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MBO

A goal-oriented management tool in which managers and employees come together to agree upon a set of objectives to achieve for the company's short-, medium-, or long-term future. Management by objectives is a multi-step process in which previous goals are periodically evaluated and changed with employee input, then put into practice with occasional performance evaluation and rewards to high achievers. Goals are expected to be explicitly defined by the SMART Principle. That is, goals must be Specific, Measurable, Achievable, Relevant, and Time-Specific. Critics of management by objectives argue that the tool only works when goals are defined more specifically than is usually possible. Proponents argue that this arrangement helps employees avoid a workaday mentality in which activities are performed without any reference to greater objectives. The term 'management by objectives' was coined and first explained by Peter Drucker in his 1954 book, The Practice of Management. MBO systems vary greatly. Some are used for the organization as a whole; others are prepared for sub units of an organization. Methods and approaches used by managers differ greatly. In the US the emphasis appears to be more on human needs and motivation and increasing subordinates participation in setting objectives while in the UK, MBO is used mainly for corporate strategy and planning. Effective planning using the approach of MBO depends upon every manager having very clearly defined objectives for his function in the company. These objectives must also be part of the contribution to other objectives of the company. If objectives are set which do not require any assistance from managers, there is much less chance of them being affected. Peter Drucker goes a stage further by suggesting that managers at every level should participate in devising objectives for the next higher level of management. The important thing is to ensure that the individuals objectives are related to the common goal. Douglas McGregor stresses the value of MBO, especially the aspect of performance appraisal. McGregors approach suggests that we look at two sets of assumptions about individuals and their reaction to work. Theory X assumes that people work to survive and need therefore a strict, authoritarian approach to dealing with subordinates. Theory Y assumes people do not dislike work, and derive satisfaction from it. The managers task under the assumptions of theory Y is to help subordinates to achieve their fullest capabilities and not to control them. It is these assumptions which are the basis of the MBO system. The stages in management by objectives are: the desired results (objectives) set by management are clarified and defined; performance standards are set, which must of course not conflict with the main objectives of the business; the organization structure must be provided, within which the manager has the maximum freedom and flexibility to perform; control information must be supplied at suitable times so the manager can take corrective action quickly; appraisal of performance identifies areas where a manager needs help and provision with guidance; employees are motivated by relating results achieved to rewards and promotion opportunities The main benefits of MBO are as follows: 1) Improved Planning: MBO involves participative decision-making which makes objectives explicit and plans more realistic. It focuses attention on goals in key result areas. MBO forces managers to think in terms of results rather than activities. It encourages people to set specific pleasurable goals instead of depending on hunches or guesswork. An integrated hierarchy of objectives is created throughout the organization. Precise performance objectives and measures indicating goal accomplishment are laid down. There is a time bound programme.

2) Coordination: MBO helps to clarify the structure and goals of the organization. Harmony of objectives enables individuals at various levels to have a common direction. Every individual knows clearly his role in the organization, his area of operation and the results expected of him. Interlinking of corporate, unit and individual objectives helps in the decentralization of authority and fixation of responsibility. MBO result in clarification of organizational roles and structure. It promotes and integrated view of management and helps interdepartmental co-ordination. 3) Motivation and Commitment: Participation of subordinates in goal setting and performance reviews tend to improve their commitment to performance. The corporate goals are converted into personal goals at all levels to integrate the individual with the organization Timely feedback on performance creates a feeling of accomplishment Job enrichment and sense of achievement help to improve job satisfaction and morale. Improved communication and sense of involvement provides psychological satisfaction and stimulates them for hard work Conversion of organizational goals into personal goals helps to integrate the individual with the organization. MBO ensures performance by converting objective needs into personal goals and by providing freedom to subordinates. 4. Accurate Appraisals: MBO replaces trait based appraisal by performance based appraisal. Quantitative targets for every individual enable him to evaluate his own performance. Performance under MBO is innovative and future oriented. It is positive, more objective and participative. Emphasis is on job requirements rather than on personality. MBO is not a scapegoat approach rather it involves constructive criticism to assess why operations have failed or lagged behind and suggests remedial actions like organizational restructuring, better communication systems, more effective incentives to motivate executives, etc. MBO provides an objective criterion for evaluation of actual performance. "Indeed one of the major contributions of MBO is that it enables us to substitute management by selfcontrol, for management by domination."'Control becomes more effective due to verifiable standards of performance. Subordinates know in advance how they will be evaluated. 5. Executive Development: The MBO strategy is a kind of self-discipline whereby shortcomings and development needs are easily identified. It stresses upon a long term perspective and self-development. MBO releases potential by providing opportunities for learning, innovation and creativity. It encourages initiative and growth by stretching capabilities of executives. MBO makes possible a high degree of selfcontrol by individual managers and increases decentralization of authority. 6. Organizational change and Development: MBO provides a frame work for planned changes. It enables managers to initiate and manage change. It helps to identify short-comings in organizational structure and processes. In this way, MBO improves the capacity of the organization to cope with its changing environment. When an organization is managed by objectives, it becomes performance-oriented and socially-useful. Originally MBO was developed for business organizations but now it is being used by social welfare organizations also. But MBO might not be very successful in welfare organizations because of the abstract nature of the values to be measured in specific and quantified terms, general unwillingness on the part of personnel to subject their efforts to precise evaluations and lack of measuring instruments which could generate valid and reliable data. MBO has special significance in the areas of long range planning and performance appraisal. MANAGEMENT BY OBJECTIVES The concept of management by objectives is a logical extension of Goal Setting theory. The Goal Setting theory proposed by Edwin Locke studies the processes by which people set goals for themselves and then put in efforts to achieve them. Evidence proves that 90% of the time performance improves with goal setting. Comparatively high achievers set comparatively more difficult goals and they are more satisfied with intrinsic rewards than extrinsic reward. Management by objectives is an extension of Goal theory as it involves systematic and programmatic goal getting throughout an organization. According to George S. Ordiorne, "The system of management by objectives can be described as a process whereby the superior and subordinate managers of an organisation jointly identify its common

