Nature and Principles of Management & OB (Module 1)

Module 1

& OB
Nature and Principles of Management
directing and
planning, organising, staffing
1.1. MANAGEMENNT controlling are ali a part of the management
Management can thus be
understood as a
process.
process of
different
1.1.1. Meaningg and Definition of setting the objectives and performing
Facets of
activities for achieving these objectives.
Management management as a process fo!lows:
are as
The term 'management' stands for the act of planning, Process: The process
the activities of ) Management is a Social
organising, directing and controlling of management is generally considered as a social
human beings and physical resources with the intention
because while carying-out the
process
of accomplishing a predefined objective. Being broad in have to deal1
nature the word carries many contextual meanings. management operations, managers
with people who are involved in attaining the
It is looked upon as a 'factor of production', as a 'class of
organisational goals. A manager can successfully
persons', as a 'process' and as an 'exploiting set of people perform his duties only when there is a positive
interaction between employees. Hence, being a
from the view point of economists, socialists, management
practitioners and trade unionists, respectively. In a social process, management is responsible for
nutshell, it is portrayed as 'an activity' or 'a process' ensuring that the employees communicate with
executed by 'a group of people' dynamically engaged with each other in a productive way.
the authorities to make decisions or policies. In further is an Integrating Process: There
simplification, it can be stated that, management is the job
ii) Management
is a continuous interaction between human and
of a manager, who exhibits the art of managing the people the non-human resources (materials, assets,
and getting the things done with the help of formally buildings, technologies, machineries, etc.) in an
organised groups of people. organisation. It is the responsibility of the
management to combine the efforts of the
According to Louis Allen, "Management is what a

manager does". employees with other organisational resources.

Management integrates and synchronises all
According to James D. Mooney and Allan C. Reiley, financial, technological, human and physical
"Management is the art of directing and inspiring people". resources of the organisation.

According to Peter Drucker, "Management is a ii) Management is a Continuous Process:

multipurpose organ that manages a business, manages Management is a never-ending process and is
manager and manages workers and work". not just confined to creating harmony between
physical and human resources for specific task.
According to Koontz and O'Donnel, "Management is The scope of management duties is quite wide
the creation and maintenance of an intermal
which encompasses solving of different
environment in an enterprise where individuals, problems and concerns. The process of
working in groups, can perform efficiently and management focuses on continuous detection
effectively toward the attainment of group goals. It is and resolution of issues and problems.
the art of getting the work done through and with
people in formally organised groups". 2) Management as an Activity: Management is
considered as a process as it involves a set of
1.1.2. activities which in order to be effective should be
Concepts of Management carried-outin a particular
Different concepts related to management are as follows:
in context of
sequence. Management
1) Management as a Process: Managementis being an
activity suggests that,
considered a process as it comprises of a sequence of management is what managers do. Management
activities. Process of management involves seting
as an activity involves the following aspects:
organisational goals and taking necessary actions i) Informational Activities: In order to
perform
ensuring that the set goals are realised. Functions like its functions, managers are
continuously in
1.1.3. Nature of Management
Nature of management can be explained with the help
of the following points:

Nature of Management

Continuous Process
Management as a Discipline

Management as a Career
Management as a Science as
well as an Art
Goal-oriented
Guidance
Management is a Human
Activity Management Denotes
Authority
Management is Universal
Management Ensures
Coordination
Management is Dynamic
Management is Primarily a
Leadership Activity
Management is Decision-
making Management is Profession
Nature and Principles of Management & OB (Module 1)
ii) Taxes and other returns to be filed on time with
the government, regulatory and statutory
agencies.
ii) Natural resources should not be exploited for
increasing profitability. Hence, management
should protect the environment from harmful
business activities.
iv) Maintaining friendly relations with dealers,
suppliers and competitors.
v) Conserving moral and ethical values of the
society.
1.1.6. Management Process:
Functions of Management
Each and every business emdeavour has its own
predetermined goals to achieve. The realisation of those
goals may not be possible without an intended and
incorporated unanimous effort of all the organisational1
members who follow the instructions of a central
coordinating agency. For example, in case of a football
or hockey team, one cannot win the game until and
unless there is a combined attempt by the players under
the appropriate guidance of a Captain of the team. The
central coordinating agency in this context is 'M-A-N-
A-G-E-M-E-N-T' and the approach of getting the
things done is known as the 'management process.
Hence, management is a complex process which
includes many activities in a particular sequence. Each
activity contributes towards the attainment of the
organisational goals. Individual action or activity
performed in the management process is designated as
functions of management'. In the process of
management, individual functions are carried-out
according to a time-specific arrangement. Thus,
management process can be referred to as a process
where the manager performs functions in sequential
time-bound manner.
Planning
Controlling
Organising
Directing Staffing
Figure 1.1: Functions of
Management
Management is a social process as it is accountable of
achieving the goals of the organisation by regulating its
functions and also ensuring that the planning activities
are being carried-out in a cost-effective and efficient
manner. Management is also a dynamic process which
involves different components and practices. Practices
performed by management are not similar to the
operational-level activities like procurement, marketing
production, finance, etc. These dynamic activities are
15
performed by the top, middle and operative level
managers. The main functions of management process
are explained below
1) Planning: The deliberate effort to attain the
expected result through a predetermined future
course of action is termed as planning.
It involves
visualisation of activities that need to be done, the
methods for doing them, where they are to be done,
what will be the outcome and the methods to
evaluate the outcomes. As-per Henry Fayol, every
management should visualise a plan that comprises
the desired result, foreseeing the line of action,
methods to be adopted and stages to go through.
2) Organising: The second function of management
is to prepare and organise. Organising involves
division and re-division of work into smaller tasks,
distributing the tasks among designated staff and
allotting authority to every position for ensuring
proper functioning of the same. Proper organising,
the effectiveness of the company is enhanced,
repetition, redundancy and duplication of the
operations is avoided; thereby reducing the
operating cost of the company. It is the
responsibility of the management to organise the
required resources beforehand and then to follow
the planned activities.
3) Staffing: It is the process of appointing people far
the positions formed by the process of organisation.
Staffing is the process of recruiting, deploying and
retaining sufficient and qualified employees or
staffs to create and maintain a favourable working
environment and thereby improving the
organisational effectiveness. In large companies
staffing process is carried-out by coordinating with
the human resource department.
4) Directing: Direction is the key to achieve required
goal. After the orientation, the senior manager is
accountable for directing and leading the
subordinates to achieve enhanced job performance
and to motivate them to work with passion,
confidence and enthusiasm. Directing motivates the
employees to perform their responsibilities towards
realising the organisational goals. While planning,
organising and staffing are the preliminary
functions to the actual business activities, direction
adds a spark to the organisation by bringing the
processes into motion.
5) Controlling: Functions of a manager are not
complete even when the above elements are in
place. It is very important for the manager to
review and assess the organisational activities on a
regular basis and take necessary steps for ensuring
that the plans are being carried-out in compliance
with the predetermined path. Controlling is a
visualisation process that verifies that the tasks are
 16
MBA First Semester (Organisational Behaviour) BU

performed as per expectations and checks for instructions and guidelines provided by the middle
current and future deviations. The controlling level of management. They are responsible for
function helps the management in getting things done by the workers. Production
deviations if any, and makes
identifying the
required changes in activities, assignment of jobs amongst workers,
the plans for achieving the arrangement of required machinery and tools, etc.,
organisational goals.
are the activities perfomed by these managers. It is
1.1.7. Levels of Management the responsibility of these managers to get the work
Every organisation has a chain of command which done of the desired quality in the specific periodof
determines the powers and the ranks held time. They provide technical assistance to the
by the workers; ensure availability of necessary facilities;
managerial personnel. Levels of management can be
divided into following categories: report problems and offer feedback to the higher
level authorities, etc. It is also a part of their job
description to prepare the daily plan of action as per
Top the guidelines specified by senior level managers.
President
Vice-Presidents
Middle 1.1.8. Significance of Management
Plant Managers, Management plays an important role in the growth and
Division Managers, welfare of an organisation. The following points
Department Managers describe the significance of management:
Supervisory/0perative Management
Foreman, Supervisors, Significance of Management
Office Managers, Team Leaders
Motivates to Take Initiative
Figure 1.2: Levels of Management Encourages Innovation
1) Top Management: Top level management Helps in Expansion and Growth
involves Increases the Standard of Living
the
people that are at the highest of the Employees
managerial positions. This position is held by the Improves Corporate Image
senior most authorities in an
organisation including Encourages Motivation
the Board of Directors, Chief Executive Officer Reduces Wastage of Resources
(CEO), sectional heads, etc. They are involved in Improves Efficiency
the long-term planning, laying down Enhances Employee Relations
policies and
strategies for organisational development and Decreases Employee Turnover
selection of methods to be adopted for and Absenteeism
the objectives.
achieving
They act as a medium of
Fosters Teamwork
communication for maintaining relations with the
external suppliers and agencies. Being the leaders
1) Motivates to Take Initiative: To do an
of the organisation, they are accountable for
good without being influenced or motivated activity
or poor performance of the
organisation. is termed as initiative.
by someone

2) Middle Management: Departrmental heads fom Management always

encourages the employees to take initiatives to
the middle level management. They are perform activities that are new yet beneficial for the
for
responsible
monitoring the departmental activities, giving organisation. Management encourages the
instructions and maintaining coordination between employees to formulate new plans,
implement them for the benefit of thestrategies
the various activities carried-out in the several units and
and divisions. Middle level managers play the role without being influenced by the organisation
of the mediator between the top level higher authorities.
Self-induced activities give sense of contentment
management to
and lower level management. They convey the the employees and thus,
decisions taken by the seniors and explain the continue doing such work encourage them to
and bring success
importancee of the same to the lower level to the organisation.
management. They also transmit the feedback and
suggestions given by the supervisory level to the 2) Encourages Innovation: Innovation is a necessity
in today's
seniors. Their role is to motivate, inspire and competitive environment. Management
encourage the operational level managers to facilitates introduction of new ideas and concepts;
use of new and
increase their performance levels.
installation of advanced
productive methodologies;
3) Supervisory or Operative Management: First technologies; launch of
innovative products and services; etc. Hence, it can
line supervisors like superintendent, section be said that
officer, foreman, supervisor, etc., come under the
management has an
important
Tole in maintaining the
operative management level. They follow the of the organisation.
competitive position
 17
Nature and Principles of Management & OB (Module 1)

involved in an activity
3) Helps in Expansion and Growth: By exercising 8) Improves Efficiency: Cost to the
can ensure and returns expected are directly proportional
proper nmanagerial skills, a manager is conducted.
effective and efficient use of resources. Since each efficiency with which the activity increased
activity is performed as per the predetermined Higher efficiency helps in achieving
in the returns at Managers are able
minimum cost.
to
norms and standards, there is a reduction
increase the organisational efficiency by
using
wastage and spoilage of the resources. Management and techniques. Thus,
motivates the employees to give better performance different managerial tools
to the
and attempts to reduce absenteeism and employee managerial activities bring prosperity
organisation and provide benefits
to the employees.
turnover. These activities in turn enhance the
growth and growth prospects of the organisation.
9) Enhances Employee Relations: Management
4) Increases the Standard of Living of the coordination between
helps in establishing proper of
Employees: Management ensures that the profits the various divisions, sections and departments
earned by the organisation are also shared with the the organisation. Cordial relations between the toop
employees. Management inspires the employees level, middle level and lower level management
results in a sense of team spirit amongst employees.
by improving the working environment and
conditions which in turn ensures their Each department and employee is governed by thhe
productivity. It also offers non-financial and standards laid down by management that are
financial incentives to satisfy their monetary and designed to coordinate with one another. Effective
non-monetary needs. Thus, satisfying the coordination and cooperation between employees at
monetary needs of the employees alongwith different levels results in the overall productivity of
offering them psychological and emotional the organisation.
satisfaction improves their standard of living. Turnoveer and
10) Decreases Employee
Absenteeism: Management is always practicing
5) Improves Corporate Image: Efficient management different ways to reduce absenteeism and employee
services to
helps in providing superior products and turnover. Absenteeism remaining absent
means
the consumers. Offering best goods and services at
reasonable and economic prices creates a good from the service without taking prior permission
from the senior management. Labour turnover
This leads
image of the organisation in the industry. means the with which the
rate or workers
to improvement in the brand image and goodwill of
main
employees leave the organisation. The
reason
the company. Good corporate image creates many
for turnover is lack of motivation. If managers
opportunitiesfor the organisation and creates a and
dominant position in the market. identify motivational needs of employees
will not
be
provide suitable incentives, employees
Motivation: Employees can Reduction in
6) Encourages think of leaving the organisation.
encouraged by providing both financial and non-
turnover minimises the cost of new
recruitment.
incentives to increase the work conditions
financial1 Management provides good working
efficiency. Financial incentives (like bonus, profit which help in reducing absenteeism.
etc.,) and non-financial
sharing, allowances, career 11) FostersTeamwork: Management motivates its
incentives (including promotion, likewise the
employees to work in a team,
advancement opportunity, job security and between team members increases
towards coordination
stability), both contribute positively among the team members is
of the productivity. Unity
improving performance and efficiency essential for achieving common objectives
of
employees. These incentives give a feeling of the organisation.
their
empowerment to the employees regarding
presence in the organisation. This results in
increased productivity and profits.
1.1.9. Limitations of Management
Limitations of management are as follows:
are three
7) Reduces Wastage of Resources: There 1) Globalisation of Business: Now-a-days,
main type of resources used in every organisation businesses are increasing their markets with the
viz., physical, human and financial
resources.

