Queens’ College

WELCOME TO:
MANAGEMENT THEORIES AND
PRACTICES
Credit hours: 2
Chapter One:
Managing and
Managers
 Brainstorming Questions
• What is management?
• What do managers do?
• What skills are needed to be good
manager?
• What are the roles of managers?
• Is management a science? An Art? A
Profession?
 1.1 Definition of Management
• Management is the process of designing and
maintaining an environment in which individuals
working together in groups efficiently accomplish
selected aims (Koontz and Weihrich).
• Management is a distinct process consisting of
activities of planning, organizing and controlling,
performed to determine and accomplish stated
objectives with the use of human beings and
other resources. (Terry and Franklin).
 Definitions cont’d
• The work involved in combining and directing the
use of resources to achieve particular purposes is
called management. (David R. Hampton)
• Management is the process of planning,
organizing, leading and controlling the work of the
organization members and of using all available
organizational resources to reach stated
organizational goals. (Stoner, Freeman and
Gilbert)
 Definitions cont’d
• Management is the art of getting things done
through people effectively and efficiently.
(Mary Parker Follett).
 Paradigm of Definitions
• The various definitions of management can be conveniently
classified in to four categories
 Functional school - management is an integrating process designed
to achieve organized, and purposeful results
 Human relations school- management is a social process because
managerial actions are principally concerned with relations between
people
 Decision making school- management as a decision making body,
as a rule making and rule enforcing body
 Systems and contingency school
 Systems school- organizations are organic and open system
consisting of different interacting and interdependent parts having
variety of goals
 Contingency school- According to the contingency theory,
management is situational. There is no one best way to design
organizations and manage them
 Organization
• Organization is a system which operates through
human activity.
• Organization is a deliberate arrangement of
people to accomplish some specific purpose. (That
individuals independently could not accomplish
alone).
• Common Characteristics of Organizations
– Have a distinct purpose (goal)
– Composed of people
– Have a deliberate structure
 1.2 Characteristics of Management
1. Management is goal-oriented:
 Management is not an end in itself, it is a means to
achieve certain goals.
The basic goal of management is to ensure
efficiency and economy in the utilization of human,
physical and financial resources.
2. Management is universal:
 Management is an essential element of every
organized activity irrespective of the size or type of
activity.
Universality of Management
 Characteristics Cont’d
3. Management is an integrative Force
 As a unifying force, management creates a whole
that is more than the sum of individual parts
 It integrates human and other resources
4. Social Process
Management is done by people, through people and
for people.
It is social process because it is concerned with
interpersonal relations.
 Characteristics Cont’d
5. Multidisciplinary
 Management has to deal with human behavior
under dynamic conditions.
 Therefore, it depends upon wide knowledge
derived from several disciplines like engineering,
sociology, psychology, economics etc.
6. Management is intangible
 Management is an unseen or invisible force
 It cannot be seen but its presence can be felt
everywhere in the form of results.
 Characteristics Cont’d
7. Management is a continuous process
 Management is a dynamic and an on-going
process.
 The cycle of management continues to
operate so long as there is organized action
for the achievement of group goals.
 1.3 Management Process/Functions
The functions of management provide a useful
framework for organizing management knowledge.
1. Planning – It is the most fundamental of all
management functions.
 It is concerned with what? Who? How? When?
Where? And how much aspect of performance.
 It is deciding in the present about the future
objectives and the course of actions for their
achievement.
 Planning involves:
 Determination of short range and long range
objectives
 Development of strategies and courses of
action to be held for achievement of the
objective
 Formulation of policies, procedures and rules
for the implementation of strategies and plan
2. Organizing
 It involves identification of activities required to achieve
the enterprise objectives.
 Sub-functions of organizing are:
– Identification of activities required
– Grouping of activities in to similar jobs
– Assigning jobs to employees
– Delegation of authority in order to enable employees
perform their jobs- command resources
– Establishing a net work or the structure of the
organization
3. Staffing
 Staffing involves:
– Determination of number and kind of
employees needed
– Recruitment of employees (creating potential
employees from whom selection is to be
made)
– Selection of the most efficient employee
suitable for job
– Placement and induction
– Training and development
4. Directing
• Directing is the function of leading employees
to perform efficiently to the achievement of
the organizational goals.
• It involves communication, motivation and
leadership.
5. Coordinating
 Coordinating is an activity of establishing a
relationship among various types of
organizations so that they all move together in
the direction of the organizational goal.
 This function involves clear definition of
authority, responsibility, relationships, unity of
directions, effective communication and
effective leadership.
6. Controlling
 It is the function of ensuring performances and
consistency of performance with the
predetermined objectives. The sub functions of
controlling are:
– Measurement of performance against goal
– Identification of deviation from goal
– Taking corrective action to ratify deviations
 1.4 Levels of Management
 Refers to a line of demarcation between
various managerial positions in an
organization
 Determines:
 a chain of command
 the amount of authority and
 status enjoyed by any managerial positions
Levels of Management Cont’d
 The levels of management can be classified in
three broad categories:
1. Top level/administrative level/ strategic level
2. Middle Level/Tactical/Executive level
3. Lower level/supervisory/operative/first line
manager
 Mangers at all these level perform different
functions
 1. Top level management
 Top management is the ultimate source of
authority and it manages goals and policies
for an organization
 It devotes more time on planning and
coordinating functions
 consider how the organization interacts with
its environment
 Ultimately responsible for the success or
failure of an organization
 2. Middle level management
 They execute the plans of the organization in
accordance with the policies and directives of
top level management
 They make plans for sub-units of the
organization
 They interpret and explain policies from top
level management to lower levels
 They are also responsible for inspiring lower
level managers towards better performance
 3.Lower level management
 Refers to those executives whose work has to
be largely with personal oversight and
direction of operative employees
 They are concerned with direction and
controlling functions of management
 They are directly responsible for the
production of goods and services
Levels of Management
1.5 Types of Managers based on Scope of
Responsibility
Two types:
1. Functional Managers
 managers who are responsible for a department that
performs a single functional task and has employees
with similar training and skills
2. General Managers
 managers who are responsible for several departments
that perform different functions.
 They are responsible for the entire operations of the
organization without being specific
 1.6 Significance of Management
 Management is important for economic growth of a country.
 It brings together the factors of production: money, machinery,
men, methods, markets and material to enable the country to
experience economic development.
 A country with enough capital, manpower and other natural
resources can still be poor if it does not have competent
managers to combine and coordinate the resources.
In the words of Drucker “without management
country’s resources of production remain resources and
never become products”.
 Management is essential in all organized efforts.
 Its principles are universally accepted in business and non business
organizations
 1.7 Managerial Roles
 Managerial roles represent specific tasks that
managers undertake to ultimately accomplish
the managerial functions
 Henry Mintzberg identified 10 managerial roles
which are in turn grouped into three categories:
 Interpersonal
 Informational and
 Decisional Roles.
 The Managerial Roles
Managerial activities Associated roles

Interpersonal roles - arising •figurehead

•liaison
from formal authority and status
•leader
and supporting the information
and decision activities.
Informational roles •monitor
•disseminator
•spokesman

Decisional roles: making •Entrepreneurial

•disturbance handler
significant decisions •resource allocator
• negotiator
 1. Interpersonal Roles
 involves developing and maintaining positive
relationships with significant others in the
organization. It includes:
A. Figurehead Role:
 officially representing the organization or unit
 symbolic duties of a legal or social nature
E.g. Signing documents, presiding at a ceremonial
event, greeting visitors, etc.
 Interpersonal Cont’d
B. Leadership Role:
 guiding and motivating staff and acting as a
positive influence in the workplace
 building relationship and communicating
with employees & coaches them.
 As a leader, the manager is responsible for
hiring, training, motivating and encouraging
employees/subordinates.
 Interpersonal Cont’d
C. Liaison Role:
 Manager interacts with peers and with
people outside the organization to gain
information
 The top management uses this role to gain
favors and information, while the other
managers use it to maintain the routine flow
of work
 2. Informational Role
 relate to receiving and sending information so that
managers can serve as the nerve centers of their
organizational unit. Three roles:
1.Monitor role: refers to seeking, receiving,
screening and getting information.
2. Disseminator role: transmit information
internally that is obtained from either internal or
external sources.
3. Spokesperson role: transmits information about
the organization to outsiders
 3. Decisional Roles
 Roles that involve making significant
decisions that affect the organization.
 Four roles:
1. Entrepreneur (change agent) - acts as
initiator, designer, and encourager of change
and innovation
2. Disturbance handler - takes corrective
action when organization faces important,
unexpected difficulties
 Decisional Roles Cont’d
3. Resource allocator - distributes resources of all
types, including time, funding, equipment, and
human resources.
4. Negotiator
 Involves interacting with superiors, persons in
other departments, and subordinates.
 Negotiation affects resource allocation,
resolution of disturbances, implementation of
change, and interpersonal behavior.
 1.8 Managerial Skills
A manager’s job is diverse and complex and it
requires a range of skills.
 Skills are specific abilities that result from
knowledge, information, practice, and aptitude.
 Robert L. Katz identified three basic kinds of
skills:
1. Technical skill,
2. Human skill,
3. Conceptual skill
 1. Technical Skills
 Knowledge & proficiency in activities involving
methods, processes and procedures
 The use of tools, techniques, and procedures in a
specialized manner
 most important at the lower levels of
management.
 It becomes less important as we move up the
chain of command
 2. Human Relation Skills
 Skills associated with a manager’s ability to
work well with others, both as a member of a
group and as a leader who gets things done.
 Because all work is done when people work
together, human relation skills are equally
important at all levels of management.
 3. Conceptual skills
Skills related to the ability to:
 visualize the organization as a whole
 discern relationships among organizational parts,
and
 understand how the organization fits into the
wider context of the industry, community and
world
Conceptual skills are more important in strategic
level
 1.9 Management science or art

Management knowledge exhibits characteristics

of both art and science, the two not mutually
exclusive but supplementary.
 Management as a science contains a systematic
body of knowledge in the form of general
principles which enjoy universal applicability.
 Management science or art Cont’d
 The art of management is personal creative power
and skill in performance.
 If science teaches one to know, art teaches one to
do
 Managers have to know and do things efficiently
and effectively to be successful, so there is unique
scientific and artistic combination in practice.
 Chapter Two

Development Management
Thoughts
 1. Factors Shaping Management Thought
Management thought has been shaped over a
period of centuries by three major sets of forces:
1) Social forces
 Refer to those aspects of a culture that guide and
influence relationships among people.
2) Political forces
 political and legal institutions influence on people and
organizations
3) Economic forces
 Pertain to the availability, production and distribution
of resources in a society.
 2. Management Perspectives over Time
1) Early approaches to management
2) Classical Perspective
– Scientific Management
– Bureaucratic Organization
– Administrative Principles
2) Humanistic Perspective
– Human Relations Movement
– Human Resources Perspective
– Behavioral Sciences Approach
3) Management Science Perspective
4) Systems Theory
5) Contingency View
6) Total Quality Management
7) The Learning Organization
8) The Technology-Driven Workplace
 2.1 Early Approaches to Management
Name Period Contribution
Robert Owen 1771-1858 Proposed legislative reforms to impr
ove working conditions of labor
Charles 1792-1871 Advocated the concept or ‘division
Babbage of labor’
Adam Smith - Specialization could lead to increase
d efficiency.

