RIFT VALLEY UNIVERSITY

BISHOFTU CAMPUS

Department of Business
Manegement
By
Lemma Gemechu (Instructor)
COURSE OBJECTIVE
General Objective: - To give general understanding to
students about the overall features of management and help
understand specially the origin and contents of management.
And clearly identify the managerial function as well
Specific objectives:-
At the end of the course the student will be able to:-
 Define the term management, basic concepts and principles
of management.
 Explain the general overview of management in relation to
its importance, roles, skills and universality
 Acquire sound understanding of the nature and practice of
management.
 Develop a comprehensive understanding of basic concepts
of management functions 2
COURSE OUTLINE
CHAPTER ONE: FUNDAMENTALS OF MANAGEMENT
1. Meaning and definition of management
2. Functions of management
3. Roles of management
4. Levels of management and types of managers
5. Managerial skills.
6. Management: art or a science.
CHAPTER TWO: DEVELOPMENT OF MANAGEMENT THOUGH
2.1 The early management pioneers
2.2 Classical theory of management
2.3 Contribution made decision making
CHAPTER THREE: PLANNING AND DECISION MAKING
3.1 Meaning and definition of planning
3.2 Organizational objective
3.3 Planning process
3.4 Types of plan
3.5 managerial decision making

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•CHAPTER FOUR: ORGANIZATION
• 4.1 An over view of organizing
• 4.2 The ten principles of organization
• 4.3 Important elements of organization process
• 4.4 Delegation
• 4.5 Centralization and decentralization
• 4.6 Forms of organization
•CHAPTER FIVE: STAFFING
• 5.1 Definition of staffing
• 5.2 The legal environments of staffing
• 5.3 The staffing process
•CHAPTER SIX: LEADING
• 6.1 The meaning of leadership
• 6.2 Leadership theories
• 6.3 Leadership styles
• 6.4 Motivation
• 6.5 Theories of motivation
• 6.6 Communication in organization
•CHAPTER SEVEN: CONTROLLING
• 7.1 The meaning of controlling
• 7.2 Controlling process
• 7.3 types of controls

4
 CHAPTER ONE
FUNDAMENTALS OF MANAGEMENT
INTRODUCTION
Management is a vital aspect of the economic life of man, which is an
organized group activity. A central directing and controlling agency is
indispensable for a business concern. The productive resources – material,
labor, capital etc. are entrusted to the organizing skill, administrative ability
and enterprising initiative of the management.
Thus, management provides leadership to a business enterprise. Without able
managers and effective managerial leadership the resources of production
remain merely resources and never become production. Under competitive
economy and ever-changing environment the quality and performance of
managers determine both the survival as well as success of any business
enterprise. Management occupies such an important place in the modern
world that the welfare of the people and the destiny of the country are very
much influenced by it.

5
•1.1 Meaning and definition of management
•There are many definitions of management but most perceptive managers are convinced that
it is an organized effort of people whose purpose is to achieve the objectives and goals of an
organization. To gain a better understanding of management, let’s review the ideas and
views expressed by academicians and practitioners.
•Definition
A, Management is an activity which everyone undertakes to some extent as they manage
their daily lives. It is also an activity which shapes the performance of organizations.
B, Management involves coordinating and overseeing the work activities of others so that
their activities are completed efficiently and effectively.
C, Management is the art of securing maximum results with the minimum of efforts so as
to get maximum prosperity and happiness for both employer and employee and give public
the best possible service”.
D, Management is a distinct process consisting of planning, organizing, staffing, leading
and controlling utilizing both in each science and art and followed in order to accomplish
predetermined objectives of the organization”.

6
 What is management?
 Management is the process of decision making/problem solving
• Emphasis is on making proper decision
• Hence, for making proper decision:
• Identify the real problem
• Study the problem
• Identify possible/alternative solutions
• Select the best possible/ alternative solution
 Management is the process of getting things done through the efforts of people and other
resources.
• Emphasis on achieving goals/objectives with efficient and effective use of
organizational resources
(i.e, based on managerial concerns)
 Effectiveness
• Doing the right things
• Attaining organizational goals/objectives
 Efficiency
• Doing thing right
• Getting the most output for the least inputs

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 FUNDAMENTALS OF MANAGEMENT

• Efficiency & Effectiveness in Management

Efficiency Effectiveness

Resource usage Goal attainment

Low Waste High

Attainment

8
 FUNDAMENTALS OF MANAGEMENT

• Management strives for;

Low resource waste (high efficiency)
High goal attainment (high effectiveness)
 Thus, management implies that:
• Organization depend on performance of
people for achieving their mission, goal &
objectives
• Organizational activates require human
effort and capabilities
• Exercise: describe organizational resources
9
FUNDAMENTALS OF MANAGEMENT

10
•1.2. Functions of management
There are five functions of managers:
•Planning, Organizing, Staffing, Leading, and Controlling.
•The functions of managers provide a useful structure for
organizing management knowledge.

A. Planning: The function of management of systematically

making decisions about the goals to be achieved and activities
or actions needed to achieve those goals that an individual, a
group, a work unit, or the overall organization will pursue in
the future.

11
B. Organizing: “The management function of assembling and
coordinating human, financial, physical, information and other resources
needed to achieve organizational goals.”

C. Staffing: The management function that involves filling and keeping

filled, the positions in the organization.

D. Leading: The management function that involves the manager's

efforts to stimulate high performance by employees and includes
directing, motivating and communicating with employees, individually
and in groups.

E. Controlling: The function of management of monitoring progress and

making needed changes to make sure that the organizational goals are
achieved. 12
1.3 Roles of management
Management is in every type of organization.
All managers perform some of the same basic
functions to make sure that their business runs
smoothly.
The idea behind management is that you facilitate
everyone working toward common goals.
Keep in mind that various goals should satisfy the
organization as a whole.
For example, you should want to make a profit, but
also want your customers to be happy.
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• A manager should strive hard to reach all objectives of an
organization. Objectives can range from promoting current
employees to changing the way that a function of your
business operates. It is management’s job to help evaluate all
of the different objectives and keep them in balance. There
are many opposing views that have a say in the organization,
and it is important to be as reasonable as possible with all
groups. Various groups that could be in competition are
consumers, employees, and government regulation. You need
to find a way to balance various needs while realizing that not
everyone can be made happy.
•Management expert and professor, Henry Mintzberg, argued
that there are ten primary roles or behaviors that can be used to
categorize a manager's different functions.
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The 10 roles are then divided up into three categories, as follows:

15
•Interpersonal category
•The roles in this category involve providing information and ideas.
1. Figurehead - As a manager, you have social, ceremonial and legal
responsibilities. You're expected to be a source of inspiration. People look up
to you as a person with authority, and as a figurehead.
2. Leader - This is where you provide leadership for your team, your
department or perhaps your entire organization; and it's where you manage
the performance and responsibilities of everyone in the group.
3. Liaison - Managers must communicate with internal and external contacts.
You need to be able to network effectively on behalf of your organization.

Informational category
•The roles in this category involve processing information.
1. Monitor - In this role, you regularly seek out information related to your
organization and industry, looking for relevant changes in the environment.
You also monitor your team, in terms of both their productivity, and their
well-being. 16
2. Disseminator - This is where you communicate potentially useful information to
your colleagues and your team.
3. Spokesperson - Managers represent and speak for their organization. In this role
you're responsible for transmitting information about your organization and its goals to
the people outside it.

Decisional category
•The roles in this category involve using information.
1. Entrepreneur - As a manager, you create and control change within the
organization. This means solving problems, generating new ideas, and implementing
them.
2. Disturbance Handler - When an organization or team hits an unexpected roadblock,
it's the manager who must take charge. You also need to help mediate disputes within it.
3. Resource Allocator - You'll also need to determine where organizational resources
are best applied. This involves allocating funding, as well as assigning staff and other
organizational resources.
4. Negotiator - You may be needed to take part in, and direct, important negotiations
within your team, department, or organization.
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•Management roles refer to specific categories of managerial
behavior. Overall there are ten specific roles performed by managers
which are included in the following three categories.
1) Interpersonal roles include figurehead, leadership, and liaison
activities.
2) Informational roles include monitoring, disseminating, and
spokesperson activities.
•3) Decisional roles include entrepreneur, disturbance handler,
resource allocator, and negotiator.

