This document provides course notes for the first semester of a Bachelor's degree in Computer Applications. It outlines the syllabus for the Principles of Management course, including 6 units that cover topics such as the nature and functions of management, management thought and theories, strategic management, and managing change. Key concepts discussed include definitions of management, the science and art of management, management functions like planning, organizing, staffing, directing, and controlling. References for further reading are also provided.

1. COURSE NOTES
FOR
Bachelor Computer Applications
First Semester
Principal Of Management
as per syllabus of
Mahatma Gandhi Kashi Vidyapith, Varanasi
Prepared By: MILAN GUPTA
Department of Computer Science
Microtek College of Management & Technology
Varanasi.

2. BCA-S103 Principles of Management
UNIT-I
 Nature of Management:
 Meaning, Definition, nature & purpose, importance & Functions, Management as Art,
Science & Profession-
 Management as social System Concepts of management-Administration-
Organization, Management Skills,
 Levels of Management.
UNIT-II
 Evolution of Management Thought:
 Contribution of F.W.Taylor, Henri Fayol, Elton Mayo, Chester Barhard & Peter
Drucker to the management
 thought. Business Ethics & Social Responsibility: Concept, Shift to Ethics, Tools of
Ethics.
UNIT-III
 Functions of Management: Part-I
 Planning – Meaning- Need & Importance, types, Process of Planning, Barriers to
Effective Planning, levels –
 advantages & limitations. Forecasting- Need & Techniques Decision making-Types -
Process of rational
 decision making & techniques of decision making, Organizing – Elements of
organizing & processes: Types of
 organizations, Delegation of authority – Need, difficulties , Delegation –
Decentralization
 Staffing – Meaning & Importance
 Direction – Nature – Principles
 Communication – Types & Importance
UNIT-IV
 Functions of Management: Part-II
 Motivation – Importance – theories
 Leadership – Meaning –styles, qualities & function of leader
 Controlling - Need, Nature, importance, Process & Techniques, Total Quality
Management
 Coordination – Need – Importance
UNIT – V
 Management of Change: Models for Change, Force for Change, Need for Change,
Alternative Change
 Techniques, New Trends in Organization Change, Stress Management.
UNIT-VI
 Strategic Management
 Definition, Classes of Decisions, Levels of Decision, Strategy, Role of different
Strategist, Relevance of
 Strategic Management and its Benefits, Strategic Management in India

Reference Books:
 Essential of Management – Horold Koontz and Iteinz Weibrich- McGraw-Hill’s
International
 Management Theory & Practice – J.N.Chandan


3. UNIT-1
MEANING OF MANAGEMENT
ACCORDING TO THEO HEIMANN, MANAGEMENT HAS THREE DIFFERENT MEANINGS, VIZ.,
1.MANAGEMENT AS A NOUN : REFERS TO A GROUP OF MANAGERS.
2.MANAGEMENT AS A PROCESS : REFERS TO THE FUNCTIONS OF MANAGEMENT I.E.
PLANNING, ORGANISING, DIRECTING, CONTROLLING, ETC.
3.MANAGEMENT AS A DISCIPLINE : REFERS TO THE SUBJECT OF MANAGEMENT
MANAGEMENT BRINGS TOGETHER ALL SIX MS I.E. MEN AND WOMEN, MONEY, MACHINES,
MATERIALS, METHODS AND MARKETS. THEY USE THESE RESOURCES FOR ACHIEVING THE
OBJECTIVES OF THE ORGANISATION SUCH AS HIGH SALES, MAXIMUM PROFITS, BUSINESS
EXPANSION, ETC.
DEFINITION OF MANAGEMENT

4. MANY MANAGEMENT EXPERTS HAVE TRIED TO DEFINE MANAGEMENT. BUT, NO DEFINITION
OF MANAGEMENT HAS BEEN UNIVERSALLY ACCEPTED. LET US DISCUSS SOME OF THE
LEADING DEFINITIONS OF MANAGEMENT:
PETER F. DRUCKER DEFINES, "MANAGEMENT IS AN ORGAN; ORGANS CAN BE DESCRIBED
AND DEFINED ONLY THROUGH THEIR FUNCTIONS".
ACCORDING TO TERRY, "MANAGEMENT IS NOT PEOPLE; IT IS AN ACTIVITY LIKE WALKING,
READING, SWIMMING OR RUNNING. PEOPLE WHO PERFORM MANAGEMENT CAN BE
DESIGNATED AS MEMBERS, MEMBERS OF MANAGEMENT OR EXECUTIVE LEADERS."
RALPH C. DAVIS HAS DEFINED MANAGEMENT AS, "MANAGEMENT IS THE FUNCTION OF
EXECUTIVE LEADERSHIP ANYWHERE."
ACCORDING TO MC FARLAND, "MANAGEMENT IS DEFINED FOR CONCEPTUAL,
THEORETICAL AND ANALYTICAL PURPOSES AS THAT PROCESS BY WHICH MANAGERS
CREATE, DIRECT, MAINTAIN AND OPERATE PURPOSIVE ORGANIZATION THROUGH
SYSTEMATIC, CO-ORDINATED CO-OPERATIVE HUMAN EFFORT."
HENRY FAYOL, "TO MANGE IS TO FORECAST AND PLAN, TO ORGANIZE, TO COMPOUND, TO
CO-ORDINATE AND TO CONTROL."
HAROLD KOONTZ SAYS, "MANAGEMENT IS THE ART OF GETTING THINGS DONE THROUGH
AND WITHIN FORMALLY ORGANIZED GROUP."

5. KIMBALL AND KIMBALL, "MANAGEMENT EMBRACES ALL DUTIES AND FUNCTIONS THAT
PERTAIN TO THE INITIATION OF AN ENTERPRISE, ITS FINANCING, THE ESTABLISHMENT OF
ALL MAJOR POLICIES, THE PROVISION OF ALL NECESSARY EQUIPMENT, THE OUTLINING OF
THE GENERAL FORM OF ORGANIZATION UNDER WHICH THE ENTERPRISE IS TO OPERATE AND
THE SELECTION OF THE PRINCIPAL OFFICERS."
.
NATURE OF MANAGEMENT
MANAGEMENT IS A MULTI-DISCIPLINARY IN NATURE AND IS DISTINCT ACTIVITY.
MANAGEMENT HAS BEEN REGARDED AS SCIENCE AND AN ART AND A PROFESSION. THE
TRUE NATURE OF MANAGEMENT CAN BE KNOWN ONLY AFTER STUDYING THESE ASPECT OF
MANAGEMENT. THE FOLLOWING ARE THE SALIENT NATURE OF MANAGEMENT:
1.MANAGEMENT IS A SCIENCE AND AN ART
2.MANAGEMENT IS UNIVERSAL
3.MANAGEMENT IS GOAL ORIENTED
4.MANAGEMENT IS ECONOMIC RESOURCE
5.MANAGEMENT IS DISTINCT PROCESS
6.MANAGEMENT IS A GROUP ACTIVITY
7.MANAGEMENT IS AN INTANGIBLE FORCE
8.MANAGEMENT IS A MULTI-DISCIPLINARY SUBJECT
9.MANAGEMENT IS DYNAMIC
10.SYSTEMS OF AUTHORITY
PURPOSE OF MANAGEMENT
IT IS THE PROCESS OF BRINGING TOGETHER PHYSICAL, FINANCIAL AND HUMAN RESOURCES
AND DEVELOPING PRODUCTIVE RELATIONSHIP AMONGST THEM FOR ACHIEVEMENT OF
ORGANIZATIONAL GOALS.
•TO ORGANIZE A BUSINESS INVOLVES DETERMINING & PROVIDING HUMAN AND NON-
HUMAN RESOURCES TO THE ORGANIZATIONAL STRUCTURE. ORGANIZING AS A PROCESS
INVOLVES:
•IDENTIFICATION OF ACTIVITIES.
•CLASSIFICATION OF GROUPING OF ACTIVITIES.

6. •ASSIGNMENT OF DUTIES.
•DELEGATION OF AUTHORITY AND CREATION OF RESPONSIBILITY.
•COORDINATING AUTHORITY AND RESPONSIBILITY RELATIONSHIPS
THE MAIN PURPOSE OF STAFFING IS TO PUT RIGHT MAN ON RIGHT JOB I.E. SQUARE PEGS IN
SQUARE HOLES AND ROUND PEGS IN ROUND HOLES.
•ESTABLISHMENT OF STANDARD PERFORMANCE.
•MEASUREMENT OF ACTUAL PERFORMANCE.
•COMPARISON OF ACTUAL PERFORMANCE WITH THE STANDARDS AND FINDING OUT
DEVIATION IF ANY.
•CORRECTIVE ACTION
MANAGEMENT FUNCTIONS
HENRY FAYOL FIRST REAL THINKER OF MANAGEMENT PHILOSOPHY HAS CLASSIFIED THE
FUNCTIONS AS
1.PLANNING
2.ORGANIZING
3.COMMANDING (DIRECTING)
4.STAFFING
5.CONTROLLING

7. PLANNING:
PLANNING IS DECIDING IN ADVANCE - WHAT TO DO, WHEN TO DO & HOW TO DO. IT
BRIDGES THE GAP FROM WHERE WE ARE & WHERE WE WANT TO BE”. A PLAN IS A FUTURE
COURSE OF ACTIONS. IT IS AN EXERCISE IN PROBLEM SOLVING & DECISION MAKING.
PLANNING IS DETERMINATION OF COURSES OF ACTION TO ACHIEVE DESIRED GOALS.
ORGANIZING
IT IS THE PROCESS OF BRINGING TOGETHER PHYSICAL, FINANCIAL AND HUMAN RESOURCES
AND DEVELOPING PRODUCTIVE RELATIONSHIP AMONGST THEM FOR ACHIEVEMENT OF
ORGANIZATIONAL GOALS.
•TO ORGANIZE A BUSINESS INVOLVES DETERMINING & PROVIDING HUMAN AND NON-
HUMAN RESOURCES TO THE ORGANIZATIONAL STRUCTURE. ORGANIZING AS A PROCESS
INVOLVES:
•IDENTIFICATION OF ACTIVITIES.
•CLASSIFICATION OF GROUPING OF ACTIVITIES.
•ASSIGNMENT OF DUTIES.
•DELEGATION OF AUTHORITY AND CREATION OF RESPONSIBILITY.
•COORDINATING AUTHORITY AND RESPONSIBILITY RELATIONSHIPS

8. STAFFING:
THE MAIN PURPOSE OF STAFFING IS TO PUT RIGHT MAN ON RIGHT JOB I.E. SQUARE PEGS IN
SQUARE HOLES AND ROUND PEGS IN ROUND HOLES.
ACCORDING TO KOOTZ & O’DONELL, “MANAGERIAL FUNCTION OF STAFFING INVOLVES
MANNING THE ORGANIZATION STRUCTURE THROUGH PROPER AND EFFECTIVE SELECTION,
APPRAISAL & DEVELOPMENT OF PERSONNEL TO FILL THE ROLES DESIGNED ON THE
STRUCTURE”.
DIRECTING
IT IS THAT PART OF MANAGERIAL FUNCTION WHICH ACTUATES THE ORGANIZATIONAL
METHODS TO WORK EFFICIENTLY FOR ACHIEVEMENT OF ORGANIZATIONAL PURPOSES.
IT IS CONSIDERED LIFE-SPARK OF THE ENTERPRISE WHICH SETS IT IN MOTION THE ACTION
OF PEOPLE BECAUSE PLANNING, ORGANIZING AND STAFFING ARE THE MERE PREPARATIONS
FOR DOING THE WORK. DIRECTION IS THAT INERT-PERSONNEL ASPECT OF MANAGEMENT
WHICH DEALS DIRECTLY WITH INFLUENCING, GUIDING, SUPERVISING, MOTIVATING SUB-
ORDINATE FOR THE ACHIEVEMENT OF ORGANIZATIONAL GOALS.
DIRECTION HAS FOLLOWING ELEMENTS:
•SUPERVISION
•MOTIVATION
•LEADERSHIP
•COMMUNICATION
CONTROLLING
CONTROLLING IS THE MEASUREMENT & CORRECTION OF PERFORMANCE ACTIVITIES OF
SUBORDINATES IN ORDER TO MAKE SURE THAT THE ENTERPRISE OBJECTIVES AND PLANS

