MANAGEMENT PRINCIPLES AND ORGANIZATIONAL BEHAVIOUR

Detailed Curriculum

Unit 1: Introduction to Management

Management-Meaning and Nature, Evolution of Management Thought: Classical approach – Taylor, Fayol,
Neo classical and Human relations approach – Hawthorne experiments, Behavioral approach, Systems
approach, Contingency approach, MBO, Learning Organization, Fortune at the Bottom of Pyramid, Managerial
roles and skills.

Unit 2: Functions of Management

Planning- Process and techniques, Organizing &staffing -Organizational structure and design, Line and staff
relationship, Departmentation, Delegation- Centralization and decentralization of authority Meaning of
staffing, Directing & controlling- Principle of directing, Basic control process and control techniques, Managers
as decision makers, Decision making styles.

UNIT -1

Introduction to Management:

Every human being has several needs and wants.But it is not possible for an individual to satisfy all his desires
himself. Therefore, he joins hands with his fellow- beings and works in an organized group to achieve, what he
cannot accomplish single handedly. There are many types of organized groups, viz., a family, a hockey team, a
college, a business firm, a government, etc.

Whatever may be the nature and kind of the group, it cannot work successfully unless there is someone to
manage its affairs. Management is essential, wherever group efforts are needed to be directed towards certain
goals. Group efforts become productive only when they are effectively managed.

It is the management which plans, organises, co-ordinates and controls the affairs of an enterprise. Every
enterprise makes use of money, machinery and manpower. Management is required to assemble and co-
ordinate these resources in the best possible manner for the achievement of the objectives of the enterprise.
According to Drucker:

“It is a multipurpose organ that manages a business and manages managers and manages workers and
work.” In this sense, management is considered as a system of authority. Management is a separate field of
study and as such it is a growing discipline within the field of Social Sciences.
Management is one of the factors of production, so it is an economic resource. As a process, management is a
series of several interrelated and interdependent functions that lead to the accomplishment of objectives.

The famous French writer Henri Fayol stated:

To manage is to forecast and to plan, to organize, to command, to co-ordinate and to control. It is a functional
definition of management which clearly indicates the functions of managers. According to the father of Sci-
entific Management Dr. F. W. Taylor. Management is the art of “knowing what you want to do” and then
seeing that it is done “in the best and cheapest way”.
If we go on increasing the number of definitions of other authorities, we shall observe that there is no complete
unanimity in the definitions. But the basic elements of management, as the authorities propound, are more or
less the’ same.

If management has to develop as a science, it is imperative that it should be defined in one sense only. To
secure a unanimous meaning of the term management, the term will have to avoid using it as both status and
function.

Concept of Management:
The word ‘management’ can be styled as—Management (i.e., manage-men- tactfully). Why manage men
tactfully? This is with a view to getting the things done through others. Traditionally, management means
“managing men tactfully to get the things done through others”. But the modern approach to management is
much broader in scope than the traditional one. It involves all kinds of activities which determine the objectives
of the organisation.
It creates an environment for the achievement of these objectives with the help of various functions. Thus, the
modern concept of management is goal oriented and it creates an internal environment for attaining the goals
efficiently. The term management is also used as a process, as a group, as a discipline and as an activity.

1. Management: A Process:
Management is considered as a process which includes all the activities—starting from the setting up of
objectives of a business enterprise to the taking up of steps which ensure the attainment of these objectives.

The management process comprises all functions which transform resources such as men, materials, money,
machines, methods, marketing and management into products and services to satisfy the consumers’ needs.
These resources as a whole are termed as 7 M’s.
The functions performed during the process of transformation of resources (i.e., 7 M’s into products and
services) are known as management functions. Thus the management process comprises of functions such as
planning, organising, staffing, directing and controlling.

Features of Management-as a Process:

1. Continuous Process:
The task of the manager does not finish even after performing the last function of management i.e., controls.
His job again starts with the planning function and so on. So, management is a continuous process.

2. Integrating Process:
All the functions of the management viz., planning, organising, staffing, directing, controlling are performed
for integrating the human and material resources for attainment the goals of the organisation. Therefore, the
management is an integrating process.

3. Social Process:
Management deals with human beings. A manager directs co-ordinates and controls the activities of the human
beings in order to achieve the pre-determined objectives. Thus, management deals with the human beings. So, it
is also a social process.

4. Universal Process:
The principles of management are applicable to all types of enterprises whether small (like family unit) or big
units such as multinational companies. Therefore, it is a universal process.

5. Interactive Process:
The functions of the management are interwoven i.e. two or more functions may be performed at a time. For
example, while preparing a plan a manager also sets the standards for control.

2. Management: A Group
Management as a group refers to those who carry the activities of management. So, the management consists of
all those persons who are managing the affairs of the business enterprise. Therefore, the term management
represents the group of people i.e., from chairman to supervisor, because they are concerned with getting things
done through others.
Now-a-days, the contribution of the proprietors/ owners in management of an enterprise has decreased
considerably. They are not in position to handle the different resources themselves as per the modern
requirements.

For this purpose they have to employ qualified and trained managers who are entrusted with the resources (such
as men, materials, money etc.) for achieving the objectives of the enterprise.

In a company form of organisation, the shareholders who are the real owners are scattered throughout the
country, and the company is managed by number of persons employed by it. Thus, managing a business
enterprise has become a group activity and ail those who are performing managerial duties are termed as
management.

The word ‘management’ also connotes as top management viz. Chief Executive or Chairman of Board, Board
of Directors, Managing Director etc. because the real decision making authority lies with the top management.
For the outsiders, the term ‘management’ is referred to as the top management as they deal with day to day
business of sale, purchase or other matters.

Characteristics:
(i) It comprises persons right from chief executive to the supervisor, who have been assigned managerial duties.

(ii) It refers to top management only.

(iii) The word management is used as a collective noun.

3. Management: A Discipline
Management has been developed as a fully fledged discipline (as a subject of study) in the due course of time.
The knowledge of management is being developed by number of scholars and it is being formally taught to the
students of management.

It includes the specialised functional courses viz.: Financial Management, Personnel Management, Marketing
Management etc. Thus, the management has grown as a separate discipline of study.

Characteristics:
Management has been recognised as a full-fledged discipline since it contains the following feature:
(i) It is an organised body of knowledge.
(ii) It can be learnt through teaching and training.

(iii) Its study produces qualified professionals.

(iv) Code of conduct and ethics for management personnel are being considered.

(v) Association of management, body managerial personnel is also coming into existence.

4. Management: An Activity
The functional aspect of management is to organise the human and the material resources to achieve the
objectives of the enterprise. In this process, the managers have to perform many activities.

These activities are:

1. Communication:
All the managers have to communicate with their superiors as well as subordinates either in writing or orally.

2. Decision Making:
In an enterprise a manager has to take a number of decisions, such as recruitment of workers, selection actually,
all the activities of the management are regulated by decision-making process.

3. Human Relations:
Management involves the activities for getting the work done through others. Therefore, the managers maintain
good relations with subordinates. The managers even develop social relation with their subordinates and look
after their personal problems sympathetically.

In this way, the managers motivate the people to work hard for achieving the objectives of the enterprise. Thus,
the management is an activity which helps in developing the relations among human beings.

Though used in different senses, the term management as a process is the most popular. Thus, management
may be defined as the sum total of all those activities which are undertaken to plan, organise, direct and control
the efforts of others to serve the interests of all. It involves the Co ordination of human efforts and physical
resources towards the achievement of organizational, individual and social objectives.
Significance of Management in Business:
It is an accepted concept in Economics that production is the result of the combination of factors land, labour,
capital and organisation. A new dimension has been added to these factors of production. Management as a
distinct activity has proved itself indispensable in organizing production.With the progress of time, science and
technology have so developed and the productive process has become so complicated that a simple assembly of
land, labour, capital and organisation cannot yield the desired results and cannot attain the predetermined objec-
tives of an enterprise unless they are managed efficiently in a scientific way.

Plenty of the attributes of land as defined in Economics, sufficient labour, abundant capital and the techniques
of organisation — all may be at their optimum level but a skilful handing, coordinating, directing and
controlling must be there to synchronies these factors.Management will make the organisation effective by the
maximum utilization of the factors. It will assess the quantum of the need of each fact and there with a
scientific outlook, it will continue its process to achieve the desired goal.

Nature of Management:

The study and application of management techniques in managing the affairs of the organization have changed
its nature over the period of time.

Multidisciplinary: Management is basically multidisciplinary. This implies that, although management has been
developed as a separate discipline, it draws knowledge and concepts from various disciplines. It draws freely
ideas and concepts from such disciplines as psychology, sociology, anthropology, economics, ecology,
statistics, operations research, etc. Management integrates the ideas and concepts taken from these disciplines
and present newer concepts which can be put into practice for managing the organization.

Dynamic nature of principle: Based on integration and supported by practical evidences, management has
formed certain principles. However, these principles are flexible in nature and change with the changes in the
environment in which an organization exists.

Relative, not absolute principles: Management principle are relative, not absolute, and they should be applied
according to the need of the organization. Each organization may be different from others. The difference may
exist because of time, place, socio-cultural factors, etc. Management Science or Art: There is a controversy
whether management is science or art. However, management is both a science and art. Management as
profession: Management has been regarded as profession by many while many have suggested that it has not
achieved the status of a profession.

Levels of Management:

1. Top Management
2. Upper Middle management
3. Middle Management
4. Lower Management
5. Operating Force or Rank and file workmen

Management Roles
The role of 'manager' sound simple enough, but anyone who has ever served as a manager knows that it is far
more complex than it might sound at first. Being a leader in any organization is a complicated and challenging
task that can take on a variety of forms depending on the needs of the organization and the people that are being
led. Any given manager may be asked to complete a variety of tasks during a given day depending on what
comes up and what problems need to be solved.
This is the general idea behind Mintzberg's Management Roles. These ten management roles were published as
part of Mintzberg's book in 1990, and they cover the spectrum of tasks and responsibilities that a manager must
take on at one point or another.

In order to better organize a long list of ten roles, they have been divided up into three categories -
interpersonal, informational, and decisional. Below we will look at each of the ten roles, what they mean for the
manager, and which of the three categories they fit into.

Figurehead
One of the important roles of a leader is simply to be a figurehead for the rest of the group. This is one of the
interpersonal roles, because so much of it is about being someone that people can turn to when they need help,
support, etc. A good leader will project confidence so that everyone involved feels a sense of security and
reassurance that the job will be done right.

Leader
Another interpersonal role, this one should be obvious. A manager needs to lead the people that he or she is in
charge of guiding toward a specific goal. This can include telling them what to do and when to do it, organizing
the structure of the team members to highlight specific skills that each possesses, and even offering rewards for
a job well done.

Liaison
The final role within the interpersonal category, acting as a liaison means that the manager must successfully
interface with a variety of people - both within the organization and on the outside - to keep things running
smoothly. This point is all about communication, and it is one of the main things that determines the ultimate
success or failure of a manager. Being able to properly communicate with a range of people in such a way that
the project remains on track is a crucial skill to develop.

Monitor
Acting as a monitor is the first managerial role within the informational category. Just as the word would
indicate, being a monitor involves tracking changes in the field that your organization works in, as well as
changes on your team that might be signs of trouble down the road. Things are never static in business, so the
successful manager is one who will constantly monitor the situation around them and make quick changes as
necessary.

Disseminator
It does no good as a manager to collect information from a variety of internal and external sources if you are
only going to keep it for yourself. The point of gathering that information is so that your team can benefit from
it directly, so the next informational role is dissemination - getting information out quickly and effectively to
the rest of your team. Wasted time by the team members on a certain part of a project often has to do with them
not possessing all of the relevant information, so make sure they have it as soon as possible.
Spokesperson
As the head of a team of any size or role within the organization, you will be the representative of that team

when it comes to meetings, announcements, etc. Being a spokesperson is the final informational role on the list,
and it is an important one because perception is often a big part of reality. Even if your team is doing great
work, it might not be reflected as such to other decision makers in the organization if you aren't a good
spokesperson.

Entrepreneur
In some ways, being a manager within a larger organization is like running your own small business. While you
will have managers above you to answer to, you still need to think like an entrepreneur in terms of quickly
solving problems, thinking of new ideas that could move your team forward, and more. This is the first role
within the decisional category on the list.

Disturbance Handler

It is almost inevitable that there will be disturbances along the way during any kind of project or task that
involves more than one person. The second item in the decisional section of the list is being a disturbance
handler, because getting back on track after a problem arises is important to short-term and long-term
productivity. Whether it is a conflict among team members or a bigger problem outside of the group, your
ability to handle disturbances says a lot about your skills as a manager.

Resource Allocator

Every project is tackled using resources that are limited in some way or another. As a resource allocator, it is
your job to best use what you have available in order to get the job done and meet your defined goals and
objectives. Resources can include budget that has been made available for a project, raw materials, employees,
and more. This is the third item within the decisional category, yet it is one of the most important things a
manager must do.

Negotiator
Business is all about negotiation, and that is especially true for managers. The final role on the list, being a
negotiator doesn't just mean going outside of the organization to negotiate the terms of a new deal. In fact, most
of the important negotiation will take place right within your own team itself. Getting everyone to buy in to the
overall goal and vision for a project likely will mean negotiating with individual team members to get them to
adopt a role that suits their skills and personal development goals. A good manager will be able to negotiate
their way through these challenges and keep the project on track for success.

Efficiency and Effectiveness are the two words which are most commonly juxtaposed by the people; they are
used in place of each other, however they are different. While efficiency is the state of attaining the maximum
productivity, with least effort spent, effectiveness is the extent to which something is successful in providing
the desired result.
Definition of Efficiency

Efficiency refers to the ability to produce maximum output from the given input with the least waste of time,
effort, money, energy and raw materials. It can be measured quantitatively by designing and attaining the input-
output ratios of the company’s resources like funds, energy, material, labor, etc.

Efficiency is also considered a parameter to calculate the performance and productivity by making comparisons
between the budgeted output and the actual outputs produced with the fixed number of inputs. It is the ability to
do things in a well-mannered way, to achieve the standard output.Efficiency is an essential element for resource
utilisation, as they are very less in number, and they have alternative uses, so they must be utilised in the
best possible way.

Definition of Effectiveness

Effectiveness refers to the extent to which something has been done, to achieve the targeted outcome. It means
the degree of closeness of the achieved objective with the predetermined goal to examine the potency of the
whole entity.

Effectiveness has an outward look i.e. it discloses the relationship of the business organisation with the macro
environment of business. It focuses on reaching the competitive position in the market.

Effectiveness is result oriented that shows how excellently an activity has been performed that led to the
achievement of the intended outcome which is either accurate or next to perfect.

Key Differences Between Efficiency and Effectiveness

The points, given below describe the substantial differences between efficiency and effectiveness:

1. The ability to produce maximum output with limited resources is known as Efficiency. The level of the
nearness of the actual result with planned result is Effectiveness.
 2. Efficiency is ‘to do the things perfect’ while Effectiveness is ‘to do perfect things’.
3. Efficiency has a short run perspective. Conversely, the long run is the point of view of Effectiveness.
4. Efficiency is yield-oriented. Unlike Effectiveness, which is result oriented.
5. Efficiency is to be maintained at the time of strategy implementation, whereas strategy formulation
requires Effectiveness.
6. Efficiency is measured in operations of the organisation, but Effectiveness of strategies is measured
which are made by the organisation.
7. Efficiency is the outcome of actual output upon given the number of inputs. On the other hand,
Effectiveness has a relationship with means and ends.

Conclusion

Efficiency and Effectiveness both have a prominent place in the business environment which must be
maintained by the organisation because its success lies on them. Efficiency has an introspective approach, i.e. it
measures the performance of operations, processes, workers, cost, time, etc. inside the organisation. It has a
clear focus on reducing the expenditure or wastage or eliminating unnecessary costs to achieve the output with
a stated number of inputs.

In the case of Effectiveness, it has an extroverted approach, that highlights the relationship of the business
organisation with the rest of the world to attain a competitive position in the market, i.e. it helps the
organisation to judge the potency of the whole organisation by making strategies and choosing the best means
for the attainment result.

What do managers do?

One good answer to this question comes from the late Peter Drucker, whose name that stands out above all
others in the century-long history of management studies.A native of Vienna, Austria, Mr. Drucker was an
intellectual who worked as a journalist and studied economics. At some point in his studies he had an epiphany:
economists, he realized, “were interested in the behavior of commodities, while I was interested in the behavior
of people.” That led him to, in effect, create the modern study of management.Mr. Drucker divided the job of
the manager into five basic tasks. The manager, he wrote:

1) Sets objectives. The manager sets goals for the group, and decides what work needs to be done to meet those
goals.

2) Organizes. The manager divides the work into manageable activities, and selects people to accomplish the
tasks that need to be done.
3) Motivates and communicates. The manager creates a team out of his people, through decisions on pay,
placement, promotion, and through his communications with the team. Drucker also referred to this as the
“integrating” function of the manager.

4) Measures. The manager establishes appropriate targets and yardsticks, and analyzes, appraises and interprets
performance.

5) Develops people. With the rise of the knowledge worker, this task has taken on added importance. In a
knowledge economy, people are the company’s most important asset, and it is up to the manager to develop
that asset.
 The Evolution of Managem ent Theor y

Management Theories – Frederick Taylor

The Father of Scientific Management, Frederick Taylor, attempted to use systematic study in order to find the
single best way of doing a task. He laid down the following four principles of management for all managers:

I. Develop a science for each aspect of work. Also, study and analyze it to find the single best way to do the
work.

II. Ensure that the selection of workers is based on a scientific methodology and not on nepotism and
favoritism. Also, train, teach and develop the workforce allowing them to reach the optimum potential.

III. Your employees are not your enemies. Therefore, create an environment of cooperation with them to ensure
the implementation of scientific principles.

IV. Divide all work and responsibility equally between the workers and the management.
Taylor believed that these principles could help determine a fair day’s work for a fair day’s pay in a manner which
was good for both the employees and the management. He also recommended the use of incentives for employee
motivation.The management theories which evolved in the early twentieth century were called the Second
Industrial Revolution. Further, there was a lot of criticism and opposition to similar management theories from
other contributors.

Management Theories – Max Weber and Henri Fayol

Max Weber introduced the idea of bureaucratic organizations to the world. Further, this came at a time when
politics and heredity or tradition were the basis of promotions to prominent positions. By definition, bureaucracy is
the exercise of control based on knowledge, expertise, and/or experience.

He proposed that organizations must adopt policies which are fair as opposed to favoritism-based and recorded in
writing. He also recommended that professional managers must supervise the organization rather than company
owners. Here are some principles to guide the management of an organization:

• Qualification-based hiring – Hire employees based on their educational qualification or technical training.

• Merit-based promotion – Managers decide on promotions and base their decisions on experience or
achievement.

• Chain of command – Organizations must have a structure wherein each position reports and is accountable
to a higher position. Also, create a complaints process to protect the rights of workers in lower positions.

• Division of labor – Responsibilities, tasks, and authority is equally divided and clearly defined.
• Impartiality – Regardless of the position or status of an employee, all rules and regulations must apply to all
members of the organization.

• Recording in writing – Record every single administrative act, decision, rule or procedure in writing.

• Owners are not managers – The owners of a company should not manage it.
Henri Fayol
The Father of Modern Management Theory, Henri Fayol, proposed a theory of general management which is
applicable to all types of fields and administration. He divided all activities of an industrial enterprise in the
following six groups:

1. Technical activities pertaining to production

2. Commercial activities (buying/selling)

3. Financial activities pertaining to the optimum utilization of capital

4. Accounting activities (final accounts, costs, statistics, etc.)

5. Security-related activities (protecting the premises)

6. Managerial activities
Of these, Fayol focused his work on describing and explaining managerial activities. He grouped managerial
functions around the activities of planning, organizing, commanding, coordinating, and controlling. He suggested
the following 14 principles of management:

1. Division of Work: to ensure optimum performance with minimal effort.

2. Authority and Responsibility: Every authority comes with certain responsibilities.

3. Discipline: Employees must respect and obey their superiors.

4. Unity of Command: Every employee must receive orders from only one senior.

5. Unity of Direction: If there are a group of tasks with a common objective, then there must be a single head
and a single plan.

6. Subordination: Individual interest is secondary to the general interest.

7. Remuneration: Wages must afford maximum satisfaction to the employees and the firm.

8. Centralization: The organization must decide about the amount of authority that the higher levels would
retain or dispersed in the organization.

9. Scalar Chain: The relations between the superiors and subordinates should be short-circuited and not
detrimental to the business.

10. Order: All employees and process must have an appointed place.
 11. Equity: Managers must strive for equity and equality of treatment while dealing with the employees. They
must display a combination of kindness and justice.

12. Stability of Tenure of Personnel: Managers must try to reduce employee turnover.

13. Initiative: Managers must take initiatives.

14. Espirit de Corps: There must be an emphasis on teamwork and effective communication for achieving it.

Behavioralists, Sociologists, and Psychologists

Many behavioralists believed that the study of management must concern itself with human behavior in
organizations. Further, they felt that the effectiveness of an organization relies on the quality of the relationship
among the people working in it. Also, good management relies on the manager’s ability to develop interpersonal
competence among its members.Further, the behavioral approach to management drew attention to a lot of socio-
psychological aspects like the dynamics of organizational behavior, groups, organizational conflict, change, and
techniques of organizational development.
Systems Approach
The systems approach defines a system as a set of interdependent and inter-related parts arranged meticulously to
produce a unified whole. Also, systems are of two types – Open and Closed. An open system recognizes the
dynamic interaction with the environment (suppliers, labor unions, customers, etc.). On the other hand, in a closed
system, the environment has no influence on it.
The 11 Most Important Management Theories For Small Business

There are many management theories floating around in the business world. Some are old and some are new.
But pretty much all of them are based — in one form or another — on one of the 11 management theories on
this list.Why is that important? Shouldn’t you concentrate on running your business instead of reading up on
old ideas? Yes, you should focus on making your business a success. But that success depends, in large part, on
the way you lead your employees.That’s why these management theories are so important: they give you
concrete ways to inspire greatness in your team.In this article, we’ll give you a brief overview of the
management theories every manager should know. Find one you like, do a bit more research, and then
incorporate it into your business.

11 Essential Management Theories

1) Systems Theory

Example of systems management theories

At its creation, Systems Theory (or The Systems Approach) had nothing to with business management and
everything to do with biology. That’s because Ludwig von Bertalanffy (1901-1972) — a biologist at the time
— founded general systems theory (GST) in an attempt to refute reductionism and revive the unity of
science.The premise of general systems theory is that a system is composed of interacting elements that are
affected by their environment. Because of this interaction, the system as a whole can evolve (develop new
properties) and self-regulate (correct itself).

When applied to business, experts shorten “general systems theory” to just Systems Theory. In actual fact,
Systems Theory is more a perspective than a fully formed practice. Systems Theory encourages you to realize
that your business is a system and is governed by the same laws and behaviors that affect every other biological
organization.

This introduces such concepts as:

Entropy — The tendency for a system to run down and die (a thing to be avoided in business)

Synergy — Working together, the parts can produce something greater than those same parts could produce on
their own
Subsystem — The whole (your business) is built on subsystems, which themselves are built on yet more
subsystems

Because it is a way of looking at your business rather than a concrete management process, you can use
Systems Theory in concert with the other management theories on this list.

2) Principles Of Administrative Management

Miner and engineer Henri Fayol (1841-1925) developed his principles of administrative management as a top-
down approach to examining a business. He put himself in his manager’s shoes and imagined what situations
they might encounter when dealing with their team.

From this, he concluded that his managers — and indeed management in general — had six responsibilities
when it came to managing employees:

Organize

Command

Control

Coordinate

Plan

Forecast

With those responsibilities in mind, Fayol developed 14 principles of administration that influence how
managers should lead their teams. These principles, which range from the importance of maintaining a clean
facility to the value of initiative and teamwork, are the foundation for many of today’s most successful
businesses.

3) Bureaucratic Management

Max Weber (1864-1920) took a more sociological approach when creating his bureaucratic management
theory. Weber’s ideas revolve around the importance of structuring your business in a hierarchical manner with
clear rules and roles.According to Weber, the ideal business structure (or bureaucratic system) is based on:
Clear division of labor

Separation of the owner’s personal and organizational assets

Hierarchical chain of command

Accurate record keeping

Hiring and promotion based on qualifications and performance, not personal relationships

Consistent regulations

Many today see Bureaucratic Management as an impersonal style that can become overwhelmed by rules and
formalities. That said, it can be very useful for new businesses that are in need of standards, procedures, and
structure.

4) Scientific Management

Toward the end of the 19th century, Frederick Taylor (1856-1915) conducted controlled experiments to
optimize his workers’ productivity. The results of these experiments helped him form the belief that the
scientific method — not judgment or discretion — is the best determiner of efficiency in the workplace.

Scientific Management promotes standardization, specialization, assignment based on ability, and extensive
training and supervision. Only through those practices can a business achieve efficiency and productivity. This
management theory attempts to find the optimal way to complete a given task, often at the expense of the
employees’ humanity.

The theory as a whole isn’t used much anymore, but parts of it — workplace efficiency, training, and
cooperation — are the foundation of some of the most successful businesses on the planet.

5) Theories X And Y

Managers Discussing management theories X and Y

In 1960, social psychologist Douglas McGregor (1906-1964) published his book The Human Side Of
Enterprise. In it, he outlined two drastically different styles of management (theories X and Y). Each style is
guided by a manager’s perceptions of their employees’ motivations.Theory X posits that employees are
apathetic or dislike their work. Managers who adhere to Theory X are often authoritarian and will micromanage
everything because they don’t trust their employees.Theory Y posits that employees are self-motivated,
responsible, and want to take ownership of their work. Managers who adhere to Theory Y include their
employees in the decision-making process and encourage creativity at all levels.In practice, small businesses
tend to operate on Theory Y while large businesses tend to operate on Theory X.

Abraham Maslow :Hierarchy of needs theory

6) Human Relations Theory

In the first quarter of the 20th century, psychologist Elton Mayo (1880-1949) was tasked with improving
productivity among dissatisfied employees. Mayo attempted to improve worker satisfaction by changing
environmental conditions like lighting, temperature, and break time. All of those changes had a positive
effect.Mayo then tried changing variables that he perceived would have a negative effect on satisfaction, like
the length of the workday and quotas (he increased both). What he observed was that regardless of the change
— good or bad — worker satisfaction always increased.

This led Mayo to conclude that performance was a result of the attention the researchers paid to the workers. In
other words, the attention made the workers feel valuable.

These findings gave rise to Mayo’s Human Relations Theory, in which he states that employees are more
motivated by social factors — like personal attention or being part of a group — than environmental factors,
such as money and working conditions.

7) Classical Management

Classical Management Theory is predicated on the idea that employees only have physical needs. Because
employees can satisfy these physical needs with money, Classical Management Theory focuses solely on the
economics of organizing workers.

Due to this narrow view of the workforce, Classical Management Theory ignores the personal and social needs
that influence employees’ job satisfaction. As a result, Classical Management Theory advocates seven key
principles:

Profit maximization

Labor specialization

Centralized leadership

Streamlined operations
Emphasis on productivity

Single-person or select-few decision making

Priority to the bottom line

When these seven principles are put into practice, they create an “ideal” workplace based on a hierarchical
structure, employee specialization, and financial rewards

Control of the business is held by a select few who exercise exclusive control over the decisions and direction
the company takes. Underneath those select few, middle managers govern the day-to-day activities of the
employees who are at the bottom of the pecking order.And all of this revolves around the idea that employees
will work harder and be more productive if they are rewarded in larger and larger increments (via wages or
benefits).While this may not sound like an “ideal” management theory by today’s standards, it worked well for
many years prior to the early 20th century. And even though the system isn’t applied lock-stock-and-barrel as it
once was, there are several strong points that managers can use in the 21st century. They include:

Clear managerial structure

Division of labor

Clear definition of employee roles

These three principles, combined with other management theories on this list, can improve the way your
employees — and your business — works in this modern age.

8) Contingency Management

Fred Fiedler and others conceived of Contingency Management Theory in the 1950s and 60s. Fiedler based his
theories on the idea that effective leadership was directly related to the traits the leader displayed in any given
situation.From that idea sprang the belief that there exist a set of traits that are effective for every situation and
that different situations demand different leadership traits. As such, leaders must be flexible and adapt to
change as the market, the business, and the team demands.Fiedler then extended that concept from an
individual, management focus to a much broader organization-focused theory. Fiedler’s theory suggests that
there is no one management approach that suits every situation and every organization.
Instead, three general variables determine business management and structure. They are:

The size of the organization

The technology employed

The leadership at all levels of the business

What that means for the individual manager who subscribes to Contingency Management Theory is that they
must be able to identify the particular management style suitable for every given situation. They must also be
willing and able to apply that management style quickly and effectively whenever necessary.In a larger sense,
businesses and managers who adhere to Contingency Management Theory — whether intentionally or
unintentionally — will be concerned, above all else, with maintaining the alignment of their team and achieving
a good fit in all projects and situations.

Ultimately, according to Contingency Management Theory, there is no one best way to do things. The way a
business chooses to organize will depend on the environment in which they operate.

9) Modern Management

Modern Management Theory developed as a direct response to Classical Management Theory. Modern-day
businesses are faced with navigating rapid change and complexities that seem to grow exponentially overnight.
Technology is both the cause of and the solution for this dilemma.As such, businesses that incorporate the
Modern Management Theory into their operations seek to meld technology and, to some extent, mathematical
analysis with the human and traditional elements of their organization.

This combination of scientific and social variables creates a dual-pronged approach to management,
organization, and decision-making. Modern Management Theory emphasizes:

Using mathematical techniques to analyze and understand the relationship between managers and
employees.That employees don’t work for money alone (in contrast to Classical Management Theory). Instead,
they work for happiness, satisfaction, and a desired lifestyle.

Modern Management Theory embraces the idea that people are complex. Their needs vary over time, and they
possess a range of talents and skills that the business can develop through on-the-job training and other
programs

At the same time, management can use mathematical techniques such as statistical, cost, revenue, and return-
on-investment (ROI) analysis to make rational decisions unaffected by emotion.Though Modern Management
Theory isn’t perfect by itself, it does, like Classical Management Theory, offer some useful points that you can
combine with other theories to create a structure that is just right for your business.
10) Quantitative Management

Quantitative Management Theory is an offshoot of Modern Management Theory developed during World War
II in response to managerial efficiency.Quantitative Management Theory brought together experts from
scientific disciplines to address staffing, materials, logistics, and systems issues for the U.S. military. The clear-
cut, numbers-oriented approach to management (which applies to business as well) helped decision makers
calculate the risks, benefits, and drawbacks of specific actions.

This shift toward pure logic, science, and math is tempered by the belief that these mathematical results should
be used to support, not replace, experienced managerial judgment.

11) Organizations As Learning Systems

Organizations As Learning Systems Management Theory is fairly new when compared to many of the other
theories on this list. Organizations As Learning Systems Management Theory — sometimes called Integral or
Holistic Management Theory — developed as a postmodern response to many of the older management
theories that are still in use today.

It starts with the idea that the business is a system that is built on a succession of subsystems. In order for the
business to run smoothly and efficiently, each subsystem must also work smoothly and efficiently within itself,
but also with the other subsystems around it.In this theory, managers are responsible for coordinating the
cooperation necessary to ensure the larger “organism” continues to function successfully.

Learning and change are major components of this theory, and learning is encouraged and made available to
everyone — not just middle and upper-management. The emphasis in this theory is on teamwork, participation,
information sharing, and individual empowerment.

The Change Is Worth The Effort

Implementing changes to your management theory and style is difficult. But when you commit to
accommodating the attitudes and natural habits of your employees, your business will reap the rewards both
now and in the future.Managing your team in a way they understand (and that appeals to them) results in
improved morale, decreased turnover, and better employee engagement. Those results are well worth the effort.

Behavioral Management Theories: Human Relations Approach

Behavioral management theories show the human relations aspect of management and how productivity
depends on workforce motivation levels.Criticism of scientific management by Taylor and administrative
management promoted by Fayol gave birth to the behavioral management theories.These theories were
criticized by several behavioral scientists for their indifference and in-sensitiveness to the human side of
managerial dealings.Instead of taking a machine-like view of workers as individuals with only economic needs;
behavioral scientists came to consider them as people with social and psychological needs too.
Recognition, respect, social contact, freedom, and achievement, is also necessary. To them, a business
organization is a psycho-social system with a prime focus on the human factor.

A good number of sociologists and psychologists like Abraham Maslow, Hugo Munsterberg, Rensis
Likert, Douglas McGregor, Frederick Herzberg, Mary Parker Follet, and Chester Barnard are the major
contributors to this school of thought; which is further subdivided by some writers into the Human Relations
approach and the Human Behavioral approach, the latter being considered as a modified version of the former
thoughts.A most important contribution to the human relations school of thought was made by Elton Mayo and
his colleagues through their famous Hawthorne study.

According to them, employees do not only have economic needs but also social and psychological needs, which
are to be fulfilled for motivating them.McGregor, Likert, Chester Barnard, Kurt Lewin, and others, classified as
exponents of the Human Behavioral School, modified the classical Human Behavior approach of Mayo.

They considered the human side of the enterprise as an interactive subsystem of the total organizational
system.As distinguished from the classical human relations theory, the Human Behavioral School is devoid of
the emotional content and emphasizes the synchronization of group goals within the broader framework of
management.

It does not consider the goals of the different groups of employees and managers as conflicting with each other
but rather co-operative.

The Human Relations theory of management arose out of a reaction against the Scientific Management
theory and Universal Management Process theory of Taylor and Fayol respectively.

Main criticisms leveled against them are their indifference to and neglect of the human side of the
enterprise.Employees, according to their critics, were viewed as mere parts to be fused in the job structure
disregarding their human needs and aspirations.

While Taylor and Fayol view people at work merely as economic beings, the Human Relations theorists
emphasize the need for viewing them as social beings with social and psychological needs such as recognition,
respect, achievement and social contact.According to the Behavioral Management Theories; a business
organization as a psycho-social system with much emphasis on the human side.

Human relations experts believe that management should recognize the need for employees for recognition and
social acceptance.Therefore managers need not have only technical skills but also human relations skills to
interact with their subordinates as human beings.

According to this school; managers must know why their subordinates behave as they do and what
psychological and social factors influence them. According to these theorists, since groups provide members
with feelings of acceptance and dignity, management can look upon the workgroup as a potentially productive
force.

Now the Behavioral and Human Relations Approach is followed in most organizations around the world.
Managers are now more likely to recognize the behavioral aspect of employees and give importance to it.
Management Concepts :

Meaning of Learning Organisation:

“Learning organisation is the one that has developed the capacity to continuously learn, adapt, and change”. —
B. P. Robbins and M. Coulter

Organisations operate in the dynamic environment. There are continuous innovations in information and
computer technologies. Markets are global and customers are spread worldwide. Though the world has become
global, customers all over the world are not the same. They are guided by their country’s culture, attitudes and
beliefs.

In order to be successful, organisations should learn and respond to changes quickly. They learn about
effectively challenging conventional wisdom, manage the organisation’s knowledge base and make the desired
changes. All organisational members take active part in identifying and resolving work- related issues. In a
learning organisation, employees practice knowledge management.

They continuously acquire, share and apply new knowledge in making decisions. In today’s world of
competition, organisations that learn and apply new concepts have edge over competitors. “All organisations
learn, whether they consciously choose to or not — it is a fundamental requirement for their sustained
existence”.

“People continually expand their capacity to create the results they truly desire, where new and expensive
patterns are nurtured, where collective aspiration is set free and where people are continually learning how to
learn together.” — Peter Senge

Learning organisation “facilitates the learning of all its members and continually transforms itself”. —
Pedlar.
It “continually improves by rapidly creating and refining the capabilities required for future success.” — Wick
and Leon

Learning organisations:
a. Learn from experience

b. Adopt continuous development programmes

c. Solve problems through systematic techniques

d. Transfer knowledge throughout the organisation through formal training programmes.

e. Create space and formal mechanism for people to think, ask questions, reflect and learn, encourage them to
challenge the existing way of working and suggest improvements.