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•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 and status enjoyed by
any managerial position.

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1.4 Levels of management

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The levels of management can be classified in three broad categories: -
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.
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.
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.
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•1.5 Managerial skills
•Management is a challenging job. It requires certain skills to
accomplish such a challenge. Thus, essential skills which every
manager needs for doing a better management are called as
Managerial Skills.
•According to Professor Daniel Katz, there are three managerial
skills, viz.,
• Conceptual Skills,
• Human Relations Skills, and
• Technical Skills.
•According to Prof. Daniel Katz, all managers require above three
managerial skills. However, the degree (amount) of these skills
required varies (changes) from levels of management and from an
organization to organization. 22
The above picture or diagram shows the managerial skills which are
required by managers working at different levels of management. The
top-level managers require more conceptual skills and less technical
skills. The lower-level managers require more technical skills and fewer
conceptual skills. Human relations skills are required equally by all three
levels of management.

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•1. Conceptual Skills
•Conceptual skill is the ability to visualize (see) the organization as a
whole. It includes Analytical, Creative and Initiative skills. It helps the
manager to identify the causes of the problems and not the symptoms. It
helps him to solve the problems for the benefit of the entire organization.
It helps the manager to fix goals for the whole organization and to plan
for every situation. According to Prof. Daniel Katz, conceptual skills are
mostly required by the top-level management because they spend more
time in planning, organizing and problem solving.
•2. Human Relations Skills
•Human relations skills are also called Interpersonal skills. It is an
ability to work with people. It helps the managers to understand,
communicate and work with others. It also helps the managers to lead,
motivate and develop team spirit. Human relations skills are required by
all managers at all levels of management. This is so, since all managers
have to interact and work with people. 24
•3.Technical Skills
•A technical skill is the ability to perform the given job. Technical skills help
the managers to use different machines and tools. It also helps them to use
various procedures and techniques. The low-level managers require more
technical skills. This is because they are in charge of the actual operations.
•
•1.6 Management: art or science
•The concept of management is universal and very old. That is why different
views have been expressed about its nature by different writers from time to
time. The continuous and rapid development of management principles and
practices in organization has changed the nature of management. The main
points of view about the nature of management are given below:

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•Management as an Art, Science or Both

•A lot of controversy arises whether management is an art or science or both. It is said

that the management is the oldest of arts and youngest of science. This explains the
changing nature of management. But to have an exact answer to this question, it is
necessary to understand both these aspects separately and combined, as given below:

•Management as an Art:

•Art refers to the way of doing specific things; it indicates how an object can be achieved.
In the words of George R. Terry, "Art is bringing about of a desired result through the
application of skill." Art is, thus, skilful application of knowledge which entirely depends
on the inherent capacity of a person which comes from within a person and is learned
from practice and experience. In this sense, management is certainly an art as a manager
uses his skill, knowledge and experience in solving various problems, both complicated
and non-complicated that arise in the working of his enterprise successful. In the words of
Ernest Dale, "Management is considered as an art rather than science mainly because
managerial skill is a personnel possession and is intuitive."
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Management as a Science:

Science may be described as a systematized body of knowledge based on

proper findings and exact principles and is capable of verification. It is a
reservoir of fundamental truths and its findings apply safely in all the
situations. In this sense, management is a science as it has also developed
some systematized knowledge. Like other sciences, management has also
developed certain principles, laws, generalization, which is universal in
nature and are applicable wherever the efforts of the people are to be
coordinated. But management is not as exact science as other physical
sciences like physic, chemistry, biology, astronomy etc. The main reason
for the inexactness of science of management is that it deals with the
people and it is very difficult to predict their behaviour accurately. In this
way, management falls in the area of 'social sciences'. Thus, it is a social
science.
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•Conclusion- Management is Both an Art and Science

•From the above study, we conclude that management is an

art and science both. "Management is the art and science
of preparing, organizing and directing human efforts to
control the forces and utilize the material of nature for the
benefit of men.”Thus, it has now been accepted that
management is an art as well as science. It has the
elements of both arts and science. In the words of Dean
Stanley, "Management is a mixture of an art and science -
the present ratio is about 80% art and 20% science."

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 CHAPTER TWO
SCHOOLS OF MANAGEMENT THOUGHT
•There are different schools of management thought which evolved in historical
sequence; each school of management though contributes to the effectiveness of
management activities by adding new knowledge on the existing practices.
2.1. Evolution of management as a field of study
The reason for the evolution of management could be:-
- Organizational growth
- Management’s increasing influence on the economy.
- The living standard of people.
Moreover, many individuals and writers have contributed for the evolution of management
as a field of study.
Contributors to the evolution of management are comprised of three groups. They are:
1. Practicing executives: - are mangers that described their own experience and tried to
organize the principles they believed could be applied in similar situations.
2. Social & behavioral scientists: - individuals who view the management of
organization as an extremely important social phenomenon using, scientific method.
3. Engineers, Mathematicians, Accountants, Economists, Psychologists, Lawyers,
Anthropologists philosophers etc... Also have contribution to the discipline of 29
•Historical Forces Shaping Management
•The three major forces that affect management are social, political and legal, and
economic forces. In addition, technical or technological force is also a factor that
affects management.
•1. Political & Legal force: - it refers to the influence of political and legal forces
on people & organization.
• Government may intervene in the environment by resource allocation and
policy making and implementation etc. So the political and legal intervention
includes.
• -Legislations
• - Decrees of regulatory agencies.
• - Foreign Policy
• - Tariffs etc all of which provide opportunities and constraints to organization.

30
2. Economic Forces: - It deals with those forces that affect the availability,
production, & distribution of a society’s resources among competing users.
3. Social Forces: - refers to those aspects of a culture that guide and
influence relationships among people- their values, needs, and standards of
behavior.
4. Technological Forces: - it refers to the development of in the external
environment. This affects the organization in two ways.
A. It can influence in an organizations use of techniques in performing their
activities (affect the process).
B. It may affect the characteristics of organization product or service.
2.2. Approaches to Management thought
There are six approach of management thought
C. Classical approach
D. Humanistic Perspective
E. Quantitative approach ( Operation research theory approach)
F. System approach
G. Contingency approach 31
A. Classical Approach
•The term classical means something traditional or long established. In this
approach, formerly the management process was analyzed in terms of the
method used by the workers at the lower level of the organization. But later the
theories expanded to consider what managers do; the forces that shape what
they do and focusing on management function as well as principles of
scientific management which was aimed at improving the efficiency and
productivity of workers.
• 1. Scientific Management
•The most important contributors of this approach where Frederick W. Taylor,
Henry Gantt, Frank and Lillian Gilberth. Etc.
•In this theory the primary goal was efficiency of labour or finding out one
best way of doing an activity, which they think reduces efficiency of labour
and loss of resource.

32
•The main points are:
- It advocates the importance of management as a means of
increasing productivity thorough division of work and expertise.
- The importance it gives to work design encouraged
managements to seek one best way of getting work done.
- It provides a rational approach to solve organizational problems
and pointed the way to the professionalization of management.
- The efficiency method (techniques) of this approach increase
awareness as to the efficient and rational movement of tools and
physical materials to accomplish tasks.
- Scientific selection and development of workers has created
recognition as to the importance of both ability and training in
increasing worker effectiveness.

33
•2. Classical Administrative Management Approach
•It is the 2nd category of classical theory and was
developed by Henry Fayol. He concentrated on how to
manage top management. He divided industrial
activities in to six. These are: - Technical, Financial,
Accounting, Commercial, Security and managerial
activities.
•And he also gave due attention to management
activities which he called managerial functions
(planning organizing, commanding / directing,
coordinating and controlling.)