goals, define each individual's major areas of responsibility in terms of results expected of him and use these measures as guides for operating the unit and assessing the contribution of each of its members. Dale D. McConkey has preferred the term management by results to management by objectives. ADVANTAGES OF MBO The concept of MBO is very important in terms of its managerial implications. Besides being a philosophy of management, it is a system which helps in sychronising the objectives of the individuals with the objectives of the organization. When implemented properly, systematically and consciously, the MBO has following advantages. Maximum Utilization of Human Resources: - Since the goals are set in consultation with the subordinates, these are more difficult to achieve and more challenging than if the superiors had imposed them. In addition, since these goals are fixed according to the particular abilities of the subordinates, it obtains maximum contribution from them and thus it leads to maximum utilisation of human resources. No Role Ambiguity: - There is no role ambiguity or confusion in the organisation, because specific and clear goals are set for the organisation, for the division for the departments and for the individual members. Both the managers and the subordinates know what they have to do and what is expected of them. Improved Communication:- In MBO, there is improved communication between the management and the subordinates. This continuous two way communication helps in clarifying any ambiguities, refining and modifying any processes or any aspects of objectives. Improved Organisational Structure: - In MBO, the whole of organizational structure is redesigned because of the revision of job descriptions of various positions as a result of resetting of the individual goals. All this helps in improving the organisational structure as a result of location of the problem and weak areas of the organisation. Device of Organisational Control: - MBO serves as a. device for organisational control and integration. If there are any deviations discovered between the actual performance and the goals, these can be regularly and systematically identified, evaluated and corrected. Career Development of the Employees: - MBO provides a realistic means of analysing training needs and opportunities for growth for the employees. The management takes keen interest in the development of skills and abilities of subordinates and provides an opportunity for strengthening those areas which need further referents, thus, leading to career development of employees. Result Based Performance Evaluation: - The system of periodic performance evaluation lets the subordinates know how well they are doing. In MBO, strong emphasis is put on measurable and quantifiable objectives. As a result, the appraisal tends to be more objectives specific and equitable. As these appraisal methods are based on result and not on some intangible characteristics, these are considered to be superior to the trait evaluation methods of appraisal. Stimulating the Motivation of the Employees: - The system of MBO stimulates the employees motivation. First of all, they feel motivated because of their participation in goal setting. They take keen interest in the implementation of the goals which they themselves have set. Secondly the appraisal system, being very objective and specific can be highly morale boosting.

Formal organization is a fixed set of rules of intra-organization procedures and structures. As such, it is usually set out in writing, with a language of rules that ostensibly leave little discretion for interpretation. In some societies and in some organization, such rules may be strictly followed; in others, they may be little more than an empty formalism. To facilitate the accomplishment of the goals of the organization: In a formal organization the work is delegated to each individual of the organization. He/She works towards the attainment of definite goals, which are in compliance with the goals of the organisation.

