Chapter Three

Functions of Management

Daniel Ab.

Bahir Dar Institute of Technology (BiT)

Faculty of Mechanical and Industrial Engineering
Introduction

Manager?
Some one who coordinates and oversees the work of
other people so that organizational goals can be
accomplished.
Managerial Concerns?
Efficiency “Doing things right”-Getting the most output
for the least inputs.
Effectiveness “Doing the right things”- Attaining
organizational goals.
Managerial functions?
(Planning, Organizing, Staffing, Directing, Controlling)
2
Planning
• Planning is the process of setting objectives for the future
and developing courses of action to accomplish them.
✓ Its purpose is to facilitate programs and improve
performance.
✓ It allows integrated, consistent, and purposeful action.
✓ Planning must be based on prudent /careful, discreet, practical/

forecasts and reasonable premise.

• According to Koontz and O‘Donnell define as 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
where we are to where we want to go.
3
 Step1. Define planning Premises

The Planning Process Step 2. Formulate company

objectives & develop
Levels and steps strategic plans

Step 3. Develop Policies

Step 4. Develop implementation

plans

Step 5. Develop Controls

Step 6. Organize for implementation

Step 7. Review

4
Step1. Define planning Premises (Identifying & defining
the real problem)
▪ The first step is determining what will have a major
impact on planning through a study of pertinent
environmental factors (the economy, society, public
policy, the industry and the market), available company
resources, past and current company operations, and
profitability. External Forces
Political Economic Social Technological
& legal

Firm

Internal Forces
Organizational Value Systems
Resources of Managers 5
Step 2. Formulate company objectives & develop strategic plans

▪ In the light of the planning premises, the manager must

develop and appraise alternative long term objectives for
the company.

▪ These objectives are commonly referred to as the

company’s mission or purpose. For example, the mission of
a nuclear power plant is to provide an adequate supply of
electrical energy.

▪ The manager selects the objective that will most profitably

exploit the market opportunities.

6
 Cont’d…..

Objectives
• Objectives are the desired outcomes that
management hopes to attain.
Example: Earn acceptable profit,
Increase market share
Goals
• Goals are more specific than objectives and often
include time schedule for completion.
Example: Increasing profit by 20% in two years,
Increasing market share by 10% in 3 years

7
Strategic Plans:
✓ It is the blueprint that determines major objectives
of an organization and the adoption of courses of
action/organizational activities, and the allocation
of resources necessary to achieve those objectives.

✓ The purpose of strategic plans is to turn

organizational goals into realities within that time
period.

8
Step 3. Develop Policies
▪ After developing and evaluating objectives, the manager
selects the overall policies that will fulfill the company
objective and still satisfy market, industry, and company
criteria.

▪ Such policies are general statement that provide a sense of

direction for subordinates. They serve as a guidelines that
channel managerial action.
✓ Policies are general guidelines for decision making.
▪ Human resource policies
▪ Purchasing department policies
▪ Pricing policies 9
Step 4. Develop Implementation Plans
• Managers next select operating plans for all areas of the
business.
• They should be consistent with the overall planning
premises, objectives and policies established in the
preceding steps and within the capabilities of the
company.
• Derivative policies, rules and procedures in all planning
areas should be specified.
• Procedures are guides to action which specify in detail the
manner in which activities are to be performed.
10
Step 5. Develop Controls
• After the operating plans are completed, methods for
measuring performance against the plans must be
developed.
• These controls usually are in the form of budgets.
• Budget is a financial plan listing the resources or funds
assigned to a particular program, project, product or
division.
• Finally you have to organize it for implementation and
review it continuously

11
Step 6: Organize for implementation
• The manager next must establish adequate administrative
procedures for implementing the plan.

Step 7: Controlling & evaluating the result/Reviewing/

• Once the plan is implemented, the manager must monitor
the progress that is being made, evaluate the reported
results, & make any modifications necessary.
• Modification may be required because a plan was not quite
“Perfect” when it was implemented.
• Reviewing and modifying the plan as needed is the final
step in the planning process.
12
 Continual improvement

PLAN DO

ACT CHECK

13
 Why continuous improvement &
Why we do always in the way we do before?

“If you always do, what you have always

done, you will only get, what you have
always gotten”
George Bernard Shaw

So you have to stand to do things in better/

new way of doing to get better/new result!

