CAT T5 - [Managing people and system]

(Sir Subhan Mirchawala)

Note: Do not need to write in essays - you can write in point format (just refer to
the past year papers answer by the examiner) & read the examiner article in March
2010 which indicates that list of points is what is expected by the examiner

Section A is not need to write notes for. Read Book for Section A
Carefully.

SECTION B:
Chapter 5
 Internal control system
 Accounting control
 Administrative control
 Characteristics of an effective internal control system
 Internal checks
 Pre list
 Post list
 Control total
 Limitation of Internal control
 Difference b/w internal and external auditor
 Types of Control

Internal control System:

It is the whole system of controls financial and otherwise it is establish by
the management in order to reduce the risk or fraud, error, safeguard of
asset, adherence to management policy and to ensure that the accounting
records and information is adequate and complete.

Accounting control:
 Bank reconciliation
 Control account
Control which are related to accounting records.

Administrative control:
Control related to the administration is called administrative control
Eight type of internal control:
SPAM SOAP

Segregation of duties:
TO divide the duties among the workers to minimize the fraud

Physical control:
Lock doors gates, strong bones all are the physical controls

Authorization and approval:

Each and every transaction must be authorize and approve.

Management Control:
Setting up of budgets, computing variance, preparing report these all are
management control.

Supervision:
One person becomes responsible and he monitors the activities.

Organization as a control:
Organization is itself as a control, the structure of the organization should
be design in such a way which minimize the risk of fraud and errors

Arithmetic and accounting control:

Bank reconciliation
Control account reconciliation
Trial balance

Personnel Control:
Recruitment and selection
When recruiting the employees or assigning the task to them ensures that
the employees are technically competent.

There is no best internal control system the best is one which fulfill the
requirement of the organization.
It is not computed to adopt all of 8 types of internal control

Internal checks:

Prelist:
The list which is drawn before the work is actually started.

Post list:
The list which is drawn during or after the work.

Control total:
The sum of one document should be equal to the balance of other
documents.
Characteristics of an effective internal control system.
 Segregation of duties
 Qualified personnel
 Everything is dated
 Everything is documented
 Everything is signed
 Proper maintenance
 Periodic reviews
 Pre-reviews, post reviews
 Customer signature

Limitation of internal controls:

 Segregation of duties become useless when there is a collision
between personnel.
 Authorization and approval is useless when a person misuse its
authority.
 Management normally overwrites the internal controls which they
setup themselves.

Audits:

External:
An audit is an independent examination of the financial statements and to
express an opinion whether the financial statement present true and fair
view.

Internal:
Internal auditing is an appraising or monitoring activities established within
an entity, established by an entity to provide services to the entity. Internal
auditor should not involve those activities which are going to appraise by
him.
Internal auditors get the authority from the top management.
Difference b/w External and internal Auditors:

 Internal auditor is an employee of company

External auditor is not an employee.

 Internal auditor is appointed by management.

External auditor is appointed by share holders.

 Internal auditor report to management

External auditor report to share holders

 Internal auditor’s work is define by management

External auditor’s work is define by the Law

 Internal auditor is relate to the internal operation

External auditor focused on the financial statement.

 It is not mandatory for internal auditor to be the member of

professional bodies.
External auditor must be the member of professional bodies.
Chapter 6

FRAUD
Chapter overview

Fraud

Categories of fraud
 Removal of funds or Asset from business
 Intentional misrepresentation of financial statement

Potential for fraud

 Dishonesty
 Motivation
 Opportunity

What happens?
 When the results are stated
 When the results are understated

Business risk
Personnel risk
Potential from computer fraud

Assessing the risk of fraud

 External factor
 Internal factor

Who is responsible?
 BOD
 Auditors

----------------------------------------------------
FRAUD:
There is no legal definition of Fraud, doing something wrong with
intension.

Categories of fraud:
There are two broad categories of fraud.

Removal of fund or asset from thee business (Fraud which is done by

employee or manager with in an organization)
 Theft of cash
 Collision with the customer, supplier
 Theft of stock
 Disposal of fixed asset lower than the market rate
 Payroll fraud
 Service not received but paid

Intentional misrepresentation of financial statement: (The fraud which is

done by director with shareholders)
 how to overstate the profit
 overstatement of sales
 overstatement of closing stock
 overstatement of other income
 manipulation of year end events
 understatement of purchase

Impact of frauds:
Removal of funds or asset from business
 Profit will be lower than expected
 Working capital cycle is affected.
Intentional misrepresentation of financial statement:
If the results are overstated:
 More tax will given
 Share price will increase
 Dividend will be decrease
If the results are understated
 Dividend will be lower paid
 Share price will be decrease
 Less tax will be given

Potentials for fraud:

Dishonesty
 Personal factor
 Cultural factor
Motivation
Opportunity
Assessing the risk of fraud:

Internal factor:
 Hiring new employees
 Delaying
 New product, new technology

External factors:
 Analyzing the environment
 Check out in which sector you are in

Business Risk:
 Gross profit margin increase
 Share price increase
 Market confident increase/decrease
 Demand is increase suddenly

Personnel factor:
 Expensive life style( it is just an indicator)
 Long hour working
 Undertaken holidays
 Low moral
 Autocratic management

System for detection and prevention of fraud:

Read [SPAM SOAP]

Who is responsible?
In limited liability companies the BOD, management, internal auditors are
responsible for the introduction of internal control, minimizing the risk of
fraud.
Chapter 7

Improving control procedure

Chapter overview:
Sale cycle
Purchase cycle
Payroll cycle
Cash cycle
Objectives
Frauds
Controls
---------------------------

Payroll:
It is the formal system that how to company pay remuneration to its
employees.

Fraud in payroll cycle:

 Overstatement of number of hours
 Changes in the rate/hour
 Absent but recorded as present
 Overstatement of cheque
 Ghost employees
 Fraud in advances
 Working in normal time writing as overtime
 Unit not produce but recorded
 Collision with guards
 Employees are not punctual
 Payment for idle hours
 Gross salary and net salary same
 Converting adverse variance into favorable.

Control:
 Segregation of duties.
 Physical control
 Attendance sheet
 Clock card
 Arithmetic and accounting control
 Bio-metric control
 When employee are working thy are supervised
 Personnel control
 Management control
 Comparison between b/w budgets
 Vouching signatures
 Every thing should be documented
  Periodic reviews
 Pre-list, post-list and compare with each other.