To facilitate the co-ordination of various activities: The authority, responsibility and accountability of individuals in the organization is very well defined. Hence, facilitating the co-ordination of various activities of the organization very effectively. To aid the establishment of logical authority relationship: The responsibilities of the individuals in the organization are well defined. They have a definite place in the organisation due to a well defined hierarchical structure which is inherent in any formal organisation. Permit the application of the concept of specialization and division of Labour, division of work amongst individuals according to their capabilities helps in greater specializations and division of work. Create more group cohesiveness

Characteristics of a formal organization


Well defined rules and regulation Arbitrary structure Determined objectives and policies Status symbol Limitation on the activities of the individual Strict observance of the principle of co-ordination Messages are communicated through scalar chain

Distinction from informal organization


Formal rules are often adapted to subjective interests social structures within an enterprise and the personal goals, desires, sympathies and behaviors of the individual workers so that the practical everyday life of an organization becomes informal. Practical experience shows no organization is ever completely rule-bound: Instead, all real organizations represent some mix of formal and informal. Consequently, when attempting to legislate for an organization and to create a formal structure, it is necessary to recognize informal organization in order to create workable structures. However, informal organization can fail, or, if already set in order, can work against mismanagement. Formal organizations are typically understood to be systems of coordinated and controlled activities that arise when work is embedded in complex networks of technical relations and boundary-spanning exchanges. But in modern societies, formal organizational structures arise in highly institutional contexts. Organizations are driven to incorporate the practices and procedures defined by prevailing rationalized concepts of organizational work and institutionalized in society. Organizations that do so increase their legitimacy and their survival prospects, independent of the immediate efficacy of the acquired practices and procedures. There can develop a tension between on the one hand, the institutionalized products, services, techniques, policies, and programs that function as myths (and may be ceremonially adopted), and efficiency criteria on the other hand. To maintain ceremonial conformity, organizations that reflect institutional rules tend to buffer their formal structures from the uncertainties of the technical activities by developing a loose coupling between their formal structures and actual work activities. (John Meyer and Brian Rowan, 1976) [edit] The Hawthorne Experiments The deviation from rulemaking on a higher level was documented for the first time in the Hawthorne studies (1924-1932) and called informal organization. At first this discovery was ignored and dismissed as the product of avoidable errors, until it finally had to be recognized that these unwritten laws of work of everyday life often had more influence on the fate of the enterprise than those conceived on organizational charts of the executive level. Numerous empirical studies in sociological organization research followed, ever more clearly proving this, particularly during the Human Relations Movement. It is important to analyze informal structures within an enterprise to make use of positive innovations, but also to be able to do away with bad habits that have developed over time.

Reasons for informal organization


There are many different reasons for informal organization: Informal standards: Personal goals and interests of workers differ from official organizational goals. Informal communication: Changes of communication routes within an enterprise due to personal relations between coworkers. Informal group: Certain groups of coworkers have the same interests, or (for example) the same origin. Informal leaders: Due to charisma and general popularity, certain members of the organization win more influence than originally intended. Different interests and preferences of coworkers.

Different status of coworkers. Difficult work requirements. Unpleasant conditions of work. Managerial organization theory often still regards informal organization as rather disturbing, but sometimes helpful. In the opinion of systems theory and cybernetics, however, formal organization fades into the background and only serves, if necessary, to supplement or to correct. Changes in structure always redevelop because of the conduct and differences among coworkers, and the ability of selforganization is recognized as a natural characteristic of a social system. The informal organization is the interlocking social structure that governs how people work together in practice. It is the aggregate of behaviors, interactions, norms, personal and professional connections through which work gets done and relationships are built among people who share a common organizational affiliation or cluster of affiliations. It consists of a dynamic set of personal relationships, social networks, communities of common interest, and emotional sources of motivation. The informal organization evolves organically and spontaneously in response to changes in the work environment, the flux of people through its porous boundaries, and the complex social dynamics of its members. Tended effectively, the informal organization complements the more explicit structures, plans, and processes of the formal organization: It can accelerate and enhance responses to unanticipated events, foster innovation, enable people to solve problems that require collaboration across boundaries, and create footpaths showing where the formal organization may someday need to pave a way.

The informal organization and the formal organization


The nature of the informal organization becomes more distinct when its key characteristics are justaposed with those of the formal organization.