9. DESIRED TO OBTAIN THEM AS BEING ACCOMPLISHED”. THEREFORE CONTROLLING HAS
FOLLOWING STEPS:
•ESTABLISHMENT OF STANDARD PERFORMANCE.
•MEASUREMENT OF ACTUAL PERFORMANCE.
•COMPARISON OF ACTUAL PERFORMANCE WITH THE STANDARDS AND FINDING OUT
DEVIATION IF ANY.
•CORRECTIVE ACTION
MANAGEMENT AS A SCIENCE :
DEVELOPMENT OF MANAGEMENT AS A SCIENCE IS OF RECENT ORIGIN, EVEN THOUGH ITS
PRACTICE IS AGES OLD. FREDRICK W. TAYLOR WAS THE FIRST MANAGER-THEORIST WHO
MADE SIGNIFICANT CONTRIBUTIONS TO THE DEVELOPMENT OF MANAGEMENT AS A
SCIENCE. HE USED THE SCIENTIFIC METHODS OF ANALYSIS, OBSERVATION AND
EXPERIMENTATION IN THE MANAGEMENT OF PRODUCTION FUNCTION. A PERCEPTIVE
MANAGER, AS HE WAS, HE DISTILLED CERTAIN FUNDAMENTAL PRINCIPLES AND
PROPOUNDED THE THEORY AND PRINCIPLES OF SCIENTIFIC MANAGEMENT. HIS WORK WAS
FOLLOWED BY MANY OTHERS INCLUDING GANTT, EMERSON, FAYOL, BARNARD, ETC.
DURING THE LAST FEW DECADES, GREAT STRIDES HAVE BEEN MADE IN THE DEVELOPMENT
OF MANAGEMENT AS A SYSTEMATIZED BODY OF KNOWLEDGE WHICH CAN BE LEARNT,
TAUGHT AND RESEARCHED. IT HAS ALSO PROVIDED POWERFUL TOOLS OF ANALYSIS,
PREDICTION AND CONTROL TO PRACTICING MANAGERS. THE SCIENTIFIC CHARACTER OF
MANAGEMENT HAS BEEN PARTICULARLY STRENGTHENED BY MANAGEMENT SCIENTISTS
WHO HAVE DEVELOPED MATHEMATICAL MODELS OF DECISION MAKING.
MANAGEMENT AS AN ART :
PRINCIPLES OF MANAGEMENT LIKE THE PRINCIPLES OF MEDICINE ARE USED BY THE
PRACTITIONER NOT AS RULES OF THUMB BUT AS GUIDES IN SOLVING PRACTICAL PROBLEMS.
IT IS OFTEN SAID THAT MANAGERIAL DECISION MAKING INVOLVES A LARGE ELEMENT OF
JUDGEMENT. THIS IS TRUE TOO. THE RAGING CONTROVERSY WHETHER MANAGEMENT IS A
SCIENCE OR AN ART IS FRUITLESS. IT IS A SCIENCE AS WELL AS AN ART. DEVELOPMENTS IN
THE FIELD OF THE KNOWLEDGE OF MANAGEMENT HELP IN THE IMPROVEMENT OF ITS
PRACTICE; AND IMPROVEMENTS IN THE PRACTICE OF MANAGEMENT SPUR FURTHER
RESEARCH AND STUDY RESULTING IN FURTHER DEVELOPMENT OF MANAGEMENT SCIENCE.
MANAGEMENT AS A PROFESSION :
WE OFTEN HEAR OF PROFESSIONALISATION OF MANAGEMENT IN OUR COUNTRY. BY A
PROFESSIONAL MANAGER, WE GENERALLY MEAN A MANAGER WHO UNDERTAKES
MANAGEMENT AS A CAREER AND I NOT INTERESTED IN ACQUIRING OWNERSHIP SHARE IN
THE ENTERPRISE WHICH HE MANAGES. BUT, IS MANAGEMENT A PROFESSION IN THE TRUE

10. SENSE OF THE WORD? OR, IS MANAGEMENT A PROFESSION LIKE THE PROFESSIONS OF LAW
AND MEDICINE? ACCORDING TO MCFARLAND A PROFESSION POSSESS THE FOLLOWING
CHARACTERISTICS : (I) A BODY OF PRINCIPLES, TECHNIQUES, SKILLS, AND SPECIALIZED
KNOWLEDGE; (II) FORMALIZED METHODS OF ACQUIRING TRAINING AND EXPERIENCE; (III)
THE ESTABLISHMENT OF A REPRESENTATIVE ORGANIZATION WITH PROFESSIONALISATION
AS ITS GOAL; (IV) THE FORMATION OF ETHICAL CODES FOR THE GUIDANCE OF CONDUCT;
AND (V) THE CHARGING OF FEES BASED ON THE NATURE OF SERVICES.MANAGEMENT IS A
PROFESSION TO THE EXTENT IT FULFILS THE ABOVE CONDITIONS.
MANAGEMENT AS SOCIAL SYSTEM APPROACH
• UNDERSTANDING THE BEHAVIOUR OF GROUPS & INDIVIDUALS.
• FEATURES
1. SOCIAL SYSTEM, A SYSTEM OF CULTURAL RELATIONSHIP
2. RELATIONSHIP EXIST BETWEEN EXTERNAL AND INTERNAL ENVIRONMENT
OF THE ORGANISATION.
3. FORMAL ORGANISATION - CULTURAL RELATIONSHIPS OF SOCIAL
GROUPS

11. WORKING WITHIN THE ORGANISATION.
4. CO-OPERATION NECESSARY
5. EFFORTS DIRECTED - HARMONY BETWEEN GOALS OF ORGANISATION &
GOALS OF GROUPS.
SYSTEMS APPROACH
• AN ENTERPRISE
• MAN-MADE SYSTEM
• INTERNAL PARTS
• ACHIEVE ESTABLISHED GOALS
• EXTERNAL PARTS
• ACHIEVE INTERPLAY WITH ITS ENVIRONMENT
• MANAGER INTEGRATES HIS AVAILABLE FACILITIES WITH GOAL
ACHIEVEMENT.
LEVELS OF MANAGEMENT
AN ENTERPRISE MAY HAVE DIFFERENT LEVELS OF MANAGEMENT. LEVELS OF MANAGEMENT
REFER TO A LINE OF DEMARCATION BETWEEN VARIOUS MANAGERIAL POSITIONS IN AN
ENTERPRISE. THE LEVELS OF MANAGEMENT DEPEND UPON ITS SIZE, TECHNICAL FACILITIES,
AND THE RANGE OF PRODUCTION. WE GENERALLY COME ACROSS TWO BROAD LEVELS OF
MANAGEMENT, VIZ. (I) ADMINISTRATIVE MANAGEMENT (I.E., THE UPPER LEVEL OF

12. MANAGEMENT) AND (II) OPERATING MANAGEMENT (I.E., THE LOWER LEVEL OF
MANAGEMENT).
HREE LEVELS OF MANAGEMENT NAMELY:
TOP MANAGEMENT OF A COMPANY CONSISTS OF OWNERS/SHAREHOLDERS, BOARD OF
DIRECTORS, ITS CHAIRMAN, MANAGING DIRECTOR, OR THE CHIEF EXECUTIVE, OR THE
GENERAL MANAGER OR EXECUTIVE COMMITTEE HAVING KEY OFFICERS.
MIDDLE MANAGEMENT OF A COMPANY CONSISTS OF HEADS OF FUNCTIONAL
DEPARTMENTS VIZ. PURCHASE MANAGER, PRODUCTION MANAGER, MARKETING MANAGER,
FINANCIAL CONTROLLER, ETC. AND DIVISIONAL AND SECTIONAL OFFICERS WORKING
UNDER THESE FUNCTIONAL HEADS.
LOWER LEVEL OR OPERATIVE MANAGEMENT OF A COMPANY CONSISTS OF
SUPERINTENDENTS, FOREMEN, SUPERVISORS, ETC.
TOP MANAGEMENT : TOP MANAGEMENT IS THE ULTIMATE SOURCE OF AUTHORITY AND
IT LAYS DOWN GOALS, POLICIES AND PLANS FOR THE ENTERPRISE. IT DEVOTES MORE TIME
ON PLANNING AND COORDINATING FUNCTIONS TOP MANAGEMENT INCLUDE :
 TO ESTABLISH THE OBJECTIVES OR GOALS OF THE ENTERPRISE.
 TO MAKE POLICIES AND FRAME PLANS TO ATTAIN THE OBJECTIVES LAID.
 TO SET UP AN ORGANIZATIONAL FRAME WORK TO CONDUCT THE OPERATIONS AS
PER PLANS.
 TO ASSEMBLE THE RESOURCES OF MONEY, MEN, MATERIALS, MACHINES AND
METHODS TO PUT THE PLANS INTO ACTION.
 TO EXERCISE EFFECTIVE CONTROL OF THE OPERATIONS.
 TO PROVIDE OVERALL LEADERSHIP TO THE ENTERPRISE.
MIDDLE MANAGEMENT : THE JOB OF MIDDLE MANAGEMENT IS TO IMPLEMENT THE
POLICIES AND PLANS FRAMED BY THE TOP MANAGEMENT. IT SERVES AS AN ESSENTIAL LINK
BETWEEN THE TOP MANAGEMENT AND THE LOWER LEVEL OR OPERATIVE MANAGEMENT.