Purchase cycle:
It is the formal cycle that how the company purchase raw material from its
suppliers.

Risk of fraud in purchase cycle:

 Overstocking
 Collision with suppliers
 Order of low quality material
 Not considering competitive price
 Artificial delivery
 Low qualities goods are received which are not ordered.
 Over/under statement of goods
 Over invoicing
 Tax fraud
 Fraud in discount
 Raw material stolen
 Over payment
 Bogus supply, goods order for personal use.
 Collision b/w purchase department and warehouses

Controls:
 Segregation of duties
 Authorization and approval
 Everything should be documented
 Dated signed by authorized person
 Pre-reviews, post-reviews
 Compare purchase budget with the production budget
 Competitive prices
 Check on purchase return
 Discount should be properly recorded
 Inspection officer should be hire
 When you are preparing the cheque, purchase order and GRN should be in
front.
 Material should be supervised.

Sale cycle:
It is the formal function of company how to sale to its customers.

Risk of Fraud in sale cycle:

 Goods delivered without any order
 Fake order forum
 Bogus supply of goods
 Collision with customers
 Overstatement of sales
  Changes in sales
 Discount Fraud
 Sales tax
 Low quality material delivered
 Over/under goods supplies
 Teaming and lading
 The customer has paid you but writing him as bad debt.
 Over/under invoicing
 Increase in selling price per unit
 Delivering goods to fake address
 Credit sales without any authorization
 Low quality goods return

Control:
 Segregation of duties
 Supervision
 Gate pass
 Cameras
 Quality inspection
 Implementation of company policy
 All the sales should be authorize and approved
 Reconcile the debtor control a/c with personal control account
 Physical control
 Comparing production budget with the sale budget
 Only cross cheque should be accepted and should be on company names.
 Cash should not be received
 Constant selling price
 Credit rating should be check
 Customer should not cross the limit
 Provision for the bad debt should be properly recorded.

Cash cycle:
It is the formal system hoe the company receives or pays cash.

Risk of fraud in cash cycle:

 Cash stolen
 Overpayment
 Cash received not recorded
 Mishandling of cash
 Cash receive in personal a/c
 Payments are not authorized
 No limit are specified
 Collision with the bank managers
 Taking the cash for the personal use
 Company is not paying on time
 Artificial cash overstatement.

Controls:
 Segregation of duties
 All the payments should be authorized
 Strong bones and lockers
 Limit should be specified
 Supervision
 Properly security when the cash is moving from the organization to bank.
 Periodic bank reconciliation
 Maintenance of the petty cash float input
 Always receive and pay through cross system cheque
CHAPTER 8

Management Information & Reporting

system

CHAPTER OVERVIEW
 Data
 Information
 Quality of good information
 Why an organization need information
 Planning
 Control
 Decision making
 Information requirement varies from level to level
 Budget
 MIS (Management information system)
 Cost centre
 Profit centre
 Performance measurement

Comparison is possible b/w:

 Different companies
 Different products
 Different areas
 Different periods
 Deferent departments
 Actual and budget
DATA:
Data is raw fact and figure e.g. purchase day book, sale day book.

Information:
Data when it is processed it becomes information which become meaning full.

Qualities of good information:

It should be accurate, reliable, complete & authorize.

Why organizations need information?

For planning, control and decision making you want information.

Information requirement varies from level to level:

The information which is relevant for senior management may be irrelevant for
operating core & vice versa.

Sources of information:

Internal External

There are some internal sources:

 Payroll
 Timesheet
 Production department
 Invoices
 Day book

There are some external sources:

 Newspaper
 www
 libraries
 regulatory and professional bodies

MIS (management information system)

Different components working together to analyze generate, record or
distribute information which is helpful for management is known as
Management information system (MIS)

------------------------------------------xxx--------------------------------------------
CAT T5 - [Managing people and system]
(Sir Subhan Mirchawala)

Note: Do not need to write in essays - you can write in point format (just refer to
the past year papers answer by the examiner) & read the examiner article in March
2010 which indicates that list of points is what is expected by the examiner

SECTION C

Chapter 9

Leadership, management and supervision

Overview:
Authority and responsibility
The role of management
The role of supervisor
The role of leader
Leadership skills and styles.

Power:
Ability to get things done.

Sources of power:

Coercive power:
Authority of power that is dependent on fear, physical force or punishment.

Reward power:
A person has this power by virtue of some contacts excess over some valuable
resources.

Legitimate power:
It come from chair and goes with chair.

Expert power:
It comes with the experience knowledge and qualification.

Referent power:
By possession of a personality or a person impress someone by force of personality.

Negative power:
The power which is used to disturb operation is called negative power such as
strike.
Authority:
It is the right to get things done. (Position power)

Responsibility:
Responsibility is a liability when you give surety that the work will be done.
Greater the authority greater will be responsibility.

Accountability:
It is an obligation when a person is answerable to hi superior. When you have to
justify your action is what accountability.

Delegation:
When a manager transfers his own power, authority to its sub ordinates and
remains accountable, this is what delegation.

Why a manager delegate?

 He wants to reduce his stress.
 For training and development
 He want to motivate his employees
 He want to reduce his work load
 Some time complexity of the organization

How to delegate?
 Specify the performance and checkout the person.
 Formally assign the task and gain the agreement
 Allocate all the resources and gave him some authority
 Back off and allow him to so the work
 Maintain contacts and regular feedback.

When to delegate?
 Consider the confidentiality
 Moral of the employees
 Ability of the sub ordinates
 Can interest be placed
 Quality of decision

Problem of delegation.
 Burdon of accountability
 Lack of trust
 A desire to stay in touch
 Feeling threatened.

How to overcome these problems?

 Give your employees some training and development
 Better communication channel
 Reduce control
 Clear lines of authority and responsibility should be defined.
Management:
Getting things done by people what management.

Henry Fayol (classical school):

Function of a manager

 Planning
 Organizing
 Coordinating
 Commanding
 controlling

Planning:
Setting objectives and targets setting budget for future.

Organizing:
Arrange the job into manageable activities and task.

Coordinating:
To reconcile the activities to mash the activities harmonizing the work.

Commanding:
To give order and instruction so that employees or subordinates start their actual
work.