34
•3. Bureaucratic Organization Theory
•Max Weber (1864-1920) produced most of the concepts for Bureaucratic
organizations in the Theory of Social and Economic organizations.
•Weber believed that
– Organizations are better managed on an impersonal and rational basis. This form of
organization is called Bureaucracy.
– Organizations based on rational authority would be more efficient and adaptable to
change because continuity is related to formal structures and positions rather than
individuals
•Characteristics of Bureaucracy
• Division of labor with Clear definitions of authority and responsibility
• Positions organized in a hierarchy of authority
• Personnel are selected and promoted based on technical qualifications
• Administrative acts and decisions recorded in writing
• Management separate from the ownership of the organization
• Managers subject to rules and procedures that will ensure reliable predictable
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behavior
•Neoclassical management theory
•Neoclassical theory/ approach
Ü Is built on the bases of classical theory. It is the modified, improved,
•and extended of the classical theory.
•Main features
•Ü Recognizes organization is a social system
•Ü The social environment effects people in the organization & vice vers
a
•Ü In an organization both formal & informal groups exist and influence e
ah
•others work
•Ü Recognizes the existence of conflict between organizations interest &
individual interest
•Ü Man is independent & his behavior can be predictable
•Ü Man has many needs & motives to work & to fulfill these needs
•Ü Man is always rational
•Ü Communication is very important in any organization
•Ü Team work plays an important part in achieving co-
ordination & integration in an organization
•Contributions
•Ü Management must get work done through others
•Ü Management is really applied behavioral science because managem
ent must
36
•motivate, lead & understand interpersonal relations
 B. Humanistic Perspective
o Humanistic perspective is an approach to psychology
that emphasizes empathy and stresses the good in
human behavior.
•Politics and social theory, this approach calls for
human rights and equality.

37
 •Has three branches
• 1. The human relation approach and
• 2. Human Resources Perspective
• 3.The behavioral science approach
•1. Human Relations Movement
•The Human Relation approach to management emphasized satisfaction of employees’ basic
needs as the key to increased worker productivity. Hence human relations is considered to be
the best approach for increasing productivity
•The famous Hawthorne Studies* (1927-1933), despite its controversies , showed that
workers productivity increased when managers treated them in a positive manner. Not money
but good human relations that create higher productivity.
•Thus the study supports the human relations approach which suggest that productivity
increases when mangers treat their employees in a good way.
•2. Human Resource Perspective
•The Human Resources Perspective combines prescriptions for design of job tasks with
theories of motivation. It suggests jobs should be designed to meet higher-level needs by
allowing workers to use their full potential.
•Abraham Maslow ( 1908-1970) and Douglas McGregor (1906-1964) were the main
contributors of the Human Resources perspective.
•Maslow hierarchy of needs begins with physiological needs, and progress to Safety,
38
belongingness, esteem , and finally self-actualization
39
•3. Behavioral Sciences Approach
•This approach applies social science in an organizational
context, drawing from economics, psychology, sociology,
anthropology, and other disciplines
– Understand employee behavior and interaction in an
organizational setting
– Use of behavioral science techniques in employee
recruitment and selection , testing , and training of employees
– Use of Organization Development (OD) technique based on
such concepts as self- managed teams , corporate culture ,
management by walking, matrix organizations, learning
organizations

40
•C. Quantitative Approach
•A management perspective which emerged after World War II and applied mathematics,
statistics, and other quantitative techniques to managerial problems.
•Managerial problems during that time involves moving massive amount of materials , and
large number of people quickly and efficiently
•Management sciences include
 Operations Research – mathematical modeling
 Operations Management – specializes in physical production of goods or services
 Information Technology – reflected in management information systems
•D. System Approach
•A system is a set of interrelated parts that function together as a whole to achieve a
common purpose.
– Open system is a system that interacts with the external environment. All organizations are open
systems
– Closed system is that does not interact with the external environment. In the classical and
management perspectives , organizations are assumed to be closed systems.
– Subsystems parts of a system that depend on one another for their functioning.
– Synergy is the concept that the whole is greater than the sum of its parts. Each functional units
or subsystems in organizations need to work closely to accomplish organizational goals.

41
42
•The systems view of organizations
•E. Contingency approach
•This approach implies that there is no one best way to management. In other words different
situation calls for different approaches and there fore there is no one best way of solving
problems for all king of situation. In applying this approach managers need to examine a
given situation and adapt to fit a given context.
•In classical perspectives management concepts were thought to be universal.
•It assumed that what works well in one organization would also work in another organization.
•In business education , the case view stress that each organization to be unique and
management principles are not universal. Accordingly managers learn about management by
experiencing a large number of case problem situation.
•The contingency view assumes that neither the universal view nor the case view to be entirely
correct
•The contingency view stresses that there exist some contingencies or variables in a given
organization situation that help managers to identify and understand situations.
•Important contingencies or variables that managers need to consider include the industry,
business, technology, and the general and task environments.

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•F. Total Quality Management ( TQM)
•W. Edward Deming is the father of the quality movement. His
ideas were initially laugh at in USA but the Japanese embraced
and modified them for their industries to become world powers.
•TQM is a concept that focuses on managing the total
organization to deliver quality to customers.
•Four significant elements of TQM are
– Employee involvement: participation of all employees in quality
improvement companywide
– Focus on the customer: meeting customers’ needs and expectations
– Benchmarking: finding out how others do better and try to imitate
or improve
– Continuous improvement: small and incremental improvement in
all areas
• 44
 CHAPTER THREE
PLANNING AND DECISION MAKING

3.1 Nature and importance of planning

•All managers share in the execution of the management functions – planning,
organizing, staffing, directing & controlling.
•An organization can succeed in effective utilization of its resources when its
management decides its objectives & methods of achieving them.

•Planning is the process of determining how the organization can get where it
wants to go; outlining the activities that are necessary to achieve organizational
goals. Planning involves determination of objectives/ goals; establishment of
overall strategy; formulation of programs; maps the courses of action for their
attainment; development of schedules, timing of action & assignment of
responsibilities for their implementation.
•Planning is a process of setting organizational objectives and choosing in
advance the most suitable means for achieving those objectives. Planning
concerned with ends (what is to be done) and with means (how it is to be done).45
•Planning answers six basic questions in regard to any intended activity.
•The „what‟ or what to do
 The goal that we want to achieve. It may be long term or short term.
•
•The „when‟ or when to do
 Is the question of timing? Each long term goal may have a series of short
term goals that must be achieved before the long term can be achieved.
•
•The „where‟ or where to do
 the place at which the plan is put into practice.
•
•The „who‟ or who does it
 The individual/ unit supposed to undertake specific tasks. It asks which
specific people will perform specific tasks.
•
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The „how‟ or how it is done or by whom it is done
 The strategy/ method for achieving the goal. It describes what specific steps are
to be taken and in what kind of sequence.

The „how much‟ or how much is required to do

 Concerns with the expenditure of resources that are determined to be essential
to reach goals.

Planning is the process of preparing for change & the dynamics of the
environment. Planning bridges the gap from where we are, to where we want to go.