14
Planning - Related Fears
▪ Planning is difficult( and I might not do a good job)
▪ It limits my actions( If it’s not in the plan, I can’t do it)
▪ It forces me to make decisions(and that makes me vulnerable)
▪ Making plan provides a yardstick for evaluation (and I might
not measure up).
▪ Planning brings its own chaos and disruption (when managers
resist or choose not to follow the plan).
Perhaps the best method for overcoming the fear of planning
is to recognize the rewards of planning.

15
Benefits of planning
▪ Planning facilitates professional growth
▪ Plans provide framework for the organization
▪ Plans aid in delegating authority
▪ Plans help motivate people
▪ Planning aids communication flow
▪ Planning helps shape the future
▪ Planning help monitor work
▪ Planning builds confidence
▪ Planning provide financial rewards

16
Characteristics of Good Plan
Every sound business plan must have these characteristics:
1. Objectivity: it should be factual, logical and realistic. It
should also be directed to achieving organizational goals.
2. Futurity: if a plan is to be effective, it must foresee with
reasonable accuracy the nature of future events affecting
the industry and the firm.
3. Flexibility: Because no one can foresee the future, plans
must have flexibility. They must adjust smoothly and
quickly to changing conditions without seriously losing
their effectiveness. The more difficult it is to predict the
future, the more flexible the plans must be.
17
 Cont’d…..
4. Stability: A stable plan will not have to be abandoned
because of long-term changes in the company’s situation.
5. Comprehensiveness: It should be comprehensive enough to
provide adequate guidance.
6. Clarity, and
7. Simplicity
▪ Although a good plan must be comprehensive, it should
also be simple.
▪ A simple plan seeks to attain its objective with the fewest
components, forces, effects, and relationships
▪ A plan should not be ambiguous. Lack of clarity makes
understanding and implementation difficult.
18
 Classifying Plans

Plans can be classified on the following three bases:

I. Duration/ time dimension

Short-range plans Annual Plan
one year or less. (Sales Revenue, Production, Materials
Requirement, Operating Expenses Budget)
Medium-range plans Development of new products
1-5 years. Modernization of New Facilities

Long-range plans Long-term lease on production or

5-10 years. warehousing facilities
Construction of hydropower plants

19
II. Specificity of Plans / repetitiveness

• Single-use plans: are used once and not over and over
again.
• Budget
• Schedule
• Project
• Objectives/goals
• Standing plans: those plans that can be used again and
again.
• Policy
• Procedure
• Rule
• Strategy
20
 III. Scope or Organizational level of Plans
✓ Strategic plans: It is the process of determining overall
objectives of the organization and the policies and strategies
adopted to achieve those objectives. Performed by top level
managers and gives general direction to the organization .

✓ Administrative plans/Tactical planning: It is the process

that structures a firm’s resources to achieve maximum
performance. It concentrate on product market aims,
selection of geographic areas, and policies dealing with
major functions of organization (production, marketing,
finance, research, personnel, etc.) 21
• Operational/Tactical: concerned with day-to-day or short-
term activities and that is most specific and most concrete
that covers a short period of time. It is the responsibility of
lower level management and involve unit supervisors.

Short range

Operational Planning

Medium range

Administrative Planning

Long range

Strategic Planning
0 1 2 3 4 5 n
22
Time frame (in years)
Some planning tools
Forecasting
– Forecasting predicts or projects what will happen under a
given set of circumstances in the future.
– Economic and marketing forecasting provides specific
quantitative premises for use in formulating plans.
– Various statistical and non statistical techniques can be
used in forecasting. Some of the more popular forecasting
Methods are:
1. Use of the Product Life Cycle to project future sales
2. Statistical Projections
3. Market Research Methods
4. Analytical Methods (Regression Analysis)
5. Technological Forecasting Methods (Delphi Technique,
Scenarios, Impact Analysis) 23
Product Life Cycle
▪ Suggest that all products pass through a series of growth
curves until they reach a point where demand either levels
out or begins to decline.