13. THE MAIN FUNCTIONS OF MIDDLE MANAGEMENT :
 TO INTERPRET THE POLICIES CHALKED OUT BY TOP MANAGEMENT.
 TO PREPARE THE ORGANIZATIONAL SET UP IN THEIR OWN DEPARTMENTS FOR
FULFILLING THE OBJECTIVES IMPLIED IN VARIOUS BUSINESS POLICIES.
 TO RECRUIT AND SELECT SUITABLE OPERATIVE AND SUPERVISORY STAFF.
 TO ASSIGN ACTIVITIES, DUTIES AND RESPONSIBILITIES FOR TIMELY IMPLEMENTATION
OF THE PLANS.
 TO COMPILE ALL THE INSTRUCTIONS AND ISSUE THEM TO SUPERVISOR UNDER THEIR
CONTROL.
 TO MOTIVATE PERSONNEL TO ATTAIN HIGHER PRODUCTIVITY AND TO REWARD
THEM PROPERLY.
 TO COOPERATE WITH THE OTHER DEPARTMENTS FOR ENSURING A SMOOTH
FUNCTIONING OF THE ENTIRE ORGANIZATION.
 TO COLLECT REPORTS AND INFORMATION ON PERFORMANCE IN THEIR
DEPARTMENTS.
 TO REPORT TO TOP MANAGEMENT
 TO MAKE SUITABLE RECOMMENDATIONS TO THE TOP MANAGEMENT FOR THE
BETTER EXECUTION OF PLANS AND POLICIES.
LOWER OR OPERATIVE MANAGEMENT:IT IS PLACED AT THE BOTTOM OF THE
HIERARCHY OF MANAGEMENT, AND ACTUAL OPERATIONS ARE THE RESPONSIBILITY OF THIS
LEVEL OF MANAGEMENT. IT CONSISTS OF FOREMAN, SUPERVISORS, SALES OFFICERS,
ACCOUNTS OFFICERS AND SO ON. THEY ARE IN DIRECT TOUCH WITH THE RANK AND FILE OR
WORKERS. THEIR AUTHORITY AND RESPONSIBILITY IS LIMITED.
MANAGERIAL SKILLS
A SKILL IS AN INDIVIDUAL'S ABILITY TO TRANSLATE KNOWLEDGE INTO ACTION. HENCE, IT
IS MANIFESTED IN AN INDIVIDUAL'S PERFORMANCE. SKILL IS NOT NECESSARILY INBORN. IT
CAN BE DEVELOPED THROUGH PRACTICE AND THROUGH RELATING LEARNING TO ONE'S
OWN PERSONAL EXPERIENCE AND BACKGROUND. THESE ARE CONCEPTUAL SKILL, HUMAN
RELATIONS SKILL AND TECHNICAL SKILL. CONCEPTUAL SKILL DEALS WITH IDEAS,
TECHNICAL SKILL WITH THINGS AND HUMAN SKILL WITH PEOPLE. WHILE BOTH
CONCEPTUAL AND TECHNICAL SKILLS ARE NEEDED FOR GOOD DECISION-MAKING, HUMAN
SKILL IN NECESSARY FOR A GOOD LEADER.

14. THE CONCEPTUAL SKILL REFERS TO THE ABILITY OF A MANAGER TO TAKE A BROAD AND
FARSIGHTED VIEW OF THE ORGANIZATION AND ITS FUTURE, HIS ABILITY TO THINK IN
ABSTRACT, HIS ABILITY TO ANALYZE THE FORCES WORKING IN A SITUATION, HIS CREATIVE
AND INNOVATIVE ABILITY AND HIS ABILITY TO ASSESS THE ENVIRONMENT AND THE
CHANGES TAKING PLACE IN IT.
THE TECHNICAL SKILL IS THE MANAGER'S UNDERSTANDING OF THE NATURE OF JOB THAT
PEOPLE UNDER HIM HAVE TO PERFORM. IT REFERS TO A PERSON'S KNOWLEDGE AND
PROFICIENCY IN ANY TYPE OF PROCESS OR TECHNIQUE. IN A PRODUCTION DEPARTMENT
THIS WOULD MEAN AN UNDERSTANDING OF THE TECHNICALITIES OF THE PROCESS OF
PRODUCTION.
HUMAN RELATIONS SKILL IS THE ABILITY TO INTERACT EFFECTIVELY WITH PEOPLE AT ALL
LEVELS. THIS SKILL DEVELOPS IN THE MANAGER SUFFICIENT ABILITY (A) TO RECOGNIZE THE
FEELINGS AND SENTIMENTS OF OTHERS; (B) TO JUDGE THE POSSIBLE ACTIONS TO, AND
OUTCOMES OF VARIOUS COURSES OF ACTION HE MAY UNDERTAKE; AND (C) TO EXAMINE
HIS OWN CONCEPTS AND VALUES WHICH MAY ENABLE HIM TO DEVELOP MORE USEFUL
ATTITUDES ABOUT HIMSELF.
UNIT 2
FAYOL HELD THAT THERE IS A SINGLE "ADMINISTRATIVE SCIENCE", WHOSE PRINCIPLES CAN
BE USED IN ALL MANAGEMENT SITUATIONS NO MATTER WHAT KIND OF ORGANIZATION
WAS BEING MANAGED.
FAYOL HELD THAT ACTIVITIES OF AN INDUSTRIAL ENTERPRISE CAN BE GROUPED IN SIX
CATEGORIES : (I) TECHNICAL (PRODUCTION), (II) COMMERCIAL (BUYING, SELLING AND
EXCHANGE), (III) FINANCIAL (SEARCH FOR AND OPTIMUM USE OF CAPITAL), (IV) SECURITY
(PROTECTION OF PROPERTY AND PERSONS), (V) ACCOUNTING (INCLUDING STATISTICS);
AND (VI) MANAGERIAL. HOWEVER, HE DEVOTED MOST OF HIS ATTENTION TO MANAGERIAL

15. ACTIVITY. HE DEVELOPED THE FOLLOWING PRINCIPLES UNDERLYING MANAGEMENT OF ALL
KINDS OF ORGANIZATIONS :
THIS ASPECT OF RELATIONSHIP BETWEEN RESPONSIBILITY AND AUTHORITY IS
PARTICULARLY RELEVANT IN INDIA WHERE AUTHORITY TENDS TO BE CONCENTRATED IN
HIGHER ECHELONS OF MANAGEMENT.
UNITY OF COMMAND : THIS PRINCIPLE HOLDS THAT ONE EMPLOYEE SHOULD HAVE
ONLY ONE BOSS AND RECEIVE INSTRUCTIONS FROM HIM ONLY. FAYOL OBSERVED THAT IF
THIS PRINCIPLE IS VIOLATED AUTHORITY WILL BE UNDERMINED, DISCIPLINE WILL BE
JEOPARDY, ORDER WILL BE DISTURBED AND STABILITY WILL BE THREATENED. DUAL
COMMAND IS A PERMANENT SOURCE OF CONFLICT. THEREFORE, IN EVERY ORGANIZATION,
EACH SUBORDINATE SHOULD HAVE ONE SUPERIOR WHOSE COMMAND HE HAS TO OBEY.
UNITY OF DIRECTION : THIS MEANS THAT ALL MANAGERIAL AND OPERATIONAL
ACTIVITIES WHICH RELATE A DISTINCT GROUP WITH THE SAME OBJECTIVE SHOULD BE
DIRECTED BY "ONE HEAD AND ONE PLAN. ACCORDING TO FAYOL, THERE SHOULD BE, "ONE
HEAD AND ONE PLAN FOR A GROUP OF ACTIVITIES HAVING THE SAME OBJECTIVE". IT,
HOWEVER, DOES NOT MEAN THAT ALL DECISIONS SHOULD BE MADE AT THE TOP.
SCALAR CHAIN OF COMMAND : ACCORDING TO FAYOL SCALAR CHAIN IS THE CHAIN
OF SUPERIORS RANGING FROM THE ULTIMATE AUTHORITY TO THE LOWEST RANKS. THE
LINE OF AUTHORITY IS THE ROUTE FOLLOWED VIA EVERY LINK IN THE CHAIN BY ALL
COMMUNICATION WHICH START FROM OR GO TO THE ULTIMATE AUTHORITY.
DIVISION OF WORK : THIS IS THE PRINCIPLE OF SPECIALIZATION WHICH, ACCORDING
TO FAYOL, APPLIES TO ALL KINDS OF WORK, MANAGERIAL AS WELL AS TECHNICAL. IT
HELPS A PERSON TO ACQUIRE AN ABILITY AND ACCURACY WITH WHICH HE CAN DO MORE
AND BETTER WORK WITH THE SAME EFFORT.
DISCIPLINE : DISCIPLINE IS A SINE QUA NON FOR THE PROPER FUNCTIONING OF AN
ORGANIZATION. MEMBERS OF AN ORGANIZATION ARE REQUIRED TO PERFORM THEIR
FUNCTIONS AND CONDUCT THEMSELVES IN RELATION TO OTHERS ACCORDING TO RULES,
NORMS AND CUSTOMS.
SUBORDINATION OF INDIVIDUAL INTEREST TO GENERAL INTEREST : THE
INTEREST OF THE ORGANIZATION IS ABOVE THE INTERESTS OF THE INDIVIDUAL AND THE
GROUP. IT CAN BE ACHIEVED ONLY WHEN MANAGERS IN HIGH POSITIONS IN THE
ORGANIZATION SET AN EXAMPLE OF HONESTY, INTEGRITY, FAIRNESS AND JUSTICE.
REMUNERATION : EMPLOYEES SHOULD BE PAID FAIRLY AND EQUITABLY.
DIFFERENTIALS IN REMUNERATION SHOULD BE BASED ON JOB DIFFERENTIALS, IN TERMS OF
QUALITIES OF THE EMPLOYEE, APPLICATION, RESPONSIBILITY, WORKING CONDITIONS AND
DIFFICULTY OF THE JOB..

16. CENTRALISATION : FAYOL BELIEVED IN CENTRALISATION. HE, HOWEVER, DID NOT
CONTEMPLATE CONCENTRATION OF ALL DECISION MAKING AUTHORITY IN THE TOP
MANAGEMENT. HE, HOWEVER, HELD THAT CENTRALISATION AND DECENTRALISATION IS A
QUESTION OF PROPORTION. THE DEGREE OF CENTRALISATION AND DECENTRALISATION
ALSO DEPENDS ON THE QUALITY OF MANAGERS.
ORDER : ORDER, IN THE CONCEPTION OF FAYOL, MEANS RIGHT PERSON ON THE RIGHT
JOB AND EVERYTHING IN ITS PROPER PLACE. THIS KIND OF ORDER, DEPENDS ON PRECISE
KNOWLEDGE OF HUMAN REQUIREMENTS AND RESOURCES OF THE CONCERN AND A
CONSTANT BALANCE BETWEEN THESE REQUIREMENTS AND RESOURCES.
EQUITY : IT MEANS THAT SUBORDINATES SHOULD BE TREATED WITH JUSTICE AND
KINDLINESS. THIS IS ESSENTIAL FOR ELICITING THEIR DEVOTION AND LOYALTY TO THE
ENTERPRISE. IT IS, THEREFORE THE DUTY OF THE CHIEF EXECUTIVE TO INSTILL A SENSE OF
EQUITY THROUGHOUT ALL LEVELS OF SCALAR CHAIN.
STABILITY OF TENURE OF PERSONNEL : THE MANAGERIAL POLICIES SHOULD
PROVIDE A SENSE OF REASONABLE JOB SECURITY. THE HIRING AND FIRING OF PERSONNEL
SHOULD DEPEND NOT ON THE WHIMS OF THE SUPERIORS BUT ON THE WELL-CONCEIVED
PERSONNEL POLICIES. HOWEVER, "A MEDIORCE MANAGER WHO STAYS IS INFINITELY
PREFERABLE TO OUTSTANDING MANAGERS WHO COME AND GO".
INITIATIVE : IT FOCUSES ON THE ABILITY, ATTITUDE AND RESOURCEFULNESS TO ACT
WITHOUT PROMPTING FROM OTHERS. MANAGERS MUST CREATE AN ENVIRONMENT WHICH
ENCOURAGES THEIR SUBORDINATES TO TAKE INITIATIVE AND RESPONSIBILITY.
ESPRIT DE CORPS : COHESIVENESS AND TEAM SPIRIT SHOULD BE ENCOURAGED
AMONG EMPLOYEES. IT IS ONE OF THE CHIEF CHARACTERISTICS OF ORGANIZED ACTIVITY
THAT A NUMBER OF PEOPLE WORK TOGETHER IN CLOSE COOPEARATION FOR THE
ACHIEVEMENT OF COMMON GOALS.. WHERE NECESSARY, SHOULD ALWAYS BE
SUPPLEMENTED BY ORAL COMMUNICATION BECAUSE FACE-TO-FACE CONTACTS TEND TO
PROMOTE SPEED, CLARITY AND HARMONY.
CHESTER BARNARD'S SOCIAL SYSTEMS APPROACH AND CONTRIBUTION
TO MANAGEMENT!