Planning is exercised for several reasons or advantages. Among them the most one
are:
1. To minimize risk & uncertainly.
2. For better coordination
3. To focus attention on original goals
4. To facilitate control
5. To promote forward thinking

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•3.2 Goals and plans
•
• Goal - A desired future state that the organization attempts to
realize.
•
•Plan - A blueprint specifying the resource allocations, schedules,
and other actions necessary for attaining goals
•Planning – determining the organization’s goals and the means
for achieving them
– the most fundamental management function
– the most controversial management function
•Levels of goals /plans in organizations
– Mission statement
– Strategic goals/plans
– Tactical goals/plans , and
– operational goals/plans 48
 3.3 Levels of goals /plans External Message
Legitimacy for
investors, customers,
4.2 Levels of Goals /Plans suppliers, community

Mission
Statement

Strategic Goals/Plans Internal Message

Senior Management Legitimacy,
(Organization as a whole)
motivation,
guides,
Tactical Goals/Plans
Middle Management rationale,
(Major divisions, functions) standards

Operational Goals/Plans
Lower Management
(Departments, individuals)

49 49
•Mission - organization’s reason for existing
•Mission Statement
– Broadly states the basic business scope and operations that distinguishes
it from similar types of organizations
– May include the market and customers
– Some may describe company values, product quality, attitudes toward
employees
•Strategic Goals
• Where the organization wants to be in the future
• Pertain to the organization as a whole
•Strategic Plans
• Action Steps used to attain strategic goals
• Blueprint that defines the organizational activities and resource
allocations
• Tends to be long term
50
•Tactical Goals
- Apply to middle management
- Goals that define the outcomes that major divisions and
departments must achieve
•Tactical Plans
- Plans designed to help execute major strategic plans
- Shorter than time frame than strategic plans

•Operational Goals
- Specific, measurable results
- Expected from departments, work groups, and individuals
•Operational Plans
- Organization’s lower levels that specify action steps toward
achieving operational goals
- Tool for daily and weekly operations
- Schedules are an important component. 51
•3.4 Types of planning
•Among the different planning types or planning approaches managers use ,
the following five are common:
A. Management by Objective ( MBO)
B. Single-use plans
C. Standing plans
D. Contingency plan
E. Crisis management planning

•A) Management By Objective ( MBO)

•MBO is a method of management whereby managers and employees

defines goals for every department , and person and use them to monitor
subsequent performance.

52
 Model of the MBO Process

Step 1: Set Goals Step 2: Develop Action Plans

Corporate Strategic Goals
Departmental goals
Action Plans
Individual goals

Review Progress

Step 3:
Review Progress

Take Corrective Action

Appraise Performance
Step 4: Appraise Overall
Performance
53
53
•Benefits and Problems of MBO
•Benefits of MBO
• Manager and employee efforts are focused on activities that will lead to
goal attainment
• Performance can be improved at all company levels
• Employees are motivated
• Departmental and individual goals are aligned with company goals
•Problems with MBO
• Constant change prevents MBO from taking hold
• An environment of poor employer-employee relations reduces MBO
effectiveness
• Strategic goals may be displaced by operational goals
• Mechanistic organizations and values that discourage participation can
harm the MBO process
• Too much paperwork saps MBO energy

54
B) single-use plans

Single-Use Plans are planned to achieve a set of goals that are unlikely to be
repeated in the future. Single use plans include programs and projects.
• A program is a complex set of objectives and plans to achieve an
important, one-time organizational goal
• A project is similar to a program, but generally smaller in scope and
complexity.

 Programs:

Programs are a relatively broad set of activities designed to accomplish a

particular set of goals. They are complex and encompass goals, policies,
procedures, rules, task assignments, steps to be taken, resources to be employed,
and other elements necessary to carry out a given course of action; they are
supported by budgets. Programs may be of various size & duration.

55
• Projects

•Projects are a part of a general program and direct the efforts

of individuals or work groups towards the achievement of well
defined goals. They are typically less comprehensive &
narrower in focus than programs; and usually have
predetermined target dates for completion. Project is a subset
of a specific program. It is a smaller portion of a program.
Projects are connected with a major program but a project can
be handled by itself.

56
 Budgets
Budget is the resources required in numerical terms. It is referred as a
numerated/ numberized program.
Budget is a fundamental planning instrument in companies that deals
with the future allocation and utilization of various resources to
different organizational activities over a given time period.
Budget can be expressed in
 Financial terms
 Labor units
 Products/ unit of product
 Machine hours or in any other numerically measured term

Budget is necessary for control; and serves as a benchmark for

controlling.

57
•C) Standing plans
•
•Standing plans are ongoing plans that are use to provide guidance for
tasks performed repeatedly within the organization including employee
illness, absence ,discipline , hiring , etc… Major types of standing plan
include
• A policy is a general guide to action and provides direction for people within
the organization
• Rules describe how a specific action is to be performed
• Procedures define a precise series of steps to be used in achieving a specific
job.
•Purpose or mission
•They are used interchangeably. Purpose or mission indicates the basic
function or task of an enterprise. Every organization to be meaningful
should have a purpose/mission. E.g. the purpose of a university is
teaching & research. 58
•Goals or objectives:
•Objectives or goals are the end points towards which all management
functions aimed.
•Strategies:
•Strategies are ways or means to achieve the established objectives.
They are major courses of action that the organization plans to take in
order to achieve objectives. Every objective at least must have one
strategy to accomplish every objective.
•
•Policies:
•Policies are general statements or understandings that guide or channel
thinking and action in decision making. They govern how certain
organizational situations will be addressed. They provide guideline to
managers who must make decisions about circumstances that occurs
frequently within the organization.
• 59
•Procedures:
•Procedures outline chronological sequences of required actions/
activities. They are sequentially arranged rules or actions that need to be
done in orderly manner to complete recurring tasks.
•Procedures are guides to action rather than to thinking and they detail
the exact manner in which certain activities must be accomplished.
•Procedures found in every parts of the organization. Like plans, they
exist in a hierarchy. They help the implementation of policies. Procedures
are more specific & action oriented than policies. They are designed to
give explicit instructions on how to complete a recurring task. e.g. the
university handout book.
•
•Methods
•Methods are more detailed than procedures. Procedure shows a series of
steps to be taken where as a method is only concerned with a single
operation, with one particular step, and tells exactly how this particular
step is to be performed.
• 60
Rules:
Rules are the simplest and strictest type of standing plan found in
organizations. They provide detail & specific regulations for action, and
reflect managerial decisions that certain actions must or must not be
done. Rules are different from policies & procedures. Rules also serve as
guidelines, but allow no discretion in their application; allow no
deviation from the stated course of action. A procedure might be looked
upon as of rules but a rule may or may not be a part of procedure. e.g.
“No smoking” is a rule unrelated to any procedure.
Rules are already decided measures that are applied in response to a
certain action. And they are pre-decided actions by top level managers.
Employees don't have right to modify or change rules by themselves.

Rules, procedures & methods, by their nature, are designed to repress

thinking; we should use them only when we do not want people in an
organization to use their discretion.

61
D) Contingency plan

Contingency plans are plans that define the organization’s response to

specific situations, such as emergencies, setbacks, and unexpected
conditions.

To develop contingency plans, managers need to identify uncontrollable

factors such as
 Economic turndowns
 Declining markets
 Increases in costs of supplies
 Technological developments
 Safety accidents

In order to minimize the impact of such uncontrollable Factors ,

managers need to forecast a range of alternative responses to most-likely
high-impact contingencies.
62
E) Crisis management planning

Crisis Management Planning: is a planning for events that are unexpected, so

sudden and devastating and requiring immediate response. The three stages of
crisis management are prevention , preparation , and containment.
– Prevention
• Build trusting relationship with key stakeholders to respond more
effectively
• Open communication
– Preparation involves
• Designating a crisis management team and a spokesperson
• Creating a detailed crisis management plan
• Setting up an effective communications system
– Containment
• Getting the awful truth out
• Responding to the physical safety , and emotional needs of
employees, customers and the public
• Providing a sense of safety and hope

63
3.5 The planning process
The planning process indicates the major steps taken in planning. And
generally there are 10 steps in planning process
Step 1: Understanding the existing situation
Awareness to the external environment to the organization is great important
in planning to identify opportunities (O) & threats (T) and identify strength
(S) & weaknesses (W) of an organization.

Step 2: Forecasting
Forecasting is assumption what the future looks like. To decide where one
wants to go, it is necessary to have information about what the future looks
like. Planning is deciding what is to be done in the future. The future is full of
uncertainties; the manager must make certain assumptions about it in order to
plan properly. These assumptions are based on forecasts of the future.