It “provides a healthy environment for natural learning.” It identifies individual needs, develops skills of people
through training, reviews organisational policies and learns from experiences of its members. It makes use of
experiences of managers to meet its strategies needs. Learning organisations are associated with internal
renewal of the organisation in the face of competitive environment.

Learning organisations use double-loop learning as against single-loop learning. In single- loop learning, errors
are corrected according to past routines and policies. In double-loop learning, when errors are detected, their
correction involves change in objectives, policies and standard routines. Double-loop learning challenges old
assumptions and norms and provides opportunities for alternative solutions to problems leading to dramatic
improvement in the organisation structures and designs.

Single-loop learning is called adaptive learning. It focuses on issues within the scope of the organisation.
Organisations that adopt single-loop learning frame targets, monitor their performance, take corrective action
and, thus, complete the loop.

Double-loop learning is called generative learning. Organisation redefine their targets. They continuously adopt
to environmental variables, learn what new can be achieved in the changed circumstances and make action
plans to achieve the new targets. They convert learning into action.

A learning organisation has the following features:

1. Boundary-less organization:
It does not have a defined structure. The organisation design is not limited to horizontal, vertical or external
boundaries. Horizontal boundaries create departments and vertical boundaries create organisational levels and
hierarchies. A learning organisation remains flexible and unstructured. Employees cooperate in performing
organisational activities.

Members share information throughout the organisation — across functional areas (horizontal boundaries) and
organisational levels (vertical boundaries). Structural and physical boundaries are minimised.

2. Teams:
Employees do not work for specific departments at specific levels. They work in teams and perform all
organisational activities. Managers create cross-functional teams to organise activities around work processes
instead of functional departments. This removes horizontal boundaries in the organisation.

They create cross-hierarchical teams and promote participative decision-making. This removes vertical
boundaries in the organisation. People subordinate personal interests and fragmented departmental interests and
work together to achieve the organisation’s shared vision.

3. Empowerment:
Employees make effective decisions as they are empowered to do so. Power is the ability to do work. Employee
teams in learning organisations are empowered to make decisions about work-related issues. Need for bosses or
direct supervisors gets reduced. Managers facilitate, support and advocate employee teams rather than direct
them. Team working results in better performance.

4. Information sharing:
Information facilitates learning. In a learning organisation, employees learn by sharing information (knowledge
management). There is timely, accurate and open sharing of information in the organisation. As there are no
structural boundaries, people openly communicate with each other (across vertical and horizontal boundaries).
This leads to extensive information sharing amongst members. People discard old ways of thinking and develop
new ways of working. Organisational policies also encourage learning amongst members.

5. Shared vision:
Leaders of learning organisation facilitate shared vision in the organisation. Members develop common vision
of organisational goals and strategies and collectively work towards that vision. It enables the organisation to
respond to future opportunities and benefit from them.

6. Collaboration:
A learning organisation has strong and committed leaders. They create, support and encourage people to
collaborate with each other. This creates a motivated workforce which learns continuously from experience and
environmental factors.

7. Organisational culture:
Organisational culture is a system of shared meaning within the organisation that determines how employees
act. In a learning organisation culture, members think of organisational processes, activities, functions and
interactions with the environment as a system of inter-relationships.

Everyone agrees on shared vision and develops strong mutual relationships. They develop community, caring
and trust for each other. The culture is supportive in nature. It questions existing assumptions and creates an
environment of learning.

Merits of Learning Organisation:

A learning organisation has the following merits:
1. The organisation experiments, tries and permits more failures. This provides extensive information to make
decisions.

2. The organisation interacts with customers and maintains a rich and informal environment conducive to
growth and success. Knowledge of customer requirement is important for company’s fortunes.

3. Learning enhances company’s speed, innovativeness and adaptability.

4. The organisation can anticipate and adapt changing market conditions. It reaches the market with innovative
products faster than competitors.

5. The organisation maximises responsiveness to customers’ needs. This provides competitive advantage to the
company.

6. It enables the organisation to survive in the knowledge economy and cope with rapidly changing technology,
global competition and demands.

Bottom Of The Pyramid Will Drive Growth In 2019:

The year gone by has been an eventful one and left us with some interesting lessons.After emerging from the
consecutive shocks of demonetisation in 2016 and the implementation of GST in mid-2017, the economy
seemed to be returning to its growth trajectory towards the end of calendar 2017. Then 2018 brought with it a
series of events that could easily have derailed growth once more.
The rupee dollar exchange rate has been deteriorating throughout the year, largely due to rising crude oil prices,
supported by fears of a trade war between the US and China and expectations of rising interest rates in the US.
Side by side, India was constantly haunted by the spectre of rising inflation (although it never really rose above
its January 2018 peak of 5.07%). These concerns prompted the RBI to raise its benchmark interest rate in two
tranches of 25 basis points each as a pre-emptive measure. Higher interest rate expectations, coupled with the
exposure of segments of the financial sector to asset-liability mismanagement caused liquidity in the system to
dry up substantially.
Despite all this, the economy posted growth of above 7% in all three quarters (March, June and September
2018), peaking at 8.2% in the June quarter. In fact, India remains ahead of China to retain the tag of the world's
fastest growing major economy.Industrial output remained resilient and consumption continued to remain
strong and resilient .
There were other domestic events in December 2018 that could have upset sentiments, such as the resignation
of the RBI governor and the incumbent party losing the assembly elections. However, stock markets, which are
considered the pulse of the economy, continued to rally.
So, what gave the economy this inherent strength to bear domestic and international shocks and keep plodding
on its growth path?
We believe that financial inclusion has set in motion a great juggernaut, driven by MSME activities and
consumption in small towns and rural areas. We are proud to have the opportunity to facilitate this unstoppable
force as we focus on financing progress. Being present in four financially underserved segments – agri-finance,
MSME lending, merchant cash and affordable housing finance – we have a first-hand experience of this
phenomenon.
Looking ahead, it is this large base of consumers and producers that will drive India’s growth story forward in
the short to medium term, at least. At the same time, economic factors – both domestic as well as international
– have begun to turn favourable for India.
Come November and both crude prices and the exchange rate become positive for our country once again as
global events that prompted the adversities mellowed. The brewing trade war between the US and China, which
had reach a boiling point in October, got smartly defused at the Buenos Aires G20 summit, where the two giant
economies reached a temporary truce. And despite commitments to cut oil production in a phased manner, at
the OPEC meet in Vienna in early December, crude prices continue to fall. Domestically, inflation level shave
fallen to an all-time low of 2.33% in November 2018 and liquidity is fast returning to the financial sector due to
a series of measures by the RBI and the support of other apex bodies, like NHB.
Against this backdrop, we expect 2019 to be a good year, irrespective of domestic or international economic
shocks, which could at most destabilize growth temporarily. As long as adequate and suitably crafted finance is
available to the large and growing base of consumers and producers at the bottom of the Indian financial
pyramid, it will be difficult to derail economic growth, much less topple it.

The fortune at the bottom of pyramid

MNCs in India are credited for frugal innovation—low-cost products and services for the bottom of the
pyramid customers
The concept ‘Bottom of the Pyramid’ was first used by US President Franklin D Roosevelt in 1932, while
talking about the poor people who are often forgotten because they live at the bottom of the economic pyramid.
Bottom of the pyramid, also called the base of the pyramid, is a phrase in economics that refers to the poorest
two-thirds of the economic human pyramid. Management scholar CK Prahalad popularised the idea of this
demographic segment as a profitable consumer base in his 2004 book ‘The Fortune at the Bottom of the
Pyramid’ co-authored by Stuart Hart. Prahalad has some useful insights about consumer needs in poor societies
and opportunities for the private sector to serve important public purposes while enhancing its own bottom line.
Four consumer tiers: At the top of the pyramid are 75-100 million affluent consumers. These are cosmopolitan
groups composed of middle- and upper-income people in developed countries, and rich elites from the
developing world (they are tier one). At the middle of the pyramid, in tiers two and three, are poor customers in
developed nations and the rising middle classes in developing countries—they have been and are the target
market for MNCs for whom strategies are made. At the bottom of the pyramid, tier four consists of 4 billion
people earning $2 or less per day.
The extreme inequity of wealth distribution is a paradox; it has reinforced a view that the poor cannot
participate in global market economy, even though they constitute the majority. Tier four represents a multi-
trillion dollar market. According to World Bank’s projections, the population at the bottom of the pyramid
could swell to more than 6 billion people over the next 40 years, because the bulk of the world’s population
growth occurs there.
Their strengths: At the bottom of the pyramid, the market is full of opportunities. The tier four market is wide
open for technological innovation. The challenge is to recognise and accept the uniqueness of these markets
and develop strategies to fulfil their needs. One comes to the conclusion that pragmatic strategies need be
devised in tune with the aspirations of the consumer. In the bottom of the pyramid market, many companies are
adopting their own models in serving these segments. In India, two-thirds of the billion-plus people represents
rural population. And the following figures are factual:
* 45% of all soft drinks are sold in the rural market;
* 50% of all motorcycles are sold in rural areas;
* 60% of all cigarettes are consumed by rural consumers;
* 55% of FMCG products are sold in the rural market (pencils, pens, notebooks);
* 50% of the national income is from rural areas;
* 41 million Kisan Credit Cards have been issued as against 22 million credit-cum-debit cards in urban areas.
Also, 50% of LIC policies are sold to rural consumers and, interestingly, 60% Rediffmail users are from
smaller towns.
Few marketers are cynical about the poor class of consumers by ignoring their potential of buying power. For
these poor consumers, buying luxury products such as a house or installing running water is a luxury. But it
doesn’t mean they can’t buy anything. They buy comfort items like TV, gas stoves, domestic electrical
appliances. These are no more considered luxury.
Margin versus volume: Traditional business in developed countries is mostly based on high gross margins. The
low buying power of the bottom of the pyramid consumers makes this approach inappropriate. Companies need
to develop a tight and effective lean management to optimise supply chain. Cost-savings management becomes
a key to performance and success in these huge low-cost markets.
Some MNCs have explored opportunities at the bottom of the pyramid. Perhaps HUL has understood it better
than others. Their marketing strategy is smart—offering brands with multiple price and packaging options has
worked wonders. The maker of Axe, Dove, Knorr and Lipton believes in selling small packs of its products in
markets such as Spain, Greece and the US. In Spain, for instance, Unilever sells Surf detergent in packs
offering five washes, and offers mashed potatoes and mayonnaise in small packages in Greece. It has also
launched a low-cost brand of tea and olive oil for the European markets.
In India, the bottom of the pyramid customers go for low-price sachets of shampoos, toothpastes, fairness
creams and hair oil. Much of what Unilever is replicating in the developed world has been initiated in India.
HUL sells power brands such as Close-Up, Pepsodent, Sunsilk, Pond’s, Vaseline, Brooke Bond Taj Mahal and
Bru to increase product penetration at the bottom of the pyramid. Lifebuoy soap in rural markets is referred to
as the ‘laal sabun’ since it’s red in colour, and ‘Colgate kiya kya’ is synonymous to brushing teeth.
A relatively small player, CavinKare from south India, is credited and has a huge role to play in ushering the
sachet revolution as a strategy for low-end buyers. Other companies like Parle, PepsiCo and Dabur started
selling products in smaller packs and hence proving the saying “big things come in small packages.” Smaller
SKUs (stock keeping units) contribute to over 40% of sales in the fast moving consumer goods category. Thus,
MNCs in India are credited for frugal innovation—low-cost products and services.
 MBO
MANAGEMENT BY OBJECTIVES

Management by objectives (MBO) is a systematic and organized approach that allows management to focus on
achievable goals and to attain the best possible results from available resources.It aims to increase
organizational performance by aligning goals and subordinate objectives throughout the organization. Ideally,
employees get strong input to identify their objectives, time lines for completion, etc. MBO includes ongoing
tracking and feedback in the process to reach objectives.

Principle:
The principle behind Management by Objectives (MBO) is to make sure that everybody within the organization
has a clear understanding of the aims, or objectives, of that organization, as well as awareness of their own
roles and responsibilities in achieving those aims. The complete MBO system is to get managers and
empowered employees acting to implement and achieve their plans, which automatically achieve those of the
organization.
The MBO style is appropriate for knowledge based enterprise when your staff is competent. It is appropriate in
situations where you wish to build employees' management and self-leadership skills and tap their
entrepreneurial creativity,tacit knowledge and initiative.

Advantages:
• MBO programs continually emphasize what should be done in an organization to achieve organizational
goals.
• MBO process secures employee commitment to attaining organizational goals.

Disadvantages:
• The development of objectives can be time consuming, leaving both managers and employees less time
in which to do their actual work.
• The elaborate written goals, careful communication of goals, and detailed performance evaluation
required in an MBO program increase the volume of paperwork in an organization.

• Some times the goals are unachievable which leads to failure of MBO
 UNIT -2

Planning :

Planning as a Function of Management

1. What is Planning?
Planning is the work the manager does to predetermine a course of action, that involves- (a) Establishing
Purpose – the work managers do to discover a vision of the future; (b) Setting Goals – the work managers do to
determine the end results to be accomplished; and (c) Creating Plans – the work of sequencing tasks to
accomplish goals.
Thus planning is an activity where goals are set, environmental studies are made, planning premises are
considered and a plan is chalked out. Thus plan is a predetermined course of action, which emerges as an
outcome of planning process.
Different management scientists have defined the ‘planning’ differently. Some definitions are as broad as –
“Planning is anticipating” – Earl Strong.
Some recognize it as a process, like – “Planning is the thinking process, the organized forecast, the vision based
on fact and experience that is required for intelligent action.” – Alfred and Beaty.
Some view it in the form of outcomes of planning, like – “Management planning involves the development of
forecasts, objectives, policies, programs, procedures, schedules, and budgets” – Louis A. Allen.
When an organization wants to reach a goal, it makes a plan to reach it. The plan is a future course of action. To
decide this future course of action, the manager has to anticipate future and take into account the organization’s
capability with regard to the resources required to implement the plan.
This plan should clearly lay out action sequences to be performed. After putting the plan into action, the
management keeps a track of it and make adjustments in it as and when required under the given
circumstances. Organizational plans generally take the shape of policies, procedures, budgets, programs, etc.
Essentially, planning has following characteristics:
1. Planning is the most basic of all managerial functions – Planning precedes all executory functions like
organizing, directing, staffing, and controlling.
2. Planning preconceives an objective – Every plan specifies the objectives to be attained in future and steps
necessary to reach them.
3. Planning is an intellectual activity- It involves vision and foresightedness to decide the things to be done in
future.
4. Planning must involve the future – It bridges the gap between where we are and where we want to go.
5. Planning is all pervasive – It is required in every managerial function and at every level.
6. Planning is a continuous activity – It is never ending activity of a manager. Planning is always tentative and
subject to revision and amendment, as new facts become known.

2. Features of Planning:

Planning has a number of characteristics:

1. Planning is Goal Oriented:
All plans arise from objectives. Objectives provide the basic guidelines for planning activities. Planning has no
meaning unless it contributes in some positive manner to the achievement of predetermined goals.
2. Planning is a Primary Function:
Planning is the foundation of management. It is a parent exercise in management process. It is a preface to
business activities. According to Koontz, “Planning provides the basic foundation from which all future
management functions arise”.
3. Planning is All Pervasive:
Planning is a function of all managers. It is needed and practiced at all managerial levels. Planning is inherent
in everything a manager does.
4. Planning is a Mental Exercise:
Planning is a mental process involving imagination, foresight and sound judgment. Planning compels managers
to abandon guesswork and wishful thinking. It makes them think in a logical and systematic manner.
5. Planning is a Continuous Process:
Planning is continuous. It is a never-ending activity. It is an ongoing process of adjustment to change. There is
always need for a new plan to be drawn on the basis of new demands and changes in the circumstances.
6. Planning Involves Choice:
Planning essentially involves choice among various alternative courses of action. If there is one way of doing
something, there is no need for planning. The need for planning arises only when alternatives are available.
7. Planning is Forward Looking:
Planning means looking ahead and preparing for the future. It means peeping into the future, analyzing it and
preparing for it. Managers plan today with a view to flourish tomorrow. Without planning, business becomes
random in nature and decisions would become meaningless, adhoc choices.
8. Planning is Flexible:
Planning is based on a forecast of future events. Since future is uncertain, plans should be reasonably flexible.
When market conditions change, planners have to make necessary changes in the existing plans.
9. Planning is an Integrated Process:
Plans are structured in a logical way wherein every lower-level plan serves as a means to accomplish higher
level plans. They are highly interdependent and mutually supportive.
10. Planning Includes Efficiency and Effectiveness Dimensions:
Plans aim at deploying resources economically and efficiently. They also try to accomplish what has been
actually targeted. The effectiveness of plans is usually dependent on how much it can contribute to the
predetermined objectives.

3. Purposes of Planning:
Why do managers plan? – The answer to this question can be best given by another question – can managers
afford not to plan? Planning is inevitable at every level. Even if a manager has to take work from 2 persons in a
day, he will have to plan to allocate the work among them. What a manager may ignore is long term planning.
But the long term planning is very important if an organization wants to survive and prosper.
Some purposes, which can be achieved by planning, are discussed below:
1. Planning focuses attention on objectives:
Planning directs explicit attention to objectives and priorities, and encourages individuals and organizations to
focus on relevant results rather than on endless activities. The intended, explicit, announced plan sets a tone,
focuses attention, and encourages action.
2. Planning establishes coordinated effort:
It gives direction to managers and non- managers alike. When employees know where the organization is going
and what they must contribute to reach the objective, they can coordinate their activities, cooperate with each
other, and work in teams. Without planning, departments could be working at cross-purposes and preventing
the organization from moving efficiently towards its objectives.
3. Planning reduces uncertainty:
Planning force managers to look ahead, anticipate change, consider the impact of change, and develop
appropriate responses. It also clarifies the consequences of actions managers might take in response to change.
4. Planning provides a means for organizations to cope with changes in their environment:
The accelerating pace of change in political, technological, economic, and other areas highlights the need for
continuing attention to strategy reformulation.
5. Planning reduces overlapping and wasteful activities:
Planning beforehand is likely to pinpoint waste and redundancy. Furthermore, when means and ends are clear,
efficiencies become obvious.
6. Planning establishes objectives or standards that are used in controlling:
If we are unsure of what we are trying to achieve, how can we determine whether or not we have achieved it?
In planning, we develop the objectives. In the controlling function, we compare actual performance against the
objectives, identify any significant deviations, and take the necessary corrective action. Without planning, there
would be no way to control.
Comprehensive planning is an integrative activity that seeks to maximize the total effectiveness of an
organization as a system in accordance with its goals.

4. Basic Steps in Planning Process:

Whether the system is an organization, department, business, project, etc., the basic planning process typically
includes similar nature of activities carried out in similar sequence.
Step 1- Identify Need for Planning:
First of all need for making plans should be identified clearly. The managers should be sensitive enough to
judge which area need planning. For example- falling sales of the company may alarm the managers to review
and plan its sales function.
Step 2- Establish a Goal or Set of Goals:
Next step is to decide what exactly the organisation or sub-unit wants or needs in order to accomplish
organizational purpose. For example- the goal of the marketing unit may be to reach a particular quantum of
turnover in the given time. Identifying priorities and being specific about them enable organizations to focus
their resources effectively.
Step 3- Define the Present Situation:
How far is the organization or the subunit from its goals? What resources are available for reaching the goals?
Only after the current state of affairs is analyzed can plans be drawn up to chart further progress. Open lines of
communication within the organisation and between its sub-units provide the information—especially financial
and statistical data—necessary for this third stage.
Step 4- Identify the Aids and Barriers to the Goals:
What factors in the internal and external environments can help the organization reach its goals? What factors
might create problems? Planning requires an intimate understanding of present resources (human, material, and
financial), core competencies, and actual obstacles with respect to the business unit, all of which describe the
current condition.
A clear vision of the desired future state with respect to its impact on the organization’s ability to overcome
potential obstacles, fulfil its mission, and serve its customers, needs to be obtained.
Step 5- Develop a Plan or Set of Actions for Reaching the Goal(s):
Each Goal must be broken down into an Action Plan which has four parts to it-
(1) The WHAT – This involves tasks- although goals clarify what is to be done in organization, each goal must
be broken down into specific tasks that will help to accomplish the goal.
(2) The WHO – this involves delegating – the work a leader does to identify the capabilities of each member of
the team and delegate tasks to them.
(3) The WHEN – this involves scheduling- the work of putting a time factor on our programme and inserting
the calendar into the programme with dates and time durations.
(4) The WITH WHAT – this involves budgeting – the application of resources (personnel, time and equipment)
to help achieve the goal.
Step 6- Monitor the Progress of Plan:
After the plan is set into motion, next task is to monitor its progress. Is it leading the organization in the same
direction as was perceived while planning? If not, what could be the reason?, can any change make the things
better?, if yes, the planning process again starts. Monitoring is a continuous process, and is required to be done
at each stage of implementation of plans, and so is the planning process.
Note that different planners might have different names for the above activities and groups them differently.
However, the nature of the activities and their general sequence remains the same.

5. Principles of Planning:
There is no standard set of principles, which can ensure effective planning.
However, few principles, which apply to planning in almost all the circumstances, are discussed below:
1. Principle of Contribution to Objectives:
Planning is meant to achieve the objectives of the organization. Thus it should focus attention to objectives and
direct all efforts and resources to their advancement.
2. Principle of Primacy of Planning:
There are different functions of management, but planning must hold the primacy and thus occupy first place
and precedes all other functions of management.
3. Principle of Planning Premises:
Planning is always based on some premises which includes forecasts of future environment, current
information of environment and organization, values and assumptions of planners and owners of organization.
4. Principle of Limiting Factors:
Planning must take the limiting factors (manpower, money, machines, materials and management) into account
by concentrating on them when developing alternative plans, strategies, policies, procedures and standards.
5. Principle of Commitment:
An organization should plan in the future for a period of time sufficient to fulfil the commitments of the
organization. This principle helps in determining the length of the planning period. It suggests that the time
period covered by planning should be related to the commitments of the organization. If the commitments are
defined in terms of long-term goals, the resources should be procured and deployed on the long-term basis.
6. Principle of Flexibility:
Flexibility in the plans is required to cope with the uncertainties of the environment. However, flexibility
entails costs. Thus, degree of flexibility in a plan should be decided after weighing the costs and probable
benefits of the given flexibility.
7. Principle of Navigational Change:
It is the duty of the navigator to check constantly whether his ship is following the right direction in the vast
ocean to reach the destination as scheduled. The navigator changes the path of ship in case it is not going on the
right path. In the same way, a manager should check his plans to ensure that these are progressing as required.
He should change the direction of his plans if he faces unexpected events.

6. Types of Plans:
As the plans are all pervasive, they are made at every level of organization with different purposes and
perspectives. Accordingly they may take various shapes and stand differently in the hierarchy of importance.
The most popular ways to describe organizational plans are by their:
1. Coverage – Strategic, tactical, and operational,
2. Time frame – Short and long term,
3. Specificity – Specific versus directional,
4. Frequency of use – Single use and standing.

1. Strategic, Tactical and Operational Plans:

a. Strategic Plans:
Strategic plans are designed to meet the broad objectives of the organization – to implement the mission that
provides the unique reason for organization’s existence. They are set at the top managerial level, and are meant
to guide the whole organization.
An organization’s strategic plan is the starting point for planning. The aim of strategic planning is to help a
company select and organize its businesses in a way that would keep the company healthy in spite of
unexpected upsets occurring in any of its specific businesses or product lines.
For example- in order to deal with uncertainties of raw material availability, a company’s strategic plan may
purport to acquire its own facilities for generating raw material. Strategic plan serves as a guide to the
development of sound sub plans to accomplish the organizational objectives.
b. Tactical Plans:
Top level managers set the strategies that an organization should focus to achieve organizational goals.
Examples of strategies include set-up a plant to generate raw material for the organization’s manufacturing
activities, explore North-East market, and likewise. Middle managers interpret these strategies and develop
tactical plans for their departments that follow strategies in order to contribute to the organizational goals.
In order to develop tactical plans, middle management needs detail reports (financial, operational, market,
external environment). Tactical plans have shorter time frames and narrower scopes than strategic plans.
Tactical planning provides the specific ideas for implementing the strategic plan. It is the process of making
detailed decisions about what to do, who will do it, and how to do it.
In short, tactical plans may be understood in following terms:
1. Tactical planning deals primarily with the implementation phase of the planning process
2. Tactical planning turns strategy into reality
3. Tactical planning usually has a 1-2 year time horizon
4. Tactical planning is usually tightly integrated with the annual budget process
c. Operational Plans:
The supervisor interprets the strategic and tactical management plans as they apply to his unit. This way, he
makes operational plans to support tactical plans. These plans provide the details of how the strategic plans will
be accomplished. Examples of planning by supervisors include scheduling the work of employees and
identifying needs for staff and resources to meet future changes. Operating plans tend to be repetitive and
inflexible over the short run. Change comes only when it is obvious that plans and specific action steps are not
working.
There are two main type of operational plans – Single use plans which are developed to achieve specific
purposes and dissolved when these have been accomplished; standing plans are standardized approaches for
handling recurring and predictable situations.
Note that Tactical plans are based on the organization’s strategic plan. In turn, operational plans are based on
the organization’s tactical plans. These are specific plans that are needed for each task or supportive activity
comprising the whole. Strategic, tactical, and operational planning must be accompanied by controls.
Monitoring progress or providing for follow-up is intended to ensure that plans are carried out properly and on
time. Adjustments may need to be made to accommodate changes in the external and/ or internal environment
of the organization.
2. Short-Range and Long-Range Plans:
Time is an important factor in planning. George Terry says, “The time period covered by planning should
preferably include sufficient time to fulfil the managerial commitments involved.”
Generally a short range planning (SRP) means a plan for one or two years and long range planning (LRP)
means a plan for three to five years or more. Though this division may be considered as arbitrary, but it may
have a general acceptability. This period of course, may vary according to the nature and size of business.
When a concern requires long gestation period, it is natural that the long range planning may cover a longer
period than five years. For example- organizations, such as oil or mining companies, or airlines must make long
range planning because of their particular purposes and objectives. A home video-rental store or a book store
might concentrate on seasonal or annual goals.
However, whatever the period of planning, it should not be too rigid. It should rather be flexible to meet the
unknown factors of the future. If a concern adopts both short-term and long-term planning, the short-term
planning should fit in with long-term planning. It is important, for managers, to understand the roles of both
long range and short range planning in overall planning scheme.
3. Specific and Directional Plans:
Specific plans are established to achieve a specific purpose and dissolves when the purpose is accomplished.
For example- a manager who seeks to increase his firm’s sales by 20 per cent over a given twelve-month period
might establish specific procedures, budget allocations, and schedules of activities to reach that objective.
These represent specific plans.
Directional plans identify general guidelines. They provide focus but do not lock managers into specific
objectives or courses of action. Instead of following a specific plan to cut costs by 4 per cent and increase
revenues by 6 per cent in the next six months, a directional plan might shoot for improving corporate profits by
5 to 10 per cent every year.
Intuitively it seems right that specific plans would be preferable to directional or loosely guided plans, because
they have clearly defined objectives. There is no ambiguity, no problem with misunderstandings. However, in
certain circumstances, like in case of fast changing environment, directional plans provide the flexibility
required to cope with the changing situations.
4. Single Use and Standing Plans:
A single-use plan is a one-time plan specifically designed to meet the needs of a unique situation and created in
response to non-programmed decisions that managers make.
In contrast, standing plans are ongoing plans that provide guidance for activities repeatedly performed in the
organization. Standing plans are created in response to programmed decisions that managers make and include
the policies, rules, and procedures.
i. Single-Use Plans:
Single-use plans are detailed courses of action that probably will not be repeated in the same form in the future.
For example- a firm planning to set up a new warehouse because it is expanding rapidly will need a specific
single-use plan for that project, even though it has established a number of other warehouses in the past.
It will not be able to use an existing warehouse plan, because the projected warehouse presents unique
requirements of location, construction costs, labour availability, zoning restrictions, and so forth. The major
types of single-use plans are programs, projects, and budgets.
a. Programs:
A program covers a relatively large set of activities. The program shows- (1) the major steps required to reach
an objective, (2) the organization unit or member responsible for each step, and (3) the order and timing of each
step. The program may be accompanied by a budget or a set of budgets for the activities required.
A program may be as large in scope as placing a person on the moon or as comparatively small as improving
the reading level of fourth-grade students in a school district. Whatever its scope, it will specify many activities
and allocations of resources within an overall scheme that may include other single-use plans as projects and
budgets.
b. Projects:
Projects are the smaller and separate portions of programs. Each project has limited scope and distinct
directives concerning assignments and time. In the warehouse example, typical projects might include the
preparation of layouts, a report on labour availability, and recommendations for transferring stock from existing
facilities to the new installation. Each project will become the responsibility of designated personnel who will
be given specific resources and deadlines.
c. Budgets:
Budgets are statements of financial resources set aside for specific activities in a given period of time. They are
primarily devices to control an organization’s activities and so are important components of programs and
projects. Budgets itemize income as well as expenditures and thus provide targets for such activities as sales,
departmental expenses, or new investments.
Managers often use budget development as the process by which decisions are made to commit resources to
various alternative courses of action. In this sense, budgets can be considered single-use plans in their own
right.
ii. Standing Plans:
a. Policies:
A policy is a general statement designed to guide employees’ actions in recurring situations. It establishes
broad limits, provides direction, but permits some initiative and discretion on the part of the supervisor. Thus,
policies are guidelines. Some policies deal with very important matters, like those requiring strict sanitary
conditions where food or drugs are produced or packaged. Others may be concerned with relatively minor
issues, such as the way employees dress.
Policies are usually established formally and deliberately by top managers of the organization. Policies may
also emerge informally and at lower levels in the organization from a seemingly consistent set of decisions on
the same subject made over a period of time.
For example- if office space is repeatedly assigned on the basis of seniority, that may become organization
policy. In recent years policy has also been set by factors in the external environment—such as government
agencies that issue guidelines for the organization’s activities (such as requiring certain safety standards).
b. Procedures:
A procedure is a sequence of steps or operations describing how to carry out an activity. It is more specific than
a policy and establishes a customary way of handling a recurring activity. Thus, less discretion on the part of
the supervisor is permissible in its application. For example- the refund department of a large discount store
may have a policy of “refunds made, with a smile, on all merchandise returned within seven days of purchase.”
The procedure for all clerks who handle merchandise returned under that policy might then be a series of steps
like these- (1) Smile at customer. (2) Check receipt for purchase date. (3) Check condition of merchandise …
and so on. Such detailed instructions guide the employees who perform these tasks and help insure a consistent
approach to a specific situation.
In day to-day operation, the procedures help in the following manner:
1. Procedures bring uniformity in performing various actions because everyone has to follow same procedure
for doing actions.
2. It helps in standardizing and streamlining day to day activities to maintain smooth functioning of the
organization.
3. Procedures may also help in maintaining coordination, because every employee performs similar type of
activity by using prescribed procedure for it.
4. Procedures also encourage delegation of authority to lower level manager, because procedure-based
activities can easily be delegated to them.
c. Rules:
A rule is an established guide for conduct. Rules include definite things to do and not to do. There are no
exceptions to the rules. An example of a rule is “No Smoking.” Managers frequently use rules when they
confront a well-structured problem because they are simple to follow and ensure consistency. For example-
rules about lateness and absenteeism permit supervisors to make disciplinary decisions rapidly and with a
relatively high degree of fairness.
Distinction between Policies and Procedures:
The terms ‘policies’ and ‘procedures’ themselves explain their scope.
However, following are some criteria to differentiate them:
1. Basis of Formulation:
Policies are formulated on the basis of objectives of organization. Procedures are determined on the basis of
work to be carried out for achieving those objectives.
2. Level of Formulation:
Policies are generally formulated by top management. Procedures are laid down at the lower level of
management.
3. Comparative Status:
In the hierarchy of plans, policies occupy higher place. Procedures occupy lower place as compared to policies.
4. Focus Area:
Policies deal with functional aspects of management. Procedures deal with operational or administrative aspect
of management.
5. Detailing of Instructions:
Policies are general statements which provide guidance to managers in decision making. Procedures are
regarded as a detailed guidelines for performing activities.
6. Rigidity:
Policies are broad based providing a scope to the manager for using his skill and experience. Procedures are
rigid and leave no scope for personal judgment.
7. Need of Skill in Application:
Policies encourage initiative of the managers, because they get opportunity for using their skill, experience and
knowledge and personal judgment. Procedures do not help in developing initiative among the employees,
because they do not leave scope for personal judgment.
Control-a process which ensures that actual performance is in conformity with planned performance, draws
important link between planning and control. Planning frames organisational goals and objectives. For effective
implementation of plans and achievement of these goals, organisation structure is designed, various official
positions are staffed with people and training, motivation and leadership facilities are provided to them.

Once the implementation process starts, workers initiate the production activities. In doing so, they face
problems which are solved by the supervisors or go unnoticed. The problems that go unnoticed may accumulate
into major problems later on and endanger the entire planning process. This may mean-starting from the
scratch.

All physical, human, financial and information resources which were used in framing the plans go waste,
production schedules are disturbed, companies may lose markets, labour turnover rate may become very high,
companies may, in fact, retrench the work force; the worst is, the company can go into liquidation.

To save enterprises from these problems, managers continuously watch the organisational activities to ensure
that things planned are actually happening. There is constant follow up of planned activities to make things
happen according to plans. “It means we must invest in developing a system for monitoring deviations from
plans when they are occurring so that adjustments and corrective actions can be taken.”
7. Features of a Good Plan:
A sound plan has the following features:
1. Integration:
A good plan integrates short-term requirements of the firm with the long- term requirements. Plans (short-term
and long-term) should be oriented towards the overall organisational goals.
2. Market Research:
Planners should conduct market research before they frame plans. “What potential customers say they are going
to do and what they end up doing may be two different things?” Plans should forecast market requirements
through a well conducted market research.
3. Economy/Financial constraints:
A plan which relies too heavily on financial budgets may turn out to be a failure if the revenues do not arise as
expected. Once the budgetary balance is disturbed, subsequent operations may get affected as plan is a
sequence of cause and effect relationships. If it becomes imperfect, it can lead to cumulative problems. Future
costs and benefits should be carefully analysed while designing organisational plans.
4. Co-ordination:
A sound plan should co-ordinate working of all the functional areas. If functional plans (or departmental plans)
are not synchronised with organisational plans, organisation will fail to achieve its goals.
5. Consistent:
Plans should be followed for a fairly long of time. Frequent modifications/ alterations in plans by higher
authorities can make their implementation ineffective at lower levels.
6. Flexible:
Though consistent, plans should adjust (flexible) to environmental changes.
7. Acceptable:
Best laid plans may turn out to be failures if they are not implemented effectively. Plans should be acceptable to
those who frame them and also to those who implement them.
8. Participative:
The acceptability of plans increases if subordinates participate in the planning process. Many organisations
follow the principle of participation in planning. Managers invite ideas/suggestions from people of different
departments at different levels and finalise the plans. The practice of participative planning promotes good
ideas and creates personal obligation on subordinates to achieve the planned targets. It, however, allows
managers to retain control over the planning activities.
9. Clear Objectives:
Plans should be oriented towards objectives. Clear, specific and attainable objectives result in sound and
effective plans.
10. Based on Planning Premises:
Since plans achieve a goal in future, they should be based on accurate forecasts and predictions about future
events. Planning premises provide a basis for making future oriented plans.
11. Effective Communication System:
Framing and implementing plans requires interaction of managers at all levels with people inside and outside
the organisation. A sound plan is based on well-designed communication system present in the organisation.

8. Relationship between Planning and Control:

Planning is the first managerial function of initiating action followed by organising and directing people and
resources to get the organisational work done and controlling is the last function which ensures that actions
have actually helped in the attainment of organisational goals. Planning starts the process of management and
controlling completes that process.

Controlling function is directly related to planning; managers monitor the results to ensure achievement of
targets laid in the plans. Control reveals deficiency in plans and leads to revision of plans. Controlling provides
feedback to the plans by pointing exceptions or variations in the planned performance. It is largely the
exceptional cases that are brought to the notice of managers so that future plans can be altered.