Key characteristics of the informal organization:


evolving constantly grass roots dynamic and responsive excellent at motivation requires insider knowledge to be seen treats people as individuals flat and fluid cohered by trust and reciprocity difficult to pin down essential for situations that change quickly or are not yet fully understood

Key characteristics of the formal organization:


enduring, unless deliberately altered top-down missionary static excellent at alignment plain to see equates person with role hierarchical bound together by codified rules and order easily understood and explained critical for dealing with situations that are known and consistent Historically, some have regarded the informal organization as the byproduct of insufficient formal organizationarguing, for example, that it can hardly be questioned that the ideal situation in the business organization would be one where no informal organization existed. [1] However, the contemporary approachone suggested as early as 1925 by Mary Parker Follett, the pioneer of community centers and author of influential works on management philosophyis to integrate the informal organization and the formal organization, recognizing the strengths and limitations of each. Integration, as Follett defined it, means breaking down apparent sources of conflict into their basic elements and then building new solutions that neither allow domination nor require compromise.[2] In other words, integrating the informal organization with the formal organization replaces competition with

coherence. At a societal level, the importance of the relationship between formal and informal structures can be seen in the relationship between civil society and state authority. The power of integrating the formal organization and the informal organization can also be seen in many successful businesses

Difference between formal and informal organisation 1. Formal organisation is made under proper assigning of duties and delegation of authorities. Every employee under formal organisation is responsible for their works . But in informal organisation , no such delegation of authorities and assigning any duties but it made automatic and increase organisation culture. 2. Formal organisation is made under proper appointment of employee under recruitment , selection and training but informal organisation is made under good relation , talking in factory canteen , discussion free time in office. 3. Formal organisation is very necessary for business without this no co-ordination . But there is no necessity of any informal organization. 4. Formal organisation sometime become burdens on head in the time of work overload but informal organisation reduces work overload burden . Meaning Formal Organisation is formed when two or more persons come together. They have a common objective or goal. They are willing to work together to achieve this similar objective. Formal Organisation has its own rules and regulation. These rules must be followed by the members (employees and managers). A formal organisation has a system of co-ordination. It also has a system of authority. It has a clear superior-subordinate relationship. In a formal organisation, the objectives are specific and well-defined. All the members are given specific duties and responsibilities. Examples of formal organisation are:- a company, a school, a college, a bank, etc. Informal Organisation exists within the formal organisation. An informal organisation is a network of personal and social relationships. People working in a formal organisation meet and interact regularly. They work, travel, and eat together. Therefore, they become good friends and companions. There are many groups of friends in a formal organisation. These groups are called informal organisation. An informal organisation does not have its own rules and regulation. It has no system of co-ordination and authority. It doesn't have any superior-subordinate relationship nor any specific and well-defined objectives. Here in informal organisation, communication is done through the grapevine.

1.1.6. Conflict Between Line and Staff There is frequent conflict and friction between the line executives and staff personnel. The causes of such conflict may be divided into three categories: 1. Line managers make the following complaints against staff personnel: (a) Staff oversteps its authority. Staff officers encroach upon line authority. They interfere in the work of line managers and attempt to tell them how to do their work.They do not confine themselves to their advisory role. (b) Staff does not give sound advice. Staff personnel fail to give fully considered, wellbalanced and sound advice. They are academicians and give new ideas that have little practical application. They are not wellacquainted with the real problems of the enterprise. They often push untried and untested ideas. (c) Staff steals credit. Staff personnel are not directly accountable for results and are generally overjealous. They tend to assume credit for success but lay the blame for failure on line managers. (d) Staff experts fail to see the whole picture objectively. They tend to emphasise their speciality rather than the interest of the total organisation.