64
Step 3: Establishing objectives
Objectives established for the entire enterprise and then for each subordinate work
unit. They specify the expected results and indicate the end points what is to be
done, where the primary emphasis to be located, & what is to be accomplished by
the network of strategies, policies, procedures, rules, budgets, & programs.
Step 4: Determining the alternative courses of action
Determining the alternative courses of action is searching for & examining
alternative course of action (strategies), especially for those not immediately
apparent. The more common problem is not finding alternatives but reducing the
number of alternatives.

Step 5: Evaluating alternative courses of action

Evaluating alternative courses of action is assessing the alternatives by weighing
them in light of premises and goals. . It is seeking out alternative courses and
examining their strong & weak points.
Step 6: Selecting a course of action
Selecting a course of action is the point at which the plan is adopted. It is the real
point of decision making.
65
Step 7: Formulating derivative plans
Derivative plans are those which support the basic or main plan.
Step 8: Numberizing plans by budgeting
After decisions are made & plans are set, the final step is giving them meaning.
Budgeting is to numberize plans by converting them into budgets. The
organization’s budget represents the sum total of income & expenses. If done
well, budgets become a means of adding together various plans & also set
important standards against which planning progress can be measures.
Step 9: Implementing the plan
After selecting optimum alternative, the manager has to develop an action plan
to implement it.
The manager must decide these issues
o Who will do what
o By what date will the tasks be initiated & completed
o What resources will be available for the process (human & material)
o How will the plan be evaluated
o What reporting procedures are to be used
o What type & degree of authority will be granted to achieve these ends

66
Step 10: Controlling & evaluating the results
Once the plan is implemented, the manager must monitor the progress,
i.e. evaluate the reported results, and make any modifications
necessary. Plans have to be modified because the environment is
constantly changing. Modification is needed because plans are not quite
perfect when they are implemented.
3.5 Decision making
Decision making is defined as a rational choice among alternatives.
“If there is no option, there is no choice & no decision.” In decision
making, manager is making judgments – reaching conclusion- from a
list of known activities. Decision making is universal. It is the main
part of all managers job. A management makes decisions constantly
while performing management functions. Decision making is not a
separate, isolated function of management, but the common core to
other functions.
Decision - choice made from available alternatives.

Decision making is the process of identifying problems and

opportunities and resolving them.
67
Types of decisions

Two categories of decisions: programmed and non-programmed decisions

• Programmed Decisions
_ Programmed decisions are decision managers make in
response to repetitive & routing problems. If a particular situation occurs
often, managers will develop a routine procedure for handling it.

– Situations occurred often enough to enable decision rules to be

developed and applied in the future
– Made in response to recurring organizational problems
• Non-programmed Decisions
– in response to unique, poorly defined and largely unstructured, and
have important consequences to the organization.
– Non – programmed decisions are decisions made for novel and
unstructured problems.

68
The decision making process
Decision making is a process which an important part of a manager’s job. It is
necessary to find anything that can improve the quality of decision making. The
effective measure is to follow conscious, rational decision making process. The
decision making process are logical & simple and all are essential to the process.
Decision making process has seven (7) steps.
Step 1. Define the problem
Defining the problem is the critical step. There is a particular problem you have to
solve. The accurate definition of a problem affects all steps that follow. If the
problem is inaccurately defined, every step in the decision making process will be
based on that incorrect point.

Step 2. Identify the limiting or critical factors

Once the problem is defined, the manager needs to develop the limiting or critical
factors of the problem. Limiting factors are the constraints those rule out certain
alternative solutions. The common limitations are time, resources, personnel,
money, facilities, and equipment. They narrow down the range of possible
alternatives.

69
Step 3. Develop potential alternatives
At this point, it is necessary to look for, develop & list as many possible
alternative solutions to the problem as you can. These alternatives should
eliminate, correct, or neutralize the problem.
Step 4. Analyze the alternatives
This step is to decide the relative merits and demerits of each of the alternatives. If
the alternatives conflict with critical (limiting) factors, they must be automatically
discarded. Depending on the type of problem, the potential solutions developed.
The manager might need to make a more through analysis by applying specific
decision making aids.
Step 5. Select the best alternative
Here all the alternatives are listed along with their corresponding advantages and
disadvantages. To select the alternatives, you must find a solution that appears to
offer the fewest serious disadvantages & the most advantages. Take care not to
solve one problem & create another with your choice.

70
Step 6. Implement the solution

Managers are paid to make decisions and to get results from these
decisions. A decision has to be put into effect. Everyone involved with it
must know what s/he must do; how to do it; why & when.
A good alternative that half–heartedly applied by uncommitted person will
often create problems. Like plans, decisions need effective implementation
to yield the desired results. People must be sold on their roles & must
know exactly what they must do & why. Programs, procedures, rules or
policies must be thoughtfully put into effect.
Step 7. Establish a control & evaluation system.

This is the final stage of decision – making process. Ongoing actions need
to be monitored.

71
Managerial decision making process

72
 Chapter Four
Organizing
Organizing is the process of identification, classification
and grouping of tasks that are necessary to achieve
objectives and assigning of work to individuals and
designing hierarchy of decision making relationship.
Organizing is a managerial function; it leads to the
creation of the formal organization and results in an
organization structure.

Organization is a group of people working together in

some type of coordinated efforts to achieve commonly
stated objectives. It is the end result of organizing process
73
4 .1 Organizing the vertical structure

A) Definition of terms
• Organizing is the deployment of organizational resources to achieve
strategic goals.
• Organizational structure is the framework in which the organization
defines
– how tasks are divided,
– resources are deployed, and
– departments are coordinated
• The set of formal tasks assigned and formal reporting relationships
provides a framework for vertical control of the organization.
• Organizational chart is the visual representation of an
organization’s structure.

74
B) Features of Vertical structures

Important features of a vertical organization includes work specialization ,

chain of command , span of control , centralization , decentralization , and
the like.

• Work specialization or division of labor refers the degree to which

– Tasks are subdivided into separate individual jobs
– Employees perform only the tasks relevant to their specialized
function
– Jobs tend to be small, but they can be performed efficiently
• Work specialization permits employees to be specialized in a specific job
and be more efficient. However, it isolates employees and makes jobs
boring. Many organizations prefer to enlarge jobs to provide more
challenges to employees and do activities in teams.
• Chain of command is unbroken line of authority that links all individuals
in the organization and shows who reports to whom.

75
• Chain of command is associated with two underlying principles
– Unity of command : each employee is accountable to only one
supervisor
– The scalar principles : clearly defined line of authority that
include all employees
• The chain of command illustrates the authority structure of the
organization.
C) Authority, responsibility, and accountability

Authority is the formal and legitimate right of a manager to make

decisions, issue orders, and allocate resources to achieve organizationally
desired outcomes.
• Authority is distinguished by three characteristics
– Authority is vested in organizational positions, not people
– Authority is accepted by subordinates
– Authority flows down the vertical hierarchy
– Responsibility is the duty to perform the task or activity an
employee (or a manager) as assigned

76
• Managers are assigned authority commensurate with responsibility. It is a
problem if authority exceeds responsibility or when the authority is
limited compared to the responsibility.

Accountability means that people with authority and responsibility are

subject to reporting and justifying task outcomes to those above them in the
chain of command.
Accountability is the mechanism through which authority and responsibility
are brought into alignment.

Delegation is the process by which managers use to transfer authority and

responsibility to positions below them in the line of command.

Some organizations make distinction between line authority and staff

authority.

77
• Line departments are those departments that perform tasks that reflect
organization’s primary goals and mission. Staff departments are departments
providing specialized skills in support of the line departments.
• Accordingly, Line Authority is a form of authority in which individuals in
management positions have the formal power to direct and control immediate
subordinates. Whereas Staff Authority granted to staff specialists in their area of
expertise the right to advice , recommend , and counsel .
Span of control (Span of Management) is the number of employees who report to a
supervisor. It is the characteristic of a structure that determines how closely a
supervisor monitors subordinates.
• The average span of control used in an organization determines whether the
structure is tall or flat.
A tall structure has an overall narrow span and more hierarchical levels. On the other
hand, a flat structure has a wide span, is horizontally dispersed, and has fewer
hierarchical levels.