Control is not possible unless plans are made. Similarly, planning is not possible unless control system checks
deviations in the performance. Planning and controlling are, therefore, inter-connected. While planning
provides basis for controlling, controlling provides the basis for planning. Rest of the managerial functions-
organising, staffing and directing are intermediate and performed according to plans.

Control function evaluates the present and takes actions to regulate the future. It prevents occurrence of
undesirable actions in future. Control is, thus, both looking back and looking ahead. It reviews the past actions
and takes corrective actions for failures. It avoids occurrence of undesirable events in future by taking lessons
from the past. The events which have already taken place, however, cannot be corrected unless corrected at the
feed forward or concurrent stages of control.

The relationship between planning and controlling can be concluded as follows:

1. Planning identifies actions and controlling ensures that actions are carried out.

2. Poor control system is followed by failure of plans and effective control system reinforces the plans.

3. Controlling helps in revising the plans or abandoning them altogether and making fresh plans.
4. Framing plans presumes existence of a well-designed control system and controlling function presumes
existence of plans achievable within the constraints of human and non-human resources.

9. Importance of Planning:
Planning is important for the organisation to survive and grow in the dynamic, changing environment.
It is important to plan because of the following reasons:
1. Achievement of Organisational Objectives:
Planning helps the organisation achieve its objectives. Planning provides the path for achievement of
organisational goals with minimum waste of time, money and energy. It bridges the gap between where we are
and where we want to go. It ensures optimum utilisation of time and money.
2. Fulfilment of Organisational Commitments:
Organisations have a long-term and short- term commitments towards the society depending on their nature. A
defence organisation, for example, has long-run commitments while a retailer is more interested in short-term
goals or responsibilities. These commitments can be fulfilled through planning.
3. Facilitates Decision-Making:
Decision-making is deciding what to do when managers face a problem-solving situation and adopting the best
way of doing out of the various courses/ways of doing it.
It is “the process of choosing a course of action from two or more alternatives.”
Managers have to make decisions like – what to produce and how to produce, what are the organisational
resources and how can they be effectively allocated over different functional areas, what are their primary goals
— profit or social responsibility. Planning helps to decide a course of action that will solve the specific
problem. Planning is the basis for making decisions – present and future.
4. Provides Stability to Organisations:
Organisations plan their business operations to ensure stability in the changing environment. Managers foresee
uncertainties and prepare the organisations to face them when they occur.
5. Overall View of the Organisation/Coordination:
Organisation is a structure of relationships where authority and responsibility of each person are clearly
defined.
Planning coordinates the functions performed by individual human beings and departments and unifies them
into a single goal — the organisational goal. It also coordinates the organisation’s internal environment with its
external environment; human, physical and financial resources and organisational activities at various levels.
6. Optimum Utilisation of Resources/Efficiency of Operations:
Organisations work with limited resources. Planning allocates resources over different objectives and
functional areas (production, personnel, finance and marketing) in the order of priority. This results in optimum
utilisation of scarce resources (men, material, money etc.) and their effective conversion into productive
outputs. Efficiency promotes business success and avoids the chances of failure.
7. Development of Managers:
Planning involves imagination, thought and creativity by managers. While planning, managers develop their
conceptual and analytical skills to coordinate organisational activities with the external environment.
8. Promotes Innovation/Creativity:
Planning involves forecasting. Managers foresee environmental opportunities, analyse the strengths of
competitors and think of new and innovative ways to promote their products. Planning promotes new ideas,
new products, new relationships and, thus, innovation and creativity.
9. Basis for Control:
Planning provides standards of performance and control ensures that the standards are achieved. Controlling
involves measurement of performance, its comparison with standard performance, finding deviations and
taking steps to remove the deviations to make better plans in future. Unless there are plans, there will be no
control. Planning, thus, provides the basis for control.
10. Reduces Risk:
Risk is a situation where incomplete but moderately reliable information is available about future. Uncertainty
is a situation where no information is available about future. Changes in government policies is a situation of
uncertainty while competitors entering the market with better technology represents a situation of risk. Planning
reduces risk through forecasting.
It predicts future and discounts it to the present and enables the organisation to exploit environmental
opportunities and overcome threats. It enables the organisations to operate in the complex environment of rapid
technological changes, international competition, changing interests of business stakeholders etc.
11. Morale Boost Up:
If organisational plans succeed and goals are achieved successfully, managers and employees feel a sense of
achievement and they feel morally committed to concentrate on organisational activities. Successful planning,
thus, promotes success of the organisation.
12. Facilitates Delegation:
Good and well-designed plans enable managers to concentrate on strategic issues and delegate
routine/operating activities to lower level managers. It, thus, facilitates delegation.

10. Advantages of Planning:

Now, after discussing the purposes, process of planning, and various types of plans, let us have a look at the
advantages which can be derived from planning-
1. Planning helps to clarify objectives:
Planning focuses the attention of all people on the goals to be achieved. Such focus helps to give meaning and
direction to activities, provide basis for determining effectiveness of activities, identify an individual’s efforts
with corporate aims and coordinate with efforts of other individuals.
2. Planning enables organization to adapt to uncertainty and change:
We live in a world of uncertainty and rapid change. To continue doing things as if the conditions of the past
will continue in future would be disastrous. Planning does not reduce the uncertainty of the future but it
increases one’s readiness to meet it.
3. It enables choice:
By trying to become aware of the situation in the future, the planning process enables one to make a choice on
the kind of position one would like to be in, instead of being caught unawares by an unanticipated future and
forced into a position, which one does not like.
4. Planning gives competitive strength:
Study of what goes on in the environment is necessary for planning. In this process, the planner becomes aware
of the market situation, customer expectations, new technology and products as well as of utilisation of
resources. Planning suggests ways to produce more attractive outputs, thus becoming more competition helps to
gain economical operations.
5. Planning enables resource allocation:
Resources are scarce. Operational departments will vie with each other to obtain available resources. A proper
plan which relates objectives (to attain) with resource requirements helps judicious allocation.
6. Planning ensures economy:
It prevents wastage of men, money, machines, methods, materials, etc., by choosing the best course of action
from many alternatives. Moreover, it secures consistency and joint efforts instead of individual piecemeal
activity. It aims at replacing uneven flow of work by even flow of work. All these steps in planning leads
automatically to economy.
7. It gives rise to efficient and coordinated efforts:
Individuals in an enterprise may differ in their outlook. But planning is done with an agreement upon certain
basic factors and is designed to channellise decision-making towards unified objectives.
8. It helps in the performance of other functions:
It precedes the performance of all other functions of management like organizing, directing, staffing, and
controlling.
9. It helps to facilitate control:
To control is to ensure that what is intended is achieved. Therefore, it is necessary to know beforehand what is
intended. Planning clarifies intentions and thereby helps control.
11. Limitations to Planning:
Planning cannot be considered as all efficient in all circumstances.
It entails its own limitations:
1. Planning is an expensive and time consuming process:
Planning involves significant amount of money, time and also risk, without any assurance of the fulfilment of
the organizational objectives.
2. Planning curbs the initiative of the manager:
Planning restricts the manager to make use of the most rational and risk free opportunities. It forces him to
operate within the limits set by it.
3. Plans involve an element of uncertainty:
Plans are made to be implemented in future. The future environment is uncertain and is resistible to change. It
can hardly be predicted accurately.
4. Planning beforehand is not always beneficial:
In case of the industries dealing in rapidly changing product, like industries producing fashionable article,
working on a day to day basis is more economical than on plan basis.
5. Planning provides a false sense of security:
With the readymade plans the managers feel secure and certain in handling the affairs of the organization. In
practice there may be events which occur suddenly for which there is no plan directive.
6. Planning delays action:
Planning is a lengthy process and the managers have to move from one stage to another systematically for
preparing plan. The whole exercise takes a long time. This may give you adverse results specially when urgent
action is needed.
7. Limitation of managers to plan:
In order to make plan, many intellectual activities including analysis, use of creativity, imagination and
farsightedness are to be performed. But every manager may not necessarily possess these abilities, which put
limitations on his part for preparing plans.
8. Planning cannot be viewed in isolation:
Planning by itself is not enough. Managers have to link up planning with other process, like organizing
leadership communication, motivation, control and so on. For example budgets made as financial plans are
useful only when organization strive to adhere the budgetary limit, and use the budgeted figures as standard for
control.
However, these limitations do not undermine the need for planning. Planning is inevitable for organization
success.

12. Barriers to Planning:

Given the understanding that planning is basic managerial function, and can lead to efficient realization of
organizational goals, we must understand that making effective plans is not easy and smooth process. Several
barriers exist to effective goal setting and planning.
These include:
1. Inappropriate Goals:
Goal setting is the essential first step in planning. Managers who are unable to set meaningful goals will be
unable to make meaningful plans. There may be several reasons why inappropriate goals may be set, like lack
of organizational and environmental knowledge.
2. A Dynamic and Complex Environment:
Planning essentially requires forecasting. And forecasting needs assessment of future environment. A dynamic
and complex environment makes this task very difficult and prone to errors.
3. Reluctance to Establish Goals:
There are a number of reasons why some managers hesitate – or fails entirely – to set goals for their
organization or subunits.
Some of these are—
i. Unwillingness to give up alternative goals – At times we may be reluctant to make a firm commitment to one
goal because it would require that other choices be foregone.
ii. Fear of failure – The fear of failure keeps some managers from taking necessary risks and establishing
specific goals.
iii. Lack of information – A manager whose information network is underdeveloped or faulty would avoid to
make new plans and like to stick to already established plans.
iv. Lack of confidence – If managers lack confidence in themselves or the organization, they will hesitate to
establish challenging goals.
4. Resistance to Change:
At times there is a general reluctance in organization members to accept planning and plans because of the
changes they bring.
There are three major reasons why organizational members may resist change:
i. Uncertainty about the causes and effects of change
ii. Unwillingness to give up existing benefits
iii. Awareness of weaknesses in the changes proposed
Thus, most people have some fear of the unknown, as well as – some interest in preserving the status quo if it
has proved workable in the past. And, on some occasions, they quite accurately perceive important errors in the
plan.
5. Other Constraints:
There may be many other constraints like, attitude of owner- managers towards planning, lack of consensus on
planning issues because of communication gaps, managerial conflicts, lack of understanding the real per-
spective of the organization, and likewise.
Methods for Overcoming these Barriers:
Most of the barriers to effective planning can be done away with the conscious efforts.
Some of the methods used to overcome the planning barriers are discussed below:
1. Understanding the Organizational Perspective Clearly:
The purpose of an organization should be very clear and be communicated clearly to every member of the
organization.
2. Understanding the Purposes and Process and Plans:
Provide more information to employees about plans and their probable consequences so that they will under-
stand the need for change, the expected benefits, and what is required for effective implementation.
3. Setting Realistic Goals:
Fear of failure and lack of confidence are also reduced by setting realistic goals and achieving them. The
individual’s immediate superior plays a key role in creating a climate in which difficult but attainable goals will
be set. Providing training and guidance in ways to achieve such goals is one important step.
4. Develop a Good Information Network:
Sound information base helps in promoting effective planning.
5. Communication:
Effective and well communicative systems of planning help in bringing consensus on planning issues and do
away with the misconceptions.
6. Participation:
Involve employees and other concerned groups, including stakeholders, in the planning process. One
particularly useful technique for managing goal setting and planning is formal goal setting, a process of
collaborative goal setting and planning.
The basic need to plan effectively is conscious and coordinated efforts towards it. The barriers, once identified
can be tackled.

Meaning and Process of Organizing:

Organising might be defined as follows:

Organising is that managerial process which seeks to define the role of each individual (manager and operator)

towards the attainment of enterprise objectives; with due regard to establishing authority-responsibility

relationships among all; and providing for co-ordination in the enterprise-as an in-built device for obtaining

harmonious groups action.

As a function of management, organizing is a process; broadly consisting of the following steps:

(i) Determination of the Total Work-Load:
The very first step in the process of organizing is to make a determination of all the activities which are

necessary to be undertaken for the attainment of the enterprise objectives. This step of organizing is, in fact,

nothing but an estimation of the total work-load that must be done for realizing objectives.

(ii) Grouping and Sub-Grouping of Activities i.e. Creation of Departmentation:

Total activities determined for achieving enterprises objectives must be classified i.e. putting similar or related

activities at one place in the form of a group or sub-group.

This step of organizing directly leads to the process of creating departments. If an enterprise is compared to a

building; the creation of departments within it would amount to construction of rooms within the building each

room meant for a specified special purpose.

(iii) Creation of Manager-Ship through Delegation of Authority:

After the scheme of departmentation is finalized; the next step in the process of organizing would be to entrust

the responsibility for the functioning of each department to a distinct manager. Creation of manager-ship, in

this manner, requires a requisite delegation of authority to each manager to enable the manager to take care of

the job assigned to him.

(iv) Division of Work within the Departmental Set-Up-Human Organization:

Since no single individual can undertake the performance of the whole of the work assigned to one department;

it becomes necessary to resort to division of work-assigning to each person only one part of the total job. As a

result to undertaking division of work for all departments; there emerges a human organization within the

enterprise.

(v) Arrangement of Physical Facilities to Personnel within the Departmental Set-Up-Material

Organisation:

Each individual of the enterprise, working in whatever capacity, in any department, must need the basic

physical facilities-raw materials, machines and tools, technology and other inputs-for the proper execution of

the assigned task.

When physical facilities are made available to all personnel in all departments; there emerges a material

organization (or a physical-technical organization) within the enterprise.

(vi) Definition and Establishment of Authority-Responsibility Relationships;

Having created manager-ship and a human organization within the enterprise; it becomes necessary to devise a

system which provides for defining and establishing authority-responsibility relationships among all personnel-

managers and operators.

As a matter of fact, such relationships must be defined and established throughout the enterprise both-

horizontally and vertically.

Points of comment:

Some of the note-worthy comments on the above description of the managerial function of organizing are

as follows:

(a) As a result of undertaking the process of organizing, there emerges a structure, called the organisational

structure (or simply the organisation). In fact, organizing is a managerial process; an organization is the

outcome of it.

(b) While designing the organizational structure, the management must plan and provide for co-ordination

throughout the organization both, horizontally and vertically. In fact, co-ordination is an in-built device for

ensuring harmonious, effective and economical organizational functioning.

(c) The question of a rightful compromise between centralization and decentralization of authority must also be

settled, at least initially, at the organization-processing stage. In fact, while delegating authority to departmental

heads and subordinate managers at middle and lower levels of the organization, the top management should

decide about the issue, as to whether to equip small managers with more of decision making powers or less of

it.

Following are some popular definitions of organizing:

1. “Organising is the establishment of authority relationships with provisions for co-ordination between them,

both vertically and horizontally in the enterprise structure”.

-Koontz and O ‘Donnell

2. “Organising is the process of identifying and grouping the work to be performed, defining and delegating the

responsibility and authority and establishing a pattern of relationship for the purpose of enabling people work

most effectively to accomplish the objective”.

– Louis A. Allen.

Principles of Organisation:

Principles of organization, for sake of clarity of discussion and a better comprehension of these, have

been classified in the following manner:

(I) Overall Principles:

(i) Principle of unity of objective

(ii)Principle of simplicity

(iii)Principle of flexibility

(II) Structural Principles:

(iv)Principle of division of work

(v)Principle of functional definition

(vi)Principle of optimum departmentation

(vii) Principle of unity of direction

(viii) Span of management principle

(III) Operational Principles:

(ix) Principle of adequate delegation

(x) Scalar chain principle

(xi) Principle of unity of comment

(xii) Authority-level principle

Following is a brief comment on each of the above-stated principles of organisation under appropriate

categories:
(I) Overall Principles:

Under this classification, some of the very fundamental principles of organization are included i.e. principles

which are absolutely essential for an effective and logical functioning of the organization.

A brief explanation of the principles under this category is as follows:

(i) Principle of unity of objective:

Very simply stated, this principle requires that individual and departmental objectives throughout the enterprise

must be perfectly harmonized; and that all objectives must be mutually supportive and collectively contributing

to overall common objectives.

(ii) Principle of simplicity:

The observance of this principle requires that the management must, as far as possible, design a simple

organizational structure. A simple structure facilitates a better understanding of superior- subordinate

relationships; and provides background for better co-operation among people.

(iii) Principle of flexibility:

While designing the organizational structure, the management must provide for in-built devices within the

structure itself; which would facilitate changes in the organizational structure to be effected as and when

environmental factors-internal and/or external- so demand.

(II) Structural Principles:

Structural principles of organization relate to those aspects of the organization, which have a bearing on the

structuring (or the development) of the organization; its fundamental design and shape.

Some of the important principles, in this context, might be the following ones:

(iv) Principle of division of work:

Since the total work of the enterprise cannot be performed by only one person; it is imperative that such work

must be suitably divided among a number of persons. In fact, the total managerial work ought to be divided

among a number of managers; and the total operational work being divided among a number of operating

personnel.

(v) Principles of functional definition:

The above stated principle implies that the role (or job) of each individual and of each department of the

enterprise must be suitably defined, in terms of the-work content, the authority and facilities required for job

performance and the relationship of the job with those of others, in the enterprise.

(vi) Principle of optimum departmentation:

There are many ways and bases for creating departments within an organization. According to the principle of

optimum departmentation, departments in an organization must be so created and maintained-as to facilitate the

best attainment of the common objectives of the enterprise.

(vii) Principle of unity of direction:

The principle implies that each group of activities having the same objective must have only one overall head

and only one overall or master plan.

As a principle of organization, this concept of unity of direction must be so embedded in designing the

organizational structure that for each group of similar activities, there is a provision for only one overall head-

having authority over all personnel performing the same function, anywhere, in the organization.

(viii) Span of management principle:

The span of management principle is variously called as- the span of control or the span of supervision.

However, the phrase ‘span of management’ is the widest; including also the notions of span of control and span

of supervision.

The span of management principle implies that there is a limit to the number of subordinates; whose work

could be effectively managed (controlled or supervised) by a superior.

Points of comment:

Certain useful observations in the context of span of management principle could be made as under:

(a) There is a limit only to effective management; for ineffective or inefficient management, well, there is no

limit. Hence, span of management principle is valid, only in the context of effective management. An example

would illustrate the significance of this idea.

As against this situation, take the case of a public speaker who could well address a giant gathering of audience;

for therein, it does not matter whether and how far the audience is receptive to the speech of the speaker or how

effective is the process of communication between the speaker and the audience. In this latter case, span of

management principle is neither valid nor applicable.

(b) What exactly is or must be the number of subordinate’s less than one superior cannot be asserted with

precision or certainty; as the span of management principle is situational. There is no hard and fast number of

subordinates which would determine an optimum span of management under all managerial situations.

Among other factors, the competence of the superior and the abilities, skills and requirements of subordinate,

are the most dominating factors- likely to determine span of management, in a particular managerial situation.

(c) Span of management principle explains the raison d’eter for the structure of the organization; in case

otherwise, a single manager might be in a position to handle and manage the work of all the subordinates; and

there would not be any need for a structured organizational structure.

(d) Span of management principle has must to do with the shape of the organizational structure; i.e. whether it

would be a tall or a flat-organisational structure. This is the notion implied behind the concepts of narrow vs.

wide spans of management.

A narrow span of management is one where a superior can handle rather a smaller number of subordinates;

while in a wide span of management, the number of subordinates is ‘larger’ than manageable under a narrow

span of management.

Accordingly, a narrow span of management would result in a somewhat taller shape of the organization; and a

wide span of management would lead to a comparatively ‘flat’ organization structure. Let us take a

hypothetical example to illustrate how a ‘tall’ or a ‘flat’ organization structure would shape out-depending on

whether it is a narrow or a wide span of management.

Suppose in an enterprise there are 10 subordinates to managed by the management. Further suppose the span of

management is also 10. In this situation, only manager would be required to handle and manage the work of all

the ten subordinates.

The organizational structure would appear as follows:

Now, suppose the span of management is only 5. In this case, the manager would be aided by two assistant

managers; and controlling 10 subordinates via two assistants-each assistant manager managing the work of 5
subordinates.

The organizational structure in this case would look like somewhat taller than its counterpart under wide span;

and will have more layers of the organization. The following chart illustrates this concept.
Without going into the details of the discussion, it would suffice to say that the shape of the organizational

structure- tall or flat-has implications for organizational efficiency on grounds of costs of administration,

effectiveness of communication and facilities in co-ordination.

(III) Operational Principles:

Operational principles of organization could be suggested to be those which have a bearing on the running or

functioning of the organization.

Some important principles, under this category, are as follows:

(ix) Principle of adequate delegation:

By the principle of adequate delegation, we mean that each managerial position be provided with adequate (or

necessary or requisite) authority-to enable the holder of the position i.e. the manager to cope successfully with

the requirements of his job.

(x) Scalar chain principle:

Scalar chain implies a chain of superiors-ranging from the highest rank to the lowest rank-in an organization.

The scalar chain forms the base of authority-responsibility relationships among managers and subordinates, in

the organisation; thus promoting mutual understanding among superiors and subordinates at different levels of

the organization.

As a principle of organization, scalar chain principle requires its incorporation into the design of the
organisation, for ensuring smooth running of the enterprise life.

(xi) Principle of unity of command:

The above-sated principle implies that an employee must receive orders and instructions, only from one

superior, at a time. The observance of this principle is desirable for reasons of removing doubts and confusions

from the mind of the employees; and for facilitating exact fixation of responsibility on individuals for the

results expected of them.

(xii) Authority-level principle:

The authority-level principle implies that managers at particular levels in the management hierarchy must

decide only those matters which fall within the purview of the authority vested in their managerial positions.

A natural extension of this principle is that if a manager at any level of the management hierarchy comes across

a matter not covered by his authority; the matter must either be referred upwards in the hierarchy or pushed

down the hierarchy at the appropriate level for decision.

Importance (or Advantages) of Organisation:

The importance of organization could be highlighted by reference to the role it plays in the enterprise

life, considered in the following analytical manner:

(i) Basic role of the organization

(ii) Other aspects of role

Let us consider the roles of the organization as planned above:

(i) Basic Role of the Organization:

The basic role of the organisation could be expressed by comparing it to a vehicle; which is devised and

designed for the attainment of the enterprise objectives.

Just as with the help of a vehicle a person is enabled to reach up to his/her destination; in a similar manner, a

group of persons (comprised in the enterprise) is made in a position to reach their destination i.e. the attainment

of common objectives via the vehicle of the organisation.

In fact, for the attainment of enterprise objectives, action on the part of individuals, comprised in a group

activity, is necessary; and undertaking such action is facilitated in a planned and systematic manager by the

organizational structure, i.e. the organisation.

(II) Other Aspects of the Role:

Some important aspects of the role of the organisation could be stated as follows:

(i) Facilitates specialization:

An organisation exists basically to take care of and implement the division of work of various types-among

managers, subordinates and operators. Such division of work, leading to specialization in various spheres, is

instrumental in bringing about increased human efficiency in the organization functioning.

Point of comment:

Division of work, not only enables an enterprise to take advantages of specialization, in managerial and

operational work; it also makes for order and system, in the functioning of the organisation.

(ii) Avoids omissions, overlapping and duplication of efforts:

While dividing work among departments and individuals, during the process of organizing, care is

exercised by management to see that:

(a) No part of work, necessary for attainment of objectives, is lost sight of

(b) There is no overlapping or duplication of activities and efforts, while assigning work to individuals and
departments.

That way, the organisation leads to an economical, effective and efficient functioning of the enterprise.

(iii) Defines (or clarifies) authority responsibility relationships:

An organizational structure defines and clarifies, authority responsibility relationships among managers and

subordinates in the enterprise all through horizontally and vertically. Such clarification of authority

responsibility relationships not only means a smooth functioning of the organizational life; but also promotes
good human relations, in the organisation through facilitating mutual understanding of one another.
(iv) Facilitates staffing:

The organizational structure is a great aid to efficient staffing. It, by clearly defining various organizational

positions-managerial and operational, not only points out to the need for appropriate personnel who must man

these positions; but also specifies the requirements to be sought after in various personnel in terms of the

abilities and skills needed to perform those jobs.

Point of comment:

A well-defined organizational structure facilitates personnel development, specially of managers, by allowing

job-rotation system. Top management can resort to job-rotational technique, as the requirements of jobs defined

in the structure indicate the possibility or otherwise for taking an appropriate decision on matters of shifting

among different positions.

(v) Provides for co-ordination:

An organisation facilitates co-ordination; as the latter is provided for in the structure of organisation as an in-

built device. Needless to say, that a well-designed and defined organizational structure provides for thorough

co-ordination-horizontally and vertically; and enables management to relish the essence of manager-ship and

take the enterprise to the heights of success.

(vi) Establishes channels of communication:

Communication among the personnel in the enterprise is not only the basis of the operational life of the
organisation; but also is instrumental in fostering good human relations-through creating a base for mutual

understanding. An organizational structure helps to establish various channels of communication; relating

people to one another through the scalar chain and other organizational links.

But for the organisation, communication could only be casual, erratic and least authentic or there could be a

situation of an absolute communication gap.

(vii) Facilitates ‘Management by Exception’:

Management by exception is a philosophy in which the top management would concentrate only on exceptional

or critical matters (like strategy formulation, policy-making, controlling significant deviations in performance

by personnel etc.); leaving the rest of routine and operational matters to subordinates throughout the enterprise.

Such a system of management i.e. management by exception could not be initiated and installed in the

enterprise, just casually or all of a sudden; rather a sound organizational structure paves the Way and creates an

environment for the introduction of this philosophy in a gradual and systematic manner.

As a matter of fact, management by exception is noting, but the highest state of decentralization of authority;

and the latter could be provided for while designing and structuring the organisation.

(viii) Copes with environmental changes:

Environmental changes being reflected in conditions like-super fast changing technology, accentuating

competition, emerging latest social and cultural values, extending State regulation of trade and industry etc. are

well taken care of by a sound organisation.

The organisation could, of course, face such challenges by resorting to changes in the systems of management

styles, reorganization of departments, providing facilities for research and development and effecting

improvements in the operational life and undertaking other like measures.

(ix) Leads to growth and expansion:

A sound organisation leads an enterprise along growth lines. Growth and expansion of the enterprise, which is

imperative even for survival in a highly dynamic economy is much facilitated by the organisation through-

creating more departments, enlarging existing departments, widening span of management, providing for better

and more effective co-ordination and communication devices and all this taking place within the existing

system, structure and functioning of the enterprise.

(x) Produces synergism:

A sound organisation through ensuring effective integration of departmental functioning helps the enterprise to

take advantage of the synergy feature of the business system. The more compact and responsible is the

organizational structure; the more would be the advantages of the synergy effect

What is Staffing?

Definition: Staffing can be defined as one of the most important functions of management. It involves the
process of filling the vacant position of the right personnel at the right job, at right time. Hence, everything will
occur in the right manner.

It is a truth that human resource is one of the greatest for every organization because in any organization all
other resources like- money, material, machine etc. can be utilized effectively and efficiently by the positive
efforts of human resource.

Therefore it is very important that each and every person should get right position in the organization so as to
get the right job, according to their ability, talent, aptitude, and specializations so that it will help the
organization to achieve the pre-set goals in the proper way by the 100% contribution of manpower. Thus it can
be said that it is staffing is an essential function of every business organization.

Functions of Staffing:

• The first and foremost function of staffing is to obtain qualified personnel for different jobs position in
the organization.
• In staffing, the right person is recruited for the right jobs, therefore it leads to maximum productivity
and higher performance.
• It helps in promoting the optimum utilization of human resource through various aspects.
• Job satisfaction and morale of the workers increases through the recruitment of the right person.
• Staffing helps to ensure better utilization of human resources.
• It ensures the continuity and growth of the organization, through development managers.

Importance of Staffing:

Efficient Performance of Other Functions

For the efficient performance of other functions of management, staffing is its key. Since, if an organization
does not have the competent personnel, then it cannot perform the functions of management like planning,
organizing and control functions properly.

Effective Use of Technology and Other Resources

What is staffing and technology’s connection? Well, it is the human factor that is instrumental in the effective
utilization of the latest technology, capital, material, etc. the management can ensure the right kinds of
personnel by performing the staffing function.

Optimum Utilization of Human Resources

The wage bill of big concerns is quite high. Also, a huge amount is spent on recruitment, selection, training,
and development of employees. To get the optimum output, the staffing function should be performed in an
efficient manner.

Development of Human Capital

Another function of staffing is concerned with human capital requirements. Since the management is required
to determine in advance the manpower requirements. Therefore, it has also to train and develop the existing
personnel for career advancement. This will meet the requirements of the company in the future.

The Motivation of Human Resources

In an organization, the behaviour of individuals is influenced by various factors which are involved such as
education level, needs, socio-cultural factors, etc. Therefore, the human aspects of the organization have
become very important and so that the workers can also be motivated by financial and non-financial incentives
in order to perform their functions properly in achieving the objectives.

Building Higher Morale

The right type of climate should be created for the workers to contribute to the achievement of the
organizational objectives. Therefore, by performing the staffing function effectively and efficiently, the
management is able to describe the significance and importance which it attaches to the personnel working in
the enterprise.

Characteristics of Staffing:

People-Centered
Staffing can broadly view as people-centered function and therefore it is relevant for all types of organization.
It is concerned with categories of personnel from top to bottom of the organization.

Staffing is the basic function of management which involves that the manager is continuously engaged in
performing the staffing function. They are actively associated with the recruitment, selection, training, and
appraisal of his subordinates. Therefore the activities are performed by the chief executive, departmental
managers and foremen in relation to their subordinates.

Human Skills
Staffing function is mainly concerned with different types of training and development of human resource and
therefore the managers should use human relation skill in providing guidance and training to the subordinates.
If the staffing function is performed properly, then the human relations in the organization will be cordial and
mutually performed in an organized manner.

Continuous Function
Staffing function is to be performed continuously which is equally important for a new and well-established
organization. Since in a newly established organization, there has to be recruitment, selection, and training of
personnel. As we compare that, the organization which is already a running organization, then at that place
every manager is engaged in various staffing activities.
Therefore, he is responsible for managing all the workers in order to get work done for the accomplishment of
the overall objectives of an organization.

Meaning and Definition of Directing

Directing is said to be a process in which the managers instruct, guide and oversee the performance of the
workers to achieve predetermined goals. Directing is said to be the heart of management process. Planning,
organizing, staffing have got no importance if direction function does not take place. Directing initiates action
and it is from here actual work starts. Direction is said to be consisting of human factors. In simple words, it
can be described as providing guidance to workers is doing work. In field of management, direction is said to
be all those activities which are designed to encourage the subordinates to work effectively and efficiently.
According to Human, “Directing consists of process or technique by which instruction can be issued and
operations can be carried out as originally planned” Therefore, Directing is the function of guiding, inspiring,
overseeing and instructing people towards accomplishment of organizational goals.

Directing means giving instructions, guiding, counselling, motivating and leading the staff in an organisation in
doing work to achieve Organisational goals. Directing is a key managerial function to be performed by the
manager along with planning, organising, staffing and controlling. From top executive to supervisor performs
the function of directing and it takes place accordingly wherever superior – subordinate relations exist.
Directing is a continuous process initiated at top level and flows to the bottom through organisational hierarchy.

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

Direction has following elements:

• Supervision
• Motivation
• Leadership
• Communication

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

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

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

(iv) Communications- is the process of passing information, experience, opinion etc from one person to
another. It is a bridge of understanding.
 7-15

Direction has got following characteristics:

1. Pervasive Function - Directing is required at all levels of organization. Every manager provides guidance and
inspiration to his subordinates.

2. Continuous Activity - Direction is a continuous activity as it continuous throughout the life of organization.

3. Human Factor - Directing function is related to subordinates and therefore it is related to human factor. Since
human factor is complex and behaviour is unpredictable, direction function becomes important.

4. Creative Activity - Direction function helps in converting plans into performance. Without this function,
people become inactive and physical resources are meaningless.

5. Executive Function - Direction function is carried out by all managers and executives at all levels throughout
the working of an enterprise, a subordinate receives instructions from his superior only.

6. Delegate Function - Direction is supposed to be a function dealing with human beings. Human behaviour is
unpredictable by nature and conditioning the people’s behaviour towards the goals of the enterprise is what the
executive does in this function. Therefore, it is termed as having delicacy in it to tackle human behaviour.
Nature and Characteristics of Directing

Directing is characterized by the following distinguishing features:

1. Element of management. Directing is one of the important functions of management. It is through direction
that management initiates action in the organization.

2. Continuing function. Direction is continuous process and it continues throughout the life of an organization.
A manager never ceases to guide, inspire and supervise his subordinates. A manager can not get things done
simply by issuing orders and instruction. He must continually provide motivation and leadership to get the
orders and instructions executed.
3. Pervasive function. Direction initiates at the top and follows right up to the bottom of an organization. Every
manager in the organization gives direction to his subordinates as superior and receives direction as
subordinates from his superior. Direction function is performed at every level of management and in every
department of the organization.

4. Creative function. Direction makes things happen and converts plans into performance it is the process
around which all performance revolves. Without direction, human forces in an organization become inactive
and consequently physical factors become useless. It breathes life into organization.

5. Linking function. Planning, organizing and staffing are merely preparation for doing the work and work
actually starts when managers perform the directing function. Direction puts plans into an action and provides
performance for measurement and control. In this way, directing serves as a connecting link between planning
and control.

6. Management of human factor. Direction is the interpersonal aspects of management. It deals with the human
aspect of organization. Human behavior is very dynamic and is conditioned by a complex of forces about which
not much is known. Therefore, direction is a very difficult and challenging function.

Principles of Directing

Directing is a complex function as it deals with people whose behaviour is unpredictable. Effective direction is
an art which a manager can learn and perfect through practice. However, managers can follow the following
principles while directing their subordinates.

1. Harmony of objectives. Individuals join the organization to satisfy their physiological and psychological
needs. They are expected to work for the achievement of organizational objectives. They will perform their
tasks better if they feel that it will satisfy their personal goals. Therefore, mar agreement should reconcile the
personal goals of employees with the organizational goals.

2. Maximum individual contribution. Organizational objectives are achieved at the optimum level when every
individual in the organization makes maximum contribution towards them. Managers should, therefore, try to
elicit maximum possible contribution from each subordinate.

3. Unity of command. A subordinate should get orders and instruction from one superior only. If he is made
accountable to two bosses simultaneously, there will be confusion, conflict, disorder and indiscipline in the
organization. Therefore, every subordinate should be asked to report to only one manager.

4. Appropriate techniques. The manager should use correct direction techniques to ensure efficiently of
direction. The technique used should be suitable to the superior, the subordinates and the situation.

5. Direct supervision. Direction becomes more effective when there is a direct personal contact between the
superior and his subordinates. Such contact improves the morale and commitment of the employees. Therefore,
whenever possible direct supervision should be used.
6. Managerial communication. A good system of communication between the superior and his subordinates
helps to improve mutual understanding. Upwards communication helps a manager to understand the
subordinates to express their feeling.

Motivational Concepts

Concept of Motivation:-

Technically, the term motivation can be traced to Latin word Movere, which means 'to move'. In order to
understand the concept of motivation, we have to examine three terms: motive, motivating and motivation and
their relationship.

Motive:-

Based on the Latin word Movere, motive (need) has been defined as follows: according to Bernard Berelson
and Garry A. Steiner, " A motive is an inner state that energizes, activates, or moves (hence motivation), and
that directs behavior towards goals."

Here, we can differentiate between needs and wants. While needs are more comprehensive and include desires-
both physiological and psychological, wants are expressed in narrow sense and include only those desires for
which a person has money and also the desire to spend the money to satisfy the wants. There are many
psychological needs, like social needs, recognition needs etc. which does not fall under the category of wants.

Motivating:-

Motivating is a term which implies that one person (in the organizational context, a manager) includes another,
(say, employee) to engage in action (work behaviour) by ensuring that a channel to satisfy the motive becomes
available and accessible to the individual. In addition to channelizing the strong motives in a direction that is
satisfying to both organization and employees, the manager can also activate the latent motives in individuals
and harness them in a manager that would be funtional for the organization.