Figure: Product Life Cycle Curve

24
 Management By Objectives (MBO)
• Management by objectives (MBO), also known as
management by results (MBR) and Result-oriented
management is a process of defining objectives within an
organization so that management and employees agree to
the objectives and understand what they need to do in the
organization in order to achieve them.
• Used to improve effectiveness of individuals and the
organization.
• MBO involves setting specific, measurable goals with
subordinates and then periodically discussing their
progress.
25
MBO essentially has four basic steps:
1. Precisely define the job that needs to be done: overall
goals are usually set by top-level management;
supervisors usually set more specific departmental goals.
2. Establishing goals: Supervisors and workers together set
attainable, specific objectives to be achieved over a set
of period of time.
3. Evaluating results: at the end of the time period,
supervisors evaluate how well objectives have been met.
4. Providing feedback to the subordinate: Subordinates are
informed of the progress.
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Features and advantages of MBO

1.Motivation – Involving employees in the whole process

of goal setting and increasing employee empowerment.
2.Better communication and coordination – Frequent
reviews and interactions between superiors and
subordinates
3.Clarity of goals
4.Subordinates tend to have a higher commitment to
objectives
5.Everybody will be having a common goal for whole
organization.
27
Pitfalls (Drawbacks) of MBO
1.Managers fail to support the program fully.
2.Managers fail to prepare adequately for evaluation and
feedback.
3.Managers fail to recognize that a subordinate can meet
an objective and still have unsatisfactory performance
4.Too much paperwork.
5.Too many objectives are set.
6.A system of reward is omitted.
7.Supervisors are not trained properly.
8.Objectives are never modified
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Decision Making
• Decision-making is not a separate, isolated function of
management but it is an integral component of every
managerial function (i.e. in planning, organizing, staffing,
directing, & controlling).
✓ Where to invest to get profit?
✓ What to do about an employee who is always late?
✓ What subject will have top priority in meeting, etc.?
• Decision making is part of every managers duties. For example,
managers can formulate planning objectives only after making
decisions about the organization’s basic mission.
• It is the process of selecting or choosing, based on some
29
criteria, the best alternative among alternatives.
Decision Making process
✓ Formulate Goals: The decision-making process begins with
the formulation of company goals. These goals may be
related to profits, service, sales, costs, or any other
measurable standard.
✓ Evaluate decision situation: It is determining if goal can be
satisfied objectively, through programmed decision, or if a
non programmed decision requiring the manager’s judgment is
required.
✓ Analyze alternatives: Alternatives are various courses of
action that may achieve the objective. For example, the
objective of increasing profits may be achieved by reducing
costs, increasing revenues, or a combination of the two.
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✓ Select the best alternative: Based on the expected outcome, the
manager must select the alternative that best meets the
objective. The choice of alternatives is simple when outcomes can
be measured precisely. However, uncertainty surrounds most
decisions. It also may be impossible to quantify the expected
outcome. In such circumstances, the preferences of the decision
maker, intuition, and other variable influence the choice of
alternatives.
✓ Implement the decision: Next, the manager puts the decision into
operation. Implementation requires making task assignments,
developing specific plans and devising a means for assessing
progress.
✓ Evaluate and follow up: Having implemented the decision, the
manager should compare the results of that course of action with
desired outcome and , if necessary, take corrective action to
assure desired results. 31
Decision Making Under Different Conditions
Decision making can be classified according to the likelihood of
the outcome, which is often is determined by existing
conditions:

a. Decision under certainty: are those in which the external

conditions are identified and predictable. Example: If you
decide to invest your money in saving account in the
Commercial Bank of Ethiopia, you are certain that you will
earn ten percent.
b. Decision under risk: are those in which the probabilities can
be assigned to the expected outcomes of each alternative.
These probabilities are determined either objectively or
subjectively.

32
 Cont’d…..

c. Decision under uncertainty: Probabilities can’t be

assigned to surrounding conditions. Some conditions that
are uncontrollable by management include competition,
government regulations, technological advances, the
overall economy, and the social and cultural tendencies of
society.
Example: A corporation that decides to expand its operation
in a strong country may know little about its culture, laws,
economic environment, or politics. The political situation may
be so volatile that even experts cannot predict a possible
change in government.

33
 Organizing
• Organizing is the process of arranging people and physical
resources to carry out plans and accomplish organizational
objectives, or
• It is the development of jobs and the arrangement of them into a
structure that will assure duties are accomplished in a
coordinated way.
• Determining what needs to be done, how it will be done, and
who is to do it.
• Organizing involves:
➢ grouping of task,
➢ involves specialisation,
➢ allocation,
➢ span of control, and
➢ departmentalization
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From Planning to Organizing
Organizing forces us to address several basic questions:
• What activities are required to implement the plan?
• How many organizational levels are needed to perform
all the required tasks?
• How should these positions be organized?
• How can these activities be effectively coordinated?
• How many layers of management are required to
coordinate them?
• How many people should a manager supervise directly?