The planning and controlling function of help of globalisation. Since, various barriers have
been removed and tariff rates have been exempted
management should be efficient so that the in some goods while it has been reduced for otheer
resources are utilised in an efficient manner. cases, this has given a broad opportunity to various
Each management activity if conducted as per
countries for easy trade. The countries which have
will
the predetermined standards and norms
and given technology and capital to India, today those
reduce wastage and spoilage of resources
are competing against India. This has created a cut-
productivity. This will
increase organisational throat competition in the world's business and has
enable the organisation to offer quality products
given a chance to even the smallest nations for their
at competitive rates to the customers.
 18
survival and growth. Entering into a global market
raises many challenges in front of the nations and
firms. These challenges can be in the form of
cultural diversity, availability of natural resources,
political environment, etc. Managers should be able
to adapt different cultures as well as shouldd
implement different management styles
different organisational situations.
2) Diverse Human Resource: Another challenge
faced by managers is the diversity of human
resource. In an organisation, the employees can
from different
come
backgrounds such as women,
physically challenged people people from
backward classes, different castes of
different religion, different states of
society,
country,
etc.
All these pose challenges both in front of the
management as well the employees.
For example, if more and more North Indians
join
the IT firms located in South India, then this creates
a level of difference
among people, which in turn
becomes a challenge for the organisation.
3) Varying Employee Expectations:
With the
change in the world economy, workforce diversity
has resulted in changing the expectations of the
employees. Mere security of job, compensations,
bonuses do not appeal to the employees any more,
instead they demand status, empowerment,
recognition, etc. This denotes that the employees
needs and demands have been shifted from
materialistic rewards to self-esteem needs. These
changes in expectations pose great challenges in
front of management.
4) Crisis Management: It is a crucial aspect for the
management. Business crisis can be anything which
can bring the business in a difficult situation. It can
affect the company's image in a negative way. The
management should take utmost care in handling
these situations as any delay can bring harm to the
organisation. Any issues related to production,
human resource, group dealings, marketing,
interpersonal situations in an organisation should
not be overlooked. These issues may not sound
important initially but can result in creating crisis in
the group or division or whole organisation.
Managers have to be watchful and identify such
situations immediately. Managers need to enforce
The
significant policies to sustain such situations. The
crisis management strategies have to be practical
and realistic in nature to confront such crisis in an
organisation.
5) Employee Retention: Management should create a
work environment which promotes and develops
the efficiency of the employees. Management
should understand the importance of employees in
the smooth functioning of anorganisation and
MBA First Semester
(Organisational Behaviour) BU
should take necessary steps to keep
service for the long-run. If employees in
satisfied with the
employees are not
working conditions, reward
system, or
superiors-subordinate
it result in labour turmover. relationships,
can
The
etc.
should put proper efforts to retain the management
for efficient
talented and
people in the organisation. The
management can face difficulties if it does not take
enough care for employee retention.
6) Increase in Quality Awareness: Global
market
increases competition in the market. New entrants
come upP with
products of better quality at an
affordable cost. This encourages every player to
innovate products of high quality at competitive
prices. Foreign companies give a lot of emphasis on
quality to attract the customers which helps other
firms in identifying the ways to improve the
of their products. Due to provision of
quality
special
importance for quality, many organisations have
adopted advanced technology and also changed the
functioning of the organisation. These changes
introduced in the organisation may not be accepted
by the employees. Normally, employees tend to
show resistance towards any change in the
organisation. This reluctance may show adverse
effects on the operations of the organisation.
7) Change Management: Change is an essential
ingredient in everyone's life. Accepting the change
and being a part of the flow is always beneficial for
the growth of an organisation. In today's modern
era, changes are essential for existence and growth
of organisations. There are several difficult
Situations, which the enterprise must be aware of
and should deal with them prudently. The modern
business is more complex and unstable in nature in
comparison to traditional form of business.
Hence, it is the ability of the managers to adapt the
changes and implement them into actions leading to
success and growth of the business. The risks and
opportunities offered by the environment have to be
successfully converted into growth prospects by the
managers with the help of workforce of the
organisation.
1.1.10. Difference between
Management and Administration
The distinction between administration and
management is merely theoretical. They are used
interchangeably in practical applications.
Administration is used more often in the public or
government sectors, while management is a more
popular term among business set-ups where
profitability is most significant. Management and
administration are differentiated on the basis of
following points:
Nature and Principles of Management & OB (Module 1) 19

13) Static vs. It is a dynamic.|It is a finite, static,

Basis of Management Administration Dynamic value-adding, non-productive
nd|function which aims
Distinction productive,
function at
1) Nature It is a doing or| It is a thinking or| infinite merely
executive function. determinative which aims to|maintaining
increase value resources
the rather
function. assigned than adding value to
2) Type of Work |It involvesIt involves| of
implementation of formulation organisational them.
of resources.
policies for the policies and
achievement of objectives.
3) Direction of
objectives.
It involves It does not involve| 1.2. MANAGER
Human directing efforts of direction of human|
Efforts employees towards|efforts. 1.2.1. Introduction
achievement of Individuals who are responsible for carrying out various
organisational functions of management are known as managers. It is
goals. the manager who supervises all the employees and
4) Main Controlling and Planning and
its divisions of an organisation to ensure right performance
Functions motivating are its organising are
of assigned tasks. There are different managers for each
main functions. main functions.
It includes middle It includes top-level management level.
5) Managerial
Level and lower-level |management, such
management such as, Board of There are usually three management levels, ie., top,
as Managing Directors. middle and lower level, under a large organisation.
Director, General Each of these management levels includes managers
Manager, etc. who supervise and undertake managerial operations. A
6) Influence |Set policies andExternal forces and lower level manager operates under basic levels of
objectives public views managerial functions, while a middle level manager
influence influence supervises lower management employees and reports to
managerial administrative senior levels.
decisions. decisions.
7) Skills |Human and Human and A top level manager oversees generated reports and
Required technical skills are conceptual skills are
represents them to Board of Directors or owners of
required for required for| the company. These reports are helpful in making
management. administration.

used in Mainly used in key decisions and setting organisational goals. Thus,
8) Usage Mainly managers are the performers of managerial
functions.
business set-ups. public and A manager has greater responsibilities and is usuaBly
government sectors.

Administration acts paid higher salaries as compared to other employees

9) Employee Management acts
of the organisation. Likewise, senior level managers
Boss Relation as an employeelas the boss who
who receives salarylearns profit and possess advanced managerial qualifications
or a part of profits|provides factors of and experience.
for services|production.
rendered. 1.2.2. Functions of Manager
10) Co-ordination |Makes use of Determines Following are the main functions of a manager:
and Control organisational set-lorganisational set-
up to direct actions up by co-ordinating 1) Setting Goals and Planning: The main function of
towards the finance, production, setting goals according to the company's vision and
distribution mission is performed by the managers. This
achievement and d function also includes planning essential steps
organisational functions,
controls the required for accomplishing set objectives.
objectives.
organisation.
need for The need for 2) Organising the Group: Another major function of
11) Administrative The a manager is to analyse processes, decisions, and
Vs. Technical technical abilities is administrative
than abilities is greater steps required for achieving organisational goals.
Ability greater
than technical For performing such a task, they divide work into
administrative
abilities. abilities. smaller manageable segments and further classify
12) Illustrations Includes Managers, Includes Chief them into simple jobs and activities. Finally, similar
General Managers, |Justice, combined together. This
group units and jobs are
Company Commissioners, helps in organising various groups and also
Directors, etc. Ministers facilitates in identifying right employee for a
Registrars, Vice-
chancellor, etc. particular task.
1.2. MANAGERR
1.2.1. Introduction
Individuals who are responsible for carrying out various
functions of management are known as managers. It is
the manager who supervises all the employees and
divisions of an organisation to ensure right
of assigned tasks. There are different
performance
managers for each
management level.

There are usually

three management levels, i.e., top,
middle and lower level, under a large
Each of these management levels includes
organisation.
managers
who supervise and undertake managerial
operations. A
lower level manager operates under basic levels of
managerial functions, while a middle level manager
supervises lower management employees and reports to
senior levels.

A top level manager oversees generated reports and

represents them to Board of Directors or owners of
the company. These reports are helpful in making
key decisions and setting organisational goals. Thus,
managers are the performers of managerial functions.
A manager has greater responsibilities and is usualy
paid higher salaries as compared to other employees
of the organisation. Likewise, senior level managers
possess advanced managerial qualifications
and experience.

1.2.2. Functions of Manager

Following are the main functions of a manager:
1) Setting Goals and Planning: The main function of
setting goals according to the company's vision and
mission is performed by the managers. This
function also includes planning essential steps
required for accomplishing set objectives.

2) Organising the Group: Another major function of

a manager is to analyse processes, decisions, and
steps required for achieving organisational goals.
For performing such a task, they divide work into
smaller manageable segments and further classify
them into simple jobs and activities. Finally, similar
group units and jobs are combined together. This
helps in organising various groups and also
facilitates in identifying right employee for a
particular task.
20
Another
3)
3) Motivating and Communicating:
to motivate
important function of manager is is
subordinates. A manager
employees and
teams and
responsible for encouraging various
workgroups that perform specified managerial
functions. Managers are also responsible for
between
minimising communication gaps
employees and departments by ensuring proper
flow of information. This avoids organisational
conflicts and is very essential for smooth working
of an organisation.
4) Measuring Performance: This function includes
setting performance standards and benchmarks for
every employee of the organisation. Managers have
to ensure that every employee, and his
subordinates, should meet these performance
standards. In this manner, managers are able to
measure the performance of each individual and
can motivate or appraise anyone, if needed.
5) Developing People: A manager is primarily
responsible for the growth and development of his
subordinates. For taking the best inputs from
employees, managers help team members and
workgroups for getting tasks done in an efficient
manner by ensuring growth of every individual
6) Establishment of Effective Coordination
Control: This function includes establishing
effective coordination and control within the
organisation for avoiding any conflict or chaos.
Effective coordination ensures smooth working of
organisation by maintaining harmony.
7) Arrangement of Capital: Another major
function of a manager is to assess the right
amount of funds required for conducting daily
busineses activities. After successful
assessment, managers are also responsible for
arranging such funds at minimum costs.
1.2.3. Roles of Manager
for fulfilling
Multiple roles are assumed by managers

responsibilities. According to Henry

different
are commonly
there are ten roles that
Mintzberg,
all the These roles are grouped
performed by managers.
into three main categories, namely:
Interpersonal: It is the link between different
1)
managerial works.
Informational: This role ensures provision of
2)
information
3) Decisional: This role facilitates efficient utilisation
of information.