Motivation:-

While motive is energizer of action, motivating is the channelization and activation of motives, motivation is
the work behavior itself. Motivation depends on motives and motivating, therefore, it becomes a complex
process. For example, Dublin has defined motivation as follows: "Motivation is the complex force starting and
keeping a person at work in an organization. Motivation is something that moves a person to action, and
continues him in the course of action already initiated."

According to McFarland, "Motivation refers to the way in which urges, drives, desires, aspirations, striving, or
needs direct, control, or explains the behavior of human beings."

The Incentive Theory of Motivation

A reward, tangible or intangible, is presented after the occurrence of an action (i.e. behavior) with the intent to
cause the behavior to occur again. This is done by associating positive meaning to the behavior. Studies show
that if the person receives the reward immediately, the effect would be greater, and decreases as duration
lengthens. Repetitive action-reward combination can cause the action to become habit. Motivation comes from
two things: you, and other people. There is extrinsic motivation, which comes from others, and intrinsic
motivation, which comes from within you.

Rewards can also be organized as extrinsic or intrinsic. Extrinsic rewards are external to the person; for
example, praise or money. Intrinsic rewards are internal to the person; for example, satisfaction or a feeling of
accomplihment.

Some authors distinguish between two forms of intrinsic motivation: one based on enjoyment, the other on
obligation. In this context, obligation refers to motivation based on what an individual thinks ought to be done.
For instance, a feeling of responsibility for a mission may lead to helping others beyond what is easily
observable, rewarded, or fun.

A reinforcer is different from reward, in that reinforcement is intended to create a measured increase in the rate
of a desirable behavior following the addition os something to the environment.

Intrinsic motivation

Intrinsic motivation occurs when people engage in an activity, such as a hobby, without obvious external
incentives. This form of motivation has been studied by social and educational psychologists since the early
1970s. Research has found that it is usually associated with high educational achievement and enjoyment by
students. Intrinsic motivation has been explained by Fritz Heider's attribution theory, Bandura's work on self-
efficacy, and Ryan and Deci's cognitive evaluation theory.

Extrinsic motivation

Extrinsic motivation comes from outside of the performer. Money is the most obvious example, but coercion
and threat of punishment are also common extrinsic motivations.Social psychological research has indicated
that extrinsic rewards can lead to over justification and a subsequent reduction in intrinsic motivation.

What is Controlling?
Controlling consists of verifying whether everything occurs in confirmities with the plans adopted, instructions
issued and principles established. Controlling ensures that there is effective and efficient utilization of
organizational resources so as to achieve the planned goals. Controlling measures the deviation of actual
performance from the standard performance, discovers the causes of such deviations and helps in taking
corrective actions

According to Brech, “Controlling is a systematic exercise which is called as a process of checking actual
performance against the standards or plans with a view to ensure adequate progress and also recording such
experience as is gained as a contribution to possible future needs.”

According to Donnell, “Just as a navigator continually takes reading to ensure whether he is relative to a
planned action, so should a business manager continually take reading to assure himself that his enterprise is on
right course.”

Controlling has got two basic purposes

It facilitates co-ordination
It helps in planning
Features of Controlling Function
Following are the characteristics of controlling function of management-

Controlling is an end function- A function which comes once the performances are made in confirmities with
plans.
Controlling is a pervasive function- which means it is performed by managers at all levels and in all type of
concerns.
Controlling is forward looking- because effective control is not possible without past being controlled.
Controlling always look to future so that follow-up can be made whenever required.
Controlling is a dynamic process- since controlling requires taking reviewal methods, changes have to be made
wherever possible.
Controlling is related with planning- Planning and Controlling are two inseperable functions of management.
Without planning, controlling is a meaningless exercise and without controlling, planning is useless. Planning
presupposes controlling and controlling succeeds planning.
 7-17

Process of Controlling
Controlling as a management function involves following steps:

1. Establishment of standards- Standards are the plans or the targets which have to be achieved in the course of
business function. They can also be called as the criterions for judging the performance. Standards generally are
classified into two-
a. Measurable or tangible - Those standards which can be measured and expressed are called as
measurable standards. They can be in form of cost, output, expenditure, time, profit, etc.
b. Non-measurable or intangible- There are standards which cannot be measured monetarily. For example-
performance of a manager, deviation of workers, their attitudes towards a concern. These are called as
intangible standards.

Controlling becomes easy through establishment of these standards because controlling is exercised on the
basis of these standards.

2. Measurement of performance- The second major step in controlling is to measure the performance. Finding out
deviations becomes easy through measuring the actual performance. Performance levels are sometimes easy to
measure and sometimes difficult. Measurement of tangible standards is easy as it can be expressed in units,
 cost, money terms, etc. Quantitative measurement becomes difficult when performance of manager has to be
measured. Performance of a manager cannot be measured in quantities. It can be measured only by-
a. Attitude of the workers,
b. Their morale to work,
c. The development in the attitudes regarding the physical environment, and
d. Their communication with the superiors.

It is also sometimes done through various reports like weekly, monthly, quarterly, yearly reports.

3. Comparison of actual and standard performance- Comparison of actual performance with the planned targets
is very important. Deviation can be defined as the gap between actual performance and the planned targets. The
manager has to find out two things here- extent of deviation and cause of deviation. Extent of deviation means
that the manager has to find out whether the deviation is positive or negative or whether the actual performance
is in conformity with the planned performance. The managers have to exercise control by exception. He has to
find out those deviations which are critical and important for business. Minor deviations have to be ignored. Major
deviations like replacement of machinery, appointment of workers, quality of raw material, rate of profits, etc.
should be looked upon consciously. Therefore it is said, “ If a manager controls everything, he ends up controlling
nothing.” For example, if stationery charges increase by a minor 5 to 10%, it can be called as a minor deviation.
On the other hand, if monthly production decreases continuously, it is called as major deviation.

Once the deviation is identified, a manager has to think about various cause which has led to deviation. The
causes can be-

a. Erroneous planning,
b. Co-ordination loosens,
c. Implementation of plans is defective, and
d. Supervision and communication is ineffective, etc.

4. Taking remedial actions- Once the causes and extent of deviations are known, the manager has to detect those
errors and take remedial measures for it. There are two alternatives here-
a. Taking corrective measures for deviations which have occurred; and
b. After taking the corrective measures, if the actual performance is not in conformity with plans, the
manager can revise the targets. It is here the controlling process comes to an end. Follow up is an
important step because it is only through taking corrective measures, a manager can exercise controlling.
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Relationship between planning and controlling

Planning and controlling are two separate fuctions of management, yet they are closely related. The scope of
activities if both are overlapping to each other. Without the basis of planning, controlling activities becomes
baseless and without controlling, planning becomes a meaningless exercise. In absense of controlling, no
purpose can be served by. Therefore, planning and controlling reinforce each other. According to Billy Goetz, "
Relationship between the two can be summarized in the following points

1. Planning preceeds controlling and controlling succeeds planning.

2. Planning and controlling are inseperable functions of management.
3. Activities are put on rails by planning and they are kept at right place through controlling.
4. The process of planning and controlling works on Systems Approach which is as follows :

Planning → Results → Corrective Action

5. Planning and controlling are integral parts of an organization as both are important for smooth running
of an enterprise.
6. Planning and controlling reinforce each other. Each drives the other function of management.

In the present dynamic environment which affects the organization, the strong relationship between the two is
very critical and important. In the present day environment, it is quite likely that planning fails due to some
unforeseen events. There controlling comes to the rescue. Once controlling is done effectively, it give us
stimulus to make better plans. Therfore, planning and controlling are inseperate functions of a business
enterprise.
Definition of Decision Making
A decision is a choice made between two or more available alternatives decision making is a process of
choosing the best alternative for reaching objectives decision making is covered in the planning section of this
text managers must also make decision when performing the other three managerial function-organizing,
influencing, and controlling- the subject requires a separate chapters.

Managers make decision affecting the organization daily and communicate that decision to other organizational
members. Not at all managerial decision is equal significance to the organization, some affect the large number
of organization members, cost a great deal of money to carry out, or have a long term effect on the
organization.

Types of Decision Making

There are two types of decision making:

- Programmed decision making

- Nonprogrammed decision making

Programmed decision making - Programmed decisions are routine and repitative, and the organization typically
develops specific ways to handle them. A programmed decision might involve determining how product will be
arranged on the selves of the supermarket. For this kind of routine, repetitive problem, standard-arrangement
decisions are typically made according to established management guidelines.

Nonprogrammed decision making - Nonprogrammed decision, in contrast is typically on shot decision that are
usually less structured than programmed decision. An example of the type of nonprogrammed decision that
more and more and more managers are having to make is whether a supermarket should carry an additional
type of bread.

What are the actual steps in a decision made by a group?

1. Identify the problem

2. Clarify the problem

Phases of Decision Making Process

Phase 1 - Identification
This is the first phase in the decision making process. It involves identification and the clear definition and
formulation of the problem. In this phase a written problem statement is prepared, which specifies the nature
and magnitude of the problem. It is necessary to determine how important and urgent the problem is not well
defined, the decision instead of solving the problem may complicate it. This phase requires the manager to use
his imagination, experience and judgment in order to identify the real nature of the problem.

Phase 2 - Analysis
The second phase of the decision making process involves determining the causes and scope. The problem
should be classified to determine the futurity, periodicity and impact of the decision required as well as limiting
or strategic factor relevant to the decision. The most important part in this phase is to find out the real cause or
source of the problem. Analyzing the real problem implies knowing the cause of gap between what is and what
should be and understanding the problem in relation to the objectives of organization. In some cases all the
required information might not be available. In such a case, the manager has to judge the risk involved in the
decision.

Phase 3 - Search
After defining and analyzing the problem, the next phase of the decision making process involves the search for
the several possible alternatives. A problem can be solved in several ways all of which are not equally good. A
wide range of alternative should be prepared this also increase the manager’s freedom of choice. This is done in
order to ensure effective decision making but it is advisable for the manager to limit his discovery of those
alternative which are strategic or critical to the problem.

Phase 4 - Selection
The forth phase of the decision making process deals with comparing and scrutinizing the various developed
alternative to identify the pros and cons of each. Also this phase requires certain criteria like feasibility, cost,
organizational goals, risk, timing, economy of effort, limitation of sources etc.

Phase 5 - Selection
The last phase is the most critical part of the decision making process. A wrong choice would negate all effort
made in the previous steps. The judgment may be influenced by the intuition and personal value system of the
decision maker. The selected solution must be acceptable to those who must implement it and who are affected
by it.

Steps in the process of Decision Making

1. Identifying and diagnosing the real problem

Understanding the situation that sets the stage for decision making by a manager is an important element in
decision making. Pre determined objectives past acts and decision and environment consideration provide the
structure for current decisions. Once this structure is laid, the manager can proceed to identify and determine
the real problem.

2. Discovery of alternatives
The next step is to search for available alternatives and assess their probable consequences. But the number of
forces reacting upon a given situation is so large and varied that management would be wise to follow the
principle of the limiting factor. That is management should limit itself to the discovery of those key factors
which are critical or strategic to the decision involved.

3. Analysis and evaluation of available alternatives

Once the alternatives are discovered, the next stage is to analyze and compare their relative importance. This
calls for the listing of the pros and cons and different alternatives in relation to each other. Management should
consider the element of risk involved in each of them and also the resources available for the implementation.

4. Selection of alternatives to be followed

Defining the problem, identifying the alternatives and their analysis and evaluation set the stage for the
manager to determine the best solution. In this matter, a manager is frequently guided by his past experience. If
the present problem is similar to one faced in the past, the manager has a tendency to decide on the basis past
experience is a useful guide for the decision in the present. But it should not be followed blindly. Changes in
the circumstances and underlying assumption of decisions in the past should be carefully examined before
deciding a problem on the basis of experience.

5. Communicate of the decision and its acceptance by the organization

Once decision is made, it needs to be implemented. This calls for laying down derivative plans and they
communicate to all those responsible for initiating action on them. It will be better if the manager takes into
account beliefs, attitude and prejudices of people in the organization and is also aware of his own contribution
to implantation of the decision. It is further required that subordinates are encouraged to participate in decision
making process so that they feel committed and morally bound to support the decisions.

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 Decision making techniques- Six Thinking Hats
Six Thinking Hats was written by Dr. Edward de Bono. "Six Thinking Hats" and the associated idea parallel
thinking provide a means for groups to plan thinking processes in a detailed and cohesive way, and in doing so
to think together more effectively.

SIX THINKING HATS( Edward de

bono)

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How It Works
You and your team members can learn how to separate thinking into six clear functions and roles. Each thinking role is
identified with a colored symbolic “thinking hat.” By mentally wearing and switching “hats,” you can easily focus or redirect
thoughts, the conversation, or the meeting.

The White Hat calls for information known or needed. “The facts, just the facts.”

The Yellow Hat symbolizes brightness and optimism. Under this hat you explore the positives and probe for value
and benefit.

The Black Hat is judgment – the devil’s advocate or why something may not work. Spot the difficulties and dangers;
where things might go wrong. Probably the most powerful and useful of the Hats but a problem if overused.

The Red Hat signifies feelings, hunches and intuition. When using this hat you can express emotions and feelings and
share fears, likes, dislikes, loves, and hates.

The Green Hat focuses on creativity; the possibilities, alternatives, and new ideas. It’s an opportunity to express new
concepts and new perceptions.

The Blue Hat is used to manage the thinking process. It’s the control mechanism that ensures the Six Thinking Hats®
guidelines are observed.

Using Six Thinking Hats®, you and your team will learn how to use a disciplined process which will…

• Maximize productive collaboration and minimize counterproductive interaction/behavior

• Consider issues, problems, decisions, and opportunities systematically
• Use Parallel Thinking as a group or team to generate more, better ideas and solutions
• Make meetings much shorter and more productive
• Reduce conflict among team members or meeting participants
• Stimulate innovation by generating more and better ideas quickly
• Create dynamic, results oriented meetings that make people want to participate
• Go beyond the obvious to discover effective alternate solutions
• Spot opportunities where others see only problems
• Think clearly and objectively
• View problems from new and unusual angles
• Make thorough evaluations
 • See all sides of a situation
• Achieve significant and meaningful results in a less time

Significant Applications for the Parallel Thinking Process of Six Thinking Hats

o Leadership Development
o Team Productivity, Alignment and Communication
o Creative and innovative thinking
o Meeting leadership and decision making
o Product and Process Improvement, and Project Management
o Critical, Analytical Thinking and Problem-Solving
o Organizational Change/Performance
o Wherever High Performance Thinking and Action is needed
 Introduction to organizational behavior

What is an organization? - An organization is a consciously coordinated social unit, composed

of two or more people that functions on a relatively continuous basis to achieve a common goal
or set of goals.

What is organizational behavior? -Organizational behavior is a field of study that investigates

the impact that individuals, groups, and structure have on behavior within organization, for the
purpose of applying such knowledge toward improving an organizations effectiveness.

Organizational behavior:

➢ The behaviour of people

➢ The process of management
➢ Organizational processes and the execution of work
➢ Interactions with the external environment of which the organization is a part
➢ Organizational implications in terms of performance and effectiveness

Why study organizational behavior? : - Behaviour is generally predictable, and the

systematic study of behavior is a means to making reasonably accurate predictions.

Systematic study involves looking at relationships, attempting to attribute causes and effects, and
drawing conclusions based on scientific evidence.
Elements of Organizational Behaviour

Peopl
e

• Individu
al

Environment
Structure
• Government Organization
• Competition al
• Jobs
• Social • Relationships Behaviour
Pressures

Technolo
gy

• Machinery
• Computer Hardware and

Management roles:

A. Interpersonal roles
1. Leadership: hiring, training, motivating, disciplining.
2. Figurehead: ceremonial and symbolic duties.
3. Liaison: contacting people for information.
B. Informational roles
1. Monitor: collecting information from environment.
2. Disseminator: transmitting information within organization.
3. Spokesperson: representing organization to outsiders.
C. Decisional roles
1. Entrepreneur: initiating new projects to improve performance.
2. Disturbance handler: correcting and solving problems.
3. Resource allocation: human, physical and monetary.
4. Negotiator: bargaining to goal advantages.
Management Skills

1. Technical skills: - The ability to apply specialized or expertise.

2. Human skills: - The ability to work with, understands, and motivates other people,
both individually and in groups.
3. Conceptual skills: - The mental ability to analyze and diagnose complex situations.
This includes looking at relationships, attempting to attribute causes looking at
relationships, conclusions on scientific evidence.

Disciplines contributing to organizational behavior

✓ Psychology
✓ Perception
✓ Motivation
✓ Emotions
✓ Personality
✓ Training
✓ Leadership effectiveness
✓ Job satisfaction
✓ Individual decision making
✓ Performance appraisal
✓ Attitude measurement
✓ Employee selection
✓ Work design
✓ Work stress
Disciplines contributing to organizational behavior
1. Sociology:
❖ Group dynamics
❖ Work teams
❖ Communication
❖ Power
❖ Conflict
❖ Intergroup bevahiour
 ❖ Formal organization theory
❖ Organization change
❖ Organization culture
2. Social psychology:
❖ Behavioural change
❖ Attitude change
❖ Communication
❖ Group processes
❖ Group decision making
3. Anthropology:
❖ Comparative values
❖ Comparative attitude
❖ Cross- cultural analysis
❖ Organizational culture
❖ Organizational environment
4. Political science:
❖ Conflict
❖ Power
❖ Intra organizational politics

Challenges and opportunities for organizational behavior

▪ Responding to globalization
▪ Managing work force diversity
▪ Improving quality and productivity
▪ Responding to the labour shortage
▪ Improving customer service
▪ Improving people skills
▪ Empowering people
▪ Stimulating innovation and change
▪ Helping employees balance work/ life conflicts
▪ Improving ethical behavior
 Individual behavior:

Organizational behaviour is traditionally considered as the ‘ study of human behaviour in the work
place’. According to this view organisations, representing collective entities of human actions and
experiences, are dependent upon the extent to which such actions/ experiences, are effectively
coordinated. To understand human action, one needs to have a fundamental understanding of human
behaviours and the underlying stimuli. The behaviour of individuals are influenced significantly by their
abilities.
Features of Individual Difference

Physical
characteri
stics
Percepti Intellige
on nce level

Personalit
y
characteris Interest
tics

Causes of Individual Behavior

Certain individual characteristics are responsible for the way a person behaves in daily life situations as well
as reacts to any emergency situations. These characteristics are categorized as −

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

• Color of a person’s eye

• Shape of the nose
Learned Characteristics
Nobody learns everything by birth. First our school is our home, then our society followed by our educational
institutions. The characteristics an individual acquires by observing, practicing and learning from others and
the surroundings is known as learned characteristics.
It consists of the following features −
• Perception − Result of different senses like feeling, hearing etc.
• Values − Influences perception of a situation, decision making process.
• Personality − Patterns of thinking, feeling, understanding and behaving.
• Attitude − Positive or negative attitude like expressing one’s thought.

Factors Influencing Individual Behavior

The way an individual addresses a situation single-handedly or say in a group is influenced by many factors.
The key factors influencing an individual’s attitude in personal as well as social life are −

• Abilities
• Gender
• Race and culture
• Attribution
• Perception
• Attitude

Abilities
Abilities are the traits a person learns from the environment around as well as the traits a person is gifted with
by birth. These traits are broadly classified as −

• Intellectual abilities
• Physical abilities
• Self-awareness abilities
In order to understand how these affect a person’s behavior, we need to know what these abilities are.
• Intellectual abilities − It personifies a person’s intelligence, verbal and analytical reasoning abilities,
memory as well as verbal comprehension.
• Physical abilities − It personifies a person’s physical strength, stamina, body coordination as well as
motor skills.
• Self-awareness abilities − It symbolizes how a person feels about the task, while a manager’s
perception of his abilities decides the kind of work that needs to be allotted to an individual.
Perception

Perception (from the Latin perceptio, percipio) is the process of attaining awareness or
understanding of the environment by organizing and interpreting sensory information. All
perception involves signals in the nervous system, which in turn result from physical stimulation
of the sense organs. For example, vision involves light striking the retinas of the eyes, smell is
mediated by odor molecules and hearing involves pressure waves. Perception is not the passive
receipt of these signals, but can be shaped by learning, memory and expectation. Perception
involves these "top-down" effects as well as the "bottom-up" process of processing sensory
input. Perception depends on complex functions of the nervous system, but subjectively seems
mostly effortless because this processing happens outside conscious awareness.

Nature of Perception

1. Intellectual Process

2. Cognitive or Psychological Process

3. Subjective Process

4. Socially Co-Created

5. Culturally Influenced

6. Self-Fulfilling
 Process of Perception

Exposur
Selectivity/Selectio
n e

Attentio
Organization

Categorizati
Interpretation
on

Inference

Factors Influencing Perception

Characteristics
of Situation
Perceiver

• Need and motives

• Self concept Perception
• Beliefs
• Past experience
• Current
psychological state
• Expectations
or
Perceived

• Size
• Intensity
• Frequency
• Status
• Contrast
 Types
a. Of sound

b. Touch

c. Taste

Perceptual Errors

1. Stereo Typing

“Making positive or negative generalizations about a group or category of people, usually based on
inaccurate assumptions and beliefs and applying these generalizations to an individual member of
the group.” For e.g. Girls are very talkative, Rich are cruel to poor.

2. Halo Effect

Drawing general impression of individual on the basis of a single characteristic. I.e. if someone is
good at one dimension, he/she is perceived to be good at other dimensions as well.

3. Recency Effect

When the most RECENT information influences our judgment, even though we have a whole of other
information on the Person.

4. The Similar-to-Me Effect

We tend to favor/like or give favorable judgment to those who are similar to us. Example two
candidates came along for interview, one from Delhi and the other from Bihar. As interviewer is from
Delhi, he tends select to the candidate from Delhi, better evaluation.

5. Fundamental Attribution Error

The tendency to underestimate the influence of external factors and overestimate the influence of
internal factors when making judgments about the behavior of others.

6. Self-Serving Bias

The tendency for individuals to attribute their own successes to internal factors while putting the
blame for failures on external factors.

7. Self-fulfilling prophecy
People’s preconceived expectations and beliefs determine their behavior, thus, serving to make their
expectations come true Example when a teacher, labeled a kid as stupid (because he has illegible
handwriting). Soon the kid believed on teacher and behave like one.

Learning

Learning is acquiring new or modifying existing knowledge, behaviors, skills, values, or

preferences and may involve synthesizing different types of information. The ability to learn is
possessed by humans, animals and some machines. Progress over time tends to follow learning
curves.

Play has been approached by several theorists as the first form of learning. Children play,
experiment with the world, learn the rules, and learn to interact. Vygotsky agrees that play is
pivotal for children's development, since they make meaning of their environment through play.

Nature of Learning

• Learning is Growth
• Learning is Adjustment
• Learning is Organising Experience
• Learning involves Acquiring of Knowledge and Skills
• Learning involves Change
• Learning is Transferable
Characteristics of learning: - Learning has the following characteristics.

1. Learning involves change: - As indicated earlier, people acquire new information

which is processed in their condition. This process produces new knowledge. This
knowledge brings changes in their existing pattern of behavior.
2. Change must be relatively permanent: - When the information acquired is
converted into knowledge and wisdom, people change their behviour more or less
permanently.
3. Behavioural issues: - The change in the knowledge and wisdom should produce
different attitudes and values. These new attitudes and values should change the
behavior. Then only it is called learning. In other words, the new attitudes and
values not accompanied by change in behavior is not called learning.
4. Experience- based: - learning is based on experience. Experience may be direct or
indirect, personal or through observation or through reading.
Theories of learning

Theories of Learning

Planning is Goal- Planning is a Primary

Oriented Function
Planning is Persuasive Planning is Flexible

Principles of learning

Individual learning in organizations has to be shaped and managed based on behavioural

requirements in an organization as. Individual learning is managed with the help of
reinforcement and punishment.

1. Law of effect
2. Reinforcement
3. Positive and negative reinforces
4. Punishment

LEARNING PROCESS/NATURE

Theories of Learning: Learning is part of every one’s life. In our life, all complex behavior is learned.
Learning is defined as any relatively permanent change in behavior that occurs as a result of experience.
Whenever any change occurs learning is taken place in the individual. If an individual behaves, reacts,
responds as a result of experience which is different from others, a person has encountered some new
learning experience in his life.
This definition consists of the following four key elements:

i) Change process: Learning involves some change in oneself in terms of observable actions
explicitly shown to others or change in one’s attitude or thought process occur with oneself
implicitly. Change may be good or bad or positive or negative from an organization point of
view. If a person is happened to experience some negative incidents, that person will hold
prejudices or bias or to restrict their output. On the contrary, if a person is encountering some
good incident, that person is likely to hold positive attitude.
ii) ii) Permanent change: Due to whatever exposure a person encounters, the impact what it
generates may be long lasting and permanent. Hence, the change must be of relatively
permanent. If change occurs due to fatigue or alcohol consumption or temporary adaptation,
it may be vanished once the goal is achieved.
iii) iii) Setting behavioral actions: Explicit changes occurring in behavior is the main goal of
learning process. A change in an individual’s thought process or attitudes without any
changes in many explicit behavior will not be considered as learning process.
iv) iv) Need for meaningful experiences: Some form of experiences is necessary for learning.
Experience may be acquired directly through observation or practice. If experience results in
a relatively permanent change in behavior, one can confidently say that learning has taken
place. Theories of Learning: There are three types of learning theories. These theories are
classical conditioning, operant conditioning and social learning.

FACTORS AFFECTING LEARNING

• Motivation of the learner
• Mental set of the learner
• Nature of Learning Material
• Practice
• Environment

CLASSICAL CONDITIONING THEORY Russian physiologist Ivan Pavlov developed

classical conditioning theory. When he was doing a research on the chemical properties of
saliva of dog, he noticed accidentally that the dog started salivating the moment hearing the
sound of a door of cupboard clinging. Based on his observation, he wanted to do some
experiment whether the dog can be conditioned to respond to any neutral stimuli. He used a
simple surgical procedure to operate the salivary glands of a dog to measure accurately the
amount of saliva. Pavlov’s Experiment: Pavlov conducted his experiment in three stages.
Stage I: When Pavlov presented the dog with a piece of meat, the dog exhibited a noticeable
increase in salivation. The meat is unconditional stimulus and salivation is unconditional
response. Stage II: In this stage, the dog was not given a peace of meat but only exposed to a
sound of ringing bell; the dog did not salivate to the mere sound of a ringing bell.
Stage III: Pavlov decided to link both the presentation of meat and the ringing of a bell one
after the other with an interval of 5 minutes. After repeatedly hearing the bell before getting
the meat, the dog began to salivate as soon the bell rang. There is an association or link
between meat and ringing a bell. After repeating the association between meat and ringing a
bell, the dog started salivating merely at the sound of the bell, even if no food was offered.
The dog is now conditioned to respond to a sound of a bell and started salivating. This is
called classical conditioning process. Thus, classical condition is defined as the formation of
S-R link (Stimulus-Response) or habit between a conditioned stimulus and a conditioned
response through the repeated paring of conditioned stimulus with an unconditioned
stimulus. In this experiment, the meat is unconditioned stimulus, and the expected response
that is, salivating to the meat is called as unconditioned response. The sound of a bell is a
neutral stimulus which does not have any property to elicit salivation, is called as
conditioned stimulus.
Although it was originally neutral, if the bell was paired with meat (unconditioned stimulus)
it acquired the same property as meat eliciting the salivation. The sound of a bell produced
salivation when presented alone. This is called conditioned response, that is, now the dog is
conditioned to respond to the sound of a bell. Learning conditioned response involves
building up an association between a conditioned stimulus and unconditioned stimulus.
When the stimuli, one is natural and the other one neutral are paired, the neutral one
becomes a conditioned stimulus and hence takes on the properties of the unconditioned
stimulus.

APPLICATION OF CLASSICAL CONDITIONING PRINCIPLES AT WORK

Whenever President or Vice-President of Corporate Office visits factory site the employees
in the shop floor will more attentive at work and look more prim, proper and active in their
work life. It is quite natural that top management personnel visit (Unconditioned Stimulus)
evoking or eliciting a desired response- being prim and proper at work from the employees
(Unconditioned Response). The routine cleaning of windows or floor of the administrative
office will be neutral stimulus never evoking any response from the employees. If the visit of
the top management personnel is associated with such cleaning process, eventually the
employees would turn on their best output and look prim and active the moment windows
and floor are being cleaned up. The employees had learned to associate the cleaning of the
windows with a visit from the head office. The cleaning process (conditioned stimulus)
evoked attentive and active work behavior (conditioned response). Similarly, Christmas
Carols songs bring pleasant memories of childhood as these songs are being associated with
the festive Christmas Spirit. Classical conditioning is passive. It is elicited in response to a
specific, identifiable event.

OPERANT CONDITIONING

Operant conditioned principle is proposed by B.F. Skinner, an American Psychologist. It is a

type of conditioning in which desired voluntary behavior leads to a reward or prevent a
punishment. Operant conditioning principle emphasizes strongly that the behavior of an
individual is a function of its consequences. If the consequences are pleasant, the behavior
associated with such consequences will be repeated again and again. If the consequences are
unpleasant, the behavior will be in extinct. The rationale behind this theory is that people
learn to behave in order to get something they want or to avoid something they don’t want.
Operant condition is learned process. The tendency to repeat such behaviour is influenced by
the reinforcement or lack of reinforcement brought about by the consequences of the
behavior. The proper reinforcement strengthens a behavior and increases the likelihood that
it will be repeated. Skinner’s Experiment: Skinner developed an apparatus to conduct a
series of learning experiment using rats. He named that apparatus as Skinner’s Box which
has certain features such as a lever, bowl, light, water container etc.
A highly deprived rat is placed in the box. Once a rat nudges or touches or hits the lever
attached in the corner of the box, a piece of food pellet is dropped in the bowl. By trial and
error, the rat learns that hitting the lever is followed by getting a food pellet in the bowl.
Skinner coined the term operant response to any behavioral act such as pressing or hitting or
nudging the lever that has some effect on the environment. Thus in a typical experiment with
a skinner box, hitting or pressing the lever is an operant response, and the increased rate of
lever hitting or pressing that occurs when the response is followed by a pellet of food
exemplifies operant conditioning.
APPLICATION OF OPERANT CONDITIONING IN WORK LIFE

If a sales person who hits the assigned target of sales quota will be reinforced with a suitable
attractive reward, the chances of hitting further sales target in future will be exemplified.
Skinner argued that creating pleasant consequences (giving attractive rewards) to follow
specific forms of behavior (hitting sales target) would increase the frequency of that
behavior. People will most likely engage in desired behaviors if they are positively
reinforced for doing so. Rewards are most effective if they immediately follow the desired
response. In addition, behavior that is not rewarded is less likely to be repeated. A
commissioned sales person wanting to earn a sizeable income finds that doing so is
contingent on generating high sales in his territory.

COGNITIVE LEARNING THEORY

Cognition refers to an individual’s thoughts, knowledge, interpretations, understandings or

views about oneself and his/her environment. Based on it cognitive theory argues that the
person tries to formhis/her cognitive structure in memory, which preserves and organizes all
information relating to the events that may occur in learning situation. Here an experiment
was conducted on a monkey by Kohler. Kohler presented two sticks to a monkey in a cage.
Both sticks were too short to reach a banana lying outside cage. This produced an
experience, or say, cognition, insight monkey. What monkey did without any prior exposure,
joined both sticks together and pulled the banana inside the cage. Clearly learning took place
inside the mind of monkey. Thus, the learning process involved in this case is putting or
organizing bits of information in a new manner perceived inside the mind. This type of
learning is very imp in organizational behaviour for changing attitudes by the individuals.

SOCIAL LEARNING THEORY People learn through both observation and direct
experience, which is called as social learning theory. Individual learn by observing what
happens to other people and just by being told about something, as well as by direct
experiences. By observing people around us, mostly from parents, teachers, peers, films and
television performers, bosses, we learn new behavior pattern. The following four processes
 are vital to determine the influence that a model will have on an individual. i) Attention
Process: People learn from a model only when they recognize and pay attention to its critical
features. People tend to be most influenced by models that are attractive, repeatedly
available similar to us in our estimation. ii) Retention Process: A model’s influence will
depend on how well the individual remembers the model’s action after the model is no
longer readily available. iii) Motor Reproduction Process: After a person has seen a new
behavior by observing the model, the watching must be converted to doing. This process
then demonstrates that the individual can perform the modeled activities. iv) Reinforcement
Process: Individual will be motivated to exhibit they modeled behavior if positive incentives
or rewards are provided. Behavior that is positively reinforced will be given more attention,
learned better and performed more often.

Personality

What does personality mean? People use different terms like good, popular, strong, honest,
weak, polite,ect., to denote personality. Behavioural scientists and common people define
personality from different perspective.

The world personality can be traced to the Latin words ‘per sona’ which are translated as “to
speak through.” According to Gordon Allport, personality is “the dynamic organization within
the individual of those psychological systems that determine his unique adjustments to his
environment.”

Fred Luthans defines the term personality as, “how people affect others and how
they understand and view themselves, as well as their pattern of inner and outer measurable traits
and the person- situation intervention.”

Robbins defines personality as, “the sum total of ways in which an individual reacts to and
interacts with others.”
Determinants of Personality

Determinants of Personality

Biological Cultural Family and Situationa Physical

l
Factors Factors Social Factors
Factors Factors

Heredity Home
Environment
Brain Family Members

Physical Social Groups

Features

Components of Personality

While there are many different theories of personality, the first step is to understand exactly what
is meant by the term personality. A brief definition would be that personality is made up of the
characteristic patterns of thoughts, feelings and behaviors that make a person unique. In addition
to this, personality arises from within the individual and remains fairly consistent throughout life.

Some of the fundamental characteristics of personality include:

• Consistency - There is generally a recognizable order and regularity to behaviors.

Essentially, people act in the same ways or similar ways in a variety of situations.
• Psychological and physiological - Personality is a psychological construct, but
research suggests that it is also influenced by biological processes and needs.
• Impact behaviors and actions - Personality does not just influence how we move and
respond in our environment; it also causes us to act in certain ways.
• Multiple expressions - Personality is displayed in more than just behavior. It can also
be seen in our thoughts, feelings, close relationships and other social interactions.
 TheOriginsofPersonality:TheNature- nurture Debate

For psychologists studying the development of personality, “nature vs. nurture” was a central debate.
“Nature vs. nurture” suggests that biology (a person’s genes) and society (the environment in which a
person grows up) are competing developmental forces. In the past, the debate sought to find whether one
may be more important than the other. Today most psychologists would concede both nature and nurture
are necessary for personality development. Both help to make us who we are.

Determinantsof Personality:

Several factors influence the shaping of our personality. Major among these are
1. Heredity,
2. Culture,
3. Family Background,
4. Our Experiences through Life,
5. And The People we interact with.

There are some genetic factors that play a part in determining certain aspects of what we tend to
become. Whether we are tall or short, experience good health or ill health, are quickly irritable or
patient, are all characteristics which can, in many cases, be traced to heredity. How we learn to handle
others’ reactions to us (eg.our appearance) and the inherited traits can also influence how our
personality is shaped.
Culture
The culture and the values we are surrounded by significantly tend to shape our personal values and
inclination. Thus, people born in different cultures tend to develop different types of personalities
which in turn significantly influence their behaviours. India being a vast country with a rich diversity
of cultural background provides a good study on this.
Family Background

The socio-economic status of the family, the number of children in the family and birth order, and the
background and education of the parents and extended members of the family such as uncles and
aunts, influence the shaping of personality to a considerable extent.
First-borns usually have different experiences, during childhood than those born later; Members in the
family mould the character of all children, almost from birth, in several ways -by expressing and
expecting their children to conform to their own values, through role modeling, and through various
reinforcement strategies such as rewards and punishments which are judiciously dispensed. Think of
how your own personality has been shaped by your family background and parental or sibling
influences!
 Experience in life:

Whether one trusts or mistrusts others, is miserly or generous, have a high or low self esteem and the
like, is at least partially related to the past experiences the individual has had. Imagine if someone
came to you and pleaded with you to lend him Rs. 100 which he promised to return in a week’s time,
and you gave it to him even though it was the last note you had in your pocket to cover the expenses
for the rest of that month.
Suppose that the individual never again showed his face to you and you have not been able to get
hold of him for the past three months. Suppose also that three such incidents happened to you with
three different individuals in the past few months. What is the probability that you would trust
another person who comes and asks you for a loan tomorrow? Rather low, one would think.
People We Interact With

“A Person is known by the company he or she keeps” is a common adage. The implication is that people
persuade each other and tends to associate with members who are more like them in their attitudes and values.
Beginning childhood, the people we interact with influence us. Primarily our, parents and siblings, then our
teachers and class mates, later our friends and colleagues, and so on. The influence of these various individuals
and groups shapes our personality. For. Instance, if we are to be accepted as members of our work group, we
have to conform to the values of that group which mayor may not always be palatable to us; if we don’t, we
will not be treated as valued members of the group. Our desire to be a part of the group and belong to it as its
member, will compel many of us to change certain aspects of our personality (for instance, we may have to
become less aggressive, more cooperative, etc.).