Andrew Ure 1778-1857 Advocated the study of

management
Charles Dupin 1784-1873
Henry R.Towne 1844-1924 Emphasized the need to consider
management as separated field of
study and the importance of
business skills for running a
business.
 2.2 MAJOR CLASSIFICATION OF
MANAGEMENT APPROACHES
CLASSICAL SCIENTIFIC BUREAUCRATIC ADMINISTRATIV
APPROACH MANAGEMENT MANAGEMENT E
MANAGEMENT

BEHAVIORAL HAWTHORNE MASLOW’S THEORY X AND

APPROACH STUDIES NEED THEORY Y
HIERARCHY

QUANTITATIVE MANAGEMENT OPERATIONS MANAGEMENT

APPROACH SCIENCE MANAGEMENT INFORMATION
SYSTEM

MODERN THE SYSTEMS CONTINGENCY EMERGING

APPROACH THEORY THEORY APPROACHES
 I. Classical Perspective
• The earliest study of management
• Emerged during the nineteenth and early
twentieth centuries
• Contains 3 subfields, each with a slightly
different emphasis:
1) Scientific management
2) Bureaucratic organizations
3) Administrative principles
 1. Scientific Management
• Scientific Management: emphasized the
scientific study of work methods to improve
the productivity of individual workers.
• The chief proponents were:
Frederick W. Taylor, Frank and Lillian
Gilbreth and Henry L. Gant
A) Frederick W. Taylor
• The “father” of scientific management
• Using scientific methods to define the “one
best way” for a job to be done:
• Putting the right person on the job with the
correct tools and equipment.
• Having a standardized method of doing the job.
• Providing an economic incentive to the worker.
 Scientific Management Today
• How Do Today’s Managers Use Scientific
Management?
– Use time and motion studies to increase
productivity
– Hire the best qualified employees
– Design incentive systems based on output
B) Frank and Lillian Gilbreth
 1868-1924
 Motion study involves finding out the b
sequence and minimum number of motio
needed to complete a task.
 Explore new ways for eliminati
unnecessary motions and reducing wo
fatigue.
 C. Henry L. Gant (1861-1919)

 Well known for Task – and - bonus system

-The Gantt chart
 If the worker completed the work fast, i.e.,
in less than the standard time, he received a
bonus.
 It is a Simple chart that compares actual
and planned performances
Characteristic of Scientific Management

• General Approach
– Developed standard method for performing each job
– Selected workers with appropriate abilities for each
job
– Trained workers in standards methods
– Supported workers by planning their work and
eliminating interruptions
– Provide wage incentives to workers for increased
output.
Contributions
Demonstrated the importance of compensation
for performance
Initiated the careful study of tasks and jobs
Demonstrated the importance of personnel
selection and training
Criticism
Did not appreciate the social context of work
and higher needs of workers
Did not acknowledge variance among
individuals
Tended to regard workers as uninformed and
ignored their ideas and suggestions
 2) Bureaucratic Organizations
• To Weber, a bureaucracy was a rational, efficient ideal
organization based on principles of logic—he felt good
organizations should have six bureaucratic features:
1. Positions organized in a hierarchy of authority
2. Managers subject to rules and procedures that will ensure reliable
predictable behavior
3. Management separate from the ownership of organization
4. Administrative acts and decisions recorded in writing
5. Personnel selected and promoted based on technical
qualifications
6. Division of labor, with clear definitions of authority and
responsibility.
 3) Administrative Management
• Administrative Management: concerned
with managing the total organization
• Among the pioneering theorists were
Henry Fayol & Max Weber
 A) Henry Fayol and Functions of Management
• Henry Fayol was the first to systematize management behavior – he was the
first to identify the major functions of management: planning, organizing,
leading, controlling, as well as coordinating and commanding.
• Management philosophy:
• Unity of command – Each subordinate receives orders from one – and
only one – superior
• Division of work – Managerial and technical work are amenable to
specialization to produce more and better work with the same amount of
effort.
• Unity of Direction – Similar activities in an organization should be
grouped together under one manager.
• Scalar chain – A chain of authority extends from the top to the bottom
of the organization and should include every employee.
 Cont’d
• Authority.-The right to issue commands, along with which must
go the balanced responsibility for its function.
• Discipline- Employees must obey, but this is two-sided:
employees will only obey orders if management play their part by
providing good leadership.
• Subordination of individual interest (to the general interest)-
Management must see that the goals of the firms are always
paramount.
• Remuneration- Payment is an important motivator although by
analyzing a number of possibilities, Fayol points out that there is
no such thing as a perfect system.
• Centralization (or Decentralization).-This is a matter of degree
depending on the condition of the business and the quality of its
personnel.
 Cont’d
• Order- Both material order and social order are necessary. The
former minimizes lost time and useless handling of materials.
The latter is achieved through organization and selection.
• Equity- In running a business a ‘combination of kindliness and
justice’ is needed. Treating employees well is important to
achieve equity.
• Stability of Tenure of Personnel- Employees work better if job
security and career progress are assured to them. An insecure
tenure and a high rate of employee turnover will affect the
organization adversely.
• Initiative- Allowing all personnel to show their initiative in some
way is a source of strength for the organization. Even though it
may well involve a sacrifice of ‘personal vanity/pride’ on the part
of many managers.
 Cont’d
• Esprit de Corps- The gist of this principle is that
' in union there is strength.' Hence, workers,
management as well as employers should work
as a team. It is the responsibility of
management to promote the spirit of
cooperation rather than the spirit of divide and
conquer.
Limitations of Bureaucratic Management
and Administrative Theory
 Not universally applicable to today’s complex
organizations.
 Fayol’s principles like that of specialization
were frequently in conflict with the principle of
unity of command.
 Principle/characteristic of bureaucracy changes
in the global environment.
 Classical theorists ignored the problems of
leadership, motivation, power or information
relations.
 II. Behavioral Approach
• The behavioral approach to management
emphasized individual attitudes and behaviors
and group processes, and recognized the
significance of behavioral process in the
workplace.
 1) The Human Relations Movement
• Proposed that better human relations could
increase worker productivity.
• One of the earliest to study motivation, Maslow
proposed his “hierarchy of human needs” in 1943
2) Human Resources Perspective
• Maintained an interest in worker participation and
considerate leadership but shifted the emphasis to
consider the daily tasks that people perform.
• Combines prescriptions for design of job tasks
with theories of motivation.
• This will allow workers to use their full potential
 Contributions of Behavioral Thinkers to
Management Thought
Name Period Contribution
Mary Parker 1868- Advocated the concept of ‘power
Follet 1933 sharing’ and integration
Elton Mayo 1868- foundation for the Human Relations
1933 Movement;
Abraham 1908 – motivated by a hierarchy of needs
Maslow 1970
Douglas 1906- Theory X and Theory Y personalities
McGregor 1964
Chris Argyris - Classified organizations based on
the employees’ set of values
A) Mary Parker Follet (1868-1933)
 Power, according to Follet, was the ability to
influence and bring about a change.
 Concept of integration, which involves
finding a solution acceptable to all group
members
 B) Elton Mayo (1868-1933)
Pre-judgment Findings
Job performance The group is the key factor
depends on the in job performance
individual worker
Fatigue is the main Perceived meaning and
factor affecting importance of the work
output. determining output.
Management sets Workplace culture sets its
production standards own production standards.
 C. Abraham Maslow
His theory rested on these assumptions.
 Physiological needs;
 Safety or security needs
 Belongingness or social needs;
 Esteem or status needs
 Self actualization or self-fulfillment needs.
Maslow’s Hierarchy of Needs
 D. Chris Argyris
 Maturity – immaturity theory
People progress from a stage of immaturity and
dependence to a state of maturity and
independence.
Model I and Model II organization analysis.
1. Model I organization are manipulative
2. Model II organization are open to learning
 3. Behavioral Science Approach
 Behavioral Science relies on scientific
research for developing theories about human
behavior that can be used to provide practical
tools for managers.
Behavioral Science draws from sociology,
psychology, anthropology, economics and other
disciplines to understand employee behavior
and interaction in an organizational setting.
 The Human Relations Movement: Douglas McGregor &
Theory X versus Theory Y
Theory Y Theory Y
• Pessimistic negative view
towards workers • Optimistic positive view of
workers: human relations
• Workers are irresponsible proponents’ view
• Workers are resistant to • Workers are capable of
change accepting responsibility
• Workers lack ambition, • Workers are capable of self-
hate to work direction
• Workers would rather be • Workers are capable of self-
led than lead control
• Workers are capable of being
imaginative and creative
 III. Quantitative Approach
 It includes the application of statistics,
optimization models, information models and
computer simulations. More specifically, this
approach focuses on achieving organizational
effectiveness.
 Three main branches:
 Management Science
 Operations Management and
 Management Information Systems
1. Management Science Perspective
• Management Science focuses on using
mathematics to aid in problem solving and
decision making.
• Suitable for large scale business firms.
• Example: forecasting, inventory modeling,
linear and nonlinear programming, scheduling
and break-even analysis
 2. Operations Management
• It deals with the effective management of the
production process and the timely delivery of
an organization’s products and services.
3. Management Information Systems