(e) Staff has a complex. Staff officers tend to impose their superiority on line managers. Staff personnel are generally more educated and specialists in their areas. Therefore, they consider themselves superior to line executives. 2. Staff personnel usually make the following complaints against line managers: (a) Line managers often resist new ideas and are not prepared to listen to the arguments of staff experts. (b) Line executive do not provide sufficient authority. Staff specialists lack authority to get their useful ideas implemented. As a result they get frustrated. (c) Line managers do not make a proper use of their service of staff specialists. Line managers :consult them only as a last resort. They consider that asking for advice is admitting defeat. Therefore, staff cannot anticipate problems and recommend precautionary measures. 3. The following weaknesses in the organisation structure also lead to line-stiff conflict: (a) Lack of well-defined authority. Very often authority relationships between line and staff are not clearly defined. This -results in overlapping and gaps in authority leading to conflicts. (b) Temperamental differences. There are fundamental differences in the orientation, viewpoints and perceptions of line and staff. Generally, staff people are relatively young, better educated and more sophisticated in their outlook. On the other hand, line personnel tend to be old, less educated and more conservative. Staff feel their advice will produce miracles while line feels it impracticable. Staff seeks change and experimentation whereas line often desire status quo and caution. A certain amount of conflict might be inevitable and even desirable. But extreme and prolonged line-staff conflict can be very dangerous to the organisation. Therefore, it is necessary that line and staff work together as a team for the smooth working of the enterprise. The following steps may be taken to improve line-staff relationships: (1) Clarify relationships. The limits of line authority and staff authority should be defined clearly and precisely. It should be made clear to all that line has the ultimate responsibility for results while staff is responsible for providing sound advice and service to the line executives. (2) Educate line. Line should give due consideration to the staff advice and should follow the recommendations if they are in the best interests of the organisation. They should give reasons for not accepting the staff advice. Line executives should be educated and encouraged to make proper use of staff. (3) compulsory staff advice. Line executives should consult and seek staff advice as a matter of habit. They may be forced to consult staff on regular basis. This will enable line to make maximum use of staff. (4) Inform staff. Line managers should not take action directly affecting staff without informing the staff. They should keep the staff fully informed of their problems and requirements. (5) Sell advice. Staff specialists should appreciate and understand the problems of line. They should not make it a prestige issue when their advice is not followed. Rather they should sell their ideas to line executives. (6) Encourage line. Staff should encourage and educate line managers by letting them know what they can do for line. (7) Overcome resistance. Staff should try to recognise and overcome resistance to change on the part of line. They should be convinced and consulted before introducing change and results of change should be made known to them. (8) Completed staff work. Staff experts should fully consider their suggestions before putting them before line executives. They should be a problem-solver not a problem-creator. They should make complete recommendation so that line can respond in terms of yes or no. This is called completed staff work. (9) Orientation. Line and staff should understand the orientations of each other. Line should recognise the importance of staff and should consider staff as a helper. Similarly, staff should not encroach upon line authority but persuade line to use their advice. In this way line and staff can become an organisational way of life. (10) Constitute committees. Committees of line and staff executives should be constituted. Such committees should meet periodically to discuss all outstanding differences among line and staff. Such differences should be amicably resolved by unanimous decisions. If differences still persist an appeal to the common superior may be made. (11) Position rotation. Wherever possible staff specialists should be placed in the position of line managers. Such position rotation will improve understanding and initial co-operation among line and staff.

(12) Linking pin concept developed by RensisLikert may be used. Under this concept, overlapping groups are formed with some individuals, being members of two or more separate groups who serve as linking pins between line and staff.

All leaders do not possess same attitude or same perspective. As discussed earlier, few leaders adopt the carrot approach and a few adopt the stick approach. Thus, all of the leaders do not get the things done in the same manner. Their style varies. The leadership style varies with the kind of people the leader interacts and deals with. A perfect/standard leadership style is one which assists a leader in getting the best out of the people who follow him. Some of the important leadership styles are as follows: Autocratic leadership style: In this style of leadership, a leader has complete command and hold over their employees/team. The team cannot put forward their views even if they are best for the teams or organizational interests. They cannot criticize or question the leaders way of getting things done. The leader himself gets the things done. The advantage of this style is that it leads to speedy decision-making and greater productivity under leaders supervision. Drawbacks of this leadership style are that it leads to greater employee absenteeism and turnover. This leadership style works only when the leader is the best in performing or when the job is monotonous, unskilled and routine in nature or where the project is short-term and risky. The Laissez Faire Leadership Style: Here, the leader totally trusts their employees/team to perform the job themselves. He just concentrates on the intellectual/rational aspect of his work and does not focus on the management aspect of his work. The team/employees are welcomed to share their views and provide suggestions which are best for organizational interests. This leadership style works only when the employees are skilled, loyal, experienced and intellectual. Democrative/Participative leadership style: The leaders invite and encourage the team members to play an important role in decision-making process, though the ultimate decision-making power rests with the leader. The leader guides the employees on what to perform and how to perform, while the employees communicate to the leader their experience and the suggestions if any. The advantages of this leadership style are that it leads to satisfied, motivated and more skilled employees. It leads to an optimistic work environment and also encourages creativity. This leadership style has the only drawback that it is timeconsuming. Bureaucratic leadership: Here the leaders strictly adhere to the organizational rules and policies. Also, they make sure that the employees/team also strictly follows the rules and procedures. Promotions take place on the basis of employees ability to adhere to organizational rules. This leadership style gradually develops over time. This leadership style is more suitable when safe work conditions and quality are required. But this leadership style discourages creativity and does not make employees self-contented.