Controlling:
To compare the actual performance with the plan with the budget. If there is some
derivation take necessary actions.

What are the key concepts of classical view of management?

Other concepts: (June 2005)

 Motivation was not mentioned because he was classical theorist because
classical school emphasized or processes, resources and efficiency
 They ignore human’s wish, will and wants.
 Early managers were technically very competent but socially incompetent
 Managers were taught each and every thing but they were not taught hat
how to manage peoples.
 Treating employees like a machine is not a recipe of either harmony or
friendliness in the workplace.
Elton Mayo: (Human relation school)
“Don’t follow myth, follow scientific way”

How to study this??

Let take an example:

Western Electric Co. (U.S)

Product: “RELAY”

Normal production room Special testing room

Modern School: (Peter Drucker)

Function of the management:
 Setting of objective
 Organizing
 Motivation
 The job of measurement (controlling)
 Developing people
It is the responsibility of manager to bring out the potential of the employees.

Rosa Beth Moss kantar: (when giant learn to dance)

She put some impossible incomparable demand over those managers and
organization those how are bureaucratic and traditional but they want flexibility
through innovation.

“Work all hours but keep fit”

Henry Mintzberg: (Manager’s Role)

 Figure head
 Leader
 Liaison
  Monitor
 Disseminator
 Spokesperson
 Entrepreneur
 Negotiator
 Disturbance handler
 Resource allocator

Roles:
Roles are different hats people wear in different situation and in different
situation and different circumstances

A business manager plays ten different roles in business organization.

Figurehead: (ceremonial role)

The one who welcome the guest at business, lunch, parties and dinner.

Leader role:
The one who motivate the employees and hire and fire the employees.

Liaison role:
The one who listen the outside customers

Monitor role:
He studies and controls the environment

Disseminator:
The one who spread the information and policies

Spokes person:
The one who represent the company or the one who give briefing in the
meeting

Entrepreneur:
The one who take the risk when launching the product or investing

Negotiator:
The one who does table talk or the one who bargain or negotiate with the
supplier or union

Disturbance handler:
The one who deal with the uncertain situation, events

Resource allocator:
The one who allocate resource to different departments and divisions
Supervisor:
Supervisor is a manager but at the lowest level. He is an interface a
connecting link a community link b/w middle line and operating core.
He does day to day operational planning. He is relating with bread and
butter work. He does technical work. He is a gatekeeper. He will perform all
the function of management at the lowest level.

Leadership:
Overview

Leadership Vs management.
Leadership skills

Trait school
Assumption
Limitation

Style school
Tennenbaum
Ashridge Model
Rensis likert
Blake and mouton’s Managerial Grid

Contingency school
Charles Handy
Heresy and Blanchard

Leadership:
Leadership is an interpersonal influencing activity to help people aim
achieving their objectives by their own wish.

Leadership Vs management:
 Mangers have subordinates whereas leaders have followers
 Managers have short term view whereas leaders have long-term view.
 Managers use their position power corrosive power whereas leader
use their personality power.
 Managers are selected on their skill, education and qualification
whereas leaders are selected on the perception of other or though
election
 Management can be exercised over non-personal things whereas
leadership can only be exercised over people
 Managers are builders whereas leaders are architects
The difference is useless because successful management without leadership
is useless and leadership without is good for nothing.

Why manager should be a leader?

Manager cannot perform his duties successfully without leadership quality.

Trait school:
“Leaders are born in centuries but not made in factories”

Leaders are born not made. Certain qualities are absolute necessary for
effective leadership. These traits were common in the part successful
leader.

Limitation of the trait school:

 The list is so worst vary and contradictory.
 A person cannot posses all the characteristics we have a mix or
balance of characteristics.
 If the person possessed all the characteristics, then he will be labeled
as Superman
 A person cannot become a leader by virtue of some characteristics
but these characteristics must have relevant relationship with the
followers, with the task, technology, organization, norms and
culture.

Style School: (Tennenbaum and Schmidt)

Dictatorial:
The leader takes the decision and h enforces them to punishments.

Autocratic:
The leader takes all the decision and he announces them.

Democratic:
The leader presents the problem listen to his sub ordinates but he takes the
decision at the end.

Leizez Fiere:
The subordinates are allowed to take their own decisions.

Ashridge Management college Models:

Tells (Autocratic):
The leader takes all the decision which must be obeyed without any
question.
Sells:
The leader presents the problem gather ideas from the subordinates but has
the final say.

Joins (Democratic):
The leader and subordinates both take the decision on the basis of
consensus.

Results: In an ideal world people prefer consult style of leadership they had
a most favorable attitude. Consistency is far more important than adopting
any leadership style.

Rensis Likert:
Exploitative authoritative:
The leader has no trust or confident over his subordinates he imposes
decision, he never delegates and he motivates by thread.

Benevolent authoritative:
The leader has only superficial trust over his sub ordinates. He imposes
decision never delegate, he motivate through rewards.

Participative:
The leader has little trust or confidence over his subordinates, he presents
the problem gather ideas from sub ordinates but controls decision making.
He motivates through participation.

Democratic:
The leader has complete confidence over his subordinates and he has
allowed his subordinates to take their own decisions.
Blake and mouton’s Managerial Grid:

Improvised:
The manager is lazy he is neither interested in production nor in people
need

Task:
Almost total concentration is on the task peoples needs are virtually
ignored.
Country club:
First priority is given to the people and rather low priority to the task.

Team:
Team is an extreme situation, is an ideal situation it achievable, it is
possible when the members are highly committed.

Middle of the road: (pendulum style)

Balancing the need of production as well as people. The Grid is a
management development tool. The manager can assess his own
performance as well as his sub-ordinates performance.

Contingency School: (Charles Handy)

There is no one ideal leadership style the best leader is one which fulfills
the requirement of situation. There are some contingent factors which
should be considered while adapting any leadership style. Change the
leadership style as the situation changes

Charles Handy:
According to the Charles handy there are three facts which should be
considered while adopting any leadership.
 Leader/leaders own personality
 Subordinates whether the have to control or not
 Task (Demand of the task either its sensitive or routine)
Henry Blanchard:

S1:
If the followers are unable and unwilling, adopt telling style.