17. BARNARD'S CONTRIBUTIONS TO MANAGEMENT THOUGHT:
BARNARD SUGGESTED SOCIAL SYSTEMS APPROACH TO MANAGEMENT. HIS MAIN
CONTRIBUTIONS TO MANAGEMENT THOUGHT CAN BE DESCRIBED AS FOLLOWS:
1. THEORY OF FORMAL ORGANISATION:
BARNARD GAVE A THEORY OF FORMAL ORGANISATION. HE DEFINED IT AS "A SYSTEM OF
CONSCIOUSLY CO-ORDINATED ACTIVITIES OF FORCES OF TWO OR MORE PERSONS."
ACCORDING TO HIM, ORGANISATION CONSISTED OF HUMAN BEINGS WHOSE ACTIVITIES
WERE CO-ORDINATED AND THEREFORE BECOMES A SYSTEM : ACCORDING TO BARNARD
INITIAL EXISTENCE OF ORGANISATION DEPENDS UPON THREE ELEMENTS : (I) THE
WILLINGNESS OF PERSONS TO CONTRIBUTE EFFORTS TO THE CO-OPERATIVE SYSTEM (II)
THERE SHOULD BE AN OBJECTIVE OF CO-OPERATION AND (III) PROPER COMMUNICATION
SYSTEM IS NECESSARY.
2. ORGANISATIONAL EQUILIBRIUM:
BARNARD SUGGESTED AN EQUILIBRIUM MODEL TO DESCRIBE THE BALANCE ACHIEVED
BETWEEN THE CONTRIBUTIONS OF THE MEMBERS OF AN ORGANISATION AND RETURN
CONTRIBUTION MADE BY THE ORGANISATION TO THE FULFILMENT OF PRIVATE GOALS OF
THE MEMBERS. BARNARD TREATED ORGANISATION AS SEPARATE FROM THE ENVIRONMENT
WHERE IT WORKS.
THE PERSONS WORKING IN THE ORGANISATION HAVE TWO ROLES—A PERSONAL ROLE AND
AN ORGANISATIONAL ROLE. THERE SHOULD BE A BALANCE BETWEEN WHAT EMPLOYEES
GET OUT OF THE ORGANISATION (MONEY, STATUS, RECOGNITION, ETC.) AND WHAT THEY
CONTRIBUTE IN FORM OF TIME, KNOWLEDGE, DISCOMFORT, PRODUCTION, ETC.
3. ACCEPTANCE THEORY OF AUTHORITY:

18. ACCORDING, TO BARNARD THE DECISION AS TO WHETHER AN ORDER HAS AUTHORITY OR
NOT LIES WITH THE PERSON TO WHOM IT IS ADDRESSED, AND DOES NOT RESIDE IN PERSONS
OF AUTHORITY OR THOSE WHO ISSUE THESE ORDERS. THUS IN BARNARD'S VIEW, IF A
SUBORDINATE DOES NOT ACCEPT HIS MANAGER'S AUTHORITY, IT DOES NOT EXIST.
A PERSON WILL ACCEPT AUTHORITY UNDER FOLLOWING CONDITIONS':
(A) HE CAN AND DOES UNDERSTAND THE COMMUNICATION;
(B) AT THE TIME OF HIS DECISION HE BELIEVES THAT IT IS NOT INCONSISTENT WITH THE
PURPOSE OF THE ORGANISATION.
(C) AT THE TIME OF HIS DECISION, HE BELIEVES IT TO BE COMPATIBLE WITH HIS PERSONAL
INTEREST AS A WHOLE; AND
(D) HE IS ABLE (MENTALLY AND PHYSICALLY) TO COMPLY WITH IT.
4. FUNCTIONS OF THE EXECUTIVE:
BARNARD POSTULATED THREE TYPES OF FUNCTIONS FOR THE EXECUTIVES IN FORMA!
ORGANISATIONAL SET UP. THESE FUNCTIONS ARE:
(A) MAINTAINING PROPER COMMUNICATION IN THE ORGANISATION
(B) OBTAINING ESSENTIAL SERVICES FROM INDIVIDUALS FOR ACHIEVING ORGANISATIONAL
GOALS
(C) FORMULATING PURPOSES AND OBJECTIVES AT ALL LEVELS.
5. INFORMAL ORGANISATION:
BARNARD WAS OF THE OPINION THAT BOTH FORMAL AND INFORMAL ORGANISATIONS CO-
EXIST IN EVERY ENTERPRISE. INFORMAL ORGANISATION REFERS TO THOSE SOCIAL
INTERACTIONS WHICH DO NOT HAVE CONSCIOUSLY CO-ORDINATED JOINT PURPOSE.

19. THIS ORGANISATION EXISTS TO OVERCOME THE PROBLEMS OF FORMAL ORGANISATION.
BARNARD SUGGESTED THAT EXECUTIVES SHOULD ENCOURAGE THE DEVELOPMENT OF
INFORMAL ORGANISATION TO BRING COHESIVENESS IN THE ORGANISATION AND ALSO TO
SERVE AS A MEANS OF COMMUNICATION.
F.W.TYLOR MANAGEMET
TAYLOR'S METHOD CONSISTED OF TESTING THE COMPLETION OF VARIOUS TASKS TO
DETERMINE THE OPTIMAL AMOUNT OF WORK THAT COULD BE ACCOMPLISHED WITHIN A
CERTAIN TIME PERIOD. TAYLOR'S MANAGEMENT
THEORY ASSERTS THAT ORGANIZATIONS SHOULD IDENTIFY THE BEST WAY TO DO A JOB,
TRAIN WORKERS TO. SOME DEVELOPMENTS THAT RESULTED FROM THE TAYLOR THEORY
OF MANAGEMENT ARE THESE:
1. SIGNIFICANTLY IMPROVED PRODUCTIVITY;
2. INCREASED EMPLOYEE INCENTIVE;
3. WIDESPREAD IMPROVEMENTS IN QUALITY CONTROL;
4. BETTER PERSONNEL PRACTICES; AND

20. 5. GREATER COOPERATION BETWEEN MANAGEMENT AND WORKERS WITH A CONSISTENT
APPLICATION OF TAYLOR S THEORY OF MANAGEMENT.
ACCORDING TO TAYLOR, “SCIENTIFIC MANAGEMENT MEANS KNOWING EXACTLY WHAT
YOU WANT MEN TO DO AND SEEING THAT THEY DO IT IN THE BEST AND CHEAPEST WAY.”
SCIENTIFIC MANAGEMENT IS BASED ON THE ANALYSIS, PLANNING AND CONTROL
FUNCTIONS. AND JOB ACCOMPLISHED BY ANALYZING, AND WORKS CAN SELECTED AND
TRAINED SCIENTIFICALLY. IN THIS, MANAGEMENT ROLE IS TO DETERMINE THE KIND OF
WORK FOR WHICH AN EMPLOYEE SUITED AND HIRE AND ASSIGN WORKERS ACCORDINGLY.
MANAGEMENT IS NOT RESPONSIBLE FOR EXECUTION OF WORK BUT THEY ARE
RESPONSIBLE FOR HOW THE WORK IS DONE. CO-OPERATION BETWEEN MANAGEMENT
AND WORKERS CAN ENHANCE THE WORK AND ACHIEVE THE MAXIMUM OUTPUT.
TAYLOR CALLED IT AS “MENTAL REVOLUTION”, BECAUSE IT CREATES THE MUTUAL
UNDERSTANDING, TRUST AND CONFIDENCE BETWEEN THE MANAGEMENT AND WORKERS
FOR ACHIEVING GOAL (HIGHER PRODUCTION).
PRINCIPLES OF SCIENTIFIC MANAGEMENT
UNDER SCIENTIFIC MANAGEMENT, TAYLOR DEVELOPED THE FOLLOWING PARAMETERS FOR
ORGANIZATION.
Ø SCIENTIFIC WORK STUDY
Ø TASK PLANNING
Ø TOOLS AND MATERIALS
Ø SELECTION AND TRAINING
Ø STANDARDIZATION
Ø WORKER MANAGEMENT INTERRELATIONSHIPS
Ø DIFFERENTIAL PIECE WAGE SYSTEM
OBJECTIVE OF SCIENTIFIC MANAGEMENT

21. Ø SCIENTIFIC UTILIZATION OF VARIOUS RESOURCES LIKE HUMAN POWER,
MATERIAL ETC.
Ø TO PROVIDE TRAINED AND EFFICIENT WORK FORCE.
Ø TO PROVIDE STANDARDIZE METHODS OF WORK.
Ø TO PROVIDE A SCIENTIFIC BASE FOR SELECTING MATERIAL, AND EQUIPMENT.
Ø TO PROVIDE EXTRA WAGES TO THE WORKER FOR HIGHER PRODUCTION.
Ø REPLACE OLD RULE OF THUMBS TO NEW SCIENTIFIC METHODS.
Ø TO DEVELOP A GOOD RAPPORT BETWEEN MANAGEMENT AND WORKERS.
Ø TO ACHIEVE HIGHER PRODUCTION, WITH REDUCE COSTS AND MAXIMUM EFFICIENCY.
Ø LESS WASTAGE.
MANAGEMENT THEORY OF PETER DRUCKER
MBO
MBO STANDS FOR MANAGEMENT BY OBJECTIVES, A PHRASE COINED BY PETER DRUCKER
IN HIS BOOK "THE PRACTICE OF MANAGEMENT," PUBLISHED IN 1954. MBO MEASURES
THE PERFORMANCE OF EMPLOYEES AS COMPARED TO TYPICAL STANDARDS FOR THE JOB.
THE BELIEF IS THAT, IF EMPLOYEES HELP DETERMINE THOSE STANDARDS, THEY WILL BE
MORE LIKELY TO FULFILL THEM.

22. SMART METHOD
DRUCKER'S SMART METHOD IS A MEANS OF CHECKING TO MAKE SURE AN OBJECTIVE IS
VALID. MANAGERS CARRIED OUT THIS VERIFICATION BY USING THE SMART ACRONYM TO
MAKE SURE THE OBJECTIVE IS SPECIFIC, MEASURABLE, ACHIEVABLE, REALISTIC AND
TIME-RELATED.
KNOWLEDGE WORKER
"KNOWLEDGE WORKER" IS ONE OF THE MANY TERMS COINED BY DRUCKER WITHIN HIS
MANAGEMENT THEORIES. BY THE MEASURE OF TODAY'S SOCIETY, A KNOWLEDGE WORKER
IS EQUIVALENT TO THE EXECUTIVE OF A COMPANY.
DECENTRALIZATION
DRUCKER WAS A BELIEVER IN DECENTRALIZATION OF MANAGEMENT. HE SAW THAT MANY
LEADERS TRY TO TAKE ON EVERYTHING IN A DEMONSTRATION OF POWER OR A MEANS OF
MAINTAINING CONTROL, UNDER THE ASSUMPTION THAT ONLY THEY CAN ACCOMPLISH A
TASK CORRECTLY. DRUCKER BELIEVED THAT MANAGERS SHOULD DELEGATE TASKS IN
ORDER TO EMPOWER EMPLOYEES.