Leadership Styles
Leaders of nations, states, organizations, local groups, and school clubs, tend to approach the job of getting things done in relatively predictable ways. Three primary leadership styles are recognized -permissive, autocratic, and participative. The three styles are not hard and fast rules. Leadership styles vary the same way people do, no one is alike. Also, youre unlikely to find any one of the three in its pure form, because people in leadership positions tend to vary their behavior and use a combination of all three. Using a combination of leadership styles appears to be the most effective way to lead a group of people. However, most leaders will adopt a style of leadership that reflects each individuals style of working with people. A leaders style will be one that is suited to the local situation, although it is quite common for the style to be modified as conditions change. For instance, if the demographic makeup of the group changes (for any of a number of reasons) the leaders style will be modified to follow the population trend.

Permissive
Permissive leadership can also be called hands-off leadership. A permissive leader does not attempt to influence the members of the group. They are allowed to work on projects using whatever methods appear O.K. at the time. The truly permissive leader uses very little leadership pressure. The group is

allowed and even expected to solve its own problems and accomplish goals using methods developed by group members. Permissive leadership may swing too far away from any form of leadership -- resulting in a vacuum of leadership which can result in confusion, lack of Productivity, and even chaos within an organization. In other words there is an absence of effective leadership; although a group of disciplined and well motivated individuals may be able to get things done

Autocratic (sometimes referred to as dictatorial)


Autocratic leadership is power-centered. In its most extreme form, this is the Saddam Hussein type of leadership. Group members are allowed little or no voice in the decision-making process. An autocratic leader uses rewards and punishments to persuade people to function. When the ratio of punishments to rewards becomes too unequal, the autocratic leader may end up looking for another line of work. Such a person relies on the power of the position to get things done. The leader makes all of the decisions and retains the right to set goals. Group members are seen as workers whose primary responsibility is to carry out instructions from the leader. An autocratic leader zealously shields himself from criticism about personal abilities and has an ego-driven need to control other people. If the workers are willing -- that is to say, submissive -- work can get done, perhaps not too willingly. Fear is often used as a tactic by an autocratic leader. The power to confer privilege on some, or withdraw it from others, serves as a powerful tool in the hand of an unscrupulous leader.

Participative
Participative leadership involves sharing authority, responsibility and decision making.Individual opinions are welcomed as valuable inputs into the decision making process. A participative leader must be an excellent communicator, one who listens to the concerns and ideas of the groups members. Members of the group are allowed to evaluate their own abilities and develop their own potential. They are encouraged to assume responsibility for their own actions and to use their creativity in helping the group achieve objectives. Typically, a participative leader will make a decision that the team accepts, although that acceptance has to be sold to the group. Questions from the team are encouraged, and the process of taking action is a continuing, fluid process of input between the leader and the team. An atmosphere of enthusiasm is kindled and each team member is stimulated to perform well, find fulfillment and self-respect, and play an integral role in achieving group goals.

Definition: Leadership style is defined as the leader's behavior pattern as perceived by his Soldiers when he is attempting to influence, guide, or direct their activities. Therefore, your leadership style is not always determined by what you think it is, but many times by how your subordinates think you lead. A leader must be constantly aware of this perception and know how to best approach subordinates in each given situation. There are many ways to lead and every leader has his or her own style. Some of the more common styles include autocratic, bureaucratic, democratic, and laissez-faire. In the past several decades, management experts have undergone a revolution in how they define leadership and what their attitudes are toward it. They have gone from a very classical autocratic approach to a very creative, participative approach. Somewhere along the line, it was determined that not everything old was bad and not everything new was good. Rather, different styles were needed for different situations and each leader needed to know when to exhibit a particular approach. Four of the most basic leadership styles are: --Autocratic --Bureaucratic --Laissez-faire --Democratic This article will briefly define each style and describe the situations in which each one might be used. Autocratic Leadership Style: This is often considered the classical approach. It is one in which the manager retains as much power and decision-making authority as possible. The manager does not consult employees, nor are they allowed to give any input. Employees are expected to obey orders without receiving any explanations. The motivation environment is produced by creating a structured set of rewards and punishments. This leadership style has been greatly criticized during the past 30 years. Some studies say that organizations with many autocratic leaders have higher turnover and absenteeism than other organizations. Certainly Gen X employees have proven to be highly resistant to this management style. These studies say that autocratic leaders: --Rely on threats and punishment to influence employees --Do not trust employees -Do not allow for employee input Yet, autocratic leadership is not all bad. Sometimes it is the most effective style to use. These situations can include: --New, untrained employees who do not know which tasks to perform or which procedures to follow --Effective supervision can be provided only through detailed orders and instructions --Employees do not respond to any other leadership style --There are high-volume production needs on a daily basis --There is limited time in which to make a decision --A manager's power is challenged by an employee --The area was poorly managed --Work needs to be coordinated with another department or organization The autocratic leadership style should not be used when: --Employees become tense, fearful, or resentful --Employees expect to have their opinions heard --Employees begin depending on their manager to make all their decisions --There is low employee morale, high turnover and absenteeism and work stoppage Bureaucratic Leadership Style: Bureaucratic leadership is where the manager manages "by the book Everything must be done according to procedure or policy. If it isn't covered by the book, the manager refers to the next level above him or her. This manager is really more of a police officer than a leader. He or she enforces the rules. This style can be effective when: --Employees are performing routine tasks over and over. --Employees need to understand certain standards or procedures. --Employees are working with dangerous or delicate equipment that requires a definite set of procedures to operate. --Safety or security training is being conducted. --Employees are performing tasks that require handling cash. This style is ineffective when: --Work habits form that are hard to break, especially if they are no longer useful. --Employees lose their interest in their jobs and in their fellow workers.