35
The Organizing Process
1. Defining Tasks: Division of Labor (Specialization)
• Involves breaking down a task into its most basic elements,
training workers in performing specific duties, and
sequencing activities so that one person’s efforts build on
another’s.
Adam Smith (Wealth of Nations, 1776)
Charles Babbage (Economy of Machinery and manufacturers, 1932)

Advantages
1. Accomplishing activities in short time
2. Saving time lost in changing from one job to another.
3. Reduce waste of materials in the learning process 36
Disadvantages
1. Boredom and fatigue caused by monotonous and
repetitive tasks.
2. Departmentalized thinking.
3. Creates communication barrier.
4. Conflicting policies and procedure may be developed by
different specialists.

37
2. Grouping Specialized Activities: Departmentalization
– It is the process of grouping specialized activities in a
logical manner.
– Relationships between these groups are depicted in
organizational charts.
Forms of Departmentalization
1. Functional Departmentalization
Groups together jobs that are similar in function or content.

Owner Manager

Manufacturing Marketing Accounting Personnel

Figure: Major functional departmentation 38

Example:

Figure: Primary and derivative functional departmentation 39

 Advantages
1. Increased efficiency through specialization of tasks.
2. Specialists can work in their fields of training & expertise
3. Tight control of all functional units is assured
Disadvantages
1. People in a functional department may lose sight of overall
operations of the business
2. Workers may develop highly specialized skills but no
managerial abilities
3. Conflict may develop among departments as each unit
competes for resources

40
2. Product Departmentalization
• Firm’s activities are grouped around its products.
• It is commonly used by manufacturers who produce and sell
a number of product lines made up of several different
items.

41
 Advantages
1. People who manufacture or market a single product line
come to know a great detail about it.
2. Customers often get better service.
3. The use of specialized capital is facilitated.
4. Coordinating functional activities is simpler.
5. Expanding products and product line is easier.
Disadvantages
1. Operations are harder to control
2. More people with comprehensive managerial skills are
required.
2. Efforts and services are duplicated.
42
 3. Geographic Departmentalization
• Groups business activities on the basis of geographic region or
territory, enabling a firm to adapt to local customs and laws to
service customers more quickly.
• Encourages decentralized decision making.
President

Bahir Dar Adigrat Nazareth Awassa

Gondor Mekele Assela Hosaena

Dessie Axum Jimma

In this,
✓ There is a duplication of effort
✓ Need to employ several executives
✓ Difficult to implementing timely changes and maintaining consistent
policies and procedures. 43
 4. Customer Departmentalization
• Companies that must provide special services to different
groups set up departments by types of customers, using
Customer Departmentalization.

The figure above shows the derivatives of customer

departmentation from functional departmentation
44
 5. Process Departmentalization
• Manufacturing firms commonly group activities according
to the product’s manufacturing process.

45
 6. Project Management/Matrix Structure

▪ Project management is an organizational arrangement

that developed because of the need for quick completion
technical projects that required significant contributions
by two or more functional groups.

▪ Traditional functional departmentation uses specialists,

who work in accounting, finance, engineering, marketing,
and so on. In project management/matrix structures,
these specialists remain in their departments but are
assigned to special project elsewhere as needed.

46
Project Management/Matrix Structure

47
 Span of Management

• Span of management, or span of control, refers to the number of

subordinates that a single manager can effectively supervise.
✓ Chief executives officers of medium and large corporations
typically have 4 – 8 immediate subordinates.
✓ Supervisors > 15 persons.
• Variations at different organizational level result from the complexity
and/or diversity of jobs, the need for personal interaction, leadership
philosophies, and a host of other variables.
• Narrow spans of control permit a manager to have greater interaction
with each subordinates; hence to exercise close supervision.
• But they also result in “taller” organizational structures and
communication barriers since information must be transmitted
through more people (levels).
• Conversely, wide spans of control necessitate general supervision and
results in “flat” organizational structure.
48
49
Factors Affecting the Span of Management
1. Routineness and simplicity of jobs: Managers supervising
people with simple and repetitive jobs are able to manage
more immediate subordinates than are those who supervise
people with complex, nonrepetitive tasks.
2. Geographic dispersion of subordinates: Normally, there is an
inverse relationship between a manager’s span of control and
the geographic dispersion of subordinates.
3. Subordinate training and experience: The amount of
training, experience and ability that subordinates have is
directly related to a manager’s span of control.