• Management information systems focuses on

designing and implementing computer-based
information systems for business
organizations.
 IV. Modern approaches
• There are 2 recent trends that grew out of the
humanistic perspective:
1) Systems Theory
2)Contingency View
 1.The Systems Theory
The Systems Theory regards the organization
as a system of interrelated parts
By adopting this perspective you can look at
your organization in two ways
1. A collection of subsystems—parts making up
the whole system
2. A part of the larger environment
 2. The Contingency View
• The Contingency View emphasizes that a manager’s
approach should vary according to—that is, be contingent
on—the individual and the environmental situation
• Also sometimes called the situational approach.
• There is no one universally applicable set of management
principles (rules) by which to manage organizations.
• Organizations are individually different, face different
situations (contingency variables), and require different
ways of managing.
V. Emerging Approaches In Management Thought

 William Ouchi, outlined new theory called

Theory Z.
 It is the blend of positive aspects of both
American and Japanese management styles.
 Quality Management is a management approach
that directs the efforts of management towards
bringing about continuous improvement in
product and service quality to achieve higher
levels of customer satisfaction and build
customer loyalty.
 Chapter Three
Planning and Plan
 1. Definition of Planning
• Planning
– conscious, systematic process of making
decisions about goals and activities that an
individual, group, work unit, or organization
will pursue in the future.
– a purposeful effort that is directed and
controlled by managers and often draws on
the knowledge and experience of employees
throughout the organization.
Cont’d
 Planning is the process of establishing
objectives and choosing the most suitable
means for achieving these objectives prior to
taking action.
 Planning is preparing for tomorrow today; it
is the activity that allows managers to
determine what they want and how to get it.
 2. Importance of Planning
It provides direction and sense of purpose
 It reduces uncertainties and preparing for change
 It provides basis for controlling
 It forces managers to see the organization as a
system
 It promotes efficiency
 It provides the base for cooperative and
coordinated efforts
It provides guideline for decision making
 3. Characteristics of Planning
1. Planning is goal-oriented
 Planning is made to achieve desired
objective of business
 Planning identifies the action that would
lead to desired goals quickly &
economically.
 It provides sense of direction to various
activities.
 Characteristics of Planning Cont’d
2. Primacy of Planning
 Planning lays foundation for other functions of
management.
 It serves as a guide for organizing, staffing,
directing and controlling.
 All the functions of management are performed
within the framework of plans laid out.
 Therefore planning is the basic or fundamental
function of management.
 Characteristics of Planning Cont’d
3. Planning is a Continuous Process
 Planning is a never ending function due to the
dynamic business environment.
 Plans are also prepared for specific period of
time and at the end of that period, plans are
subjected to evaluation and review in the light of
new requirements and changing conditions.
 Planning never comes into end till the enterprise
exists issues, problems may keep cropping up
and they have to be tackled by planning
effectively.
 Characteristics of Planning Cont’d
4. Planning is all Pervasive.
 It is required at all levels of management and
in all departments of enterprise.
 Of course, the scope of planning may differ
from one level to another.
 The top level may be more concerned about
planning the organization as a whole whereas
the middle level may be more specific in
departmental plans and the lower level plans
implementation of the same.
 Characteristics of Planning Cont’d

5. Planning is Flexible
 Planning is done for the future.
 Since future is unpredictable, planning
must provide enough room to cope with
the changes in customer’s demand,
competition, govt. policies etc.
 Under changed circumstances, the original
plan of action must be revised and
updated to make it more practical.
 Characteristics of Planning Cont’d
6. Planning is an intellectual process.
 Planning is a mental exercise involving
creative thinking, sound judgment and
imagination.
 It is not a mere guesswork but a rotational
thinking.
 A manager can prepare sound plans only if he
has sound judgment, foresight and imagination.
 Planning is always based on goals, facts and
considered estimates.
 Characteristics of Planning Cont’d
7. Planning involves choice & decision making.
Planning essentially involves choice among various
alternatives.
Therefore, if there is only one possible course of
action, there is no need of planning because there is
no choice.
Thus, decision making is an integral part of
planning.
A manager is surrounded by number of alternatives.
He has to pick the best depending upon
requirements & resources of the enterprises.
 Characteristics of Planning Cont’d
8. Planning is designed for efficiency.
Planning leads to accomplishment of objectives at
the minimum possible cost.
It avoids wastage of resources and ensures
adequate and optimum utilization of resources.
A plan is worthless or useless if it does not value
the cost incurred on it.
Planning leads to proper utilization of human
resources, money, materials, methods and
machines.
 4. Planning Tools and Techniques
Forecasting tries to predict the future.
 Qualitative forecasting relies on expert opinions
 Quantitative forecasting relies on mathematical models and statistical
analysis
Contingency planning Identifying alternative courses of action that can be
implemented to meet the needs of changing circumstances
Benchmarking identifies best practices used by others
Best practices are methods that provide superior performance
Staff planners provide special expertise.
Participatory planning improves implementation.
Promotes creativity in planning.
Increases available information.
Fosters understanding, acceptance, and commitment to the final plan.
 5. Types of Plan

Plans can be classified on different bases or

dimensions. These are:
Scope/Breadth Dimension,

Time Dimension, and

 Use/Repetitiveness
 Types of plan Cont’d

I. Scope/Breadth Dimension
 Scope refers to the comprehensiveness of the
plan, or it refers to the level of management
where plans are formulated.
This dimension creates hierarchy of plans.
 Based on scope/breadth we can classify plans
into: Strategic, Tactical and Operational.
 Types of plan Cont’d
A) Strategic plan
• Action Steps used to attain strategic goals
• Blueprint that defines the organizational activities and
resource allocations
• Tends to be long term
Strategy - A pattern of actions and resource allocations
designed to achieve the organization’s goals
Tactics are immediate decisions based on the executive’s
judgment and experience whilst facing an actual situation
B) Tactical plan
- Plans designed to help execute major strategic plans and to
accomplish a specific part of the organizations strategy
 Types of plan Cont’d
C) Operational plan
- Developed at the organization’s lower levels that
specify action steps toward achieving operational
goals and that support tactical planning activities.
- Tool for daily and weekly operations
- Schedules are an important component
- Schedules define precise time frames for the
completion of each operational goal required for
the organization’s tactical and strategic goals
 Types of plan Cont’d
II. Time Dimension
 Long-range (five years or more), medium-range
(between one and five years) and short-range plans (one
year or less).
 Time dimension and scope dimension are the same
except the former is about the length of time that the plan
covers and the later about the level of management
where the plan is formulated.
 Note!
 All strategic plans are long-range plans.
 All tactical plans are medium-range plans.
 All operational plans are short-range plans
 Types of plan Cont’d

III. Use/Repetitiveness
 standing plans
 single use plans

A) Standing Plans: are plans that provide an ongoing

guidance for performing recurring activities. They are
 policy
 rule
 procedure
 Types of plan Cont’d

Policies: Broad guidelines for making decisions

and taking action in specific circumstances.
Rules: spell out specific required action or non-
actions
- allowing no discretion in a given situation.
E.g. No smoking, cheating is prohibited.
Procedures: are statements that detail the exact
manner in which certain activities must be
accomplished
 Types of plan Cont’d
B) Single use plans:
aimed at achieving a specific goal and dissolved when
these have been accomplished
are detailed courses of action
The major types of single use plans are:
Programs: is a comprehensive plan that coordinates a
complex set of activities related to a major non-recurring
goal
Projects: One-time activities that have clear beginning and
end points
Budgets: commit resources to activities, projects, or
programs.
 6. Steps in Planning/Planning process
It encompasses the following steps:
1. Situational analysis
 gathering, interpreting, and summarizing all
information relevant to the planning issue under
consideration, within time and resource constraints
2. Determining Alternative Goals and Plans
Plan:
 A blue print specifying the resource allocations,
schedules, and other actions necessary for
attaining goals
 Planning process cont’d

Goal :
 a desired future state that the organization
attempts to realize.
Characteristics: Specific, measurable,
attainable, relevant, time-bound –
SMART/ER
 Setting goals starts with top managers.
 The overall planning process begins with a
mission statement and strategic goals for the
organization.
 Planning process cont’d
Organizational Mission
Mission- the organization’s reason for existence.
 mission is at the top of goal hierarchy
 mission describes the organization’s:
Values
 aspirations, and
 reason for being
 A well-defined mission is the basis for development of all
subsequent goals and plans.
 Mission statement is a broadly stated definition of basic
business scope and operations that distinguishes the
organization from others of a similar type.
 Planning process cont’d
the content of mission statement often:
 focuses on the market and customer and
 identifies desired fields of endeavor
 some mission statements describe organization
characteristics such as corporate value, product
quality, location of facilities, and attitude toward
employees.
 Mission statement often reveal the organization’s
philosophy as well as its purpose.
 Planning process cont’d
Types of Goal:
Strategic Goals
 broad statements describing where the organization wants to be in the future
 Pertain to the organization as a whole
 often called official goals, because they are the stated intentions of what the
organization want to achieve
Tactical Goals
- Goals that define the outcomes that major divisions and departments must achieve
Operational Goals
 Specific, measurable results Expected from:
 departments,
 work groups, and
 individuals
 Planning process cont’d
3. Goal and Plan Evaluation
 determination of advantages, disadvantages,
and potential effects of each alternative goal
and plan
 prioritizing those goals and even eliminate
some of them
4. Goal and Plan Selection
 Selection of the option that is most appropriate
and feasible
 Planning process cont’d
5. Implementation
• Managers and employees must understand the
plan, have the resources to implement it, and be
motivated to do so
• Successful implementation requires a plan to be
linked to other systems in the organization,
particularly the budget and reward systems
6. Evaluation
 Managers must continually monitor the actual
performance of their work units against the unit’s
goals and plans.
7. Management by Objective (MBO)
MBO is a method whereby mangers and
employees:
 define goals for every departments, project ,
and person and
 use them to monitor subsequent performance.
Process of MBO:
1. Set goal: the most difficult step in MBO
 involves employees at all levels and looks
beyond day-to day activities to answer the
question “what are we trying to accomplish?”
 Management by Objective (MBO)Cont’d
2. Develop action plans:
 action plan defines the course of action needed to achieve the stated
goals
 action plans are made for both individuals and departments
3. Review progress
 Important to ensure that action plans are working
 Allows managers and employees to see whether they are on target or
whether corrective action is necessary
4. Appraise overall performance:
Benefits of MBO
Focus efforts on activities that will lead to goal attainment
Performance can be improved at all organization level
Employees are motivated
Departmental and individual goals are aligned with organization goals.
Management by Objective (MBO)Cont’d
Limitations of MBO:
 Failure to teach the philosophies of MBO
 Difficulty in setting goals
 Emphasis on short-run goals
 Danger of inflexibility
 Frustration
Prerequisites for installing MBO Program
1. Purpose of MBO
2. Top - Management support
3. Training for MBO.
4. Participation
5. Feedback for self – direction and self – control
The End!!!
Chapter Four

Decision Making
 1. Definition of Decision Making

Decision is choice made from available

alternatives.