S2:
If your followers are unable but willing, adopt selling style

S3:
If your followers are able but unwilling, adopt participating style

S4:
If your followers are able and willing, adopt delegating style.
Chapter 10

Individual and group behavior

Groups

Formal groups
Informal groups

Groups:
Group is the collection of individuals which shared objectives and goals.
In a group there is sense of identification, interaction b/w members.
There is a manager who is ultimately responsible for the activities.

Formal Groups:
Formal groups are designed by organization for a particular task;
members are formally selected, formal rules and regulations, formal
channel of communication. The manager is ultimately responsible.

Informal group:
informal groups are loosely structured between pair workers; co-workers
the schismatic members influence.

Positive aspects of groups:

Positive synergy follow chapter 1

Negative aspects of groups:

 No one is individually accountable
 No one is individually responsible
 As the group size increases, individual efforts decreases
 Negative synergy

Group norms:
Behavior which are normal in the group

Positively reinforced:
When they are excepting show them rewards and praise

Negative reinforced:
Show them punishments.
Group cohesions:
Sun of all the forces or force of attraction between the members, which
bind the members.
Group cohesion is positive key factor for the effectiveness of team
working.
A very cohesive group is dangerous because:
 Outsiders are considers as enemies
 Decision making is disturbed
 Chances of fraud
 Labor turnover rate

Group polarization:
Like minded people when taking the decision is what polarization.

Culture:

Topics overview:

Organization culture:

Culture can be understood at three different levels.

Observable
Value & belief
Assumptions

What shape the organization culture?

The founder
The history
Leaders and managers
The environment

Importance of organization culture

Culture and structures

Culture:
The values transferring from one generation to another, the way we do
things round here.
Culture is the collective program of the mind which distinguishes the
members of one category to another.
Culture can be understood at three different levels:
 Observable (from dressing and language)
 Values and belief
 Assumption

What shapes the organization culture?

Founder:
The person who startup the organization. If the founder is strong no
matter he gets the retirement or he is dead the values still remain in
practice.

History:
The time when the organization is incorporated

Leaders and managers:

The leaders and managers they also set culture.

The environment:
The organization is an open system

Importance of organization culture:

 Identification
 It brings unity
 It motivates
 Cultural values can be used as reward
 Cultural values can replace rules and regulations
 Culture can bring a change in organization

Cultures and structures: (Charles Handy)

 god Zeus
 god Apollo
 goddess Athena
 god Dionysus

god Zeus: (Power culture)

 Small organization
 Young organization
 Few no: of employees
 Direct communication with all of its employees
 Authority centralized
 Few rules and regulations
god Apollo: (Role culture)
Complete bureaucracy

god Athena: (task culture)

When the performance is judge on the basis of output (Adhocracy). This
culture is an expensive culture because there is need to hire experts
and experts demand the market price.

god Dionysus: (person culture)

In this culture the individual is not working for organization interest but
he is working for his own personal interest. And the business is based
on his talent. In such organizations these are few job and low level
jobs.

Role culture: (Bureaucracy)

The organizations having a role culture has a formal structure and operates by well
established rules procedures. Individuals are required to perform these jobs full but
not over step of boundaries of their authority.
Personality:
Topics overview:

Personality:
Personality trait
Personality types

Personality clashes
With the task
With system
Management and culture
With other personalities

How to solve these clashes

Change the job
Negotiate
Fire

Perception:
Process of perception:
The context
Nature of stimuli
Some internal factors

Misperceptions happen between:

Manager and staff
Different work cultures
Different races religion and sex

Human brain taken as example of stimulation and reaction

Perception:
Perception is the physiological data in which incoming sensory data is
analyze or is processed and it gives meaning to individual is called
perception
Perception is a unique picture which is quite different from reality, what
the world really is, but how sees the world.

Process of perception:

The context:
People see what they want to see. Things which are relevant in
situation influence the situation.

Nature of the stimuli:

Our attention is automatically divert to large, bright, loud, unfamiliar and
moving items
Some internal factors:
Our need and interest also influence our perception.

Personality:
Personality is the stable pattern of characteristics, stable pattern of
motion, feeling, attitude, behavior shown by individual.

Self image:
What a person of himself, where you stand in your eyes. People want
response from the world in accordance to their self-image

Personality trait:
List of characteristics qualities by which we can differentiate between
different individuals.

Personality type:
The associated characteristic automatically comes under the head of
particular type.

Personality clashes:
 With task
 With system management culture
 With other personalities

How to solve these clashes?

 Switch the person to another job
 Negotiate, let him understand the problem, nature
 Incompatible personalities should be outside of the team.
Chapter 11

Team management

Chapter overview:

TEAMS:
Multi disciplinary team
Multi skilled team
Self managed team
Virtual team

Belbin’s Team roles

Neil Rackham and terry Morgan:

How do people contribution?

Tuckman:
Stages of team management

Wood cock:
Blockages and building blocks

Effective Vs Ineffective team

How to reward an effective team
How to build:
Team identity
Team solidity
Commitment toward shared objective
How to reward an effective team:
Profit sharing scheme
Group sharing scheme
Group bonus scheme
Employee share option scheme

Team:
Team is a collection of individuals with complimentary skills who hold
themselves mutually accountable.
Multi disciplinary team:
All the members are specialized and they are from different backgrounds.
There are no backup roles available.

Multi skilled team:

People are multi skill and they can perform any of the group task, backup and
substitute are available

Self managed team:

People are highly mature, self disciplined peoples, they set their own rules
and regulation, it saves managerial cost, they solve their own conflict.

Virtual teams:
Team which doesn’t physically exist but it wok like a physical team. For such
team information and communication technology is must.

How to reward an effective team?

 Profit sharing scheme and xyz percentage of profits an effective team
 Gain sharing scheme, the percentage of a surplus gain is given to the
team members.
 Group bonus scheme
 Employee share option scheme. Schemes are offered to an effective
team at lower than the market price.

Effective Vs Ineffective team:

Effective team Ineffective team

 High productivity  Low productivity

 High quality  Low quality
 High motivation  Low motivation
 Low conflict  High conflict
 Labor turnover low  High labor turnover rate

How to build a team?

 Name
 Badge
 Uniform
 Separate space
 Special vocabulary
How to build team solidity?
 Express solidity
 Be loyal with team
 Reduce conflict among the members
 Reduce competition among the members
 Reduce group bonus scheme

How to make people more committed?

