need to blow apart the traditional
budgeting process, become more dynamic and refocus on crucial management functions individually.”
 What is dynamic planning?

It’s planning with a balance of strategy and flexibility.

It attempts to take the big picture into account in order to make a broad, responsible plan for the year
ahead. But it also requires you to revisit that plan regularly–perhaps quarterly–to ensure it’s where it
needs to be right now.

A dynamic plan allows employees to take intelligent risks, pursue unforeseen opportunities, respond
swiftly to threats, adopt new technology, and carry out new ideas–all for the betterment of the
business.
Set clear goals

Having clear, big-picture goals is just as important in dynamic planning as it was in static planning. When
they are in place, they can serve as the measuring stick for whether or not an opportunity is worth
investing the required resources.
For example, let’s say that your primary goal for the year is to increase the amount of time your sales
reps are out in the field and decrease the amount of time they’re in the office for meetings, planning,
and getting up to speed on new inventory or sales materials.
Then, a new software product launches, stirring up buzz in your industry.
After researching the newly launched software, you find it has features that would allow your reps to
communicate more efficiently with co-workers and access content and sales materials remotely.
These, along with other features you learn about, are likely to help your reps spend more time out in
their territories selling and reduce the need to spend so much time in the office.
At this point, it looks like this new software could be worth the investment, as long as further research
continues to strongly suggest it will help your company achieve its primary goal.
Shrink your outlook

Static planning tries to predict what things will be like a year from now or even more. Dynamic planning
shifts your mindset to more immediate concerns–but in the best way possible.
Try to scale down your thinking to just 90 days. Focus on one quarter, major milestone, or product
launch at a time.
With those big-picture goals in place for the long haul, you’re freed up to focus on the short term. By
deepening your focus on the here and now, allowing yourself and your team to take risks and pounce on
new opportunities, you could drastically change what the next short-term window of time will look like.
Let’s say that with static planning, your company predicts Q3 of next year to be relatively slow.
It’s always slow.

Your customers are vacationing and thinking about getting their kids back to school. They’re not buying
from you. So, you plan for a slow Q3. You bake it into the annual strategy. You inadvertently prepare
your reps for a slow Q3. And, what do you know? After all is said and done, it is a slow Q3.
Now rewind a bit.
With dynamic planning, you’re free to focus more on the short term and the flexibility to do whatever it
takes to move the needle closer and closer to your primary goals. Maybe that new software we found
earlier in this article ends up looking like it could really improve your productivity.
So, in Q2 you implement it.
With that investment, your sales reps are able to dedicate far more time and energy to active selling. As
a result, Q3 turns out to be a record-breaking quarter for your company.
Focus on the short-term while actively analyzing the results of your efforts.
Be nimble and change what’s not working while also maximizing what is.
Seek every opportunity to be better–immediately. Don’t wait until your next planning meeting.
Communicate

One advantage of a static annual plan is that it can serve as an unwavering playbook for your company.
Everyone receives it at the beginning of the year and does their part to see it through to the end.
Not so with dynamic plans. Things change. Strategies take twists and turns. Priorities are rearranged.
This can be frustrating on the individual level if it’s not all accompanied by strong communication.
Everyone involved should communicate regularly–both within teams and among departments–about
what they’re doing to move the company forward. This way, everyone can flex together to help achieve
common goals.
Now, you don’t need to replace your annual static planning meetings with regular dynamic planning
meetings. You just need to be responsible for keeping others in-the-know about what you’re up to.
Send emails. Mention it at team meetings. Do what works for you.
Just don’t do it in secret.
Track progress

Doing away with annual strategies and yearly detailed budgets doesn’t mean you can also do away with
measurement.
Quite the contrary, actually.
It’s important to measure results of each initiative as you move through them.
Take time each step of the way to evaluate what’s working and what’s not. Understand why things
worked out the way they did.
Fail fast. Maximize success. Be quick to act and hungry to improve.
Dynamic planning gives you and your team the freedom to be strategic more than once a year.
Actually, it encourages strategic thinking as often as possible. And with the world changing as quickly as
it is today, who doesn’t need a little more freedom and encouragement to keep up with it all?
Decision making process
 Decision- making is the process of choosing the best from among the alternative
solutions under a given set of circumstances.

Now we shall discuss the meaning of decision – making based on this analysis.

Decision making is the process of choosing the best among the available alternatives
with a purpose under a given set of circumstances.

The analyses of these definitions present the following facts.

● Identify the purpose or goal, based on which decision has to be made.

● Analyze the set of circumstances, conditions or ground realities which set the
norms for decision- making.
● Decision – making is a process of identifying the issues, collecting information
and data, analyze them and generate or develop necessary inputs for developing
alternative solutions.
● Develop alternative solutions to solve the pro+blem or ways to deal with the situation.
● Evaluate the alternative solutions and choose the best solution.
● Implement the selected solution.

Importance of Decision- Making

✔ Managers perform all their functions and activities through decision- making.
✔ In addition, making the decision in right time values much to the organization
rather than making a right decision in the wrong time.
✔ Managers in the business world, often fail to make a decision in the right time
and allow the competitors to grab the opportunities.
✔ As such, managers have to make not only the right decisions but make them in right
time.
✔ Otherwise, the problems remain or magnify and culminate into a crisis.
✔ Decision- making process helps the management to procure necessary data and
information.
✔ Decision- making further helps in the formulation of strategies and implement them.
Process of Decision- Making
 1. Problem Awareness
2. Problem diagnosis
3. Development of alternative solutions
4. Evaluation of alternative solutions
5. Selection of the best solution
6. Implementation of the decision

Process of Decision- Making

Identify and define the

problem
Revise
Develop alternative
solutions

Evaluate alternative
Revise solutions

Certainty conditions Risk conditions Uncertainty conditions

Select alternative

Revise
Implement decision

Evaluate and control

1. Problem awareness
✔ Mostly individual employees identify the problems in various areas.
✔ Individuals, when they get a ‘gut feeling’ that something is wrong, they identify
 the problem.
✔ The awareness of a problem mostly occurs to employees at the grass- root level
like sales people, machine operator, finance assistants, human resource
assistants etc.
✔ Internal performance measurements like level of turnover or profit performance.
2. Problem diagnosis
✔ After the individual employees are aware of the problem and it is informed to
the managers, managers will gather the information and define the problem.
✔ Information may be explored to determine the facts of the problem in detail.
✔ Such information may be gathered on a verbal and informal basis.
✔ Rationalize the information and stimuli relevant to the problem so as to classify
the situation.
✔ Act diplomatically to establish peer groups or those of political support for
individual views of the problem.
3. Development of alternative solutions
✔ After the problem is diagnosed clearly, the tendency of managers is that of
searching for ready made solutions.
✔ Through memory search in which the managers seek for known, existing or
attempted solutions.
✔ Passive search which entails waiting for possible solutions to be offered.
✔ This process of developing solutions takes place through discussions, debates,
consultations and brainstorming sessions and by sharing management wisdom
and experience.
4. Evaluation of alternative solutions
✔ After the alternative solutions are developed, the solutions have to be formally
evaluated based on their inherent strengths and weaknesses and also based on
the environmental threats and opportunities for implementations.

✔ The solutions are to be ranked on the basis of their weights in terms of strengths
and opportunities after eliminating the non- viable solutions in view of their
weaknesses and environmental threats for implementation.
5. Selection of the best solution
 ✔ After the formal evaluation and ranking is completed, the managers tend to re-
evaluate the solution based on the managerial judgment followed by political
bargaining as the formal evaluation is not the predominant criterion for
assessing the feasibility in practice.
✔ Therefore, the techniques for evaluation of solutions also include social and
political process.
6. Implementation of the decision
✔ Implementation of the selected solutions is a part of the decision- making
process as the process may be required to be recycled due to impediments in the
process of implementation.
✔ The managers should secure the support of the top management for allocation
of resources; time ect, regarding the implementation of the decision.

Types of Decisions

● Programmed and Non-Programmed Decisions

● Major and Minor Decisions
● Routine and Strategic Decisions
● Policy and Operative Decisions
● Organizational and Personal Decisions
● Individual and Group Decisions
● Long-Term, Departmental and Non-Economic Decisions
● Crisis and Research Decisions
● Problem and Opportunity Decisions

Decision Making Styles

We all make decisions every day. Some are only of minor importance such as; “Which socks am I going
to wear today?” Some of the decisions you make will have an impact on your life for a long time to
come. Some decisions will not only affect you, but will have far reaching implications for others, as well.
If you are a business owner, or you manage employees, it is important to be aware of personal decision-
making style and how it affects the people you work with each day. Understanding how your decision-
making style affects others will help you to make the serious leadership calls that define a successful
leader.
 What is Decision Making?
This seems like an easy question, but take a moment and think about how you would answer. What
process do you go through when making a decision? How about when you must make decisions as part
of a group? Decision making can be defined as the cognitive process which results in the selection of a
course of action among several alternative scenarios. Your decision-making style can be intellectual or
emotional, rational or irrational.

The rational decision maker follows four steps to making a decision.

1. Identify the problem

2. Generate multiple possible solutions for the problem
3. Select the solution deemed most likely to solve the problem
4. Implement the solution and evaluate its effectiveness

Now with that in mind, we then need to understand the decision-making style that we most often
employ and how that style affects the ultimate results.

Decision Making Styles

Decision making can be grouped into four main styles. The four styles are, Directive style, Analytic style,
Conceptual style, and Behavioral style. Although no one fits completely into just one style category, you
should have characteristics that fit, more or less, into one or two styles. Each style looks at decisions in a
somewhat different way. Each style deals with processing the information on which the decision is
based differently.

Directive Style
For the person that is a directive style decision maker, structure is very important. The directive decision
maker is aggressive and expects immediate results. The typical directive style decision maker takes
charge of a situation, makes quick decisions and expects those “under” him to carry out those decisions
immediately, with no questions asked. They rely on their own information, knowledge, experience and
judgment. The directive style decision maker tends to follow the rules and is an excellent verbal
communicator. On the negative side of things, directive style decision makers act quickly and often don’t
have all of the facts. They can be rash and fail to consider other options when addressing a problem.
Directive decision makers focus on short-term results instead of long-term solutions.

Analytic Style
If your decision-making style is analytic, you probably enjoy solving problems and puzzles. An analytic
style decision maker is innovative and likes to analyze large amounts of data before making a decision.
They are adaptable and can function well even under unique or challenging situations. Unfortunately,
this style of decision making can be very slow and time consuming. An analytic decision maker wants to
use direct observation, data, and facts when coming to a decision. They also tend to want to control
every aspect of the process.

Conceptual Style
Conceptual style decision makers like to look at problems from an artistic angle. They are extremely
creative and like to look for solutions that are outside the box. They are achievement oriented and like
to think far into the future when making important decisions. A conceptual style decision maker will
take risks and try to make decisions that take a broad vision in problem solving.
Behavioral Style
People who use a behavioral decision making style are very interested in making sure that everyone
works well together and avoids conflict. They are very persuasive talkers and are good at getting people
to see things their way. Behavioral decision makers like working with a group. Together they attempt to
reconcile differences and negotiate a solution that is acceptable to all parties.

Vroom Yetton Jago Decision Model

What is a Vroom Yetton Jago Decision Model?

The Vroom Yetton Jago Decision Model is a model for decision-making that’s based on situational
leadership. The model can be used by everyone, irrespective of rank or position and helps to choose the
right management style in various decision situations. In some business situations, it’s better that the
leader takes all the decisions, whereas in other situations it’s better if the group has a say.

The Vroom Yetton Jago Decision Model helps to choose the right style by having the user answer a
series of questions with either yes or no. This series of questions is presented in the form of a decision
matrix. After answering the questions, the user immediately sees what method best suits the situation
concerned. According to the model, three specific factors have direct influence on the method for
decision-making: quality, collaboration and time. The series of questions creates clarity regarding the
influence of these factors in the decision situation. Subsequently, the model displays how the leader
should make the decision: independently, together with the group or after obtaining advice. There are
five different situations in total in which a different approach is desired and effective.

The Vroom Yetton Jago Decision Model was originally developed by Victor Vroom and Phillip Yetton in
1973, and it was expanded 15 years later by supplementations from Arthur Jago.

Three Important Factors in Decision-making

When a decision must be made, the desired management style and the degree of participation of team
members are influenced by three important factors. The Vroom Yetton Jago Decision Model therefore
demands proper thought before answering the series of questions. By considering the three specific
factors, better insight is formed about the decision to be made. The following three factors are
important in each decision situation:

The Quality of the Decision

The quality of the decision to be taken is about how much impact the decision will have and how
important it is to find the right solution. The higher the decision’s quality, the more people must be
involved in the decision process.

Involvement and Collaboration

Involvement and collaboration concern the question of how important it is that everyone agrees to the
decision in a team. Depending on how important this is, the degree of participation must be raised or
lowered.
Time Constraints
How much time is there to take decision? If there’s little time, a fast autocratic approach might be more
desirable, as there’s no time to lose in certain situations. If there’s a lot of time, there are more options
to involve more team players in the decision process.

The way in which these factors influence the situation helps the user to determine what the best
leadership style and decision method are.

Five Decision-making Styles

The Vroom Yetton Jago Decision Model distinguishes between three leadership styles and five different
decision processes:

Autocratic I (A1)
In this decision process, the leader uses the available information to make a decision independently. The
opinion of team members or external parties is not consulted in this case. Although the decision itself is
not dependent upon the team members, and their opinion doesn’t matter, it is important that the made
decision is communicated openly and clearly towards the team.

Autocratic II (A2)
Here too, the leader independently makes the decision, but the difference with autocratic style 1 is that
the leader has a bit more time and gathers information from team members or external parties. The
team members don’t know why information is requested from them and don’t think about the situation,
alternative or eventual choice.

Consultative I (C1)
The leader adopts a consulting role and actively takes the lead to have team members individually give
their opinion about the situation, the problem and the decision to be made. Here, the team’s
involvement is higher than in the autocratic decision-making style. However, the decision is still made by
the leader; he can choose to disregard the team’s opinion and input when these haven’t changed his
outlook on the situation.

Consultative II (C2)
Where the leader requests the individual opinions from the team members in the first consulting style,
he brings the team together in a group meeting for a discussion in the second. Ideas and suggestions are
asked for in this meeting. Here, the leader shares the problem and the situation with the group, but
eventually, the leader is still the one to individually make the decision.

Group II (G2)
The group as a whole makes the decision. The leader presents the situation and the problem to the
group, identifies alternatives and makes a consensus decision. The leader purely plays the role of
facilitator and accepts the decision of the group without considering his own opinion or vision.
In order to determine which of these styles and processes is most suitable, taking into account the three
factors, the decision tree from the Vroom-Yetton-Jago Decision Model must be completed.

Determining the Right Decision Style

Victor Vroom, Phillip Yetton and Arthur Jago developed eight questions that must be answered with yes
or no to arrive at the right decision style. All the questions have a certain theme. These themes are
represented by the abbreviations in the model. The eight questions must be answered in the order
below by the leader so as to determine the right leadership style and decision method.

1. Is the quality of the decision very important? Are the consequences of possible failure
significant? – QR (quality requirement)
2. Is a successful result dependent upon the team members? – CR (commitment requirement)
3. Does the leader have sufficient information to make an important decision alone? – LI (leader’s
information)
4. Has the problem been defined and structured properly so it can be easily understood what
needs to be done and what a good solution might be? ST – (problem structure)
5. When a leader makes the decision himself, is it likely to assume that the team is sufficiently
involved and motivated and will accept the decision? – CP (commitment probability)
6. Are the goals of the team consistent with the goals of the organisation that have been set to
define a successful solution? – GC (goal congruence)
7. If the team has to make a decision, are conflicts expected about the decision to be made and
solution? – CO (subordinate Conflicts)
8. Do the team members and other external parties have sufficient information to make an
important decision? – SI (subordinate information)
Use the visualisation of the model to answer the questions step by step and arrive at the right
style of decision-making. All the way to the right in the image of the model, an arrow is used to
indicate which decision method is most suitable for the situation.
 Pros and Cons Vroom Yetton Jago Decision Model
The main advantage of the Vroom Yetton Jago Decision Model is that it can flexibly be used in many
situations. The capacity to organise the decision process is a quality of the model many a leader could
use to their advantage. Each situation demands a different approach, and practically every situation can
be considered with this model.

On the other hand, the model also has several shortcomings. For instance, the personal factors and
characteristics of the leader aren’t considered, and the questions in the model might not be specific
enough to determine the ideal decision method.

Additionally, users of the model also indicate that they have doubts regarding the Vroom Yetton Jago
Decision Model’s effectiveness to determine the decision strategy for important decisions the outcomes
of which influence a large team.

ORGANIZING & CONTROLLING

Organizational Structure

An organization is a social unit of individuals that is designed and managed to achieve collective goals.
As such organizations are open systems that are greatly affected by the environment, they operate in.
Every organization has its own typical management structure that defines and governs the
relationships between the various employees, the tasks that they perform, and the roles,
responsibilities and authority provided to carry out different tasks.
An organization that is well structured achieves effective coordination, as the structure delineates
formal communication channels, and describes how separate actions of individuals are linked together.
Organizational structure defines the manner in which the roles, power, authority, and responsibilities
are assigned and governed, and depicts how information flows between the different levels of hierarchy
in an organization.

The structure an organization designs depends greatly on its objectives and the strategy it adopts in
achieving those objectives.
An organizational chart is the visual representation of this vertical structure. It is therefore very
important for an organization to take utmost care while creating the organizational structure. The
structure should clearly determine the reporting relationships and the flow of authority as this will
support good communication – resulting in efficient and effective work process flow.
Common Organization Structures
Managements need to seriously consider how they wish to structure the organization. Some of the
critical factors that need to be considered are −

● The size of the organization

● Nature of the business
● The objectives and the business strategy to achieve them
● The organization environment

Types of organizational structures

1. Hierarchical org structure

2. Functional org structure

3. Horizontal or flat org structure

4. Divisional org structures (market-based, product-based, geographic)

5. Matrix org structure

6. Team-based org structure

 7. Network org structure

The typical org chart looks like a pyramid, your C-level executives at the top with lines stretching down
to middle management and finally staff-level employees. 

But not every company functions best with a hierarchical organizational structure. Many types of
organizational charts exist because many types of organizational structures exist. 