Decision Making is a process of identifying

problems and opportunities and resolving
them.
 2. Importance of Decisions
Basically some decisions are more
important than other. The importance of
decisions can be seen from:
 The degree of influence the decision has
on the future business activities
 The impact of the decision on other
functional areas
 Recurrence of the decision
 3. Categories of Decision
 Programmed and non programmed
 Major and minor
 Routine and strategic
 Simple and complex
A) Programmed Decisions
 a simple, routine matter for which a manager
has an established decision rule
B) Non-programmed Decisions
 a new, complex decision that requires a creative
solution
 Categories of Decision Cont’d
C) Major and Minor
 Categorized based on the importance.

D) Routine and Strategic

Routine decisions are:
 repetitive decisions and are called tactical or
household decisions.
 supportive to the major decisions and have a
main purpose of achieving efficiency.
 Strategic decisions are long range decisions that
have significant impact on the entire organization.
 4. Decision Making Conditions
 Virtually all decisions are made in an
environment of at least some uncertainty.
 The degree will vary from relatively certain to
great uncertainty.
The conditions under which decisions are made
includes: Certainty, Risk, Uncertainty, Ambiguity
 Decision Making Conditions Cont’d
A) Decision making under Certainty:
 Decision makers are relatively sure about what will happen when they
make decisions.
 Information is available and is considered to be reliable and cause and
effect relationship are known.

B) Decision making under Risk

● decision has clear-cut goals
● good information is available
● future outcomes associated with each alternative are subject to chance
Attitude towards risk
 Decision maker’s aversion to or acceptance of risk depends on:
 Individual difference
 Size of the risk
 Level of management in organization
 Source of funds involved
 Decision Making Conditions Cont’d
C) Decision making under uncertainty:
managers know which goals they wish to achieve
 information about alternatives and future events is
incomplete
 managers may have to come up with creative approaches
to alternatives
D) Decision making Ambiguity
 by far the most difficult decision situation
 goals to be achieved or the problem to be solved is
unclear
 alternatives are difficult to define
 information about outcomes is unavailable
 5.Decision Making Techniques
1. Group Decision Making
 Group problem solving directs the manager in the role of facilitators
and consultant.
 Compare to individual decision making , group can provide more
input and better decision.
2. Nominal Group Technique (NGT)
 It is eliciting written questions, ideas, and reactions from group
members.
Consists of :
 Silently generating ideas in written.
 Round-robin presentation by group members of their ideas on a flip
chart.
 Discussing each recorded idea and evaluate.
 Voting individually on priority ideas, with group solution being
derived mathematically through rank ordering.
 Decision making techniques Cont’d
3. Delphi Technique
 It is judgments on a particular topic are systematically gathered
from participants who do not meet face to face.
 Useful when expert opinions are needed .
4. Brainstorming
 The idea generating technique wherein a Group members meet and
generate diverse ideas about the nature, cause , definition, or
solution to a problem without regard to questions of feasibility or
practicality.
 Through this technique, individuals are encouraged to identify a
wide range of ideas. Usually, one individual is assigned to record
the ideas on a chalkboard.
 most effective at the beginning, once a problem has been stated
 most effective for simple, well-defined problems
 Decision making techniques Cont’d
5. Fishbone diagram (causes and effect)
 Is drawn after a brainstorming session, the central problem is
visualized as the head of the fish, with the skeleton divided into
branches showing contributing causes of different parts of the
problem.
6. Pareto Analysis
 Selecting the Most Important Changes To Make.
 It uses the Pareto principle - the idea that by doing 20% of work
you can generate 80% of the advantage of doing the entire job
 is a formal technique for finding the changes that will give the
biggest benefits.
 Decision making techniques Cont’d
7. Paired Comparison Analysis
 Working Out the Relative Importance of Different Options.
 helps you to work out the importance of a number of
options relative to each other.
 particularly useful where you do not have objective data to
base this on.
 easy to choose the most important problem to solve, or
select the solution that will give you the greatest advantage .
 Decision making techniques Cont’d
8. Six thinking hats - Looking at a Decision from All Points of
View
 It is used to look at decisions from a number of
important perspectives.
 This forces you to move outside your habitual
thinking style, and helps you to get a more rounded
view of a situation.
'6 Thinking Hats‘
How to the Tool:
 Each 'Thinking Hat' is a different style of thinking.
 Decision making techniques Cont’d
White Hat:
 With this thinking hat you focus on the data
available. Look at the information you have, and see
what you can learn from it.
Red Hat:
 you look at problems using intuition, gut reaction,
and emotion .
 Try to understand the responses of people who do
not fully know your reasoning.
Black Hat:
 look at all the bad points of the decision .
 Decision making techniques Cont’d
Yellow Hat:
 The yellow hat helps you to think positively.
 It is the optimistic viewpoint that helps you to see all the benefits
of the decision and the value in it
Green Hat:
 The Green Hat stands for creativity.
 This is where you can develop creative solutions to a problem
Blue Hat:
 The Blue Hat stands for process control.
 This is the hat worn by people chairing meetings.
 When running into difficulties because ideas are running dry, they
may direct activity into Green Hat thinking.
 When contingency plans are needed, they will ask for Black Hat
thinking,
 Decision making techniques Cont’d
9. Decision grid:
 is a matrix for comparing multiple options when there are
also several criteria to consider.
 It has many names, including Pugh matrix, solution matrix,
decision making matrix, decision grid, problem selection
grid.
 It is a rational model and is also classed as a
visual decision tool.
 When the complexity of the decision increases these
decision making tools and techniques can prove useful.
 Especially as the number of options and criteria increase.
 6. Decision-Making Process
 
Evaluation Recognition of
and Decision
Feedback Requirement


Implementation Diagnosis
of Chosen Decision- and Analysis
Alternative Making of Causes
Process


Selection of Development of
Desired Alternatives
Alternative


129
 7. Decision Making Model
Selecting a Decision Making Model Depends
on:
 the manager’s personal preference
 Whether the decision is programmed or non-
programmed
 Extent to which the decision is characterized by
risk, uncertainty, or ambiguity
7.1 Three Decision-Making Models

 Classical model
 Administrative Model
 Political Model
 A) Classical Model
 Logical decision in the organization’s best economic
interests
Assumptions
 Decision maker operates to accomplish goals that are known
and agreed upon
 Decision maker strives for condition of certainty – gathers
complete information
 Criteria for evaluating alternatives are known
 Decision maker is rational and uses logic
Normative = describes how a manager should make decision
and provides guidelines for reaching an ideal outcome for the
organization
B) Administrative Model - Herbert A. Simon
 Managers actually make decisions in difficult
situations characterized by non-programmed
decisions, uncertainty, and ambiguity
 Two concepts are instrumental in shaping the
administrative model
● Bounded rationality: people have limits or
boundaries on how rational they can be
● Satisficing: means that decision makers choose the
first solution alternative that satisfies minimal
decision criteria
Administrative Model Cont’d
 Decision goals often are vague, conflicting
and lack consensus among managers;
 Rational procedures are not always used
 Managers’ searches for alternatives are limited
 Managers settle for a satisficing rather than a
maximizing solution
 Based on intuition (uncertainty, limited facts
& data, time, less scientific predictability)

Descriptive = how managers actually make

decisions - not how they should
 C) Political Model
 Closely resembles the real environment in
which most managers and decision makers
operate
 Useful in making non-programmed decisions
 Decisions are complex
 Disagreement and conflict over problems and
solutions are normal
Coalition = informal alliance among managers
who support a specific goal
 7.2 Characteristics of Decision Making Models

Classical Administrative Political

- Clear-cut problem and goal - Vague problem and goals - Pluralistic; conflicting goals

- Condition of certainty - Condition of uncertainty - Condition of uncertainty/ambiguity

- Full information about - Limited information about - Inconsistent viewpoints;

alternatives and their outcomes alternatives and their outcomes ambiguous information

- Rational choice by individual - Satisficing choice for resolving - Bargaining and discussion

for maximizing outcomes problem using intuition among coalition members

 Chapter Five

Organizational Structure
 5.1 Definition of Organizing
Organizing is arranging the activities of the
organization in a manner that systematically
contribute to the organization’s goals.