Centralization and Decentralization pertains to the hierarchical level at which

decisions are made. Centralization means that decision authority is located near the
top of the organization, where as in decentralization decision authority is pushed
down to the lower levels. 78
4.2 Departmentalization

Departmentalization is the basis on which individuals

are grouped into departments and departments into the
total organization. It is a logical grouping of work
activities based on functions, products, territory
(geographic) customer, time process etc….

Approaches to departmentalization
1. Departmentalization by function: - is grouping the
work in functional departments such as production,
marketing, administration, finance, etc….

79
 President

VIP VIP marketing VIP Administration VIP Finance

production

•The advantages of this type of departmentalization are that it enables firms to

•employee a great variety of skills and utilize efficiently.
•The disadvantages are that it makes managers develop funnel vision

B. Departmentalization by product
It is adopted in the case of multi productive price. The
structure is divided into several fairly autonomous and self
contained units.

80
 President

Vice president

Managers of Manager of individual Managers of military Manager of consumer’s

agricultural products product product product

Product Product Product Product Product Product Product Product

B A A A A A A

C. Departmentalization by territory
(Graphical Departmentalization)
This approach groups activity for one department for an entire enterprise under
geographical heads or territories. It helps the organization in exploiting local
advantages. .Decision regarding product design, price and marketing may be left to
the discretion of the territorial, managers who are close to customers and know
these needs better.
.It reduce transport costs
.provide s an excellent opportunity to build community good will
81
 President

Vice president Vice president Vice president Vice Vice

of Of southern of control president of president of
North region region region East region Region

D. Departmentalization by customers
Here separated department are created to serve the needs of a particular customer so as to help
managers satisfy the customers requirements more conveniently and successfully
It depends on mark4et segmentation:-
E.g. Foreign customers
Individual customers
Industrial customers
Their advantages are each section gives the best service for its customers. Its disadvantageous is it is
difficult to coordinate

82
 President

Vic president
Marketing

Manager of Manager’s whole Manager retailers Manager foreign

business seller customer Customer customers

E. Departmentalization by process or equipment

Activities are grouped on the basis of various manufacturing process

similar type of labor and equipment are bought together
It permits intensive and economical usage of costly equipment

83
 President

Manager of Managers Manager of Manager of

drilling of grinding welding assemble
F. Departmentalization by time
Working hours the clock on the basis of day and night shift

President

Vic president
Protection

Manager Day Managers Manager night

shift evening shift
Shift

84
4.3 Organizing for horizontal coordination
In today’s fast shifting environment, organizations are moving towards
horizontal structures based on work processes rather than departmental
functions. This trend is to enhance the horizontal integration and
coordination
As an organization grow and evolve the need for more coordination among
all its departments becomes increasingly important.
Task forces, teams, and project management units provide a means to
increases horizontal communication and coordination.
• Task Force is a temporary team or committee designed to solve a
short-term problem involving several departments.
• Project Manager is a person responsible for coordinating activities of
several departments on a full-time basis for the completion of a
specific project

85
• Business processes Reengineering (BPR) is a radical
redesign of business processes to achieve dramatic
improvements in cost, quality, service, and speed.
• BPR helps to focus on core processes that cut
horizontally across the organization and working in
teams to provide value for the customer. ( Note that
a process is an organized group of related tasks and
activities that work together to transform inputs into
outputs and create value.)

86
 CHAPTER FIVE
STAFFING THE ORGANIZATION
After jobs are identified, grouped & organizational
structure is created, then comes the other managerial task
staffing.

Staffing is the process of obtaining & maintaining capable

& competent people to fill positions in organizational
structure. Organizations require people who have different
knowledge, skills & experiences to fill various positions to
attain organizational objectives. Hence selection of the
right person & placement in the right position are the main
aspects of staffing.
87
5.1 Steps in staffing
Staffing involves a series of steps. They are
1. HR planning (manpower planning)
It is the process which involves objective and systematic assessment of present
and further staff’s forecasting the future demand and supply of workers
formulating staffing strategies with a view to both short range as well as long
range. Strategic plans are continuous monitoring, evaluating and updating these
needs and sources of supply.
It is the means for acquiring, using, improving, and preserving organizations HR
and an integral part of corporate planning. It involves assessing current HR of the
organization, future needs & ways to fill the gap i.e. HR inventory, forecasting
personnel requirement & planning to procure new employees.
HR planning involves three distinct activities.
1. Evaluating the existing work forces
2. Forecasting the future needs of HR and
3. Ensuring the availability of workers when needed.

88
 2. Recruitment and selection
Recruitment is the process of searching for prospective
employees and stimulating & encouraging them to apply for the
job vacancies in the organization, i.e. seeking & attracting a
pool of people from which qualified candidates for job
vacancies can be chosen. It acts as a bridge between the
prospective employees & the organization.
During recruitment, potential candidates pooled together
through advertising vacancies. Vacancies can be filled
 by internal recruitment – the existing workers through
transfer, promotion, demotion and recall from layoff
 from external sources - labor market through vacancy
announcements, and unsolicited applicants, educational
institutions, employment agencies, labor unions, etc.

89
The vacancy to be announced should incorporate at least two statements
1. Job description
It is the written record of duties, responsibilities & requirements of a particular job.
It gives information about the title, location, duties, working conditions, etc. as
well as it is the description of job quality characteristics.
2. Job specification statement
It is the statement giving the requirements of personnel who should be made
responsible for a given job. And also it gives information regarding the
characteristics, qualities (physical & mental/ psychological), qualifications,
experiences, etc of the worker who is most suitable to carryout the activities
mentioned in the job description. It specifies the characteristics of the worker
occupying the position.

90
Methods of Recruitment
1. Direct method of recruitment
Recruiters directly contact the prospective employees and attract them. i.e.
 contact graduating students & select the best among them
 hold conferences/ seminars for prospective employees and encourage them to
apply for vacancies
 participate in job exhibitions or job fairs to attract prospective employees
2. Indirect method
Organizations encourage prospective employees to apply for vacancies through
advertisements in newspapers, magazines, journals, etc..
3. Third party method
Private employment agencies, those carry out recruitment process of an organization
for a fee.
Selection Selection is the process of identifying and choosing those applicants who
can successfully perform a job from the available candidates.
 choosing from the pool of applicants the person(s) best meeting/ fitting job
specification
 securing & extracting relevant information about an applicant.
 ascertaining whether or not the candidates possess qualifications for the specified
job. 91
It is crucial process & requires constant attainment, interest and concerns of
management.
The ultimate of objective of selection is to match the requirement of the job
and the qualification, knowledge, skill & experience of the individual
applicant.

3. Placement & Employment decision

The candidates who have been selected should be given placement letters
that state their employment and specific positions, and other employment
related matters.
4. Induction & orientation (socialization)
When the candidate is selected and offered a job, it is necessary to introduce
the new employee to the organizations philosophy, rules, policies,
etc…..then the new employee begins his work. He should be assimilated to
the job & organizational environment.
Induction & orientation have to do with familiarizing the new employee
with the organization. They can be done by oral communication and
physical observation, written media like manuals, guidelines and others.