50
4. Management by exception: Is a philosophy of supervision that
encourages lower-level managers to make decisions on routine
matters within set guidelines. The only time higher-level
managers become involved is in new, exceptional situations.
Management by exception therefore requires decentralized
decision making. It frees managers from time-consuming
involvement in routing matters and lets them use their time
more efficiently.
5. Use of assistants: The number of assistants that a manager
has is related to span of management. That is, the greater the
support given a manager, including the more assistants the
manager has to help handle details, the wider the span of
management can be. 51
 Authority and Responsibility
• Authority is the right to command subordinates’ action.
• When authority is dispersed throughout the organization, it
is said to be decentralized.
• When most decisions are made at or near the top, the
organization is centralized.
• Responsibility is a felt obligation. Unlike authority,
responsibility can not be assigned or given away.
• Authority should be given only to managers who are willing
to assume equal amount of responsibility.
• Although Responsibility can not be delegated, a manager
can hold subordinates accountable for their actions.
52
 Delegating
• Delegating is the process of allocating tasks to
subordinates, giving them adequate authority to carry out
those assignments, and making them obliged to complete
the tasks satisfactorily.

Importance of delegation
• It frees a manager from time consuming duties that can be
handled by subordinates
• Lets the manager devote more time to problems requiring his/
her attention
• It makes decision making quick
• It helps the subordinate reaches their full potential b/c they
get a chance to making decision
53
 Staffing
• Staffing is the process of matching jobs and people.
• It is the process of identifying human resource needs,
procuring the necessary employees, training, utilization,
and separation of those employees.
• Staffing function includes:
▪ Human resource planning
▪ Job Design
▪ Recruiting/hiring and Selecting
▪ Developing and Retaining qualified workers

54
 Line and Staff Positions
❖ People with Line positions are responsible for physically
producing the product or service and for selling it.
❖ Line positions have authority over a business’s operations, such as
production and selling in a manufacturing firm. Sales manager
and production supervisor, for example are line jobs. ( Note: Not
every job in manufacturing and marketing is a line position.
Purchasing and advertising, for instance, are staff functions
within manufacturing and marketing areas.)

❖ Staff people advise and assist line people.

❖ All staff positions are advisory. Staff people may make
recommendations, but line managers retain formal authority and
decide what to do with a staff person’s advice. 55
 56
Figure: Selected line and staff positions-manufacturing organization
Employee selection procedure
The employee selection procedure illustrated below has
five steps: human resource planning, developing sources
of applicants, receiving applications, screening
applicants, and induction/orientation.

Human Developing
Receiving Screening Induction/
resource Sources of
applications applicants orientation
planning Applicants

Medical
exam
57
 A. Human Resource Planning
▪ Human resource planning (HRP) reflects the growing
importance of people in organizations.

▪ The general approaches to human resource planning equates

it with personnel administration. In this approach, HRP is
defined as the strategy for acquiring, using, improving, and
preserving a firm’s human resources; it covers three distinct
activities:
1. Evaluating existing labor resources
2. Forecasting future labor needs
3. Ensuring the availability of workers when needed
58
 Job Design
• One of the most important aspects of the manager’s job is
job design, the attempt to organize work to require less
effort, increase employee satisfaction, reduce costs, and
boost efficiency.
• The cycle of job design has five basic steps, illustrated in
figure. It should be viewed as continuous, in as much as jobs
must be analyzed every time they are modified.

Job Wage
Job Analysis Implementation
Evaluation Allocation

Job Modification
59
 Cont’d…..

Step I: Job Analysis is the process of gathering, analyzing,

and recording facts about each job in a firm. It is
performed on three occasions: 1) when an organization
is just starting, 2) when a new job is created, and 3)
when a job is changed significantly as a result of new
technology, additional duties, or new methods and
procedures. Job descriptions and specifications are
developed from the analysis.