Different managers can perform these roles at various

circumstances or one manager can perform them
according tothe situation and the management level.
These individual roles are a part of an integrated
managerial role as depicted in the figure 1.3:
 Figurehead
Provide
Interpersonal Leader
Information
Liaison

Monitor Process
Informational Disseminator Information
SDokesderson

Entrepreneur
Disturbance Handler
Use
Decisional Resource Allocation Information
Negotiator
Figure 1.3: Role of Manager
has to
play
play
1) Interpersonal Roles: A manager
different roles as per the requirements
of the
him. These roles are
responsibilities vested upon
connected with the interpersonal relations shared by
a manager and his subordinates. While performing
interpersonal roles the manager acts as a:

manager has a role of a star

i) Figurehead: A
figure during some events like welcoming
foreign business associates or senior personnel,
attending personal function of the subordinates,
hosting lunch for special customers, etc.
ii) Leader: It the role of the manager as a leader
to encourage his subordinates and motivate
them to satisfy their individual needs in a way
that ensures fulfilment of the overall
organisational objectives.
ii) Liaison: Every manager should be a good
communicator outside his commanding area to
gather information from other sources present
in the organisation.
2) Informational Roles: Collection and dissemination
of information is a major part of managerial work
performed by a manager. While performing
informational roles the manager acts as a:
i) Monitor: A manager has to develop a personal
network of contacts inside and outside of the
organisation. As a monitor, he has to constantly
analyse his business environment for extracting
information, questioning his isubordinates and
receiving unsolicited information from the
established contacts.
ii) Disseminator: It is the role of a manager to
share privilege business infornmation with his
department members which otherwise would
not be available to them.
ii) Spokesperson: An organisation has several
stakeholders like shareholders, investors,
consumers, society, etc., who require information
about the activities of the
enterprise.
role are to recommend the shareholders
A manager's

financial performance, assure the regarding

government and
regulatory authorities that the enterprise abides by
thelaw, and that social responsibilities
ensure
are
met for the
well-being of consumers.
3)
3) Decisional Roles: A manager is the key personnel
in the decision-nmaking process. As he has access to
all the information and can voice his opinions for
the benefit of the organisation. While performing
decisional roles the manager acts as alan:
i) Entrepreneur: Business environment is
dynamic in nature. The environmental factors
keep on changing constantly. A successful
manager is one who adopts these changes,
implements them to improve existing and new
products, device innovative business plans, etc.
i) Disturbance Handler: A manager must be
prepared for handling unanticipated problems
in and outside the organisation. He must have
contingency plans or prompt solutions in case
of strike by the workers, important consumers
going bankrupt, a client terminating contract
against the terms decided, etc.
iii) Resource Allocator: Division of work among
subordinates and delegation of authority to
perform the given work should be done by the
manager. He assigns tasks to employees as per
their individual capacities.
iv) Negotiator: A manager represents the
organisation in case of a dispute that calls for
negotiation. A corporate level manager plays a
role of a negotiator and takes decisions for the
organisation as a whole. Not all negotiations
are handled by the top-level manager; issues at
executive level are resolved by the executive
level managers.
 1.2.4. Skills for Managers
Individual talent and skills are required to successfully
transform an idea into action. It is not possible for any
individual to have all the qualities and skills. But an
individual who understands these skills and is willing to
learn can acquire them through training and conscious
efforts. Proper training and development can sharpen
the skills of manager. A manager should possess
motivational skills, social skills, communication skills,
etc. to discharge his duties and responsibilities
effectively. The various skills required by a manager
are grouped into three broad heads -

technical skills,
human-reiations skills and conceptual skills. These are
discussed below in detail:
1) Technical Skills: Technical skills (also termed as
hard skills) are mainly concerned with the
knowledge of the particular subject or area for
which the manager is responsible. These skills are
related to the knowledge of the various processes,
procedures, techniques and methodologies used in
the area of expertise. Technical skills can be
enhanced by proper training and on job experience.
Professionals like engineers, architects,
accountants, etc., possess knowledge required to
 skills are developed
perform their job but the
work. For
further by actually practicing the
example, if a person is responsible for maintaining
inventory in an organisation then he must possess
the required technical skills to efficiently maintain
the flow of inventory.

2) Human Skills: A manager should be social and

friendly towards his subordinates. He should
understand people and maintain good human
relations with them. He should have the capacity to
clearly explain his ideas to his subordinates. He
should have the ability to judge the possible
outcomes of his actions. A manager should have
self- evaluation skills so that he is able to analyse
and develop his behaviour and attitude. Human
skills are consistently required by the managers at
every level of management.
3) Conceptual Skills: These skills are related with
ideas. The thought process behind developing new
and innovative products is called conceptualising.
Conceptual skills are also known as soft skills and
they are not easy to identify. These skills are
present in the form of vision, inspiration, idealistic
ideas, imagination, etc. These skills are also known
as general management skills which help the
managers in visualising small elements present in a
situation as well as the interdependence of these
elements. This helps the manager in understanding
the situation in a broader perspective.
Thus, technical skills action-based, human skills are
are

relation-based and conceptual skills are idea-based.

However, every person may not necessarily possess
order to become a
these skills in equal proportion in
successful manager. Every skill may
be present in
depending upon the personal and
varying amount
of the individual. Thus, a
professional background
should management skills in aa
manager possess
proportion required perform
to his roles and functions.
Top level management are expected to possess the
skills which may not be expected by the lower level
management, and vice versa. The importance of these
skills differs from top to the bottom of the
organisational hierarchy (figure 1.4), which can be
understood as follows:
Conceptual
Top-Level Skills

Middle-Level Human
Skills

Lower-Level
|Technical Skills

Figure 1.4: Relative Needs for the Main Categories of Skills

 operational level should possess more
1) Managers at
technical skills in comparison with 'conceptual
skills' which are rarely used at this management
level. The managers at supervisory level are in direct
contact with the subordinates for providing proper
assistance and guidance. Thus 'human skills' are
also extremely significant at operational level for
creating cooperation and mutual understanding
between the management and the workers.

2) Middle level management acts as a mediator

between the high level and supervisory level
management. Thus, human skills' are very
important at this stage. It is the responsibility of the
middle level managers to understand the decisions
taken by the senior authority and convey the same
to the workers. Also, 'conceptual skills' are
required at this level as the managers have to
develop and implement various techniques to
increase production levels.

3) Managers at the highest hierarchy level require

3)
conceptual skills to develop novel ideas to
accomplish the predetermined standards of the
organisation. They need to select various policies
and strategies for long-term planning. Inter
personal skills' are also required to manage the
activities carried out in the organisation and also
to maintain cordial relations with external
agencies in an efficient and effective manner.
However, 'technical skills are required at a
minimal level because they are not in direct
contact with the supervisory staff. They deal with
planning cost effective techniques for attaining
common objectives and offering quality products
to the end consumers.
 1.2.5. Responsibilities of a Manager
A manager has the following responsibilities
1) Planning for Work: Managers are primarily
responsible for planning work by focussing on the
organisational objectives. Every work plan should
aim towards the achievement of such objectives.

2) Proper and Effective Communication:

A
manager is responsible for maintaining a proper
and effective communication within the company.
He is also
responsible for identifying and
eliminating communication gaps and related
barriers of communication. This fosters free
flow of communication and removes
misunderstandings or doubts.

3) Coordination of Efforts: A manager is responsible

for coordinating the efforts of all the empioyees.
These efforts are considered to have more worth
than company's finance. Thus, these efforts are
accurately coordinated in a productive manner by

developing a system for channelisation.

4) Getting Cooperation from Employees: Due to
to th
the
distinct nature of employees, there iS an absence

cooperation at the workplace

ressl. ot
which often
in
low production activities. Thus, a managerfromis
responsible for extracting cooperation froOm
employees by motivating them towards their work

5) Encouraging Team Spirit: Alongwith acting as a

mentor, a manager is also responsible for for
encouraging team spirit within workgroups. By
using polite and powerful words, and
simultaneously adopting a suitable approach, a
manager stimulates positivity and a sense of group
morale among employees.
6) Better Utilisation of Resources: A manager
ensures optimal and better utilisation of resources.
He is responsible for accurately measuring the
amount of available resources and creatively using
them at their maximum level, so that no resource
becomes a waste product.
7) Selecting Right Procedure: The top level
executives establish plans and objectives of the
organisation. However, the right procedure of
achieving such objectives and plans is identified
and developed by managers. They are also
responsible for selecting the right course of action
among various alternatives.
8) Maintaining Good Human Relations: Managers
are responsible for maintaining good and healthy
human relations with all employees and workers.
They also ensure harmony and good working
relations between employees of different
management levels.
9) Solving the Problem: Managers are responsible
for taking initiatives towards solving various
problems and conflicts that arise within an
organisation. They identify and understand the real
problems of employees and make them grateful.

10) Arranging Training and Development Facilities:

A
manager is also responsible for organising
training and development related facilities for the
growth of employees and organisation as a whole
as these facilities are
beneficial for both employr
and the organisation.
1.3. EVOLUTION OF
MANAGEMENT
The emergence of management thoughts and principles
can be drawn out from pre-historic times.
Since then,
human beings started living together in organised
groups or in a society consisting of different groups.
groups
These efforts have helped them to organise their action
and carry-out their activitiees in an efficient
and
and
productive manner.
Management principles have evolved with time and are
in continuous process of evolution.
Management
principles are flexible in nature and its application
depends widely on the nature of the situation.
Management principles have a broad base and help in
decision-making process. They are famous and have a
worldwide acceptance. As management principles are
linked to human behaviour, they keep on Constantly
changing and evolving.

The evidence of such management practises and

theories have been found. For example, in 3000 B.C,
the Sumerian civilisation followed a well-organised tax
collection system under the management of priests. The
history of Egyptian civilisation sets an excellent
example of organising human and material resources by
constructing pyramids. Till now, the organisation of
political, economic and social affairs in the Roman
Empire is regarded as the most efficient management
practice. Kautilya's Arthashastra highlights one of
the best techniques of managing the State affairs.

The evolution of various formal management theories

started in the early 1990's. The era of industrial
revolution recognised the need of efficient management
of the societal resources. This involved the
development of steam engines and other mechanised
production means, so as to manage large scale
production, utilising physical and human resources.
The development of management thoughts comprises of
major schools which can be classified into three major
categories as given in table 1.1:
Table 1.l: Major Management Gurus and their
Contribution
Major Classification of Management Management
Schools Gurus
1) Classical i) Scientific a) Frederick
Approach Management W. Taylor
b) Henry
Gantt
c) Frank and
Lillian
Gilbreth
ii) Administrative Henry Fayol
Management
iii) Bureaucracy Max Weber
2) Behavioural i) Human Elton Mayo
Approach Relation
Approach
ii) Behavioural a) Maslow
Science b) Herzberg
Approach c) McGregor
d) Mary
Parker
Follett
e) Blake and
Mouton
f) Chester
Bernard
 3) Modern i) Quantitative a) Russel L.
Approach Approach Ackoff
b) F.W.
Lanchester
c) Thomas
A. Edison
ii) System Churchman
Approach West
ii) Contingency Paul Hersey
Theory
iv) Social Vilfredo Pareto
System
Approach
v) Decision- Herbert A.
Making Simon
Approach

1-4. CLASSICAL APPROACH

1.4.1. Introduction
With the gradual changing phase of Industrial
Revolution, this extended from 1700s to the 1900s,
brought in a much improved and systematic study of
management. In order to manage new factory set-ups
which were the vital part of Industrial Revolution, it
became essential to introduce different approaches for
managing work and human resources. Therefore, the
classical school helps to understand the core of of
management knowledge. This includes planning,
organising, leading and controlling. For example, in
the 1950s, the decentralisation of General Electric
(GE) took place, which was based on classical school
approach of management.
The classical school is considered as the systematic and
formalised way of managing work and human
resources. This is the major strength of classical school
which becomes more adaptable in nature with time.
One main drawback of this approach is that, at times it
overlooks the differences between people and situation.
These classical approaches are rigid in nature and do
not apply well with the changing situations. Various
management theorists have contributed towards framing
of principles for establishing and managing
organisations. The classical theory is the base or an
underlying principle in the field of management
thought. The three major schools of thought of classical
theory and their contributors are:
1) Scientific Management by Frederick W. Taylor,
2) Administrative Theory by Henry Fayol, and
3) Bureaucratic Management by Max Weber.

1.4.2. F.W. Taylor's Contribution:

Scientific Management
Scientific Management was used widely by the
the way
managers in the early 1900s. It was defined as
of conducting business
of activities using pre-defined
pre-defined

systematic
standards, information based on
observations, experiments and reasoning. In simple
words, it is a classical management study which focuses
on scientific approaches so as to improve the efficiency
level of the workers in an organisation.

In the initial phase of 20" century, the concept of

scientific management was announced by Frederick
Winslow Taylor in U.S.A. This theory of management
was strongly recommended by many theorists like
Frank and Lillian Gilbreth, Henry Gantt, George
Berth, Edward Felen, etc. Scientific management
primarily emphasises on refining the functional
activities at the workmen level.

According to Taylor, "Scientific management is

concerned with knowing exactly what you want men to
do and then see in that they do it in the best and
cheapest way".
F. W. Taylor was named as the "Father of Scientific
Management". He was a scientist and conducted many
researches on the efficient utilisation of workmen. In
one of his researches, he found out that improper use of
scientific methods by workmen and managers led to the
wastage and inefficiency in factories. Therefore, he
further developed 'Scientific Management Theory'

In this theory, he advocated that the efficiency of a

factory can be attained by proper surveys, analysis and
measurement. The concept of scientific management
opposed the rule of thumb and is considered to solve
several management problemns by applying
scientific methods. 1
 1.4,2.1. Principles of Scientific Management
wanted to signify the power of workmen
Taylor always conducted
in the organisation. For this purpose, he
various researches which would result in high labour
productivity without pressurising the workers. As a
consequence, he developed the theory of Scientific
Management. The views and ideas of Taylor can be
seen in his books "Scientific Management" and "Shop

Management". Mostly, he is recognised for his Work

"The Principles of Scientific Management" published in
1911. These principles are:
1) Replacing Rule of Thumb with Science: Taylor
highlighted that through scientific management,
organised knowledge can be used to maximise
efficiency and this can replace rule of thumb.
Scientific method includes
method to be utilised in the
investigation of standard
use of scientific method
organisation. Thus, the
helps in determining
accurate outputs whereas rule of
thumb is based
on estimations.