92
 5. Training and development
Having qualified & well trained personnel to perform various jobs is a basic
necessity for any organization. Training & development programs include various
activities that enhance the awareness of employees in policy issues & procedures,
educate them to job skills, and develop them for future advancement.
Through recruitment & selection, and placement, competent employees can be
brought into the organization, but they need continuous trainings & developments
so that their needs and the objectives of the organization can be met.
6. Compensation & performance appraisal (PA)
People work is organizations for the sole purpose of earning enough money to live
comfortably & satisfy all their needs. Wages & Salary administration is the
establishment and implantation of sound policies & practices of employee
compensation. It is just the reward for the work done by an employee and it
should be balanced so as to keep the parties, the employer and the employee
happy & satisfied. It also includes the money paid as reimbursement.
Performance appraisal is the process of determining & communicating to an
employee how he is performing the job. It is evaluating employees performance of
the job assigned, and used to determine the extent to which an employee is
performing the job effectively.
93
 7. Separation, Promotion, Transferv & Layoffs
Separation refers to the discontinuation of the relation between employee &
the employer. It is the final HRM function. Like other functions it requires
preparation & planning.
Promotion is the advancement of an employee to a better job.
Characteristics of ' better job' to which an employee seeks promotion are
greater responsibilities, more prestige or status, greater skill, and specially
increased rate of pay or salary, better hours or better locations or working
conditions. If the job does not involve greater skill or responsibilities &
high pay, it should not be considered as promotion.

Transfer is the movement of an employee from one job to another on the

same occupational level of wage/ salary. No appreciable increase or
decrease in duties and responsibilities involved but there may be a change
in their specific nature and in working conditions. Some transfers entail a
decrease in job duties and especially in pay, and called downgrading or
bumping. It is more frequently used to protect employment opportunities
for employees displaced from higher rated jobs. It is moving to less
desirable jobs.
94
Layoff occurs when there is lack of business or budget
curtailment/ shortage. It is forced reduction of the
number of employees. It is the most frequent type of
separation of employees from the employed
workforce.
Layoff is unlike quits, retirements or deaths. It does
not necessarily involve a permanent separation from
the payroll. Laid-off employees normally expect to be
rehired by their employer when conditions improve.

95
 CHAPTER SIX
LEADERSHIP

Leading is the process of integrating the people with the organization, so as to

obtain their willingness and enthusiastic co-operation for the achievement of its
goals. It requires the integration of organizational & individual goals. It is the heart
of managerial functions because it is involves with initiating actions.
Leadership is the ability to influence people toward the attainment of organizational
goals. To lead is to guide, direct, conduct & proceed. Leaders act to help a group to
achieve objectives with the maximum application of their capabilities. They don’t
stand behind a group to push but place themselves before the group as they
facilitate progress & inspire the group to accomplish organizational goals.
The term leadership used as directing, executing, leading, supervising, ordering,
commanding, etc. It is putting into effect decisions, plans & programs that are
previously worked out to achieve organizational goals.
Leadership is necessary for achieving individual, group and organizational
performance. Managers influence expectations & attitudes of employees by
encouraging or discouraging performances; securing or alienating employees‟
commitment; rewarding or penalizing achievements.

96
 Leadership versus Management

Management Leadership
Promotes stability, order Promotes vision,
and problem solving creativity, and change
within existing
organizational structure
and systems
M L

Takes care of where you are Takes you to a new place

97
6.1 Leadership roles
All managers are required to perform the leadership roles. A manager plays
four basic roles in the interaction with employees.
1. Educator role
 This involves teaching employees necessary skills, acceptable behavior &
organizational values that enable them to perform the job. A manager has to be
a good exemplary for the employees, and also he has responsibility to provide
appropriate formal training for employees by identifying their training needs.
2. Counselor role:
 This involves listening to employee’s problems and providing advice that
enable them to alleviate the problems and also preventing the problems before
they occur.
3. Judge role
 This involves appraisal of employee’s performance, enforcing policies,
procedures, rules regulations, taking disciplinary measures, etc.. To perform
this task, managers must possess knowledge & information.
4. Spokesperson role
 This involves acting on the behalf of employees whenever their intervention
is sole means & demanded.
98
6.2 Leadership theories
Leadership is a complex interpersonal process of influencing behavior, and it is
crucial ingredient in organizational effectiveness. The systematic study of personal
characteristics & traits of leaders is important to discover the characteristics that
distinguish the most effective managers from least effective ones.
There are three leadership theories.
1. Trait theory
2. Behavioral theory &
3. Situational theory
Trait theory
According to this theory, leadership is largely a matter of personality, a function
of specific traits. Leaders differ from followers with respect to some key traits,
which remain unchangeable across time.
 attempts to in so late the attributes of successful & unsuccessful leaders that
help select leaders for organization. But it failed to consider how different
situations demand different characteristics, styles & skills. It describes leaders on
the basis of what leaders are. It examines successful leadership from the stand
point of individual’s personal characteristics’ even as intelligence, initiative, self-
assurance, etc..
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Behavioral theory
Behavioral theory in contrast to trait theory, attempts to describe leadership
in terms of what leaders do.
According to this approach leadership is the result of effective role behavior;
what matters a lot is not person’s traits rather his acts.
Situational or the Contingency theory
There is no one-best way to lead. The best way to lead varies with the forces
that exist in specific situations.
Effective leader must be flexible enough to adapt to differences among
subordinates & situations. Leadership effectiveness depends on the fit
between personality, task, power, attitude & perceptions
Leadership styles
Leadership style is the behavior exhibited by a leader during influencing
subordinates to accomplish organizational objectives. It implies the ways in
which the leaders exercise leadership; the ways in which the functions of
leadership are carried out, and the ways how the leaders behave towards their
subordinated in the accomplishment of the work.
It is classified as
1. Autocratic (Authoritarian) leadership style
2. Participative leadership style
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3. Lasses fair or Free – rein leadership style
Autocratic leadership style
Autocratic leadership style centralizes power & decision making for him &
exercises complete control over the subordinates. In autocratic situations
frustrations, low moral & conflict develop easily.
Participative leadership style
Participative leadership style initiates decision sharing & practices leadership
by consultation. It improves job satisfaction & moral of the employees.
Lasses fair or free –rein leadership style
Lasses fair or Free –rein leadership style is a complete delegation of authority
to subordinates so that they must plan, motivate & control and be responsible
for their own actions. The free- rein manager avoids power & relinquishes the
leadership positions.

6.3 Qualities of leadership

In general, the important qualities of leadership are
1. Physical appearance and strength
A leader has to put hard work physically. He should have a capacity to work for
long hours than others. This proves the diligence of the leader to his followers
easily.
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2. Mental vigor
A leader has to be strong mentally. He is expected to withstand strain
in finishing the work properly.
3. Emotional stability
A leader should not be moved by emotion or sentiment, but he
should analyze the problem rationally and take decisions without
bias.
4. Sense of judgment
A leader should know human psychology. He should understand the
behavior, needs, thoughts, motives, etc... of his followers. This helps
him to take strategic decisions and get recognized by his followers.
5. Goodwill
A leader should understand the feeling of others and take decisions
on the basis of his followers, and then he will win the goodwill of
his followers.

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6. Motivation
A leader should know the motivation techniques and how to use them.
7. Communication skill
A leader should communicate information to the workers, and also be effective
speaker & writer. Whatever the information needed to the workers, it should
pass through the leader.
8. Guiding ability
A leader should act as a teacher for new workers and help his followers to learn
their work.
9. Sociability
An able leader can easily mingle (mix) with the workers. The workers should
be encouraged to discuss their problems and difficulties with their bosses. The
leader should meet workers frequently.
10. Technical knowledge
A leader should posses a thorough knowledge of theory and practice of his job;
and he also knows the current development in his job along with technical
knowledge.
11. Be honest, sincere and fair
A leader should also be honest, sincere and fair. Others mostly like sincere, fair
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and honest people and their leadership is accepted by one or all.
6.4. Motivation
 is the energizer of human behavior or the process of stimulating
action.
 refers the degree of readiness of an organization to pursue some
designated goals.
 involves a complex combination of individual needs, drives,
tensions, discomforts & expectations.

Human behavior is directed towards certain goals & objectives,

because peoples have reasons for doing what they do. Such goal
directed behavior revolves around the desires for satisfaction. A
need is physiological, psychological or sociological want or desire
that can be satisfied by receiving a desired goal. Motivation starts
with unsatisfied need & drives behavior towards satisfaction.