60
 Cont’d…..
Step II: Job Evaluation is a systematic method of figuring the
worth of each job compared to other jobs in the organization
and jobs in similar organization.

Step III: Wage Allocation: takes places after all jobs have been
evaluated and their relative value has been determined.
▪ First, managers must decide whether everyone performing
the same job will receive equal pay or whether to establish
pay ranges. Pay ranges allow employees to be paid
according to their experience and performance.

61
 Cont’d…..
Step IV: Implementation
• Once the duties, responsibilities, and procedures of a job
are determined, the job is established.
• Not only should a job should help achieve organizational
goals, it also should be satisfying for the workers.

Step V: Job Modification: help to make jobs more efficient,

more interesting, or less tiring through work simplification,
job enlargement, job rotation, job enrichment, the plan-
do-control approach, telecommuting, and alternative Job-
enrichment Methods.
62
 B. Developing Sources of Applications
▪ The second step in the selection procedure may include:

➢ Advertising in newspapers, journals, and other media;

➢ Job posting within the company;

➢ Listing needs with private or public employment

agencies;

➢ Campus and field recruiting, and

➢ Personal contacts with current and former employees.

▪ Sources of applicants thus fall into two categories:

1) Sources from within the company and

2) Outside sources 63
 Cont’d…..

1. Internal Sources of Application: A company can announce

job vacancies by:
▪ Job Posting
▪ Employee Referral Programs
Advantages
▪ Morale is boosted
▪ Strength and weakness of applicants are known
▪ Less expensive
2. External Sources of Applicants: the source of applicants
include:
▪ College and Universities
▪ Business and Technical Schools
▪ Employment Agencies
▪ Media Sources
Benefits
64
▪ Introduction of new ideas and philosophies
 C. Receiving Applications:
◼ Can be used as pre-employment interview.
◼ Is designed to give the manager personal data, information
on work experience, educational background and other
information useful in evaluating applicant’s qualification.
D. Screening Job Applicants
1. The Personal Interview: the most widely used screening tool.
▪ Patterned (structured) interview
▪ Planned (nondirective, unstructured)
▪ Panel or Board
2.Selection Test
▪ Achievement tests ; to measure acquired knowledge or skills.
▪ Aptitude tests: to gauge potential knowledge or skills.
▪ Vocational Interest tests: to measure person’s likes and dislikes
concerning various occupations, hobbies and so on
▪ Personality tests: to measure motivation and personality
characteristics 65
 E. Induction and Orientation
• Having made the hiring decision, the manager must establish an
environment in which the new employee will feel comfortable and
be productive.
• Thus the induction and orientation phase include:-
✓ Arranging financial aid for travel and moving expenses
✓ Completing Payroll
✓ Insurance
✓ Explaining company policies and practices
✓ Making introduction to colleagues
✓ Discussing specific job duties
✓ Arranging training programs (if required)

66
 Leading/ Directing

• It is concerned with the execution of plans

through organized action.
• It is also known as commanding or actuating.
• Motivating employees to achieve organizational
objectives.

67
 Motivation
• Motivation is the energizing of human behavior, or, simply
stated, the process of stimulating action.
Why focus on motivation?
▪ Company performance depends on individual and groups
▪ To understand how an organization functions, we must
understand why individuals behave like they do.
▪ Ease competitive pressure
▪ Important to develop talent pool that will be a
perpetual reservoir of skills and abilities to keep
them competitive on a long term basis.
Motivation improve productivity??????
68
 Motivation Models
The Traditional Model
• It is based on the following assumptions of human nature
(by McGregor) called Theory X:
✓ The average person has dislike of work and will avoid it
if possible.
✓ Most people must be pressurized, controlled, directed
and threatened with punishment.
✓ The average person wishes to be directed, wishes to
avoid responsibility, has relatively little ambition and
wants security above all.

69
The Human Relations Model
▪ Although money was considered the primary tool of
motivation, the importance of viewing workers as “whole
people” began to emerge. This new approach, called the
human relations model, emphasized two areas:

1. Making workers feel important

2. Allowing workers to satisfy their personal needs

through social interaction on the job

▪ Employee morale, adequate communication, and job

satisfaction became management concerns, and
importance of individual recognition became apparent. 70
The Human Resource Model
• The human resources Model of motivation recognizes
that people are motivated by a complex set of variables,
including recognition, social needs, money, achievement,
and a host of other factor
• It is based on Theory Y (Douglas McGregor) with the
following assumptions:
1. Expending physical and mental effort in work is natural as
it is in play or rest
2. External control and the threat of punishment are not the
only ways to achieve organizational goals.
71
 Cont’d…..