23. SOCIAL AND BUSINESS ETHICS
COMPLIANCE
THE MANAGEMENT COMMITTEE/BOARD MUST ENSURE THAT THE ORGANISATION
UNDERSTANDS AND COMPLIES WITH ITS OWN GOVERNING DOCUMENT, RELEVANT LAWS,
CONTRACTUAL OBLIGATIONS AND THE REQUIREMENTS OF ANY REGULATORY BODIES.
INTERNAL CONTROLS
THE MANAGEMENT COMMITTEE/BOARD SHOULD MAINTAIN AND REGULARLY REVIEW THE
ORGANISATION’S SYSTEM OF INTERNAL CONTROLS, PERFORMANCE REPORTING, POLICIES
AND PROCEDURES.
EQUALITY AND DIVERSITY

24. THE MANAGEMENT COMMITTEE/BOARD MUST ENSURE THAT IT UPHOLDS AND APPLIES THE
PRINCIPLES OF EQUALITY AND DIVERSITY AND THAT THE ORGANISATION IS FAIR AND
OPEN TO ALL SECTIONS OF THE COMMUNITY IN ALL OF ITS ACTIVITIES.
PRUDENCE
THE MANAGEMENT COMMITTEE/BOARD MUST ACT PRUDENTLY TO PROTECT THE ASSETS
AND PROPERTY OF THE ORGANISATION AND ENSURE THAT THEY ARE USED TO DELIVER
THE ORGANISATION’S OBJECTIVES.
MANAGING RISK
THE MANAGEMENT COMMITTEE/BOARD SHOULD UNDERSTAND AND REGULARLY REVIEW
THE RISKS TO WHICH THE ORGANISATION IS SUBJECT AND TAKE ACTION TO MANAGE THE
RISKS IDENTIFIED.
MANAGING STAFF AND VOLUNTEERS
THE MANAGEMENT COMMITTEE/BOARD NEEDS TO UNDERSTAND THE DISTINCTION
BETWEEN EMPLOYEES AND VOLUNTEERS AND ENSURE THAT GOOD PRACTICE IN THE
RECRUITMENT AND MANAGEMENT OF BOTH STAFF AND VOLUNTEERS IS IN PLACE.
IN PARTICULAR THE RESPONSIBILITIES OF THE GOVERNMENT TOWARDS BUSINESS CAN
BE DESCRIBED AS FOLLOWS:
TO PASS AND EXECUTE PROPER LAWS
THE BEHAVIOUR OF THE PEOPLE IN SOCIETY CAN BE EFFECTIVELY CONTROLLED WITH THE
HELP OF LAWS. THE GOVERNMENT HAS TO PASS LAWS WHICH WOULD CREATE A
FRIENDLY AND HELPFUL ATMOSPHERE FOR THE BUSINESS TO GROW..
IN INDIA THE GOVERNMENT HAS PASSED SEVERAL LAWS SUCH AS COMPANIES
REGULATION ACT, THE FACTORY ACT, THE LABOUR LAWS, THE SOCIAL SECURITY LAWS,
THE FOREIGN EXCHANGE MANAGEMENT ACT ETC.
THOUGH PASSING OF PROPER LAWS IS IMPORTANT, AN EFFICIENT IMPLEMENTATION OF
THE LAW IS MORE IMPORTANT. IF A GOOD LAW IS IMPLEMENTED IN A BAD WAY IT
PRODUCES HARMFUL EFFECTS. IT ENCOURAGES DISHONESTY ON THE PART OF THE
PEOPLE.

25. MAINTENANCE OF LAW AND ORDER
IT IS THE RESPONSIBILITY OF THE GOVERNMENT TO MAINTAIN LAW AND ORDER AND
PEACE IN THE COMMUNITY. ANY BUSINESS CAN EXIST AND PROSPER IF THERE IS LAW
AND ORDER IN THE COUNTRY. PERIODS OF DISTURBANCE ARE HARMFUL TO THE
EXISTENCE OF BUSINESS AND MUCH MORE TO THE PROGRESS OF THE BUSINESS. THE
GOVERNMENT HAS TO MAINTAIN LAW AND ORDER FOR ATTRACTING FOREIGN
INVESTMENT.
PROVIDING MONEY AND CREDIT
EVERY BUSINESS REQUIRES CREDIT. IT IS LIKE BLOOD CIRCULATION IN THE BODY OF
THE ECONOMY. FINANCE IS PROVIDED TO BUSINESS BY THE MONEY MARKET AND THE
CAPITAL MARKET. THE GOVERNMENT HAS TO REGULATE THEM IN SUCH A WAY THAT THEY
ARE ABLE TO ATTRACT MORE CAPITAL AND DIRECT IT TO THE BUSINESS. IT IS THE
RESPONSIBILITY OF THE GOVERNMENT TO MAINTAIN THE FINANCIAL INSTITUTIONS IN
SOUND HEALTH SO THAT THEY CAN MOBILIZE MORE FINANCES.
THE GOVERNMENT, THROUGH THE CENTRAL BANK OF THE COUNTRY HAS TO MAINTAIN A
STABLE AND APPROPRIATE RATE OF EXCHANGE WHICH IS HELPFUL IN ATTRACTING MORE
FOREIGN INVESTMENT
BUILDING INFRASTRUCTURE
ALL PRODUCTIVE ACTIVITIES REQUIRE INFRASTRUCTURE BY WAY OF MEANS OF
TRANSPORT AND COMMUNICATIONS, SUPPLY OF ENERGY AND CREDIT, PROVIDING
APPROPRIATE INFORMATION ABOUT THE OPENINGS FOR DIFFERENT BUSINESSES ETC. IF
THE GOVERNMENT IS SUCCESSFUL IN BUILDING EFFICIENT INFRASTRUCTURE, BUSINESS
CAN EXPAND AT A FAST RATE.
bms team

26. UNIT -3
FUNCTIONS OF MANAGEMENT

27. MANAGEMENT HAS BEEN DESCRIBED AS A SOCIAL PROCESS INVOLVING RESPONSIBILITY
FOR ECONOMICAL AND EFFECTIVE PLANNING & REGULATION OF OPERATION OF AN
ENTERPRISE IN THE FULFILLMENT OF GIVEN PURPOSES. IT IS A DYNAMIC PROCESS
CONSISTING OF VARIOUS ELEMENTS AND ACTIVITIES. THESE ACTIVITIES ARE DIFFERENT
FROM OPERATIVE FUNCTIONS LIKE MARKETING, FINANCE, PURCHASE ETC. RATHER THESE
ACTIVITIES ARE COMMON TO EACH AND EVERY MANGER IRRESPECTIVE OF HIS LEVEL OR
STATUS.
DIFFERENT EXPERTS HAVE CLASSIFIED FUNCTIONS OF MANAGEMENT. ACCORDING TO
GEORGE & JERRY, “THERE ARE FOUR FUNDAMENTAL FUNCTIONS OF MANAGEMENT I.E.
PLANNING, ORGANIZING, ACTUATING AND CONTROLLING”.
ACCORDING TO HENRY FAYOL, “TO MANAGE IS TO FORECAST AND PLAN, TO ORGANIZE,
TO COMMAND, & TO CONTROL”. WHEREAS LUTHER GULLICK HAS GIVEN A KEYWORD
’POSDCORB’ WHERE P STANDS FOR PLANNING, O FOR ORGANIZING, S FOR STAFFING, D
FOR DIRECTING, CO FOR CO-ORDINATION, R FOR REPORTING & B FOR BUDGETING. BUT
THE MOST WIDELY ACCEPTED ARE FUNCTIONS OF MANAGEMENT GIVEN BY KOONTZ AND
O’DONNEL I.E. PLANNING, ORGANIZING, STAFFING, DIRECTING AND CONTROLLING.
FUNCTIONS OF MANAGEMENT

28. PLANNING
IT IS THE BASIC FUNCTION OF MANAGEMENT. IT DEALS WITH CHALKING OUT A FUTURE
COURSE OF ACTION & DECIDING IN ADVANCE THE MOST APPROPRIATE COURSE OF
ACTIONS FOR ACHIEVEMENT OF PRE-DETERMINED GOALS. ACCORDING TO KOONTZ,
“PLANNING IS DECIDING IN ADVANCE - WHAT TO DO, WHEN TO DO & HOW TO DO. IT
BRIDGES THE GAP FROM WHERE WE ARE & WHERE WE WANT TO BE”. A PLAN IS A FUTURE
COURSE OF ACTIONS. IT IS AN EXERCISE IN PROBLEM SOLVING & DECISION MAKING.
PLANNING IS DETERMINATION OF COURSES OF ACTION TO ACHIEVE DESIRED GOALS.
ORGANIZING
IT IS THE PROCESS OF BRINGING TOGETHER PHYSICAL, FINANCIAL AND HUMAN
RESOURCES AND DEVELOPING PRODUCTIVE RELATIONSHIP AMONGST THEM FOR
ACHIEVEMENT OF ORGANIZATIONAL GOALS. ACCORDING TO HENRY FAYOL, “TO
ORGANIZE A BUSINESS IS TO PROVIDE IT WITH EVERYTHING USEFUL OR ITS
FUNCTIONING I.E. RAW MATERIAL, TOOLS, CAPITAL AND PERSONNEL’S”. ORGANIZING
AS A PROCESS INVOLVES:
 IDENTIFICATION OF ACTIVITIES.
 CLASSIFICATION OF GROUPING OF ACTIVITIES.
 ASSIGNMENT OF DUTIES.
 DELEGATION OF AUTHORITY AND CREATION OF RESPONSIBILITY.
 COORDINATING AUTHORITY AND RESPONSIBILITY RELATIONSHIPS.
STAFFING
IT IS THE FUNCTION OF MANNING THE ORGANIZATION STRUCTURE AND KEEPING IT
MANNED. STAFFING HAS ASSUMED GREATER IMPORTANCE IN THE RECENT YEARS DUE TO
ADVANCEMENT OF TECHNOLOGY, INCREASE IN SIZE OF BUSINESS, COMPLEXITY OF
HUMAN BEHAVIOR ETC. THE MAIN PURPOSE O STAFFING IS TO PUT RIGHT MAN ON RIGHT
JOB I.E. SQUARE PEGS IN SQUARE HOLES AND ROUND PEGS IN ROUND HOLES.
ACCORDING TO KOOTZ & O’DONELL, “MANAGERIAL FUNCTION OF STAFFING INVOLVES
MANNING THE ORGANIZATION STRUCTURE THROUGH PROPER AND EFFECTIVE SELECTION,
APPRAISAL & DEVELOPMENT OF PERSONNEL TO FILL THE ROLES DESIGNED UN THE
STRUCTURE”. STAFFING INVOLVES:

29. MANPOWER PLANNING (ESTIMATING MAN POWER IN TERMS OF
SEARCHING, CHOOSE THE PERSON AND GIVING THE RIGHT PLACE).
 RECRUITMENT, SELECTION & PLACEMENT.
 TRAINING & DEVELOPMENT.
 REMUNERATION.
 PERFORMANCE APPRAISAL.
 PROMOTIONS & TRANSFER.
DIRECTING
IT IS THAT PART OF MANAGERIAL FUNCTION WHICH ACTUATES THE ORGANIZATIONAL
METHODS TO WORK EFFICIENTLY FOR ACHIEVEMENT OF ORGANIZATIONAL PURPOSES. IT
IS CONSIDERED LIFE-SPARK OF THE ENTERPRISE WHICH SETS IT IN MOTION THE ACTION
OF PEOPLE BECAUSE PLANNING, ORGANIZING AND STAFFING ARE THE MERE
PREPARATIONS FOR DOING THE WORK. DIRECTION HAS FOLLOWING ELEMENTS:
 SUPERVISION
 MOTIVATION
 LEADERSHIP
 COMMUNICATION
SUPERVISION- IMPLIES OVERSEEING THE WORK OF SUBORDINATES BY THEIR
SUPERIORS. IT IS THE ACT OF WATCHING & DIRECTING WORK & WORKERS.
MOTIVATION-MEANS INSPIRING, STIMULATING OR ENCOURAGING THE SUB-
ORDINATES WITH ZEAL TO WORK. POSITIVE, NEGATIVE, MONETARY, NON-MONETARY
INCENTIVES MAY BE USED FOR THIS PURPOSE.
LEADERSHIP- MAY BE DEFINED AS A PROCESS BY WHICH MANAGER GUIDES AND
INFLUENCES THE WORK OF SUBORDINATES IN DESIRED DIRECTION.
COMMUNICATIONS-IS THE PROCESS OF PASSING INFORMATION, EXPERIENCE,
OPINION ETC FROM ONE PERSON TO ANOTHER. IT IS A BRIDGE OF UNDERSTANDING.
CONTROLLING
IT IMPLIES MEASUREMENT OF ACCOMPLISHMENT AGAINST THE STANDARDS AND
CORRECTION OF DEVIATION IF ANY TO ENSURE ACHIEVEMENT OF ORGANIZATIONAL
GOALS. THE PURPOSE OF CONTROLLING IS TO ENSURE THAT EVERYTHING OCCURS IN
CONFORMITIES WITH THE STANDARDS. AN EFFICIENT SYSTEM OF CONTROL HELPS TO
PREDICT DEVIATIONS BEFORE THEY ACTUALLY OCCUR. ACCORDING TO THEO HAIMANN,
“CONTROLLING IS THE PROCESS OF CHECKING WHETHER OR NOT PROPER PROGRESS IS
BEING MADE TOWARDS THE OBJECTIVES AND GOALS AND ACTING IF NECESSARY, TO

30. CORRECT ANY DEVIATION”. ACCORDING TO KOONTZ & O’DONELL “CONTROLLING IS THE
MEASUREMENT & CORRECTION OF PERFORMANCE ACTIVITIES OF SUBORDINATES IN
ORDER TO MAKE SURE THAT THE ENTERPRISE OBJECTIVES AND PLANS DESIRED TO
OBTAIN THEM AS BEING ACCOMPLISHED”. THEREFORE CONTROLLING HAS FOLLOWING
STEPS:
 ESTABLISHMENT OF STANDARD PERFORMANCE.
 MEASUREMENT OF ACTUAL PERFORMANCE.
 COMPARISON OF ACTUAL PERFORMANCE WITH THE STANDARDS AND FINDING OUT
DEVIATION IF ANY.
 CORRECTIVE ACTION.
TOOLS AND TECHNIQUE
SWOT ANALYSIS IS A USEFUL TECHNIQUE FOR UNDERSTANDING YOUR STRENGTHS AND
WEAKNESSES, AND FOR IDENTIFYING BOTH THE OPPORTUNITIES OPEN TO YOU AND THE
THREATS YOU FACE.
USED IN A BUSINESS CONTEXT, IT HELPS YOU CARVE A SUSTAINABLE NICHE IN YOUR
MARKET. USED IN A PERSONAL CONTEXT , IT HELPS YOU DEVELOP YOUR CAREER IN A
WAY THAT TAKES BEST ADVANTAGE OF YOUR TALENTS, ABILITIES AND OPPORTUNITIES.
BUSINESS SWOT ANALYSIS

31. STRENGTHS
WHAT ADVANTAGES DOES YOUR ORGANIZATION HAVE?
WHAT DO YOU DO BETTER THAN ANYONE ELSE?
WHAT UNIQUE OR LOWEST-COST RESOURCES CAN YOU DRAW UPON THAT OTHERS
CAN'T?
WHAT DO PEOPLE IN YOUR MARKET SEE AS YOUR STRENGTHS?
WHAT FACTORS MEAN THAT YOU "GET THE SALE"?
WHAT IS YOUR ORGANIZATION'S UNIQUE SELLING PROPOSITION (USP)?
WEAKNESSES
WHAT COULD YOU IMPROVE?
WHAT SHOULD YOU AVOID?
WHAT ARE PEOPLE IN YOUR MARKET LIKELY TO SEE AS WEAKNESSES?
WHAT FACTORS LOSE YOU SALES?
OPPORTUNITIES
WHAT GOOD OPPORTUNITIES CAN YOU SPOT?
WHAT INTERESTING TRENDS ARE YOU AWARE OF?
USEFUL OPPORTUNITIES CAN COME FROM SUCH THINGS AS:
CHANGES IN TECHNOLOGY AND MARKETS ON BOTH A BROAD AND NARROW SCALE.
CHANGES IN GOVERNMENT POLICY RELATED TO YOUR FIELD.
CHANGES IN SOCIAL PATTERNS, POPULATION PROFILES, LIFESTYLE CHANGES, AND SO
ON.
LOCAL EVENTS.
THREATS

32. WHAT OBSTACLES DO YOU FACE?
WHAT ARE YOUR COMPETITORS DOING?
ARE QUALITY STANDARDS OR SPECIFICATIONS FOR YOUR JOB, PRODUCTS OR SERVICES
CHANGING?
IS CHANGING TECHNOLOGY THREATENING YOUR POSITION?
DO YOU HAVE BAD DEBT OR CASH-FLOW PROBLEMS?
COULD ANY OF YOUR WEAKNESSES SERIOUSLY THREATEN YOUR BUSINESS?
STRENGTHS
WE ARE ABLE TO RESPOND VERY QUICKLY AS WE HAVE NO RED TAPE, AND NO NEED FOR
HIGHER MANAGEMENT APPROVAL.
WE ARE ABLE TO GIVE REALLY GOOD CUSTOMER CARE, AS THE CURRENT SMALL AMOUNT
OF WORK MEANS WE HAVE PLENTY OF TIME TO DEVOTE TO CUSTOMERS.
OUR LEAD CONSULTANT HAS STRONG REPUTATION IN THE MARKET.
WE CAN CHANGE DIRECTION QUICKLY IF WE FIND THAT OUR MARKETING IS NOT
WORKING.
WE HAVE LOW OVERHEADS, SO WE CAN OFFER GOOD VALUE TO CUSTOMERS.
WEAKNESSES
OUR COMPANY HAS LITTLE MARKET PRESENCE OR REPUTATION.
WE HAVE A SMALL STAFF, WITH A SHALLOW SKILLS BASE IN MANY AREAS.
WE ARE VULNERABLE TO VITAL STAFF BEING SICK, AND LEAVING.
OUR CASH FLOW WILL BE UNRELIABLE IN THE EARLY STAGES.
OPPORTUNITIES
OUR BUSINESS SECTOR IS EXPANDING, WITH MANY FUTURE OPPORTUNITIES FOR
SUCCESS.
LOCAL GOVERNMENT WANTS TO ENCOURAGE LOCAL BUSINESSES.
OUR COMPETITORS MAY BE SLOW TO ADOPT NEW TECHNOLOGIES.
THREATS
DEVELOPMENTS IN TECHNOLOGY MAY CHANGE THIS MARKET BEYOND OUR ABILITY TO
ADAPT.

33. A SMALL CHANGE IN THE FOCUS OF A LARGE COMPETITOR MIGHT WIPE OUT ANY MARKET
POSITION WE ACHIEVE.
DELEGATION OF AUTHORITY
. AUTHORITY SHOULD BE PROVIDED TO THE SUBORDINATES TOO. PROCESS OF
TRANSFERRING AUTHORITY AND CREATION OF RESPONSIBILITY BETWEEN SUPERIOR AND
SUBORDINATES TO ACCOMPLISH A CERTAIN TASK IS CALLED DELEGATION OF AUTHORITY.
IT CAN TAKE PLACE WITHOUT DECENTRALIZATION. IT CAN BE WITHDRAWN BY
DELEGATOR AT ANY TIME. IT MINIMIZES THE BURDEN OF MANAGERS OF UNIT,
DEPARTMENTS OR PLANT. RELATIONSHIP IS BETWEEN SUPERIOR AND IMMEDIATE
SUBORDINATES ARE INDICATED. IT IS TECHNIQUE OF MANAGEMENT USED TO GET THE
THINGS DONE THROUGH OTHERS. IT IS CONFINED TO MANAGER AND SUBORDINATES.
AUTHORITY IS ONLY DELEGATED, NOT RESPONSIBILITIES. VERY IMPORTANT TO
MANAGEMENT PROCESS CONTROL REMAINS IN HAND OF SUPERIOR WHO SUPERVISE THE
ACTIVITIES OF SUBORDINATES. IT IS AN ART OF MANAGEMENT SCIENCE. WHEN
AUTHORITY IS NOT GIVEN TO SUBORDINATES THERE IS NO PERFORMANCE. DELEGATION
IS THE PROCESS OF SHARING POWER AND WORK (DELIVER THE POWER FROM ONE TO
ANOTHER).
PRINCIPLES OF DELEGATION OF AUTHORITY

34. 1. PRINCIPLE OF PARITY OF AUTHORITY AND RESPONSIBILITY–
PARITY OF AUTHORITY AND RESPONSIBILITY IS ONE OF THE IMPORTANT
PRINCIPLES OF DELEGATION OF AUTHORITY. THERE IS EQUALITY IN ASSIGNED
TASK AND POWER TO DO THE WORK. AUTHORITY TO THE SUBORDINATES IS GIVEN
BY THE SUPERIOR ON THE BASIS OF ASSIGNED TASK. SO AUTHORITY TO THE
SUBORDINATES IS GIVEN NETHER MORE OR LESS THAN THE TASK OTHERWISE
THEIR CAN BE IMPROPER UTILIZATION OF AUTHORITY AND MISMANAGEMENT OF
TASK.
2. PRINCIPLE OF ABSOLUTENESS OF RESPONSIBILITY– ACCORDING TO IT,
RESPONSIBILITY CAN’T BE DELEGATED. ONLY AUTHORITY CAN BE DELEGATED. THE
PERSON WHO DELEGATES AUTHORITY IS HIMSELF RESPONSIBLE FOR HIS SENIORS.
3. PRINCIPLE OF UNITY OF COMMAND– ACCORDING TO IT, SUBORDINATES MUST
BE COMMANDED BY ONE SUPERIOR, THEY SHOULD TAKE THEIR TASK FROM ONE SUPERIOR
AND SHOULD BE ACCOUNTABLE FRO THEIR RESPONSIBILITY TOWARD THE SUPERIOR
LEVEL OF OPERATION
4. PRINCIPLE OF FUNCTIONAL DEFINITION OF AUTHORITY AND
RESPONSIBILITY– AS PER THIS PRINCIPLE. DUTIES AND TASK ASSIGNED BY THE
SUPERIOR AND THE AUTHORITY GIVEN TO FULFILL THE TASK SHOULD BE CLEARLY
EXPLAINED AND DECIDED. BT THIS SUBORDINATES CAN KNOW ABOUT THE LIMIT OF
ONE’S RIGHT, DUTIES AND RESPONSIBILITY.