2) Harmony in Group Action: In every

the group action should be organisation,
well-coordinated and in
harmony so as to attain maximum
output. Propeer
understanding helps to maintain cordial relations
 between the group members and disagreement in a
group may lead to loss. Taylor emphasises that
there should be complete harmony between group
members and management as a whole.
3) Cooperation between Management
and
Workers: There should be a proper coordination
between workers and management. This can be
attained through mutual understanding. Therefore,
scientific management theory is applied
by
organisations to bring in cooperation among
workers and management. As the scientific
management entirely operatees on mutual
confidence, cooperation and goodwil.
4) Maximum Output in Place of Restricted Output:
The application of scientific management theory
implicates high productioon and efficiency by
eliminating restricted production. Consequently both,
the workers and the management should work with an
aim to improve the productivity of the organisation.
5) Development of Workerss through Scientific
Selection and Training: The development of
of
workers is based on the selection and training
procedure. Scientific method should be adopted for
selection and training process. After the selection
process, workers should be assigned jobs as per their
intellectual and physical capabilities followed by
proper training. Efficient employees will always be
beneficial for the company. This helps to boost the
success rate of workers well of the
as as organisation.
1.4.2.2. Techniques of Scientific Management
Techniques of scientific management are as follows:
the amount
1) Tinme Study: This technique measures

of time taken by a workman having specific skills

and knowledge to perform a certain job. It helps the
manager to determine the standard time taken to
complete a particular job. In time-study method,
every element of the job is studied in detail. For
this, a worker with average ability and skill sets is
selected. Then a supervisor observes the worker
and measures the time taken by the selected worker
with the help of a stop watch to note the accurate
time. It measures thee time taken by a standard
worker to do a standard job. In this way, a standard
time is fixed to a particular activity. Taylor
emphasised that by conducting experiments,
observations and analysis, a fair day's work can be
calculated, keeping in mind an average worker. For
this purpose, the formula given below can be used:
Fair Day's Work = Standard Time x Working Hours

2) Motion Study: Motion study is a close observation of

body and limbs movement required to perform a job.
The main aim of this technique is to ignore useless
motions and identify the most efficient ways of doing
a specific job. It also refers to the movement of a user
on a machine fora specific task.
 It removes all the inadequate motions and adopts
the best possible way of doing a job. The motion
study also deternines whether the job has to be
eliminated. combined or its sequence has to be
changed to attain the required pace. It also boosts
the productivity of workers by eliminating all
unproductive activities.

3) Standardisation: Standardisation refers to the

process of setting up standard t0ols, techniques.
equipment, working conditions, etc., for the
workers. Along with this. workers should also
follow quality standards. If the workmen are
provided with suitable working conditions, then
only they can work efficiently. The major objective
of standardisation is to establish performance
standards of men and machines.

4) Functional Foremanship: Taylor has introduced

functional foremanship to enhance the supervision
and control activities of workers. Here, a person
works under the supervision of several professional
foremen. For example, Under Taylor's Eight-
Boss-Scheme, speed boss is liable to improve the
speed of workers, whereas the work related to
breakdowns and repairs are supervised by repair
boss, etc. Likewise, various professionals are
appointed to supervise various functional activities.
5) Differential Piece Rate Plan: This is a wage
payment method introduced by Taylor. In this
method, efficient and inefficient workers are paid
different rates. The most efficient workers are paid
higher rate as compared to inefficient or less
performing workers. The payment made to workers
is based on the number of pieces produced, i.e., per
piece rate. In this technique, the standard output by
a worker for a day is calculated. Then every
worker's performance is compared with the defined'
standard. If the worker produces more than the
standard then he is awarded with higher rate per
piece on the total output. If his output is below the
standard then he is paid less for 'per piece'. The
difference between the rates is known as
differential piece rate plan'.
1.4.3. Henry Fayol's Contribution:
Administrative Management
One of the major contributors to administrative
approach of management is Henry Fayol. He is
considered as the Father of Modern Management'.
Fayol was a French industrialist and a mining engineer.
He had worked at ail the positions of the mining
company before the Managing Director of
becoming
the Company. He portrayed his ideas based on real-
world experiences in his book, 'Administration
Industrialle at Generali' in French language printed in
1916. It was translated in English as "General and
Industrial Management"" in 1929 and was later on
published in U.S.A. in the year 1949.

Henry Fayol explained the importance of managerial

efficiency in an organisation and focussed on the
management point of view in dealing the company issues
whereas Taylor focused on the workers point of view. All
the industrial activities were divided by Fayol into six
groups, i.e., technical, commercial, financial, security,
accounting and managerial. These activities are applicable
to organisations whether
big or small in size. He entirely
concentrated on the sixth activity, i.e., managing.

1.4.3.1. Fayol's Principles of Management

The 14 principles of
management given by Fayol are as
follows:
Fayol's Principles of Management

Division of Labour Parity of Authority and

Responsibility
Discipline
Unity of Command

Unity of Direction
Subordination of Individual's
Fair Remuneration to
Interest to General Interest
Employees Centralisation and
Order Decentralisation
Scalar Chain
Equity
Stability of Tenure
Initiative
Esprit de Corps
1) Division of Labour: 'Division of labour' is the
specialisation of various tasks so as to increase the
overall efficiency of individual employees. Fayoi
highlighted that the work of any type, i.e., technical
or managerial must be divided and assigned among
number of employees. This division makes the task
much easier and improves the efficiency of
individuals. It also enhances the speed and
accuracy of employees. Specialised efforts help the
company to achieve its predetermined objectives.
2) Parity of Authority and Responsibility:
Authority' is the legal power inherent in a
particular job. A superior in any organisationis
entitled to give instructions and orders to his
subordinates, take important decisions, plan
plan for
optimum utilisation of available resources, providee
guidance to subordinates and control the
behavioural patterns of subordinates. While,
responsibility' is the outcome of authority.
26
7)
perf orm ing
Resp onsibility involves duties like
com pan y's
various functions in orde r to attain the
Base d on the
obje ctiv es in an effective man ner.
betw een
prin cipl e of parity, there mus t parity
shou ld be
authority and responsibility. Man ager s
their resp onsibility
given authority proportionate to
auth ority.
as this may lead to inappropriate use of
onsibility
Likewi se, if a person is given certain resp
ired auth ority to
then he mus t also need to have requ
execute that task. 8)
behaviour of .
3) Discipline: 'Discipline' means orderly
rules and
an individual towards abiding the
e, it is
regulations of an organisation. Therefor
business.
essentiaJ for the smooth functioning of the
by the workers
Discipline is not just a role played
In orde r to
but aJso one of the roles of management.
tion must
follow and maintain discipline, organisa
should
have a good supervisor at all levels. The rules
indi scip line,
be clearly defined and in case of any
impos~d penaJties should be fair.
to Fayol, a
4) Unity of Command: According 9)
one superior.
subordinate is accountable to only
liable to
Every emp loye e in an organisation is
If a pers on
receive orders from only one superior.
pers on then it may
gets orders from more than one
create confusion and conflict.
, ever y mem ber
5) Unity of Direction: As per this rule
in an organisation should coor dina te and direct
s. 'Uni ty
his/her efforts to attain com mon objective
of action,
of dire ctio n' strives to ensure "unity
efforts". In
coordination of strength and focusing of
, each grou p activity
consideration of the principle 10)
by one head
should have one plan supervised
focused
following the same objective. This ensures
tion. For
efforts, unity of action and coordina
n depa rtme nt in an
example, the productio
, to guid e and
organisation should hay'e one head
attai ning
cont rol the activities of the group towards
ucts · to be
the desired quality and quantity of prod
ity in the
manufactured. There should be uniform
to achi eve the
efforts and direction of the activities
·
grou p and organisational targets.
to
6) Subordination of Individual's Interest
inte rest of the
General Interest: The
est prio rity
orga nisa tion shou ld be kept at the high
emp loye e
over the inte rest of individuals. Eve ry
mot ivat es
has cert ain individual interests whic h
orga nisa tion . But
the emp loye e to wor k for the
rsed e the
the indi vidu al inte rest shou ld not supe
tanc es.
orga nisa tion al inte rests unde r any circ ums
shou ld
Acc ordi ng to Fayol, the man agem ent
rest in gene ral (bot h
mak e effo rts to unite the inte
case of conf lict
emp loye r and employee). But in
ifice d for th'e
inte rest. of individuals shou ld be sacr
Iarge r mterest.
7) •. Fair Remuneration to Employees~ Eve~
employee in an organisation should receive a fair
and reasonable remuneration. The wage structure of
the employees should be based on the job assigned,
cost of living and average wage rate followed in the
industry and the financial situation of the company.
In general, the basic pay is fixed as per the work
done but the allowances are liable to change with
the altering cost of living.
8) Centralisation and Decentralisation:
concentration of decision-making authority in the
The
hands of top management leads to 'centralisation'.
If the authority is shared with the lower level
management then it leads to 'decen~alisation'.
Fayol suggests that there should be a proper
balance between centralisation and decentralisation
of authorities. In small organisations, centralisation ,. .
of authority exists as the number of activities '..J1
undertaken is less compared to large organisations.
Whereas, in large organisations, the level of
decentralisation is high.
9) Order: The principle of 'order' refers to the
arrangement of people and things at the right place.
There should be a fixed place for everything in the
organisation and everything should be in its own
place in the organisation. In the same way, social
order involves right person at the right place. These
orders demand detailed knowledge of the ·
requirements and resources in· the organisation and
to maintain a proper balance between them. If the
organisation is a large organisation then it is a
difficult task to maintain the required balance. tl
10) Scalar Chain: Every organisation has superiors ~
and subordinates. The formal line of authority from
highest to lowest ranks is defined as scalar chain.
All managers are linked in a chain from highest to
lowest level positions. Every manager is superior to
a manager working below hii:n but he is a
subordinate to his own superior. Hence, this is a
step-wise chain of authority. According to Fayol,
every organisation should have a distinct chain of
authority from top to bottom, linking all the
managers at all levels.

Figure 1.5: Scalar Chain and Gang Plank

Scalar chain also acts as a chain of comman d and
communication. It is considered · as chain of
command as orders given at higher levels flow to
the lower level through the intennediate managers.
 It is also a type of communicntion ( written or orul)
which has to be communicnted throu gh th e chnin in
the hierarchy . For example, if u supcrv isor has to
submit n repon to the head of the department , then
the supervisor first needs to submit it to his
immediate hend who will pass it on to the heud of
the department. Hence, this scalar chain involves
certain limitations. which are as follows:
i) The communicu tion process is very lengthy .
ii) The chances of bi ased messages may be
involved during the fl ow of in formation. To
avoid such situations, a 'gung plank · can be
created. i.e .. a shorter route, for smooth and
fast communica tion und ac tion.
The scalar chain principle can be understood with
the explanation given below. In an organi sation, the
scalar chain comprises of two ladders, i.e., A to F
and A to P. If communication between F to P has to
be held then the communication has to flow
upwards through E, D, C and B to reach A, and
then downwards through L, M, N, 0 to reach P.
This is a very time consuming process. To avoid
this delay a 'gang plank' can be created between F
and P as shown with the dotted line. But this can be
implemented only in case of emergency and cannot
be used as a normal practice as it violates the
established line of authority.
11) Equity: Under this principle, every person of the
similar position should be treated equally. For
example, the workers carrying out identical jobs
should be paid equally without any discrimination.
It also suggests that superiors should be fair and
unbiased towards each subordinate. They should
not favour some and overlook other employees.
The judgments of performance should be based on
same terms for every employee.
l 2f Stability of Tenure: Employee turnover from their
positions should be minimal. The time period of
service in a particular position should be fixed and ·
employees should not shift from the allotted position
repeatedly. It takes time for a person to get adjusted
towards a certain work. Once the employee is selected
for a position, then he should remain at that position
for a fixed tenure. He should be given realionable time
and opportunity to perfonn as instability may affect
the performance of the employee.
13) Initiative: Initiative refers to the first act or
initiation to do things independently. Fayol
suggests that all employees should be motivated to
take initiative in work and develop their own
course of actions. Therefore, it needs one to remain
in certain limits and be disciplined.
14) Esprit de Corps: It encourages team spirit, group
harmony and mutual understanding amongst the
team members. Managers should promote team
 work to achieve common goals of the company·
This will raise the level of trust between the
members and create a sense of belongingness
among team members.