3. Commitment to objectives depends on the rewards

associated with achieving them
4. Under the right conditions, the average person learns
not only to accept but also to seek responsibility
5. Many people have a relatively high degree of
imagination, ingenuity and creativity in the solution of
organizational problems
6. The average persons intellectual potential is only
partially utilized under the conditions of modern
industrial life
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• Hertzberg’s Motivation-Hygiene Theory
Motivation Hygiene
(work satisfiers) (Work dissatisfiers)
◼Responsibility ◼Company policy

◼Achievement ◼Technical Supervision

◼Work itself ◼Interpersonal Relations
◼Recognition ◼Salary

◼Advancement ◼Working Conditions

73
 Leadership
• Leadership is the art of influencing others to act in
order to accomplish specific objectives.
• All groups need skilled leaders to accomplish their
objectives. This skill has three basic ingredients:
▪ The understanding that people’s motivation varies at
different times
▪ The ability to inspire, and
▪ The ability to create a climate for motivation

74
Traits of successful leaders – Stogdill and Ghiselli’s Studies

▪ Intelligence
▪ Self-actualization
▪ Supervisory ability
▪ Occupational achievement
▪ Self assurance
▪ Decisiveness
▪ Initiative

75
Contingency Approach
• Leadership effectiveness is influenced by a host of
situational factors that affect all managers.
• Characteristics of Subordinates
• Nature of tasks to be done
• Climate of the work Environment
• Perceived power of leaders
• Subordinates attitude towards Leaders

76
Contingency Model of Leadership
▪ Figure below depicts the range of a manager’s possible
leadership behavior.
▪ Each type of action is related to the degree of authority
the manager uses and to how much freedom his or her
subordinates have in making decisions.
▪ The approaches in the extreme left of the continuum
characterize the manager who maintains a high degree of
control.
▪ Those on the extreme right characterize the manager who
hand over most control
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 Contingency Models of Leadership

Subordinate-
Boss-Centered Centered
Leadership leadership

Use of authority
by the manager Area of freedom
for subordinates

Manager Manager
Manager Manager Manager Manager Manager
presents permits
makes sales presents presents defines
tentative subordinates
Decision & Decision ideas and problems gets limits asks
decision to function
Announces invites suggestions, groups to
subject to within limits
it questions makes make
change defined by
decision decisions superior

Figure: Continuum of Leadership Behavior (Tannenbaum and Schmidt) 78

Effective Communication in Management
Role of Communication in Management
• Communication is the transfer of information via an
understandable message from a sender to others. Hence it
is one of the manager’s most important tools.
• Communication has four functions in management
1. Disseminating information
2. Motivating and persuading/ encouragement
3. Promoting understanding
4. Aiding in decision making

Communicator Message Listener (Receiver)

(Sender)

Aristotelian Model of Communication 79

The Communication Process
▪ Phillip Lewis’s model, illustrated in figure below show how
communication occurs in a formal organization, and communication
is a complex system.
▪ Individuals can both send and receive information. Both the receiver
and sender have their own personal frame of reference.
▪ Each participant in the communication process operates in a
semantic net that allows him/her to interpret and to relate the
massage received.
▪ Each should also use his/her own communication skills, such as
reading, writing, and listing abilities, that either strengthen or lessen
understanding
▪ Verbal or non verbal cues trigger speaking or action responses.
80
 Cont’d…..

Noise
Frame of Frame of
reference reference
Message feedback
Sender Receiver
cue
Media Output
Input Person A Verbal or Nonverbal Person B
feedback
Cues Media
Receiver Sender