35. 5. THE SCALAR CHAIN– ACCORDING TO IT, AUTHORITY FLOWS FROM TOP TO
BOTTOM. SO THAT SCALAR CHAIN IS THE BASIS OF RELATIONSHIP BETWEEN THE
SUPERIOR AND SUBORDINATES. IT EMPHASIZES THE RELATION BETWEEN SUPERIOR AND
SUBORDINATES BY WHICH DELEGATION WILL BE EASIER.
CENTRALIZATION AND DECENTRALIZATION
CENTRALIZATION:
THE EXTENT TO WHICH AUTHORITY IS CONCENTRATED AT THE TOP MANAGEMENT LEVELS.
THE ACT OR PROCESS OF CENTRALIZING, OR THE STATE OF BEING CENTRALIZED; THE ACT
OR PROCESS OF COMBINING OR REDUCING SEVERAL PARTS INTO A WHOLE; AS, THE
CENTRALIZATION OF POWER IN THE GENERAL GOVERNMENT; THE CENTRALIZATION OF
COMMERCE IN A CITY.
CENTRALISATION, OR CENTRALIZATION, IS THE PROCESS BY WHICH THE ACTIVITIES OF AN
ORGANISATION, PARTICULARLY THOSE REGARDING PLANING DECISION-MAKING, BECOME
CONCENTRATED WITHIN A PARTICULAR LOCATION AND/OR GROUP.
DECENTRALIZATION:
THE EXTENT TO WHICH AUTHORITY IS DELEGATED TO LOWER MANAGEMENT LEVELS.
DELEGATION OF DECISION-MAKING TO THE SUBUNITS OF AN ORGANIZATION. IT IS A
MATTER OF DEGREE. THE LOWER THE LEVEL WHERE DECISIONS ARE MADE, THE GREATER IS
THE DECENTRALIZATION. DECENTRALIZATION IS MOST EFFECTIVE IN ORGANIZATIONS

36. WHERE SUBUNITS ARE AUTONOMOUS AND COSTS AND PROFITS CAN BE INDEPENDENTLY
MEASURED. THE BENEFITS OF DECENTRALIZATION INCLUDE: (1) DECISIONS ARE MADE BY
THOSE WHO HAVE THE MOST KNOWLEDGE ABOUT LOCAL CONDITIONS; (2) GREATER
MANAGERIAL INPUT IN DECISION-MAKING HAS A DESIRABLE MOTIVATIONAL EFFECT; AND
(3) MANAGERS HAVE MORE CONTROL OVER RESULTS. THE COSTS OF DECENTRALIZATION
INCLUDE: (1) MANAGERS HAVE A TENDENCY TO LOOK AT THEIR DIVISION AND LOSE SIGHT
OF OVERALL COMPANY GOALS; (2) THERE CAN BE COSTLY DUPLICATION OF SERVICES; AND
(3) COSTS OF OBTAINING SUFFICIENT INFORMATION INCREASE.
COMMUNICATION
TWO-WAY PROCESS OF REACHING MUTUAL UNDERSTANDING, IN WHICH PARTICIPANTS
NOT ONLY EXCHANGE (ENCODE-DECODE) INFORMATION, NEWS, IDEAS AND FEELINGS BUT
ALSO CREATE AND SHARE MEANING. IN GENERAL, COMMUNICATION IS A MEANS OF
CONNECTING PEOPLE OR PLACES. IN BUSINESS, IT IS A KEY FUNCTION OF MANAGEMENT--
AN ORGANIZATION CANNOT OPERATE WITHOUT COMMUNICATION BETWEEN LEVELS,

37. DEPARTMENTS AND EMPLOYEES. SEE ALSO COMMUNICATIONS
PROCESS OF COMMUNICATION
7 MAJOR ELEMENTS OF COMMUNICATION PROCESS
SEVEN MAJOR ELEMENTS OF COMMUNICATION PROCESS ARE: (1) SENDER (2) IDEAS (3)
ENCODING (4) COMMUNICATION CHANNEL (5) RECEIVER (6) DECODING AND (7)
FEEDBACK.
COMMUNICATION PROCESS AS SUCH MUST BE CONSIDERED A CONTINUOUS AND DYNAMIC
INTER-ACTION, BOTH AFFECTING AND BEING AFFECTED BY MANY VARIABLES
(1) SENDER:
THE PERSON WHO INTENDS TO CONVEY THE MESSAGE WITH THE INTENTION OF PASSING
INFORMATION AND IDEAS TO OTHERS IS KNOWN AS SENDER OR COMMUNICATOR.
(2) IDEAS:
THIS IS THE SUBJECT MATTER OF THE COMMUNICATION. THIS MAY BE AN OPINION,
ATTITUDE, FEELINGS, VIEWS, ORDERS, OR SUGGESTIONS.

38. (3) ENCODING:
SINCE THE SUBJECT MATTER OF COMMUNICATION IS THEORETICAL AND INTANGIBLE, ITS
FURTHER PASSING REQUIRES USE OF CERTAIN SYMBOLS SUCH AS WORDS, ACTIONS OR
PICTURES ETC. CONVERSION OF SUBJECT MATTER INTO THESE SYMBOLS IS THE PROCESS OF
ENCODING.
(4) COMMUNICATION CHANNEL:
THE PERSON WHO IS INTERESTED IN COMMUNICATING HAS TO CHOOSE THE CHANNEL FOR
SENDING THE REQUIRED INFORMATION, IDEAS ETC. THIS INFORMATION IS TRANSMITTED TO
THE RECEIVER THROUGH CERTAIN CHANNELS WHICH MAY BE EITHER FORMAL OR
INFORMAL.
(5) RECEIVER:
RECEIVER IS THE PERSON WHO RECEIVES THE MESSAGE OR FOR WHOM THE MESSAGE IS
MEANT FOR. IT IS THE RECEIVER WHO TRIES TO UNDERSTAND THE MESSAGE IN THE BEST
POSSIBLE MANNER IN ACHIEVING THE DESIRED OBJECTIVES.
(6) DECODING:
THE PERSON WHO RECEIVES THE MESSAGE OR SYMBOL FROM THE COMMUNICATOR TRIES TO
CONVERT THE SAME IN SUCH A WAY SO THAT HE MAY EXTRACT ITS MEANING TO HIS
COMPLETE UNDERSTANDING.
(7) FEEDBACK:
FEEDBACK IS THE PROCESS OF ENSURING THAT THE RECEIVER HAS RECEIVED THE MESSAGE
AND UNDERSTOOD IN THE SAME SENSE AS SENDER MEANT IT.
HOW TO MAKE AN EFFECTIVE COMMUNICATION
A TWO WAY INFORMATION SHARING PROCESS WHICH INVOLVES ONE PARTY SENDING A
MESSAGE THAT IS EASILY UNDERSTOOD BY THE RECEIVING PARTY. EFFECTIVE
COMMUNICATION BY BUSINESS MANAGERS FACILITATES INFORMATION SHARING BETWEEN
COMPANY EMPLOYEES AND CAN SUBSTANTIALLY CONTRIBUTE TO ITS COMMERCIAL
SUCCESS.

39. BARRIER OF COMMUNICATION
4 DIFFERENT TYPES OF BARRIERS TO EFFECTIVE COMMUNICATION
FOR THE CONVENIENCE OF STUDY THE DIFFERENT BARRIERS CAN BE DIVIDED INTO FOUR
PARTS:
(1) SEMANTIC BARRIERS
THERE IS ALWAYS A POSSIBILITY OF MISUNDERSTANDING THE FEELINGS OF THE SENDER OF
THE MESSAGE OR GETTING A WRONG MEANING OF IT. THE WORDS, SIGNS, AND FIGURES
USED IN THE COMMUNICATION ARE EXPLAINED BY THE RECEIVER IN THE LIGHT OF HIS

40. EXPERIENCE WHICH CREATES DOUBTFUL SITUATIONS. THIS HAPPENS BECAUSE THE
INFORMATION IS NOT SENT IN SIMPLE LANGUAGE.
THE CHIEF LANGUAGE-RELATED BARRIERS ARE AS UNDER:
(I) BADLY EXPRESSED MESSAGE:
BECAUSE OF THE OBSCURITY OF LANGUAGE THERE IS ALWAYS A POSSIBILITY OF WRONG
INTERPRETATION OF THE MESSAGES. THIS BARRIER IS CREATED BECAUSE OF THE WRONG
CHOICE OF WORDS, IN CIVIL WORDS, THE WRONG SEQUENCE OF SENTENCES AND FREQUENT
REPETITIONS. THIS MAY BE CALLED LINGUISTIC CHAOS.
EFFECTIVE COMMUNICATION
(II) SYMBOLS OR WORDS WITH DIFFERENT MEANINGS:
A SYMBOL OR A WORD CAN HAVE DIFFERENT MEANINGS. IF THE RECEIVER
MISUNDERSTANDS THE COMMUNICATION, IT BECOMES MEANINGLESS. FOR EXAMPLE, THE
WORD ‘VALUE’ CAN HAVE DIFFERENT MEANINGS IN THE FOLLOWING SENTENCES:
(A) WHAT IS THE VALUE OF COMPUTER EDUCATION THESE DAYS

41. (B) WHAT IS THE VALUE OF THIS MOBILE SET?
(C) VALUE OUR FRIENDSHIP.
(III) FAULTY TRANSLATION:
A MANAGER RECEIVES MUCH INFORMATION FROM HIS SUPERIORS AND SUBORDINATES AND
HE TRANSLATES IT FOR ALL THE EMPLOYEES ACCORDING TO THEIR LEVEL OF
UNDERSTANDING. HENCE, THE INFORMATION HAS TO BE MOULDED ACCORDING TO THE
UNDERSTANDING OR ENVIRONMENT OF THE RECEIVER. IF THERE IS A LITTLE CARELESSNESS
IN THIS PROCESS, THE FAULTY TRANSLATION CAN BE A BARRIER IN THE COMMUNICATION.
(IV) UNCLARIFIED ASSUMPTIONS:
IT HAS BEEN OBSERVED THAT SOMETIMES A SENDER TAKES IT FOR GRANTED THAT THE
RECEIVER KNOWS SOME BASIC THINGS AND, THEREFORE, IT IS ENOUGH TO TELL HIM ABOUT
THE MAJOR SUBJECT MATTER. THIS POINT OF VIEW OF THE SENDER IS CORRECT TO SOME
EXTENT WITH REFERENCE TO THE DAILY COMMUNICATION, BUT IT IS ABSOLUTELY WRONG
IN CASE OF SOME SPECIAL MESSAGE,
(V) TECHNICAL JARGON:
GENERALLY, IT HAS BEEN SEEN THAT THE PEOPLE WORKING IN AN ENTERPRISE ARE
CONNECTED WITH SOME SPECIAL TECHNICAL GROUP WHO HAVE THEIR SEPARATE
TECHNICAL LANGUAGE.
THEIR COMMUNICATION IS NOT SO SIMPLE AS TO BE UNDERSTOOD BY EVERYBODY. HENCE,
TECHNICAL LANGUAGE CAN BE A BARRIER IN COMMUNICATION. THIS TECHNICAL GROUP
INCLUDES INDUSTRIAL ENGINEERS, PRODUCTION DEVELOPMENT MANAGER, QUALITY
CONTROLLER, ETC.
(VI) BODY LANGUAGE AND GESTURE DECODING:
WHEN THE COMMUNICATION IS PASSED ON WITH THE HELP OF BODY LANGUAGE AND
GESTURES, ITS MISUNDERSTANDING HINDERS THE PROPER UNDERSTANDING OF THE
MESSAGE. FOR EXAMPLE, MOVING ONE’S NECK TO REPLY TO A QUESTION DOES NOT
INDICATE PROPERLY WHETHER THE MEANING IS ‘YES’ OR ‘NO’.
(2) PSYCHOLOGICAL OR EMOTIONAL BARRIERS
THE IMPORTANCE OF COMMUNICATION DEPENDS ON THE MENTAL CONDITION OF BOTH
THE PARTIES. A MENTALLY DISTURBED PARTY CAN BE A HINDRANCE IN COMMUNICATION.
FOLLOWING ARE THE EMOTIONAL BARRIERS IN THE WAY OF COMMUNICATION:
(I) PREMATURE EVALUATION:
SOMETIMES THE RECEIVER OF INFORMATION TRIES TO DIG OUT MEANING WITHOUT MUCH
THINKING AT THE TIME OF RECEIVING OR EVEN BEFORE RECEIVING INFORMATION, WHICH