--Employees do only what is expected of them and no more. Democratic Leadership Style: The democratic leadership style is also called the participative style as it encourages employees to be a part of the decision making. The democratic manager keeps his or her employees informed about everything that affects their work and shares decision making and problem solving responsibilities. This style requires the leader to be a coach who has the final say, but gathers information from staff members before making a decision. Democratic leadership can produce high quality and high quantity work for long periods of time. Many employees like the trust they receive and respond with cooperation, team spirit, and high morale. Typically the democratic leader: --Develops plans to help employees evaluate their own performance --Allows employees to establish goals --Encourages employees to grow on the job and be promoted --Recognizes and encourages achievement. Like the other styles, the democratic style is not always appropriate. It is most successful when used with highly skilled or experienced employees or when implementing operational changes or resolving individual or group problems. The democratic leadership style is most effective when: --The leader wants to keep employees informed about matters that affect them. --The leader wants employees to share in decision-making and problem-solving duties. --The leader wants to provide opportunities for employees to develop a high sense of personal growth and job satisfaction. --There is a large or complex problem that requires lots of input to solve. --Changes must be made or problems solved that affect employees or groups of employees. --You want to encourage team building and participation. Democratic leadership should not be used when: --There is not enough time to get everyone's input. --It's easier and more cost-effective for the manager to make the decision. --The business can't afford mistakes. --The manager feels threatened by this type of leadership. --Employee safety is a critical concern. Laissez-Faire Leadership Style: The laissez-faire leadership style is also known as the "hands-off style. It is one in which the manager provides little or no direction and gives employees as much freedom as possible. All authority or power is given to the employees and they must determine goals, make decisions, and resolve problems on their own. This is an effective style to use when: --Employees are highly skilled, experienced, and educated. --Employees have pride in their work and the drive to do it successfully on their own. --Outside experts, such as staff specialists or consultants are being used --Employees are trustworthy and experienced. This style should not be used when: --It makes employees feel insecure at the unavailability of a manager. --The manager cannot provide regular feedback to let employees know how well they are doing. --Managers are unable to thank employees for their good work. --The manager doesn't understand his or her responsibilities and is hoping the employees can cover for him or her. Varying Leadership Style: While the proper leadership style depends on the situation, there are three other factors that also influence which leadership style to use. 1. The manager's personal background. What personality, knowledge, values, ethics, and experiences does the manager have. What does he or she think will work? 2. The employees being supervised. Employees are individuals with different personalities and backgrounds. The leadership style managers use will vary depending upon the individual employee and what he or she will respond best to. 3. The company. The traditions, values, philosophy, and concerns of the company will influence how a manager acts.