Organizing deals with:

 How to divide the work
 Who does what?
 Who reports to whom?
 How to coordinate organization’s activities
 5.2 Purpose of Organizing
 Coordinating diverse organizational tasks
 Establishing relationships
 Establishing formal lines of authority
 Allocating and deploying organizational resource
 Assuring more efficient use of the organization’s
resources
 Improving employee understanding of job duties
and responsibilities
 Providing a sense of direction for each of the
organization’s functional areas
 5.3 Steps of organizing process
1. Determining the activities to be performed
2. Identification of major functions to which
these activities relate.
3. Grouping and sub-dividing the activities
4. Establishing relationship among individuals
and groups- an important aspect of the
organizing process
Note! The end result of an organizing process
is an organization.
 5.4 Formal and Informal
Organization
 Formal Organization
 is the intentional, deliberate or rational structures of roles in a
formally organized enterprise.
 characterized by well-defined:
 authority
 reporting relationships,
 job titles,
 Policies and procedures,
 specific job duties and
a host of other factors necessary to accomplish its
respective goals.
 Represented by organization chart
Informal Organization
 A network of personal and social
relationships that arises spontaneously as
people associate with one another in a
work environment.
 develops within the formal organization
 has a structure which is loosely designed,
highly flexible and spontaneous
 5.5 Basic Elements/Fundamental of
Organizing

 Division of labor/work specialization

 Chain of command
 Span of control/management ( supervision)
 Centralization and decentralization
 Delegation of authority

 Departmentalization
 5.5.1 Division of Labor/Specialization

Division of labor- the degree in which tasks

in the organization are subdivided into
separate jobs
 Division of labor:
 Makes efficient use of employee skills
 Increases employee skills through
repetition
 Allows use of specialized equipment
 5.5.2 Chain of Command

 An unbroken line of authority that links all

individuals in the organization and specifies
who report to whom
 It is associated with two underlying principles:
1. Unity of command- each employee is held
accountable to only one supervisor
2. The scalar principle- refers to a clearly defined
line of authority in the organization that
includes all employees
 5.5.3 Span of Control/Management (Supervision)

 refers to the number of employees reporting to a

supervisor
 Two types:
1. Narrow span of control -The manager
supervises a small number of workers
- many levels – tall organization
2. Wide span of control- The manager supervises
a large number of workers
- few levels – flat organization
5.5.4 Centralization and Decentralization
Centralization and Decentralization-
pertain to the hierarchical level at which
decisions are made
 Centralization- decision making
authority is concentrated at the top of the
organization
 Decentralization- decision making
authority is delegated to the lower level of
the organization
 5.5.5 Delegation of Authority
Process of assigning work from a top organizational level/
superior to a lower one/subordinate, and giving that person
the authority to accomplish them
Main principles of delegation:
 Responsibility can not be delegated
 Authority and responsibility should be in equal
proportion.
The delegation process:
1. Allocation of duties
2. Delegation of authority.
3. Assignment of responsibility
4. Creation of accountability.
 Delegation of Authority Cont’d
Authority : The legitimate right to make
decisions and to tell other people what to do
 flow downward from Higher to Lower level
Responsibility: The obligation involved when
one accepts an assignment
 it may be continued or it may be terminated
with the accomplishment of a single action.
 5.5.6 Departmentalization

The basis on which jobs are grouped into

departments and departments into total
organization
 The combination of jobs is based on the
degree of similarity among the jobs within
the department
 Based on the criteria up on which
departmentalization is undertaken different
types organization structures are identified
 5.6 Concept of Organizational Structure
 Organization structure - formal system of task and
reporting relationships showing how workers use resources
 Depicted by organization chart
 Organization chart: refers to a line diagram that
depicts the broad outlines of an organization’s structure
 Provide four major pieces of information about an
organization structure: Task, Subdivisions, Level of
management, Lines of authority
Organizational design - The process by which
managers make specific choices that result in a particular
kind of organizational structure.
 5.6.1 Organization Design
Two generic models of organizational design: Mechanistic &
Organic
Mechanistic Organic
- High specialization - Cross-functional teams
- Rigid departmentalization - Flexible departmentalization
- Clear chain of command - Free flow of information
- Narrow span of control - Wide span of control
- Centralization - Decentralization
- High formalization - Low formalization
- a limited information net work
- little participation in decision
making
5.6.2 Factors Affecting Organizational
Structure
Factors Affecting Organizational Structure Cont’d
 The environment: The quicker the environment
changes, the more problems face managers.
• Structure must be more flexible when
environmental change is rapid.
– Usually need to decentralize authority.
 Strategy: Different strategies require the use of
different structures.
• A differentiation strategy needs a flexible

structure,
• low cost may need a more formal structure.

• Increased vertical integration or diversification

also requires a more flexible structure

 Factors Affecting Organizational Structure Cont’d
 Technology: The combination of skills, knowledge, tools and
equipment used in the organization.
Technology can be measured by:
 Task Variety: new problems a manager encounters.
 Task Analyzability: programmed solutions available to a
manager to solve problems.
 High task variety and low analyzability present many unique
problems to managers.
– Flexible structure works best in these conditions.
 Low task variety and high analyzability allow managers to
rely on established procedures
Factors Affecting Organizational Structure Cont’d
 Technology and people
 Small Batch Technology: produces small quantities of
one-of-a-kind products.
 Based on the skills of the workers, needs a flexible structure
 Mass Production Technology: automated machines
make high volumes of standard products.
 Workers perform repetitive tasks so a formal structure works
well.
 Continuous Process Technology: totally
mechanized systems of automatic machines.
• Workers must watch for unexpected problems and react
quickly. A flexible structure is needed here.
Factors Affecting Organizational Structure Cont’d
 Human Resources:
 Higher skilled workers who need to
work in teams usually need a more
flexible structure
Therefore, Managers must take into
account all four factors (environment,
strategy, technology and human
resources) when designing the structure
of the organization.
 5.6.3 Types of Organization Structure
 Line Structure
 Line and Staff /Horizontal Structure
 Functional structure
 Divisional structure
 Matrix organization structure
 Network organization structure
A)Line Structure
 Is the oldest and simplest of structures
 Has direct authority flowing vertically from the
top
 generally found in small organizations because
support staff is needed once they begin to
grow.
B) Line and Staff /Horizontal Structure

 Has line authority similar to line structure

 Specialized staff activities are added that
support line activities
 Line employees are directly concerned with
the organization’s primary objectives
 Staff employees support the line employees
C) Functional Structure
• An organizational form in which the major functions
of the firm, such as production, marketing, R&D, and
accounting, are grouped internally.
 Functional Structure Cont’d
Advantages:
 Economies of scale can be realized
 Effective monitoring of the environment
 Performance standards better maintained
 Greater opportunity for specialized training and skill development
 Technical specialists are relatively free of administrative work
 Decision making and lines of communication are simple and clearly
understood
Disadvantages:
– Impeded communication and coordination due to differences in
values and orientations
– May lead to short-term thinking (functions vs. organization as a
whole)
– Difficult to establish uniform performance standards
 D) The Divisional Structure
Departmentalization that groups units around products,
customers, or geographic regions.
 Divisions create smaller, manageable parts of a firm.
 Divisions develop a business-level strategy to compete.
 A division has marketing, finance, and other functions.
 Functional managers report to divisional managers who then report to
corporate management.
– Product structure: divisions created according to the
type of product or service.
– Geographic structure: divisions based on the area of a
country or world served.
– Market structure: divisions based on the types of
customers served.
Divisional Structure Cont’d
Divisional Structure Cont’d
Advantages of Divisional Organizations:
1.Information needs are managed more easily
2.People have a full-time commitment to a particular
product line
3.Task responsibilities are clear
4.People receive broader training

Disadvantages
– Can be very expensive
– Can be dysfunctional competition among divisions
– Differences in image and quality may occur across
divisions
– Can focus on short-term performance
 E) The Matrix Organization Structure

 An organizational structure that

simultaneously groups people and resources
by function and product
 Results in a complex network of superior-
subordinate reporting relationships
 The structure is very flexible and can respond
rapidly to the need for change.
 Each employee has two bosses (functional
manager and product manager)
Matrix Organization Structure Cont’d
 Matrix Organization Structure Cont’d
 Advantages of a Matrix:
 Better inter functional cooperation in operations and
problem solving.
 Increased flexibility to meet changing demands.
 Better customer service
 Better performance accountability
 Improved decision making
Disadvantages of a Matrix:
 It increases role of ambiguity, stress, and anxiety
because people are assigned to more than one
department.
 Violates the principle of unity of command
F) Network Organization Structure
A collection of independent, mostly
single-function firms that collaborate on a
good or service
 a whole series of strategic alliances.
Strategic alliance:
• a formal agreement committing two or
more firms to exchange resources to
produce a good
 5.7 Coordination
5.7.1 Techniques of Effective Coordination
 Direct supervision
 Standardization
 Mutual adjustment
 Coordination by plan
Coordination Cont’d
 Direct Supervision
 One individual (typically a manager) gives
specific orders to others and thereby
coordinates their work
 Standardization
 Establishing common routines and procedures
that apply uniformly to everyone.
Various Types of Standardization:

Standardization of work- every work

process follows a predefined path and a set of
rules
Standardization of outputs- the work is
coordinated by the imposition of standard
performance measures or specifications
concerning the outputs of the work
Standardization of skills- the work is
coordinated by the internalization by
individuals of standard skills and knowledge,
usually before they begin to do the work
Coordination Cont’d
 Mutual adjustment
 In mutual adjustment, individuals coordinate
their own work, by communicating informally
with each other.
 Coordination by plan
 Interdependent units are required to meet
deadlines and objectives that contribute to a
common goal
The End !
 Chapter Seven

Organizational Change and Development

176
 Guiding Questions

• What is change? And change

management?
• Why change?
• How to manage change?

177
 1. Definition of Change
• Change is the process of alteration or transformation
that individuals, groups and organizations undergo in
response to internal and external factors.
• Organizational Change refers to "the movement of an
organization away from its present state towards
some desired future state to increase its
effectiveness” (Broome: 1998).

Present How? Future

178
 1.1. Definition of Change Management
• Change management is the process of planning,
directing and controlling all activities involved in a
state of change to ensure that change programs
meet preset objectives and goals.
• Change management is an important issue in all
industries and organizations. It is of relevance to a
wide range of situations at all levels from individual,
team and organization to leadership.

179
 1.2. Purpose of Change

Why change is necessary or important to

organizations?
• Environmental change: to adapt to
environmental change, organizations must
develop new products, services, modify their
structure, introduce new technology, or change
work methods and change employee’s behavior
• To meet changing customer needs
• To meet changing market conditions
• To respond to internal pressures
• To take advantages of new opportunities 180
 1.3.Effectiveness of Change

Not all changes are actually effective. Some changes

may fail.
Effectiveness of change is going to be seen when the
following points are achieved.
Change is achieved when the organization is moved
from a less desired state to a more desired one; and
the indicators for this are:
• Organization meets planned expectation
• No undue costs to the organization
• No undue costs to the individuals

181
 1.4. Why Change programs fail?
• Change programs are common but research
indicates that two-thirds of all organizational
changes fail
• Several of the most common reasons for failed
change programs include:
– lack of commitment from the top
– change overload
– lack of incentives tied to the change initiative
– lack of training

182
Cont’d…
 Communication breakdown
 lack of space and support

 unclear objectives

 lack of performance measures, and

 underestimating emotions

183
1.5. Targets for Organizational Change

• The five major areas of change include:

– Strategy – develop new visions, missions,
strategic plans
– Structure – add a new department or division,
or consolidate two existing ones
– People – replace a person or change
knowledge, skills, attitudes, or behaviors
– Technology – upgrade a data processing system
– Management –encourage participation by
those involved in solution of problems
 1.6. Approaches or Strategies for
Organization Change
• The planned changes are sought through the
following three Strategies/Approaches:
– Structural changes
– Technological changes
– Value centered changes
 2. Models of Change
• Kurt Lewin has proposed two models of
change in 1951. These are:
- Force field analysis
- A three step change process
2.1. Force field analysis
• By force field analysis, we have three step
change process which involves an interplay
of multiple opposing forces.