1.4.3.2. Functions of Management by Fayol

There are five managerial function s which are identified
by Henry Fayol. These fun ctions are grouped in
accordance with their activities. They are:
I) Planning: A plan of action is a proposed means of
achieving the desired objectives. Planning identifies
the course of action, deals with the problems, if any,
in the system and takes corrective measures to solve
those problems. Planning also highlights the short-
term and long-term goals of the organisation.
According to Henry Fayol, "Planning is deciding
the best alternatives among others to perform
different managerial operations in order to achieve
the pre-determined goals".
2) Organisation: Another important function of
management is organising. Here, all the men and
material required to develop the organisational
structure are arranged and made available.
According to Henry Fayol, "to organise a
business is to provide it with everything useful to
its functioning, that is, materials, tools, capitals
. and personner'.
3) Command: Command is to ascertain the authority
among the employees of the organisation. The art
of command depends on the person's ability,
knowledge and expertise towards fundamental
management principles. The level of ability differs
from unit to unit in an organisation.
4) Coordination: It is a process of arranging and
harmonising of all the activities, so as to ensure
smooth functioning of. the organisation. It is an
effort to maintain consistency between ~.11 the
departments of the company to attain common
objectives. The efforts of one department should be
parallel to the efforts of the other departments in
accordance with the entire organisational objective.
According to Henry Fayol, "To coordinate is to
harmonise all the activities of a concern so as to
facilitate its working and its success. ln a well
coordination enterprise, each department or
division, works in harmony with others and is fully
infonned of its role in the organisation. The
working schedules of various departments are
constantly tuned to circumstances".
5) Control: Controlling is very crucial to ensure that
all the activities in an organisation are perfonned
as per the plan adopted, commands given and
principles followed. In this process, all the
problems and challenges must be resolved and
 also
their ITl'lll TCncc should he preve nted. It is
ld be
ncccssn ry 1ha1 tht· n mtni l proce ss shou
coni µk tcd in :, pre de fi ned time, fo ll owed by
the
mana gc nu:nt · s cun:--c 11 1.
Acl·o rding to lh•nry Fn yol , "Contro l cons
ists of
ty 3)
vc,i fying whether t·wry th ing occurs in confo rmi
wi th the plan !'> adop ted . the instruc.:tions
issued and
princ iples estab lishe d, 11 has fo r its objec t to point -
out weakn ess and l! ITOf!-. 111 order l o rl!c lify them
nnd preve nt rccun cnccs".

1.4.4. l\tlax " 'ebe r's Contribution:

Bur eau cra cy
made a
The theory of bmca ucra~y by Max Web er has
mana geme nt scho ols of
majo r cont.ri hu tion towa rds the
y fo r a speci al
thoug ht. He used the theory of burea ucrac 4
er's majo r
kind of admin istrative orga nisati on. Web
ols of
contribution towards the mmrngement scho
autho rity struc ture. He has also
thought is his theory of
basis of the autho rity
described organisatio ns on the
relations shared by them .
types
Max Weber asserted that there are three different
of authotity which are legally justif iable , such as:
legal
1) Rational -Legal Authority: Unde r the
ion
oblig ation , obed ience holds a well-known posit
ess
or rank within the hiera rchy followed by a busin
unit, a milit ary unit, govemme nt. etc.
to a
2) Traditional Authority: A person belonging
g an autho rity or
high er position or rank havin
of a royal
recognised conv entionally like a mem ber
ty to
family, may influence other people in the socie
obey his orders or respect his opinions.
has a
3) Charismatic Authority: If a person
char isma tic character or an appe al in his beha viour,
he may be follo wed or obey ed by people.
nal-
Max Weber' s theory of bureaucracy identifies ratio
authority
legal auth ority as the most important type of
hand , no one follo ws a
in an orga nisation. On the other
tradi tiona l
leade r for his competenc ies, i.e., people with
relatively
auth ority or chari smatic authority, are
emot iona l and irrational in natur e.

1.4.4.1. Features of Bureaucracy

ion are
The characteri sti cs of a bureaucratic organisat
listed below :
1) Division of Work: The concept of divis
ion of work
ative
is · pract iced at both operative and administr
ed into
level s in an organisation. This can be divid
to
specialise d tasks. Thus, divi sion of work leads
specialisation of work .
ion has a
2) Hierarchy of Positions: Every orga nisat
level . The
hierarchy of autho rity from top to botto m
r the
botto m posit ions in the hierarchy are unde
ions. Thus , this
cont rol of top manageme nt posit
 signifies the concept of unity of command. The
nature of bureaucratic structure in an organisation
is hierarchical. The amount of authority one holds,
keeps on increa sing as one climbs the hierarchical
ladde r in an organisation.
3) Rules and Regulations: Under the mana gement of
top level, certain rules, regulations and processes
are defined. The significance of these rules and
regulations are as follow s:
i) They help to standardise the organisational
operations and decisions.
ii) The learning and experiences of past event s
help to drive future actions.
iii) They ensure equality among organisational
members.
4) Impersonal Conduct: Members of an
organisation do not have any personal
relationships with each other. The decision-
making process strictly adheres to the rules and
regulations and is entirely impersonal in nature.
There is no space for emotions and sentiments in
the bureaucratic structure. Another name for
bureaucratic organisation is 'depe rsona lisati on'.
5) Staffing: An employee enters into a contractual
relationship with the employer to serve the
company in return of a certain fixed
remuneration. The contract includes all the terms
and conditions of employment. Thus, the
employee is directed by these rules throughout
his service. The payment or salary of the
4
employee depends on the designation and the
tenure of his service.
6) Technical Competence: Technical competence
plays a major role in the selection of a
bureaucrat.- A bureaucrat only gets selected for
his techn ical competencies and not on basis of
election or inheritance . Even promotions in
bureaucracies are totally based on the technical
qualifications and performance.
7) Official Records: Good record keeping plays a
pivotal role in the administration of a bureaucratic
organisation. All the significant decisions and
activities conducted in the organisaticm are properly
recorded and kept safely for future references. An
efficient record keeping system governs the success
of a bureaucratic organisation.

1.4.4.2. Advantages of Bureaucracy

The advantages of bureaucracy are as follows:
l) Controls Interactions: A bureaucratic set-up lays
down the rules required for planning an
organisational hierarchy. These regulations
competently control interactions between the
different levels in the hierarchy.
2) u,,nnc.•11 lndlvld11Hl'N Authorlfy Hild
ltcl11tlmu,hl1• ( 'lcnrly : B11rca ucnu.:y vi Hihly
defi11cN the rol e dcsignu 1cd 1·0 11n employ ee . fl
Nt·parnl CH lhc position fro111 lhc pcri,ion and clearl y
Nl ll ll' N the vcrl it:111 11111lmri1y and hori :mn111I la Hk s
of c11rh pcn-1011 in lhc organi 1rn tion . 1l crc. lhe
person iN held 111:cou11111hl e for cuch acli vil.y he
pc, form s 1111d 1hi1-1 dcacasc~ 1he tran sac liw1 1.:ost-1
m isin g oul nf c onlinuou s ncgol iation H and
dl'lining of orga11i 1-1 11lio11 .i l rol cN.
, ) Rcdm·cs ( '. ostN: The coHIH incurrc<.J for
perfonnamT cval11a1io11 ii, reduced due 111 rul e~
wriuen hy lhe hureaucrul N for promoti on and
lamination . Thc.'lc arc wrill en rul es in rcg,m l with
the punishment and rcwnrd of employees.
4) Improves Stakcholdcn,' lntcrcNt: The process c,f
selection. evaluation and reward systems must he
fair and equitable in nature. Thi s stimu lates the
members to a<.Jvance the interests of all
organisational stakeholders and attain the
organisational objectiv~s.
5) Enables Opportunity to Develop Skills:
Bureaucratic structure provides an opportunity to
its employees in order to develop their skills and
pass them on to their beneficiaries. As a result,
bureaucracy strengthens differentiation, increases
the efficiencies or abilities of the organisation and
enhances the competency levels of the organisation
in the market against other organisations for
scarce resources.
6) Provides Organisational Stability: Stability is
also very crucial for the members of an
organisation to maintain a long-term organisational
perspective. It also helps to create cordial
relationship with the environment wherein the
organisation operates.

1.5. BEHAVIOURAL
APPROACH ·

1.5.1. Introduction
Human relations approach can be further extended to
the "behavioural science approach" or "human resource
approach". Various researchers have used several
research methods for understanding the human
behaviour, some being simple while others being
complex in nature. Elton Mayo conducted research by
using simple methods.

However, Abraham Maslow, Douglas McGregor and

other researchers used research techniques that were
complex in nature. All these researchers were called as
"Behavioural Scientists''. This approach signifies the
different attitudes, behaviour and functions of
individuals and groups in various organisatio~s.
 L'-J

Behavioural school was formed on the bas is o f classical

theory. The behavioural approach assu mes lhat social
and psychological features of an employee on
individual basjs and as a part of a workgroup needs to
be given prime importance. Points highlighli ng the
features of behavioural approach are as foJlows:
I ) As management is all about getting things done by
people~managers in an organi sation should try and
comprehend the importance of human behaviour in
order to achieve effi cient and desired results.
2) In this approach, prominence is given to increase
productivity through developing human relations
and motivating the employees.
3) The core concepts of behavioural approach are
leadership, motivation, participative management,
conmmnication and group dynamics.
Main contributors to the behavioural science approach
are Elton Mayo (Hawthrone study), Douglas
McGregor (theory X and theory Y), Maslow (need
hierarchy ), Herzberg (motivation-hygiene theory and
job enrichment), Blake and Mouton (managerial grid),
Bennis (organisational development), Likert
(management systems and linking pin model), Fiedler
(contingency model of leadership styles), Argyris
(immaturity-maturity theory, integration of individual
and organisational goals and pattern of A B analysis),
Sayles (interpersonal behaviour) and Tannenbaum and
others (continuum approach of leadership).

Table 1.2: Difference between Scientific Approach and

Bh .
e avmura IA.pproach
Scientific Aooroach Behavioural Aooroach
1) It emphasises the 1) It emphasises the
scientific study of work importance of
methods to improve understanding various
worker' s efficiency. fac tors affecting human
behaviours.
2) Focuses on achieving the 2) Stressed the need for
task in the most efficient human skills rather than
and effective way possible. technical skills.
3) Jobs were allocated to 3) Encourages participation
people without matching of workers in decision-
the job to the worker' s making authority at all
skill and ability. levels.
4) Relationship of the 4) Human relations and the
workers with the social needs of workers
managers included many are crucial aspects of
confrontations. business management.
5) Theory of management 5) Relies on the notion that
that focu sed on worker's managers will better
efficiency through the understand the human
scientific. study of work aspect to workers and
methods. treat em ployees as
important assets to
achieve goals.
6) It begins wi th Frederick 6) It begins with Robert
Winslow Taylor in 1890 Owen in 177 J, Hugo
and 1930. Munsterberg in 1863,
then Elton Mayo in 1880.
 30

1.5.2. Contribution of Elton Mayo:

Hawthorne Studies
Human resource is an important managerial function .
The behaviour of employees in an organisation is
governed by various desires, attitudes and feelings of
the employees. George Elton Mayo was one of the few
theorists who considered the human relations issues and
their impact on work performance. George Mayo and
his other colleagues conducted experiments, caUed as
Hawthorne experiments. Hawthorne experiments are
acknowledged all over the world, as these experiments
have changed the viewpoint of managers towards
workers of the organisation. Hawthorne experiments
gave a positive turning point in the history of the human
relations movement. These experiments gave a different
perspective to the concept of human behaviour and its
function in an organisation.
Hawthorne studies governed the human relations
movement, although Great Depression and the Labour
Movement were initiators of human relations practices.
The Hawthorne studies gave academic position to the
study of organisational behaviour. The studies were
undertaken at the Western Electric Company's
Hawthorne Works in Cicero, a suburb of Chicago, and
are linked with the name of Elton Mayo. Mayo was the
professor of Industrial Research at the Harvard School
of Business Administration. Mayo was mainly
responsible for executing these studies and spreading
the importance of these studies. Thus, he is known as
the "Father of Human Relations Movement".
These experiments were quite similar to the scientific
management school of thought that gave emphasis to
scientific research for . improving the efficiency of
processes with the help of ~tt~r methods and
equipment. In case of Hawthorne studies, the major
emphasis was on improving the lighting of the working
area. The National Research Council conducted
experiments to study the n;l~tionship between lighting
and productivity. As General Electric (GE) wanted to
increase the sale of tube-lights, it supported the studies
conducted at the National Research Council along with
other companies in the electronic industry. Hawthorne
studies involve four interconnected experiments, which
are as follows:
l) fflumination Experiments: It was named as
illumination experiment because light was selected by
researchers for conducting the study and to examine
the link between physical factor and productivity. The
methods adopted for this experiment were:
i) First of all, two separate groups of employees
were chosen.
ii) Then, one group was asked to work under
steady light and other group was asked to work
under inconsistent light.
iii) ~im of t~is ~xperiment was to analyse the
impact of hghtmg on productivity.
 MBA First Semes ter (Organi sationa l Behav iour) BU