Organizational Control Techniques Control techniques provide managers with the type and amount of information they need to measure and monitor performance. The information from various controls must be tailored to a specific management level, department, unit, or operation. To ensure complete and consistent information, organizations often use standardized documents such as financial, status, and project reports. Each area within an organization, however, uses its own specific control techniques, described in the following sections. Financial controls: After the organization has strategies in place to reach its goals, funds are set aside for the necessary resources and labor. As money is spent, statements are updated to reflect how much was spent, how it was spent, and what it obtained. Managers use these financial statements, such as an income statement or balance sheet, to monitor the progress of programs and plans. Financial statements provide management with information to monitor financial resources and activities. The income statement shows the results of the organization's operations over a period of time, such as revenues, expenses, and profit or loss. The balance sheet shows what the organization is worth (assets) at a single point in time, and the extent to which those assets were financed through debt (liabilities) or owner's investment (equity). Financial audits, or formal investigations, are regularly conducted to ensure that financial management practices follow generally accepted procedures, policies, laws, and ethical guidelines. Audits may be conducted internally or externally. Financial ratio analysis examines the relationship between specific figures on the financial statements and helps explain the significance of those figures: Liquidity ratios measure an organization's ability to generate cash. Profitability ratios measure an organization's ability to generate profits. Debt ratios measure an organization's ability to pay its debts. Activity ratios measure an organization's efficiency in operations and use of assets. In addition, financial responsibility centers require managers to account for a unit's progress toward financial goals within the scope of their influences. A manager's goals and responsibilities may focus on unit profits, costs, revenues, or investments. Budget controls: A budget depicts how much an organization expects to spend (expenses) and earn (revenues) over a time period. Amounts are categorized according to the type of business activity or account, such as telephone costs or sales of catalogs. Budgets not only help managers plan their finances, but also help them keep track of their overall spending. A budget, in reality, is both a planning tool and a control mechanism. Budget development processes vary among organizations according to who does the budgeting and how the financial resources are allocated. Some budget development methods are as follows: Top-down budgeting. Managers prepare the budget and send it to subordinates. Bottom-up budgeting. Figures come from the lower levels and are adjusted and coordinated as they move up the hierarchy. Zero-based budgeting. Managers develop each new budget by justifying the projected allocation against its contribution to departmental or organizational goals. Flexible budgeting. Any budget exercise can incorporate flexible budgets, which set meet or beat standards that can be compared to expenditures. Marketing controls: help monitor progress toward goals for customer satisfaction with products and services, prices, and delivery. The following are examples of controls used to evaluate an organization's marketing functions: Market research gathers data to assess customer needsinformation critical to an organization's success. Ongoing market research reflects how well an organization is meeting customers' expectations and helps anticipate customer needs. It also helps identify competitors.

Test marketing is small-scale product marketing to assess customer acceptance. Using surveys and focus groups, test marketing goes beyond identifying general requirements and looks at what (or who) actually influences buying decisions. Marketing statistics measure performance by compiling data and analyzing results. In most cases, competency with a computer spreadsheet program is all a manager needs. Managers look at marketing ratios, which measure profitability, activity, and market shares, as well as sales quotas, which measure progress toward sales goals and assist with inventory controls. Unfortunately, scheduling a regular evaluation of an organization's marketing program is easier to recommend than to execute. Usually, only a crisis, such as increased competition or a sales drop, forces a company to take a closer look at its marketing program. However, more regular evaluations help minimize the number of marketing problems. Human resource controls: Human resource controls help managers regulate the quality of newly hired personnel, as well as monitor current employees' developments and daily performances. On a daily basis, managers can go a long way in helping to control workers' behaviors in organizations. They can help direct workers' performances toward goals by making sure that goals are clearly set and understood. Managers can also institute policies and procedures to help guide workers' actions. Finally, they can consider past experiences when developing future strategies, objectives, policies, and procedures. Common control types include performance appraisals, disciplinary programs, observations, and training and development assessments. Because the quality of a firm's personnel, to a large degree, determines the firm's overall effectiveness, controlling this area is very crucial. Computers and information controls: Almost all organizations have confidential and sensitive information that they don't want to become general knowledge. Controlling access to computer databases is the key to this area. Increasingly, computers are being used to collect and store information for control purposes. Many organizations privately monitor each employee's computer usage to measure employee performance, among other things. Some people question the appropriateness of computer monitoring. Managers must carefully weigh the benefits against the costsboth human and financialbefore investing in and implementing computerized control techniques. Although computers and information systems provide enormous benefits, such as improved productivity and information management, organizations should remember the following limitations of the use of information technology: Performance limitations. Although management information systems have the potential to increase overall performance, replacing long-time organizational employees with information systems technology may result in the loss of expert knowledge that these individuals hold. Additionally, computerized information systems are expensive and difficult to develop. After the system has been purchased, coordinating itpossibly with existing equipmentmay be more difficult than expected. Consequently, a company may cut corners or install the system carelessly to the detriment of the system's performance and utility. And like other sophisticated electronic equipment, information systems do not work all the time, resulting in costly downtime. Behavioral limitations. Information technology allows managers to access more information than ever before. But too much information can overwhelm employees, cause stress, and even slow decision making. Thus, managing the quality and amount of information available to avoid information overload is important. Health risks. Potentially serious health-related issues associated with the use of computers and other information technology have been raised in recent years. An example is carpal tunnel syndrome, a painful disorder in the hands and wrists caused by repetitive movements (such as those made on a keyboard).

Regardless of the control processes used, an effective system determines whether employees and various parts of an organization are on target in achieving organizational objectives.