Thus, our personality becomes shaped throughout our lives by at least some of the people and groups we
interact with.In summary, our personality is a function of both heredity and other external factors that shape it.
It is important to know what specific personality predispositions influence work behaviors.

PersonalityTheories

TraitsTheory

The traditional approach of understanding personality was to identify and describe personality in terms
of traits. In other words, it viewed personality as revolving around attempts to identify and label
permanent characteristics that describe an individual’s behavior.
Popular characteristics or traits include shyness, aggressiveness, submissiveness, laziness, ambition, loyalty,
and timidity. This distinctiveness, when they are exhibited in a large number of situations, are called
personality traits. The more consistent the characteristic and the more frequently it occurs in diverse situations,
the more important that trait is in describing the individual.
EarlySearch forPrimary Traits
 Efforts to isolate traits have been stuck because there are so many of them. In one study, as many as
17,953 individual traits were identified. It is virtually impossible to predict behavior when such a large
number of traits must be taken into account. As a result, attention has been directed toward reducing these
thousands to a more manageable number. One researcher isolated 171 traits but concluded that they were
superficial and lacking in descriptive power. What he sought was a reduced set of traits that would
identify underlying patterns. The result was the identification of 16 personality factors by Cattell, which
he called the source, or primary, traits. These 16 traits have been found to be generally steady and
constant sources of behavior, allowing prediction of an individual’s behavior in specific situations by
weighing the characteristics for their situational relevance. Based on the answers individual gave they
have been classified as on the basis of the answers individuals give to the test, they are classified as:

Extroverted Or Introverted (E Or I),

ORGANISATION BEHAVIOUR
1.
2. Sensing Or Intuitive (S Or N),
3. Thinking Or Feeling (T Or F), And
4. Perceiving Or Judging (P Or J).
These classifications are then combined into 16 personality types.

PERSONALITY TRAITS

Big Five Model gives five basic personality traits presented below.

● Extraversion. The extraversion dimension captures our comfort level with relationships. Extraverts
tend to be gregarious, assertive, and sociable. Introverts tend to be reserved, timid, and quiet.

● Agreeableness. The agreeableness dimension refers to an individual’s propensity to defer to others.

Highly agreeable people are cooperative, warm, and trusting. People who score low on agreeableness are
cold, disagreeable, and antagonistic.

● Conscientiousness. The conscientiousness dimension is a measure of reliability. A highly conscientious

person is responsible, organized, dependable, and persistent. Those who score low on this dimension are
easily distracted, disorganized, and unreliable.

● Emotional stability. The emotional stability dimension—often labeled by its converse, neuroticism—
taps a person’s ability to withstand stress. People with positive emotional stability tend to be calm, self-
confident, and secure. Those with high negative scores tend to be nervous, anxious, depressed, and
insecure.
 ● Openness to experience. The openness to experience dimension addresses range of interests and
fascination with novelty. Extremely open people are creative, curious, and artistically sensitive. Those at
the other end of the category are conventional and find comfort in the familiar.

MeasuresofPersonality

Can Personality be Measured?

If we wish to measure the current in a electric circuit, we can insert an ammeter into the circuit. If we
wish to measure the weight of some substance, we simply place that substance on scales designed to
measure weight. What about personality? Unfortunately, we cannot directly “measure” personality. But
if we cannot directly observe the seemingly unconscious, how do we know it exists? The answer to the
question lies in the fact that we can, in fact, directly observe behaviors. As students of human behavior,
we are then left to infer personality from the behaviors it manifests. Psychologists thus use behavioral
indicators in constructing projective tests. These tests are designed to draw conclusions about personality
from observed behaviors. There are various standard tests and scales available to measure personality.

Personality Types A and B Definition: These two theorists came up with two extreme ‘behaviour syndromes’
to allow us to look into different stress levels people endure. Each side of the spectrum was split into its own
category; Type A Personality and Type B Personality.

Type A Personality

• Works better with long hours

• Works better with larger amounts of work
• Works better with tight deadlines

Type A Personalities are also said to be quite competitive, and therefore a food type of person to have within an
organisation because they are willing to work and are always striving to be better. On the other hand, because
they are always on the edge, it means that they may not be able to relax, look back on things and make sure
everything is being done properly. Therefore it could cause problems within a business or management team.
Type B Personality

Type B Personalities are obviously the opposite, they are able to sit down and relax, be confident they will meet
deadlines, without rushing and not doing the work properly. They also cope with pressure well and therefore
can turn decisions around. However, their relaxed approach could mean that work doesn’t get done on time
they are less likely to strive for perfection.

Carl Jung Personality Theory

In his theory of personality, Carl Jung distinguishes two different attitude types: Introverts, which are those
people who receive stimulation from within, and extroverts, which are those who receive their stimulation from
the environment.

Introverts are generally more withdrawn, while extroverts are generally more sociable. For example, Donna is
an extrovert. She loves to go out on adventures with lots of people and see exciting new things. Her friend
David, though, is the opposite. Given the choice, he'd rather read a book on his couch than go skydiving with
Donna. David is an introvert.

Jung also separates introverts and extroverts into four subtypes according to the functions that control the way
they perceive the world. Both introverts and extroverts can be any of these subtypes, so there are eight possible
personality types. These four functions are:

1. Thinking

Applying reasoning to the situations and environments you encounter. For example, David likes to think things
through and consider all the pros and cons before he makes a decision about anything.

2. Feeling

Applying subjective, personal assessment to the situations and environments you encounter. Unlike David,
Donna relies on her feelings to tell her how to make a decision. If something feels good, she goes for it; if it
doesn't, she avoids it.

3. Sensation

Applying aesthetic value to the situations and environments you encounter. For example, when deciding how to
arrange his living room, David tries to make things very symmetrical. If there's a chair on one side of the room,
he has to put the same chair on the other side of the room to balance it. This symmetry makes the room look
nice.

4. Intuition

Using your unconscious or the mystical to understand your experiences. For example, Donna thinks David is
arranging his furniture all wrong. She thinks he should use feng shui, an ancient Chinese philosophy, to choose
where to put his furniture.

Sigmund Freud's psychoanalytic theories

Sigmund Freud is considered to be the founder of the psychodynamic approach to psychology, which looks to
unconscious drives to explain human behavior. Freud believed that the mind is responsible for both conscious
and unconscious decisions that it makes on the basis of psychological drives. The id, ego, and super-ego are
three aspects of the mind Freud believed to comprise a person's personality. Freud believed people are "simply
actors in the drama of [their] own minds, pushed by desire, pulled by coincidence. Underneath the surface, our
personalities represent the power struggle going on deep within us".

Major Personality Attributes

Following are the five major personality attributes that influence OB −

Locus of Control

Locus of control is the center of control of an individual’s code of conduct. People can be grouped into two
categories i.e., internals and externals respectively.

People who consider themselves as the masters of their own fates are known as internals, while, those who
affirm that their lives are controlled by outside forces known as externals.

Before making any decision, internals actively search for information, they are achievement driven, and want
to command their environment. Thus, internals do well on jobs that craves complex information processing,
taking initiative and independent action.
Externals, on the other hand, are more compliant, more willing to follow instructions, so, they do well in
structured, routine jobs.

Machiavellianism

Machiavellianism is being practical, emotionally distant, and believing that ends justify means.

Machiavellians are always wanting to win and are great persuaders. Here are the significant features of a high-
mach individuals −

• High-Machs prefer precise interactions rather than beating about the bush.

• High-Machs tend to improvise; they do not necessarily abide by rules and regulations all the time.

• High-Machs get distracted by emotional details that are irrelevant to the outcome of a project.

Self-esteem

It is the extent up to which people either like or dislike themselves. Self-Esteem is directly related to the
expectations of success and on-the-job satisfaction.

Individuals with high self-esteem think that they have what it takes to succeed. So, they take more challenges
while selecting a job.

On the other hand, individuals with low self-esteem are more susceptible to external distractions. So, they are
more likely to seek the approval of others and to adapt the beliefs and behaviors of those they respect.

Self-monitoring

Self-monitoring is the capability of regulating one’s behavior according to social situations. Individuals with
high self-monitoring skill easily adjust their behavior according to external, situational factors. Their
impulsive talents allow them to present public personae which are completely different from their private
personalities.

However, people with low self-monitoring skills cannot cover themselves. Regardless of any situation, they
are always themselves. They have an attitude of, “what you see is what you get.”

Risk taking

Generally, managers are reluctant on taking risks. However, individual risk-taking inclination affects the bulk
of information required by the managers and how long it takes them to make decisions.
Thus, it is very important to recognize these differences and align risk-taking propensity with precise job
demands that can make sense.

Theories of Personality

There are a number of different theories about how personality develops. Different schools of
thought in psychology influence many of these theories. Some of these major perspectives on
personality include:

• Type theories are the early perspectives on personality. These theories suggested that
there are a limited number of "personality types" which are related to biological
influences.

• Trait theories viewed personality as the result of internal characteristics that are
genetically based.

• Psychodynamic theories of personality are heavily influenced by the work of

Sigmund Freud, and emphasize the influence of the unconscious on personality.
Psychodynamic theories include Sigmund Freud’s psychosexual stage theory and Erik
Erikson’s stages of psychosocial development.
• Behavioral theories suggest that personality is a result of interaction between the
individual and the environment. Behavioral theorists study observable and
measurable behaviors, rejecting theories that take internal thoughts and feelings
into account. Behavioral theorists include B. F. Skinner and John B. Watson.
 • Humanist theories emphasize the importance of free will and individual experience
in the development of personality. Humanist theorists include Carl Rogers and
Abraham Maslow

• Importance of Personality in an Organization

• The importance of personality and how it complements an organization, varies by role and
industry. For managers and business leaders, having the ability to motivate and encourage
your colleagues while also understanding their shortcomings, is critical to an organization's
success.For employers, having the ability to communicate effectively with staff and remain
flexible toward change is imperative to driving an organization forward. In both instances, a
manager's ability to build and sustain relationships with colleagues is integral to the
organization's success. More often than not, personality dictates how you're able to build and
sustain such relationships, and is thus an important element to any organization.

Johari window

The Johari window is a technique created by Joseph Luft and Harrington Ingham in 1955 in
the United States, used to help people better understands their relationship with self and others. It
is used primarily in self-help groups and corporate settings as a heuristic exercise.

When performing the exercise, subjects are given a list of 56 adjectives and pick five or six that
they feel describe their own personality. Peers of the subject are then given the same list, and
each pick five or six adjectives that describe the subject. These adjectives are then mapped onto a
grid.

An alternative mechanism for determining an individual's Johari Window is to plot the scores
from the Personal Effectiveness Scale (PES). The Scale comprises three factors : Self-
Disclosure, Openness to Feedback & Perceptiveness. The Self-Disclosure score is to be plotted
horizontally, whereas the Openness to Feedback score is to be plotted vertically. The Johari
Window formed naturally displays the sizes of the Open, Hidden, Blind Spot & Unknown areas,
the Dream Johari Window. The sizes of the areas in the Dream Johari Window may be
different from the sizes of the same areas in the current Johari Window. The Dream Johari
Window represents what an individual wants his/her personality to be like. The individual having
a Dream Johari Window identical to the current Johari Window may have a balanced
personality. The Perceptiveness score from the PES indicates how likely it is for the individual to
achieve the Dream Johari Window. For example, a LOW score on the PES indicates less
possibility of transition.
Open: Adjectives that are selected by both the participant and his or her peers are placed into
the Open quadrant. This quadrant represents traits of the subjects that both they and their peers
are aware of.

Hidden: Adjectives selected only by subjects, but not by any of their peers, are placed into
the Hidden quadrant, representing information about them their peers are unaware of. It is then
up to the subject to disclose this information or not.

Blind Spot: Adjectives that are not selected by subjects but only by their peers are placed into
the Blind Spot quadrant. These represent information that the subject is not aware of, but others
are, and they can decide whether and how to inform the individual about these "blind spots".

Unknown: Adjectives that were not selected by either subjects or their peers remain in
the Unknown quadrant, representing the participant's behaviors or motives that were not
recognized by anyone participating. This may be because they do not apply or because there is
collective ignorance of the existence of these traits.
Transactional analysis

(TA to its adherents), is an integrative approach to the theory of psychology and psychotherapy.
It is described as integrative because it has elements of
psychoanalytic, humanist and cognitive approaches. TA was first developed by Canadian-born
US psychiatrist Eric Berne, starting in the late 1950s.

According to the International Transactional Analysis Association, TA 'is a theory of

personality and a systematic psychotherapy for personal growth and personal change'.

Components of Transactional Analysis

1. Ego States
a. Parent ego
• Nurturing parent ego
• Critical parent ego
b. Adult ego
c. Child ego
• Natural child
• Adaptive child
• Rebellion child
2. Types of Transactions
 a. Complementary
b. Non-Complementary transactions
c. Gallows transactions
3. Life Positions

Advantages of Transaction Analysis

1. Interpersonal Effectiveness
2. Organizational Development
3. Conflict Resolution
4. Executive Development

Dis-Advantages of Transactional Analysis

1. Difficult to understand
2. Encourage Amateur Psychologizing
3. Tool of manipulation
4. Not supported by scientific findings
 Motivation
Motivation can be described as the internal force that impacts the direction, intensity, and endurance of a
person’s voluntary choice of behavior. It consists of −
• Direction − focused by goals.
• Intensity − bulk of effort allocated.
• Persistence − amount of time taken for the effort to be exerted.
Example − A team leader encourages team members to work efficiently.

Features of Motivation
Motivation is an internal feeling, that is, it defines the psychological state of a person. It is a continuous
process and we should make sure that it is not disturbed. A person should be encouraged completely.
Motivation consists of three interacting and dependent elements −
• Needs − The requirements or deficiency which is created whenever there is physiological
imbalance.
• Drives − The various camps or events organized to motivate the employees and give them new
opportunities.
• Incentives − Employees need to be rewarded for their nice work in order to keep them encouraged.
• Motivation is one of three key performance elements. In fact, research suggests that
performance is a function of ability, motivation and opportunity:

Performance = Function {Ability × Motivation × Opportunity}

• Ability refers to a person’s or a team’s ability to perform a task. Opportunity refers to the
timing and situation around the task. For instance, if a hospital sets out to be known for
successful heart transplants, it must have a team of surgeons that are skilled in performing
transplants (ability), and there must be adequate space and equipment to perform
transplants, as well as patients who need them (opportunity). Managers have little influence
over ability, and they can only somewhat influence opportunity.
• Can managers influence employees to be more productive by understanding their sources of
motivation, or even creating sources of motivation for their employees? Most researchers
agree that the answer to that is yes. Motivation isn’t a stable state of mind, and what
motivates an employee right now might not be the same a year later. But researchers don’t
necessarily agree on the best way to accomplish that—and perhaps there is not one best
approach.
• Motivation is one of the most researched topics in organizational behavior, because a
manager’s ability to influence employee motivation can directly affect an organization’s
bottom line.
 Importance of Motivation

We need to motivate employees because of the following reasons −

• Motivated employee are more quality oriented.

• Highly motivated employees are more productive as compared to other employees.
• It helps in achieving three behavior dimension of human resource namely
o Candidates must be attracted not only to join but also remain in the firm.
o Employees must perform task in a dependable manner.
o Employees should be creative, spontaneous and innovative at work.

Theories of Motivation
Need-Based Theories
Maslow’s Hierarchy of Needs
Human motivation can be defined as the fulfillment of various needs. These needs can encompass a
range of human desires, from basic, tangible needs of survival to complex, emotional needs
surrounding an individual’s psychological well-being.

Abraham Maslow was a social psychologist who was interested in a broad spectrum of human
psychological needs rather than on individual psychological problems. He is best known for his
hierarchy-of-needs theory. Depicted in a pyramid (shown in Figure 1), the theory organizes the
different levels of human psychological and physical needs in order of importance.

A triangle is divided vertically into five sections with corresponding labels inside and outside of the
triangle for each section. From top to bottom, the triangle's sections are labeled: “self-actualization”
corresponds to “Inner fulfillment” “esteem” corresponds to “Self-worth, accomplishment,
confidence”; “social” corresponds to “Family, friendship,belonging”’ “security” corresponds to
“Safety, employment, assets”; ““physiological” corresponds to “Food, water, shelter, warmth.”

Figure 1. Maslow’s hierarchy of needs is illustrated here. In some versions of the pyramid, cognitive
and aesthetic needs are also included between esteem and self-actualization. Others include another
tier at the top of the pyramid for self-transcendence.

The needs in Maslow’s hierarchy include physiological needs (food and clothing), safety needs (job
security), social needs (friendship), self-esteem, and self-actualization. This hierarchy can be used by
managers to better understand employees’ needs and motivation and address them in ways that
lead to high productivity and job satisfaction.

At the bottom of the pyramid are the physiological (or basic) human needs that are required for
survival: food, shelter, water, sleep, etc. If these requirements are not met, the body cannot continue
to function. Faced with a lack of food, and safety, most people would probably consider food to be
their most urgent need.

Once physical needs are satisfied, security (sometimes referred to as individual safety) takes
precedence. Security and safety needs include personal security, financial security, and health and
well-being. These first two levels are important to the physical survival of the person. Once
individuals have basic nutrition, shelter, and safety, they seek to fulfill higher-level needs.

The third level of need is social, which includes love and belonging; when individuals have taken
care of themselves physically, they can address their need to share and connect with others.
Deficiencies at this level, on account of neglect, shunning, ostracism, etc., can impact an individual’s
ability to form and maintain emotionally significant relationships. Humans need to feel a sense of
belonging and acceptance, whether it comes from a large social group or a small network of family
and friends. Other sources of social connection may be professional organizations, clubs, religious
groups, social media sites, and so forth.

The fourth level is esteem, which represents the normal human desire to be valued and validated by
others, through, for example, the recognition of success or status. This level also includes self-
esteem, which refers to the regard and acceptance one has for oneself. Imbalances at this level can
result in low self-esteem or an inferiority complex. People suffering from low self-esteem may find
that external validation by others—through fame, glory, accolades, etc.—only partially or
temporarily fulfills their needs at this level.

At the top of the pyramid is self-actualization. At this stage, people feel that they have reached their
full potential and are doing everything they’re capable of. Self-actualization is rarely a permanent
feeling or state. Rather, it refers to the ongoing need for personal growth and discovery that people
have throughout their lives. Self-actualization may occur after reaching an important goal or
overcoming a particular challenge, and it may be marked by a new sense of self-confidence or
contentment.

The Expectancy Framework

Yale University Professor Victor Vroom is an authority on the psychological analysis of behavior in
organizations and he proposed a basic expectancy framework. We can use this basic framework to
understand the components of motivation better.

The expectancy framework assumes that motivation is a cognitive process and considers how workers feel
about their efforts and how they’re related to performance and outcome. Yes, you read that right. It’s about
how workers feel about these things, not necessarily how they really are, because it’s an employee’s
perception of events that’s important here. Managers should understand how their employees feel about a
situation if they’re going to motivate them.

The framework is basic in that employees feel their efforts lead to good performance, and good
performance leads to outcomes (see Figure 1). This seems pretty simple. Employees who understand that
their effort yields good performance and outcomes will be motivated!

Figure 1
But what about Danny and his motivation to read? Does he not understand that effort reading his history
text yields good performance on a test, and thus the outcome of a passing grade? You’re right, this model
doesn’t quite speak to motivation yet. Let’s add in a couple more components.

First, there is expectancy. Expectancy asks, “Will more hard work achieve this goal?” This is the
individual’s perception as to how difficult the target goal is to accomplish, or how much effort will need to
go into accomplishing it. Next, instrumentality comes into play. Instrumentality asks, “Will the
outcome/reward actually be delivered as promised?” Finally, there’s valence. Valence asks, “Is this reward
worth the work?”

Figure 2

Expectancy: “Will more hard work achieve this goal?”

Instrumentality: “Will the outcome/reward actually be delivered as promised?”

Valance: “Is this reward worth the work?”

Adding the elements of expectancy, instrumentality and valance help us understand how individual
perception figures into the expectancy framework. Now, let’s use that expectancy framework to help us
understand the three components of motivation—individual, workplace and organization.

Individual Components of Motivation

When managers reviews their team members, the biggest difference they may see in each individual is
what motivates them.

Intrinsic and Extrinsic Motivators

For an individual there are intrinsic (internal) and extrinsic (external) motivating factors.

• Intrinsic motivation comes from within, and it’s usually driven by individuals’ needs to do
something for themselves. Each person has unique desires: they may want to learn a language
or skill, or reach a goal of finishing a 5K in a certain amount of time. Intrinsic motivation is the
reason why people climb mountains. (It’s not because they’re there!)
• Extrinsic motivation comes from an external source. People may work a second (or third) job
because they need additional money to pay the bills. Children may apologize to another child
for not sharing their toys to avoid punishment from their parents.

An individual’s view of these intrinsic and extrinsic motivational factors is impacted by previous
experience, current needs, gender, and personal and cultural values. For instance, women tend to site
“personal satisfaction” and “job security” as motivational factors in their work, while men tend to site
“status” and “wealth” as the reasons they get up in the morning. Older workers indicate “company loyalty”
as a motivational factor, but Gen Xers and Millennials, who are more likely to job hop, are motivated by
“job flexibility” and “challenging work.” Cultural differences can fall into play as well—European
countries value vacation time and use quite a bit, while in the United States, workers sometimes don’t even
use the days they’ve been given.

Work Components of Motivation

The work an individual does holds tremendous motivational power. But, as we discussed, no two
individuals are alike, and no two individuals are motivated by the same things. A manager’s challenge,
when it comes to manipulating the work components of motivation, is to assemble work that is challenging
and rewarding. He or she can do that by designing jobs that fit employees’ skills and interests, providing
training and good working conditions, and setting challenging but attainable goals.

Let’s take a look at each of these areas.

Job Design

“What kind of skills do I need to do this job?” “How important is this job to the success of the
organization?”

These are the answers an employee seeks before he or she agrees to accept a job with an organization.
Individuals are looking for interesting work—work that will foster positive internal feelings. Those
feelings might come in the form of achieving high production, overcoming obstacles, or being innovative
and coming up with new ideas that help the organization succeed. The right job design can help a manager
get to those intrinsic motivations an individual brings to work each day, rather than just the extrinsic
factors, like pay and benefits.

When reviewing Vroom’s expectancy framework, we can see that job design affects both the effort to
performance piece and the performance to outcome piece. The question managers look to answer is,
“What’s the right balance for the job design?”

Early management theorists suggested that the easier the job, the more motivated the employee would be.
Later studies suggested that organizations should make jobs more challenging and interesting. Both of
these points of view fail to take into consideration individuals and the factors each person brings that might
influence whether a job design is motivating to him or her personally.
 Richard Hackman and
Gary Oldham published the Hackman-Oldham Job Design Model as part of a 1980 study, and it suggested
that managers should tailor the job to meet the employee’s individual needs. Where job design is
concerned, Hackman and Oldham suggested that a job’s motivating potential can be influenced by skill
variety, task identity, task significance, autonomy and feedback.

• Skill variety refers to the number of skills used to do a job. A traditional assembly line job
would have a low skill variety, whereas a nurse would have higher skill variety.
• Task identity refers to the level at which employees feel like they “owns” the outcome when
completing the task. Going back to our first example, workers on an assembly line would have
low task identity. Which parts from their lines ended up in which machines? They’re not likely
to know, so they would have a low task identity. A nurse, however, can identify with how well a
patient recovers, or see immediately that a choice he or she made saved the life of a patient.
Thus, a nurse would have high task identity.
• Task significance indicates the importance of that task to the organization. The job of
receptionist, for example, has lower task significance. A temporary employee can be brought in
to answer phones and sort mail. But doctors would have high task significance—not anyone
can do their job, and they have knowledge of their patients and their situations that others
would not have.
• Autonomy is the degree to which an employee can make independent decisions and not have
to check in with a supervisor. Again, clerical work would have low autonomy because the job is
repetitious and workers make few decisions on their own. Doctors would have high autonomy,
making decisions to medicate a patient a certain way or handle an emergency procedure on
the operating table.
• Feedback is information about an employee’s performance. Most employees who perform a
task want to know if they are doing it right, doing it well, and so on.

Hackman and Oldham noted that while the first three components of the job design (skill variety, task
identify, and task significance) are very important, the last two, autonomy and feedback, are considered
even more so. Thus managers should think a little harder about how to incorporate a little autonomy and
feedback into the roles their team members fill.
Goal Setting theory

Employees are motivated when they’re set on the path toward a particular goal. Goal setting is essential in
the effort-performance link on the expectancy framework. Management by objective (MBO) focuses on
setting goals, monitoring progress, and giving feedback and correction. MBO assumes that employees
must have clear, challenging, measurable and specific goals to be motivated to perform well.

The idea behind goal setting is that the company goals are cascaded down to the departments, which are
then cascaded down to the employees.

Alderfer’s ERG Theory

Clayton Paul Alderfer is an American psychologist who developed Maslow’s hierarchy of needs into a
theory of his own. Alderfer’s ERG theory suggests that there are three groups of core
needs: existence (E), relatedness (R), and growth (G)—hence the acronym ERG. These groups align with
Maslow’s levels of physiological needs, social needs, and self-actualization needs, respectively.

Existence needs concern our basic material requirements for living. These include what Maslow
categorized as physiological needs (such as air, food, water, and shelter) and safety-related needs (such as
health, secure employment, and property).

Relatedness needs have to do with the importance of maintaining interpersonal relationships. These needs
are based in social interactions with others and align with Maslow’s levels of love/belonging-related needs
(such as friendship, family, and sexual intimacy) and esteem-related needs (gaining the respect of others).

Finally, growth needs describe our intrinsic desire for personal development. These needs align with the
other portion of Maslow’s esteem-related needs (self-esteem, self-confidence, and achievement) and self-
actualization needs (such as morality, creativity, problem-solving, and discovery).

Alderfer proposed that when a certain category of needs isn’t being met, people will redouble their efforts
to fulfill needs in a lower category. For example, if someone’s self-esteem is suffering, he or
she will invest more effort in the relatedness category of needs.

McClelland’s Acquired Needs Theory

Psychologist David McClelland’s acquired-needs theory splits the needs of

employees into three categories rather than the two we discussed in Herzberg’s theory. These three
categories are achievement, affiliation, and power.

Employees who are strongly achievement-motivated are driven by the desire for mastery. They prefer
working on tasks of moderate difficulty in which outcomes are the result of their effort rather than luck.
They value receiving feedback on their work.

Employees who are strongly affiliation-motivated are driven by the desire to create and maintain social
relationships. They enjoy belonging to a group and want to feel loved and accepted. They may not make
effective managers because they may worry too much about how others will feel about them.

Employees who are strongly power-motivated are driven by the desire to influence, teach, or encourage
others. They enjoy work and place a high value on discipline. However, they may take a zero-sum
approach to group work—for one person to win, or succeed, another must lose, or fail. If channeled
appropriately, though, this approach can positively support group goals and help others in the group feel
competent.

McClelland proposes that those in top management positions generally have a high need for power and a
low need for affiliation. He also believes that although individuals with a need for achievement can make
good managers, they are not generally suited to being in top management positions.

McGregor’s Theory X and Theory Y

The idea that a manager’s attitude has an impact on employee motivation was originally proposed
by Douglas McGregor, a management professor at the Massachusetts Institute of Technology during the
1950s and 1960s. In his 1960 book, The Human Side of Enterprise, McGregor proposed two theories by
which managers perceive and address employee motivation. He referred to these opposing motivational
methods as Theory X and Theory Y management. Each assumes that the manager’s role is to organize
resources, including people, to best benefit the company. However, beyond this commonality, the attitudes
and assumptions they embody are quite different.

Theory X

According to McGregor, Theory X management assumes the following:

• Work is inherently distasteful to most people, and they will attempt to avoid work whenever
possible.
• Most people are not ambitious, have little desire for responsibility, and prefer to be directed.
• Most people have little aptitude for creativity in solving organizational problems.
• Motivation occurs only at the physiological and security levels of Maslow’s hierarchy of needs.
• Most people are self-centered. As a result, they must be closely controlled and often coerced to
achieve organizational objectives.
• Most people resist change.
• Most people are gullible and unintelligent.

Essentially, Theory X assumes that the primary source of employee motivation is monetary, with security
as a strong second. Under Theory X, one can take a hard or soft approach to getting results.

The hard approach to motivation relies on coercion, implicit threats, micromanagement, and tight
controls— essentially an environment of command and control. The soft approach, however, is to be
permissive and seek harmony in the hopes that, in return, employees will cooperate when asked. However,
neither of these extremes is optimal. The hard approach results in hostility, purposely low output, and
extreme union demands. The soft approach results in a growing desire for greater reward in exchange for
diminished work output.

It might seem that the optimal approach to human resource management would lie somewhere between
these extremes. However, McGregor asserts that neither approach is appropriate, since the basic
assumptions of Theory X are incorrect.

Drawing on Maslow’s hierarchy of needs, McGregor argues that a need, once satisfied, no longer
motivates. The company uses monetary rewards and benefits to satisfy employees’ lower-level needs.
Once those needs have been satisfied, the motivation disappears. Theory X management hinders the
satisfaction of higher-level needs because it doesn’t acknowledge that those needs are relevant in the
workplace. As a result, the only way that employees can attempt to meet higher-level needs at work is to
seek more compensation, so, predictably, they focus on monetary rewards. While money may not be the
most effective way to self-fulfillment, it may be the only way available. People will use work to satisfy
their lower needs and seek to satisfy their higher needs during their leisure time. However, employees can
be most productive when their work goals align with their higher-level needs.

McGregor makes the point that a command-and-control environment is not effective because it relies on
lower needs for motivation, but in modern society those needs are mostly satisfied and thus are no longer
motivating. In this situation, one would expect employees to dislike their work, avoid responsibility, have
no interest in organizational goals, resist change, etc.—creating, in effect, a self-fulfilling prophecy. To
McGregor, a steady supply of motivation seemed more likely to occur under Theory Y management.

Theory Y

The higher-level needs of esteem and self-actualization are ongoing needs that, for most people, are never
completely satisfied. As such, it is these higher-level needs through which employees can best be
motivated.

In strong contrast to Theory X, Theory Y management makes the following assumptions:

• Work can be as natural as play if the conditions are favorable.

• People will be self-directed and creative to meet their work and organizational objectives if
they are committed to them.
• People will be committed to their quality and productivity objectives if rewards are in place
that address higher needs such as self-fulfillment.
• The capacity for creativity spreads throughout organizations.
• Most people can handle responsibility because creativity and ingenuity are common in the
population.
• Under these conditions, people will seek responsibility.

Under these assumptions, there is an opportunity to align personal goals with organizational goals by using
the employee’s own need for fulfillment as the motivator. McGregor stressed that Theory Y management
does not imply a soft approach.

McGregor recognized that some people may not have reached the level of maturity assumed by Theory Y
and may initially need tighter controls that can be relaxed as the employee develops.

If Theory Y holds true, an organization can apply the following principles of scientific management to
improve employee motivation:

• Decentralization and delegation: If firms decentralize control and reduce the number of
levels of management, managers will have more subordinates and consequently need to
delegate some responsibility and decision making to them.
• Job enlargement: Broadening the scope of an employee’s job adds variety and opportunities
to satisfy ego needs.
• Participative management: Consulting employees in the decision-making process taps their
creative capacity and provides them with some control over their work environment.
 • Performance appraisals: Having the employee set objectives and participate in the process of
self-evaluation increases engagement and dedication.

If properly implemented, such an environment can increase and continually fuel motivation as employees
work to satisfy their higher-level personal needs through their jobs.

Herzberg’s Two-Factor Theory

American psychologist Frederick Herzberg is regarded as one of the great original thinkers in
management and motivational theory. Herzberg set out to determine the effect of attitude on motivation, by
simply asking people to describe the times when they felt really good, and really bad, about their jobs.
What he found was that people who felt good about their jobs gave very different responses from the
people who felt bad.

The results from this inquiry form the basis of Herzberg’s Motivation-Hygiene Theory (sometimes known
as Herzberg’s “Two Factor Theory”). Published in his famous article, “One More Time: How do You
Motivate Employees,” the conclusions he drew were extraordinarily influential, and still form the bedrock
of good motivational practice nearly half a century later. He’s especially recognized for his two-factor
theory, which hypothesized that are two different sets of factors governing job satisfaction and job
dissatisfaction: “hygiene factors,” or extrinsic motivators and “motivation factors,” or intrinsic motivators.

Hygiene factors, or extrinsic motivators, tend to represent more tangible, basic needs—i.e., the kinds of
needs included in the existence category of needs in the ERG theory or in the lower levels of Maslow’s
hierarchy of needs. Extrinsic motivators include status, job security, salary, and fringe benefits. It’s
important for managers to realize that not providing the appropriate and expected extrinsic motivators will
sow dissatisfaction and decrease motivation among employees.

Motivation factors, or intrinsic motivators, tend to represent less tangible, more emotional needs—i.e., the
kinds of needs identified in the “relatedness” and “growth” categories of needs in the ERG theory and in
the higher levels of Maslow’s hierarchy of needs. Intrinsic motivators include challenging work,
recognition, relationships, and growth potential. Managers need to recognize that while these needs may
fall outside the more traditional scope of what a workplace ought to provide, they can be critical to strong
individual and team performance.

The factor that differentiates two-factor theory from the others we’ve discussed is the role of
employee expectations. According to Herzberg, intrinsic motivators and extrinsic motivators have an
inverse relationship. That is, intrinsic motivators tend to

increase motivation when they are present, while extrinsic motivators tend to reduce motivation when they
are absent. This is due to employees’ expectations. Extrinsic motivators (e.g., salary, benefits) are
expected, so they won’t increase motivation when they are in place, but they will cause dissatisfaction
when they are missing. Intrinsic motivators (e.g., challenging work, growth potential), on the other hand,
can be a source of additional motivation when they are available.
If management wants to increase employees’ job satisfaction, they should be concerned with the nature of
the work itself—the opportunities it presents employees for gaining status, assuming responsibility, and
achieving self-realization. If, on the other hand, management wishes to reduce dissatisfaction, then it must
focus on the job environment—policies, procedures, supervision, and working conditions. To ensure a
satisfied and productive workforce, managers must pay attention to both sets of job factors.

Managerial Responses to Motivation

Now that we understand a bit more about what motivation is and the theories behind its origins and
development, we can put them to work in a managerial setting. Let’s take a look at some managerial
responses to motivation.

Management by Objectives

We talked a bit about management by objectives (MBO) when we discussed goal setting as a part of the
work component of motivation. Management by Objective is a response to the goal-setting theory as a
motivator.

The goal setting theory has an impressive base of research support, and MBO makes it operational. As a
reminder, MBO sets individual goals for employees based on department goals, which are based on
company goals. It looks like this:
MBO advocates specific, measurable goals and feedback. There is only implication, though, that goals are
perceived as attainable. The approach is most effective when the individual has to stretch to meet the goals
set.

MBO can be a participative process. When individuals are consulted in the creation of their own goals, it
often results in workers setting a goal that stretch them further. MBO does not require that the individual
worker participate, though. The process seems to be about as effective when goals are assigned by a
manager to the individual.

MBO is a widely used and successful practice for many industries. Failures occur when unrealistic
expectations come into play, or cultural incompatibilities thwart the process.