amazed by the results as the

The researchers v:er~ t· lights did not influence
r
cand 1e powe_ vanau
.
on o ·
As productivity of both the
the pr~du ctivit~ - they recogni sed that not the
grou~ s ,~crease t, s~~m e other factor affected
illummallon bu ·
the produ ctivity •
Experiments: The aim of this
2) Rela~ Room to discover the physical eleme
nts
experiment wtahs· productivity of workers. The
that affect e
methods adopted were:
. . f . II six femal e employees who were
1) F1Tst o a ,
responsible for assem bl mg ' t l ho
e e~ nes were
.
chosen. Then. researchers modified several
• hysical environment to de tenrun .
factors m p h . od . . e the
impact of these factors on t eir pr uct1v1ty.
ii) The physical factors that w~re modified
included hours of work (mcreased or
decreased), rest intervals, enha~ced physical
conditions, temperature and particular type of
group incentives. ✓
iii) These employees were working in isolation,
away from the plant. \ ;
iv) Employees were not supervised, but they were
under researcher's observation.
"\!
Researchers found that there is no effective
relationship between any of these factors and
productivity. Even after so many manipulations the
productivity increased continuously.
3) Bank Wiring Observation Room Experiment:
Basic objective of researchers was to identify the
actual determinant affecting productivity. The
methods adopted by the researchers were:
i) Fol:}rteen employees were selected by the
researchers, and
ii) Production records of these emplo yees were
compared with their earlier production records.
The outcomes of this experiment were:
i) Each individual was limiting output.
ii) Group · had decided its own 'infor mal'
performance standards.
iii) Outpu t of each individual remai ned some what
stable for a particular period.
iv) Records of each department were distor ted due
to variation between actual and repor ted
output. This variation was also betwe en
standard and reported worki ng time.
4) Interview Programme: The aim of interv iew
progr amme was to identify facto rs affec ting
pro~uctivity. Henc e, 20,000 interv iews were
c~1e d-out by researchers. A quest ionna ire was
g1~en to emplo yees and they were asked to respo nd
~Itbo ~t any hesitation. Thus , the resul ts of these
mterv1e~s expl~ined the relevance of socia l facto rs
on work ing envuo nmen t.
Findings of Hawthorne Experiments
l) Workers should primarily be treated as social
beings before tJ1ey are considered as members of
an organisation. The management must
understand the social factors that govern the
attitude of the workers. There are various socia.l
requirements both within and outside the working
environment that impact the effectiveness and
attitude of the workers.
2) Work is essentiaJty a group effort.. Workers tend
to react as group members rather than as
individuals towards management. the organi sation
and the work itself.
3) There are many factors which govern the
productivity level of a worker, like physical,
psychological and social factors. Psychological
and social factors like security, recognition.
sense of belonging, etc., are quite significant in
boosting the morale and productivity of an
employee. The extent of influence of physical
factors or physical working conditions on
employee productivity is less in comparison to
psychological and social factors.
4) Non-financial incentives like status, social rewards,
approval, etc., are important variables that
determine the employee motivation level. These
factors are linked with the emotional and
psychological satisfaction rather than monetary
satisfaction. Non-financial variables affect the
extent of job satisfaction and security which are far
more important than financial incentives provided
by the organisation.
5) Informal groups which are formed during working
in the given workplace situation have a strong
bearing on the attitude and behaviour of the
workers on individual levels. The standards set by
these informal groups strongly affect the employee
work behaviour in an organisation.
6) According to the Hawthorne experiments, the
managers can achieve effective results by
implementing the concepts of participative
management. Every manager should seek the
advice of the leaders of the informal groups formed
at the workplace before implementing any change
in work schedule of the workers.
Participative management tries to involve each and
every factor in the decision-making process. Thus,
participation in the important decisions increases
the efficiency of the workers. With increased
employee participation the management can
overcome the problem of resistance to c~nge and
the changes can be introduced it with minimum
discontentment. It prevents the problem of isQlation
among workers and motivates them towards
achieving organisational objectives.
 .Ji

Implications of Elton Mayo's Hawth

orne Experiment
1) Social Factors in Output: Soc
ial factors play a
major role in every organisation.
According to
Elton Mayo an organisation can
be referred as a
social system, a system consist
ing of several
gr\)ups, a ritual, an informal status
system, and a
combination of logical, ill-logical
and non-logical
behaviour. An organisation is not
just a formal
hierarchy where the all functions
are carried out
based on the prescribed policies
and guidelines.
There are many social norms and
rituals that may
influence the formal organisational
activities.
2) Group Influence: Workers
tend to develop
informal groups with people as per
their personal
likings. These informal groups may
or may not be
according to the formal group
settings. These
groups help the workers to overcome
the limitation
of the official relationships. The usu
al behaviour of
the group members is based on the
group norms or
rituals. If a group member is not com
fortable with a
norm or a ritual, he may try to substitu
te it because
opposing a group ritual may not
be tolerated.
Management must see the worker
as a part of a
group and not as an individual.
3) Conflicts: The groups so form
ed apart from the
formal groups may create conflic
ts between the
workers and the management. These
groups may be
one of the causes of the differel
\Ce of opinion
between the organisation and its
workers. There
may be inconsistency between the obj
ectives of the
two groups. However, these info
rmal groups
formed may also be helpful in
achieving the
organisational objectives set by the
management.
These groups may motivate the gro
up members to
deliver their best efforts towards
achieving the
organisational goals. These groups
may help to
remove the obstructions created
by the formal
structure in the process·,of enhanc
ing productivity
of the workers. Conflicts may also
arise between
these two groups because of ineffect
ive efforts of
the informal groups towards their
adjustment with
the changing environment of the' 'org
anisation. An
individual always have to try and
adapt with the
ever changing or the dynamic
nature of the
organisation. The individual has to
develop himself
to cope with the constant change
s arising at the
structural level of the organisation.
4) Leadership: Leadership influen
ces the behaviour
of people. A good leader helps
in directing the
group behaviour and may influen
ce the group
members to contribute positively
towards the
overall progress of the organisatio
n. A formally
elected leader or superior may not alw
ays be a good
leader as per the views of the form
er thinkers of
management thought. The bank wir
ing observation
room experiment has proved that
informal leaders
 exist in an organisation. Thus, informal leadership
is important in controlling group behaviour as an
th
infonnal leader may be more accustomed wi th e
attitudes and behaviour of the group members.
5) Supervision: Supervisory aspect should be used
th
effectively to maximise the efficiency of . e
workers and increase productivity · A supervisor
can motivate and build employee morale. A .good
supervisor maintains friendly relations and t~es to
maintain hannony amongst the workers. It is the
responsibility of the supervisor to ensure that the
productivity levels and performance of the workers
are as per pre-set organisational standards.
6) Communication: Hawthorne experiments
concluded that communication is an important
segment which helps in maintaining positi_ve
relations in an organisation. The management with
the help of good communication can explain the
reasons behind different tasks and incorporate
employee views and suggestions in the decision-
making processes. Effective communication can
help in identifying the problems faced by workers
by taking regular feedbacks from them and
accordingly suggesting ways and means to resolve
those problems. Hence, proper two-way
communication channels can help the management
in understanding employee attitude, their ways of
working and their issues as well. ·

1.5.3. Contribution of Mary Parker

Follett: Human Relations Appr.oach
to Work -
Most of the management gurus in the industry have been
men, but the contribution of female experts cannot be
neglected. The school of management thought has got few
but talented and intelligent female contributors towards
development of manageme~ theories. One of the leading
female contributors of management was Mary Parker
Follett. She was born in the year 1868 in the Quaker
family in the city of Massachusetts. Being a woman, she
was denied a degree from the Radcliffe College, which is
a coordinate college of Harvard University.
Contribution of Mary Follett towards the development
of theory of management was quite different in
comparison with the theories of scientific school of
management developed in the early 1900s. The human
relations approach developed by Mary Follett was
quite innovative unlike the time and motion studies
developed by Frederick W. Taylor in that era. In one
of the essay published in the year 1924, she explained
the concept of power, and to elaborate it she used th
. " e
express10ns power-over" and "power-with".
The .observation concluded that 'groups perform more
effic1e~tly when the people feel empowered and the
power 1s shared amongst them•. She wrote .,1 to
, - t.seems
 1.8.2. Nature of Organisational Behaviour
Nature of organisational behaviour is as follows:
1) Fundamental Part of Management:
Organisational behaviour is a scientific study of
how people behave in an organisation and helps in
improving the focus of management towards the
employees and in setting provisions for them.
2) Multi-disciplinary Approach: Organisational
behaviour has psychological foundation and several
behaviourat and social sciences disciplinaries such
as psychology. sociology and anthropology
significantly affect its functioning. The different
concepts taken from these disciplinaries includc
learning, perceptioD, motivation, attitude, etc.
3) Normative Science: Organisational behaviour is
considered to be a normative science because it
helps in applying the results of different studies in
working of the organisation in such a way that it is
compatible with the societý. Hence, individual and
social acceptance is also akey factor in the working
and decision-making of an organisation.
4) Science and Art: Organisational behaviour is
considered as a science as well as an art. Science,
because it involves utilisation of scientific
methods and art, because it deals with the
behaviour of individuals.
5) Humanistic and Optimistic Approach:
Organisational behavioer teaches managers to
apply humanistic approach towards the employees.
It emphasises on the fact that it is very important to
meet the need of employees and motivate them.It
also inculcates a positive work approach by
stressing on the inborn qualities like being
independent, innovative, predictive and capable of
giving posiive input to the organisation.
6) Focussed towards Organisational Objectives:
Organisational behaviour helps to combine both
organisational and individual objectives in such a
way that both can be achieved at the same time.
..
7) Total System
Approach: Certain factors such as
psychological structure, interpersonal orientation,
group influence, and social & personal factors are
responsible for complexity of individual's
behaviour. Thus, organisational behaviour uses
system approach to understand and find solution for
this complex individual behaviour.

1.8.3.Scope of Organisational Behaviouur

Scope of organisational behaviour is as follows:
1) Skill Development: For entering and surviving in
the new-age, organisation .requires certain set of
skills, i.e., work-related skills and generic skills
such as problem-solving and communication skills.
Organisational behaviour deals directly with the
generic skills. Skills related to organisational
behaviour are gaining momentum in the current
work scenario. For example, CIOs (Chief
Information Officers) today work hand-in-hand
with information technology professionals so that
they can get a better insight of the business,
communicate effectively with colleagues and
interact with other departments in a better manner.
Soft skills like leadership, business knowledge and
communication have started playing a very crucial
role in the overail running of the business.
2) Personal Growth through Insight into Human
Behaviour: As per Robert P. Vecchio, people
study organisational behaviour to attain self
accomplishment that one gets while learning about
the behaviour and attitude of others. This ultimately
results in improved self-knowledge and self
insight. For example, when peopie study the
factors which drive other people, they also come to
know the factors which encourage themselves.

3) Improvement of Organisational and Individual

Effectiveness: The study of organisational
behaviour provides information that can be used to
solve organisational issues. It also improves
organisational effectiveness, i.e., the potential of an
organisation to be efficient and to meet the
requirements of the parties involved.
 MBA First Semester (Organisational Behaviour) BU

Organisational behaviour improves

by revealing factors
organisational cffectiveness
Such as employee motivation, communication

personality factors that enhance

or
hurdles and
obstruct effective performance. Organisational
effectiveness is understood as the extent to which
an organisation attains its goals under finite
amount of funds and resources, without putting
excessive burden on its employees.
According to Hannan and Freeman,
Organisational effectiveness is the degree of
congruence between organisational goals and
observable outcomes".
Alongwith organisational effectiveness, organisational
behaviour also provides approaches and competencies
that improve effectiveness of a person. A person with
knowledge of conflict resolution, interpersonal
communication and teamwork would prove to be
more efficient for the organisation.
4) Sharpening and Refining of Common Sense:
Gaining knowledge and information about
organisational behaviour is crucial for managers as
it teaches them how to deal with their subordinates
which cannot be taught through any book.
Common sense without the knowledge of
organisational behaviour is not enough to manage
workforce. Knowledge of organisational behaviour
sharpens and widens the sphere of common sense.
It decreases the time one might need to attain
important behavioural knowledge and skills.
Common sense tells us that rewarding employees
on the basis of performance is an effective way to
motivate them for better performance. But the
study of organisational behaviour teaches that
rewards should be given seldom and not everyday.
It also teaches that the kind of reward given to
different employees should be modified as per their
personalities and priorities. For example, some
people prefer loud appraisals while others might
prefer appreciation based on quality of outcome.
1.8.4. Foundations of Organisational Behaviour
Organisational behaviour begins with a specific set of fundamental concepts that form a strong base for
organisational behaviour. These are as follows:
Individual
Organisation is a
Differences Social System
Perception
Motivation to
Empioyees
Whole Person
Nature of Nature of Mutuality of Interest
People OB Organisations
Caused Behaviour

Desire for Ethics

Involvement
Human Dignity Foundations of Organisational Behaviour
Figure 1.7:
 Nature and Principles of Management & OB (Module 1)

1) Nature of People: There are certain concepts

related to the people which are as follows:
i)Individual Differences: Management can
encourage employees in a better way by
understanding that all people are different, and
hence, treating every person differently. Law
of individual differences also taught us that
each individual is different and unique.
ii) Perception: People see different thingsin
different ways, i.e., people may have different
viewpoints for the same object. These
viewpoints about the environmental objects are
made clear by right perception.
ii) Motivation to Employees: Need of an
employee motivates him to perform well in the
organisation. In some cases, motivation is also
required to pursue excellence or to foster the
work quality.
iv) Whole Person: While hiring an employee the
manager also hires things that are associated
with him like his nature, likes and dislikes,
preferences, background, hobbies, etc. But his
family life cannot be isolated from his work
life. Hence, a manager must try to make the
workplace as a home so that employee feels
like home at work.
v)Caused Behaviour: Psychology teaches us
that normal behaviour has issues related to
need of a person or as a consequence to certain
action. The management can motivate
employees in two ways. Firstly, by showing
them how their action can raise their need
fulfilment. Secondly, by threatening them that
their undesirable action can adversely affect
the fulfilment of their needs.
vi) Desire for Involvement: An employee who is
meaningfully involved in the working of an
organisation feels good about himself/herself.
Management should provide such opportunities
to employees as it results in mutual growth of
the employee and the organisation.
vii) Human Dignity: Every person desires to get
respect from others. Therefore, employees
should also be respected like managers.
2) Nature of Organisations: Following are the
concepts with regard to organisation:
i) Organisation is a Social System: Just like a
social system an organisation also coordinates
the activities of its employees in order to
achieve its goals.
ii) Mutuality of Interest: The relation between
an employee and the organisation is a
symbiotic one. The organisational goals can
only be achieved through combined efforts of
 47

the employee and the employer. This results in

the mutual growth of both the employee and
the organisation.
iii) Ethics: Ethical conduct is essential to obtain
and hold valuable employees in this competitive
world. Organisations must treat their employees
in an ethical way in order to succeed.