 Clarify the objectives
 Attached rewards
 Motivate team
 Allow them to participate
 Give them regular feedback

Belbin’s team roles: (9 roles)

1. Plant
2. Resource investigators
3. Coordinator
4. Monitor evaluator
5. Shaper
6. Team worker
7. Implementer
8. Completer/ finisher
9. Specialist

According to Belbin in an ideal team, there should be a mixed balance

of roles and not necessary nine members.

Plant:
Person who solve difficult problem and very creative

Resource investigator:
Person who develop contacts. The resource investigator is the executive
who is never in his room, and if he is, he is on the telephone.
Coordinator:
The one who clarify the goals and coordinate the activities

Monitor evaluator:
The one who judges accurately. The monitor evaluator is not deflected by
emotional arguments, is serious minded

Shaper:
The one who overcome the obstacles and barrier in the way of effective
team working
Team worker:
The one who listen to every one, build the relation and he is a cheerful
person.

Implementer:
The one who convert ideas into reality

Completer/finisher:
The one who complete the task and delivery on time. The completer
finisher dots the i’s and crosses the t’s. He or she gives attention to detail, aims to
complete and to do so thoroughly. They are not so interested in the glamour of
spectacular success.

Specialist:
The specialist provides knowledge and technical skills which are in rare supply
within the team. They are often highly introverted and anxious and tend to be
self-starting, dedicated and committed.

Two additional roles given by Belbin

 Team role
 Functional role

Team role:
How you deal with other politeness, trust and your interpersonal role.

Functional role:
The technical knowledge which is demanded by job

Neil Rackham and Terry Morgan:

People’s contribution:
 Proposing
 Supporting
 Seeking information
 Giving information
 Attacking
 Defending
 Open behavior
 Shutdown behavior
 Bringing in behavior
 Testing, understanding and summarizing
Proposing:
The one who put forward the suggestion

Supporting:
The one who support other person’s proposal

Seeking information:
Asking fact and figures

Giving information:
Provide information to another member

Attacking:
They put difficulty and are totally disagreed

Defending:
They support

Open behavior:
They don’t take either side

Shutdown behavior:
They just end up the conversation

Bringing in behavior:
They startup the conversation again

Testing, understanding and summarizing:

All the arguments are listened and the decision is then make

Tuckman:

Stages of the team development:

 Forming
 Storming
 Norming
 Performing
 Dorming
 Mourning/Adjourning
Forming:
The team is just coming together, no body knows each other. Every
body wants to impress each other, the objective is not clear, no body
knows about the organization norms

Storming:
Less open conflicts between members and this is fruitful stage

Norming:
Every thing is settle down, the objective is clear, the leader is clear

Performing:
Now the team has actually started his work

Dorming:
When the team has been working successfully for a periods then the
members attention is change toward the personal interest at the
expense of the task.

Adjourning/Mourning:
The team is dissolved and this is the stage of sadness and confusion,
also this is the stage of celebration because the task has been achieved

WOOD COCK:
Factor: Blockages: Building Block:
 Leadership  Inappropriate style  adopt a proper leadership
 style
 Feedback  Not giving  giving regular feedback
 Members  Roles are not defined  define the roles
 Methods  ineffective  adopt effective method
Chapter 12

Motivation
Chapter overview:

Motivation
+ve motivation
- ve motivation

Reward and incentives

Extrinsic reward
Intrinsic reward

Feedback as motivator
Motivational feedback
Development feedback

Management style as motivator

Theory X
Theory Y

Pay as motivator
Job enrichment
Job enlargement
Job rotation

Job satisfaction

William Ouchi
Theory Z

Context school
Abraham Maslow
Herzberg
McClelland (Need theory)

Process School
Victors Vroom’s
Equity theory
Handy’s motivation Calculus

Discipline
+ve discipline
-ve discipline
Self discipline

Disciplinary procedure
Informal talk
 Oral warning
Written warning
Suspension
Denotation
Dismissal

Factor to be consider during disciplinary actions

Immediacy
Impersonality
Advance warning
Fairness
Privacy
Consistency

Discipline:
In an orderliness state or an acceptable behavior or a sensible conduct
which is in accordance with the goal of the organization

Positive discipline:
Also called constructive discipline, when the organization system
equipment is designed in such a way that the employee has no other
option but to act on the desired manner.

Negative discipline:
When the employee has the option to go wrong but later will be
punished, fired and there will be sanction.

Self discipline:
It is the best discipline found in mature people. When the employee
think by his own about the organization’s rights

Disciplinary situations:
 Irregularity
 Punctual
 Behavior
 Sleeping on duty
 Living
 Involved in fraud
 Violation of rules
 Intoxication
 Embezzlement
 Arrestment

Disciplinary procedure:
 Informal talk
 Oral warning
  Formal written warning
 Suspension
 Demotion
 Dismissal (fire him)

Factors to be consider during disciplinary action:

 Immediacies
 Disciplinary action should be taken as speedily as possible.
 Impersonality
 It should be for everyone
 Always the same action should be taken (consistency)
 Fairness (just treatment)
 Advance warning (the person must already informed)
 Privacy ( the case should be kept confidential)

Disciplinary interview:
 The manager will welcome you and he will explain you the
purpose of interview
 Without any personal emotion he will let you know about behavior
that how it is affected our organization
 The manager will explain the organization’s future expectation
 Now the employee will comment and justify himself
 The organization might change his policy
 The manager will put a penalty
 The manager will explain him organization’s appraisal procedure

Motivation:
Motivation is the decision making process people choose an appropriate
behavior to the desire outcomes.
“Motivation is a social process where other people influence us to behave in
the way they wish”

Rewards Vs Incentives:

Reward:
Any thing which is given to the employee after the work has actually
been done, after the success after the contribution.

Incentives:
It is the promise is the offer for the reward made before the work
actually been started
Extrinsic rewards:
Extrinsic reward is the materialistic financial reward. These are under
the control of other. These rewards motivates but for the short time.

Intrinsic Rewards:
Intrinsic rewards are the apological reward. It gives you ever lasting
reward e.g. after complete the task, the satisfaction you get about
completion.

Management style as motivator: (Douglas MC Gregor)

Theory X:
Theory X is the manager perception, the manager who think my
employees are lazy and they hate to work and responsibility and they
are only working for pay. Such managers adopt autocratic
management, less delegations, less trust relationship.