1. Hierarchical org structure

The pyramid-shaped organizational chart we referred to earlier is known as a hierarchical org chart. It’s
the most common type of organizational structure––the chain of command goes from the top (e.g., the
CEO or manager) down (e.g., entry-level and low-level employees) and each employee has a supervisor. 
Pros    
● Better defines levels of authority and responsibility
● Shows who each person reports to or who to talk to about specific projects
● Motivates employees with clear career paths and chances for promotion     
 ● Gives each employee a specialty     
● Creates camaraderie between employees within the same department
Cons
● Can slow down innovation or important changes due to increased bureaucracy
● Can cause employees to act in interest of the department instead of the company as a whole
● Can make lower-level employees feel like they have less ownership and can’t express their ideas
for the company

2. Functional org structure

Similar to a hierarchical organizational structure, a functional org structure starts with positions with the
highest levels of responsibility at the top and goes down from there. Primarily, though, employees are
organized according to their specific skills and their corresponding function in the company. Each
separate department is managed independently. 
Pros
● Allows employees to focus on their role
● Encourages specialization
● Help teams and departments feel self-determined
● Is easily scalable in any sized company
Cons
● Can create silos within an organization
● Hampers interdepartmental communication
● Obscures processes and strategies for different markets or products in a company

3. Horizontal or flat org structure

 Hor
izontal or Flat Org Chart Example (Click on image to modify online)

A horizontal or flat organizational structure fits companies with few levels between upper management
and staff-level employees. Many start-up businesses use a horizontal org structure before they grow
large enough to build out different departments, but some organizations maintain this structure since it
encourages less supervision and more involvement from all employees.
Pros    
● Gives employees more responsibility
● Fosters more open communication    
● Improves coordination and speed of implementing new ideas    
Cons
● Can create confusion since employees do not have a clear supervisor to report to
● Can produce employees with more generalized skills and knowledge
● Can be difficult to maintain once the company grows beyond start-up status

4. Divisional org structure

In divisional organizational structures, a company’s divisions have control over their own resources,
essentially operating like their own company within the larger organization. Each division can have its
own marketing team, sales team, IT team, etc. This structure works well for large companies as it
empowers the various divisions to make decisions without everyone having to report to just a few
executives. 
Depending on your organization’s focus, there’s a few variations to consider.
Market-based divisional org structure
Divisions are separated by market, industry, or customer type. A large consumer goods company, like
Target or Walmart, might separate its durable goods (clothing, electronics, furniture, etc.) from its food
or logistics divisions. 
 Ma
rket-Based Divisional Org Chart Example

Product-based divisional org structure

Divisions are separated by product line. For example, a tech company might have a division dedicated to
its cloud offerings, while the rest of the divisions focus on the different software offerings––e.g., Adobe
and its creative suite of Illustrator, Photoshop, InDesign, etc.

Pro
duct-Based Divisional Org Chart Example

Geographic divisional org structure

Divisions are separated by region, territories, or districts, offering more effective localization and
logistics. Companies might establish satellite offices across the country or the globe in order to stay
close to their customers.
Pros
● Helps large companies stay flexible 
● Allows for a quicker response to industry changes or customer needs
● Promotes independence, autonomy, and a customized approach
Cons
● Can easily lead to duplicate resources
● Can mean muddled or insufficient communication between the headquarters and its divisions
● Can result in a company competing with itself

5. Matrix org structure

A matrix organizational chart looks like a grid, and it shows cross-functional teams that form for special
projects. For example, an engineer may regularly belong to the engineering department (led by an
engineering director) but work on a temporary project (led by a project manager). The matrix org chart
accounts for both of these roles and reporting relationships.

Pros
● Allows supervisors to easily choose individuals by the needs of a project
● Gives a more dynamic view of the organization
● Encourages employees to use their skills in various capacities aside from their original roles

Cons
 ● Presents a conflict between department managers and project managers
● Can change more frequently than other organizational chart types

6. Team-based org structure

It’ll come as no surprise that a team-based organizational structure groups employees according to
(what else?) teams––think scrum teams or tiger teams. A team organizational structure is meant to
disrupt the traditional hierarchy, focusing more on problem solving, cooperation, and giving employees
more control.
Pros
● Increases productivity, performance, and transparency by breaking down silos
● Promotes a growth mindset
● Changes the traditional career models by getting people to move laterally
● Values experience rather than seniority
● Requires minimal management
● Fits well with agile companies with scrum or tiger teams
Cons
● Goes against many companies’ natural inclination of a purely hierarchical structure
● Might make promotional paths less clear for employees

7. Network org structure

These days, few businesses have all their services under one roof, and juggling the multitudes of
vendors, subcontractors, freelancers, offsite locations, and satellite offices can get confusing. A network
organizational structure makes sense of the spread of resources. It can also describe an internal
structure that focuses more on open communication and relationships rather than hierarchy.
Pros
● Visualizes the complex web of onsite and offsite relationships in companies
● Allows companies to be more flexible and agile
● Give more power to all employees to collaborate, take initiative, and make decisions
● Helps employees and stakeholders understand workflows and processes
Cons
● Can quickly become overly complex when dealing with lots of offsite processes
● Can make it more difficult for employees to know who has final say
Importance of Organizing
Organizations are systems created to achieve common goals through people-to-people and people-to-
work relationships. They are essentially social entities that are goal-directed, deliberately structured for
coordinated activity systems, and is linked to the external environment. Organizations are made up of
people and their relationships with one another. Managers deliberately structure and coordinate
organizational resources to achieve the organization’s purpose.
Each organization has its own external and internal environments that define the nature of the
relationships according to its specific needs. Organizing is the function that managers undertake to
design, structure, and arrange the components of an organization’s internal environment to facilitate
attainment of organizational goals.
Organizing creates the framework needed to reach a company's objectives and goals.
Organizing is the process of defining and grouping activities, and establishing authority relationships
among them to attain organizational objectives.
Importance of Organizing
A comprehensive approach to organizing helps the management in many ways. Organizing aligns the
various resources towards a common mission.
Efficient Administration
It brings together various departments by grouping similar and related jobs under a single
specialization. This establishes coordination between different departments, which leads to unification
of effort and harmony in work.
It governs the working of the various departments by defining activities and their authority
relationships in the organizational structure. It creates the mechanism for management to direct and
control the various activities in the enterprise.
Resource Optimization
Organizing ensures effective role-job-fit for every employee in the organization. It helps in avoiding
confusion and delays, as well as duplication of work and overlapping of effort.
Benefits Specialization
It is the process of organizing groups and sub-divide the various activities and jobs based on the
concept of division of labor. This helps in the completion of maximum work in minimum time ensuring
the benefit of specialization.
Promotes Effective Communication
Organizing is an important means of creating coordination and communication among the various
departments of the organization. Different jobs and positions are interrelated by structural
relationship. It specifies the channel and mode of communication among different members.
Creates Transparency
The jobs and activities performed by the employees are clearly defined on the written document
called Job description which details out what exactly has to be done in every job. Organizing fixes the
authority-responsibility among employees. This brings in clarity and transparency in the organization.
Expansion and Growth
When resources are optimally utilized and there exists a proper division of work among departments
and employees, management can multiply its strength and undertake more activities. Organizations
can easily meet the challenges and can expand their activities in a planned manner.
Principles of Organizing
The following illustration shows the five principles of Organizing −

Work Specialization
Also called division of labor, work specialization is the degree to which organizational tasks are divided
into separate jobs. Each employee is trained to perform specific tasks related to their specialized
function.
Specialization is extensive, for example running a particular machine in a factory assembly line. The
groups are structured based on similar skills. Activities or jobs tend to be small, but workers can
perform them efficiently as they are specialized in it.
In spite of the obvious benefits of specialization, many organizations are moving away from this
principle as too much specialization isolates employees and narrows down their skills to perform
routine tasks.
Also, it makes the organization people dependent. Hence organizations are creating and expanding job
processes to reduce dependency on particular skills in employees and are facilitating job rotation
among them.

Authority
Authority is the legitimate power assigned to a manager to make decisions, issue orders, and allocate
resources on behalf of the organization to achieve organizational objectives.
Authority is within the framework of the organization structure and is an essential part of the
manager’s job role. Authority follows a top-down hierarchy. Roles or positions at the top of the
hierarchy are vested with more formal authority than are positions at the bottom.
The extent and level of authority is defined by the job role of the manager. Subordinates comply with
the manager’s authority as it is a formal and legitimate right to issue orders.
Chain of Command
The chain of command is an important concept to build a robust organization structure. It is the
unbroken line of authority that ultimately links each individual with the top organizational position
through a managerial position at each successive layer in between.
It is an effective business tool to maintain order and assign accountability even in the most casual
working environments. A chain of command is established so that everyone knows whom they should
report to and what responsibilities are expected at their level. A chain of command enforces
responsibility and accountability. It is based on the two principles of Unity of command and Scalar
Principle.
Unity of command states that an employee should have one and only one manager or supervisor or
reporting authority to whom he is directly accountable to. This is done to ensure that the employee
does not receive conflicting demands or priorities from several supervisors at once, placing him in a
confused situation.
However, there are exceptions to the chain of command under special circumstances for specific tasks
if required. But for the most part organizations to a large extent should adhere to this principle for
effective outcomes.
Scalar principle states that there should exist a clear line of authority from the position of ultimate
authority at the top to every individual in the organization, linking all the managers at all the levels. It
involves a concept called a gang plank using which a subordinate may contact a superior or his superior
in case of an emergency, defying the hierarchy of control. However, the immediate superiors must be
informed about the matter.
Delegation
Another important concept closely related to authority is delegation. It is the practice of turning over
work-related tasks and/or authority to employees or subordinates. Without delegation, managers do
all the work themselves and underutilize their workers. The ability to delegate is crucial to managerial
success.
Authority is said to be delegated when discretion is vested in a subordinate by a superior. Delegation is
the downward transfer of authority from a manager to a subordinate. Superiors or managers cannot
delegate authority they do not have, however, high they may be in the organizational hierarchy.
Delegation as a process involves establishment of expected outcomes, task assignment, delegation of
authority for accomplishing these tasks, and exaction of responsibility for their accomplishment.
Delegation leads to empowerment, as employees have the freedom to contribute ideas and do their
jobs in the best possible ways.

Span of Control
Span of control (also referred to as Span of Management) refers to the number of employees who
report to one manager. It is the number of direct reportees that a manager has and whose results he is
accountable for.
Span of control is critical in understanding organizational design and the group dynamics operating
within an organization. Span of control may change from one department to another within the same
organization.
The span may be wide or narrow. A wide span of control exists when a manager has a large number of
employees reporting to him. Such a structure provides more autonomy. A narrow span of control exists
when the number of direct reportees that a manager has is small. Narrow spans allow managers to
have more time with direct reportees, and they tend to spark professional growth and advancement.

Authority: Meaning, Characteristics and Types

Meaning of Authority:
Authority is the formal right to do the work. Henry Fayol defined the authority as “the right to give
orders and the power to exact obedience. Authority gives the management the power to enforce
obedience. It is the power to give orders and make sure that these orders are obeyed.”

According to Simon, authority may be defined as “the power to make decisions which guide the actions
of another. It is a relationship between two individuals—one supervisor, the subordinate. The
superior frames and transmits decisions with the expectation that they will be accepted by the
subordinate. The subordinate expects such decisions, and his conduct is determined by them.”
Writers on management argue that the concepts of power and authority are synonymous, while others
contend that they are distinctly different. Both are viewed by people in many different ways.

Authority is one type of power. It is based on the recognition of the legitimacy or lawfulness of the
attempt to exert influence. But the power is defined as “the ability to exert influence that is the ability to
change the attitudes or behaviour of individuals or groups.”

Koontz and Weihrich distinguish authority and power. Power is a much broader concept than authority.
It is the ability of individuals or groups to induce or influence the beliefs or actions of other persons or
groups. Authority is the right to exercise discretion in making decisions affecting others.

It is, of course, one type of power.

French and Raven’s Classic study in 1959 identified five bases or sources of power, an individual has over
others.

These bases are given below:

1. Legitimate Power,

2. Coercive Power,

3. Reward Power,

4. Expert Power, and

5. Referent Power.

1. Legitimate Power:
It 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”. In a private business authority of
position arises primarily from the social institution of private property. In government, this authority
arises basically from the institution of representative government.
2. Coercive Power:
This is derived from a person’s ability to create fear in another individual and is based on the
subordinate’s expectation that punishment will be received for not agreeing or complying with the
superior’s commands or beliefs.

3. Reward Power:
Reward power is the opposite of coercive power. It arises from the ability of some people to grant
rewards. Purchasing agents, with little position power, might be able to exercise considerable influence
by their ability to expedite or delay a much-needed spare part. Likewise, university professors have
considerable reward power, they can grant or withhold high grades. Pick of vacation time.

4. Expert Power:
This is the power of knowledge, skill and expertise in certain areas. Since the superiors possess these
knowledges the subordinate’s desires to fulfil the wishes and their directions. Physicians, lawyers, and
university professors may have considerable influence on others because they are respected for their
special knowledge.

5. Referent Power:
Referent power is based on the identification of an individual faith a leader who is held in high esteem,
admired and often imitated by the subordinate.
Characteristics of Authority:
1. Basis of Getting Things Done:
Authority provides the basis of getting things done in the organisation. It refers to the right to affect the
behaviour of others in the organisation with a view to performing certain activities to accomplish the
defined objectives.

2. Legitimacy:
Authority is accepted as it has certain legitimacy about it, that is to say it implies a right to secure
performance from others. Such right may be legal or formal, or it may be supported by tradition.
Custom or accepted standards of authenticity. The right of a manager to affect the behaviour of his
subordinates is given to him by virtue of his position or office in the organisation.

3. Decision-Making:
It is a prerequisite of authority. The manager can command his subordinates to act or abstain from
acting in a particular manner only when he has made decisions as regards the course of activities to be
performed by them.

4. Subjectivity in Implementation:
Though authority has an element of objectivity about it, its exercise is significantly influenced by
subjective factors, such as the personality of the manager who is empowered to use it, as also of the
subordinate or group of subordinates with reference to whom it is to be exercised.

Types of Authority:
Basically, the following types of authority are given below:
1. Legal Authority.

2. Traditional or Formal or top-down Authority.

3. Acceptance or Bottom-up Authority.

4. Charismatic Authority.

5. Competence or personal Authority.

1. Legal Authority:
The authority is based upon the rank of the person in the organisation and such authority may be given
by law or by social norms, rules and regulations protected by law. For example, law has granted a place
officer, the authority to arrest anyone who has committed a crime. Similarly, the president of a company
has the right to fire an employee because that is how the rules and policies of the company have been
established.

This type of authority is similar to power, which is the capacity to secure dominance of one’s goals and
beliefs. This authority has been called formal authority, which has been legalised through social
institutes, which attain and enforce group goals, objectives and welfare through a maze of laws, codes,
cultures and ethics.
This type of authority is embedded in the bureaucracy where the authority is bestowed upon
contractually hired and appointed officials.

For example, shareholders of an organisation give the authority to Board of Directors, who in turn pass it
on to the Chief Executive and so on the shareholders have this authority, to start with, because they
bought the shares in the company and society, through its complex structure, gives them this authority,
to start with, because they bought the shares in the company and society, through its complex
structure, gives them this authority.

While bureaucracy is the purest form of legal authority, other forms of such authority may comprise of
rotating office holders, elected officials or office holders chosen by lot. They have similar authority since
they must follow the same rules and regulations, which govern their positions and define the limits of
their authority.

Some examples are the elected officials, such as the president of a country or a member of parliament
or a community leader.

2. Traditional Authority:
This authority is based upon the belief in traditions and the legitimacy of the status of people exercising
authority through those traditions. Such traditions have evolved from a social order and communal
relationships in the form of the ruling “Lord” and the obedient “subjects”.
The obedience results on the promise of traditional “piety” and traditional respect and identity of
the “Lord” or the King or the tribal chief. The traditional chief generally makes rules and decisions at his
own pleasure.
Traditional authority has flowed from the top of the organisation to the bottom, from the owners or
stockholders to the board of directors to the president to the vice-presidents to middle managers to
supervisors to workers. Figure 7.1 illustrates this traditional top-down flow of legitimate authority, with
referent, expert, coercive and reward power also influencing the acceptance of formal authority.

 
The bases of power or influence do not constrain the use of authority, but rather affect how the
authority is exerted and accepted.

3. Acceptance Theory of Authority:

The acceptance theory of authority presents a contrast to the traditional formal view of authority.
According to the acceptance theory, authority in the ultimate analysis depends on the acceptance or
consent of the people who are managed (subordinates) rather than legitimacy, or any legal, social or
cultural norms.

If the subordinates don’t accept the command of their superior, the superior cannot be said to have any
authority with reference to them.

Chester Barnad, in 1938, began writing about organisations being ‘co-operative systems’ and proposed
the ‘acceptance theory or bottom-up theory of authority”. He argued that management has only as
much authority or power as subordinates is willing to accept and to the extent they consent to comply
with directives.

Barnard suggested that at least four conditions must be met for subordinates to comply with
authoritative communication.

a. The communication is fully understood.

b. At the time of decision, the employee believes the directive is consistent with the objectives of the
organisation.

c. At the time of decision, the employees believe the command is compatible with personal interests
and objectives.

d. The employees believe he or she is physically and mentally capable of complying with the
communication.

4. Charismatic Authority:
The Charismatic Authority rests on personal charisma of a leader who commands respect of his
followers on the basis of his personality and his personal traits such as intelligence and integrity. This is
especially true of religious and political leaders. The followers become highly attached to the leader
partly because the leader’s goals seem to be consistent with their own needs.

A charismatic leader is a forceful orator and generally has hypnotic effect on his followers who accept
his command and authority. For example, President John. F. Kennedy of America was known to have
such a Charisma and hold on people that many succeeding presidential candidates tried to imitate his
style.

Some organisational leaders are also known to be charismatic and responsible for the success of their
organisations.
5. Competency Theory of Authority:
This is also known as “technical authority” and is implicit in person’s special knowledge or skill. For
example, when doctor advises you to rest, you accept his “order” because you respect his knowledge
and his skills as a doctor. Again, this order will not get results unless you accept and obey and, in that
sense, it rests on acceptance theory of authority.

The Power to Influence

What Is Influence?