186
 Models of Change…
• These forces are driving forces, restraining forces and
the role of change manager in the interaction
between these two forces (interaction management).

Driving Forces
Forces Interaction Restraining
Mgt.

187
 Models of Change…

The steps of change as put forward in the Force field analysis are:
•The first step is identifying and analyzing driving & restraining
forces.
• The second step is assessing which forces are critical.
- Not all forces are equally important in driving or holding the
change back.
•The third and foremost important step is increasing the critical
driving forces and decreasing the critical restraining forces.

188
 Models of Change…
• Force field analysis: Example

Driving Forces Restraining forces

e.g., e.g.,
• Experienced • Fear of unknown
workforce (fear of loss of job)
• Committed work • Unskilled, obsolete
force human resource
• Flexible • Loss of influence
organizational (may be from top
culture management)

189
 Models of Change…
2. 2 Three phases (steps) of change theory
• This theory is about unfreezing, changing and
refreezing.
• What do we unfreeze? What do we change? What
do we refreeze?
• Lewin thinks that any change suffers from three
problems.
1) unwillingness to change
2) Inability to change
3) Inability to sustain the change

190
 Models of Change…
• Lewins 3 Phases Change Theory

Unfreeze Change Refreeze

•Behavior
Raised State of •Change
advocated and stabilized
Tension
implementation
Climate adapted •Desired
begins
to minimize Attitudes
resistance Changes tested
•Values
Dissatisfaction and adapted for
internalized
with status quo desired results
& reinforced

191
 Models of Change…
Illustration

A Awareness of the need for change

Desire to support and participate in
D change

K Knowledge of how to change

A Ability to implement change

R Reinforcement to sustain change

192
2.3 Kotter’s Eight Step Change Model

Build a
Create
guiding team
urgency Create a
vision for
change
Make
change stick
Remove
obstacles /
communicate
Don’t let
up Empower
Create short- action
term wins
 KOTTER’S MODEL -
THE 8 STAGE PROCESS

STEP 1

CREATE URGENCY

Helping others see the need for change &

the importance of acting quickly

Slide 194
 KOTTER’S MODEL -
THE 8 STAGE PROCESS

STEP 2

BUILD A GUIDING TEAM

Ensuring there is a powerful group, with the appropriate leadership skills, credibility & authority to guide the change process

Slide 195
 KOTTER’S MODEL -
THE 8 STAGE PROCESS

STEP 3

CREATE A VISION FOR CHANGE

Creating a picture of the future & how it

will be different from the past

Slide 196
 KOTTER’S MODEL -
THE 8 STAGE PROCESS

STEP 4

COMMUNICATE THE CHANGE VISION

Ensuring everyone understands

& accepts the vision

Slide 197
 KOTTER’S MODEL -
THE 8 STAGE PROCESS

STEP 5

REMOVE OBSTACLES

Removing the barriers to making change successful

Slide 198
 KOTTER’S MODEL -
THE 8 STAGE PROCESS

STEP 6

CREATE ‘SHORT TERM WINS’

Create clear, visible success stories early in the process

Slide 199
 KOTTER’S MODEL -
THE 8 STAGE PROCESS

STEP 7

CONSOLIDATE GAINS &

PRODUCE MORE CHANGE – DON’T LET UP

Recognise more change opportunities following the

‘quick wins’ to take full advantage of the momentum for change

Slide 200
 KOTTER’S MODEL -
THE 8 STAGE PROCESS

STEP 8

ANCHOR THE NEW APPROACHES

IN THE CULTURE

Ensure the new ways of behaving are recognised & rewarded to embed the change into the organisational culture

Slide 201
 3.Overcoming Resistance to Change
Some of the techniques/strategies used to overcome
resistance to change are:
Education and communication: educating and
communicating people who resist change using one- to
one discussion, conference, broachers and reports
Participation and involvement: involving those who
resist change in designing and implementation of change
Facilitation and support: facilitating grounds for change
by providing training, counseling so that barriers to
change can be prevented
Negotiation and agreement: when necessary
management offer incentives ( bonus, wage, salary and
recognition) for cooperation with the change
202
 cont’d
Manipulation and cooptation: giving an informal group
leader a desirable role in the designing and
implementation of a potential change. It is a tactic of
neutralizing or wining over a minority by assimilating
them in to established groups
Explicit and implicit coercion: applying punishment to
those who resist change.

203
 Minimizing Resistance to Change

Communication
Coercion

Training
Manipulation &co-operation Minimizing
Resistance
to Change Employee
Involvement
Negotiation
Stress
Management

204
4. Overview of Organizational Development

• Organization- two or more people

working together toward one or more
shared goals.

• Development in this context is the notion that

an organization may become more effective
over time at achieving its goals.

205
 4.1 Definitions of OD
 OD is an effort:
1. planned,
2. organization wide, and
3. managed from the top, to
4. increase organization effectiveness and health
through planned intervention in the
organizations “processes,” using behavioral-
science knowledge.

206
OD definitions cont’d …

• OD is a response to change, a complex

educational strategy intended to
– change the beliefs, attitudes, values, and
structure of organizations
– so that they can better adapt to new
technologies, markets, and challenges…

207
4.2 OD Objectives and values
• The OD paradigm values human and
organizational growth, collaborative and
participative processes, and a spirit of inquiry.
• The change agent may be directive in OD;
however, there is a strong emphasis on
collaboration.
• Concepts such as power, authority, control,
conflict, and coercion are held in relatively low
esteem among OD change agents.
208
OD Objectives and values cont’d …

The following briefly identifies the underlying

 
values in most OD efforts.
• Respect for people. Individuals are perceived as
being responsible, conscientious, and caring.
They should be treated with dignity and respect.
• Trust and support. The effective and healthy
organization is characterized by trust,
authenticity, openness, and a supportive climate.

209
OD Objectives and values cont’d …

• Power equalization. Effective organizations

deemphasize hierarchical authority and control.

• Confrontation. Problems shouldn't be swept

under the rug. They should be openly confronted.

• Participation. The more that people who will be

affected by a change are involved in the decisions
surrounding that change, the more they will be
committed to implementing those decisions.
210
4.3 Primary Distinguishing Characteristics of OD

• OD focuses on culture and processes

• Specifically, OD encourages collaboration between
organization leaders and members in managing
culture and processes
• Teams of all kinds are particularly important for
accomplishing tasks and are targets for OD
activates.
• OD focuses on the human and social side of the
organization and in so doing also intervenes in the
technological and structural sides.
211
Primary distinguishing cont’d …

• Participation and involvement in problem

solving and decision making by all levels of the
organization are hallmark of OD
• OD focuses on total system change and views
organizations as complex social systems.
• OD practitioners are facilitators,
collaborators, and co-learners with the client
system.

212
Primary distinguishing Cont’d …

• An overarching goal is to make the client

system able to solve its problems on its own by
teaching the skills and knowledge of continuous
learning through self-analytical methods.

• OD views organization improvement as an

ongoing process in the context of a
constantly changing environment.

213
Primary distinguishing cont’d …

• OD rely on an action research model with

extensive participation by client system
members.

• OD takes a development view that seeks the

betterment of both individual and the
organization. Attempting to create “win-win”
solutions are standard practice in OD programs.

214
The End !!

215
CHAPTER EIGHT

Motivation
 1. MOTIVATION
• Motivation is a psychological feature that
arouses an organism to act towards a
desired goal and elicits, controls, and
sustains certain goal-directed behaviours.
• It can be considered a driving force; a
psychological one that compels or
reinforces an action toward a desired goal.
1.1 BASICS OF MOTIVATION
 1.2 THEORIES OF MOTIVATION
1.2.1 THEORY X AND Y
• Theory X Assumptions:
 People inherently dislike work
 People must be coerced or controlled to do
work
to achieve objectives
 People prefer to be directed
• Theory Y Assumptions:
 People view work as being as natural as play
and rest
 People will exercise self-direction and control
towards achieving objectives they are
committed to
 People learn to accept and seek responsibility
1.2.2 NEED HIERARCHY
A. PHYSIOLOGICAL NEEDS
• These are biological needs.
• They consist of needs for oxygen, food, water,
and a relatively constant body temperature.
• They are the strongest needs because if a
person were deprived of all needs, the
physiological ones would come first in the
person's search for satisfaction
B. SAFETY NEEDS
• When all physiological needs are satisfied and are no
longer controlling thoughts and behaviors, the needs
for security can become active.
• Adults have little awareness of their security needs
except in times of emergency or periods of
disorganization in the social structure (such as
widespread rioting).
• Children often display the signs of insecurity and the
need to be safe.
C. NEEDS OF LOVE, AFFECTION AND
BELONGINGNESS
• When the needs for safety and for
physiological well-being are satisfied, the next
class of needs for love, affection and
belongingness can emerge.
• Maslow states that people seek to overcome
feelings of loneliness and alienation.
• This involves both giving and receiving love,
affection and the sense of belonging.
 D. NEEDS FOR ESTEEM
• When the first three classes of needs are
satisfied, the needs for esteem can become
dominant.
• These involve needs for both self-esteem and
for the esteem a person gets from others.
• Humans have a need for a stable, firmly
based, high level of self-respect, and respect
from others.
• When these needs are satisfied, the person
feels self-confident and valuable as a person
in the world. When these needs are frustrated,
the person feels inferior, weak, helpless and
worthless
E. NEEDS FOR SELF-ACTUALIZATION
• When all of the foregoing needs are satisfied,
then and only then are the needs for self-
actualization activated.
• Maslow describes self-actualization as a
person's need to be and do that which the
person was "born to do."
• "A musician must make music, an artist must
paint, and a poet must write."
SELF-ACTUALIZATION (CONT’D)
• These needs make themselves felt in signs of
restlessness.
• The person feels on edge, tense, lacking
something, in short, restless.
• If a person is hungry, unsafe, not loved or
accepted, or lacking self-esteem, it is very easy
to know what the person is restless about. It is
not always clear what a person wants when
there is a need for self-actualization.
1.2. 3 HERZBERG'S TWO FACTOR THEORY
• Herzberg interviewed a number of people in
different professions at different levels to find
out two things:

Those factors that MOTIVATED them

in the workplace
These were identified as factors that gave
employees an incentive to work resulting in job
satisfaction. They are also referred to as
'motivators'. These motivators increased the job
satisfaction of the employee and further increased
their efficiency.
CONT’D
Those factors that PREVENTED JOB
DISSATISFACTION
 These were identified as factors that prevented
job dissatisfaction. These did not make the
employees happy (or have job satisfaction): it
just removed the unhappiness out of working.
They are also referred to as 'hygiene' factors.
Such hygiene factors, if not satisfied, had an
effect of reduced employee efficiency
 HERTZBERG TWO FACTOR THEORY CONT’D
 Hygiene factors are those whose absence can create job
dissatisfaction:
 Supervision
 Company policy
 Working conditions
 Salary
 Peer relationship
 Security
 Motivator factors increase job satisfaction:
 Achievement
 Recognition
 Work itself
 Responsibility
 Advancement
 Growth
 1.2.4. MCCLELLAND'S
MOTIVATIONAL THEORY
A. Need for Achievement
Personal responsibility
Feedback
Moderate risk
B. Need For Power
 Influence
 Competitive
C. Need for Affiliation
 Acceptance and Friendship
 Cooperative
NEED FOR ACHIEVEMENT
• A strong need for achievement is a drive to succeed
and excel.
• It depends on how well individuals are motivated to
perform their work tasks.
• People with a high need for achievement like to take
responsibility for solving problems; they tend to set
moderately difficult goals for themselves and take
calculated risks to meet those goals; and they greatly
value feedback on how well they are doing.
NEED FOR POWER
• The need for power deals with the degree of
control a person desires over his or her
situation.
• People think about their control and influence
they have over others and how they can
influence to change people’s behavior, gain
authority and status and dominate decisions.
• Manipulating and controlling others satisfy
their needs.
NEED FOR AFFILIATION
• Many people spend much of their time
thinking about developing warm, friendly,
personal relationships with others in the
organization.
• They have a high need for affiliation; more
sensitive to others feelings, seek to establish
friendly relationships in groups, share
agreeable and supportive ideas
 1.3 MOTIVATIONAL THEORY
THAT FOCUS ON BEHAVIOR
• Goal Setting Theory
• Equity Theory
• Vroom’s Expectancy Theory
GOAL SETTING THEORY
• Specific goals increase performance, and difficult
goals, when accepted, result in higher performance
than easy goals.
EQUITY THEORY

An employee compares her/his job's inputs-

outcomes ratio with that of referents.
If the employee perceives inequity, she/he will
act to correct the inequity:
 Lower productivity
 Reduced quality
 Increased absenteeism
 Voluntary resignation.
VROOM’S EXPECTANCY THEORY
• Expectancy is the extent to which an individual
believes that a specific action will result in a
particular outcome
• There are two types of expectancies:
– Effort- performance (E-P) and
– Performance – Outcome (P-O)
EFFORT PERFORMANCE (E-P)
• Involves a person believing that increased
effort will in fact lead to increased
performance.
PERFORMANCE OUTCOME (P–O)
• Expectancies are beliefs that a certain
performance will lead to a particular outcome.
• Individuals expect certain consequences of
their behavior, which affect their decisions on
how to behave.
VALENCE
• is the outcome of a particular behavior, or
power to motivate, which varies from
individual to individual.
• Valence is the value or preference, an
individual places on an outcome.
– Given a choice, individuals tend to select the level
of performance that seems to have the best
chance of achieving an outcome they value.
EXPECTANCY THEORY (SUMMARY)
• An individual will act in a certain way based on the
expectation that the act will be followed by a given
outcome and on the attractiveness of that outcome
to the individual.
 Effort -------> Performance linkage (How hard will I
have to work?)

 Performance -------> Reward linkage (What is the

reward?)

 Attractiveness (How attractive is the reward?)

EXPECTANCY (CONT’D)
• EXPECTANCY x VALENCY = LEVEL OF
MOTIVATION
The End!!!!
CHAPTER NINE
LEADERSHIP
• “Trust men and they will be true to you;
treat them greatly and they will show
themselves to be great.”
Ralph Waldo Emerson
1. DEFINITIONS
 Leadership: is the process by which a person exerts
influence over others and inspires, motivates and
directs their activities to achieve group or
organizational goals.
 The leadership definition implies that:
 It involves the use of influence.
 Involves the importance of being a change agent—
being able to affect followers’ behavior and
performance.
 Finally, the definition focuses on accomplishing
goals.
DEFINITION CONT’D
 Leadership occurs when one modifies the
motivation or competencies of others.
 Effective leader may have to deal with
individual, group, and organizational goals.
 Leader effectiveness is typically measured by
the accomplishment of one or a combination
of these goals.
DEFINITION CONT’D
 Followership – the process of being guided and
directed by a leader in the work environment.
 Ineffective followers may be more of a handicap to
an organization than ineffective leaders.
 Qualities of effective followers:
 They manage themselves well.
 They are committed to a purpose outside
themselves.
 They build their competence and focus their efforts
for maximum impact.
 They are courageous, honest, and credible
2. LEADERSHIP ROLE
• It involves people
• It involves unequal distribution of power
• the ability to use the different forms of power
to influence follower’s behaviors in a number
of ways
• Leadership constitutes values
• The ability to comprehend that human beings
have different motivation forces
 3. SOURCE OF POWER
 Two sources of power which in turn divided into
five categories:
 Organizational sources of power (Legitimate,
reward and coercive)
 Personal sources of power (expertise and referent)

A. Legitimate Power
 The authority that a manager has by virtue of his
or her position in the organization.
B. Reward Power
 The ability of a manager to give or withhold
tangible and intangible rewards.
SOURCE OF POWER CONT’D
C. Coercive Power
 The ability of a manager to punish others.
D. Expert Power
 Power that is based on special knowledge, skills,
and expertise that the leader possesses.
 Tends to be used in a guiding or coaching manner
E. Referent Power
 Power that comes from subordinates’ and
coworkers’ respect , admiration, and loyalty
 Possessed by managers who are likable and whom
subordinates wish to use as a role model
4. LEADERSHIP THEORIES
1. Early Theories:
 Great Man Theories
 Trait Theories

2. Behavioral Theories
3. Contemporary Views on Leadership
 4.1 EARLY THEORIES
 Great Man Theory
 Leaders are exceptional people, born with innate
qualities, destined to lead.
 Leaders are born, not made
 Great man approach actually emphasis “charismatic”
leadership .charisma being the Greek word for gift.
 According to this great man theory of leadership,
leadership calls for certain qualities like:
persuasiveness
 commanding personality
 charm courage
 Intelligence
 aggressiveness.
  TRAIT THEORY
 Theory that attempts to identify specific
characteristics (physical, ability, personality)
associated with leadership success.
 Traits are characteristics of the person:
 Physical characteristics (height, weight,
appearance, health, etc)
 Abilities (intelligence, creativity, knowledge,
technical competence etc).
 Personality traits (self-confidence,
dominance, adaptable,
extroversion/sociability, originality, etc)
TRAIT THEORY CONT’D
 Traits consistently associated with leadership:
 Ambition and energy
 The desire to lead
 Honesty and integrity
 Self-confidence

 Intelligence

 Job-relevant knowledge
4.2 BEHAVIORAL THEORIES OF LEADERSHIP

 Propose that specific behaviors

differentiate leaders from non-leaders
 Four schools:
 Kurt Lewin Studies
 Ohio State Studies
 University of Michigan Studies
 Managerial Grid
 1. KURT LEWIN STUDIES
 Identified three leadership styles:
 Autocratic style: centralized authority, low

participation
 Democratic style: involvement, high
participation, feedback
 Laissez faire style: hands-off management

 Research findings: mixed results

 No specific style was consistently better for

producing better performance

 Employees were more satisfied under a
democratic leader than an autocratic leader
 2. OHIO STATE STUDIES
 Identified two dimensions of leader behavior:
 Initiating structure: the role of the leader in
defining his or her role and the roles of group
members
 Consideration: the leader’s mutual trust and respect
for group members’ ideas and feelings.
 Research findings: mixed results
 High-high leaders generally, but not always,
achieved high group task performance and
satisfaction.
 Evidence indicated that situational factors appeared
to strongly influence leadership effectiveness.
STUDIES

 Identified two dimensions of leader behavior

Employee oriented: emphasizing
personal relationships
Production oriented: emphasizing task
accomplishment
 Research findings:
Leaders who are employee oriented are
strongly associated with high group
productivity and high job satisfaction.
4. MANAGERIAL GRID
 Appraises leadership styles using two
dimensions:
Concern for people

Concern for production

Places managerial styles in five categories:

Impoverished management

Task management

Middle-of-the-road management
Country club management
Team management
MANAGERIAL GRID CONT’D
 RESEARCH FINDINGS FOR
BEHAVIORAL
THEORIES
 When subordinates experience a lot of pressure
because of deadlines or unclear tasks, leaders who are
people oriented will increase employee satisfaction and
performance.
 When the task is interesting or satisfying, there is less
need for leaders to be people oriented.
 When it’s clear how to perform the task and what the
goals are, leaders who are people oriented will increase
employee satisfaction, while those who are task
oriented will increase dissatisfaction.
 When people don’t know what to do, or individuals
don’t have the knowledge or skills to do the job, it’s
more important for leaders to be production oriented
than people oriented.
4.3 CONTEMPORARY VIEWS ON
LEADERSHIP

 Transformational Leadership
 Transactional Leadership
 Charismatic Leadership
 Visionary Leadership
 Servant and Super-leadership
A. TRANSACTIONAL VS. TRANSFORMATIONAL
LEADERSHIP
 Transactional leaders

 Leaders who guide or motivate their followers in

the direction of established goals by clarifying role
and task requirements.
 Transformational leaders

 Leaders who inspire followers to transcend their own

self-interests for the good of the organization by
clarifying role and task requirements.
 Leaders who also are capable of having a profound
and extraordinary effect on their followers.
CHARACTERISTICS OF TRANSACTIONAL
LEADERS
 Contingent reward
Contracts exchange of rewards for effort, promises
rewards for good performance, recognizes
accomplishments.
 Management by exception (active)
Watches and searches for deviations from rules and
standards, takes corrective action.
 Management by exception (passive)
Intervenes only if standards are not met.
 Laissez-Faire leader
Abdicates responsibilities, avoids making decisions.
 CHARACTERISTICS OF
TRANSFORMATIONAL LEADERS
 Charisma
 Provides vision and sense of mission, instills pride,
gains respect and trust.
 Inspiration
 Communicates high expectations, uses symbols to
focus efforts, expresses important purposes in
simple ways.
 Intellectual stimulation
 Promotes intelligence, rationality, and careful
problem-solving.
 Individualized consideration
 Gives personal attention, treats each employee
individually, coaches, advises.
TRANSFORMATIONAL LEADERSHIP
ELEMENTS

Building Creating
Commitment a Vision

Transformational
Leadership
Communicating
Modelling the Vision
the Vision
 B. CHARISMATIC LEADERSHIP
 An enthusiastic, self-confident leader whose
personality and actions influence people to behave in
certain ways.
 Characteristics of charismatic leaders:
Have a vision.