Theory Y:
Theory Y is the manager’s perception. The manager who think my
employees like work and they are not only for pay, they work for interest
challenge and no body inherently dislikes work, people work as natural
as rest or play. Such managers adopt democratic management, more
delegations more trust more perception.

Pay as motivator:

Pay from organizational point of view:

Pay is a major expense for organization. Organization welcomes high
salary when the profit is high but it sucks low wages when the profit is
low.

Pay from individual point of view:

Pay is an income from individual point of view to fulfill the basis needs.
They satisfy their wants, their luxuries. Pay is a security symbol, status
symbol; pay sets your standard of living, pay is a short term motivating
factor.

Feedback:

Feedback as motivator:
Feedback is the perception of others about your job.
Motivational feedback:
When the performance is up to the standard and feedback is given
positively in the form of reward and in the form of praise.

Development feedback:
When the performance is not up to the standards there is some lacking
in the performance but the feedback is given fairly so that the learning
opportunity are develop in the person.

William Ouchi: (Theory Z)

 Long term employment with slow progressing.
 Broad concern for employee welfare both inside and outside the
work context.
 Implicit informal control.
 Decision making should in for of consensus.
 No artificial status barrier and there should be trust relationship.

Job design as motivator: (Herzberg)

 Job enrichment
 Job enlargement
 Job rotation

Job enrichment:
Job enrichment is a vertical extension of the job giving a person more
authority more freedom and more decision making power and is also
called as empowerment.

Job enlargement:
Job enlargement is the horizontal extension of the job it means widen
the job by increasing number of operations. It reduces repetition, it
reduces Burdon. It is the step toward promotion.

Job rotation:
Job rotation is the plan to transfer of the job switching a person from
one job to another. It reduces multi-skills. Backup roles are normally
created.

Job satisfaction five factors:

 Skill variety
 Task identity
 Task significance
 Autonomy
 Feedback
Job satisfaction:
When an employee thinks about his job and he feel relax. There are five
factors which contribute toward job satisfaction

Skill variety:
All your potential been utilize in the job

Task identity:
Job which you performing have some identity

Task significance:
The importance of task.

Autonomy:
It mean the employee have some power, decision making power

Feedback:
You must know where you stand, regular feedback.

Context school:
Context school asks one question, what are the things which motivate a
person whereas process school asks that how a person can be motivated.

Process school:
What is the way which motivates the person?

Content school: (Abraham Maslow)

Self
Actualization

Esteem need

Love /social needs

Safety needs

Psychological need

Psychological needs:

Safety needs:
Security for him or his money

Love/social needs:

Esteem need:
Respect from other, status etc

Self Actualization:
Fulfillments of personal potential never try to dance better than other. I always
try to dance better than myself.
If you want to motivate someone, you need to start from very basic need.
Once the need has been satisfied, it can no longer be motivating factor, need
are dominant until satisfied.

Limitation of Maslow:
 Different peoples have different priorities
 Some needs are rare in nature
 The theory is culturally specific only for UK and USA.
 Self actualization can really be satisfied
 Pay is an ambiguous concept
 Some behavior may be after difficult needs
 We do current suffering for the future promise.

Herzberg 2factor theory:

 Hygiene factors
 Motivators

Hygiene factor:
Hygiene factors are those factors, the presence of which doesn’t motivate but
his absence creates great dissatisfaction. These factors simply normalize the
condition. If these factors motivate it give short term motivation, e.g. pay,
working condition, company policy, job security.

Motivators:
The presence may which motivates but absence may divert the attention of
the employee toward hygiene factor. E.g. personal growth, achievement,
feedback, training and development.

McClellan’s Need theory:

 Need for power
 Need for affiliation
 Need for achievement
Need for power:
People want to control other, they want to have to say in decision making
such people s are motivated through promotion, authority

Need of Affiliation:
Some people want relationship belonging affiliation. Such people are
motivated through working in a group in a department

Need of achievement:
Some people have strong desire for success and strong fear of failure. They
are motivated through challenging task and shorter deadlines.

Process school: (Victor Vroom)

F=VxE

F= force of motivation
V= valence
E= expectancy

Force of motivation:
If a person is motivated he put some extra force and this force of motivation is
the product of valance and expectancy

Valance:
The worth or the strength of the reward in the eyes of the individual. Valance could
be either positive, zero or negative

Expectancy:
It is the chance of outcome probability. Expectancy become 0 or 1

Equity Theory:
A person is always compare his input and output with the other employee’s input and
output within an organization as well as outside the organization and when he feel
that he is getting lesser as compare to other person there will be a sense of negative
inequity and when negative inequity occur.
 Increase absenteeism rate
 Increase in labor turnover rate
 Decrease in productivity
 Decrease in quality
 Grievances

Handy’s Motivation calculus:

This is another expectancy approach
He has identified some “E” factors, when a person is motivated and he put some
extra efforts, extra energy, extra excitement, excellence, extra expenditure and extra
endeavors.

-------------------------------------------------------xxx-----------------------------------------------------
CAT T5 - [Managing people and system]
(Sir Subhan Mirchawala)

Note: Do not need to write in essays - you can write in point format (just refer to
the past year papers answer by the examiner) & read the examiner article in March
2010 which indicates that list of points is what is expected by the examiner

SECTION D
-----------------------------------------------------------------------------------

Chapter 13

Panning and organizing personal work

Chapter Overview

Appraisal
Purpose of appraisal
Why only formal appraisal system?
Appraisal process
Evaluating appraisal scheme
Barriers to effective appraisal

Who does appraisal?

Self appraisal
Upward appraisal
Custom appraisal
360 degree appraisal

Appraisal techniques:
Overall appraisal
Guided assessment
Grading
Behavioral incidental method
Result oriented scheme

Appraisal Interview techniques:

Tell & Sell method scheme
Tell & listen method scheme
Problem solving approach

Appraisal:
Appraisal is an assessment of employee’s past performance and take some
reasonable action today in order to get efficiency in future
Purpose of appraisal:
 It brings efficiency in the organization
 It brings control in the organization
 Employees training need may be identified
 Whether the employees deserve promotion
 Whether he deserve reward a increment in pay
 He helps in human resource planning

Why only formal appraisal system?