Starting at infancy, we all try to get others to do what we want. We learn early what works in getting us
to our goals. Instead of crying and throwing a tantrum, we may figure out that smiling and using
language causes everyone less stress and brings us the rewards we seek.
By the time you hit the workplace, you have had vast experience with influence techniques. You have
probably picked out a few that you use most often. To be effective in a wide number of situations,
however, it’s best to expand your repertoire of skills and become competent in several techniques,
knowing how and when to use them as well as understanding when they are being used on you. If you
watch someone who is good at influencing others, you will most probably observe that person switching
tactics depending on the context. The more tactics you have at your disposal, the more likely it is that
you will achieve your influence goals.
Al Gore and many others have spent years trying to influence us to think about the changes in the
environment and the implications of global warming. They speak, write, network, and lobby to get
others to pay attention. But Gore, for example, does not stop there. He also works to persuade us with
direct, action-based suggestions such as asking everyone to switch the kind of light bulbs they use, turn
off appliances when not in use, drive vehicles with better fuel economy, and even take shorter showers.
Ironically, Gore has more influence now as a private citizen regarding these issues than he was able to
exert as a congressman, senator, and vice president of the United States.
SELF-ASSESSMENT

Do You Have the Characteristics of Powerful Influencers?

People who are considered to be skilled influencers share the following attributes.
How often do you engage in them? 0 = never, 1= sometimes, 2 = always.
● present information that can be checked for accuracy
● provide a consistent message that does not change from situation to situation
● display authority and enthusiasm (often described as charisma)
● offer something in return for compliance
● act likable
● show empathy through listening
● show you are aware of circumstances, others, and yourself
● plan ahead
If you scored 0–6: You do not engage in much effective influencing behavior. Think of ways to enhance
this skill. A great place to start is to recognize the items on the list above and think about ways to
enhance them for yourself.
If you scored 7–12: You engage in some influencing behavior. Consider the context of each of these
influence attempts to see if you should be using more or less of it depending on your overall goals.
If you scored 13–16: You have a great deal of influence potential. Be careful that you are not
manipulating others and that you are using your influence when it is important rather than just to get
your own way.

Commonly Used Influence Tactics

Researchers have identified distinct influence tactics and discovered that there are few differences
between the way bosses, subordinates, and peers use them. We will focus on nine influence tactics.
Responses to influence attempts include resistance, compliance, or commitment. Resistance occurs
when the influence target does not wish to comply with the request and either passively or actively
repels the influence attempt. Compliance occurs when the target does not necessarily want to obey, but
they do. Commitment occurs when the target not only agrees to the request but also actively supports it
as well. Within organizations, commitment helps to get things done, because others can help to keep
initiatives alive long after compliant changes have been made or resistance has been overcome.

Influence Tactics Use and Outcomes.Source: Adapted from information in Falbe, C. M., & Yukl, G.
(1992).  Consequences for managers of using single influence tactics and combinations of tactics. Academy of
Management Journal, 35, 638–652.

1. Rational persuasion includes using facts, data, and logical arguments to try to convince
others that your point of view is the best alternative. This is the most commonly applied
influence tactic. One experiment illustrates the power of reason. People were lined up at
a copy machine and another person, after joining the line asked, “May I go to the head of
 the line?” Amazingly, 63% of the people in the line agreed to let the requester jump
ahead. When the line jumper makes a slight change in the request by asking, “May I go to
the head of the line because I have copies to make?” the number of people who agreed
jumped to over 90%. The word because was the only difference. Effective rational
persuasion includes the presentation of information that is clear and specific, relevant,
and timely. Across studies summarized in a meta-analysis, rationality was related to
positive work outcomes.
2. Inspirational appeals seek to tap into our values, emotions, and beliefs to gain support for
a request or course of action. When President John F. Kennedy said, “Ask not what your
country can do for you, ask what you can do for your country,” he appealed to the higher
selves of an entire nation. Effective inspirational appeals are authentic, personal, big-
thinking, and enthusiastic.
3. Consultation refers to the influence agent’s asking others for help in directly influencing
or planning to influence another person or group. Consultation is most effective in
organizations and cultures that value democratic decision making.
4. Ingratiation refers to different forms of making others feel good about themselves.
Ingratiation includes any form of flattery done either before or during the influence
attempt. Research shows that ingratiation can affect individuals. For example, in a study
of résumés, those résumés that were accompanied with a cover letter containing
ingratiating information were rated higher than résumés without this information. Other
than the cover letter accompanying them, the résumés were identical. Effective
ingratiation is honest, infrequent, and well-intended.
5. Personal appeal refers to helping another person because you like them, and they asked
for your help. We enjoy saying yes to people we know and like. A famous psychological
experiment showed that in dorms, the most well-liked people were those who lived by
the stairwell—they were the most often seen by others who entered and left the hallway.
The repeated contact brought a level of familiarity and comfort. Therefore, personal
appeals are most effective with people who know and like you.
6. Exchange refers to give-and-take in which someone does something for you, and you do
something for them in return. The rule of reciprocation says that “we should try to repay,
in kind, what another person has provided us.” The application of the rule obliges us and
makes us indebted to the giver. One experiment illustrates how a small initial gift can
open people to a substantially larger request at a later time. One group of subjects was
given a bottle of Coke. Later, all subjects were asked to buy raffle tickets. On the average,
people who had been given the drink bought twice as many raffle tickets as those who
had not been given the unsolicited drinks.
7. Coalition tactics refer to a group of individuals working together toward a common goal
to influence others. Common examples of coalitions within organizations are unions that
may threaten to strike if their demands are not met. Coalitions also take advantage of
peer pressure. The influencer tries to build a case by bringing in the unseen as allies to
convince someone to think, feel, or do something. A well-known psychology experiment
draws upon this tactic. The experimenters stare at the top of a building in the middle of a
busy street. Within moments, people who were walking by in a hurry stop and also look
at the top of the building, trying to figure out what the others are looking at. When the
experimenters leave, the pattern continues, often for hours. This tactic is also extremely
popular among advertisers and businesses that use client lists to promote their goods and
services. The fact that a client bought from the company is a silent testimonial.
 8. Pressure refers to exerting undue influence on someone to do what you want or else
something undesirable will occur. This often includes threats and frequent interactions
until the target agrees. Research shows that managers with low referent power tend to
use pressure tactics more frequently than those with higher referent power. Pressure
tactics are most effective when used in a crisis situation and when they come from
someone who has the other’s best interests in mind, such as getting an employee to an
employee assistance program to deal with a substance abuse problem.
9. Legitimating tactics occur when the appeal is based on legitimate or position power. “By
the power vested in me…”: This tactic relies upon compliance with rules, laws, and
regulations. It is not intended to motivate people but to align them behind a direction.
Obedience to authority is filled with both positive and negative images. Position, title,
knowledge, experience, and demeanor grant authority, and it is easy to see how it can be
abused. If someone hides behind people’s rightful authority to assert themselves, it can
seem heavy-handed and without choice. You must come across as an authority figure by
the way you act, speak, and look. Think about the number of commercials with doctors,
lawyers, and other professionals who look and sound the part, even if they are actors.
People want to be convinced that the person is an authority worth heeding. Authority is
often used as a last resort. If it does not work, you will not have much else to draw from
in your goal to persuade someone.

Direction of Influence

The type of influence tactic used tends to vary based on the target. For example, you would probably
use different influence tactics with your boss than you would with a peer or with employees working
under you.

Upward Influence

Upward influence, as its name implies, is the ability to influence your boss and others in positions higher
than yours. Upward influence may include appealing to a higher authority or citing the firm’s goals as an
overarching reason for others to follow your cause. Upward influence can also take the form of an
alliance with a higher status person (or with the perception that there is such an alliance). As complexity
grows, the need for this upward influence grows as well—the ability of one person at the top to know
enough to make all the decisions becomes less likely. Moreover, even if someone did know enough, the
sheer ability to make all the needed decisions fast enough is no longer possible. This limitation means
that individuals at all levels of the organization need to be able to make and influence decisions. By
helping higher-ups be more effective, employees can gain more power for themselves and their unit as
well. On the flip side, allowing yourself to be influenced by those reporting to you may build your
credibility and power as a leader who listens. Then, during a time when you do need to take unilateral,
decisive action, others will be more likely to give you the benefit of the doubt and follow. Both Asian
American and Caucasian American managers report using different tactics with superiors than those
used with their subordinates. Managers reported using coalitions and rationality with managers and
assertiveness with subordinates. Other research establishes that subordinates’ use of rationality,
assertiveness, and reciprocal exchange was related to more favorable outcomes such as promotions and
raises, while self-promotion led to more negative outcomes.
Influence takes place even before employees are hired. For example, ingratiation and rationality were
used frequently by fire fighters during interviews. Extraverts tend to engage in a greater use of self-
promotion tactics while interviewing, and research shows that extraverts are more likely to use
inspirational appeal and ingratiation as influence tactics. Research shows that ingratiation was positively
related to perceived fit with the organization and recruiters’ hiring recommendations.

Downward Influence

Downward influence is the ability to influence employees lower than you. This is best achieved through
an inspiring vision. By articulating a clear vision, you help people see the end goal and move toward it.
You often don’t need to specify exactly what needs to be done to get there—people will be able to
figure it out on their own. An inspiring vision builds buy-in and gets people moving in the same direction.
Research conducted within large savings banks shows that managers can learn to be more effective at
influence attempts. The experimental group of managers received a feedback report and went through a
workshop to help them become more effective in their influence attempts. The control group of
managers received no feedback on their prior influence attempts. When subordinates were asked 3
months later to evaluate potential changes in their managers’ behavior, the experimental group had
much higher ratings of the appropriate use of influence. Research also shows that the better the quality
of the relationship between the subordinate and their supervisor, the more positively resistance to
influence attempts are seen. In other words, bosses who like their employees are less likely to interpret
resistance as a problem.

Peer Influence

Peer influence occurs all the time. But to be effective within organizations, peers need to be willing to
influence each other without being destructively competitive. There are times to support each other and
times to challenge—the end goal is to create better decisions and results for the organization and to
hold each other accountable. Executives spend a great deal of their time working to influence other
executives to support their initiatives. Research shows that across all functional groups of executives,
finance or human resources as an example, rational persuasion is the most frequently used influence
tactic.

Organic versus Mechanistic Models

When managers combine the basic components and elements of an organizational structure together,
the result has certain characteristics that are best understood by looking at it through the lens of organic
and mechanistic organizations.

Organic Organizations
Organic organizations have a low degree of formality, specialization and standardization. Their decision
making is decentralized, and their activities are well-integrated. The organic model is usually flat, and it
usually uses cross-hierarchical and cross-functional teams and possesses a comprehensive information
network that features lateral and upward communication in addition to downward communication.
Organic organizations look a lot like boundaryless organizations. They allow for employees to cultivate
more ideas and be more creative because the business is not as rigidly structured. Organic structures are
used in dynamic, unstable environments where the business needs to quickly adapt to change, as the
structure gives the organization the flexibility to deal with fast-paced environmental change and many
different elements.
A good example of an organization that uses an organic structure might be a consulting firm. A
consulting firm responds to customer issues as they come up, and those issues change with the business
environment. Consulting firms want to respond to change quickly, so by choosing an organic structure
they’re able to be nimble and address their customers’ needs.

Mechanistic Organizations

Mechanistic organizations have centralized decision making and formal, standardized control systems.
Essentially, they are bureaucracies.
Mechanistic organizations work well in stable, simple environments. Managers integrate the activities of
clearly defined departments through formal channels and in formal meetings. Often, they feature many
hierarchical layers and a focus on reporting relationships.
 GENERAL MOTORS

General Motors is a good example of an organization using the mechanistic model. Why do they use
that? For one, they’re very large, and when that many people and functions are involved, order is
needed. But they’re also in a stable, if not somewhat simple, environment. The car market fluctuates
with the economy, yes, but the company builds cars and trucks. Across all their divisions, that function is
basically the same.

Here’s a table comparing the basic characteristics of both models:

Organic Mechanistic
General tasks Specialized tasks

Loosely defined departments and hierarchy Well-defined departments with

clear hierarchy
Decentralized decision making by many individuals Centralized decision making by a
few people

Integration achieved by managers and employees interacting Integration achieved by formal

and exchanging information as needed manager meetings
Flexibility and capability of rapid change Clear and efficient reporting
relationships

Most companies find themselves falling somewhere in between the two extremes of organic and
mechanistic. Each organization designs its structure to enable its mission, goals, and strategy. If the
structure fits with other contextual elements, it has a better chance of being effective in supporting the
organization.
CONTROLLING:
Control Process

Controlling is one of the most important functions of management. Its main objective is to ensure that
an organization’s activities are advancing as planned. The control process that all managers have to
implement consists of several steps. Each one of these is equally important and plays a big role in
effective management.

The control process of management ensures that every activity of a business is furthering its goals. This
process basically helps managers in evaluating their organization’s performance. By using it effectively,
they can decide whether to change their plans or continue with them as they are.

Controlling: A Five-Step Process

Controlling involves ensuring that performance does not deviate from standards. Controlling consists of
five steps: (1) set standards, (2) measure performance, (3) compare performance to standards, (4)
determine the reasons for deviations and then (5) take corrective action as needed (see Figure 1,
below). Corrective action can include changes made to the performance standards—setting them higher
or lower or identifying new or additional standards. Performance standards are often stated in monetary
terms such as revenue, costs, or profits but may also be stated in other terms, such as units produced,
number of defective products, or levels of quality or customer service.

The measurement of performance can be done in several ways, depending on the performance
standards, including financial statements, sales reports, production results, customer satisfaction, and
formal performance appraisals. Managers at all levels engage in the managerial function of controlling
to some degree.
The managerial function of controlling should not be confused with control in the behavioral or
manipulative sense. This function does not imply that managers should attempt to control or to
manipulate the personalities, values, attitudes, or emotions of their subordinates. Instead, this function
of management concerns the manager’s role in taking necessary actions to ensure that the work-related
activities of subordinates are consistent with and contributing toward the accomplishment of
organizational and departmental objectives.
Effective controlling requires the existence of plans, since planning provides the necessary performance
standards or objectives. Controlling also requires a clear understanding of where responsibility for
deviations from standards lies. Two traditional control techniques are budget and performance audits.
An audit involves an examination and verification of records and supporting documents. A budget audit
provides information about where the organization is with respect to what was planned or budgeted
for, whereas a performance audit might try to determine whether the figures reported are a reflection
of actual performance. Although controlling is often thought of in terms of financial criteria, managers
must also control production and operations processes, procedures for delivery of services, compliance
with company policies, and many other activities within the organization.
Controls also come at a cost. It is useful to know that there are trade-offs between having and not
having organizational controls. Let’s look at some of the costs and benefits of organizational controls.

Costs

Financial costs—direct (i.e., paying for an accountant for an audit) and indirect (i.e., people employed by
the organization whose primary function is related to control—internal quality control, for instance).

Culture and reputation costs—the intangible costs associated with any form of control. Examples include
damaged relationships with employees or tarnished reputation with investors or government.

Responsiveness costs—downtime between a decision and the actions required to implement it due to
compliance with controls.

Poorly implemented controls—implementation is botched or the implementation of a new control

conflicts with other controls.

Benefits

Cost and productivity control—ensures that the firm functions effectively and efficiently.

Quality control—contributes to cost control (i.e., fewer defects, less waste), customer satisfaction (i.e.,
fewer returns), and greater sales (i.e., repeat customers and new customers).

Opportunity recognition—helps managers identify and isolate the source of positive surprises, such as a
new growth market. Though opportunities can also be found in internal comparisons of cost control and
productivity across units.

Manage uncertainty and complexity—keeps the organization focused on its strategy, and helps
managers anticipate and detect negative surprises and respond opportunistically to positive surprises.

Decentralized decision making—allows the organization to be more responsive by moving decision

making to those closest to customers and areas of uncertainty.

The management functions of planning, organizing, leading, and controlling are widely considered to be
the best means of describing the manager’s job, as well as the best way to classify accumulated
knowledge about the study of management. Although there have been tremendous changes in the
environment faced by managers and the tools used by managers to perform their roles, managers still
perform these essential functions.

Types of controls
A. Controls can be classified according to their timing or place in the productive cycle.
1. Feedforward control focuses on the regulation of inputs to ensure that they meet the standards
necessary for the transformation process.
a. The emphasis is upon preventing problems.
b. Other names for feedforward control are “preliminary control,” “precontrol,” “preventative control”
and “steering control.”
2. Concurrent control involves the regulation of ongoing activities that are part of the transformation
process to ensure that conform to organizational standards.
a. Checkpoints are in place to determine whether to continue the process, take corrective action, or stop
work altogether.
b. Other names for concurrent control are “screening” and “yes-no control.”
c. This type of control is not appropriate for work that requires creativity or innovation.
3. Feedback control is regulation exercised after a product or service has been completed in order to
ensure that the final output meets organizational standards and goals.
a. Feedback control is used when feedforward and concurrent controls are not feasible or are too costly.
b. Feedback control serves a number of functions:
1) To serve as a final means to check for deviations not detected earlier
2) To provide information that will facilitate the planning process
3) To provide information regarding employee performance
c. Other names for feedback control are “post action control” or “output control.”
B. Multiple control systems are systems that use two or more of the Feedforward, concurrent, and
feedback control processes and involve several strategic control points.
1. Multiple control systems develop because of the need to control various aspects of
a productive cycle, including inputs, transformation, and outputs.
2. Computer software companies provide examples of processes complex enough to require multiple
controls.
C. The degree to which human discretion is part of a control process determines whether it is cybernetic
or non-cybernetic.
1. A cybernetic control system is a self-regulated control system that, once it is put into operation, can
automatically monitor the situation and take corrective action when necessary, e.g., a heating system or
some computerized inventory systems.
2. A non-cybernetic control system is a control system that relies on human discretion as a basic part of
its process.

CONTROLLING FOR ORGANIZATIONAL PERFORMANCE

A. What Is Organizational Performance?
Performance is the end result of an activity. Managers are concerned with organizational performance
— the accumulated end results of all the organization’s work processes and activities.
Measures of Organizational Performance
Employees need to see the connection between what they do and the outcomes. The most frequently
used organizational performance measures include organizational productivity, organizational
effectiveness, and industry rankings.
1. Organizational productivity is the overall output of goods or services produced divided by the inputs
needed to generate that output. It’s the management’s job to increase this ratio.
2. Organizational effectiveness is a measure of how appropriate organizational goals are and how well
an organization is achieving those goals.