Are able to articulate the vision.

Are willing to take risks to achieve the vision.

Are sensitive to the environment and follower

needs.
 Exhibit behaviors that are out of the ordinary.
 C. VISIONARY LEADERSHIP
 A leader who creates and articulates a realistic,
credible, and attractive vision of the future that
improves upon the present situation.
 Visionary leaders have the ability to:
 Explain the vision to others.
 Express the vision not just verbally but
through behavior.
 Extend or apply the vision to different
leadership contexts.
 D. SERVANT AND SUPER-
LEADERSHIP
 Servant Leadership represents a philosophy in
which leaders focus on increased service to
others rather than to oneself.
 A super-leader is someone who leads others to
lead themselves by developing employees’
self-management skills.
 Super-leaders attempt to increase
employees’ feelings of personal control and
intrinsic motivation.
 5. STYLES OF LEADERSHIP

1. Authoritarian
 A style of leadership in which the leader uses strong,
directive, controlling actions to enforce the rules,
regulations, activities and relationships in the work
environment.
CHARACTERISTICS OF AUTHORITARIAN
LEADERSHIP
• Sets goals individually
• Engages primarily in one-way, downward
communication
• Controls discussions of followers
• Sets policy and procedures unilaterally
• Dominates interaction
• Personally directs the completion of tasks
• Provides infrequent positive feedback
• Rewards obedience and punishes mistakes
• Exhibits poor listening skills
• Uses conflict for personal gain
 2. DEMOCRATIC
 A style of leadership in which the leaders takes
collaborative, responsive, interactive actions
with followers concerning the work and the
work environment.
 CHARACTERISTICS OF DEMOCRATIC
LEADERSHIP
• Involves followers in setting goals
• Engages in two-way, open communication
• Facilitates discussion with followers
• Solicits input regarding determination of policy and
procedures
• Focuses interaction
• Provides suggestions and alternatives for the
completion of tasks
• Provides frequent positive feedback
• Rewards good work and uses punishment only as a
last resort
• Exhibits effective listening skills
• Mediates conflict for group gain
 3. LAISSEZ-FAIRE
(“LEAVE THEM ALONE”)
• A style of leadership in which the leader fails to
accept the responsibilities of the position.
 CHARACTERISTICS OF LAISSEZ-FAIRE
LEADERSHIP
• Allows followers free rein to set their own goals
• Engages in noncommittal, superficial communication
• Avoids discussion with followers to set policy and
procedures
• Avoids interaction
• Provides suggestions and alternatives for the
completion of tasks only when asked to do so by
followers
• Provides infrequent feedback of any kind
• Avoids offering rewards or punishments
• May exhibit either poor or effective listening skills
• Avoids conflict
The End!!!
 Chapter Ten

Fundamentals of Controlling
1. Definition
Controlling is the process through which
managers assure that actual activities
conform to planned activities
It sees that the right things happen, in the
right ways, and at the right time.
 2. Purposes of Controlling
Controls make plans effective
 Managers need to measure progress, offer feedback,
and direct their teams if they want to succeed.
Controls make sure that organizational activities are
consistent
 Policies and procedures help ensure that efforts are
integrated.
 Controls make organizations effective
 Controls make organizations efficient
 Efficiency probably depends more on controls than
any other management function.
 Purposes of controlling Cont’d
Controls provide feedback on project status.
 Feedback influences behavior and is an essential
ingredient in the control process.
Controls aid in decision making.
 Controls make managers aware of problems and give
them information that is necessary for decision
making.
Adapting to changing conditions
 A properly designed control system allows managers
to effectively anticipate, monitor, and respond to
often constantly changing conditions.
3. Relationship with other management functions

The controlling process is closely associated with

the other three functions of management:
planning, organizing and leading.
 It builds most directly on the planning function
by providing the means for monitoring and
making adjustment in performance
 Controlling also supports the organizing and
leading functions by helping ensure those
resources are channeled toward organizational
objectives.
4. Characteristics of an Effective Control System
Future–Oriented
 To be effective, control systems need to help regulate
future events, rather than fix blame for past events.
 Multidimensional
 need to be multidimensional in order to capture the major
relevant performance factors, such as, quality, quantity,
overhead, etc.
 Economically Realistic/ Cost Effective
 The cost of implementing a control system should be
less, or at most, equal to the benefits derived from the
control system.
Characteristics Cont’d

Accurate
 Since control systems provide the basis for
future actions, accuracy is vital.
 Acceptable to Organization Members
 Control systems operate best when they
are accepted by the organization members
who are affected by them 
Characteristics Cont’d

Timely
 Control systems must provide relevant
information soon enough to allow corrective
action before there are serious repercussions or
consequences
 Reliability and Validity
 Controls not only must be dependable (reliable),
but also must measure what they intend to
measure (must be valid).
Characteristics Cont’d

Flexible
Control systems need to be flexible
enough to meet new or revised
requirements.
 Easy to Understand
The simpler the control, the easier it
will be to understand and apply.
5.Controlling Process
Establish objectives and standards.
 Measure actual performance.
 Compare results with objectives and
standards.
 Take necessary action.
5.1 Establish Objectives and Standards

• Performance objectives are defined and the

standards for measuring them are set.
• There are two types of standards:
– Output Standards - measures
performance results in terms of quantity,
quality, cost, or time.
– Input Standards - measures work efforts
that go into a performance task.
5.2 Measuring Actual Performance
 Measurements must be accurate enough to
spot deviations or variances between what
really occurs and what is most desired.
 Without measurement, effective control is not
possible.
5.3 Comparing Results with Objectives and Standards
 The comparison of actual performance with
desired performance establishes the need for
action.
 Ways of making such comparisons include:
 Historical / Relative
 Benchmarking
5.4 Taking Corrective Action
 The corrective action to be taken depends up on
the type of deviation that exists
 When performance exactly meets (deviation of
zero) or exceeds (positive deviation) the
standards set - recognizing the positive
performance
 When standards are not meet, managers must
carefully assess the reason why and take
corrective action
6.Types of Controlling
 Control can focus on events before, during, or
after a process. Based on this three types of
control are identified:
 Preliminary
 Concurrent
 Post-action
6.1 Preliminary/Preventive/Steering/Input Control
 accomplished before a work activity begins.
 make sure that proper directions are set and that the
right resources are available to accomplish them.
 attempts to monitor the quality and/or quantity of
resources (human, material, and financial) within the
organization
 aims to prevent problems before they arise
 It is future oriented
6.2 Concurrent/Screening/ Yes-No/Checking Control

monitor ongoing operations and activities to

make sure that things are being done correctly.
 rely on performance standards, rules, and
regulations for guiding employee tasks and
behaviors.
 the purpose is to ensure that work activities
produce the desired results.
 Concurrent Cont’d
the only controls that can cope with
contingencies (unexpected events) that cannot be
anticipated
 When contingencies arise involving activities in
a transformation process, a yes/no decision is
required
decision must be made whether to:
 continue as before or follow an alternative course, or
 take corrective action, or
 stop work altogether.
6.3 Feedback/Post-Action/Output Controls

they take place after an action is completed.

 They focus on end results, as opposed to inputs
and activities.
 its purpose is to:
help prevent mistakes in the future and
also it can be used as a base for reward
7.Designing Effective Control Systems

1. Establish valid performance standards.

2. Provide adequate information to
employees.
3. Ensure acceptability to employees.
4. Maintain open communication.
5. Use multiple approaches.
8.Controlling Techniques
Control techniques provide managers with the
type and amount of information they need to
measure and monitor performance.
 Includes:
 Financial controls
 Budget controls
 Marketing controls
 Human resource controls
 Computers and information controls
8.1 Financial Controls
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.
 Financial controls Cont’d
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.
 Financial audits are regularly conducted to
ensure that financial management practices
follow generally accepted procedures, policies,
laws, and ethical guidelines.
 Financial controls Cont’d
 Financial ratio analysis:
 examines the relationship between specific figures on the
financial statements and
 helps explain the significance of those figures:
 Financial ratios include:
 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.
8.2 Budget Controls
A budget, in reality, is both:
 a planning tool and
 a control mechanism
 A budget depicts how much an organization:
 expects to spend (expenses) and
 earn (revenues) over a time period.
 Budgets also help managers keep track of their
overall spending
8.3 Marketing Controls
help to monitor progress toward goals for customer
satisfaction with products and services, prices, and delivery.
 Examples of controls used to evaluate an organization’s
marketing functions:
 Market research gathers data to assess customer needs
 Test marketing is small-scale product marketing to
assess customer acceptance
 Marketing statistics measure performance by compiling
data and analyzing results
 8.4 Human Resource Controls
help managers regulate:
 the quality of newly hired personnel,
 as well as monitor current employees’
developments and daily performances.
 Common control types include:
 performance appraisals
 disciplinary programs
 observations, and
 training and development assessments.
8.5 Computers and Information Controls

It is Controlling access to computer databases

The aim is to protect confidential and sensitive
information that an organization don’t want to
become general knowledge
Any Questions?

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