 There is no documentation in record
 Chances of discrimination
 Different assess and different criteria
 Manager remember your short coming but forgot your major
contribution
 There is no regular feedback in an informal system

Appraisal process:
 Select the criteria
 Preparation of appraisal report prepare by appraise and appraisal both
 Getting the appraisal and appraise together
 Review of the assessment
 Action plan
 Follow up, implement, monitor & control

Appraisal techniques:

*Overall assessment:
The manager write in narrative form about the employee’s performance, there
is no consistency in criteria and it is very vague approach

*Guided assessment:
This is another vague approach, the manager will comment upon employee’s
integrity, straight forward dealing and other characteristics of employees

*Grading:
Grades are assign from A (excellent) to E (poor) to each individual’s
performance area

*Behavioral incident method:

Your actual behavior is compared with the standard behaviors demanded by the
job
*Result oriented scheme:
The performance is judge on the basis of result and outputs

1) Self Appraisal:

The employee assesses his own performance himself. It save manager’s time, it
reduces the burden on senior management. It brings motivation. It brings
commitment. Employee is directly involved in job.

Disadvantages:

 He might not be mature enough

 He can’t identify mistakes

 He might be dishonest

2) Upward appraisal:

The subordinates assess the performance of appraisal

 It brings motivation

 Enhance upward communication

 The manager can have more views more feedback

 Subordinates are directly involved with the manager

Disadvantages:

 They are not mature sometimes

 Office politics

 Fear of giving negative feedback

 Sometime subordinate writes nothing because they think that they won’t
be listen

3) Customer appraisal:

The customer assess the performance of employees

4) 360º Appraisal:

Ask from his boss co-workers and employees

Appraisal Interview techniques:

1) Tell and sell method:

The manager will explain the employee that how he has been asses and he will
let him know about the result. It is one way of communication

2) Tell and listen method:

The manager will explain the employee that how he has been assess and then
he will allow the employee to comment, and then manager will announce the
result.

Through out the interview manager will not only one to lead

3) Problem solving approach:

The manager and the employee they both solve the problem on the basis of
consensus. The objective of the approach s to bring the efficiency in the job

Barrier to effective appraisal:

 Appraisal has confrontation ( appraisal us proceed in an open way)

 Appraisal is one sided process, the manager act as a judge.

 Appraisal has bureaucracy

 Appraisal has chat

 Appraisal has annual event

 Appraisal has unfinished business

 Appraisal and pay

Evaluating appraisal scheme:
 Whether the objective of the organization is achieved

 Labor turnover rate

 Employee grievance

 We can have feedback on appraisal and appraise

 Efficiency

 Cost benefit analysis

Chapter 14

Training and development

Topic list
Training

Development

Experimental learning cycle

Learning organization

Learning barriers

A systematic approach to training

Induction training

On the job training / off the job training

Evaluating training performance

Method of development

Management development

Carrier

Professional

Personal

Learning style

Theorist

Reflectors

Activist

Pragmatist

Benefits of training
 From organization view

From individual view

How does a person learn?

Behaviorist psychology

Cognitive approach

Training:
Training is the systematic modification of behavior through learning
provision or acquires new knowledge or enhancement in skills

Development:
Development is the growth, construction or realization of the person
potential

Benefit of training from organization point:

 It bring efficiency

 More productivity

 Motivated workforce

 Wastage rate reduce

 Accident rate may reduce

 Less need for detail supervision

 Ready for competition

 Flexibility

Benefit of training from individual point of view:

 Enhancement in post folio or in CV

  More opportunities for promotion

 Enhancement in skills

 Personal growth

 Job satisfaction

 Social benefits

Limitation of training:

 training cannot change bad management

 training cannot change poor factory equipments

 training cannot change poor recruitment

 training cannot give you willingness

 training cannot increase your intelligence

A systematic approach to training:

 identification of overall growth development

 define the learning gaps that how man skills are already present and how
many are need to acquire

 plan the training program

 implement the training program

 monitor, control, review, feedback is very necessary

 go back to step 2 if more training is requires or more training is

demanded

On the job and off the job training:

The training which is given to the employee within the work context it mean
whatever you learn while doing the job is on the job training
Methods of on the job training:

 observation

 learning from colleagues

 learning from manager

 learning from experience

 learning from mistakes

 temporary transfer

 temporary promotion

 job rotation

Off the job training:

The training which is given to the employee outside the work context is off the
job training.

Methods of off the job training:

 Workshop

 Seminar

 Classrooms

 Universities

 Computer based learning

 Visits and tours

Advantages of ON THE JOB training:

 It saves time

 It saves cost
  Practical approach

 No irrelevant theories

 No need for induction training

 Departmental and group relationship

Disadvantages
 Stress

 Work overload

 Efficiency may decrease

 Chances of costly mistakes

 No formal lectures

 Office politics

 No formal degree

Learning style:
Theorist:

They like theories, they like to study principles, and they can best learn from
teacher, they like formal classrooms

Reflectors:

They observe the phenomena first they learn. They have their own pace of
learning, they cannot learn in hurry program.

Activist:

They like practical work; they don’t have patience with theories
Pragmatist:

They want to connection b/w learning and rear situation. They want to
implement on rear situation.

Experimental learning style:

Have an experience

Review the whole scene

Give a conclusion in the light of theories and principles

Plan for the next step or implement

Learning organization:
An organization provides learning and development opportunities to its
employees and managers. These organizations are good at experimentation.
Theorists are risk takers. They can be bear costly mistakes. They transfer their
knowledge very quickly through the organization

Induction training:
Induction training is the formal training which is giving to the new employees
to reduce its frustration to let hi about the organization norms, organization
culture, value, pin point of the areas, so that he can start his job, let hi know
about the health and safety policies, let him know about the office layout, who
is the boss and who is the subordinate and what is the reporting structure.
Induction training is not a first day affair it is an ongoing process

Learning barriers:

 People hates responsibilities

 Blaming others

 Fixation on events

 People hate charges sometimes

  Office politics

 People ignore their experience

 Some people peruses that it has wastage of time

 Some people perceive that t has wastage of money

 Some peoples are not willing

Evaluating training program:

 We can have a feedback from its employees

 We can have a feedback from manager

 Accident rate check

 Wastage rte check

 We can have a test

 Quality of goods

 Cost of benefits analysis check

 We can observe employee when he is doing a job

Method of development:
Management development:

Enhancement is leadership skill, communicating skills, administration skills,

and HR skills for e.g. MBA

Career development:

Enhancement through promotion, career moves or through transfer

Professional development:

The training program which is designed by a professional body for its member
is called professional development
Personal development/ self development:

It is designed by the organization for the employee where as self development

plan is designed by the employee himself

How does a person learn: - (refer book) Online books available at

http://www.accaglobe.tk
Chapter 15

Conflict:
Clashes b/w two forces, different in opinion, dissatisfaction, disagreement

Causes of conflict:

 Miscommunication

 Misunderstanding

 Different in opinion

 Different in objectives

 Different in personality

 Different in perception

 Limited resources

 People are competing for power

Constructive conflict:
Healthy competition

Destructive conflict:
Strikes, etc

How to manage conflict personality?