Employee Recognition Programs

Employee recognition programs cover a wide variety of activities, ranging from private “thank yous” to
publicized recognition ceremonies. It strengthens the link between performance and outcome on the
expectancy framework. Recognition continues to be cited on surveys as one of the most powerful
motivators for an employee.

Types of recognition might include:

• A personal thank you to an employee from a manager, verbally or in a note

• A public recognition of an employee, in a company communication or ceremony
• A team thank you via a lunch bought by the manager
• A program where customers recognize great service by front line workers

In an environment where there are layoffs and increased workloads all across the country, recognition
programs go a long way toward motivating employees and provide a relatively low-cost way to boost
performance.

Employee Involvement Programs

Employee participation and participative management, employee ownership, workplace democracy . . .

these are all a part of the catch-all term called “employee involvement programs.” Specifically, employee
involvement is a process that uses the entire capacity of employees and is designed to increase employee’s
commitment to the organization’s success.

Here are a few types of employee involvement:

• Employee stock ownership plans (ESOPs). A fairly popular employee involvement program,
where an ESOP trust is created, and the organization will contribute stock or cash to buy stock
for the trust. The stock is then allocated to employees. Research suggests that ESOPs increase
satisfaction but their impact on performance remains unclear, as companies offering this
option often perform similarly to companies that don’t.
• Participative management. This is a program where subordinates share a significant
responsibility for decision making with their managers. As jobs become more complex,
managers aren’t always aware of everything that employees do, and studies have found that
this process increases the commitment to decisions. Research shows that this approach has a
modest influence productivity, motivation, and job satisfaction.
 • Representative participation. This is an approach where workers are represented by a small
group of employees who participate in organizational decisions. Representative participation
is mean to put labor on more equal terms with management and stockholders where company
decisions are concerned. The overall influence on working employees seems to be minimal,
and the value of it appears to be more symbolic than motivating.

If you look at these employment involvement programs through the Theory X & Theory Y lens, the
approach certainly leans more toward the Theory Y approach of people management. These programs can
also satisfy an employee’s needs for responsibility, achievement, etc., and thus fit well with the ERG
theory as well. They can be part of a good balance of motivational offerings.

Job Redesign Programs

Clever redesign of jobs to accommodate employees’ needs for additional flexibility can serve to motivate
them. Managers looking to reshape jobs in order to make them more motivating might look toward a few
redesign and scheduling options.

• Job rotation. Employees who have very repetitive jobs can find new motivation in a job
rotation program. An assembly line might employ this technique, where a worker might be
focused on constructing a portion of an exhaust system for a period of time, and the move over
to an area that is devoted to putting together transmissions. This approach navigates the
pitfalls of boredom, but it can increase training costs and temporarily reduce productivity as
people ramp up with their new responsibilities.
• Job enrichment. This refers to the vertical expansion of one’s job to include additional
responsibilities that allow employees to control planning, execution, and evaluation aspects of
their work. Employees can see a task through from start to finish in many cases, allowing for a
holistic view of the task and ownership of the outcome. For instance, a group that formerly
only handled the development of art for marketing materials might be retrained to meet with
clients, get a better understanding of their needs, and then work with a printer to produce the
final product. This process generally yields a reduction in turnover and an increase in job
satisfaction for employees, but evidence of increased productivity is often inconclusive.
• Flexible Hours. Flexible hours allow employees a degree of autonomy when it comes to the
hours of their workday. Morning people can be up-and-at-‘em at 6AM, and night owls can show
up later and work later. Flexible hours often reduce absenteeism, increase productivity, and
reduce overtime expenses. However, this approach is not applicable to every job.
• Job Sharing. This program allows for two or more individuals to share a 40-hour work week.
Job sharing allows an organization to draw on the talents of more than one person to complete
a job and allows them to avoid layoffs due to overstaffing. Conversely, a manager has to find
compatible pairs of employees, which is not always such an easy task.
• Telecommuting. When an individual can work from home, he or she can have more flexible
hours, less downtime in a car, the ability to wear whatever he or she wants, and fewer
interruptions. Organizations that employ telecommuting can realize higher productivity, enjoy
a larger labor pool from which to select employees, and experience less office space costs. But
telecommuters can’t experience the benefits of an office situation, and managers can tend to
undervalue the contributions of workers they don’t see regularly.

Job redesign and scheduling can be linked to several motivational theories. Herzberg’s two-factor theory
supports the idea of job enrichment in its proposal that increasing intrinsic factors of a job will increase an
employee’s satisfaction with a job. Flexibility is an important link in linking rewards to personal goals in
the expectancy theory.
Variable Pay Programs

While we’ve already discussed that pay isn’t always a motivator for employees, revamping an
organization’s compensation system to incentivize employees can play well into increasing motivation and
productivity. Examples of variable pay programs include piece-rate programs, where employees are
compensated by the number of units they produce, or profit-sharing plans, where organizations share
compensation with employees based on the company’s profitability.

Variable-pay programs increase motivation and productivity, as organizations with these plans are shown
to have higher levels of profitability than those who don’t. Variable-pay is most compatible with the
expectancy theory predictions that employees should perceive a strong relationship between their
performance and the rewards they receive.

These programs help managers address differences in individual needs and allow employees to participate
in decisions that affect them. Combining some of these tactics with MBO so that employees understand
what’s expected of them, linking performance and rewards through recognition and making sure the
system is equitable can help make a manager’s organization productive.

STRESS MANAGEMENT
Stress is a state of discomfort experienced by an individual. Loss of emotional stability is the
general expression of stress. It is generally apparent when the individual experiences a biological
disorder. Stress has a positive association with the age, life styles, time constraints and the nature of
occupation. Certain occupations are more prone to the stress than the others. For instance, drivers of
vehicles, doctors, lawyers and managers are more likely to get stress than teacher, bankers and
operating personnel. Individuals feel stress when the needs or desires are not accomplished in the
normal expected ways. This is because of the natural constraints operated on the individuals. The
more the intensity of the desire and greater is the uncertainty associated with the achievement of the
goal, the greater is the degree of stress. Employees are working for longer hours, taking on the work
once done by laid-off colleagues, meeting tighter deadlines and cutting back on expenses are some
of the causes of stress. Combined to this with the double-income family demands of monthly
mortgages, childcare issues and aging parents, and the result for many is anxiety, sleeplessness,
irritability, and physical and mental deterioration. Perhaps these are the potential reasons for stress
in the employees. Let us first learn what is stress?

In the words of Fred Luthans, stress is defined as an adaptive response to an external situation that
results in physical, psychological, and/or behavioural deviations for organisational participants.
Ivancevich and Matteson define stress as the interaction of the individual with the environment. It is
 an adaptive response, mediated by individual characteristics and/or psychological processes that are
consequence of any external action, situation or event that places special physical and / or
psychological demands upon a person. Schuler defines stress as a dynamic condition in which an
individual is confronted with an opportunity, constraint, or demand related to what he or she desires
and for which the outcome is perceived to be both uncertain and important.

The following are the features of stress.

• Stress is both psychological and physical aspect.
• It is common to both the genders.
• It results from the deviation of expectations from actual situation.
• It is symptomatic. Potential stress appears with the symptoms. If the potential stress is
ignored it leads to actual stress.
• Stress is treated to be negative. Nevertheless, it has positive consequences. This is called as
eustress.
• Stress is an interactive concept. It does not spring from the internal organs of the
individual. It comes from the interaction of the human being with the environment. Thus,
environment has a profound influence on the stress.
• Stress is generic term. If it is applied to the context of organisation, it is known as work
stress or job stress.
• Stress occurs only when the human being feels mediation of the internal or external factors.
• Stress is related to the attitude of the person. Stress does not occur when the person
is having an indifferent attitude to the opportunity.
• Stress is associated with certain common biological disorders such as heart attack, stroke,
diabetic, blood pressure, neurological disorders etc.

CAUSES OF STRESS
Stress is a psychological state of imbalance coupled with biological disorder. Individual
experiences deviation in his biological system which is called potential stress. Potential stress
moderated by individual, organisational and environmental variable leads to actual stress. The
variables that convert potential stress into actual stress are known as stressors. Thus, stressors can
be intra- organisational and extra organisational. Intra-organisational stress arises out of
individual, group, and organisational factors. Extra organisational factors relate to environment of
the organisation. The intra organisational factors causing stress are divided into individual factors
and organisational factors. Let us learn them in detail.

Intra Organisational Factors

Individual Factors: Individual factors, which cause stress include: personality and individual
differences, family problems, economic problems, life styles and role demands.

i) Personality and individual differences: Individual basic dispositions are the main
reason for potential stress. Introversion, extroversion, masculinity, rigidity, locus of
control, personal life, demographic differences such as age, health, education and
occupation are some of the reasons causing stress in individuals. It is found that type A
personality is prone to more stress than type B personality. Type A personality is
characterised by emotion and sensitivity to organisation goals, competitive spirit and
achievement oriented behaviour. This leads to frustration even for small deviations from
the expectations, thus feeling of more stress. Type B personality is typically relaxed,
carefree, patient and less serious in achieving objectives. Thus, he never feels stress.
Some propositions of personality and individual stress are:
• Age is positively related to stress. When a person grows older, his expectations also
go up. If he is unable to find avenues for realising expectations, he feels stress.
• Sound health enables a person to cope up stress better than unsound health.
• Education and health are related positively and negatively. Better education provides
an opportunity to understand things in a better manner. Even the level of maturity
increases with better education. So better educated persons are less prone to stress.
Poorly educated people in relation to the jobs are likely to feel more stress due to the
poor adaptability on the jobs.
• The nature of the occupation and stress are related. Certain occupations are inherently
stressful than the other occupations. For instance, doctors, lawyers, politicians etc. At
the same time occupation also gives enough stress tolerance ability. Politicians are
found to posses more stress tolerance ability.
• Strong urge for satisfaction of needs compel people to over work and may lead to stress.
• Greater degree of locus of control leads to stress. A person is less likely to feel stress
as he believes that he can exercise control over external factors.
 • Self-efficacy and stress are negatively related. Higher degree of self-efficacy elevates
motivation levels. Therefore people with greater self-efficacy remain calm and
effectively face stressful situation. Perception of capacity to bring changes
provides greater ability to withstand stress.
• Another personal disposition related to stress is psychological hardiness. Hardiness is
the ability to withstand provocation from others. People with greater psychological
hardiness are able to survive and withstand stressful environment. For instance,
people who remain calm even at the provocation of others and ignore the esteem are
less likely to feel stress.

Individual differences in perception, job experiences, social support, hostility etc., are some of the
reasons that cause stress.
• Perception helps in understanding the environment. Person possessing a
positive perception understands reality and appraises the events objectively.
Thus, he feels less stress.
• Job experience and stress are negatively related. As one gains experience he develops
adaptability to various job and organisational demands. He realises the job expectations.
He develops a mechanism to deal with stress situations. Therefore more experienced
people remains cool, calm, and ignore stressors than young and inexperienced employees.
• Hostility and aggressive behaviour is positively related to stress. A person who becomes
aggressive and gets quick anger is cynical and does not trust others. He feels more stress
than others who are cool and calm.

ii) Family Problems: Family issues influence the personal life of individuals. Sound
marital relationships, marital discipline, early and healthy children may lead to happy
personal life. They enjoy the life and become positive in their attitudes. So they do not
tend to greater stress.
iii) Economic Problems: Economic difficulties are the main cause of stress. Poor
management of personal finances, heavy family expenditure, and constant demand for
money, poor incoming earning capacity and slow financial growth in the job are some of
the economic reasons responsible for greater stress. For instance, an increasing family
expenditure, increased expenditure on children education and health create heavy
demand for income. This creates greater stress in the individuals.
iv) Life Styles: Life Styles of individuals can cause stress. The following situations of life
style cause stress:
• Individuals experiencing certain unique situations may be compelled to alter
their attitude, emotions and behaviour. These are known as life trauma. Life
trauma is potential reason for stress.
• Faster career changes bring more responsibilities to the individuals. Persons
occupying higher positions in the younger age are likely to get heart attacks due to
greater stress. This is because of inability to adapt to the new carrier responsibilities.
v) Role Demands: Individuals play multiple roles in their personal life and organisations. In
their personal life, they play the roles of family head, husband, father, brother and son. In
social life they play the roles of club members, informal community group members,
members of recreation groups, religious groups and a number of other social groups.
Similarly in organisations, employees play the role of superior, subordinate, co-worker,
union leader, informal group leaders etc. Incidentally, all these roles are performed
simultaneously.
Thus, they cause anxiety and emotion. Another potential reason is role conflict. It arises
because of poor role perception, role ambiguity, role overload and role overlapping. Role
ambiguity and stress are positively related. The greater the role conflict, individual experiences
more stress.

Organisational Factors: An organisation is a combination of resources, goals, strategies, and

policies. In order to make people to work, organisations create structure, process and working
conditions. In modern organisations, number of factors create an environment of stress. The
changing environmental dynamics, globalisation, organisational adjustments like mergers and
acquisitions lead to stress among employees. In addition, a number of internal organisational factors
cause employee stress. Some of them are poor working conditions, strained labour management
relations, disputed resource allocations, co-employee behaviour, organisational design and policies,
unpleasant leadership styles of the boss, misunderstandings in organisational communication,
bureaucratic controls, improper motivation, job dissatisfaction, and less attention to merit and
seniority. Let us learn the organisational stressors in detail.

i) Working Conditions: Working conditions and stress are inversely related. Employees
working with poor working conditions are subject to greater stress. The factors that lead
to more stress are crowded work areas, dust, heat, noise, polluted air, strong odour due to
toxic chemicals, radiation, poor ventilation, unsafe and dangerous conditions, lack of
privacy etc.

ii) Organisational Tasks: Organisational tasks are designed to meet the objectives and
goals. Poorly designed tasks lead to greater stress. Task autonomy, task inter-
dependency, task demands, task overload are some of the potential reasons for
stress in organisations. For instance greater the task interdependence, greater is
the coordination required. This requires employees to adjust themselves to
coworkers, superiors, and subordinates, irrespective of their willingness. They are
expected to communicate, coordinate, exchange views, with other people
irrespective of caste, creed, gender, religion and political differences. Lack of
adjustment and poor tolerance to others lead to greater degree of stress.
iii) Administrative Policies and Strategies: Employee’s stress is related to certain
administrative strategies followed by the organisations. Down sizing,
competing pressure, unfair pay structures, rigidity in rules, job rotation and
ambiguous policies are some of the reasons for stress in organisations.

iv) Organisational Structure and Design: As pointed out earlier organisational structure
is designed to facilitate individual’s interaction in the realisation of organisational
goals. Certain aspects of design like specialisation, centralisation, line and staff
relationships, span of control, and organisational communication can severely
create stress in organisations. For example, wider span of management compels
the executive to manage large number of subordinates. This may create greater
stress. Similarly, frequent line and staff conflict lead to obstacles in the work
performance. Inability to resolve the conflicts lead to stress.

v) Organisation Process and Styles: A number of organisational processes are designed

for meeting organisational goals. Communication process, control process,
decision making process, promotion process, performance appraisal process, etc.
are designed for realising organisational objectives. These processes limit the
 scope of functioning of employees. Improper design of various organisational
processes leads to strained relationships among the employees. They may also
cause de-motivation and job dissatisfaction. Consequently, employee feels stress
in adapting to the processes.

vi) Organisational Leaderships: Top management is responsible for creation of a

sound organisation climate and culture by appropriate managerial style. The
climate provided should be free of
 tensions, fear, and anxiety. Authoritarian leadership style creates a directive
environment in which employees are pressurised to attain targets. They work under
impersonal relationships and tight controls. This creates greater work stress to
employees. On the other hand, a climate of warm and friendliness, scope for
participation in decision making, non financial motivation and flexibility are
encouraged under democratic leadership style. This relieves stress in the employees.
Therefore, employees working under authoritarian leadership styles experience stress
than employees working under democratic leadership style.

vii) Organisational Life Cycle: Every organisation moves through four phases of
organisational life cycle. They are birth, growth, maturity and decline. In each of
these stages the structure and the design of organisation undergoes frequent
changes. In addition, human beings are subject to metamorphosis to adapt to the
stages in the life cycle. In this process, employees are subject to job stress. For
instance in the initial stages of organisational birth, stress is caused because of
ambiguous policies and designs. In the growth stage, employees experience stress
due to failure to meet conflicting demands. At the time of decline, stress is caused
due to down sizing, retrenchment and loss of financial rewards and changing
organisational systems.

viii) Group Dynamics: Groups are omni present in organisations. Groups arise out of inherent
desire of human beings and spontaneous reactions of people. In organisations both formal
groups and informal groups exist. A formal group exist in the form of committees, informal
group exit among different levels of organisation. Groups have a number of functional and
dysfunctional consequences. They provide social support and satisfaction, which is helpful
in relieving stress. At the same time, they become the source of stress also. Lack of
cohesiveness, lack of social support, lack of recognition by the group and incompatible
goals cause stress.

Thus a number of organisational factors cause stress in the individuals. Now let us learn about the extra-
organisational factors.

9.0.1 Extra-Organisational Factors

Environmental Factors: Environmental factors are extra organisational. Nevertheless, they

create job stress in the individuals. These are internal and external factors. Most of the internal
environmental factors relate to the organisational goals, management systems, structure, processes
and design of organisations.
They are discussed in the preceding section. External environmental factors relate to the general
environment of the organisation. They are political, economical, technological, legal, ecological,
governmental, social, cultural and ethical. Certain propositions describing the impact of
environment on stress are presented below:

i) The political party in power as per their ideology enacts legislation in the Parliament.
As the new laws and regulations are enacted by the new political party, the political
changes bring uncertainty in the environment. This compels employees to adapt to the
new legal order. This creates stress.
ii) Economic environment deals with income levels, demand and
supply, inflation etc. Changes in these factors may require
 more work or better strategy to cope up with the
environment. This creates stress when the employees are
unable to adjust to the new situations. For instance, increase
in inflation levels creates pressures on the employee income
levels leading to stress.
iii) Technological changes bring new methods of production and
new ways of handling the organisational tasks. Employees are
required to learn new skills in order to discharge their jobs
effectively. Unable to cope up
 with the new technology creates stress in the employees. For
example, bank employees felt stress when the bank management
decided to introduce computers.
iv) Legal environment consists of complex web of laws and
regulation intended to control the business operations.
Organisations are required to follow the legal provisions
otherwise they are subject to prosecution. Practical difficulties
arise in the implementation of the legislative framework.
Employees who are unable to respond properly to the laws
and regulations find themselves in stressful situation.
v) The government is enacting legislation to protect the
ecological environment in the country. Organisations are
compelled to adapt to the legislative framework protecting the
ecological environment. Protecting the ecological balance
becomes a cause for potential stress.
vi) Government Administration is composed of the
administrative machinery and institutions that enforce the
laws, regulations, policies and other government
instructions. The bureaucratic practices of the
administrative machinery can create stress in the
executives.
vii) Social, cultural and ethical environment can bring stress in
the individuals.
Certain other environmental factors that result in stress in recent times are stock market crashes,
frequent elections, down sizing, information technology and the related changes in the business.
Career oriented couples, racial and gender discriminations, health hazards due to pollution and
imbalance in the natural environment etc. are contributing to stress.

CONSEQUENCES OF STRESS
An individual experiences stress through psychological emotions and is disseminated through
physiological breakdown or biological changes. However stress is not negative always. Stress has
also positive consequences. The positive form of stress is known as eustress. The word taken
from Greek language means good stress. Mild stress elevates body metabolic and biological rates.
The increase in the metabolism leads to secretion of juices from body glands that will increase the
inner drive for achievement.
Achievement motivation comes from deep intention, mild tensions, inner urge, fire and feeling of
restlessness to achieve objectives. Stress helps in the development of people too. In its mild form it
enhances job performance, leads to excellence and provides impetus to work hard and perform
better. Individuals involved in the discharge of professional oriented jobs, jobs involving creativity,
challenge, interpersonal communications and certain managerial jobs, will be benefited by stress,
which leads to positive performances. However, jobs involving physical effort do not get benefit
out of stress. As indicated above mild levels of stress increases job performance. It stimulates body
and increases reactivity. Thus, individuals perform tasks better and in a rapid way. Inverted-U
relationship illustrates this phenomenon.
Some positive consequences are: increased productivity, positive response to target, development of
proper perception in the decision making, increased motivation and performance, increased
adaptability to change and increased quality of job performance. For instance, employee
experiencing a moderate stress of repetitiveness on the job finds new ways of discharging jobs.
Thus, stress promotes creativity in the employees.
However, in the modern organisations the negative consequences of stress are creating more
problems. The positive and negative consequences are discussed below:

Physiological Consequences: Stress influences the biological system of the human being. Certain
visible forms of stress are increased blood pressure, proneness to heart disease, cancer, sweating,
dry mouth, hot and cold flashes, frustration, anxiety, depression, increased level of cholesterol,
ulcer, arthritis etc. Physical stress increases the body metabolic rate. This results into
malfunctioning of internal gland and consequently the body disorder. This is felt in the form of
increasing heart beating, increase in breathing rate and headache. This creates biological illness.
The physical stress also creates psychological problems. In fact, physical stress and physiological
disorders are interrelated. However, physical disorders and stress always need not associate
positively. This is because of complexity of symptoms of physical stress and lack of objective
measurement of impact of stress on bodily disorders.
Psychological Consequences: Psychological consequences are interrelated to biological
consequences. They are invisible, but affect the employees’ job performance. Psychological stress
creates a pressure on human brain. This is expressed in terms of certain psychological symptoms
such as anger, anxiety, depression, nervousness, irritation, tension, boredom, aggressiveness,
moodiness, hostility and poor concentration. Tensions, anxiety, and emotions lead to
procrastination. Psychological stress produces interpersonal aggressions, misunderstanding in
communication, poor interpersonal communication and low interpersonal attraction. This is
demonstrated through aggressive actions like sabotage, increased interpersonal complaints, poor
job performance, lowered self-esteem, increased resentment, low concentration on the job and
increased dissatisfaction. Psychological stress produces harshness in the behaviour and may lead to
assumption of authoritarian leadership style by the superior executive.

Behavioural Consequences: Stress has an impact on employee’s behaviour. An abnormal

behaviour is observed in those individuals who are prone to stress. A change in eating habits, sleep
disorder, increased
smoking, alcoholism, fidgeting and aloofness are some of the behavioural changes observed in
stressful employees. Sometimes stress leads to anxiety, apathy, depression and emotional disorder.
This leads to impulsive and aggressive behaviour and frequent interpersonal conflicts. Under
eating, overeating, drug abuse and sleeplessness are some of the behavioural consequences. The
following are some propositions relating to stress and behaviour:

i) Perception: Stressful individuals develop tension and anxiety. As a result, their level of
understanding considerably decreases. When perceptual distortions occur in the
employees, it may adversely affect decision making process, interpersonal
understanding, interpersonal communication and capacity to work with groups.
They become stress intolerable. All these lead to increased levels of interpersonal
conflicts.

ii) Attitudes: Continued stressful environment creates certain permanent negative

impressions in the mind of the employees. These permanent impressions
adversely influence their work performance. For example, an employee
developing a negative attitude on work, superior, working conditions,
organisational climate and culture intentionally decreases his output. He also
becomes demoralised and the motivation level decreases.

iii) Learning : Employees in organisations continuously learn new skills and techniques.
Learning new methods and techniques to adapt themselves and discharge their
jobs effectively is inevitable to employees. Stressful employees can not learn the
things quickly.

Organisational Consequences : Stress has negative impact on the performance of the job.
Organisations face the problems of poor performance and other negative consequences. Some of
them are described below:

i) Absenteeism: Employees subject to stress were found to addict to drugs and alcohol.
Thus, they abstain from the jobs frequently. This creates discontinuity in the jobs and
adversely effect performance of other employees.

ii) Turnover: Turnover and stress have shown some relationships. An employee
experiencing continued stress develops disgust and frustration. Therefore, they are
likely to change their jobs.

iii) Decision-Making: Excessive stress distorts perception of managers. This adversely

effects their capacity to take decision. Thus, stressful executives become irrational in the
decision making. This leads to loss of organisational resources and reputation.
iv) Disturbed Customer Relationships: Employees experiencing excessive stress develop
irritation, looses emotional stability and emotional tolerance. Intolerance impels them to
pick up conflicts easily due to misunderstandings. Employees dealing with the customers
and the public disturb relationship due to their inpatient behaviour. For instance sales
persons, bank employees, public relation executives are required to be more emotionally
stable. Otherwise, customers dealing with them will have trouble in dealing with the
company. This also creates poor impression on the corporate image of the organisation.

The consequences of stress are multifaceted. Stress has a vicious circle. Most of the consequences
of the stress are interdependent. One has roots into the other. For instance, psychological
 consequences result in physiological disorders, the later will produce behavioural consequences and
ultimately the organisation suffers from adverse effects.

TECHNIQUES OF MANAGING STRESS

Individual and organisational stimuli causes stress, and the implications are more negative at
individual and organisational levels. It needs to be managed both by adopting individual and
organisational strategies. The individual management techniques are more popular than
organisational management techniques. Let us learn the strategies of stress management in detail.

9.0.2 Individual Management

Individuals assume automatic responsibility and look for ways and means of dealing with their
stress. Individuals are more concerned about their health. There is an increasing rate of health
clinics and health consciousness observed in recent times. Following are some of the techniques
which individuals can adopt for reducing stress :

1) Time Management : Time management and stress are inversely related. Improper
and poor management of time are the root cause of a greater degree of stress. Improper
and inadequate utilisation of time cause anxiety. The following principles of time
management can help in combating stress.
• Identifying and listing of daily activities in a logical order.
• Arranging the activities of the day based on importance and urgency.
• Preparing logical schedule of activities.
 • Analysing and understanding the daily cycle and nature of the job.
• Allocating time properly to various activities based on time demands.
• Delegating minor tasks to the subordinates in order to make use of the time in a better
manner.
• Discouraging unwanted visitors.
• Setting unfinished tasks on the top of list for tomorrow.

2) Physical Management : Management of stress relates to understanding one’s own

biological and body conditions. Examining hereditary characteristics habits like smoking
and drinking, life styles and body conditions help in understanding one’s physiological
conditions. Overcoming stress is possible with managing physiological relaxation. Physical
exercises greatly help in relieving tension and stress. When body is conditioned with
physical exercise, oxygen is inhaled properly and blood circulation increases. This
promotes healthy secretions from glands and the supply of blood to all the parts of the
body keeps every organ active. Consequently, immunity to withstand stress increases.
Physical exercises could be reactive or proactive. Non competitive physical exercises like
walking, jogging, swimming, riding, aerobics and playing games considerably increases
heart capacity, provide mental diversion from work pressures and increases heart
capacity to withstand stressful situations. The chances of heart attack, adverse blood
pressure and diabetics reduce.

3) Psychological Management : Most of the stresses arise because of psychological

tensions. Therefore, it is suggested that managing psychological activities lead to effective
management of stress. The following are some of the psychological management
techniques.

i) Relaxation : Relaxation of mind through meditation, hypnosis and biofeedback can

effectively reduce mental tensions. Meditation involves silently sitting on the
ground taking deep inhalation and chanting mantra. This takes the mind into deep
relaxation. This technique relaxes muscles and mind. It also brings significant
changes in heart rate, blood pressure, lung capacity and other biological organs of
the body.
ii) Behavioural Self-control: Stress also results from behavioural disorders. Exercising
proper control over behaviour in dealing with others can bring down the chance of
stress. Self-introspection brings self-awareness of the individual. Similarly knowing
the antecedents and consequences of own behaviour enables behavioural self-
control. Stress can be relaxed by developing proper perception, practicing good
listening, maintaining calm and tension free mind empathy and positive attitude
are some of the behavioural self control techniques.
iii)Cognitive Therapy: It is a technique of clinical psychology. Cognitive therapy involves
knowing ones’ own emotions to release anxiety and tension. In this technique,
people are made to understand the reasons causing stress in them by the process of
self-observation. For example, if an employee develops a feeling that he is
incompetent to handle a new job, counselling is provided to develop a confidence of
competence to handle all the new jobs. Thus, with the help of cognitive therapy, a
positive impact is created for the mental satisfaction. Cognitive therapy enables
 people to exercise self- control for relaxing stress.
iv) Yogic Management : In recent times, yoga is an effective technique of relieving stress.
Yoga practice involves Asana, Pranayama, Mudra and Kriya. Practicing a number of
yogasana relaxes muscels, reduces blood pressure, controls asthma, relieves
neurological problems, improves lung capacity, enhances proper flow of blood and
helps relax tensions and strains.
4) Social Management: Developing good social networks involves grouping of people
who are good listeners and confidence builders. This increases social support to
individuals. Encouraging informal groups to share information without inhibitions,
developing free exchange of ideas, views and distasteful experiences, promoting
confidence of social support decrease tensions and stress.

5) Self-awareness Management: Self-awareness is similar to self-audit or personal audit.

Managers are required to understand themselves in a free and fair manner. They should
encourage open communication and willing to listen to others especially on their
deficiencies. Being aware of self is a difficult task, as individuals are unprepared to accept
their defects. Self-awareness management involves three stages.
• Stage – I: Identify, understand and analyse one’s own skills, capacities, limitations and
defects.
• Stage – II: Encourage feed back from others viz., subordinates, peers, superiors,
friends, family members and other social associations. This requires patient
hearing without inhibitions.
• Stage -III: Develop self program to improve the skills, capacities to overcome the limitations
in a
scientific way. Attend self-management-training programs to develop the personality for all round
development of self.

6) Inter Personal Management: One of the most successful techniques of stress

management is developing inter personal understanding. Inter- personal communication,
inter personal attraction and inter personal knowledge improve understanding of others
behaviour. Most of the organisational stresses are created due to misunderstanding,
organisational politics, setting one self-aloof from others and encouraging unreliable
comments. Thus, maintaining openness of communication and valuing proper comment
enable development of inter personal understanding. Transactional Analysis, Johari
Window and Grid techniques help in the development of inter personal understanding and
consequent relief from stress.

9.0.3 Organisational Management

In modern organisations, human resources are vital resources. Most of the organisational stresses
are caused by the structure and design of the organisation, policies, programs and procedure of the
administration and due to managerial styles and strategies. Thus organisations are interested in
finding out the organisational stressors and remove them as far as possible. Organisations adapt the
following techniques of stress management.

1) Selection and Placement Policy: Stress and personality characteristics of employees

are closely related. Thus selecting the employees by a proper personality fit suitable to
jobs minimise the chance of stress in the individuals. For instance a sales person jobs
requires extensive travelling rather than experience. If a person having a poor attitude of
travelling is selected, he is likely to experience more stress in performing the job.
Therefore, proper recruitment and selection policy should be followed by the organisation
to reduce stress.
2) Goal Setting: Goal ambiguity, lack of proper perception of goals, challenging goal and
unattainable goals cause stress in individuals. Therefore, organisations should follow
a strategy of participation in goal setting to provide motivation, reduce frustration
and ambiguity of goals. Management by Objectives (MBO) is an appropriate technique
of goal setting which reduces stress.
3) Job Enrichment and Job Design: Job enrichment provides motivation to the
employees. It enriches job factors such as responsibility, recognition, and opportunity
for advancement, growth and self-
 esteem. Routine, unstructured and poorly designed jobs cause greater stress in individuals. Job
redesign provides more responsibility, more meaningful work, more autonomy and increased
feed back. This provides greater control over work activities and reduces dependence on others.
Therefore, job enrichment and job redesign provide an effective way of reducing stress.
4) Role Clarity: Organisational stress is associated with role ambiguity, role overlap, lack of
role clarity and role conflict. Proper role definition helps employees understand their role in
organisation and appraise interpersonal roles. This reduces the chance of role conflict and
increases role compatibility. This eliminates stress in the individuals. Wherever role conflict
arises, counselling and negotiation can be used to resolve inter- personal role conflict to
avoid stressful situations.
5) Communication and Counselling: Barriers in communication are potential moderators of
organisational stress. In organisations formal communication creates a number of problems of
inter personal misunderstandings. Thus redesigning the formal communication channels can
improve understanding and consequently reduce stress caused by communication bottlenecks.
Counselling is exchange of ideas and views in a free and fair manner. It is intended to share
problems of employees and cope up with the stressful situation. Counselling consists of
advice, reassurance, communication, and release of emotional tensions, clarified thinking and
reorientation. The techniques of counselling are non-directive, participative and directive.
6) Carrier Planning and Development: Employees in general are free to plan their careers.
However, organisations also aim at employee development. The employee development is
aimed at the enrichment of skills and the development of personality for undertaking future
managerial jobs. Stress is caused when employees’ expectations of their career in organisation
are not fulfilled and when employees get promotion without the development of
corresponding skills. Organisations take less interest in career planning of the employees.
Designing appropriate career plans, education programs, development programs and
organisation development considerably reduce employee’s stress.
7) Democratic Leadership: Democratic leaders create confidence in the subordinates and
allow participation in the decision making process. They create an atmosphere of warmth,
friendship, and supportive climate. Under such climate employees feel satisfied, motivated
and psychologically committed to the achievement of objectives. In addition, communication
is open, conflicts are avoided and coordination improved. This enables employees to relieve
stress and promote healthy work.
8) Organisation Climate: Organisation design is the basic reason for job stress. Bureaucratic,
directive and ambiguous administration and poor organisational climate leads to greater
stress. A sound organisation climate and culture characterised by sound administrative policy,
good organisational communication, participative culture and supportive climate ensure
reduction of stress.
9) Wellness Programmes: Programmes that focus on employee’s physical and mental
condition organised by the management are known as wellness programmes. As part of these
programmes, workshops, seminars and counselling sessions are conducted to help the
employees understand the dangers of smoking, alcoholism and drug abuse. They promote a
positive attitude for eating better stuff, fighting obesity, doing regular physical exercise and
developing positive personality. However, these programmes are successful only when the
 employee himself takes personal interest in his physical and mental health. Organisations act
as only a catalyst to promote programmes that facilitate reduction of stress.
10) Quality of Work Life: The concept has been increasingly recognised in the recent years.
This technique involves improving the working conditions and other internal and external
aspects of work life. In addition, providing good housing facilities, living conditions, social and
recreational facilities, training and development of employees for overall development of
human resources in the organisation will develop quality of work life.

Group Dynamics

Meaning and Definition of Group

A group consists of two or more persons who interact with each other, consciously for the
achievement of certain common objectives. The member of the independent and are
aware that they are part of a group. Group consists in every organization and they affect
the behavior of their members.

According to Stephen Robbind, “A group may be defined as two or more individuals,

interacting and interdependent, who have come together to achieve particular objectives”.
According to Marvin Shaw, “A group comprises, of two or more persons who interact with
one another in such a manner that each person influences and is influenced by each other
persons”.

Nature of Group

1.Two or more persons 


2.Collective Identity 


3.Interaction 


4.Shared goal interest 


Reasons for Joining Group

a. Personal attraction 


b.Group activities 


c. Group goals 


d.Security and social affiliations 


e. Status and self-esteem 


f. Power 


Need or Benefits for Forming a Group

1.Security 


2.Empowerment through sharing of resources 


3.Becoming a leader 


4.Synergy 


5.Goal achievement 

6.Status 


7.Affiliation needs 


8.Self-esteem 


Comparing Work Groups and Work Teams

Work Groups Work Teams

Share information Goal Collective Performance

Neutral(s.t.negative) Synergy Positive
Individual Accountability Individual and mutual
Random and varied Skills Complementary

Process/Stages of Group Development/Evolution:

Group Development is a dynamic process. How do groups evolve? There is a process of five
stages through which groups pass through. The process includes the five stages: forming,
storming, forming, performing, and adjourning.

Forming:

The first stage in the life of a group is concerned with forming a group. This stage is
characterized by members seeking either a work assignment (in a formal group) or other
benefit, like status, affiliation, power, etc. (in an informal group). Members at this stage either
engage in busy type of activity or show apathy.

Storming:

The next stage in this group is marked by the formation of dyads and triads. Members
seek out familiar or similar individuals and begin a deeper sharing of self. Continued
attention to the subgroup creates a differentiation in the group and tensions across the
dyads / triads may appear. Pairing is a common phenomenon. There will be conflict about
controlling the group.