1.8.5. OB Models
Models of organisational behaviour are as follows:

OB Models

Autocratic Model Custodial Model

Supportive Model Collesial Model

1) Autocratic Model: In the organisation following

autocratic model, the manager has the authority to
order the employees to perform a specific task.
Management considers itself as the supreme power
to tell what is right for the organisation and thus the
employees must obey their commands. This model
results in excessive dependence of the employees on
the management which leads to reduced employee
morale, poor decision-making ability in the
employees and high rate of turnover. Employees
start expressing their hatred towards the company at
home and in the society but not in the premises.
Another drawback of this model is high human cost.
Major features of autocratic model are as follows:
i) Only Management Decides Right or Wrong:
Power of decision-making lies only with the
management and if the employees do not follow
their bosses they would be punished. This theory
believes that only management knows what is
right or wrong. Employees are assumed to be
obedient and resistant to needs and requirements
of organisation. This model is same as the
McGregor's Theory X.
ii) Power Based: As per the autocratic model the
power lies only with the management. The
ones in command have the right to issue orders
and employees have to obey the command or
else they will have to face the consequences.
in) Formal by Nature: Organisations which follow
autocratic model have formal managerial
orientation and have official authority. People are
obligated to follow the instructions.
iv) Obedient Orientation of Employees: Under
this model, the employee does not respect his
manager, but he is dutiful to his boss.
v) Employees are Dependent on Managers:
The managers have complete power over their
employees in such organisations. Thus,
psychological result is over dependence of
employees on their managers (superiors).
48

2) Custodial Model: The focus of this model is on the

satisfaction, security and welfare needs of the
employees, thus leading the employees to depend
on the organisation rather than the managers. The
employees get frequent economic rewards and
recognitions which make them happy but it does
not lead to high motivation. The salient features of
custodial model are:
i) Resource Based: For a successful custodial
approach, the presence of economic resources
is essential.
ii) Monetary Afiliations: The prime focus of the
management is on payment of salaries and
benefits to the employees.
ii) Focuses Employee Security: Employees
security needs are given much importance in
order to motivate them for better performance.
An organisation can follow the custodial
model only when it is in good financial
condition to make timely payment of salaries.
pensions and other benefits to employees.
iv) Employee Dependence on the Organisation:
The monitory benefits that the employees gain
from this model make them dependent on the
organisation rather than on the employer.
v) Employee Focuses on Rewards and Benefits:
In a custodial environment the
employee's
performance beconmes dependent on the
rewards and remunerations that they get. The
employees feel well maintained and contented
but not essentially motivated. As a result,
certain employees do not perform well to the
extent as they would perform under
autocratic approach.
3) Supportive Model: This model focuses on getting
work done through better leadership than
power
and money. It believes in creating an environment
which helps both the employees and the
organisation to grow mutually. It provides the
employees a chance to take responsibility and
contribute towards the goals of the organisation and
develop themselves. It differs from the custodial
approach as it focuses on employee's growth and
performance rather than on payment of employee's
benefit. The psychological result is that the
employee develops a sense of belongingness
towards the organisation as he participates in its
growth and development. Various features of
supportive model are as follows:
i) Based on Leadership: This model believes in
good leadership instead of emphasising on
power and money to achieve results.
Organisation gives an opportunity to the
employees to develop and give their best and
contribute in the growth of the organisation
using effective leadership.
 MBA First Semester (Organisational Behaviour) BU

ii) Leader Supports Employees: Leaders have

the quality of bringing out the best in their
subordinates. They understand that n o
employee is lazy or resistant towards the
organisational work but improper working
conditions make them so. If an opportunity is
given to them, then they can take
responsibility, make effort to contribute and
improve their performance. The management's
focus in this model is to improve the
performance of employees by providing them
opportunities rather than offering benefits as
done in custodial model.
ii) Increases Participation: A sense of
belongingness towards the organisation
develops in the employees because an
opportunity to participate is provided to
employees by management.
iv) Strongly Motivated Employee: Employees in
the organisation with supportive model are
more directed towards work because their
status and recognition needs are properly met.
Thus, employees work with vigour and zeal.

4) Collegial Model: Collegial refers to a group of

people with a common goal. In this approach, the
management works to develop better team and acts
as a mutual contributor not as a boss. The
psychological result of this approach is that the
employee feels a sense of self-discipline as he owns
the responsibility of the work. This condition
makes the employees feel their worth in the
organisation. The employee is thus inspired
towards performing better. Features of collegial
model are as follows:
1) Based on Employee Cooperation: In the
collegial model, the management builds a sense
of partnership with the employee and employee
feels his value and necessity in the
organisation. Since the manager is also seen
contributing towards the task. the employees
begin to respect their job as well. Hence,
manager acts as active participant rather than
as an authority.
ii) Focuses Teamwork: The management acts as
a trainer and emphasises on teamwork.
i) Employees Feel Responsible: Employees
when provided with trust react in a very
responsible manner. For example, employees
provide quality products not because of fear of
management or quality inspector but because
they feel themselves to be duty-bound. They
feel responsible towards the quality standard of
their product which in tum will be beneficial to
them and to the organisation also. This self-
discipline that the collegial model inculcates in
the employees results in quality work.
 & OB (Module 1)
Nature and Principles of Management

iv) Employees Feel Satisfied: This type of

organisational setup acts as a motivator for
the employee's self-esteem. They feel a
sense of worth and self-awareness by
to the success of the
contributing
This leads to reasonable
organisation.
enhancement in employee's performance.

1.8.6. Reasons of Studying OB

behaviour is an interesting field which
Organisational
to effectively manage the human
helps managers
resources, and thus achieving the organisational
describe the
objectives efficiently. Following points
reasons for studying organisational behaviour
1) Understanding of Self and Others:
Organisational behaviour helps individuals to
understand themselves and others clearly, and thus
improves interpersonal relations. Understanding
transactional
attitude, perception, leadership.
analysis and conflict greatly helps individuals in
shaping their personalities and understanding others
in a better manner.

Organisational behaviour helps to understand

human behaviour in every possible manner and can
be studied at the following levels:
i) Individual Behaviour: The science of human
psychology deals with the study of how and
why an individual behaves in a specifie
manner. Human behaviour is influenced by
various psychological, social and cultural
factors. Organisational behaviour combines all
these factors to study individual behaviour in
an organisation.
ii) Inter-personal Behaviour: Human beings
have a strong need to socialise and develop
interpersonal relations. Behavioural sciences
study these interpersonal relationships inside
an organisation. They providea better
understanding of self and others and improve
interpersonal relations to a great extent. To
understand interpersonal relations one needs to
study attitude. perception, role analysis,
transactional analysis, etc.

iii) Grouup Behaviour: Hawthorne studies

suggest that people behave in a different way
as an individual than when in a group. When
in a group, an individual's behaviour is
influenced by the group norms. Thus
organisational behaviour emphasises on
studying group dynamics. It assists in
understanding the process as well as reason of
group formation,. and its impact on
individuals, group and management team.
Group dynamics can be used by the
management for improved communication,
morale building and efficient leadership.
 2) Motivation of Human Resources: A manager's
task is to get work done by others anda
successful manager is one who can effertively
motivate his workers to achieve the goals of
organisation. Organisational behaviour helps the
managers in understanding the requirements of the
workers in a better manner and thus, motivates
them towards better performance. For example.
managers can appreciate the work of employees to
boost their morale by giving incentives or some
other kind of benetits
3) Enhancement of Quality and Productivity:
Organisational behaviour guides managers to use
various techniques such as quality management.
prcess re-engineernng. etc. to inerease the
participation of employees. Thus, organisational
behaviour helps in improving the quality of
operations and employee productivity.
4) Effective Communication: Any type of
communication whether verdal or non-verbal is
very essential in improving interpersonal
relations in an organisation and achieving
organisational effectiveness. Organisational
behaviour plays an important role in improv ing
communication. However, communication ean be
made effective by analysing the factors that
affect communication.
5) Effective Organisational Climate: Acconding to
the behavioural science formation of
organisational elimate enables etticient
organisational working rather than simply
enhancing the physiological conditions or
improving satisfaction level of employces. Suitable
working conditions, sufticient compensation and
improved tools for the job are considered as minor
steps in the direction of creating a healthy
organisational climate.
6) Good Human Relations: Organisational behaviour
can be helpful in maintaining healthy relations
between the employees and management.
Dissatisfaction among employees leads to a tensed
work environment. An employee can be slow in
work due to any reason, not just due to rjection in
promotion or poor work environment. Similarly, if
a union calls for a strike, the reason might not be a
demand for higher wages, leaves. higher bonus, ete.
The employee or union dissatisfaction can be due
to unhealthy relation between employees, union
and management. The reason behind tensed
relations between management and employees at

many times is purely psychological. In such cases,

organisational behaviour helps the management in
determining the reasons behind poor industrial
relations in the organisation and formulates suitable
measures to handle them.
50
MBA Frs Semesr (Orgeisanaea Bebavi) BU
7) Introduction of Change in Organisation: At some point of time.
because change is
every organisadon needs to undergo change
compulsory. Numerous forces such as technological. social. poliical and enviroamental
factors are responsible for the
change. Employees who are directdy affected by the change often resist it This
problem should be handled by using the behavioural science and edcating the employaes about the positive
aspects of the change.

1.8.7. Determinants of Organisational Behaviour

Key determinants of organisational behaviour are shown in figure 18:
People
Individual
Group

Environment
Government Structure
Organisational
Competition Jobs
Behaviour
Social Pressures Relationships

Technolog
Machinery
Computer Hardware and Softwa

Figure 18: Determinants of Organisational Behaviour

1) People: The internal social system of an
organisation is made up of the people who work in
it. This comprises of individuals, large and small
groups, informal and formal groups. It is the
organisation that exists to serve its people and not
vice versa. Today's organisations have changed
and have become more diverse than before.
Present day employees come up with a broad
range of talents, educational backgrounds and
perspectives. Hence, the managers are required to
transform themselves with the workforce in order
to attain maximum efficiency.
2) Structure: Relationships and roles of people in the
organisation are defined by structure. People
working in an organisation perform different roles
and have different relationships with each other.
Division of work is done based on the capabilities
and designation of the
employees so that
organisational goals are met efficiently. These may
be managers, supervisors, clerks, etc.,
working in
one direction to achieve the organisational goals in
an organised manner. Authority-responsibility
relationships are the essence of structure.
3) Technology: Technology plays a vital role in
modern organisations. It empowers people for their
work and also influences their activities. Since
work cannot be done without equipment, hence
organisations use technology to build buildings,
design machines, develop work processes and
 collect resources. Technology in turn helps people
to perform better. But technology has some side
effects like it is costly and limits people in certain
ways, i.e., it makes them dependent on machines.
So, technology has both pros and cons.

4) Environment: Operations of all organisations take

place under internal and external environment. An
organisation is a small part of a large system which
contains elements such as government, family and
other organisations. Changes in the external
environment affect the individual organisations
such as schools or factories. It also affects working
conditions and people's behaviour and results in
struggle for resources and power. Thus,
organisations need to adept. as pet their
environment it while studying human behaviour.