Communication Message feedback Communication

skills skills

Organizational Environment

Lewis’s Organizational Model of Communication

81
Organizational Communication
▪ In all organization, formal and informal information is transmitted
through different channels: Downward, Upward and Horizontal.
1. Downward Communication: occurs when information is
transmitted from higher to lower levels in an organization in the
form of :
• Job Instructions: explain how task is performed. They come from
written specifications, training manuals)
• Job Rationale Statement: explain to workers how their tasks
relate to other jobs in the company
• Policy and Procedure Statements: explain the employer’s
regulations and personal benefits provided.
• Feedback; includes messages that tell employees whether their
work is satisfactory. 82
2. Upward Communication: is the flow of opinions, ideas,
complaints, and other kinds of information from subordinates
up to managers in the form of:
▪ Opinions, Complains, Job related problems
▪ Ideas
▪ Feedback
▪ Report
3. Horizontal/lateral Communication: refers to the flow of
information among workers on the same organizational level,
and can be used for:
▪ Coordinating tasks
▪ Solving problems
▪ Sharing information
▪ Resolving conflict
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▪ Developing rapport/understanding among workers
Obstacles to Effective Communication; The overriding objective
of communication is to make the message understood, but the
obstacles and barrier inhibit the communication process;
1. Semantic Problems: problems caused when the intended
audience does not understand the use of words and phrase
2. Varying Perception:
3. Filtering
4. Poor listening habits
5. Lack of Credibility/ reliability
6. Low readership(circulation) Level
7. Impersonal/ unfriendly Correspondence
8. Psychological communication Barriers
9. Lack of Empathy
10. Patterns of Incorrect Evaluation
11. Defensive Behavior
84
TEN COMMANDMENTS FOR GOOD LISTENING
1. Stop Talking!
2. Put the talker at ease
3. Show the individual that you want to listen
4. Remove distractions
5. Emphasize with the person
6. Be patient
7. Hold your temper
8. Go easy on argument and criticism
9. Ask Questions
10. Stop Talking!

85
Nature gave man two ears but

only one tongue, which is the

gentle hint that he should listen

more than he talks.

86
 Controlling/Monitoring

• Controlling is the process by which managers

determine whether organizational objectives are
achieved and whether actual operations are
consistent with plans.

Steps in the Control Process

1. Establishing standards or targets
2. Measuring Actual Performance
3. Comparing Performance Against Standards
4. Taking Corrective Action

87
▪ Making sure that plans are being carried out and taking
corrective action when necessary are the aspects of a
manager’s job referred to as controlling.
▪ Essentially, control is concerned with making events conform
to plans.
▪ Control consists in verifying whether everything occurs in
conformity with the plan adopted, the instructions issued
and principles established
▪ The controlling function begins whenever plans are
activated.

88
1. Establishing Standards:
▪ The control process begins when standards are set.
▪ Standards are units of measurement established by
management to serve as benchmarks for comparing
performance levels.
▪ In virtually all cases, standards are attainable,
minimum levels of acceptable performance.
Methods of Setting Standards
Three different methods are used for establishing standards:
1. Judgmental
2. Statistical and Historical Data
3. Observation 89
Types of Standards
1. Performance Standards: deals with Quantity, Quality,
Cost and Time.
2. Corollary Standards: support a given level of
performance. These include minimum personnel
requirements and adequate physical resources.
3. Standards of Conduct: are moral and ethical criteria
that shape the behavioral climate of the workplace.
They originate from law, custom and religious beliefs.

90
2. Measuring Actual Performances
▪ The way that standards are expressed may define how the
should be measured.
▪ To make sure that performance levels are measured
accurately and correctly by any standard, managers
should pay close attention to:
1. The timeliness of the information: Control information is
useful only if it is timely. Managers must have accurate
information during each working day so that the have an
adequate basic for taking corrective action.

91
2. The appropriateness of the unit of measurement: Organizations
use several different measurement units to ensure that
performance is being gauged adequately. For example; profits,
productivity, and sales usually are based on quantitative
assessments
3. The reliability of the information: is its degree of accuracy.
Accurate information has consistent data and measures all
aspects of the situation.
4. The validity of the information: in some cases, an inadequate
sampling of performance results in unreliable, invalid data
5. The channeling of the information to the proper person:
control information should be channeled to the person who is
accountable for the operation and who has authority to take
corrective action.
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3. Comparing Performance against Standards
Analysis of variance from the standard which predicts the
future out comes in addition to determine error occurrence
by the use of control chart

4. Taking corrective Actions

– Standardize performance to increase efficiency
– Controls that safeguarding company assets from theft,
waste, etc.
– Standardize the product quality
– Set limits for delegated authority
– Controls job performance of all employees
– Controls Production forecasts and budget
– Keep the firms plans and program in balance
– Motivate people to contribute their best effort

93