Norming:
The third stage of group development is marked by a more serious concern about task
performance. The dyads/triads begin to open up and seek out other members in the
group. Efforts are made to establish various norms for task performance.

Members begin to take greater responsibility for their own group and relationship while
the authority figure becomes relaxed. Once this stage is complete, a clear picture will
emerge about hierarchy of leadership. The norming stage is over with the solidification of
the group structure and a sense of group identity and camaraderie.

Performing:
This is a stage of a fully functional group where members see themselves as a group and
get involved in the task. Each person makes a contribution and the authority figure is also
seen as a part of the group. Group norms are followed and collective pressure is exerted
to ensure the Process of Group effectiveness of the group.

The group may redefine its goals Development in the light of information from the outside
environment and show an autonomous will to pursue those goals. The long-term viability
of the group is established and nurtured.
How to make teams effective :
 High Performance Team Essentials

Ingredients
üLeaders focus on “What”
1. Trust

2. Vision üTeams focus on “How”

3. Optimism
üTeam members self directed
4. Enjoyment

5. Empowerment üOwnership of responsibilities

GROUP TYPES
One common way to classify group is by whether they are formal or informal in nature. Formal
work groups are established by an organization to achieve organizational goals. Formal groups
may take the form of command groups, task groups, and functional groups.
COMMAND GROUPS.
Command groups are specified by the organizational chart and often consist of a supervisor and
the subordinates that report to that supervisor. An example of a command group is an academic
department chairman and the faculty members in that department.

TASK GROUPS.
Task groups consist of people who work together to achieve a common task. Members are
brought together to accomplish a narrow range of goals within a specified time period. Task
groups are also commonly referred to as task forces. The organization appoints members and
assigns the goals and tasks to be accomplished. Examples of assigned tasks are the
development of a new product, the improvement of a production process, or the proposal of a
motivational contest. Other common task groups are ad hoc committees, project groups, and
standing committees. Ad hoc committees are temporary groups created to resolve a specific
complaint or develop a process. Project groups are similar to ad hoc committees and normally
disband after the group completes the assigned task. Standing committees are more permanent
than ad hoc committees and project groups. They maintain longer life spans by rotating
members into the group.
FUNCTIONAL GROUPS.
A functional group is created by the organization to accomplish specific goals within an
unspecified time frame. Functional groups remain in existence after achievement of current
goals and objectives. Examples of functional groups would be a marketing department, a
customer service department, or an accounting department.
In contrast to formal groups, informal groups are formed naturally and in response to the
common interests and shared values of individuals. They are created for purposes other than the
accomplishment of organizational goals and do not have a specified time frame. Informal
groups are not appointed by the organization and members can invite others to join from time
to time. Informal groups can have a strong influence in organizations that can either be positive
or negative. For example, employees who form an informal group can either discuss how to
improve a production process or how to create shortcuts that jeopardize quality. Informal
groups can take the form of interest groups, friendship groups, or reference groups.

INTEREST GROUPS.
Interest groups usually continue over time and may last longer than general informal groups.
Members of interest groups may not be part of the same organizational department but they are
bound together by some other common interest. The goals and objectives of group interests are
specific to each group and may not be related to organizational goals and objectives. An
example of an interest group would be students who come together to form a study group for a
specific class.

FRIENDSHIP GROUPS.
Friendship groups are formed by members who enjoy similar social activities, political beliefs,
religious values, or other common bonds. Members enjoy each other's company and often meet
after work to participate in these activities. For example, a group of employees who form a
friendship group may have an exercise group, a softball team, or a potluck lunch once a month.

REFERENCE GROUPS.
A reference group is a type of group that people use to evaluate themselves. According to
Cherrington, the main purposes of reference groups are social validation and social comparison.
Social validation allows individuals to justify their attitudes and values while social comparison
helps individuals evaluate their own actions by comparing themselves to others. Reference
groups have a strong influence on members' behavior. By comparing themselves with other
members, individuals are able to assess whether their behavior is acceptable and whether their
attitudes and values are right or wrong. Reference groups are different from the previously
discussed groups because they may not actually meet or form voluntarily. For example, the
reference group for a new employee of an organization may be a group of employees that work
in a different department or even a different organization. Family, friends, and religious
affiliations are strong reference groups for most individuals.

GROUP STRUCTURE
Group structure is a pattern of relationships among members that hold the group together and
help it achieve assigned goals. Structure can be described in a variety of ways. Among the more
common considerations are group size, group roles, group norms, and group cohesiveness.

GROUP SIZE.
Group size can vary from 2 people to a very large number of people. Small groups of two to ten
are thought to be more effective because each member has ample opportunity to participate and
become actively involved in the group. Large groups may waste time by deciding on processes
and trying to decide who should participate next. Group size will affect not only participation
but satisfaction as well. Evidence supports the notion that as the size of the group increases,
satisfaction increases up to a certain point. In other words, a group of six members has twice as
many opportunities for interaction and participation as a group of three people. Beyond 10 or
12 members, increasing the size of the group results in decreased satisfaction. It is increasingly
difficult for members of large groups to identify with one another and experience cohesion.

GROUP ROLES
In formal groups, roles are usually predetermined and assigned to members. Each role will have
specific responsibilities and duties. There are, however, emergent roles that develop naturally to
meet the needs of the groups. These emergent roles will often replace the assigned roles as
individuals begin to express themselves and become more assertive. Group roles can then be
classified into work roles, maintenance roles, and blocking roles.
Work roles are task-oriented activities that involve accomplishing the group's goals. They
involve a variety of specific roles such as initiator, informer, clarifier, summarizer, and reality
tester. The initiator defines problems, proposes action, and suggests procedures.
The informer role involves finding facts and giving advice or opinions. Clarifiers will interpret
ideas, define terms, and clarify issues for the group. Summarizers restate suggestions, offer
decisions, and come to conclusions for the group. Finally, reality testers analyze ideas and test
the ideas in real situations.
Maintenance roles are social-emotional activities that help members maintain their involvement
in the group and raise their personal commitment to the group. The maintenance roles are
harmonizer, gatekeeper, consensus tester, encourager, and compromiser. The harmonizer will
reduce tension in the group, reconcile differences, and explore opportunities. Gatekeepers often
keep communication channels open and make suggestions that encourage participation. The
consensus tester will ask if the group is nearing a decision and test possible conclusions.
Encouragers are friendly, warm, and responsive to other group members. The last maintenance
role is the compromiser. This role involves modifying decisions, offering compromises, and
admitting errors.
Role ambiguity concerns the discrepancy between the sent role and the received role, as shown
in Exhibit 1. Supervisors, directors, or other group leaders often send (assign) roles to group
members in formal groups. Group members receive roles by being ready and willing to
undertake the tasks associated with that role. Ambiguity results when members are confused
about the delegation of job responsibilities. This confusion may occur because the members do
not have specific job descriptions or because the instructions regarding the task were not clear.
Group members who experience ambiguity often have feelings of frustration and
dissatisfaction, which ultimately lead to turnover.
Role conflict occurs when there is inconsistency between the perceived role and role behavior.
There are several different forms of role conflict. Interrole conflict occurs when there is conflict
between the different roles that people have. For example, work roles and family roles often
compete with one another and cause conflict. Intrarole conflict occurs when individuals must
handle conflicting demands from different sources while performing the tasks associated with
the same role.

GROUP NORMS.
Norms are acceptable standards of behavior within a group that are shared by the members of
the group. Norms define the boundaries of acceptable and unacceptable behavior. They are
typically created in order to facilitate group survival, make behavior more predictable, avoid
embarrassing situations, and express the values of the group. Each group will establish its own
set of norms that might determine anything from the appropriate dress to how many comments
to make in a meeting. Groups exert pressure on members to force them to conform to the
group's standards. The norms often reflect the level of commitment, motivation, and
performance of the group.
Performance norms determine how quickly members should work and how much they should
produce. They are created in an effort to determine levels of individual effort. They can be very
frustrating to managers because they are not always in line with the organization's goals.
Members of a group may have the skill and ability to perform at higher levels but they don't
because of the group's performance norms. For example, workers may stop working a
production machine at 20 minutes before quitting time in order to wash up, even though they
produced fewer items that day than management intended.
Reward-allocation norms determine how rewards are bestowed upon group members. For
example, the norm of equality dictates equal treatment of all members. Every member shares
equally so rewards are distributed equally to everyone. Equity norms suggest that rewards are
distributed according to the member's contribution. In other words, members who contribute
the most receive the largest share of the rewards. Members may contribute through effort, skill,
or ability. Social responsibility norms reward on the basis of need. Members who have special
needs therefore receive the largest share of the reward.

GROUP COHESIVENESS.
Cohesiveness refers to the bonding of group members and their desire to remain part of the
group. Many factors influence the amount of group cohesiveness. Generally speaking, the more
difficult it is to obtain group membership the more cohesive the group. Groups also tend to
become cohesive when they are in intense competition with other groups or face a serious
external threat to survival. Smaller groups and those who spend considerable time together also
tend to be more cohesive.
Cohesiveness in work groups has many positive effects, including worker satisfaction, low
turnover and absenteeism, and higher productivity. However, highly cohesive groups may be
detrimental to organizational performance if their goals are misaligned with organizational
goals. Highly cohesive groups may also be more vulnerable to groupthink. Groupthink occurs
when members of a group exert pressure on each other to come to a consensus in decision
making. Groupthink results in careless judgments, unrealistic appraisals of alternative courses
of action, and a lack of reality testing. It can lead to a number of decision-making issues such as
the following:

1. Incomplete assessments of the problem,

2. Incomplete information search,
3. Bias in processing information,
4. Inadequate development of alternatives, and
5. Failure to examine the risks of the preferred choice.

Evidence suggests that groups typically outperform individuals when the tasks involved require
a variety of skills, experience, and decision making. Groups are often more flexible and can
quickly assemble, achieve goals, and disband or move on to another set of objectives. Many
organizations have found that groups have many motivational aspects as well. Group members
are more likely to participate in decision-making and problem-solving activities leading to
empowerment and increased productivity. Groups complete most of the work in an
organization; thus, the effectiveness of the organization is limited by the effectiveness of its
groups.

Understanding Interpersonal Behavior in Organisation

Johari window

The Johari window is a technique created by Joseph Luft and Harrington

Ingham in 1955 in the United States, used to help people better understands their
relationship with self and others. It is used primarily in self-help groups and
corporate settings as a heuristic exercise.

When performing the exercise, subjects are given a list of 56 adjectives and pick
five or six that they feel describe their own personality. Peers of the subject are
then given the same list, and each pick five or six adjectives that describe the
subject. These adjectives are then mapped onto a grid.

An alternative mechanism for determining an individual's Johari Window is to plot

the scores from the Personal Effectiveness Scale (PES). The Scale comprises
three factors : Self- Disclosure, Openness to Feedback & Perceptiveness. The Self-
Disclosure score is to be plotted horizontally, whereas the Openness to Feedback
score is to be plotted vertically. The Johari Window formed naturally displays the
sizes of the Open, Hidden, Blind Spot & Unknown areas, the Dream Johari
Window. The sizes of the areas in the Dream Johari Window may be different
from the sizes of the same areas in the current Johari Window. The Dream Johari
Window represents what an individual wants his/her personality to be like. The
individual having a Dream Johari Window identical to the current Johari Window
may have a balanced personality. The Perceptiveness score from the PES indicates
how likely it is for the individual to achieve the Dream Johari Window. For
example, a LOW score on the PES indicates less possibility of transition.
Open: Adjectives that are selected by both the participant and his or her peers are
placed into the Open quadrant. This quadrant represents traits of the subjects that
both they and their peers are aware of.

Hidden: Adjectives selected only by subjects, but not by any of their peers, are
placed into the Hidden quadrant, representing information about them their peers
are unaware of. It is then up to the subject to disclose this information or not.

Blind Spot: Adjectives that are not selected by subjects but only by their peers are
placed into the Blind Spot quadrant. These represent information that the subject is
not aware of, but others are, and they can decide whether and how to inform the
individual about these "blind spots".

Unknown: Adjectives that were not selected by either subjects or their peers
remain in the Unknown quadrant, representing the participant's behaviors or
motives that were not recognized by anyone participating. This may be because
they do not apply or because there is collective ignorance of the existence of these
traits.
Transactional analysis

(TA to its adherents), is an integrative approach to the theory of psychology and

psychotherapy.
It is described as integrative because it has elements of
psychoanalytic, humanist and cognitive approaches. TA was first developed by
Canadian-born US psychiatrist Eric Berne, starting in the late 1950s.

According to the International Transactional Analysis Association, TA 'is a

theory of personality and a systematic psychotherapy for personal growth and personal
change'.

Components of Transactional Analysis

4. Ego States
a. Parent ego
• Nurturing parent ego
• Critical parent ego
b. Adult ego
 c. Child ego
• Natural child
• Adaptive child
• Rebellion child
5. Types of Transactions
 a. Complementary
b. Non-Complementary transactions
c. Gallows transactions

Advantages of Transaction Analysis

5. Interpersonal Effectiveness
6. Organizational Development
7. Conflict Resolution
8. Executive Development

Dis-Advantages of Transactional Analysis

5. Difficult to understand
6. Encourage Amateur Psychologizing
7. Tool of manipulation
8. Not supported by scientific findings

3.Life Positions

Analysis of Life Positions:

In the process of growing up, people make basic assumptions about their own self worth as
well as about the worth of significant people in their environment. These assumptions tend
to remain with the person for life, unless major experiences occur to change them. Harris
called the combination of assumptions about self and the other person, a LIFE POSITION.

Transactional analysis constructs the following classifications of the four possible life
positions or psychological positions:
(i) I am OK, you are OK

(ii) I am OK, you are not OK

(iii) I am not OK, you are OK

(iv) I am not OK, you are not OK.

These life positions can be shown with the help of the following figure also.

1. I am OK-You are OK:

This is a rationally chosen and mentally healthy position. It appears to be an ideal life
position. People with this type of life position have confidence in themselves as well as
trust and confidence in others. They accept the significance of other people and feel that life
is worth living. The people who have this position behave from adult, nurturing parent and
happy child ego state.

When managers have this type of position, they have complete confidence and trust in their
subordinates. They display a very high level of mutual give and take. They delegate
authority throughout the organisation. These managers encourage free flow of
communication not only up and down the hierarchy but among the peers also. In short,
people with these feelings have positive outlooks on life. They seem to be happy-active
people who succeed in whatever they do.

2. I am OK-You are not OK:

This is a distrustful psychological position. This position is taken by people who feel
victimized or prosecuted. They blame others for their miseries. This is the attitude of those
people, who think that whatever they do is correct. Such behaviour is the outcome of a
situation in which the child was seriously neglected and ignored by his parents in his
childhood. Criminals often have this position, based on rebellious child ego, which in
extreme cases may lead to homicide also. In his life position, people operate from critical
Parent Ego.
Managers operating with this position will always be negative and will give critical and
oppressive remarks. They tend to point out the flaws, the bad things, rarely giving any
positive feelings. They feel that workers are lazy, irresponsible and untruthful; therefore,
they need to be closely controlled and often coerced to achieve organisational objectives.
They do not delegate any authority and feel that decentralization is a threat.

3. I am not OK-You are OK:

This is a common position for those people who feel powerless when they compare
themselves to others. People with this position always feel themselves at the mercy of
others and grumble for one thing or the other. They have a tendency to withdraw,
experience depression and in extreme cases become suicidal. People who have this position
operate from child ego state.

Managers operating from this position, tend to give and receive bad feelings. They use
these had feelings as an excuse to act against others. But when the whole thing comes out,
they feel guilty for their acts and turn their bad feelings against themselves. These people
are often, unpredictable and erratic.

4. I am not OK-You are not OK:

People in this position tend to feel bad about themselves and see the whole world as
miserable. These people tend to give up. They do not trust others and have no confidence in
themselves. This is a desperate life position. In extreme cases these people commit suicide
or homicide. This is the case of individuals who were seriously neglected by their parents in
their childhood and were brought up by servants. At times, persons with this life position
begin to use intoxicated drugs.

Managers who operate from this position are not competent, energetic, efficient and
effective. They are indecisive, confused and make stupid mistakes. They provoke others to
give them negative strokes in order to relieve themselves for stresses and strains.
One of the above four life positions dominates each person’s life. The desirable position
and the one that involves the greatest likelihood of adult to adult transaction is “I am OK-
you are OK”. It shows healthy acceptance of self and others. The other three life positions
are less mature and less effective. However, regardless of one’s present life position, the “I
am OK-you are OK” position can be learnt. If all the people in the society operate from this
life position, there will be hope for improved interpersonal transactions.
LEADERSHIP

The organisation is made up of groups of people. An essential part of management is

coordinating the activities of groups and directing the efforts of their members
towards the goals and objectives of the organisation. is involves the process of
leadership and the choice of an appropriate form of behaviour.

MEANING OF LEADERSHIP

Leadership might be interpreted in simple terms, such as ‘getting others to follow’ or

‘getting people to do things willingly,’ or interpreted more specially as ‘the use of
authority in decision making.’ It is interpersonal influence which is exercised in a
situation and directed through the communication process towards the attainment of
a specified goal. Tead (1935) says, “Leadership is that combination of qualities by the
possession of which one is able to get something done by others, chiefly because
through his influence they become willing to do it.” It is often associated with the
willing and enthusiastic behaviour of followers. Terry (1960) also thinks that
leadership is “the ability of influencing people to strive willingly for mutual
objectives.”

Since leadership is an inspirational process, a leader influences long-term changes in

attitude. It does not necessarily take place within the hierarchical structure, and many
people operate as leaders without role definition. Leadership is related to motivation
and the process of communication through which one person influences the
behaviour of other people. e process of leadership is not separable from the activities
of group. Effective leadership is a two-way process.

LEADERSHIP RELATIONSHIP

A leader may:

- Be imposed; 

 - Be formally appointed; 


- Be chosen informally; 


- Emerge naturally. 


Leadership may be:

- Attempted leadership: when any individual in the group

attempts to exert 
influence over other members of the group; 


- Successful leadership: when the influence brings about the

behaviour and 
results that were intended by the leader; 


- Effective leadership: when successful leadership results in

functional behaviour 
and the achievement of group goals. 


g. Leadership may also involve:

- Exercise through greater knowledge, expertise or

reputation; 


- Personal qualities or charisma; 


- Manner of exercising authority; 


- Adoption of a particular style of leadership. 


h.Dynamic form:
Leadership is a dynamic form of behaviour and there are a

number of variables which affect it. According to McGregor (1987), “leadership
is not a property of individual, but a complex relationship among these
variables.” He has specified the following variables:

- Characteristics of the leader; 


- Attitude, needs and other personal characteristics of group

members; 


- Nature of the organisation, such as its purpose, its structure,

the tasks to be 
performed; 

 - Social, economic and political environment. 


6.2 DIFFERENCE BETWEEN MANAGERS AND LEADERS

Leaders are there in every group. All the unions and workgroups have leaders. But all
such leaders are not managers and they do not have managerial responsibilities and
accountabilities. At the same time all the managers are not leaders. Managerial
responsibility is by position but leadership is the contribution of several unwritten
and undefined but specific qualities. Managerial duties are discharged effectively
when managers possess leadership qualities.

6.3 GENERAL APPROACHES TO LEADERSHIP

Given below are some of the important studies that have been conducted on
leadership.

6.4 TRAITS APPROACH

e basic premise behind trait theory was that effective leaders are born, not made.
According to this theory, traits are innate, inherent personal qualities. It follows that if
a leader is seen to possess certain traits, his/her leadership index can be read off a
leadership meter. The following three conditions must be satisfied if traits should be
unique determinants of the leadership index:

The trait quality should follow a descending order as one traverses from the
highest (top executives in leadership positions) to the lowest (employees) levels
of the organisation system. 


There must be high correlation between the level of a manager’s traits and the
level of his/her success. 


The correlation between success and traits should be higher as one goes up the
management hierarchy from bottom (employees) to top executive levels. 


Early trait research was largely theoretical, offering no explanations for the proposed
relationship between individual characteristics and leadership. It also did not consider
the impact of situational variables that might moderate the relationship between
leader traits and measures of leader effectiveness. As a result of the lack of consistent
findings linking individual traits to leadership effectiveness, empirical studies of
leader traits were largely abandoned in the 1950s.

6THE MANAGERIAL GRID THEORY

With the shift of leadership research away from leader traits to leader behaviour it
was believed that the behaviour exhibited by leaders is more important than their
physical, mental or emotional traits.

One concept based largely on the behavioural approach to leadership effectiveness

was the Managerial Grid developed by Blake and Mouton (1964). e Grid combines
“concern for people” with “concern for production.”

4.Concern for people: This is the degree to which a leader considers the needs of the
team members, their interests, and areas of personal development when
deciding how best to accomplish a task. 


5.Concern for production: This is the degree to which a leader emphasizes concrete
objectives, organisational efficiency and high productivity when deciding how
best to accomplish them. 
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Using the above parameters, Blake and Mouton defined the following five leadership
styles

Blake and Mouton’s Managerial Grid

• Country Club Leadership – Low Production/High People (1, 9): is style of leader
is most concerned about the needs and feelings of members of his/her team. These
people operate under the assumption that as long as team members are happy and
secure they will work hard. What tends to result is a work environment that is very
relaxed and fun but where production suffers due to lack of direction and control.

• Produce or Perish Leadership – High Production/Low People (9, 1): Also known
as Authoritarian or Compliance leaders, people in this category believe that
employees are simply a means to an end. Employee needs are always secondary to the
need for effcient and productive work people. is type of leader is very autocratic, has
strict work rules, policies, procedures, and views punishment as the most effective
means to motivate employees.

• Impoverished Leadership – Low Production/Low People (1, 1): e leader is

mostly ineffective. He/she has neither a high regard for creating systems for getting
the job done, nor for creating a work environment that is satisfying and motivating. e
result is a place of disorganization, dissatisfaction and disharmony.
CONTINGENCY OR SITUATIONAL THEORY

Situational theory of leadership proposes that the organisational or workgroup

context aspects the extent to which given leader traits and behaviour will be effective.
According to Mullins (2002), the situation is the most important factor which
determines the behaviour and nature of the leader’s action.

Hersey and Blanchard (1976) suggested that the contingency factor affecting leaders’
choice of leadership style is the task-oriented maturity of subordinates. The theory
clarifies leader behaviour into two broad classes of task-oriented and relationship-
oriented behaviour.

Situational leadership is also closely linked to another factor of holistic leadership viz.
the empowerment of followers. Like situational leadership, the empowerment of
followers centres around the situation in which the leader finds himself/herself and
leadership will be determined by this situation. the ‘readiness’ level of followers is
important. According to Hersey and Blanchard (1976), “as followers move from low
levels of readiness to higher levels, the combinations of task and relationship
behaviour appropriate to the situation begin to change.”

• Task needs involve defining group tasks, planning the work, controlling quality. 


• Team maintenance needs involve inculcating team spirit, setting standards, having

effective communication. 

• Technical needs involve looking after personal needs, rewards, conflict resolution.



PATH-GOAL THEORY

Path-goal theory of leadership, proposed by House (1971), draws heavily on

expectancy motivation theory and high concerns for both people and work. is theory
suggests that the performance of subordinates is affected by the extent to which the
leader satisfies their expectations.

The main features are the following:

• Dynamic leadership:

- Giving specific instructions; 


- Expecting subordinates to follow.


• Supportive leadership:

- Friendly and approachable; 


- Concern for subordinates’ needs.


• Participative leadership:

- Consulting subordinates; 


- Evaluating their suggestions before deciding.


• Achievement-oriented leadership:

- Setting challenging goals; 


- Seeking improvement in performance; 


- Confidence in their ability. 


FUNCTIONS OF A LEADER

A leader’s functions will vary according to the kind of group he/she is leading, and the
rules set down by the organisation. However, there are certain functions that a leader
is expected to perform. As executive: top coordinator of the group activities and
overseer of the execution of policies. 


• As planner: deciding the ways and means by which the group achieves its ends. is
 may involve both short-term and long-term planning. 


• As policy maker: the establishment of group goals and policies. 
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• As expert: a source of readily available information and skills, although there will be
some reliance on technical expertise and advice from other members of the
group. 


• As external group representative: the official spokesperson for the group, the
representative of the group and the channel for both outgoing and incoming

communications. 


• As controller of internal relations: determines specific aspects of the group


structure. 


• As purveyor of rewards and punishment: has control over group members by


the power to provide rewards and punishments. 


• As arbitrator and mediator: controls interpersonal conflicts within the group. 


• As exemplar: a model of behaviour for members of the group, setting an example


of what is expected. 


• As symbol of the group: enhancing group unity by providing some kind of


cognitive focus and establishing the group as a distinct entity. 


• As substitute for individual responsibility: relieves the individual members of


the group from the necessity of, and responsibility for, personal decision. 


• As ideologist: serving as the source of beliefs, values and standards of behaviour


for individual members of the group. 


STYLES OF LEADERSHIP

In work situation it has become increasingly clear that managers can no longer rely
solely on the use of their position in the hierarchical structure as a means of exercising
the functions of leadership. In order to get the best results from subordinates, the
managers must also have regard for the need to encourage high morale, a spirit of
involvement and cooperation, and a willingness to work.
Leadership style is the way in which the functions of leadership are carried out, and
the way in which the manager typically behaves towards members of the group.

6.9.1 THE AUTHORITARIAN STYLE

It is where the focus of power is with the leader, and all interactions within the group
move towards the leader. e leader exercises decision making and authority for
determining policy, procedures for achieving goals, work tasks and relationships,
control of rewards and punishments.

6.9.2 THE DEMOCRATIC STYLE

Here the focus is more with the group as a whole and there is greater interaction
within the group. e leadership functions are shared with members of the group. e
group members have a greater say in decision making, determination of systems and
procedures.

6.9.3 A GENUINE LAISSEZ-FAIRE STYLE

With this style the leader observes that members of the group are working well on
their own. e leader makes a decision to allow them freedom of action and to not
interfere, but is readily available if help is needed. is is to be contrasted with the
leader who could not care, who deliberately keeps away from the trouble spots and
does not want to get involved. e leader just lets members of the group get on with the
work on hand. is is more a non-style of leadership. It can perhaps be labeled as
abdication.

6.9.4 THE SITUATIONAL STYLE

Leadership behaviour is determined by two main situational factors – the personal

characteristics of subordinates, and the nature of the task:

• The personal characteristics of subordinates determine how they will react to the
leader’s behaviour and the extent to which they see such behaviour as an
immediate or potential source of need satisfaction. 


• The nature of the task relates to the extent that it is routine and structured, or non-
routine and unstructured. For example, when a task is highly structured and the
goals are readily apparent, attempts to further explain the job or to give
directions are likely to be viewed by subordinates as unacceptable behaviour.
However, when a task is highly unstructured or the nature of the goals is not
clear, a more directive style of leadership behaviour is likely to be welcomed by
subordinates. 
Leadership behaviour is based, therefore, on both the
 willingness of the leaders to help subordinates and the needs of subordinates
for help. Leadership behaviour will be motivational to the extent that it provides
necessary direction, guidance and support, helps clarify path- goal relationships,
and removes any obstacles which hinder the attainment of goals. By using one of
the four styles of leadership behaviour the leader attempts to in uence
subordinates’ perceptions and motivation, and smooth the path to their goals.



STRESS MANAGEMENT

Stress is a psychological condition and body discomfort. Stress is a common phenomenon. Every
individual experiences stress at some or other time. Employees experience stress in the process of
meeting the targets and working for long hours. When the person experiences a constraint inhibiting
the accomplishment of desire and demand for accomplishment, it leads to potential stress. Anxiety
is converted into stress and ultimately it leads to job burnout. In fact for most of the time
individuals are responsible for stress.
However, organisations also create stress in the individuals. Why one should be concerned about
stress? The reason is that the stress has more negative consequences than positive. In this unit, you
will learn the definition, causes and consequences of stress. You will be exposed to the techniques
of managing stress.
You will further learn the process of creating stress free environment.

9.1 DEFINITION OF STRESS

Stress is a state of discomfort experienced by an individual. Loss of emotional stability is the
general expression of stress. It is generally apparent when the individual experiences a biological
disorder. Stress has a positive association with the age, life styles, time constraints and the nature of
occupation. Certain occupations are more prone to the stress than the others. For instance, drivers of
vehicles, doctors, lawyers and managers are more likely to get stress than teacher, bankers and
operating personnel. Individuals feel stress when the needs or desires are not accomplished in the
normal expected ways. This is because of the natural constraints operated on the individuals. The
more the intensity of the desire and greater is the uncertainty associated with the achievement of the
goal, the greater is the degree of stress. Employees are working for longer hours, taking on the work
once done by laid-off colleagues, meeting tighter deadlines and cutting back on expenses are some
of the causes of stress. Combined to this with the double-income family demands of monthly
mortgages, childcare issues and aging parents, and the result for many is anxiety, sleeplessness,
irritability, and physical and mental deterioration. Perhaps these are the potential reasons for stress
in the employees. Let us first learn what is stress?

In the words of Fred Luthans, stress is defined as an adaptive response to an external situation that
results in physical, psychological, and/or behavioural deviations for organisational participants.
Ivancevich and Matteson define stress as the interaction of the individual with the environment. It is
an adaptive response, mediated by individual characteristics and/or psychological processes that are
consequence of any external action, situation or event that places special physical and / or
psychological demands upon a person. Schuler defines stress as a dynamic condition in which an
individual is confronted with an opportunity, constraint, or demand related to what he or she desires
and for which the outcome is perceived to be both uncertain and important.

The following are the features of stress.

• Stress is both psychological and physical aspect.
• It is common to both the genders.
• It results from the deviation of expectations from actual situation.
• It is symptomatic. Potential stress appears with the symptoms. If the potential stress is
ignored it leads to actual stress.
• Stress is treated to be negative. Nevertheless, it has positive consequences. This is called as
eustress.
• Stress is an interactive concept. It does not spring from the internal organs of the
individual. It comes from the interaction of the human being with the environment. Thus,
environment has a profound influence on the stress.
• Stress is generic term. If it is applied to the context of organisation, it is known as work
stress or job stress.
• Stress occurs only when the human being feels mediation of the internal or external factors.
• Stress is related to the attitude of the person. Stress does not occur when the person
is having an indifferent attitude to the opportunity.
• Stress is associated with certain common biological disorders such as heart attack, stroke,
diabetic, blood pressure, neurological disorders etc.

The stress is caused when a person has needs, desires, wishes and expectations and certain forces
prevent the person from doing the desired activities.
Stress and anxiety are not similar concepts. Anxiety occurs as a result of emotions caused by the
interactions of environmental stimuli. Thus, it is confined to the psychological disturbance. On the
other hand, stress is
originated by the psychological tensions and slowly leads to physical or biological breakdown.
While stress is accompanied by anxiety, the latter need not always lead to stress.
Similarly, stress and burnout are different concepts. Prolonged stress leads to burnout. It is a state
of mind. It results from a continuous feeling of emotional stress. An individual feels physical,
mental and emotional exhaustion. Job burnout is characterised by emotional exhaustion,
depersonalisation, and diminished personal accomplishment. Burnout is also closely associated
with the so-called helping professions such as nursing, education, and social work.

CAUSES OF STRESS
Stress is a psychological state of imbalance coupled with biological disorder. Individual
experiences deviation in his biological system which is called potential stress. Potential stress
moderated by individual, organisational and environmental variable leads to actual stress. The
variables that convert potential stress into actual stress are known as stressors. Thus, stressors can
be intra- organisational and extra organisational. Intra-organisational stress arises out of
individual, group, and organisational factors. Extra organisational factors relate to environment of
the organisation. The intra organisational factors causing stress are divided into individual factors
and organisational factors. Let us learn them in detail.

Intra Organisational Factors

Individual Factors: Individual factors, which cause stress include: personality and individual
differences, family problems, economic problems, life styles and role demands.

vi) Personality and individual differences: Individual basic dispositions are the main
reason for potential stress. Introversion, extroversion, masculinity, rigidity, locus of
control, personal life, demographic differences such as age, health, education and
occupation are some of the reasons causing stress in individuals. It is found that type A
personality is prone to more stress than type B personality. Type A personality is
characterised by emotion and sensitivity to organisation goals, competitive spirit and
achievement oriented behaviour. This leads to frustration even for small deviations from
the expectations, thus feeling of more stress. Type B personality is typically relaxed,
carefree, patient and less serious in achieving objectives. Thus, he never feels stress.
Some propositions of personality and individual stress are:
• Age is positively related to stress. When a person grows older, his expectations also
go up. If he is unable to find avenues for realising expectations, he feels stress.
• Sound health enables a person to cope up stress better than unsound health.
• Education and health are related positively and negatively. Better education provides
an opportunity to understand things in a better manner. Even the level of maturity
increases with better education. So better educated persons are less prone to stress.
Poorly educated people in relation to the jobs are likely to feel more stress due to the
poor adaptability on the jobs.
• The nature of the occupation and stress are related. Certain occupations are inherently
stressful than the other occupations. For instance, doctors, lawyers, politicians etc. At
the same time occupation also gives enough stress tolerance ability. Politicians are
found to posses more stress tolerance ability.
• Strong urge for satisfaction of needs compel people to over work and may lead to stress.
• Greater degree of locus of control leads to stress. A person is less likely to feel stress
as he believes that he can exercise control over external factors.
 • Self-efficacy and stress are negatively related. Higher degree of self-efficacy elevates
motivation levels. Therefore people with greater self-efficacy remain calm and
effectively face stressful situation. Perception of capacity to bring changes
provides greater ability to withstand stress.
• Another personal disposition related to stress is psychological hardiness. Hardiness is
the ability to withstand provocation from others. People with greater psychological
hardiness are able to survive and withstand stressful environment. For instance,
people who remain calm even at the provocation of others and ignore the esteem are
less likely to feel stress.

Individual differences in perception, job experiences, social support, hostility etc., are some of the
reasons that cause stress.
• Perception helps in understanding the environment. Person possessing a
positive perception understands reality and appraises the events objectively.
Thus, he feels less stress.
• Job experience and stress are negatively related. As one gains experience he develops
adaptability to various job and organisational demands. He realises the job expectations.
He develops a mechanism to deal with stress situations. Therefore more experienced
people remains cool, calm, and ignore stressors than young and inexperienced employees.
• Hostility and aggressive behaviour is positively related to stress. A person who becomes
aggressive and gets quick anger is cynical and does not trust others. He feels more stress
than others who are cool and calm.

vii) Family Problems: Family issues influence the personal life of individuals. Sound
marital relationships, marital discipline, early and healthy children may lead to happy
personal life. They enjoy the life and become positive in their attitudes. So they do not
tend to greater stress. On the other hand, poor marital relationships, nagging wife, family
separations, extra marital relationships, disturbing children, poor settlement of family
members, aging parents, dual working couple, death of spouse or other close family
member are some of the reasons for greater stress in the individuals.
viii) Economic Problems: Economic difficulties are the main cause of stress. Poor
management of personal finances, heavy family expenditure, and constant demand for
money, poor incoming earning capacity and slow financial growth in the job are some of
the economic reasons responsible for greater stress. For instance, an increasing family
expenditure, increased expenditure on children education and health create heavy
demand for income. This creates greater stress in the individuals.
ix) Life Styles: Life Styles of individuals can cause stress. The following situations of life
style cause stress:
• Sedentary life styles cause greater stress.
• Individuals experiencing certain unique situations may be compelled to alter
their attitude, emotions and behaviour. These are known as life trauma. Life
trauma is potential reason for stress.
• Faster career changes bring more responsibilities to the individuals. Persons
occupying higher positions in the younger age are likely to get heart attacks due to
greater stress. This is because of inability to adapt to the new carrier responsibilities.
x) Role Demands: Individuals play multiple roles in their personal life and organisations.
In their personal life, they play the roles of family head, husband, father, brother and
son. In social life they play the roles of club members, informal community group
members, members of recreation groups, religious groups and a number of other
social groups. Similarly in organisations, employees play the role of superior,
subordinate, co-worker, union leader, informal group leaders etc. Incidentally, all
these roles are performed simultaneously. Thus, they cause anxiety and
 emotion. Another potential reason is role conflict. It arises because of poor role
perception, role ambiguity, role overload and role overlapping. Role ambiguity and stress
are positively related. The greater the role conflict, individual experiences more stress.