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Types of motivation
Some of the types of motivation are
1. Negative motivation and Positive motivation
Negative motivation is motivation based on force of fear. It has benefit in the short
run. It results the disloyalty to the group as well as to the organization and it is also
used when the worker fails to complete the work which may be treated as demotion,
dismissal, layoff, play-cut, etc.
Positive motivation is motivation based on rewards such as praise, involvement, pride,
delegation of authority and responsibility...
2. Extrinsic motivation and intrinsic motivation
Extrinsic motivation is motivation available only after the completion of a job such as
increase in wage, retirement benefits, rest periods, holiday, health wages & insurances,
etc…
Intrinsic motivation is motivation available at the time of performance of work. It
provides satisfaction during the performance of work itself. It includes such as praise,
recognition, power, participation

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3. Financial motivation and Non-financial motivation
Financial motivation is directly or indirectly associated with money. It
includes wages & salaries, bonuses, profit sharing, vacation pay, free
medical services, retirement benefits, insurances,
Non-financial motivation is motivation which is not associated with
monetary rewards. It includes praise, job rotation, delegation, participation
recognition & power. Non-financial motivations are psychic rewards or the
rewards or enhanced position, which can be secured in the work
organization (Robert Dulin).

Theories of Motivation
Human behavior is complex in nature. Motivational theories are not
universally accepted to explain the complex human behavior. But they help
managers to improve their understanding of why people behave as they do.
Theories of motivation focus on needs and behavior. They enable
managers understand motivated behavior of employees so that pay their
attention to meet those methods.

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Motivational theories those focuses the employee needs
Needs are basically classified as innate needs & acquired needs;
and also as primary needs & secondary needs.
Innate needs are also called natural needs and they are inherent in
nature, e.g. hunger, sexual desire, anger, etc. whereas acquired
needs are based upon experiences, e.g. If one has a nice car, the
other needs the same car.
Primary needs are necessary to survive & for preservation of life,
e.g. food, water, air, etc. where as secondary needs are concerned
with mind & sprit. E.g. love, recognition, affection, etc…
1. Maslow’s Hierarchy of needs.
Suggests that the people must satisfy five groups of needs in the
following order or believed that five levels of needs exist, which
are represented in fig. as follows:

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Self-actualization needs
Esteem needs
Social needs
Safety needs
Physiological needs
Physiological needs:
They are biological needs required to preserve human life. Include needs for food,
clothing, shelter; sex, etc. they are most powerful motivating stimuli. One must
satisfy most of them in order to exist (survive). They have to be met before higher
level needs emerge.
The Safety/ security needs
They are needs for security and include protection from physiological danger,
economic security, desire for orderly, predictable environment and the desire to know
the limits of acceptable behavior.
The Social/ belongingness need
It is the desire for love, affection, sense of belongingness in one’s relationships with
other person

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The esteem/ status needs
They are twofold in nature, namely self –esteem &
esteem of others.
Self – esteem needs are the needs for self-confidence,
achievement, competence, self –respect, knowledge &
independence of freedom. Whereas esteem for others are
those related to one’s reputation needs for status,
recognition, appreciation & deserved respects for one’s
fellow or associates?
The self – actualization need is the need for realization
of one’s own potentialities for continued self
development for being creative in the broadest sense of
that term. It is the desire to become what one is capable
of becoming. 109
2. The ERG theory of motivation
This theory suggests that people’s need is grouped in to three overlapping categories
such as existence, relatedness and growth.
3. The Herzberg’s two –factor theory
Two-factor theory of motivation suggests that people’s satisfaction and dissatisfaction
are influenced by two independent sets of factors.
1. Maintenance or hygiene factors:
 Prevent losses of morale or efficiency can forestall any serious dissatisfaction or
drop in productivity and allow the motivator to operate. They create motivation to the
workers, but their absence caused serious dissatisfaction. They are also necessary to
maintain a reasonable level of satisfaction.
 Include Organizational policies to administration; Technical supervision;
Interpersonal relationship with supervisors; Interpersonal relations with peers;
interpersonal relations with subordinates; Salary; Job security; Personal life; Work
conditions; and Status.
2. Motivational factors or satisfiers
 they are factors those having uplifting effects on attitudes or performance. They
also creates motivation to the workers, absence of such factors doesn’t cause
dissatisfaction.

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 It include achievement, recognition, advancement, work itself,
possibility of growth, responsibility.

The hygiene factors cause much dissatisfaction if they are not

present, but don’t provide strong motivation when they are present.
Motivational factors lead to strong motivation & satisfaction when
they are present but don’t cause much dissatisfaction.
Intrinsic factors are internal rewards which are available at the time
of performance of work. So workers are directly motivated and
they have self-motivation.
Extrinsic factors are external rewards which are available only after
the performance of the job. Workers are not motivated directly.

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 CHAPTER 7
CONTROLLING
Organizational resources are limited. Their acquisition & use are critical to the
survival of the organization. Controlling is the last management function and it
affects or is affected by the other four functions. Planning, organizing, staffing &
directing must be monitored to maintain their effectiveness & efficiency. Efficiency
and effectiveness are the measures of performance. Mangers review performances
of employees daily, weekly, and monthly to determine actual performances.
Organizational control is the systematic process through which managers regulate
organizational activities to make them consistent with expectations established in
plans, targets, and standards of performance.
To effectively control an organization, managers need to decide
– What information is essential
– How will they obtain that information
– How they can and should respond to it
Control can focus on events before, during and after a process. Accordingly, the
three types of organizational control focus are known as the
– Feed forward control
– Concurrent control
– Feedback control
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 The three types of organizational control focus

Concurrent control
Feedforward Control Feedback Control
(Solve problems
(Anticipates Problems) (Solves problems
as they happen)
after they occur)
Examples Examples Examples
• selection of employee • Adaptive • Analyze sales and
• culture profit
Inspection of raw • Total •Final quality
materials quality inspection of
• cost –benefit analysis products
management • Survey customers
•
Focus is on

Focus is on

Focus is on
Employee
self-
control
Ongoing
Inputs Outputs
Processes

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Feed forward Control is an organizational control that focuses human, material,
and financial resources flowing into the organization.

Feed forward control attempts to identify and prevent deviations or problems

before they actually occur. For this reason, feed forward control is also known as
preliminary or preventive control.

Concurrent control is an organizational control that monitors ongoing activities to

ensure consistency with performance standards.

Concurrent control assesses current work activities, relies on performance

standards, and includes rules and regulations for guiding employees’ tasks and
behaviors.

Feedback control is an organizational control that focuses on the organizational

outputs, in particular on the quality of products or services.
Feedback control is sometimes called post-action or output control.

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7.1 The control process

Feedback provides information on the progress of the various levels of plan or

individual performance to management, i.e. it reports the progress as planned & it
indicated the changes required in the plan.
The initial view of control process reveals that it consists of three basic steps
applicable to any person, items or processes being controlled. They are
1. Establishing Standards
Standards are measuring devices, qualitative or quantitative, designed to help
monitor the performance of people, capital goods, or processes. Standards can be:-
 Managerial Standards
They are such as reports, regulations, and performance evaluations and focuses only
on the key areas & the kind of performance required reaching specific goals.
 Technical Standards

They specify the „what & how‟ of the business, and applied to production methods
& processes; to materials, machinery, safety equipments, parts & supplies. They can
come from internal & external sources control system.

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2. Measuring Performance

It is measuring the performance & determining if the performance is in line

with the set of standards. It is comparison between „what is‟ & „what should
be‟. It is discovering the deviation.
3. Taking corrective action

Determining precise action to be taken depends on three things.

1. The standard
2. Accuracy of the measurements that determine the existence of deviation &
3. The diagnosis of the person or device investigating the causes of deviation.

Corrective action can be prescribed by management in advance through

policies, procedure & practices. It is sometimes automatic.

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THANK YOU SO MUCH

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