1) Communication:

Exchanging of ideas

2) Negotiation:
Table talk, exchanging words

3) Separate:

Withdraw yourself form the situation if the other person is rigid

How to manage conflict in the team?

1) Denial/ withdraw:

If the conflict is on minor values just ignore it.

2) Suppression:

Sweeping it under the carpet

3) Compromise

4) Encourage collaboration

Divert their attention toward the shared objectives

5) Problem solving team

WIN WIN MODEL:

Win lose:

When one party completely satisfied and one completely lost this situation is
very common

Lose lose:

When both the parties scarify. It could be senseless outcome. The third party
takes the advantage

Win win:

When both the parties completely satisfied, they get what they want; here we
need to ask some questions

Grievance:

Grievance means sad feelings, sorrow feelings.

It occur when a person feels that he is been wrongly or unfairly treated by other
employee or manager

When grievance occur:

 Unfair disciplinary action

 Unfair appraisal

 Discrimination

 Harassment

 Dismissal

 Inequitable pay

 Blockages and training and development

Grievance should be should be solve either informally or there should be a

formal grievance handling procedure

1. consult with your union leader or your immediate boss

2. if you are not satisfied with your decision of immediate boss, go

to the higher management

3. cases referred to higher management should also be submitted in

the human resource department

Interpersonal skills
Skills which are used n interaction b/w more than one individual.

Needs of interpersonal skills

 motivation

 team working

 negotiation

 customer care
  communication

 interview

What is communication?

Transfer of message or exchange of ideas

Effective communication

It is a two way process when a sender send a message and receiver receive it,
he understand it, he interpret it and then get you the feedback

Feedback

Feedback is the response or reaction of the receiver and it gives confirmation to

the sender. Feedback could be verbal or non verbal or it could be an action

Encoding:

When the message is converted into words, symbols are called encoding and
encoding is from the sender side.

Decoding:

The words/symbol are converted into message and it is from receiver side

Distortion:

Sometime meaning is changed or lost during encoding/decoding

There are some factors which should be considered while selecting media.

 Speed

 Cost

 Confidentiality

 Complexity

 Need for the written record

 Need for interaction

Communication flows:

*Vertical

Downward

Upward

*Horizontal

Formal

Informal

* Diagonal

Vertical:
Downward communication:

From manager to subordinate

 Order

 Laws

 Rules and regulations

 Warning

 Command

Upward communication:

From subordinate to manager

 Feedback

 Report

 Advices
Horizontal communication:
Communication b/w pair workers,

 Manager to manager

 Subordinate to subordinate

It could be either formal or informal

Diagonal communication:
Communication which crosses the vertical and horizontal barriers

Communication barriers:
1) Physical noise:

Traffic, machinery, fans etc

2) Technical noise:

Bad internet connections, bad mobile connections

3) Social noise:

When peoples are from different culture they communicate

4) Physiological noise:

The state of mind and the mood of a person

5) Language:

6) Use of non verbal signs

7) Technical jargons:

Vocabulary which is for particular field

8) Lack of communication skills

9) Distortion
How to overcome these barriers?

 Use sound proof doors

 Use good internet connections, use good mobile connections

 Give them training

 Use simple language

Communication methods:
1) Written communication:

Communication in black and white form (letter, applications, memo, email,

policy manual, house journal, fax etc)

2) Oral communication:

Face to face interaction or verbal communication, (telephone calls, voice chat,

meeting lectures, interviews etc)

3) Non-verbal communication:

Communication without words (postures, facial expression, body language,

symbols, nonverbal signs, smile etc)

General guidelines on informing:

 Identify the listener needs, audience need

 Use visual aids

 Seek feedback

 Use appropriate verbal signs

 Use effective media

 Identify the audience taste

Influencing:
Push style:

Influence the people in authoritative style, identify the problems and give
command and don’t ask comments from other person. Its fast but the
commitment is weak

Pull style:

It is democratic approach, consult approach, we identify the problems, give our

suggestion and ask for comment, it’s slow but the commitment is strong

Assertive behavior:

Positive communication, clear-cut communication, direct communication,

honest communication.

Standing up for your right in such a way that you are not violating the right of
others. Expressing your needs, your wants in appropriate manner is what
assertive behavior

Aggressive behavior:

It is a fright reaction either physical or verbal

Standing up for you right n such a way that you are violating the rights of
other. Expressing your needs, your wants your opinion in an appropriate
manner is what aggressive behavior.

Positive behavior:

It is a flight behavior; one can’t standup for his or her own rights.

Negotiation:
Negotiation is a problem solving technique when both the parties exchange
arguments and in the beginning they have different objectives but at the end
they ant to solve their problems without damaging the relationship they want to
reach a mutual consent, mutual understanding what they both can live with that
situation.

 What is your ideal situation and worst situation?

  Though the both parties should be flexible?

 Over coming side tracks

 Don’t be personal

 Be culturally sensitive

Counseling:
Counseling means guidance, advice, support someone, to help someone.

Counseling is the temporary relationship when one person helps another person
to help himself it is a way of exploring thoughts, emotions and the feelings
with the aim of reaching the clearer understanding, there should be a separate
space for counseling. The meeting should be kept confidential. You should
always be honest and correct; you must be good listen as well. You should play
a passive role. Councilor can’t take the decision because it is not his problem.
He should adopt a passive role. Canceling is free of cost and indirect service to
an employee, this problem can solve without the involvement of councilor.

CHAPTER 16 (read from T5 study text)

Section E is basically a section of common sense. So there is no need of

writing in concise notes format. For section E you must read the Book.

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