TOOLS FOR MONITORING AND MEASURING ORGANIZATIONAL PERFORMANCE

Managers might use any of the following types of performance control tools: financial controls,
information controls, balanced scorecard approach, or benchmarking best practices approach.
A. Financial Controls.
1. Traditional Financial Control Measures. a. Financial ratios are calculated by taking numbers from the
organization’s primary financial statements—the income statement and the balance sheet. The four key
categories of financial ratios are as follows.
1) Liquidity ratios measure an organization’s ability to meet its current debt obligations.
2) Leverage ratios examine the organization’s use of debt to finance its assets and whether it’s able to
meet the interest payments on the debt.
3) Activity ratios measure how efficiently the firm is using its assets.
4) Profitability ratios measure how efficiently and effectively the firm is using its assets to generate
profits.
b. We have also discussed budgets as a planning tool. However, budgets are also control tools. They
provide managers with quantitative standards against which to measure and compare actual
performance and resource consumption.
2. Other Financial Control Measures. Managers are using measures such as EVA (economic value added)
and MVA (market value added).
a. Economic value added is a tool for measuring corporate and divisional performance by calculating
after-tax operating profit minus the total annual cost of capital.
b. Market value added adds a market dimension by measuring the stock market’s estimate of the value
of a firm’s past and expected capital investment projects.
B. Information Controls.
Controlling information can be vital to an organization’s success. We need to look at the development
and use of management information systems.
1. A management information system is a system that provides managers with needed and usable
information on a regular basis.
a. Managers need usable information, not just data
b. Data are raw, unanalysed facts. Information is analysed and processed data.
2. Information can help managers control the various organizational areas efficiently and effectively. It
plays a vital role in the controlling process.
C. Balanced Scorecard Approach.
1. The balanced scorecard is a performance measurement tool that looks at four areas—financial,
customer, internal processes, and people/innovation/growth assets—that contribute to a company’s
performance.
2. The intent of the balanced scorecard is to emphasize that all of these areas are important to an
organization’s success.
A balanced scorecard is a strategic management performance metric used to identify and improve
various internal business functions and their resulting external outcomes. Balanced scorecards are used
to measure and provide feedback to organizations. Data collection is crucial to providing quantitative
results as managers and executives gather and interpret the information and use it to make better
decisions for the organization.
D. Benchmarking of Best Practices
1.Benchmarking is the search for the best practices among competitors or non-competitors that lead to
their superior performance.
2. Research shows that best practices frequently already exist within an organization, but usually go
unidentified and unused. Internal benchmarking best practices program.
In many large multi-national companies, there are pockets of excellence, aspects of an operating unit
that represent leading edge practices from which there is a great deal to be learned. However, most
organizations look externally and benchmark competitors and/or organizations in unrelated industries
that have world class reputations in a particular area of interest, rather than learn from themselves. The
advantages that internal benchmarking offers are as follows. It allows you to:
* Probe for details, including what went wrong as well as right
* Educate those doing the benchmarking to work in new ways
* Demonstrate successes within your own company's culture and business environment
* Establish communication channels and a network for highlighting and disseminating improvements
and innovations throughout the organization
* Focus external benchmarking activities once you know your own company's strengths and weaknesses
Establishing Quality Management Systems
By implementing international quality standards like ISO-9000, European Quality Award, Deming Prize,
or Malcom Balridge Award; an organization can boost its productivity and quality. This will give leverage
for a continuous improvement and consistent quality products for customers and keeping the
employees happy as well. One can also adapt TQM philosophy of Deming, Juran or Crosby or Taguchi to
outperform their competitors in the global market.

ORANIZATIONAL BEHAVIOR
Individual & Group Behavior - Introduction
Organizational behavior is the study of both group and individual performance and action within an
enterprise. This field of study scans human behavior in the working atmosphere.
It determines its effect on job structure, performance, communication, motivation, leadership, decision
making abilities etc. The way an individual behaves and behavior as a group have two perspectives −
internal and external.
Behavior Analysis at Different Levels
Behavior as an individual or in a group is always analysed by everyone in the organization. It is analyzed
at three different levels −

● Individual level of analysis

● Group level of analysis
● Organizational level of analysis
Individual Level of Analysis
Organizational behavior, at this level of analysis massively draws upon psychology, engineering, and
medicine. At the individual level of analysis, organizational behavior includes the study of learning,
perception, creativity, motivation, and personality.
In addition, it also includes the study of turnover, task performance and evaluation, coordinated
behavior, deviant work behavior, ethics, and cognition.
For example − Ram joins a company as an intern and is very open to learning new things but as time
passes and he gets promoted his attitude towards his interns becomes rude. This is a fine example of
individual level of analysis.
Group Level of Analysis
Organizational behavior, at this level of analysis, draws upon the sociological and socio-psychological
discipline. At the group level of analysis, organizational behavior includes the study of group gesture,
intra-group and intergroup dispute and attachment.
It is further extended to the study of leadership, power, norms, interpersonal communication,
networks, and roles.
An example of this level of analysis − Board of directors of company X decide to give bonus to their
workers as they have really worked hard on a certain project.
Organizational Level of Analysis
Organizational behavior, at this level of analysis draws upon sociology and political science. At this level
of analysis, organizational behavior includes the study of organizational culture, structure, cultural
diversity, inter-organizational cooperation and coordination.
It further includes the study of dispute, change, technology, and external environmental forces. Some
other fields of study that adds to the interest of organizational behavior are ergonomics, statistics, and
psychometrics.
To have a clear understanding on the topic and avoid any kind of confusion let’s look at an example at
different levels and try to analyze it.
Rohit is interested in becoming a singer as he is interested in music and feels he can do better in this
field. While his parents force him to pursue his job as a software engineer, as according to his father’s
perception a software job pays well and is far better than struggling to become a singer.
In this case, we see Rohit and his father have a clash of opinions, hence this is a case of individual level
of analysis.
Extending this example further, if Rohit seeks help from his friends on this matter his friends will
support him as they have the same mindset support the idea of following their own dreams, struggling
and achieving their goal. Meanwhile Rohit’s father’s friend circle might find the idea of pursuing singing
as a career insane and support his father’s decision of opting for a software.
Here we see two different groups of people with contradicting ideologies, this becomes a case of group
level of analysis.
Individual Behavior
Individual behavior can be defined as a mix of responses to external and internal stimuli. It is the way a
person reacts in different situations and the way someone expresses different emotions like anger,
happiness, love, etc.
To get a brief idea about the individual behavior let us learn about the individual behavior framework
and other key elements related to it.
Individual Behavior Framework
On the basis of these elements, psychologist Kurt Lewin stated the Field theory and outlined the
behavior framework. This psychological theory studies the patterns of interaction between an
individual and the environment. The theory is expressed using the formula
B = F(P,E)
where, B – Behavior, F - Behavior Function, P – Person, and E - Environment around the person.
Say for example, a well-paid person who loses his job in recession may behave differently when
unemployed.
 Causes of Individual Behavior
Certain individual characteristics are responsible for the way a person behaves in daily life situations as
well as reacts to any emergency situations. These characteristics are categorized as −

● Inherited characteristics
● Learned characteristics
Inherited Characteristics
The features individuals acquire from their parents or from our forefathers are the inherited
characteristics. In other words, the gifted features an individual possesses by birth is considered as
inherited characteristics.
Following features are considered as inherited characteristics −

● Color of a person’s eye

● Religion/Race of a person
● Shape of the nose
● Shape of earlobes
Learned Characteristics
Nobody learns everything by birth. First our school is our home, then our society followed by our
educational institutions. The characteristics an individual acquires by observing, practicing and learning
from others and the surroundings is known as learned characteristics.
It consists of the following features −
 ● Perception − Result of different senses like feeling, hearing etc.
● Values − Influence’s perception of a situation, decision making process.
● Personality − Patterns of thinking, feeling, understanding and behaving.
● Attitude − Positive or negative attitude like expressing one’s thought.
Factors Influencing Individual Behavior
The way an individual addresses a situation single-handedly or say in a group is influenced by many
factors. The key factors influencing an individual’s attitude in personal as well as social life are −

● Abilities
● Gender
● Race and culture
● Attribution
● Perception
● Attitude
Let’s take a quick look over these major elements that imprints a person’s behavior inside and outside
of the organization.
Abilities
Abilities are the traits a person learns from the environment around as well as the traits a person is
gifted with by birth. These traits are broadly classified as −

● Intellectual abilities
● Physical abilities
● Self-awareness abilities
In order to understand how these, affect a person’s behavior, we need to know what these abilities
are.
● Intellectual abilities − It personifies a person’s intelligence, verbal and analytical reasoning
abilities, memory as well as verbal comprehension.
● Physical abilities − It personifies a person’s physical strength, stamina, body coordination as
well as motor skills.
● Self-awareness abilities − It symbolizes how a person feels about the task, while a manager’s
perception of his abilities decides the kind of work that needs to be allotted to an individual.
Thus, the psychological, physical, self-assurance traits owned by a person defines the behavior of a
person in social and personal life. For ex: Ram has a high IQ level, whereas Rahul can lift a bike and is a
strong guy.
Gender
Research proves that men and women both stand equal in terms of job performance and mental
abilities; however, society still emphasizes differences between the two genders. Absenteeism is one
area in an organization where differences are found as women are considered to be the primary
caregiver for children. A factor that might influence work allocation and evaluation in an organization is
the manager’s perception and personal values.
For example − An organization encourages both genders to work efficiently towards the company’s
goal and no special promotion or demotion is given or tolerated for any specific gender.
Race & Culture
Race is a group of people sharing similar physical features. It is used to define types of persons
according to perceived traits. For example − Indian, African. On the other hand, culture can be defined
as the traits, ideas, customs and traditions one follows either as a person or in a group. For example −
Celebrating a festival.
Race & culture have always exerted an important influence both at the workplace as well as in the
society. The common mistakes such as attributing behavior and stereotyping according to individual’s
race & culture basically influences an individual’s behavior.
In today’s diverse work culture, the management as well as staff should learn and accept different
cultures, values, and common protocols to create more comfortable corporate culture.
For example − A company invites candidates for a job post and hires one on the basis of eligibility
criteria and not on the basis of the country a person belongs to or the customs one follows.
Perception
Perception is an intellectual process of transforming sensory stimuli into meaningful information. It is
the process of interpreting something that we see or hear in our mind and use it later to judge and give
a verdict on a situation, person, group, etc.
It can be divided into six types namely −
● Of sound − the ability to receive sound by identifying vibrations.
● Of speech − the competence of interpreting and understanding the sounds of language heard.
● Touch − Identifying objects through patterns of its surface by touching it.
● Taste − the ability to detect flavour of substances by tasting it through sensory organs known
as taste buds.
● Other senses − other senses include balance, acceleration, pain, time, sensation felt in throat
and lungs etc.
● Of the social world − It permits people to understand other individuals and groups of their
social world.
For example − Priya goes to a restaurant and likes their customer service, so she will perceive that it is a
good place to hang out and will recommend it to her friends, who may or may not like it. However,
Priya’s perception about the restaurant remains good.
Attribution
Attribution is the course of observing behaviour followed by determining its cause based on individual’s
personality or situation.
Attribution framework uses the following three criteria −
 ● Consensus − the extent to which people in the same situation might react similarly.
● Distinctiveness − the extent to which a person’s behaviour can be associated to situations or
personality.
● Consistency − the frequency measurement of the observed behaviour, that is, how often does
this behaviour occur.
The framework mentioned says it is all about how an individual behaves in different situations.
For example − Rohit invites Anisha and two more friends for a movie and they agree to bunk and watch
the movie, this is consensus. Bunking of class says that they are not interested in their lectures, this is
distinctiveness. A little change in the situation, like if Rohit frequently starts bunking the class then his
friends may or may not support him. The frequency of their support and their rejection decides
consistency.
Attitude
Attitude is the abstract learnt reaction or say response of a person’s entire cognitive process over a
time span.
For example − A person who has worked with different companies might develop an attitude of
indifference towards organizational citizenship.
Now we have a clear idea about what are the factors responsible for the way we behave. We never
think about these elements and how they affect our daily life but we can’t ignore the fact that they are
responsible for the way we walk, talk, eat, socialize, etc.
Occupational Personality Types
The traits we use to find out the careers and college majors we should opt for, and will fit us the best is
known as occupational personality traits. Personality can be further classified on the basis of an
individual’s occupation and vocational options. John Holland grouped these features into six
personality types −
 ● Realistic Personality − These types of individuals have a realistic personality. They are shy in
nature, stable, and practical. They belong to professions like agriculture, engineering, fashion
designing, etc.
● Investigative Personality − These types of individuals are analytical, curious, and have an
independent mindset. They belong to professions like writing, teaching, medicine, etc.
● Artistic Personality − These types of individuals have great imagination and are idealistic. They
belong to professions like fine arts, music, photography, etc.
● Social Personality − These types of individuals are sociable, helpful and cooperative in nature.
They belong to professions like teaching, social work, counselling, etc.
● Enterprising Personality − These types of individuals are ambitious, adventurous and energetic.
They belong to professions like business, journalism, consultancy, etc.
● Conventional Personality − These types of individuals are practical, organized, and logical. They
belong to professions like training, nursing, finance, etc.
Most people fall into anyone of these six personality types.
People sharing the same personality type and working together create a work environment that fits
their type. For example, when enterprising persons are together on a job, they create a work
environment that rewards enthusiastic and innovative thinking and behavior -- an enterprising
environment.
People opt for such environments where they can use their skills and abilities, and freely express their
values and attitudes. For example, Realistic types search for stable work environment; Artistic types
look for Artistic environment, and so forth.
People who work in an environment similar to their personality type are more likely to be successful
and satisfied with their job. For example, artistic persons are more likely to be successful and satisfied if
they choose a job that has an artistic environment, like choosing to be a music teacher in a music
school -- an environment "dominated" by artistic people where innovative abilities and expression are
highly valued.

Understanding the theory and using it efficiently, aligns our core personality traits to fields that nurture
who we are, who we want to be, by offering a rewarding path towards professional and personal
growth.

Perception: Definition, Importance, Factors, Perceptual Process, Errors

Perception is the organization, identification, and interpretation of sensory information in order to
represent and understand the environment.

All perception involves signals in the nervous system, which in turn result from physical or chemical
stimulation of the sense organs.

It is not the passive receipt of these signals but is shaped by learning, memory, expectation, and
attention.

The study, of these perceptual processes, shows that their functioning is affected by three classes of
variables – the objects or events being perceived, the environment in which perception occurs, and the
individual doing the perceiving.
Perception is an intellectual process of transforming sensory stimuli to meaningful information. It is the
process of interpreting something that we see or hear in our mind and use it later to judge and give a
verdict on a situation, person, group etc.
It can be divided into six types −
● Of sound − The ability to receive sound by identifying vibrations.
● Of speech − The competence of interpreting and understanding the sounds of language heard.
● Touch − Identifying objects through patterns of its surface by touching it.
● Taste − The ability to receive flavor of substances by tasting it through sensory organs known
as taste buds.
 ● Other senses − They approve perception through body, like balance, acceleration, pain, time,
sensation felt in throat and lungs etc.
● Of the social world − It permits people to understand other individuals and groups of their
social world. Example − Priya goes to a restaurant and likes their customer service, so she will
perceive that it is a good place to hang out and will recommend it to her friends, who may or
may not like it. Priya’s perception about the restaurant is good.
What is Perception

Perception depends on complex functions of the nervous system but subjectively seems mostly
effortless because this processing happens outside of conscious awareness.

According to Joseph Reitz; “Perception includes all those processes by which an individual receives
information about his environment—seeing, hearing, feeling, tasting and smelling.”

According to B. V. H. Gilmer, “Perception is the process of becoming aware of situations, of adding

meaningful associations to sensations.”

Uday Pareek said perception can be defined as “the process of receiving, selecting, organizing,
interpreting, checking, and reacting to sensory stimuli or data.”

According to S. P. Robbins, perception can be defined as “the process by which individuals organize and
interpret their sensory impressions in order to give meaning to their environments.”

Perception includes the 5 senses; touch, sight, taste smell and sound. It also includes what is known as
perception, a set of senses involving the ability to detect changes in body positions and movements.

It also involves the- cognitive processes required to process information, such as recognizing the face of
a friend or detecting a familiar perfume.

The study of these perpetual processes shows that their functioning is affected by three classes of
variables—the objects or events being perceived, the environment in which perception occurs and the
individual doing the perceiving.

In simple words, we can say that perception is the act of seeing what is there to be seen.

But what is seen is influenced by the perceiver, the object and its environment. The meaning of
perception emphasizes all these three points.

Importance of Perception

Perception is a subjective, active and creative process through which we assign meaning to sensory
information to understand ourselves and others. It can be defined as our recognition and interpretation
of sensory information. It also includes how we respond to the information.
It is the process by which an organism detects and interprets information from the external world by
means of the sensory receptors. It is our sensory experience of the world around us and involves both
the recognition of environmental stimuli and actions in response to these stimuli.

Through the perceptual process, we gain information about the properties and elements of the
environment that are critical to our survival.

Perception not only creates our experience of the world around us; it allows us to act within our
environment.

1. Perception is very important in understanding human behaviour because every person

perceives the world and approaches life problems differently. Whatever we see or feel is not
necessarily the same as it really is. When we buy something, it is not because it is the best, but
because we take it to be the best.
2. If people behave on the basis of their perception, we can predict their behaviour in the changed
circumstances by understanding their present perception of the environment. One person may
be viewing the facts in one way which may be different from the facts as seen by another
viewer.
3. With the help of perception, the needs of various people can be determined, because people’s
perception is influenced by their needs.
4. Perception is very important for the manager who wants to avoid making errors when dealing
with people and events in the work setting. This problem is made more complicated by the fact
that different people perceive the same situation differently. In order to deal with the
subordinates effectively, the managers must understand their perceptions properly.
5. Perception can be important because it offers more than objective output; it ingests an
observation and manufactures an altered reality enriched with previous experiences.
6. Perception builds character (not necessarily good or bad character) that defines different roles
individuals fall into the clown, the hypocrite, the self-righteous, the victim, etc.
7. It is vitally important if we want to get along with others to try to see things from their
perspective or walk in their shoes for a while. If we walk in their shoes we will gain a new
perspective about things and in that understand the other and also can love and help the other
more appropriately.

Thus, for understanding human behaviour, it is very important to understand their perception, that is,
how they perceive the different situations.

People’s behaviour is based on their perceptions of what reality is, not on reality itself. The world as it is
perceived is the world that is important for understanding human behaviour.

Factors Affecting Perception

Perception is the process by which an individual selects, organizes, and interprets information to create
a meaningful picture. Perception depends not only on the physical stimuli but also on the stimuli’s
relation to the surrounding field and on conditions within the individual. Perception is a process by
which individuals organize and interpret their sensory perceives in order to give meaning to their
environment.
However, what one perceives can be substantially different from objective reality. It is the process
through which the information from the outside environment is selected, received, organized and
interpreted to make it meaningful.