Organisational Factors: An organisation is a combination of resources, goals, strategies, and

policies. In order to make people to work, organisations create structure, process and working
conditions. In modern organisations, number of factors create an environment of stress. The
changing environmental dynamics, globalisation, organisational adjustments like mergers and
acquisitions lead to stress among employees. In addition, a number of internal organisational factors
cause employee stress. Some of them are poor working conditions, strained labour management
relations, disputed resource allocations, co-employee behaviour, organisational design and policies,
unpleasant leadership styles of the boss, misunderstandings in organisational communication,
bureaucratic controls, improper motivation, job dissatisfaction, and less attention to merit and
seniority. Let us learn the organisational stressors in detail.

ix) Working Conditions: Working conditions and stress are inversely related. Employees
working with poor working conditions are subject to greater stress. The factors that lead
to more stress are crowded work areas, dust, heat, noise, polluted air, strong odour due to
toxic chemicals, radiation, poor ventilation, unsafe and dangerous conditions, lack of
privacy etc.

x) Organisational Tasks: Organisational tasks are designed to meet the objectives and
goals. Poorly designed tasks lead to greater stress. Task autonomy, task inter-
dependency, task demands, task overload are some of the potential reasons for
stress in organisations. For instance greater the task interdependence, greater is
the coordination required. This requires employees to adjust themselves to
coworkers, superiors, and subordinates, irrespective of their willingness. They are
expected to communicate, coordinate, exchange views, with other people
irrespective of caste, creed, gender, religion and political differences. Lack of
adjustment and poor tolerance to others lead to greater degree of stress.
xi) Administrative Policies and Strategies: Employee’s stress is related to certain
administrative strategies followed by the organisations. Down sizing,
competing pressure, unfair pay structures, rigidity in rules, job rotation and
ambiguous policies are some of the reasons for stress in organisations.

xii) Organisational Structure and Design: As pointed out earlier organisational

structure is designed to facilitate individual’s interaction in the realisation of
organisational goals. Certain aspects of design like specialisation, centralisation,
line and staff relationships, span of control, and organisational communication can
severely create stress in organisations. For example, wider span of management
compels the executive to manage large number of subordinates. This may create
greater stress. Similarly, frequent line and staff conflict lead to obstacles in the
work performance. Inability to resolve the conflicts lead to stress.

xiii) Organisation Process and Styles: A number of organisational processes are

designed for meeting organisational goals. Communication process, control
process, decision making process, promotion process, performance appraisal
process, etc. are designed for realising organisational objectives. These processes
limit the scope of functioning of employees. Improper design of various
 organisational processes leads to strained relationships among the employees.
They may also cause de-motivation and job dissatisfaction. Consequently,
employee feels stress in adapting to the processes.

xiv) Organisational Leaderships: Top management is responsible for creation of a

sound organisation climate and culture by appropriate managerial style. The
climate provided should be free of
 tensions, fear, and anxiety. Authoritarian leadership style creates a directive
environment in which employees are pressurised to attain targets. They work under
impersonal relationships and tight controls. This creates greater work stress to
employees. On the other hand, a climate of warm and friendliness, scope for
participation in decision making, non financial motivation and flexibility are
encouraged under democratic leadership style. This relieves stress in the employees.
Therefore, employees working under authoritarian leadership styles experience stress
than employees working under democratic leadership style.

xv) Organisational Life Cycle: Every organisation moves through four phases of
organisational life cycle. They are birth, growth, maturity and decline. In each of
these stages the structure and the design of organisation undergoes frequent
changes. In addition, human beings are subject to metamorphosis to adapt to the
stages in the life cycle. In this process, employees are subject to job stress. For
instance in the initial stages of organisational birth, stress is caused because of
ambiguous policies and designs. In the growth stage, employees experience stress
due to failure to meet conflicting demands. At the time of decline, stress is caused
due to down sizing, retrenchment and loss of financial rewards and changing
organisational systems.

xvi) Group Dynamics: Groups are omni present in organisations. Groups arise out of inherent
desire of human beings and spontaneous reactions of people. In organisations both formal
groups and informal groups exist. A formal group exist in the form of committees, informal
group exit among different levels of organisation. Groups have a number of functional and
dysfunctional consequences. They provide social support and satisfaction, which is helpful
in relieving stress. At the same time, they become the source of stress also. Lack of
cohesiveness, lack of social support, lack of recognition by the group and incompatible
goals cause stress.

Thus a number of organisational factors cause stress in the individuals. Now let us learn about the extra-
organisational factors.

Extra-Organisational Factors

Environmental Factors: Environmental factors are extra organisational. Nevertheless, they

create job stress in the individuals. These are internal and external factors. Most of the internal
environmental factors relate to the organisational goals, management systems, structure, processes
and design of organisations.
They are discussed in the preceding section. External environmental factors relate to the general
environment of the organisation. They are political, economical, technological, legal, ecological,
governmental, social, cultural and ethical. Certain propositions describing the impact of
environment on stress are presented below:

viii) The political party in power as per their ideology enacts legislation in the Parliament.
As the new laws and regulations are enacted by the new political party, the political
changes bring uncertainty in the environment. This compels employees to adapt to the
new legal order. This creates stress.
ix) Economic environment deals with income levels, demand and
 supply, inflation etc. Changes in these factors may require
more work or better strategy to cope up with the
environment. This creates stress when the employees are
unable to adjust to the new situations. For instance, increase
in inflation levels creates pressures on the employee income
levels leading to stress.
x) Technological changes bring new methods of production and
new ways of handling the organisational tasks. Employees are
required to learn new skills in order to discharge their jobs
effectively. Unable to cope up
 with the new technology creates stress in the employees. For
example, bank employees felt stress when the bank management
decided to introduce computers.
xi) Legal environment consists of complex web of laws and
regulation intended to control the business operations.
Organisations are required to follow the legal provisions
otherwise they are subject to prosecution. Practical difficulties
arise in the implementation of the legislative framework.
Employees who are unable to respond properly to the laws
and regulations find themselves in stressful situation.
xii) The government is enacting legislation to protect the
ecological environment in the country. Organisations are
compelled to adapt to the legislative framework protecting the
ecological environment. Protecting the ecological balance
becomes a cause for potential stress.
xiii) Government Administration is composed of the
administrative machinery and institutions that enforce the
laws, regulations, policies and other government
instructions. The bureaucratic practices of the
administrative machinery can create stress in the
executives.
xiv) Social, cultural and ethical environment can bring stress in
the individuals. Social factors influence the life styles of
employees. Certain social security measures such as health
protection, civic facilities and social groups reduce stress in
the employees. Certain sociological variables such as race,
sex, social class, gender etc., and cultural factors such as
beliefs, customs and traditions cause potential stress.
Certain other environmental factors that result in stress in recent times are stock market crashes,
frequent elections, down sizing, information technology and the related changes in the business.
Career oriented couples, racial and gender discriminations, health hazards due to pollution and
imbalance in the natural environment etc. are contributing to stress.
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CONSEQUENCES OF
STRESS
An individual experiences stress through psychological emotions and is disseminated through
physiological breakdown or biological changes. However stress is not negative always. Stress has
also positive consequences. The positive form of stress is known as eustress. The word taken
from Greek language means good stress. Mild stress elevates body metabolic and biological rates.
The increase in the metabolism leads to secretion of juices from body glands that will increase the
inner drive for achievement.
Achievement motivation comes from deep intention, mild tensions, inner urge, fire and feeling of
restlessness to achieve objectives. Stress helps in the development of people too. In its mild form it
enhances job performance, leads to excellence and provides impetus to work hard and perform
better. Individuals involved in the discharge of professional oriented jobs, jobs involving creativity,
challenge, interpersonal communications and certain managerial jobs, will be benefited by stress,
which leads to positive performances. However, jobs involving physical effort do not get benefit
out of stress. As indicated above mild levels of stress increases job performance. It stimulates body
and increases reactivity. Thus, individuals perform tasks better and in a rapid way. Inverted-U
relationship illustrates this phenomenon.
Some positive consequences are: increased productivity, positive response to target, development of
proper perception in the decision making, increased motivation and performance, increased
adaptability to change and increased quality of job performance. For instance, employee
experiencing a moderate stress of repetitiveness on the job finds new ways of discharging jobs.
Thus, stress promotes creativity in the employees.
However, in the modern organisations the negative consequences of stress are creating more
problems. As pointed out by Schuler, Khan and Byosiyere, stress leads to high blood pressure,
ulcer, cancer, accident proneness and irritation. Though there is no perfect association between
stress and its consequences, stress itself demonstrates into physiological, psychological,
behavioural, job and organisational consequences. The positive and negative consequences are
discussed below:

Physiological Consequences: Stress influences the biological system of the human being. Certain
visible forms of stress are increased blood pressure, proneness to heart disease, cancer, sweating,
dry mouth, hot and cold flashes, frustration, anxiety, depression, increased level of cholesterol,
ulcer, arthritis etc. Physical stress increases the body metabolic rate. This results into
malfunctioning of internal gland and consequently the body disorder. This is felt in the form of
increasing heart beating, increase in breathing rate and headache. This creates biological illness.
The physical stress also creates psychological problems. In fact, physical stress and physiological
disorders are interrelated. However, physical disorders and stress always need not associate
positively. This is because of complexity of symptoms of physical stress and lack of objective
measurement of impact of stress on bodily disorders.
Psychological Consequences: Psychological consequences are interrelated to biological
consequences. They are invisible, but affect the employees’ job performance. Psychological stress
creates a pressure on human brain. This is expressed in terms of certain psychological symptoms
such as anger, anxiety, depression, nervousness, irritation, tension, boredom, aggressiveness,
moodiness, hostility and poor concentration. Tensions, anxiety, and emotions lead to
procrastination. Psychological stress produces interpersonal aggressions, misunderstanding in
communication, poor interpersonal communication and low interpersonal attraction. This is
demonstrated through aggressive actions like sabotage, increased interpersonal complaints, poor
job performance, lowered self-esteem, increased resentment, low concentration on the job and
increased dissatisfaction. Psychological stress produces harshness in the behaviour and may lead to
assumption of authoritarian leadership style by the superior executive.

Behavioural Consequences: Stress has an impact on employee’s behaviour. An abnormal

behaviour is observed in those individuals who are prone to stress. A change in eating habits, sleep
disorder, increased
smoking, alcoholism, fidgeting and aloofness are some of the behavioural changes observed in
stressful employees. Sometimes stress leads to anxiety, apathy, depression and emotional disorder.
This leads to impulsive and aggressive behaviour and frequent interpersonal conflicts. Under
eating, overeating, drug abuse and sleeplessness are some of the behavioural consequences. The
following are some propositions relating to stress and behaviour:

iv) Perception: Stressful individuals develop tension and anxiety. As a result, their
level of understanding considerably decreases. When perceptual distortions occur
in the employees, it may adversely affect decision making process, interpersonal
understanding, interpersonal communication and capacity to work with groups.
They become stress intolerable. All these lead to increased levels of interpersonal
conflicts.

v) Attitudes: Continued stressful environment creates certain permanent negative

impressions in the mind of the employees. These permanent impressions
adversely influence their work performance. For example, an employee
developing a negative attitude on work, superior, working conditions,
organisational climate and culture intentionally decreases his output. He also
becomes demoralised and the motivation level decreases.

vi) Learning : Employees in organisations continuously learn new skills and techniques.
Learning new methods and techniques to adapt themselves and discharge their
jobs effectively is inevitable to employees. Stressful employees can not learn the
things quickly.

Organisational Consequences : Stress has negative impact on the performance of the job.
Organisations face the problems of poor performance and other negative consequences. Some of
them are described below:

v) Absenteeism: Employees subject to stress were found to addict to drugs and alcohol.
Thus, they abstain from the jobs frequently. This creates discontinuity in the jobs and
adversely effect performance of other employees.

vi) Turnover: Turnover and stress have shown some relationships. An employee
experiencing continued stress develops disgust and frustration. Therefore, they are
likely to change their jobs.

vii) Decision-Making: Excessive stress distorts perception of managers. This adversely

effects their capacity to take decision. Thus, stressful executives become irrational in the
decision making. This leads to loss of organisational resources and reputation.
viii) Disturbed Customer Relationships: Employees experiencing excessive stress develop
irritation, looses emotional stability and emotional tolerance. Intolerance impels them to
pick up conflicts easily due to misunderstandings. Employees dealing with the customers
and the public disturb relationship due to their inpatient behaviour. For instance sales
persons, bank employees, public relation executives are required to be more emotionally
stable. Otherwise, customers dealing with them will have trouble in dealing with the
company. This also creates poor impression on the corporate image of the organisation.

The consequences of stress are multifaceted. Stress has a vicious circle. Most of the consequences
of the stress are interdependent. One has roots into the other. For instance, psychological
consequences result in physiological disorders, the later will produce behavioural consequences and
ultimately the organisation suffers from adverse effects. The ill effects of stress are more
dangerous. Addiction to smoking, drinking alcohol, narcotic drugs, perverted sex, atrocities on
women and children, criminal attitude, terrorism and indecent behaviour are some of the social
consequences of stress. It is in this context that stress received more attention of the organisations,
psychologists and the medical practitioners in recent times. A number of
strategies exist to overcome stress. Most of them suggest leading a peaceful, calm and
regulated life. Interestingly people overlook their life styles and suffer from stress. However,
stress is not difficult to overcome.

TECHNIQUES OF MANAGING STRESS

Stress management has assumed greater importance in the modern organisations. More than
organisations, individuals are concerned with the stress reduction. As the saying goes ‘prevention is
better than cure’, prevention of stress is better than attempting to cure stress. This is because stress
once experienced has negative consequences. Though employee possesses negative perception of
stress, there is a need to induce moderate levels of stress for better performance. The question arises
what should be the acceptable levels of stress? More over, there is a wide gap between theoretical
and actual practice of stress management. For instance, practicing yoga early in the morning and
doing exercise is considered very effective way of fighting stress. However, how many people really
sacrifice morning comfortable sleep for the sake of yoga and exercises. When a problem occurs,
people resort to yoga. Otherwise, they feel that taking allopathic medicine is easy than yoga and
exercises.

Individual and organisational stimuli causes stress, and the implications are more negative at
individual and organisational levels. It needs to be managed both by adopting individual and
organisational strategies. The individual management techniques are more popular than
organisational management techniques. Let us learn the strategies of stress management in detail.

9.1.1 Individual Management

Individuals assume automatic responsibility and look for ways and means of dealing with their
stress. Individuals are more concerned about their health. There is an increasing rate of health
clinics and health consciousness observed in recent times. Following are some of the techniques
which individuals can adopt for reducing stress :

7) Time Management : Time management and stress are inversely related. Improper
and poor management of time are the root cause of a greater degree of stress. Improper
and inadequate utilisation of time cause anxiety. The following principles of time
management can help in combating stress.
• Identifying and listing of daily activities in a logical order.
• Arranging the activities of the day based on importance and urgency.
• Preparing logical schedule of activities.
 • Analysing and understanding the daily cycle and nature of the job.
• Allocating time properly to various activities based on time demands.
• Delegating minor tasks to the subordinates in order to make use of the time in a better
manner.
• Discouraging unwanted visitors.
• Setting unfinished tasks on the top of list for tomorrow.

8) Physical Management : Management of stress relates to understanding one’s own

biological and body conditions. Examining hereditary characteristics habits like smoking
and drinking, life styles and body conditions help in understanding one’s physiological
conditions. Overcoming stress is possible with managing physiological relaxation. Physical
exercises greatly help in relieving tension and stress. When body is conditioned with
physical exercise, oxygen is inhaled properly and blood circulation increases. This
promotes healthy secretions from glands and the supply of blood to all the parts of the
body keeps every organ active. Consequently, immunity to withstand stress increases.
Physical exercises could be reactive or proactive. Non competitive physical exercises like
walking, jogging, swimming, riding, aerobics and playing games considerably increases
heart capacity, provide mental diversion from work pressures and increases heart
capacity to withstand stressful situations. The chances of heart attack, adverse blood
pressure and diabetics reduce.

9) Psychological Management : Most of the stresses arise because of psychological

tensions. Therefore, it is suggested that managing psychological activities lead to effective
management of stress. The following are some of the psychological management
techniques.
v) Relaxation : Relaxation of mind through meditation, hypnosis and biofeedback can
effectively reduce mental tensions. Meditation involves silently sitting on the
ground taking deep inhalation and chanting mantra. This takes the mind into deep
relaxation. This technique relaxes muscles and mind. It also brings significant
changes in heart rate, blood pressure, lung capacity and other biological organs of
the body. Transcendental Meditation, Soul management, Atma yoga,
Anthahakarana, Silence sitting posture, Shavasana, Bhavathetha meditation and
praying the God are some of the relaxation techniques practiced for reducing
stress.
vi) Behavioural Self-control: Stress also results from behavioural disorders.
Exercising proper control over behaviour in dealing with others can bring down the
chance of stress. Self-introspection brings self-awareness of the individual.
Similarly knowing the antecedents and consequences of own behaviour enables
behavioural self-control. Stress can be relaxed by developing proper perception,
practicing good listening, maintaining calm and tension free mind empathy and
positive attitude are some of the behavioural self control techniques.
vii) Cognitive Therapy: It is a technique of clinical psychology. Cognitive therapy
involves knowing ones’ own emotions to release anxiety and tension. In this
technique, people are made to understand the reasons causing stress in them by
the process of self-observation. For example, if an employee develops a feeling that
he is incompetent to handle a new job, counselling is provided to develop a
confidence of competence to handle all the new jobs. Thus, with the help of
 cognitive therapy, a positive impact is created for the mental satisfaction. Cognitive
therapy enables people to exercise self- control for relaxing stress.
viii) Yogic Management : In recent times, yoga is an effective technique of relieving stress.
Yoga practice involves Asana, Pranayama, Mudra and Kriya. Practicing a number of
yogasana relaxes muscels, reduces blood pressure, controls asthma, relieves
neurological problems, improves lung capacity, enhances proper flow of blood and
helps relax tensions and strains. Certain asanas which help stress relaxation are pada
hasthasana, vajra asana, sashanka asana, camel asana, lotus asana, crocodile asana,
sarvanga asana, shava asana .
10) Social Management: Developing good social networks involves grouping of people
who are good listeners and confidence builders. This increases social support to
individuals. Encouraging informal groups to share information without inhibitions,
developing free exchange of ideas, views and distasteful experiences, promoting
confidence of social support decrease tensions and stress. Social clubs, recreation clubs,
friendship clubs, informal gatherings, birthday parties, and family are some of the social
networks that increase social support and reduce stress.

11) Self-awareness Management: Self-awareness is similar to self-audit or personal audit.

Managers are required to understand themselves in a free and fair manner. They should
encourage open communication and willing to listen to others especially on their
deficiencies. Being aware of self is a difficult task, as individuals are unprepared to accept
their defects. Self-awareness management involves three stages.
• Stage – I: Identify, understand and analyse one’s own skills, capacities, limitations and
defects.
• Stage – II: Encourage feed back from others viz., subordinates, peers, superiors,
friends, family members and other social associations. This requires patient
hearing without inhibitions.
• Stage -III: Develop self program to improve the skills, capacities to overcome the limitations
in a
scientific way. Attend self-management-training programs to develop the personality for all round
development of self.

12) Inter Personal Management: One of the most successful techniques of stress
management is developing inter personal understanding. Inter- personal communication,
inter personal attraction and inter personal knowledge improve understanding of others
behaviour. Most of the organisational stresses are created due to misunderstanding,
organisational politics, setting one self-aloof from others and encouraging unreliable
comments. Thus, maintaining openness of communication and valuing proper comment
enable development of inter personal understanding. Transactional Analysis, Johari
Window and Grid techniques help in the development of inter personal understanding and
consequent relief from stress.

9.1.2 Organisational Management

In modern organisations, human resources are vital resources. Most of the organisational stresses
are caused by the structure and design of the organisation, policies, programs and procedure of the
administration and due to managerial styles and strategies. Thus organisations are interested in
finding out the organisational stressors and remove them as far as possible. Organisations adapt the
following techniques of stress management.

11) Selection and Placement Policy: Stress and personality characteristics of employees
are closely related. Thus selecting the employees by a proper personality fit suitable to
jobs minimise the chance of stress in the individuals. For instance a sales person jobs
requires extensive travelling rather than experience. If a person having a poor attitude of
travelling is selected, he is likely to experience more stress in performing the job.
Therefore, proper recruitment and selection policy should be followed by the organisation
to reduce stress.
12) Goal Setting: Goal ambiguity, lack of proper perception of goals, challenging goal and
unattainable goals cause stress in individuals. Therefore, organisations should follow
a strategy of participation in goal setting to provide motivation, reduce frustration
and ambiguity of goals. Management by Objectives (MBO) is an appropriate technique
of goal setting which reduces stress.
13) Job Enrichment and Job Design: Job enrichment provides motivation to the
employees. It enriches job factors such as responsibility, recognition, and opportunity
for advancement, growth and self-
 esteem. Routine, unstructured and poorly designed jobs cause greater stress in individuals.
Job redesign provides more responsibility, more meaningful work, more autonomy and
increased feed back. This provides greater control over work activities and reduces
dependence on others.
Therefore, job enrichment and job redesign provide an effective way of reducing stress.
14) Role Clarity: Organisational stress is associated with role ambiguity, role overlap,
lack of role clarity and role conflict. Proper role definition helps employees understand
their role in organisation and appraise interpersonal roles. This reduces the chance of
role conflict and increases role compatibility. This eliminates stress in the individuals.
Wherever role conflict arises, counselling and negotiation can be used to resolve inter-
personal role conflict to avoid stressful situations.
15) Communication and Counselling: Barriers in communication are potential
moderators of organisational stress. In organisations formal communication creates a
number of problems of inter personal misunderstandings. Thus redesigning the formal
communication channels can improve understanding and consequently reduce stress
caused by communication bottlenecks. Counselling is exchange of ideas and views in a free
and fair manner. It is intended to share problems of employees and cope up with the
stressful situation. Counselling consists of advice, reassurance, communication, and
release of emotional tensions, clarified thinking and reorientation. The techniques of
counselling are non-directive, participative and directive.
16) Carrier Planning and Development: Employees in general are free to plan their
careers. However, organisations also aim at employee development. The employee
development is aimed at the enrichment of skills and the development of personality for
undertaking future managerial jobs. Stress is caused when employees’ expectations of
their career in organisation are not fulfilled and when employees get promotion without
the development of corresponding skills. Organisations take less interest in career
planning of the employees. Designing appropriate career plans, education programs,
development programs and organisation development considerably reduce employee’s
stress.
17) Democratic Leadership: Democratic leaders create confidence in the subordinates
and allow participation in the decision making process. They create an atmosphere of
warmth, friendship, and supportive climate. Under such climate employees feel satisfied,
motivated and psychologically committed to the achievement of objectives. In addition,
communication is open, conflicts are avoided and coordination improved. This enables
employees to relieve stress and promote healthy work.
18) Organisation Climate: Organisation design is the basic reason for job stress.
Bureaucratic, directive and ambiguous administration and poor organisational climate
leads to greater stress. A sound organisation climate and culture characterised by sound
administrative policy, good organisational communication, participative culture and
supportive climate ensure reduction of stress.
19) Wellness Programmes: Programmes that focus on employee’s physical and mental
condition organised by the management are known as wellness programmes. As part of
these programmes, workshops, seminars and counselling sessions are conducted to help
the employees understand the dangers of smoking, alcoholism and drug abuse. They
promote a positive attitude for eating better stuff, fighting obesity, doing regular physical
exercise and developing positive personality. However, these programmes are successful
only when the employee himself takes personal interest in his physical and mental health.
 Organisations act as only a catalyst to promote programmes that facilitate reduction of
stress.
20) Quality of Work Life: The concept has been increasingly recognised in the recent
years. This technique involves improving the working conditions and other internal and
external aspects of work life. In addition, providing good housing facilities, living
conditions, social and recreational facilities, training and development of employees for
overall development of human resources in the organisation will develop quality of work
life.

Stress is a multi faceted phenomenon. The cause and effect relationship in stress is difficult to
obtain because it is a qualitative psychological phenomenon. Moreover, individuals overlook the
symptoms of
stress until they experience physiological break down. Otherwise, they resort to a number of
uncongenial life habits and addict to them. Changing their attitudes and addiction is not an easy
task. Moreover, in large organisations functioning in a competitive and dynamic environment,
organisational redesign, job redesign and administrative reorientation are more theoretical than
practical. Even personal strategies sound theoretically good, but lack implementation. Hence, stress
management programmes must be implemented carefully for the reduction of stress.

CONFLICT MANAGEMENT:
Conflict management:
“Conflict is a process that begins when one party perceives that another party has negatively
affected, or is about negatively affect, sometimes that first party cares about”

– Stephen p. Robbins and S. Sanghi

Conflict can be visualized as the active striving for one’s own preferred goals which, if
accomplished, perceives the attainment by others of their own preferred goal thereby causing
hostility.

– Rensis Likert and J.G Likert

Various views of conflict:

Traditional view: All conflict is bad and must be avoided
Human relations view: Conflict is natural and inevitable outcome of any group
Interactionist view: Some conflict is necessary for a group to perform effectively
Functional view: Conflict supports group goals and improves its performance
Dysfunctional view: Conflict prevents a group from achieving its goals
Task conflict: Conflict over content and goals of the work
Relationship conflict: Conflict based on interpersonal relationships
Process conflict: Conflict over how work gets done.

Various types of conflict

Inter personal conflict:

Conflict between two or more individuals is known as interpersonal conflict. Interpersonal conflict
may arise between people who have different beliefs, perception, goal and attitudes. When two
people distrust each other’s motive or dislike each other then conflict may arise.

Intergroup conflict:
Conflict between two or more groups is known as intergroup conflict. Intergroup conflict may arise
between groups who have different beliefs, perception, goal and attitudes. When two groups distrust
each other’s motive and simply can’t get along each other then conflict may arise.
Inter organizational conflict:
Conflict between two or more organization is known as inter organization conflict. Inter
organizational conflict may arise between organizations who have different beliefs, perception, goal
and attitudes.

Causes of conflict:

1. variety in perceptions and beliefs

2. attitudes
3. limited resources
4. excess competition
5. deprivation of power
6. communication system
7. goal difference
8. personality clashes
9. sexual harassment
10. sequential work
11. structural change
12. unfavorable working conditions
13. unclear responsibility and authority
14. unorganized placement of employees
15. Improper use of resources.

Methods of conflict management:

A. Stimulating conflict
1. increase competition
2. hire outsider
3. change working procedures

B. Controlling conflict:
1. emphasize the use of resources
2. increase resources
3. enhance coordination
4. set super ordinate goals
5. match personalities and work habits

C. Resolving and eliminating conflict

1. avoid conflict
2. convince conflicting parties
3. confront and negotiate conflict
 The 5 conflict management styles
Accommodating
Avoiding
Compromising
Competing
Collaboration

UNIT - 5

Organisational Change: Meaning, Causes and Its Process

Meaning of Organisational Change:
Organisational change refers to any alteration that occurs in total work environment. Organisational change
is an important characteristic of most organisations. An organisation must develop adaptability to change
otherwise it will either be left behind or be swept away by the forces of change. Organisational change is
inevitable in a progressive culture. Modern organizations are highly dynamic, versatile and adaptive to the
multiplicity of changes.

Organisational change refers to the alteration of structural relationships and roles of people in the
organization. It is largely structural in nature. An enterprise can be changed in several ways. Its technology
can be changed, its structure, its people and other elements can be changed. Organisational change calls for
a change in the individual behaviour of the employees.
Organizations survive, grow or decay depending upon the changing behaviour of the employees. Most
changes disturb the equilibrium of situation and environment in which the individuals or groups exist. If a
change is detrimental to the interests of individuals or groups, they will resist the change.

Causes of Organisational Change:

(A) External Pressures:
i. Change in Technology and Equipment:
Advancements in technology is the major cause (i.e., external pressure) of change. Each technological
alternative results in new forms of organization to meet and match the needs.

ii. Market Situation:

Changes in market situation include rapidly changing goals, needs and desires of consumers, suppliers,
unions etc. If an organization has to survive, it has to cope with changes in market situations.

iii. Social and Political Changes:

Organisational units literally have no control over social and political changes in the country. Relations
between government and business or drive for social equality are some factors which may compel for
organisational change.

(B) Internal Pressures (Pressures for Change from Within the Organisation):
i. Changes in the Managerial Personnel:

One of the most frequent reasons for major changes in the organisation is the change of executives at the
top. No two managers have the same style, skills or managerial philosophies.

ii. Deficiencies in the Existing Organization:

Many deficiencies are noticed in the organisations with the passage of time. A change is necessary to
remove such deficiencies as lack of uniformity in the policies, obstacles in communication, any ambiguity
etc.

iii. Other Factors:

Certain other factors such as listed below also demand a change in the organisation.

Employee’s desire to share in decision-making

Employee’s desire for higher wage rate

Improvement in working conditions, etc.

Response to Organisational Change:

Every change is responded by the people working in the organisation. These responses may be positive or
negative depending upon the fact as how they affect people.
Before introducing a change, the manager should study and understand employee’s attitudes so as to create
a positive response. Three sets of factors-psychological, personal and social- govern the attitude of people.

Process of Organisational Change:

Unless the behavioural patterns of the employees change, the change will have a little impact on the
effectiveness of the organisation.

A commonly accepted model for bringing change in people was suggested by Kurt Lewin in terms of
three phase process:-

(1) Unfreezing:
The essence of unfreezing phase is that the individual is made to realize that his beliefs, feelings and
behaviour are no longer appropriate or relevant to the current situation in the organisation. Once
convinced, people may change their behaviour. Reward for those willing to change and punishment for
others may help in this matter.

(2) Changing:
Once convinced and ready to change, an individual, under this phase, learns to behave in new ways. He is
first provided with the model in which he is to identify himself. Gradually he will accept that model and
behave in the manner suggested by the model. In another process (known as internalisation), the individual
is placed in a situation where new behaviour is demanded of him if he is to operate successfully.

(3) Refreezing:
During this phase, a person has to practice and experiment with the new method of behaviour and see that
it effectively blends with his other behavioural attitudes. Reinforcement, for creating a permanent set in the
individual, is provided through either continuous or intermittent schedules.

Resistance to Organisational Change:

Resistance to change is perhaps one of the baffling problems a manager encounters because it can take
many shapes. People may resign, they may show tardiness, loss of motivation to work, increased
absenteeism, request for transfer, wild-cat strikes, shoddy work, reduction in productivity etc.

Classification of Resistance to Change:

Resistance to change may be classified as:

1. Industrial Resistance

2. Organisational Resistance

1. Industrial Resistance:
Individual resistance may be there because of the following reasons:
A. Economic Reasons:
(a) Obsolescence of Skills:
When a person feels that with the introduction of newer processes, his skills will just become obsolete, he
will resist the change. For example, a twenty years experienced accountant is quite likely to resist the
introduction of a computer for preparing the wage bills because he feels that might affect his pay and
position.

(b) Fear of Economic Loss:

People resist change if it opens the possibility of lowering their income directly or indirectly.

B. Personal Reasons:
(a) Ego Defensiveness:
A sales manager may turn down the suggestions of a salesman simply because the manager perceives that
his ego may be deflated by accepting the suggestion.

(b) Status Quo:

Most of the people feel comfortable with status quo and strongly resist change as it may involve
uncertainty and risk.
(c) Fear of Unknown:
Change presents unknown and unknown poses a constant threat and sores people. For fear of unknown, a
manager may refuse promotion that requires his relocating in another state.

C. Social Reasons:
(a) Social Displacement:
Introduction of change (e.g., relocating) may result in breaking up of work groups and thus result in
disturbance of the existing social relationships of people.

(b) Peer Pressure:

Whenever change is unwilling to the peers, they force the individual subordinate employees who are bent
of accepting the change, to resist it.

2. Organizational Resistance:
Resistance may also be present at organizational level. Some organizations are so designed that they resist
innovations.

Overcoming Resistance to Organisational Change:

Change creates tension and emotional turmoil in the minds of employees. Change thus results in resistance
quite frequently, negative reactions doom the success of the change program especially when a manager is
unable to handle it properly.

Some of the techniques to handle the change properly and to deal with resistance to change are:
(a) Education and Communication:
One of the easiest techniques to overcome resistance to change is to educate the people who resist it. In
many cases, people do not properly understand the change and hence become afraid of its consequences
and resist change.

(b) Participation and Involvement:

If subordinates are allowed to participate and involve themselves in the change process (decision-making
regarding the implementation of the change), their misunderstandings about the consequences of change
are cleared, they generally feel satisfied and do not oppose change.

(c) Support:
Support may be facilitative and emotional. Managers sometimes deal with potential resistance by being
supportive. This includes listening, providing emotional support, providing training in new skills etc.

(d) Incentives:
Offering incentive is another fruitful way to overcome resistance to change.

(e) Manipulation:
Managers generally indulge in manipulation when all other tactics have failed to overcome resistance to
change.

(f) Coercion:
At times, there is no way except to deal with resistance coercively. People are forced to accept change by
threatening them with loss of their jobs, promotion possibilities.

Organizational culture
Organizational culture is a system of shared assumptions, values, and beliefs, which governs how people
behave in organizations. Organizational culture includes an organization’s expectations, experiences,
philosophy, and values that hold it together, and is expressed in its self-image, inner workings, interactions
with the outside world, and future expectations.

It is based on shared attitudes, beliefs, customs, and written and unwritten rules that have been developed
over time and are considered valid.

These shared values have a strong influence on the people in the organization and dictate how they dress,
act, and perform their jobs.Every organization develops and maintains a unique culture, which provides
guidelines and boundaries for the behavior of the members of the organization.

Organizational culture/corporate culture includes-

• The ways the organization conducts its business, treats its employees, customers, and the wider
community,
• The extent to which freedom is allowed in decision making, developing new ideas, and personal
expression,
• How power and information flow through its hierarchy, and
• How committed employees are towards collective objectives.
• Many Scholars had given the definition of organizational culture. Some of the popular definitions
are given below:

According to Robbie Katanga, “Organizational Culture is how organizations do things.”

Organizational, culture affects the organization’s productivity and performance and provides guidelines on
customer care and service, product quality and safety, attendance and punctuality, and concern for the
environment.It also extends to production methods, marketing, and advertising practices, and to new
product creation.

Organizational culture is unique for every organization and one of the hardest things to change. Corporate
culture reflects the values, beliefs, and attitudes that permeate a business.

Corporate culture is often referred to as “the character of an organization” representing the collective
behavior of people using common corporate vision, goals, shared values, attitudes, habits, working
language, systems, and symbols.
Characteristics of organizational culture are;

Innovation (Risk Orientation).

Attention to Detail (Precision Orientation).
 Emphasis on Outcome (Achievement Orientation).
Emphasis on People (Fairness Orientation).
Teamwork (Collaboration Orientation).
Aggressiveness (Competitive Orientation).
Stability (Rule Orientation).

Roles of Organizational Culture

Culture plays an important role in organizations. Some organizations which developed a strong corporate
culture, they increased their goodwill and got a good position in the market.

The various roles of organizational culture are given below:

▪ Culture unites (brings together) employees by providing a sense of identity with the organization.

▪ An informal control mechanism.

▪ Facilitation of open communication.

▪ Culture enables organizations to differentiate themselves from one another.

▪ Culture often generates commitment, superseding personal interests.

▪ Culture sets organization norms, rules, and standards. Thereby, culture enables employees to
function in an organization, by teaching them how to behave.

▪ A shared understanding.

▪ Culture becomes especially important in a program/project-based organization. In such an

organization, the hierarchy is flat and decision-making is moved to the project/program purpose
units and departments. In this context, culture provides the guiding light towards the achievement
of goals and objectives.

▪ Enhanced mutual trust and cooperation.

▪ Fewer disagreements and more efficient decision-making processes.

▪ A strong sense of identification.

▪ Assisting employees in making sense of their behaviors by providing justification for behaviors.