1.8.8. Benefits/ Importance of

Organisational Behaviour
Importance of studying organisational behaviour is as
follows:
1) Helps in Understanding Human Behaviour:
Human beings interact differently and this
interaction can be understood with the help of
organisational behaviour. Hence, organisational
behaviour is studied at various levels as per the
organisational needs, i.e., individual level,
interpersonal level, group level and
inter-group level.
Nature and Principles of Management & OB (Module I)

Importance of Organisational Behaviour

Helps in Understanding Assists in Controlling

Human Behaviour and Directing
Behaviour
Explains Application of
Helps in Understanding
Power and Sanction
Leadership Concepts

Evaluates Communication
Process Helps in Understanding
Organisational Climate

Assists in Organisational
Adaptation
2) Assists in Controling and Directing Behaviour:
Once the manager has understood human behaviour,
his focus should be on controlling and directing the
behaviour at all levels of interaction, thereby helping
the organisation in achieving its goals.
3) Explains Application of Power and Sanction:
Managers can use power and sanction to control
and direct the behaviour of their employees.
Organisational behaviour teaches how to use power
and sanction in order to attain the goals of both the
employee and the organisation at the same time.
4) Helps in Understanding Leadership Concepts:
Organisational behaviour helps the managers to
view the theory of leadership in a new perspective.
It identifies multiple leadership styles and helps the
manager in choosing the most appropriate style of
leadership in that condition.
5) Evaluates Communication Process: Effective
communication is a giant step towards achieving
organisational goals. Half the task is done if
employees learm to communicate effectively.
Organisational behaviour evaluates communication
process and its role in interpersonal dynamics.
6) Helps in Understanding Organisational Climate:
Organisational climate refers
the work to
atmosphere in an organisation that affects
behaviour of its people. It comprises of
enhancement of satisfactory working conditions
and adequate compensation. It also includes
effective supervision under which employees get an
opportunity to realise personal goals, interpersonal
relations and gain a feeling of achievement. Thus,
organisational behaviour helps in understanding the
organisational climate effectively.
7) Assists in Organisational Adaptation:
Organisation in itself is a dynamic unit that is
affected by constant changes. Organisations have to
familiarise themselves according to the external
environment and make internal changes accordingly
like preparing employees to accept the change.
1.8.9. OB is an
Inter-disciplinary Subject
Organisational behaviour is an applied behavioural
science based on contributions from
numerous
behavioural disciplines. These disciplines are described
as follows:
1) Paychology: Psychology is a behavioural science
which studies behaviour of human
beings in
specific conditions and predicts how the individual
will react in such conditions.
Psychology with its
various studies and theories has brought about
immense difference in human bchaviour. Theories
related to leadership, motivation, individual
decision-making, attitude, ego state, learning.
personality, performance appraisal, job satisfaction,
training and development, work design, job stress
and conflict resolution have been taken
from
psychology itself. If used efficiently these theories
can bring about changes in the attitude of
employees and inculcate a positive approach
towards the organisation. Several
tests also
psychological
are undertaken the
prospective
on
employees during the hiring process which help the
managers to understand the employees thought
process and attitude in a better manner. Apart from
this, certain other aspects of human personality can
also be measured with the help of this science.
2) Medicine: Medicine is an application of science
which is concerned with diagnosis and treatment of
diseases so that health of an individual can be
improved. It includes healing of both physical as
well as psychological diseases of the person. It
observes individual's behaviour and
lifestyle
pattern while devising a strategy for treatment of
chronic diseases. This has led to the
of wellness programmes in the perspective of
development
commercial medicine and these programmes have
led to more intense focus on employee's health in
the organisation.
3) Sociology: Sociology is a social science which
examines the influence of culture on groups and
helps managers to understand group dynamics,
communication, customs, position, authority, group
processes, conflict resolution, formal organisation
theory and group decision-making.
4) Social Psychology: Organisations are group of
people with designated jobs and they play an
important role in developing human behaviour.
Social psychology is a combination of psychology
and sociology. It has helped in managing changes,
decision-making, communicating and developing
skills to sustain social norms.
5) Anthropology: This field of applied science
studies human behaviour in several cultures and
environments to understand the differences
between them. It is the manager's responsibility to
handle and control people from different ethnicities
 and guide their efforts in the direction suitable for
the growth of the organisation. Organisational
behaviour teaches about
the attitudes and
transactions occurring in various cultures.
Environmental studies under anthropology helps in
understanding human behaviour across cultures so
that mergers and acquisitions become easier.
6) Political Science: A stable government helps the
business to grow internationally. A stable
government at national level promotes international
business, financial investments, expansion and
employment. Rules and regulations formed by
government deeply influence the functioning and
decision-making of organisations.
7) Industrial Engineering: Engineering deals with
the study of energy and matter and helps in
understanding job design. In the early years of
studying organisational behaviour, Fredrick
Taylor took basic engineering ideas and applied
them to
human behaviour at work. Since
Fredrick was from the engineering
hence he gave special
background,
emphasis to human
productivity and efficiency in work behaviour.
He provided
organisational behaviour with the
concept of performance standards, i.e., piece-rate
system which was a huge contributor in the
growth of organisations.

8) Economics: Organisational climate is affected by

economic environment as well. Economic factors
such as labour market
dynamics, cost-benefit
analysis, marginal utility analysis, human resource
planning, forecasting and decision-making also
influence organisational behaviour.

1.8.10. Challenges and Opportunities

for Organisational Behaviour
In present time, managers have to deal with various
contemporary challenges and opportunities in order to
use
organisational behaviour concepts. Some of these
challenges and opportunities are as follows:

Challenges and Opportunities

for Organisational Behaviour

Globalisation of
Business Workforce Diversity
Changed Employee
Expectations Increasing Quality

Ethical Issues at Work

1) Globalisation of Business: With globalisation,

where the world has turmed into a large global
village, a global yet local approach is being
followed by organisation. Organisational behaviour
is leading organisations on the way to a new world
 where there are minium hurdles to trade and
investment and national economy is becoming
intensely connected with each other. Technologies
such as telecommunication and transportation have
brought nations closer to each other and have given
rise to an interdependent economic system where
even the least minute change in one domain
directly affects the others around the world. This
entire process is termed as globalisation.
For effective working of the organisation. the
managers have to understand the local cultures and
behaviours in order to adapt their managerial styles.
They need to understand the differences in cultures
and accondingly change their working style in order
to run the organisation and resolve problems
effectively. Hence, managers face both opportunities
as well as challenges due to globalisation.
2) Workforce Diversity: Another challenge that the
organisations face today is adjusting with people
coming from different backgrounds. cultures.
countries, races. genders and ethnicities. These
also include physically disabled. gays and lesbians
and elderly people. This is called workforce
diversity. The issue is relevant all over the world
be it Europe. Canada, Australia, Japan or U.S. The
main reason behind this is the changing
demographics of working population. Coping with
diversity is a matter of concern for the managers
because of two reasons:
) Managers must leam how to encourage a
diversified workforce.
ii) Mangers must also learn how to interact with
employees coming from countries with
different values and languages.
3) Changed Employee Expectations: Employee
expectations and attitudes have also changed
alongwith the modifications in workforce
demographics. Today's employees give less or
no value to the traditional temptations such as
job security, housing, attractive remuneration,
etc. Today's employees demand
empowerment
and look forward for symmetry in status with
the management.

4) Increasing Quality Consciousness: With the

increase in competition at domestic as well as
global levels, quality of product or service has
gained much importance. Practices like Total
Quality Management, Six Sigma Standard, Kaizen
and Quality Certification have
gained momentum.
Due to this, the organisations have to
modify their
functioning. This also changes the working
conditions under which the employees work and
make the employees comfortable to
It is the task of the
accept change.
manager to ascertain that the
employees accept the change whole-heartedly and
understand that it is for their betterment.
Nature and Principles of Management & OB (Module 1)

5) Ethical Issues at Work: Ethics are the

principles,
beliefs and moral values that an individual or group
poSsess and for which they are accountable to the
community. Ethical issues are problems that require
individuals; organisation or groups to choose those
actions that are right and ethical and discard those
that are wrong. If all the choices are
wrong or illegal
then the least wrong among them is to be chosen.
People running organisations are now held accountable
for their actions and hence they prefer to fulfil their
duties towards their customers and provide them
maximum satisfaction. As it is truly said that a
dissatisfied customer can definitely hurt a company,
something which the company cannot afford.

1.8.11. Approaches to the Study of OB

Different types of approaches of organisation behaviour
are stated as below:

Approaches to the Study of OB

Human Resources
Approach
Contingency Approach
Productivity Approach
Systems Approach

1.8.11.1. Human Resources Approach

The human resource approach of organisational
behaviour can be seen as a developmental concept. As
the manpower is the focal point of any society or
organisation, this approach mainly deals with the
employee development and growth to attain high degree
of creativity, satisfaction, and competency.
By
comparing this approach with the conventional
approaches of early 1900s, the basic nature of this
approach can be effectively understood. In the
conventional approach, the employees were closely
monitored to ensure the performance of the task; once
the manager determined the different activities to be
performed. The main responsibilities of managers were
to control and direct. Whereas in human resource
approach, supportiveness is the main philosophy
adopted. Employees are made more responsible and
efficient and a work environment is created where
employees try to provide their best performances.

1.8.11.2. Contingency Approach

In traditional approach, irrespective of the nature of the
organisation or the prevailing circumstances, the
appropriate methods were employed. All the
management principles were treated as universally
applicable. The concept of universality was initially
promoted by many individuals, as the field of
organisational behaviour gradually developed. In any
kind of circumstances, behavioural ideas were expected
to be implemented.
 53

leadership was
In a typical example, employee-oriented
preferred over task-oriented leadership
always
irrespective of any situation. Few
rare exceptions could
were
be accounted but the traditional concepts
the twenty first
universally implemented. However, in and
non-traditional
century, it is believed that some
exceptional concepts are applicable in almost every
situation. The circumstances are more complex than
be
early time and different behavioural approaches can
needed by various variables. The solution is received in
the form of a contingency approach to organisational
behaviour which explains that different behavioural
practices can be employed for different circumstances
in order to obtain higher effectiveness.

The contingency approach is characterised by being

and
research-oriented,
more system-oriented,
thetoconventional
interdisciplinary in comparison
the
approach. It therefore enables the managers in using
information regarding organisational members in most
effective manner. Searching for principles in order to
find out the most ideal way of managing was the prime
focus of traditional management.

1.8.11.3. Productivity Approach

Some significant results or outcomes are required to be
every organisation. Increased
accomplished by
productivity is the main objective for most of the
organisations and this common orientation is created
with the help of organisational behaviour. In most
simple words, productivity can be defined as the ratio
of number of output units to number of input units on
the basis of a predefined benchmark. Productivity is
said to be improved if the number of units produced is
increased using same inputs. Similarly, productivity can
be considered to be improved if the same number of
units can be produced with the lesser number of input
units. Usually, economic inputs and outputs are the
measurement units of productivity. However, the
significance of social and human inputs and outputs
cannot be ignored.

For example, better human-oriented results or output

can be achieved if job satisfaction is enhanced through
improved organisational behaviour. Similarly, a
remarkable social result is obtained when a responsible
citizen is the outcome of an employee development
programme.

1.8.11.4. Systems Approach

Physical science was the first stream in which the
theory of system or systems approach emerged for
the first time and was later utilised by various other
streams such as management. System can be defined
as the combination of all the interlinked elements
which perform as a single unit. The success of

greatly depends on treating it

any organisation
as a system.
 54

The various basic elements of the system approach are

as followws:
1) A system contains a number of variables.
2) All the elements of a system are dependent on each
other (one element influences the other elements
and may get influenced by others in a more

trivial manner).
3) A larger system can include various other sub-
systems.
4) Inputs, transformation process, and produced
outputs are mainly included in a system.
5) The mechanism of input-process-output is normally
self-managing and cyclic in nature (it is continuous,
iterative, and adapts itself through feedback).
6) Both positive as well as negative outcomes are
obtained from systems.
7) Both intentional as well as unintentional results are
received through systems.
8) Long-term, short-term, or both types of results are
accomplished from systems.

Figure 1.9 depicts a framework for observing

organisations as a system:
Feedback
Inputs Outputs
Material Inputs Products/Seryices
Human Inputs Profits/Losses
Financial Inputs Transformation Employee Behaviours
Information Inputs Technology Additional
(From Information
Environment) (To Enviroament)

Figure 1.9: Systems Approach

There are mainly four types of inputs namely human,

financial, information and material which are obtained
by a system from its environment.
 MBA First Semester (Organisational Behaviour) BU

These inputs are then combined and processed by

manager of the organisation to be returmed to the
environment in the form of services, goods, profits,
losses, additional information, and employee behaviour.
A feedback is finally sent by the environment for the
outputs to the system.

1.9. EXERCISE
1.9.1. Short Answer Type Questions
1) Explain the concept of management.
2) State the functions of management.
3) What are the roles of managers?
4) What are the benefits of studying organisational
behaviour?
5) Elucidate the scope of organisational behaviour.
6) Organisational behaviour is to understand, predicting
and controlling human behaviour at work". Comment.

1.9.2. Long Answer Type Questions

1) Define management. Describe the skills of
managers.
2) Elaborate evolution of management.
the
3) Discuss the Indian contribution to management.
4) Define the term organisational behaviour. Elaborate
conceptual foundations of organisational behaviour.
5) OB is interdisciplinary subject." Comment.
6) Elucidate the challenges and opportunities for
organisational behaviour.
7) Explain the reasons for studying organisational
behaviour.
8) Discuss the models of organisational behaviour.