This input of meaningful information results in decisions and actions. A number of factors operate to
shape and sometimes distort perception. These factors can reside in the perceiver in the object or target
being perceived, or in the context of the situation in which the perception is made.

When an individual looks at a target and attempts to interpret what he or she sees, that interpretation is
heavily influenced by the personal characteristics of the individual perceiver.

Personal characteristics that affect perception include a person’s attitudes, personality, motives,

interests, past experiences, and expectations.

There are some factors that influence the target such as- novelty, motion, sounds, size, background,
proximity, similarity, etc.

Characteristics of the target being observed can affect what is perceived. Because targets are not looked
at in isolation, the relationship of a target to its background also influences perception, as does our
tendency to group close things and similar things together.

There are also some situational factors like the time of perceiving others, work settings, social settings,
etc. which influence the perception process.

Besides these, there are some other factors like perceptual learning which is based on past experiences
or any special training that we get, every one of us learns to emphasize some sensory inputs and to
ignore others.

Another factor is the mental set, which refers to preparedness or readiness to receive some sensory
input.

Such expectancy keeps the individual prepared with good attention and concentration. The level of
knowledge we have may also change the way we perceive his or her behaviours.

For example;

If a person knows that her friend is stressed out over family problems then she might overlook her
snappy comments. Learning has a considerable influence on perception.

It creates expectancy in people. The nature of the things which have to be perceived is also an influential
factor. By nature we mean, whether the object is visual or auditory, and whether it involves pictures,
people or animals.

Perception is determined by both physiological and psychological characteristics of the human being
whereas sensation is conceived with only the physiological features.
Thus, perception is not just what one sees with the eyes it is a much more complex process by which an
individual selectively absorbs or assimilates the stimuli in the environment, cognitively organizes the
perceived information in a specific fashion and then interprets the information to make an assessment
about what is going on in one’s environment.

When an individual looks at a target and attempts to interpret what he or she sees, that interpretation is
heavily influenced by the personal characteristics of the individual perceiver.

Personal characteristics that, affect perception included a person’s attitudes, personality motives
interest, past experiences, and expectations.

Perceptual Process

The perceptual process allows us to experience the world around us.

In this overview of perception and the perceptual process, we will learn more about how we go from
detecting stimuli in the environment to actually taking action based on that information and it can be
organized into our existing structures and patterns, and are then interpreted based on previous
experiences.

Although the perception is a largely cognitive and psychological process, how we perceive the people
and objects around us affects our communication.

Actually, perception process is a sequence of steps that begins with the environment and leads to our
perception of a stimulus and action in response to the stimulus.

In order to fully understand how the perception process works, we have to follow each of the following
steps.

3 stages of perception process are;

1. Selection.
2. Organization.
3. Interpretation.

Selection

The world around us is filled with an infinite number of stimuli that we might attend, but our brains do
not have the resources to pay attention to everything.

Thus, the first step of perception is the decision of what to attend to.

When we attend to one specific thing in our environment — whether it is a smell, a feeling, a sound, or
something else entirely — it becomes the attended stimulus.
Selecting is the first part of the perception process, in which we focus our attention on certain incoming
sensory information. In selection, we choose stimuli that attract our attention.

We focus on the ones that stand out to our senses (sight, sound, smell, taste, and touch). We take
information through all five of our senses, but our perceptual field includes so many stimuli that it is
impossible for our brains to process and make sense of it all.

So, as information comes in through our senses, various factors influence what actually continues on
through the perception process.

Organization

Once we have chosen to attend to a stimulus in the environment, the choice sets off a series of reactions
in our brain.

This neural process starts with the activation of our sensory receptors (touch, taste, smell, sight, and
hearing).

Organizing is the second part of the perception process, in which we sort and categorize information
that we perceive based on innate and learned cognitive patterns.

Three ways we sort things into patterns are by using proximity, similarity, and difference (Stanley, mo).

Interpretation

After we have attended to a stimulus, and our brains have received and organized the information, we
interpret it in a way that makes sense using our existing information about the world Interpretation
simply means that we take the information that we have sensed and organized and turn it into
something that we can categorize.

By putting different stimuli into categories, we can better understand and react to the world around us.

Perception of others involves sensing, organizing, and interpreting information about people, and what
they say and do. The sensation is a main characteristic of perception as it relates to outside input. In the
perceptual process, firstly the perceiver should select what will be perceived.

Then, the organization takes place when listeners identify the type of sound and compare it to other
sounds heard in the past.

Interpretation and categorization are generally the most subjective areas of perception, as they involve
decisions about whether listeners like what they hear and want to keep listening.

We make immediate evaluations that cause automatic judgments of positive and negative reactions
toward others, which occur outside of our awareness.

The selection, organization, and interpretation of perceptions can differ among different people.
On the basis of these, the perceptual output that means, values, attitudes, behavior, etc. of the
perceiver may differ.

Therefore, when people react differently in a situation, part of their behavior can be explained by
examining their perceptual process, and how their perceptions are leading to their responses.

Errors in Perception

As seen above perception is the process of analyzing and understanding a stimulus as it is.

But it may not be always possible to perceive the stimuli as they are.

Knowingly or unknowingly, we mistake the stimulus and perceive it wrongly.

Many times the prejudices in the individual, time of perception, unfavorable background, lack of clarity
of stimulus, confusion, conflict in mind and such other factors are responsible for errors in perception.

There are some errors in perception;

● Illusion.
● Hallucination.
● Halo Effect.
● Stereotyping.
● Similarity.
● Horn Effect.
● Contrast.

Illusion

The illusion is a false perception. Here the person will mistake a stimulus and perceive it wrongly.

For example, in the dark, a rope is mistaken as a snake or vice versa. The voice of an unknown person is
mistaken as a friend’s voice. A person standing at a distance who is not known may be perceived as a
known person.

Hallucination

Sometimes we come across instances where the individual perceives some stimulus, even when it is not
present.

This phenomenon is known as a hallucination. The person may see an object, person, etc. or he may
listen to some voice though there are no objects and sounds in reality.
Selective Perception

Selective perception means the situation when people selectively interpret what they see on the basis of
their interests, background, experience, and attitudes.

It means any characteristics that make a person, object, or event stand out will increase the probability
that it will be perceived.

Because it is impossible for us to assimilate everything we see, only certain stimuli can be taken in.

Halo Effect

The individual is evaluated on the basis of perceived positive quality, feature or trait. When we draw a
general impression about an individual on the basis of a single characteristic, such as intelligence,
sociability, or appearance, a halo effect is operating.

In other words, this is the tendency to rate a man uniformly high or low in other traits if he is
extraordinarily high or low in one particular trait: If a worker has few absences, his supervisor might give
him a high rating in all other areas of work.

Stereotyping

People usually can fall into at least one general category based on physical or behavioral traits then they
will be evaluated. When we judge someone on the basis of our perception of the group to which he or
she belongs, we are using the shortcut called stereotyping.

or example, a boss might assume that a worker from a Middle East country is lazy and cannot meet
performance objectives, even if the worker tried his best.

Similarity

Often, people tend to seek out and rate more positively those who are similar to themselves. This
tendency to approve of similarity may cause evaluators to give better ratings to employees who exhibit
the same interests, work methods, points of view or standards.

Horn Effect

When the individual is completely evaluated on the basis of a negative quality or feature perceived. This
results in an overall lower rating than an acceptable rate.

He is not formally dressed up in the office, that’s why he may be casual at work too.
Contrast

The tendency to rate people relative to other people rather than to the individual performance he or
she is doing. Rather will evaluate an employee by comparing that employee’s performance with other
employees.

In the early 20th Century, Wilhelm Wundt identified contrast as a fundamental principle of perception,
and since then the effect has been confirmed in many different areas.

These effects shape not only visual qualities like color and brightness but other kinds of perception,
including how heavy an object feels. One experiment found that thinking of the name “Hitler” led to
subjects rating a person as more hostile.

Basically, we use the above shortcuts when we judge others. Perceiving and interpreting what others do
is burdensome. As a result, individuals develop techniques for making the task more manageable.

These techniques are frequently valuable-they allow us to make accurate perceptions rapidly and
provide valid data for making projections. But sometimes it also creates problems.

Because firstly, we have said that these are the shortcuts.

In these ways, we can judge others in a short period of time but sometimes we mistakenly judge others
by these shortcuts.

When Perception Fails

Perception often provides a false interpretation of sensory information.

Such cases are known as illusions, a term used by psychologists to refer to incorrect perceptions.

There are two types of illusions: those due to physical processes and those due to cognitive processes.
Illusions due to distortion of physical conditions include hallucination, in which an individual perceives
objects which are non-existent, as for example, water on a dry road.

Cognitive processes result in many illusions but more common shape illusions which often result in
unsettling consequences. Consider a real-world example involving the Poggendorf illusion.

In this illusion, a line disappears at an angle behind a solid figure, reappearing at the other side at what
seems to be the incorrect position. Incorrect perceptions of the world around them may lead to
problems for personnel.

Budding managers who flame out do so because they fail to read situations properly and act
accordingly. They develop poor working relationships, are too authoritarian, or have a conflict with
upper management. As a result, their careers come to screeching halt.
This should be avoided and they had been able to correctly perceive what they should be doing and had
the emotional maturity and ability to make the necessary changes.

Why Perception Vary

Our perceptions vary from person to person, and the meaning we take from those perceptions varies.
This is why people have different tastes in music, art, architecture, clothes, etc.

Different people perceive different things about the same situation. But more than that, we assign
different meanings to what we perceive.

And the meanings might change for a certain person.

One might change one’s perspective or simply make things mean something else. Two people with
identically tested seeing and hearing will still have different tastes in what they like to see and hear.

The way we perceive the world around us varies and is as unique as our individual personalities. Even
though we might look at the same picture, what we interpret will vary depending on a number of
factors, including what we expect to see.

Basically, perception is a very interesting facet of life and business. How we perceive our world and how
we think our world, perceives us can dictate how we act and how we respond in certain situations.

Thus, perception, or apprehending by means of the senses or the mind, can be a very powerful and
influential aspect of our lives. It can direct our actions and our thoughts, which in many ways guide who
we are.

Group Behavior
A group can be defined as two or more interacting and interdependent individuals who come together
to achieve particular objectives. A group behavior can be stated as a course of action a group takes as a
family. For example − Strike.
Types of Groups
There are two types of groups individual’s form. They are formal groups and informal groups. Let us
know about these groups.
Formal Groups
These are the type of work groups created by the organization and have designated work assignments
and rooted tasks. The behavior of such groups is directed toward achieving organizational goals.
Formal groups can be further classified into two sub-groups −
● Command Group − It is a group consisting of individuals who report directly to the manager.
● Interest Group − It is a group formed by individuals working together to achieve a specific
objective.
Informal Groups
These groups are formed with friendships and common interests.
These can be further classified into two sub-groups −
● Task group − Those working together to finish a job or task is known as a task group.
● Friendship group − Those brought together because of their shared interests or common
characteristics is known as friendship group.
For example − A group of workers working on a project and reporting to the same manager is
considered as command group, while a group of friends chilling out together is considered as an
interest group or say members of a club.
Why Do People Join Groups:
There is no particular reason answering why individuals join groups. Group helps individuals to feel
stronger, have fewer self-doubts, and be more contrary to threats. The following points helps us
understand the need of joining a group by individuals.
● Security mirrors strength in numbers.
● Status pinpoints a prestige that comes from belonging to a specific group.
o Inclusion in a group is considered as important as it provides recognition and status.
● Self-esteem transmits people's feeling of self-worth.
o Membership can sometimes raise feelings of self-esteem like being accepted into a
highly valued group.
● Affiliation with groups can meet one's social needs.
o Work groups significantly contribute to meet the need for friendships and social
relations.
● One of the appealing attitudes of groups is that they represent power.
o What mostly cannot be achieved individually becomes possible with group effort.
● Power might be aimed to protect themselves from unreasonable demands.
● Informal groups additionally provide options for individuals to practice power.
● Finally, people may join a group for goal achievement.
o Sometimes it takes more than one person to accomplish a particular task.

Group Roles
The concept of roles is applicable to all employees within an organization as well as to their life outside
the organization. A role is a set of expected behavior patterns attributed to the one who occupies the
position demanded by the social unit.
Individuals play multiple roles at the same time. Employees attempt to understand what kind of
behavior is expected from them. An individual when presented by divergent role expectations
experiences role conflict.
Group roles are divided into three types −
Task-oriented Roles
Roles allotted to individuals according to their work and eligibility is known as task-oriented roles. Task-
oriented roles can broadly divide individuals into six categories initiator, informer, clarifier, summarizer,
reality tester and information seekers or providers respectively.
● Initiator − The one who proposes, suggests, defines.
● Informer − The one who offers facts, expresses feelings, gives opinions.
● Clarifier − The one who interprets, defines, clarifies everything.
● Summarizer − The one who links, restates, concludes, summarizes.
● Reality Tester − The one who provides critical analysis.
● Information seekers or providers − The one who gives information and data.
These roles present the work performed by different individual according to their marked designation.
Relationship-oriented Roles
Roles that group individuals according to their efforts made to maintain healthy relationship in the
group and achieve the goals are known as relationship-oriented roles. There are five categories of
individuals in this category − harmonizer, gate keeper, consensus tester, encourager, and compromiser.
● Harmonizer − The one who limits tension and reconciles disagreements.
● Gate Keeper − The one who ensures participation by all.
● Consensus Tester − The one who analyzes the decision-making process.
● Encourager − The one who is warm, responsive, active, shows acceptance.
● Compromiser − The one who admits error and limits conflict.
These roles depict the various roles an individual plays to maintain healthy self as well as group
relationships.
Individual Roles
Roles that classify a person according to the measure of individual effort put in the project aimed is
known as individual roles. Five types of individuals fall into these roles − aggressor, blocker, dominator,
cavalier, and avoidance.
● Aggressor − The one who devalues others, attacks ideas.
● Blocker − The one who disagrees and rebels beyond reason.
● Dominator − The one who insists superiority to manipulate.
● Cavalier − The one who takes part in a group non-productively.
 ● Avoidance − The one who shows special interest to avoid task.
These are the various roles a person plays in an organization.
Well-Functioning Groups
We know what a group is, why it is important to form a group, and what the group-oriented roles are.
Now we need to know how to mark a group as a well-functioning group, what features are necessary
for a group to mark it as an efficient one.
A group is considered effective when it has the following characteristics −

● Atmosphere is relaxed, comfortable, and friendly.

● Task to be executed are well understood and accepted.
● Members listen well and actively participate in given assignments.
● Assignments are made clear and are accepted.
● Group is acquainted of its operation and function.
● People express their feelings and ideas openly.
● Consensus decision-making process is followed.
● Conflict & disagreement center regarding ideas or method.
Group Behavior – Example
Let us understand group behavior with the help of an example.
To work on a specific project, we make a group of four members: Rohit, Raj, Sid, and Rahul. It is not
possible for anyone of them to complete the project individually, as it may be time-consuming as well
as not all the members as individuals have mastered the skills required to complete the project. This
indicates the need to come together as a group.
Moving ahead, now let us specify their roles. Rohit is the initiator as he proposes the idea of the
project. Raj collects all the information and resources required for the project and becomes the
informer. Sid is the clarifier as he interprets the data and saves refined information, while Rahul is the
summarizer as he concludes the result of project stating what is to be achieved by the end of the
project. These are the task-oriented roles.
When a group of people come together and present their ideas there is a fair chance of collision. Rohit
tries to resolve all the disagreements and disputes in the first place and acts as a harmonizer, Sid makes
sure that everybody is giving their full support and effort in the project and acts as a gate keeper, Raj is
the one encouraging everyone and motivating them when they fail to try harder to complete the
project and is the encourager, and Rahul tests the project at each stage and examines the major
decision to be made and is acts as the consensus tester. These are the relationship-oriented roles of
each member.
Individually each of them has different tasks to fulfil. Rohit tries to be the group leader and impose his
ideas on others and we consider him as the dominator, Rahul is always up with excuses to avoid the
task given to him and acts as avoider, Raj is the one who opposes everything but is never up with some
new idea and becomes the blocker and Sid takes part in every group activity in a non-productive way
and becomes the cavalier.
 Five Stage Model of Group Development
A team cannot be expected to perform well right from the time it is formed. Forming a team is just like
maintaining a relationship. It takes time, patience, requires support, efforts and members often go
through recognizable stages as they change from being a collection of strangers to a united group with
common goals.
Bruce Tuckman presented a model of five stages Forming, Storming, Norming, and Performing in order
to develop as a group.

Orientation (Forming Stage)

The first stage of group development is the forming stage. This stage presents a time where the group
is just starting to come together and is described with anxiety and uncertainty.
Members are discreet with their behavior, which is driven by their desire to be accepted by all
members of the group. Conflict, controversy, misunderstanding and personal opinions are avoided
even though members are starting to form impressions of each other and gain an understanding of
what the group will do together.
Typical consequences of the forming stage include achieving an understanding of the group's purpose,
determining how the team is going to be organized and who will be responsible for what, discussion of
major milestones or phases of the group's goal that includes a rough project schedule, outlining general
group rules that includes when they will meet and discovery of what resources will be available for the
group to use.
At this stage, group members are learning what to do, how the group is going to operate, what is
expected, and what is acceptable.
Power Struggle (Storming Stage)
The second stage of group development is the storming stage. The storming stage is where dispute and
competition are at its greatest because now group members have an understanding of the work and a
general feel of belongingness towards the group as well as the group members.
This is the stage where the dominating group members emerge, while the less confrontational
members stay in their comfort zone.
Questions around leadership, authority, rules, policies, norms, responsibilities, structure, evaluation
criteria and reward systems tend to arise during the storming stage. Such questions need to be
answered so that the group can move further on to the next stage.
Cooperation and Integration (Norming Stage)
In this stage, the group becomes fun and enjoyable. Group interaction are lot easier, more cooperative,
and productive, with weighed give and take, open communication, bonding, and mutual respect.
If there is a dispute or disruption, it’s comparatively easy to be resolved and the group gets back on
track.
Group leadership is very important, but the facilitator can step back a little and let group members take
the initiative and move forward together.
Synergy (Performing Stage)
Once a group is clear about its needs, it can move forward to the third stage of group development, the
norming stage. This is the time where the group becomes really united.
At this stage, the morale is high as group members actively acknowledge the talents, skills and
experience that each member brings to the group. A sense of belongingness is established and the
group remains focused on the group's purpose and goal.
Members are flexible, interdependent, and trust each other. Leadership is distributive and members
are willing to adapt according to the needs of the group.
Closure (Adjourning Stage)
This stage of a group can be confusing and is usually reached when the task is successfully completed.
At this stage, the project is coming to an end and the team members are moving off in different
directions.
This stage looks at the team from the perspective of the well-being of the team instead of the
perspective of handling a team through the original four stages of team growth.
Group Structure
Group structure is defined as the layout of a group. It is a combination of group roles, norms,
conformity, workplace behavior, status, reference groups, status, social loafing, cohorts, group
demography and cohesiveness.
● Group Roles − The different roles a person plays as a part of the group.
● Norms − The typical standard set by the group collaboratively that every member has to follow.
● Conformity − The decisions or stand taken by majority in the group.
● Workplace behavior − The ethics that one needs to follow while working with an organization.
● Status − The designation of members in the group.
● Social Loafing − The phenomena where group members put less effort towards achieving a
goal than they would have while working alone.
 ● Cohorts − Sharing common behavior in the group.
● Reference Groups − Other groups to which a group is compared to.
● Group Demography − Extent of sharing same behavior.
● Cohesiveness − Extent of belongingness towards each other in the group.
Roles
Roles are a set of expected behavior patterns associated to someone occupying a given position in a
social unit. There are three broad types of roles people play in small groups −

● Task roles
● Building and maintenance roles
● Self-centered roles
Task Roles
Task roles are roles that focus on completing group’s goal. The different task roles of a group are stated
below −
● Coordinator − Links statements made by one group member to another.
Example − “Gita’s comment relate well to what Ram was saying.”
● Energizer − Provokes group to take action.
Example − “How many of you are willing to bring in a video on dispute for the next session?”
● Elaborator − Extends upon another’s ideas.
Example − “I think what Niki and Anni are suggesting is that we first explain nonverbally before
we turn to verbal communication.”
● Evaluator-critic − Evaluates the group’s work against higher standards.
Example − “This is okay, but I think Shree needs to give more feedback.”
● Information-giver − Gives helpful information.
Example − “Rohit has some books about conflict we could use.”
● Information-seeker − Questions for clarification.
Example − “Richa or Trishala, could you please tell me what you said about disconfirming
responses?”
● Recorder − Keeps notes regarding the meeting.
Example − “Last session we did not get to A-P’s presentation. Rahul and Rohit had just finished
theirs.”
● Procedural Technician − Takes accountability for tasks.
Example − “I checked out the VCR for Nigaar and Neha’s presentations.”
Group-Building / Maintenance Roles
It focuses on building interpersonal relationships and maintaining harmony. The various maintenance
roles in a group are −
● Encourager − Gives positive feedback.
Example − “I think what Shyam was saying was totally right.”
● Follower − Obtains ideas of others in the group.
Example − “Let’s follow Adi’s plan—he had the right idea.”
● Compromiser − Attempts to reach a solution acceptable by everyone.
Example − “Pratik, Sid, and Nimmi have offered three great solutions. Why don’t we integrate
them?”
● Gatekeeper − Assists participation from everyone in the group.
Example − “I don’t think we’ve heard from Madhuri yet.”
● Harmonizer − Limit’s conflict and tension.
Example − “After that test, we deserve a free meal!”
● Observer − Examines group progress.
Example − “I think we’ve learned a lot so far. Monica and Mona gave us great information.”
Self-centered Roles
These roles aim to impede or disrupt the group from reaching its goals. The various self-centered roles
in a group are as follows −
● Aggressor − Acts aggressively towards other group members and their ideas.
Example − “Playing desert survival is the greatest idea I’ve ever heard.”
● Dominator − Dominates group speaking time.
Example − Interrupting— “I’m going to tell you seven reasons why this is a great idea.”
● Blocker − Refuses to collaborate with other’s ideas.
Example − “I refuse to play Family Swap.”
● Help-Seeker − Acts helpless to neglect work.
Example − “I don’t think I can put together a summary. Why don’t you do it for me?”
● Loafer − Refrains from work.
Example − “Why don’t we just go have coffee instead of finishing this project?”
● Special Interest Advocate − Presents own viewpoint and requirements.
Example − “I can’t meet today. I need to sleep early and call my mom.”
● Self-confessor − Talks about the topics important to self and not the group.
 Example − “I really like tea. Yesterday I went to CCD. Their coffee is better than what you get
elsewhere . . .”
Norms
Norms are the acceptable standards of behavior within a group that are shared by the group members.
Every group develops its own customs, values, habits and expectations for how things need to be done.
These patterns and expectations, or group norms as they're called sometimes, direct the ways team
members interact with each other.
Norms can help or block a group in achieving its goals.
Types of Norms
There are four different types of norms that exist in a group −

● Performance norms
● Appearance Norms
● Social arrangement norms
● Resource allocation norms
Performance Norms
These are centered on how hard a person should work in a given group. They are informal clues that
help a person understand how hard they should work and what type of output they should give.
For example − Team leader puts various posters in the firm to motivate employees to work efficiently
and give their best performance.
Appearance Norms
Appearance norms updates or guides us as to how we should look or what our physical appearance
should be, like what fashion we should wear or how we should style our hair or any number of areas
related to how we should look.
For example − There is a formal dress code we need to follow while working in a organization, we
cannot wear a wedding gown to a board meeting.
Social Arrangement Norms
This norm is basically centered on how we should behave in social settings. Again here, there are clues
we need to pick up on when we are out with friends or at social events that help us fit in and get a
closer connection to the group.
For Example − We cannot take our official work to a friend’s birthday party just for the sake of
completing it.
Resource Allocation Norms
This norm focusses on the allocation of resources in a business surrounding. This may include raw
materials as well as working overtime or any other resource found or needed within an organization.
For Example − If the client needs the project by tomorrow then anyhow it has to be completed by using
available resources or doing over time.
 Conformity
Conformity can be stated as “accommodating to group pressures”. It is also called as the majority
influence or we can say the group pressure.
It is widely used to indicate an agreement to the majority position, brought about either by a desire to
fit-in or be liked or because of a desire to be correct, or simply to conform to a social role.
Types of Social Conformity
Three types of conformity can be identified −

● Normative Conformity
● Informational Conformity
● Ingratiational Conformity
Normative Conformity
Yielding to group pressure because an individual wants to fit in with the group. Conforming usually
takes place because the individual is scared of being rejected or neglected by the group.
This type of conformity usually includes compliance like where a person publicly accepts the views of a
group but privately rejects them.
Informational Conformity
This usually happens when a person lacks knowledge and looks to the group for guidance. Or when a
person is not clear about a situation and socially compares one’s behavior with the group.
This type of conformity includes internalization like where a person accepts the views of the groups and
adopts them as an individual.
Ingratiational Conformity
Where a person conforms to gain a favor or acceptance from other people. It is relative to normative
influence but is encouraged by the need for social rewards rather than the threat of being rejected.
In other words, group pressure is not always the reason to conform.
Harvard psychologist, Herbert Kelman, identified three different types of conformity −
● Compliance − Socially changing behavior in order to fit in with the group while disagreeing
privately. In simple words, conforming to the mass, in spite of not really agreeing with them.
● Internalization − Socially changing behavior to fit in with the group and also agreeing with
them privately.
● Identification − Agreeing to the expectations of a social role. It is similar to compliance, but
there is no change in private opinion.
Reference Groups
It is a group to which a person or another group is compared. Reference groups are used in order to
examine and determine the nature of a person or other group's features and sociological attributes.
It is the group to which a person relates or aspires to link himself or herself psychologically. It becomes
the individual's frame of reference and source to derive his or her experiences, perceptions, needs, and
ideas of self.
These groups act as a benchmark and contrast needed for comparison and evaluation of group and
personal characteristics.
Status
Status is a socially defined position or rank given to groups or group members by others. A group
structure status includes group norms, culture, status equity. All these factors when combined presents
the status of members of the group.
Social Loafing
It is the phenomenon of people exerting less effort to achieve a goal when they work as a group than
when they work alone.
This is one of the main reasons why groups are sometimes less productive than the combined
performance of their members working as individuals, but should be recognized from the accidental
coordination problems that groups sometimes experience.
Many of the causes of social loafing arise from an individual feeling that his or her effort will not matter
to the group.
Cohorts & Group Demography
Individuals who, as a part of a group, share a common attribute are known as cohorts. Group
demography is the level to which a member of a group can share a common demographic attribute
with his fellow team members. Group demography is a successful ploy in increasing the efficiency of a
team in the long run.
For Example − Age, sex, religion, region, length of the service in the organization and the impact of this
attribute on turnover.
Cohesiveness
Extent to which group members are attracted towards each other, and are encouraged to stay in the
group. Group cohesion is the aggregate of all the factors causing members of a group to stay in the
group or be attracted to the group. Group cohesion acts as the social glue that binds a group together.
Some people think that work teams illustrating strong group cohesion will function and perform better
in achieving work goals.
Group cohesion is not attributed to one single factor, but is the interaction of more than one factor.
While group cohesion may have an impact on group performance, group performance may create or
increase group cohesion. Thus, group cohesion can actually have a negative impact on group task
performance.
The most influential factor that creates a positive relationship between group cohesion and group
performance is the group members' commitment towards the organization's performance goals and
norms.
 Deviant Workplace Behavior
Workplace deviance can take the form of bitterness towards co-workers. Organizations usually strive to
create an atmosphere of conformity and teamwork to achieve maximum productivity and create a
healthy corporate culture.
In organizations of any size, deviant behavior can occur, which can sabotage the work. There are
usually two types of deviant behavior −
Aggressive Behavior
Workplace deviance can sometimes take the form of aggressive behavior. In diverse work
environments, deviance may occur when workers display intolerance of co-workers of different
nationalities or cultures.
Some common examples include: sexual harassment, bullying and showing open hostility towards co-
workers.
Unproductive Behavior
Actions that disrupt or minimize productivity are also a form of workplace deviance. Common examples
of this type of deviant behavior include: Workers who waste their time by standing around the water
cooler, taking the "scenic route" while making sales calls or extending the time it takes to complete a
task that slows down productivity.
Some other examples include showing up late for work, calling in sick when in perfect health, sneaking
out early or taking long lunch or coffee breaks.
Some other types of deviant behavior include the following −
Abuse of Property
It includes using company vehicles for personal errands, damaging company equipment or defacing
work areas, taking home office supplies or failing to return items borrowed from the company and
many more.
Company Politics
This occurs in many workplaces and is considered as a part of workplace deviance. A worker may
spread false rumors or gossip about another in an effort to gain promotion or more favorable work
assignment.
Supervisors who are partial towards one employee over another or prevent deserving employees from
career advancement are also guilty of committing a deviant act.
Employees who are actively engaged in gossip sessions can have a negative impact on employee
morale.
Group Decision-Making
Group decision-making commonly known as collaborative decision-making is a situation faced when
individuals collectively make a choice from the alternatives before them.
The decision is then no longer attributable to any individual group member as all the individuals and
social group processes like social influence contribute to the decision outcome.
The decisions made by groups are mostly different from those made by individuals. For example −
groups tend to make decisions that are more extreme than those made by individual members, as
individuals tend to be biased.
Advantages of Group Decision-Making
Group decision-making has two advantages over individual decision-making.
Synergy
It is the idea that the whole is greater than the aggregate of its parts. When a group makes a decision
collectively, its judgment can be powerful than that of any of its members. Through discussing,
questioning, and collaborative approach, group members can identify more complete and robust
solutions and recommendations.
Sharing of Information
Group decisions take into account a wider scope of information as each group member may contribute
distinct information and expertise. Sharing information increases understanding, clarifies issues, and
facilitates movement towards a collective decision.
Disadvantages of Group Decision-Making
The major disadvantages of group decision-making are as follows −
Diffusion of Responsibility
Group decision making results in distribution of responsibility that results in lack of accountability for
outcomes. In this way, everyone is responsible for a decision, and no one really is.
Moreover, group decisions can make it easier for members to refuse personal responsibilities and
blame others for bad decisions.
Lower Efficiency
Group decisions can sometimes be less efficient than individual decisions. It takes additional time
because there is a need of active participation, discussion, and coordination among group members.
Without good facilitation and structure, meetings can get eliminated in trivial details that may matter a
lot to one person but not to the others.
Groupthink
One of the biggest disadvantage of effective group decision making is groupthink. It is a psychological
phenomenon that occurs within a group of people in which the wish for harmony or conformity results
in an illogical or dysfunctional decision-making outcome.
By refraining themselves from outside influences and actively suppressing opposing viewpoints in the
interest of minimizing conflict, group members reach a consensus decision without critical evaluation
of substitute viewpoints.
Groupthink sometimes produces dehumanizing actions against the out-group.
Theories of Group Formation:
1. Propinquity Theory:
The most basic theory explaining affiliation is propinquity. This interesting word simply means that
individuals affiliate with one another because of spatial or geographical proximity. In an organisation
employee who work in the same area of the plant or office or managers with offices close to one
another would more probably form into groups than would those who are not physically located
together. There is some research evidence to support the propinquity theory and, on the surface, it has
a great deal of merit for explaining group formation. The drawback of this theory is that it is not
analytical and does not begin to explain some of the complexities of group formation. Some more
theoretical and practical reasons need to be explored.

2. Homan’s Theory:
According to George C. Homans, “The more activities persons share, the more numerous will be there
interactions and the stronger will be their shared activities and sentiments, and the more sentiments
people have for one another, the more will be their shared activities and interactions.”
It is a very comprehensive theory and based on activities, interactions and Homan’s theory is based on
sentiments. These three elements are directly related to each other. The members’ activities
interactions and of a group share activity and interact with one another not just because of physical
proximity but also to accomplish group goals.
The key element is interaction because of which they develop common sentiments for one another.
These sentiments gradually get expressed through the formation of informal groups. If any disturbance
is caused to any of the three-activities, interactions and sentiments, it is likely to disturb all the others.
Their relationships are shown in the following figure:

3. Balance Theory:
Another very comprehensive theory is a Balance Theory of group formation. This theory as proposed by
Theodore Newcomb states that “Persons are attracted to one another on the basis of similar attitudes
towards commonly relevant objects and goals. Once a relationship is formed, it strives to maintain a
symmetrical balance between the attraction and the common attitudes. If an imbalance occurs,
attempts are made to restore the balance. If the balance cannot be restored, the relationship dissolves.”
Thus, the balance theory is additive in nature in the sense, that it introduces the factor of balance to the
propinquity and interaction factors. There must be a balance in the relationship between the group
members for the group to be formed and for its survival. The following -figure shows the balance theory.
Individual (A) will interact and form a relationship/group with individual (B) because of common
attitudes and values (C). Once this relationship is formed, the participants strive to maintain a
symmetrical balance between the attraction and the common attitudes. If an imbalance occurs, an
attempt is made to restore the balance. If the balance cannot be restored, the relationship dissolves.
4. Exchange Theory:
This theory is based on reward-cost outcomes of interactions. To be attracted towards a group, a person
thinks in terms of what he will get in exchange of interaction with group members. A minimum positive
level (rewards greater than costs) of an outcome must exist in order for attraction or affiliation to take
place. Rewards from interactions gratify needs while costs incur anxiety, frustrations, embarrassment or
fatigue. Propinquity, interaction and common attitudes all have roles in the exchange theory.

LEADERSHIP AND MOTIVATION

What are Leadership Traits?

Leadership traits refer to personal qualities that define effective leaders. Leadership refers to the ability
of an individual or an organization to guide individuals, teams, or organizations toward the fulfilment of
goals and objectives. It plays an important function in management, as it helps maximize efficiency and
achieve strategic and organizational goals. Leaders help motivate others, provide guidance, build
morale, improve the work environment, and initiate action. List of Effective Leadership Traits

A common misconception is that individuals are just naturally gifted with leadership skills. The truth is
that leadership traits, like other skills, can be acquired with time and practice. Below are seven traits of
an effective leader:

1. Effective Communicators

Leaders are excellent communicators, able to clearly and concisely explain problems and solutions.
Leaders know when to talk and when to listen. In addition, leaders are able to communicate on different
levels: one-on-one, via phone, email, etc.

2. Accountable and Responsible

Leaders hold themselves accountable and take responsibility for any mistakes. Leaders support and
encourage individuality while abiding by organizational structure, rules, and policies that need to be
followed.

3. Long-term Thinkers

Leaders are visionaries. This is evidenced by the leadership trait of being able to plan for the future
through concrete and quantifiable goals. They understand the need for continuous change and are open
to trying new approaches to solve problems or improve processes.

4. Self-motivated

Leaders are self-motivated and are able to keep going and attain goals despite setbacks. In addition,
good leaders try their best to exceed, not just meet, expectations.

5. Confident

Virtually all good leaders share the leadership trait of confidence. They are able to make tough decisions
and lead with authority. By being confident, leaders are able to reassure and inspire others, establish
open communications, and encourage teamwork.

6. People-oriented

Leaders are typically people-oriented and team players. They’re able to foster a team culture, involve
others in decision-making, and show concern for each team member. By being people-oriented, leaders
are able to energize and motivate others. By making each individual feel important and vital to the
team’s success, they secure the best efforts from each member of the team.

7. Emotionally Stable

Leaders exercise good control and regulation over their own behavior and are able to tolerate
frustration and stress. Leaders are able to cope with changes in an environment without having an
intense emotional reaction.

Traits of a Bad Leader

Listed below are the traits that bad leaders commonly exhibit:

Too bossy

Fearful of change

Unwilling or unable to communicate effectively

Dismissive of ideas other than their own

Lacking empathy

Inconsistent

Prone to blame others rather than accept responsibility themselves

Indecisive
Organizational Leadership Styles
Whether you’re a natural-born leader or you’re growing into a management opportunity, whether
you’re a fearless innovator or a somebody who simply must take the reigns out of a sense of duty,
whether you’re an entrepreneurial thinker or a steady hand in periods of sustained growth, your
organizational leadership style will have a direct impact on the culture, morale, and indeed, on the
success of your organization.

Transformational

Democratic

Autocratic

Laissez-Faire

Bureaucratic

Servant

Transactional

Situational

Cross-Cultural

Charismatic

Fortunately, there’s a style of business leadership to match nearly every personality type and every kind
of organization. To lead effectively, you’ll need to find a style of leadership compatible with both your
personality and your organization.

On a related note, if you’re trying to ace an exam on organizational leadership, formulate a final essay
topic for a business class, or write a cover letter that accurately highlights your strengths, it should help
to know and understand a few of the top leadership styles. Below are 10 of the most commonly seen
styles in business today.

1. Transformational Leadership

A transformational leader is one who navigates an organization toward improvement by changing

existing thoughts, procedures, and culture. Leading through example, inspiration, and engagement, the
transformational leader will seek ways to get the best performance and potential out of each team
member. It takes courage to be a transformational leader, one who challenges old ways of doing things
in favor of better, more efficient, and more intuitive strategies.

What are the top qualities of a transformational leader?

Innovative

Empathetic
Motivational

When would you want a transformational leader?

Your corporation was once on the cutting edge of the electronic communication game, but suddenly,
nobody wants to buy your fax machines. How did you get so out of touch? Time to bring in a dynamic
leader with the capacity to change the focus, strategy, and techniques that once made your company
successful but today make it look like a dinosaur.

2. Democratic Leadership

With democratic leadership, while organizational hierarchy may still exist, influence, power and the
ability to contribute to decisions may be widely distributed across tiers and departments.

Also sometimes called participative leadership, democratic leadership requires collaborative energy,
delegation of responsibilities, and group-level decision making. This demands a leader who knows how
to cultivate participation, empower team members, and work directly alongside organizational members
at every level. With democratic leadership, while organizational hierarchy may still exist, influence,
power and the ability to contribute to decisions may be widely distributed across tiers and departments.
This means the right leader will know when to act, when to authorize, how to mediate conflict, and how
best to synthesize the talents of team members.

What are the top qualities of a democratic leader?

Actively Engaged

Supportive

Accountable

When would you want a democratic leader?

You’ve got a team of talented Major League Baseball players, a mixed squad of experienced veterans
and gifted prospects, each earning more than a million dollars a year to swing a bat at a ball. Some of
these guys have championship rings, one or two might even be headed to the Hall of Fame. They aren’t
looking for a manager to boss them around. Some of the today’most successful baseball managers have
taken a more democratic approach to the game, giving their players the opportunity to contribute to key
decisions, to nurture their talents along individual paths, and to assume their own key leadership roles
on and off the field. This more collegial approach to leadership is increasingly finding support — in
contrast to the iron-fisted, chair-throwing, drop-and-give-me-50 coaches of the old days.

3. Autocratic Leadership

An autocratic leader holds singular authority in an organization. This is a common leadership style in
which all key decisions go through a top figure and in which most members of the organization answer
to a hierarchy that leads up to this figure. While autocratic leadership is rarely very popular with
employees, it’s the preferred strategy in organizations where employees perform streamlined functions,
where control is more critical to success than creativity, and where there is scant threshold for error.
The autocratic leader prefers to take charge, and while he or she may be receptive to input and
feedback, this individual will make all final decisions according to personal discretion.
What are the top qualities of an autocratic leader?

Disciplined

Decisive

Confident

When would you want an autocratic leader?

You run a regional chain of supermarkets with a slim profit-margin. While you do a good volume of
business, factors such as food spoilage, breakage, and theft are cutting into your revenue. You need
somebody to come in and right the ship, which means ensuring employees are effectively rotating stock,
reducing habits that result in breakage, and taking steps to mitigate shoplifting. Because you largely
employ a staff that works for low wages, has limited professional training, and is prone to high turnover,
good results require constant oversight. You need a leader that keeps a watchful eye on management,
employee behavior, and outcomes in each location as well as one with the authority to intervene where
results are less than desired.

4. Laissez-Faire Leadership

Laissez-faire leadership is a style in which organizational leaders take a hands-off approach to decision-
making and task-completion. This style of leadership gives organizational members a wide latitude when
it comes to managing projects, solving problems, and resolving disagreements. In most instances,
leadership simply provides a clear set of expectations, the resources needed for job completion, and
accountability to the public, shareholders, or any other outside interests. This style of leadership can be
effective in select contexts, but it can be challenging to motivate employees or establish accountability
when implemented in the wrong setting.

What are the top qualities of a laissez-faire leader?

Open-minded

Trusting

Communicative

When would you want a laissez-faire leader?

You preside over a team of experienced product developers tasked with the challenge of inventing an
innovative, biometric refrigerator alarm for stubborn dieters. You may know how to manage the big
picture stuff, but these experts all know more about biometrics, refrigerators, and alarms than you ever
will. In a setting like this, where most organizational members are skilled, creative, highly-motivated.
and capable of working independently, a laissez-faire style of leadership can offer the freedom needed
for creative thinking and experimentation.

5. Bureaucratic Leadership

Bureaucratic leadership refers to organizational leadership through a highly formalized set of processes,
procedures, and structures. Here, rules, policies, and hierarchies form a clear set of expectations as well
as an explicit chain of command. At each level of a bureaucracy, organizational members are beholden
both to their immediate superiors and to a larger ecosystem of rules and procedures. Bureaucratic
leaders lead by channelling established rules, enforcing existing structures, and presiding over specific
segments of the hierarchy.

What are the top qualities of a bureaucratic leader?

Organized

Consistent

Focused

When would you want a bureaucratic leader?

You run a company that processes insurance claims for individuals affected by weevil infestations, but of
course, there are more than 60,000 kinds of weevil, and insurance providers require a different form for
each one of them. This means your organization must process a dizzying array of forms, deal with an
enormous number of people every day, and navigate a complex array of regulatory minutiae. The only
way your organization can do this effectively is through a clearly delineated hierarchy, strict procedural
norms, and rigid enforcement of the rules that ensure forms are processed correctly, information is
verified accurately, and individual matters are addressed only when all proper steps have been taken.

6. Servant Leadership

Servant leaders empower employees, interact directly with clients, and recognize their organization's
role as part of a community.

Servant leadership refers to a decentralized style in which a leader satisfies the needs of stakeholders
first. An approach to leadership formed in contrast to the drive for power or material acquisition, this
style places the leader on the front lines of day to day operation. From this vantage, the leader works
directly with organizational members at every level to make decisions. Servant leaders empower
employees, interact directly with clients, and recognize their organization’s role as part of a community.

What are the top qualities of a servant leader?

Receptive

Persuasive

Encouraging

When would you want a servant leader?

You run a small but growing brokerage company. Your organization is comprised of smart, talented, and
experienced financial advisors and stockbrokers. The top priority for your company is to help your
customers achieve success. That success translates into success for your employees, your company, and
your public reputation. This is a scenario in which a decentralized approach to leadership and customer-
first orientation can yield the best results. Here, servant leadership will work alongside those talented
advisors and brokers to ensure customers and other key stakeholders get results.

7. Transactional Leadership
Transactional leadership succeeds best in a context of order, structure, and rigid hierarchy. While it may
sound similar in name to transformational leadership, it’s almost exactly the opposite. Here, roles are
clearly and strictly defined. The job of leadership is to ensure individuals perform their roles correctly
and effectively, and that group performance produces positive outcomes. Often, a clear system of
penalties and rewards for performance is in place, including pay bonuses and opportunities for upward
mobility. A good transactional leader will use those rewards and penalties to identify strengths and
weed out weaknesses among personnel. Transactional leaders may prize the status quo. Where change
is needed, a transactional leader will typically implement it within existing systems and structures rather
than through major structural transformation.

What are the top qualities of a transactional leader?

Regimented

Focused

Efficient

When would you want a transactional leader?

You’re a military general presiding over multiple interdependent units. The stakes of your mission are
high, the organization is complex, and the chain of command is of critical importance. At every level,
leaders both above and below you in the hierarchy must take a transactional approach of strict rules
enforcement, with the command chain implemented explicitly, and with instructions given and followed
from the top down. Discipline and conformity are critical in this context.

8. Situational Leadership

Situational leadership refers less to one specific style of leadership and more to the idea of leadership as
an inherently adaptable responsibility. Situational leadership remains highly flexible at all times, capable
of adjusting strategies, procedures, and vision according to an organization’s circumstances, demands,
and even to a shifting culture. The situational leader possesses the agility to adapt strategy to changing
dynamics. This calls for a leader with the emotional intelligence to recognize organizational needs and
the skill to act on those needs. The result is a leader who guides an organization through transformation,
collaborates at the team-level with personnel and, where necessary, takes decisive, unilateral action.

What are the top qualities of a situational leader?

Nimble

Adaptable

Versatile

When would you want a situational leader?

Your small chain of coffee shops verges on the next leap forward. After a few years of steady growth,
you’re investing considerable capital into a handful of new locations and menu items. You expect a
period of transformation, followed by another steady period of rapid growth, and eventually, a
sustainable phase of modest and incremental growth. At that point, your company may even go public,
but it’s hard to know for certain. To weather this journey with steady leadership, you’ll want a
situational leader, one with the instincts and adaptability to lead according to each phase’s demands.

9. Cross-Cultural Leadership

Cross-cultural leadership acknowledges the increasingly global nature of business. The level of
collaboration, competition, and partnership across international borders have spiked due to web
technology and the deconstruction of global trade barriers. Cross-cultural leaders recognize that every
country has different business norms, leadership practices, and cultural realities. This type of leader
knows how to navigate these differences to unite culturally-diverse partners, achieve unified goals, and
create pathways to common ground. The cross-cultural leader understands that diversity is a virtue and
a resource rather than an obstacle.

What are the top qualities of a cross-cultural leader?

Inclusive

Respectful

Versatile

When would you want a cross-cultural leader?

You’re starting a blockchain consulting group comprised of technical gurus, financial experts, and
marketing professionals. Your dream team of consultants consists of former business partners and
colleagues working in major financial centers all over the world. You hope to unite this diverse group to
serve a common set of goals while giving each team member the freedom to contribute unique talents.
Your ability to help this team find common ground while ensuring each participant feels respected and
comfortable will depend on how well you manage a culturally diverse set of customs, practices,
mannerisms, and expectations.

10. Charismatic Leadership

The truly charismatic leader effectively creates a sense of shared purpose, nurtures the passions of
organizational members, and unites personnel behind a single vision.

Charismatic leadership depends significantly on the compelling personality of the leader. This type of
leader will inspire others through commitment, conviction, and positive example. Charismatic leaders
will usually possess strong communication skills, the capacity for exceptional personal empathy, and the
strength of personality to positively define company culture. The truly charismatic leader effectively
creates a sense of shared purpose, nurtures the passions of organizational members, and unites
personnel behind a single vision. This style of leadership is often particularly valuable in times of crisis.

What are the top qualities of a charismatic leader?

Inspiring

Influential

Personally invested
When would you want a charismatic leader?

After years of mismanagement and even a small dose of executive corruption, your accounting firm
“cleaned house.” Old leaders and managers were fired in a cloud of scandal, leaving the confidence of
employees shaken and the firm’s public reputation stained. A charismatic leader has been hired to
preside over the company as it repairs its image and restores the trust of its employees. This leader
brings passion and commitment as well as the ability to appeal to the personal interests and emotional
instincts of employees, who are wary of their company’s integrity. This leader will be critical to bringing
the firm back from the dead.

What are Leadership Theories?

Leadership theories are schools of thought brought forward to explain how and why certain individuals
become leaders. The theories emphasize the traits and behaviors that individuals can adopt to boost
their own leadership abilities. Early studies on the psychology of leadership pointed to the fact that
leadership skills are inherent abilities that people are born with. It was not until recently that formal
leadership theories emerged, despite leadership becoming a concept of interest at the beginning of
time.

Leadership at a Glance

A leader is crucial to the success of every team. Take an orchestra, for instance, one that consists of all
the best musicians in the world but lacks a conductor. Even though every member of the orchestra can
play perfectly by themselves, they will only produce an incompatible melody in the absence of a
conductor. The same concept applies to communities, companies, and countries. Without a leader,
nothing will ever run smoothly.

So, what makes leaders who they are? Why are some people elected as managers and presidents while
the rest remain followers? Leadership theories were developed to find answers to these questions.

Key Leadership Theories

1. Great Man Theory

According to the Great Man Theory (which should perhaps be called the Great Person Theory), leaders
are born with just the right traits and abilities for leading – charisma, intellect, confidence,
communication skills, and social skills.

The theory suggests that the ability to lead is inherent – that the best leaders are born, not made. It
defines leaders as valiant, mythic, and ordained to rise to leadership when the situation arises. The term
“Great Man” was adopted at the time because leadership was reserved for males, particularly in military
leadership.

2. Trait Theory

The Trait Theory is very similar to the Great Man Theory. It is founded on the characteristics of different
leaders – both the successful and unsuccessful ones. The theory is used to predict effective leadership.
Usually, the identified characteristics are compared to those of potential leaders to determine their
likelihood of leading effectively.
Scholars researching the trait theory try to identify leadership characteristics from different
perspectives. They focus on the physiological attributes such as appearance, weight, and height;
demographics such as age, education, and familial background; and intelligence, which encompasses
decisiveness, judgment, and knowledge.

3. Contingency Theory

The Contingency Theory emphasizes different variables in a specific setting that determine the style of
leadership best suited for the said situation. It is founded on the principle that no one leadership style is
applicable to all situations.

Renowned leadership researchers Hodgson and White believe that the best form of leadership is one
that finds the perfect balance between behaviors, needs, and context. Good leaders not only possess
the right qualities but they’re also able to evaluate the needs of their followers and the situation at
hand. In summary, the contingency theory suggests that great leadership is a combination of many key
variables.

4. Situational Theory

The Situational Theory is similar to the Contingency Theory as it also proposes that no one leadership
style supersedes others. As its name suggests, the theory implies that leadership depends on the
situation at hand. Put simply, leaders should always correspond their leadership to the respective
situation by assessing certain variables such as the type of task, nature of followers, and more.

As proposed by US professor Paul Hersey and leadership guru Ken Blanchard, the situational theory
blends two key elements: the leadership style and the followers’ maturity levels. Hersey and Blanchard
classified maturity into four different degrees:

M1 – Team members do not possess the motivation or tactical skills to complete necessary jobs.

M2 – Team members are willing and ambitious to achieve something, but they lack the necessary ability.

M3 – Team members possess the skills and capacity to accomplish tasks, but they’re not willing to take
accountability.

M4 – Team members possess all the right talents and are motivated to complete projects.

According to situational theory, a leader exercises a particular form of leadership based on the maturity
level of his or her team.

5. Behavioral Theory

In Behavioral Theory, the focus is on the specific behaviors and actions of leaders rather than their traits
or characteristics. The theory suggests that effective leadership is the result of many learned skills.

Individuals need three primary skills to lead their followers – technical, human, and conceptual skills.
Technical skills refer to a leader’s knowledge of the process or technique; human skills means that one is
able to interact with other individuals; while conceptual skills enable the leader to come up with ideas
for running the organization or society smoothly.
What is Path-Goal Theory?

The Path-Goal model is a theory based on specifying a leader’s style or behavior that best fits the
employee and work environment in order to achieve a goal. The path-goal theory can best be thought of
as a process in which leaders select specific behaviors that are best suited to the employees’ needs and
their working environment so that they may best guide the employees through their path in the
obtainment of their daily work activities (goals).

Origins & Theory

The Path-Goal theory, inspired by the work of Martin G. Evans (1970),[1] can best be thought of as a
process by which leaders select specific behaviors that are best suited to their employees’ needs and
their working environment, so that leaders may best guide their employees through their path in the
obtainment of their daily work activities (goals) (Northouse, 2013).

The theory argues that leaders will have to engage in different types of leadership behavior depending
on the nature and the demands of a particular situation. It is the leader’s role to assist employees in
attaining goals and to provide the direction and support needed to ensure that their individual goals are
in concert or compatible with the organization’s goals.
 Path-Goal’s Four Styles
The Path-Goal model is a theory based on specifying a leader’s style or behavior that best fits the
employee and work environment in order to achieve a goal.  The goal is to increase an employee’s
motivation, empowerment, and satisfaction so they become a productive member of the organization. 
Employee satisfaction is contingent upon the leader’s performance as both a facilitator and coach and
rewards their employees for effective performance.  The original Path-Goal theory
identifies achievement-oriented, directive, participative, and supportive leader behaviors rooted in four
(4 styles).

The Four Styles:

1. The directive path-goal clarifying leader behavior  refers to situations where the leader lets
employees know what is expected of them and tells them how to perform their tasks. The
 theory argues that this behavior has the most positive effect when the employees’ role and task
demands are ambiguous and intrinsically satisfying.
2. The achievement-oriented leader behavior  refers to situations where the leader sets challenging
goals for employees, expects them to perform at their highest level, and shows confidence in
their ability to meet this expectation. Occupations in which the achievement motive were most
predominant were technical jobs, sales persons, scientists, engineers, and entrepreneurs.
3. The participative leader behavior  involves leaders consulting with employees and asking for
their suggestions before making a decision. This behavior is predominant when employees are
highly personally involved in their work.
4. The supportive leader behavior  is directed towards the satisfaction of employees’ needs and
preferences. The leader shows concern for the employees’ psychological well-being. This
behavior is especially needed in situations in which tasks or relationships are psychologically or
physically distressing.

How to use it:

If you have a good understanding of what the needs of the group are, then you can adapt to the styles
as the situation demands:

● Achievement oriented works best when the staff suffers from lack of challenge and boredom.
● Directive leadership helps workers cope with otherwise vague and unclear job responsibilities.
● Participative leadership is effective in situations where the follower is making poor decisions or
improper procedure and the leader can take steps to help them improve.
● Supportive leadership is useful with a team that is new, inexperienced, or otherwise lacking
confidence.

Path–Goal theory assumes that leaders are flexible and that they can change their style, as situations
require. The theory proposes two contingency variables, such as environment and employee
characteristics, that moderate the leader behavior-outcome relationship. Environment is outside the
control of the follower-task structure, authority system, and work group. Environmental
factors determine the type of leader behavior required if the employee outcomes are to be
maximized. Follower characteristics are the locus of control, experience, and perceived ability. Personal
characteristics of employees determine how the environment and leader are interpreted. Effective
leaders clarify the path to help their employees achieve goals and make the journey easier by reducing
roadblocks and pitfalls. Research demonstrates that employee performance and satisfaction are
positively influenced when the leader compensates for the shortcomings in either the employee or the
work setting.

In conclusion The Path-Goal theory is useful because it reminds leaders that their central purpose as a
leader is to help employees define and reach their goals in an efficient manner.

Applying Leadership Theories at the Workplace

To a great extent, leadership theories have helped form and shape the kind of governance that exists
today. Many aspects of these theories can be applied to help one improve his or her leadership skills.
1. Maximize Your Strengths

As proposed by the Trait Theory, effective leadership depends on the traits that one possesses. Leaders
should strive to focus on their strengths rather than their weaknesses. The strengths vary from one
leader to another and may include:

A strong will is crucial to staying resilient and seeing leaders through difficult times. No matter how
challenging the situation may be, a strong-willed leader is able to find inner strength and carry on until
he or she overcomes all challenges.

A decisive nature is another strength that some leaders possess. Decisiveness means that when others
may be perplexed, a leader can calmly assess the situation and choose one action to unite everyone.
But, since they may not always make the right decisions, they must also be willing to learn from their
mistakes.

2. Be Inclusive Leaders

Some of the more complex situational theories emphasize focusing on people. It means that they
acknowledge individual people to be their greatest assets and not just mere numbers in their workforce.
Being an inclusive leader requires that one constantly involves other people in their leadership, whether
it is by always welcoming the feedback of others or delegating more responsibility to others than other
forms of leadership.

Power and Politics

Power
·        Definition: A capacity that A has to influence the behavior of B, so that B acts in accordance
with A’s wishes.
·        The definition implies a potential that need not be actualized to be effective and
a dependency relationship.  Power may exist but not be used. It is, therefore, a capacity or
potential.
 
Contrasting Leadership and Power
 
Essentially, leaders achieve goals, and power is a means of facilitating their achievement
·        Leadership involves the goals of the leaders and followers - Power does not
·        Leadership focuses on downward influence (leader - subordinate) - Power does not
 
Bases of Power
 
Formal Power
 
▪ Coercive Power
Power that is based on fear.
▪ Reward Power
Compliance achieved based on the ability to distribute rewards that others view as valuable.
▪ Legitimate Power
The power a person receives as a result of his or her position in the formal hierarchy of
an organization.
 ▪ Information Power
Power that comes from access to and control over information
 
Personal Power
▪ Expert Power
Influence based on special skills or knowledge.
▪ Referent Power
Influence based on possession by an individual or desirable resources or personal traits.
▪ Charismatic Power
An extension of referent power stemming from an individual’s personality and
interpersonal style.
 
So, does a person have one or more of the bases of power listed above? Affirmative (“YES”) responses to
the following questions can answer this question:
 
▪ The person can make things difficult for people, and you want to avoid getting him or her angry.
[coercive power ]
 
▪ The person is able to give special benefits or rewards to people, and you find it advantageous to
trade favors with him or her. [reward power]
 
▪ The person has the right, considering his or her position and your job responsibilities, to expect
you to comply with legitimate requests. [legitimate power]
 
▪ The person has the experience and knowledge to earn your respect, and you defer to his or her
judgment in some matters. [expert power]
 
▪ You like the person and enjoy doing things for him or her. [referent power]
 
Dependency: The key to power
 
"The greater B’s dependency on A, the greater the power A has over B"
 
What creates dependency?
·        Importance, scarcity, no substitutability
 
Power Tactics
·        Ways in which individuals translate power bases into specific actions:
1)     Legitimacy
2)      Rational persuasion
3)      Inspirational appeals
4)      Consultation
5)      Exchange
6)      Personal appeals
7)      Ingratiation
8)     Pressure
9)     Coalitions
 
Power in groups: Coalitions
·        Coalition – an informal group bound together by the active pursuit of a single issue
·        Coalitions seek to maximize their size = “strength” in numbers
 
Sexual Harassment
·        Unwelcome advances, requests for sexual favors, and other verbal or physical conduct of a
sexual nature. Sexual harassment is about power.
 

POLITICS
Politics: Power in action
 
Political behavior are those activities that are not required as part of one’s formal role in the
organization, but that influence, or attempt to influence, the distribution of advantages and
disadvantages within the organization.
 
Legitimate and illegitimate political behaviors are common in organizations.  Politics is a fact of life in
organizations.
 
Factors contributing to Political Behavior
 
Individual factors (e.g., personality traits, needs)
Organizational factors (e.g., when organizational resources decline, resources change, low trust
exists, high performance pressures, and the opportunity of promotion exists = political behavior is likely)
 How do People Respond to Organizational Politics?
 
▪ Decreased job satisfaction, increased anxiety, increased turnover, and reduced
performance        
 
▪ Defensive Actions: Reactive and protective behaviors to avoid action, blame, or change
 

The Politics of Business

As mentioned before, there is a political side to business. In a sense, it follows the same science behind
the politics found in government.8 There is leadership that guides the group as a whole and a company
philosophy and ethical code that everyone is expected to adhere to. The set up and style of the business'
leadership determines how power is divided and what role, if any, the employees have in how the
business is run. The people in that business tend to have their own agenda in all of this, shaped by their
behavior and viewpoints, that surpasses the agenda of the organization as a whole-which is the entire
premise behind organizational or business poltics. 9

Politics tend to come up in a business when someone begins to act on their own interest without regard
to others in the company. It commonly comes into play during times of conflict and power struggles, as
people with conflicting agendas will typically be the ones at odds. Most experts and leaders state that
business politics are more harmful than good; they're inherently selfish. 10 Business politics bring down
productivity amongst employees through distraction, hurts motivation and morale, increases stress
levels, and warps the environment of the business.

Business politics do the worst damage when business leaders act according to their personal agendas.
Those in positions of power will exert their authority based on their politics, which can lead to abuse.
This may also encourage conflict between opposing political sides. Leaders higher up in the business'
hierarchy, like CEOs, can stir-up politics in their company regardless of if they are political
themselves.11 Changes to policies and leadership, as well as changes to the components of organizational
behavior, can help reduce the power of office politics-or bolster them, if not done correctly.

How To Deal with Workplace Abuse

No one wants abuses of power to happen in their business. It's harmful to employees, the customers,
productivity, and the business' overall environment. Preventing it doesn't always work, as people cannot
be fully controlled. If there are abuses of power occurring in your business, here are a few things that
can be done:

          Confront The Person-Best done carefully and in private, confronting the person who is on a
power trip or abusing their power is one way of getting them to stop. 16 Someone who has only recently
started to become abusive due to their power may not realize that what they are doing is hurtful and
unprofessional; power can be an intoxicating force. It should be noted that this can backfire and should
definitely not be done without assistance in severe cases.
          Document It-Keep track of instances of abuse by documenting it. Write down notes on what
happened, when, and where, and take it home with you; never leave it at work where an abusive person
may find it and use it as a motive to attack. 17 Check what laws and policies there are regarding recording
someone without their permission. If there is physical evidence, take photos and keep them with your
notes. All of this can be presented to the business' human resources department and used against an
abuser.
          Human Resources-Here's that spoiler alert from earlier. A business' human resources
department is designed to handle any instance of misbehavior amongst the staff at work. They will
have the resources to deal with the situation and will know what can or cannot be done. Submitting
a complaint-with copies of what you've documented-can at least bring abusive behavior to the
company's attention. In severe cases where outside intervention like police or legal action is needed,
the HR department will usually need to get involved in the situation on behalf of the business. 

Motivation Theories
From the very beginning, when human organisations were established, various thinkers have tried to
find out the answer to what motivates people to work. Different approaches applied by them have
resulted in a number of theories concerning motivation.

1.Maslow’s Need Hierarchy Theory:

It is probably safe to say that the most well-known theory of motivation is Maslow’s need hierarchy
theory. Maslow's theory is based on human needs. Drawing chiefly on his clinical experience, he
classified all human needs into a hierarchical manner from the lower to the higher order. In essence, he
believed that once a given level of need is satisfied, it no longer serves to motivate man. Then, the next
higher level of need has to be activated in order to motivate the man. Maslow identified
These are now discussed one by one:
1. Physiological Needs:
These needs are basic to human life and, hence, include food, clothing, shelter, air, water and
necessities of life. These needs relate to the survival and maintenance of human life. They exert
tremendous influence on human behaviour. These needs are to be met first at least partly before higher
level needs emerge. Once physiological needs are satisfied, they no longer motivate the man.

2. Safety Needs:
After satisfying the physiological needs, the next needs felt are called safety and security needs. These
needs find expression in such desires as economic security and protection from physical dangers.
Meeting these needs requires more money and, hence, the individual is prompted to work more. Like
physiological needs, these become inactive once they are satisfied.

3. Social Needs:
Man is a social being. He is, therefore, interested in social interaction, companionship, belongingness,
etc. It is this socialising and belongingness why individuals prefer to work in groups and especially older
people go to work.

4. Esteem Needs:
These needs refer to self-esteem and self-respect. They include such needs which indicate self-
confidence, achievement, competence, knowledge and independence. The fulfilment of esteem needs
leads to self-confidence, strength and capability of being useful in the organisation. However, inability to
fulfil these needs results in feelings like inferiority, weakness and helplessness.

5. Self-Actualisation Needs:
This level represents the culmination of all the lower, intermediate, and higher needs of human beings.
In other words, the final step under the need hierarchy model is the need for self-actualization. This
refers to fulfilment.

The term self-actualization was coined by Kurt Goldstein and means to become actualized in what one is
potentially good at. In effect, self- actualization is the person’s motivation to transform perception of
self into reality.
According to Maslow, human needs follow a definite sequence of domination. The second need does
not arise until the first is reasonably satisfied, and the third need does not emerge until the first two
needs have been reasonably satisfied and it goes on. The other side of the need hierarchy is that human
needs are unlimited. However, Maslow’s need for hierarchy-theory is not without its detractors.

The main criticisms of the theory include the following:

1. The needs may or may not follow a definite hierarchical order. So to say, there may be overlapping in
need hierarchy. For example, even if safety need is not satisfied, the social need may emerge.

2. The need priority model may not apply at all times in all places.

3. Researches show that man’s behaviour at any time is mostly guided by multiplicity of behaviour.
Hence, Maslow’s preposition that one need is satisfied at one time is also of doubtful validity.

4. In case of some people, the level of motivation may be permanently lower. For example, a person
suffering from chronic unemployment may remain satisfied for the rest of his life if only he/she can get
enough food.

Notwithstanding, Maslow’s need hierarchy theory has received wide recognition, particularly among
practicing managers. This can be attributed to the theory’s intuitive logic and easy to understand. One
researcher came to the conclusion that theories that are intuitively strong die hard’.

2. Herzberg’s Motivation Hygiene Theory:

The psychologist Frederick Herzberg extended the work of Maslow and propsed a new motivation
theory popularly known as Herzberg’s Motivation Hygiene (Two-Factor) Theory. Herzberg conducted a
widely reported motivational study on 200 accountants and engineers employed by firms in and around
Western Pennsylvania.

He asked these people to describe two important incidents at their jobs:

(1) When did you feel particularly good about your job, and

(2) When did you feel exceptionally bad about your job? He used the critical incident method of
obtaining data.

The responses when analysed were found quite interesting and fairly consistent. The replies
respondents gave when they felt good about their jobs were significantly different from the replies given
when they felt bad. Reported good feelings were generally associated with job satisfaction, whereas bad
feeling with job dissatisfaction. Herzberg labelled the job satisfiers motivators, and he called job
dissatisfies hygiene or maintenance factors. Taken together, the motivators and hygiene factors have
become known as Herzberg’s two-factor theory of motivation
According to Herzberg, the opposite of satisfaction is not dissatisfaction. The underlying reason, he says,
is that removal of dissatisfying characteristics from a job does not necessarily make the job satisfying. He
believes in the existence of a dual continuum. The opposite of ‘satisfaction’ is ‘no satisfaction’ and the
opposite of ‘dissatisfaction’ is ‘no dissatisatisfaction’.

According to Herzberg, today’s motivators are tomorrow’s hygiene because the latter stop influencing
the behaviour of persons when they get them. Accordingly, one’s hygiene may be the motivator of
another.

However, Herzberg’s model is labelled with the following criticism also:

1. People generally tend to take credit themselves when things go well. They blame failure on the
external environment.

2. The theory basically explains job satisfaction, not motivation.

3. Even job satisfaction is not measured on an overall basis. It is not unlikely that a person may dislike
part of his/ her job, still thinks the job acceptable.

4. This theory neglects situational variable to motivate an individual.

Because of its ubiquitous nature, salary commonly shows up as a motivator as well as hygine.

Regardless of criticism, Herzberg’s ‘two-factor motivation theory’ has been widely read and a few
managers seem untaminar with his recommendations. The main use of his recommendations lies in
planning and controlling of employees work.
3. McClelland’s Need Theory:
Another well-known need-based theory of motivation, as opposed to hierarchy of needs of satisfaction-
dissatisfaction, is the theory developed by McClelland and his associates’. McClelland developed his
theory based on Henry Murray’s developed long list of motives and manifest needs used in his early
studies of personality. McClelland’s need-theory is closely associated with learning theory, because he
believed that needs are learned or acquired by the kinds of events people experienced in their
environment and culture.

He found that people who acquire a particular need behave differently from those who do not have. His
theory focuses on Murray’s three needs; achievement, power and affiliation. In the literature, these
three needs are abbreviated “n Ach”, “n Pow”, and “n Aff” respectively’.

They are defined as follows:

Need for Achievement:
This is the drive to excel, to achieve in relation to a set of standards, and to strive to succeed. In other
words, need for achievement is a behaviour directed toward competition with a standard of excellence.
McClelland found that people with a high need for achievement perform better than those with a
moderate or low need for achievement, and noted regional / national differences in achievement
motivation.

Through his research, McClelland identified the following three characteristics of high-need achievers:
1. High-need achievers have a strong desire to assume personal responsibility for performing a task for
finding a solution to a problem.

2. High-need achievers tend to set moderately difficult goals and take calculated risks.

3. High-need achievers have a strong desire for performance feedback.

Need for Power:

The need for power is concerned with making an impact on others, the desire to influence others, the
urge to change people, and the desire to make a difference in life. People with a high need for power are
people who like to be in control of people and events. This results in ultimate satisfaction to man.

People who have a high need for power are characterized by:
1. A desire to influence and direct somebody else.

2. A desire to exercise control over others.

3. A concern for maintaining leader-follower relations.

Need for Affiliation:

The need for affiliation is defined as a desire to establish and maintain friendly and warm relations with
other people’. The need for affiliation, in many ways, is similar to Maslow’s social needs.

The people with high need for affiliation have these characteristics:
1. They have a strong desire for acceptance and approval from others.
2. They tend to conform to the wishes of those people whose friendship and companionship they value.

3. They value the feelings of others.

The chart shows the parallel relationship between the needs in each of the theories. Maslow refers to
higher- lower order needs, whereas Herzberg refers to motivation and hygiene factors.

4. McGregor’s Participation Theory:

Douglas McGregor formulated two distinct views of human being based on participation of workers. The
first basically negative, labelled Theory X, and the other basically positive, lablled Theory Y.

Theory X is based on the following assumptions:

1. People are by nature indolent. That is, they like to work as little as possible.

2. People lack ambition, dislike responsibility, and prefer to be directed by others.

3. People are inherently self-centred and indifferent to organisational needs and goals.

4. People are generally gullible and not very sharp and bright.

On the contrary, Theory Y assumes that:

1. People are not by nature passive or resistant to organisational goals.

2. They want to assume responsibility.

3. They want their organisation to succeed.

4. People are capable of directing their own behaviour.

5. They have need for achievement.

What McGregor tried to dramatize through his theory X and Y is to outline the extremes to draw the
fencing within which the organisational man is usually seen to behave. The fact remains that no
organisational man would actually belong either to theory X or theory Y. In reality, he/she shares the
traits of both. What actually happens is that man swings from one set or properties to the other with
changes in his mood and motives in changing environment.

5. Vroom’s Expectancy Theory:

One of the most widely accepted explanations of motivation is offered by Victor Vroom in his
Expectancy Theory” It is a cognitive process theory of motivation. The theory is founded on the basic
notions that people will be motivated to exert a high level of effort when they believe there are
relationships between the effort they put forth, the performance they achieve, and the outcomes/
rewards they receive.

Thus, the key constructs in the expectancy theory of motivation are:

1.  Valence:
Valence, according to Vroom, means the value or strength one places on a particular outcome or
reward.

2.  Expectancy:
It relates efforts to performance.

3.  Instrumentality:
By instrumentality, Vroom means, the belief that performance is related to rewards.

Thus, Vroom’s motivation can also be expressed in the form of an equation as follows: Motivation =
Valence x Expectancy x Instrumentality

Being the model multiplicative in nature, all the three variables must have high positive values to imply
motivated performance choice. If any one of the variables approaches to zero level, the possibility of the
so motivated performance also touches zero level.

However, Vroom’s expectancy theory has its critics. The important ones are:
1. Critics like Porter and Lawler labelled it as a theory of cognitive hedonism which proposes that
individual cognitively chooses the course of action that leads to the greatest degree of pleasure or the
smallest degree of pain.

2. The assumption that people are rational and calculating makes the theory idealistic.

3. The expectancy theory does not describe individual and situational differences.
But the valence or value people place on various rewards varies. For example, one employee prefers
salary to benefits, whereas another person prefers to just the reverse. The valence for the same reward
varies from situation to situation.

In spite of all these critics, the greatest point in me expectancy theory is that it explains why significant
segment of workforce exerts low levels of efforts in carrying out job responsibilities.

6. ERG Theory

Clayton P. Alderfer’s ERG theory from 1969 condenses Maslow’s five human needs into three categories:
Existence, Relatedness and Growth.

Existence Needs

Include all material and physiological desires (e.g., food, water, air, clothing, safety, physical love and
affection). Maslow’s first two levels.

Relatedness Needs

Encompass social and external esteem; relationships with significant others like family, friends, co-
workers and employers. This also means to be recognized and feel secure as part of a group or family.
Maslow’s third and fourth levels.

Growth Needs

Internal esteem and self-actualization; these impel a person to make creative or productive effects on
himself and the environment (e.g., to progress toward one’s ideal self). Maslow’s fourth and fifth levels.
This includes desires to be creative and productive, and to complete meaningful tasks.

Even though the priority of these needs differs from person to person, Alberger’s ERG theory prioritises
in terms of the categories’ concreteness. Existence needs are the most concrete, and easiest to verify.
Relatedness needs are less concrete than existence needs, which depend on a relationship between two
or more people. Finally, growth needs are the least concrete in that their specific objectives depend on
the uniqueness of each person.

Differences between ERG theory and Maslow’s model

Alderfer’s ERG motivation theory differs from Maslow’s theory in three ways:

A lower-level need does not have to be gratified (i.e., a person may satisfy a need at hand, whether or
not a previous need has been satisfied);

If a relatively more significant need is not gratified, the desire to gratify a lesser need will be increased
(i.e., the frustration in meeting high-order needs might lead a person to regress to a more concrete need
category);

Alderfer’s ERG theory allows the order of the needs to differ for different people (e.g., it accounts for the
“starving artist” who may place growth needs above existence ones).