42. CAN BE WRONG. THIS TYPE OF EVALUATION IS A HINDRANCE IN THE EXCHANGE OF
INFORMATION AND THE ENTHUSIASM OF THE SENDER GETS DAMPENED.
(II) LACK OF ATTENTION:
WHEN THE RECEIVER IS PREOCCUPIED WITH SOME IMPORTANT WORK HE/SHE DOES NOT
LISTEN TO THE MESSAGE ATTENTIVELY. FOR EXAMPLE, AN EMPLOYEE IS TALKING TO HIS
BOSS WHEN THE LATTER IS BUSY IN SOME IMPORTANT CONVERSATION. IN SUCH A
SITUATION THE BOSS MAY NOT PAY ANY ATTENTION TO WHAT SUBORDINATE IS SAYING.
THUS, THERE ARISES PSYCHOLOGICAL HURDLE IN THE COMMUNICATION.
(III) LOSS BY TRANSMISSION AND POOR RETENTION:
WHEN A MESSAGE IS RECEIVED BY A PERSON AFTER IT HAS PASSED THROUGH MANY
PEOPLE, GENERALLY IT LOSES SOME OF ITS TRUTH. THIS IS CALLED LOSS BY TRANSMISSION.
THIS HAPPENS NORMALLY IN CASE OF ORAL COMMUNICATION. POOR RETENTION OF
INFORMATION MEANS THAT WITH EVERY NEXT TRANSFER OF INFORMATION THE ACTUAL
FORM OR TRUTH OF THE INFORMATION CHANGES.
ACCORDING TO ONE ESTIMATE, WITH EACH TRANSFER OF ORAL COMMUNICATION THE
LOSS OF THE INFORMATION AMOUNTS TO NEARLY 30%. THIS HAPPENS BECAUSE OF THE
CARELESSNESS OF PEOPLE. THEREFORE, LACK OF TRANSMISSION OF INFORMATION IN ITS
TRUE OR EXACT FORM BECOMES A HINDRANCE IN COMMUNICATION.
(IV) DISTRUST:
FOR SUCCESSFUL COMMUNICATION THE TRANSMITTER AND THE RECEIVER MUST TRUST
EACH OTHER. IF THERE IS A LACK OF TRUST BETWEEN THEM, THE RECEIVER WILL ALWAYS
DERIVE AN OPPOSITE MEANING FROM THE MESSAGE. BECAUSE OF THIS, COMMUNICATION
WILL BECOME MEANINGLESS.
(3) ORGANISATIONAL BARRIERS
ORGANISATIONAL STRUCTURE GREATLY AFFECTS THE CAPABILITY OF THE EMPLOYEES AS
FAR AS THE COMMUNICATION IS CONCERNED. SOME MAJOR ORGANISATIONAL
HINDRANCES IN THE WAY OF COMMUNICATION ARE THE FOLLOWING:
(I) ORGANISATIONAL POLICIES:
ORGANISATIONAL POLICIES DETERMINE THE RELATIONSHIP AMONG ALL THE PERSONS
WORKING IN THE ENTERPRISE. FOR EXAMPLE, IT CAN BE THE POLICY OF THE ORGANISATION
THAT COMMUNICATION WILL BE IN THE WRITTEN FORM. IN SUCH A SITUATION ANYTHING
THAT COULD BE CONVEYED IN A FEW WORDS SHALL HAVE TO BE COMMUNICATED IN THE
WRITTEN FORM. CONSEQUENTLY, WORK GETS DELAYED.
(II) RULES AND REGULATIONS:

43. ORGANISATIONAL RULES BECOME BARRIERS IN COMMUNICATION BY DETERMINING THE
SUBJECT-MATTER, MEDIUM, ETC. OF COMMUNICATION. TROUBLED BY THE DEFINITE RULES,
THE SENDERS DO NOT SEND SOME OF THE MESSAGES.
(III) STATUS:
UNDER ORGANISING ALL THE EMPLOYEES ARE DIVIDED INTO MANY CATEGORIES ON THE
BASIS OF THEIR LEVEL. THIS FORMAL DIVISION ACTS AS A BARRIER IN COMMUNICATION
ESPECIALLY WHEN THE COMMUNICATION MOVES FROM THE BOTTOM TO THE TOP.
FOR EXAMPLE, WHEN A LOWER-LEVEL EMPLOYEE HAS TO SEND HIS MESSAGE TO A SUPERIOR
AT THE TOP LEVEL THERE IS A LURKING FEAR IN HIS MIND THAT THE COMMUNICATION MAY
BE FAULTY, AND BECAUSE OF THIS FEAR, HE CANNOT CONVEY HIMSELF CLEARLY AND IN
TIME. IT DELAYS THE DECISION MAKING.
(IV) COMPLEXITY IN ORGANISATIONAL STRUCTURE:
THE GREATER NUMBER OF MANAGERIAL LEVELS IN AN ORGANISATION MAKES IT MORE
COMPLEX. IT RESULTS IN DELAY IN COMMUNICATION AND INFORMATION GETS CHANGED
BEFORE IT REACHES THE RECEIVER. IN OTHER WORDS, NEGATIVE THINGS OR CRITICISM ARE
CONCEALED. THUS, THE MORE THE NUMBER OF MANAGERIAL LEVELS IN THE
ORGANISATION, THE MORE INEFFECTIVE THE COMMUNICATION BECOMES.
(V) ORGANISATIONAL FACILITIES:
ORGANISATIONAL FACILITIES MEAN MAKING AVAILABLE SUFFICIENT STATIONERY,
TELEPHONE, TRANSLATOR, ETC. WHEN THESE FACILITIES ARE SUFFICIENT IN AN
ORGANISATION, THE COMMUNICATION WILL BE TIMELY, CLEAR AND IN ACCORDANCE WITH
NECESSITY. IN THE ABSENCE OF THESE FACILITIES COMMUNICATION BECOMES
MEANINGLESS.
(4) PERSONAL BARRIERS
THE ABOVE-MENTIONED ORGANISATIONAL BARRIERS ARE IMPORTANT IN THEMSELVES BUT
THERE ARE SOME BARRIERS WHICH ARE DIRECTLY CONNECTED WITH THE SENDER AND THE
RECEIVER. THEY ARE CALLED PERSONAL BARRIERS. FROM THE POINT OF VIEW OF
CONVENIENCE, THEY HAVE BEEN DIVIDED INTO TWO PARTS:
(A) BARRIERS RELATED TO SUPERIORS: THESE BARRIERS ARE AS
FOLLOWS:

44. (I) FEAR OF CHALLENGE OF AUTHORITY:
EVERYBODY DESIRES TO OCCUPY A HIGH OFFICE IN THE ORGANISATION. IN THIS HOPE THE
OFFICERS TRY TO CONCEAL THEIR WEAKNESSES BY NOT COMMUNICATING THEIR IDEAS.
THERE IS A FEAR IN THEIR MIND THAT IN CASE THE REALITY COMES TO LIGHT THEY MAY
HAVE TO MOVE TO THE LOWER LEVEL,
(II) LACK OF CONFIDENCE IN SUBORDINATES:
TOP-LEVEL SUPERIORS THINK THAT THE LOWER- LEVEL EMPLOYEES ARE LESS CAPABLE
AND, THEREFORE, THEY IGNORE THE INFORMATION OR SUGGESTIONS SENT BY THEM. THEY
DELIBERATELY IGNORE THE COMMUNICATION FROM THEIR SUBORDINATES IN ORDER TO
INCREASE THEIR OWN IMPORTANCE. CONSEQUENTLY, THE SELF-CONFIDENCE OF THE
EMPLOYEES IS LOWERED.
(B) BARRIERS RELATED TO SUBORDINATES: SUBORDINATES-RELATED BARRIERS ARE THE
FOLLOWING:
(I) UNWILLINGNESS TO COMMUNICATE:
SOMETIMES THE SUBORDINATES DO NOT WANT TO SEND ANY INFORMATION TO THEIR
SUPERIORS. WHEN THE SUBORDINATES FEEL THAT THE INFORMATION IS OF NEGATIVE
NATURE AND WILL ADVERSELY AFFECT THEM, AN EFFORT IS MADE TO CONCEAL THAT
INFORMATION.
IF IT BECOMES IMPERATIVE TO SEND THIS INFORMATION, IT IS SENT IN A MODIFIED OR
AMENDED FORM. THUS, THE SUBORDINATES, BY NOT CLARIFYING THE FACTS, BECOME A
HINDRANCE IN COMMUNICATION,
(II) LACK OF PROPER INCENTIVE:
LACK OF INCENTIVE TO THE SUBORDINATES CREATES A HINDRANCE IN COMMUNICATION.
THE LACK OF INCENTIVE TO THE SUBORDINATES IS BECAUSE OF THE FACT THAT THEIR
SUGGESTIONS OR IDEAS ARE NOT GIVEN ANY IMPORTANCE. IF THE SUPERIORS IGNORE THE
SUBORDINATES, THEY BECOME INDIFFERENT TOWARDS ANY EXCHANGE OF IDEAS IN
FUTURE.
UNIT-4
MOTIVATIONAL THEORIES:
MOTIVATION IS THE PROCESS OF AROUSING AND SUSTAINING GOAL-DIRECTED BEHAVIOR.
MOTIVATION THEORIES ATTEMPT TO EXPLAIN AND PREDICT OBSERVABLE BEHAVIOR.
MOTIVATION THEORIES MAY BE CLASSIFIED AS INTERNAL, PROCESS, OR EXTERNAL
THEORIES. THIS IS ONE OF THE MOST COMPLEX TOPICS IN ORGANIZATIONAL BEHAVIOR
BECAUSE OF THE LARGE NUMBER OF VARIABLES THAT AFFECT MOTIVATION.

45. A. INTERNAL NEEDS
B. EXTERNAL INCENTIVES
.
MASLOW’S NEED HIERARCHY
A.THE HIERARCHY OF NEEDS
MASLOW’S-HIERARCHY OF NEEDS THEORY: THIS THEORY WAS PROPOSED BY ABRAHAM
MASLOW
AND IS BASED ON THE ASSUMPTION THAT PEOPLE ARE MOTIVATED BY A SERIES OF FIVE
UNIVERSAL
NEEDS. THESE NEEDS ARE RANKED, ACCORDING TO THE ORDER IN WHICH THEY INFLUENCE
HUMAN
BEHAVIOR, IN HIERARCHICAL FASHION
• PHYSIOLOGICAL NEEDS ARE DEEMED TO BE THE LOWEST- LEVEL NEEDS.
THESE NEEDS
INCLUDE THE NEEDS SUCH AS FOOD & WATER .
O SO LONG AS PHYSIOLOGICAL NEEDS ARE UNSATISFIED, THEY EXIST AS A DRIVING OR
MOTIVATING FORCE IN A PERSON'S LIFE. A HUNGRY PERSON HAS A FELT NEED. THIS
FELT NEED SETS UP BOTH PSYCHOLOGICAL AND PHYSICAL TENSIONS THAT MANIFEST

46. THEMSELVES IN OVERT BEHAVIORS DIRECTED AT REDUCING THOSE TENSIONS (GETTING
SOMETHING TO EAT). ONCE THE HUNGER IS SATED, THE TENSION IS REDUCED, AND
THE NEED FOR FOOD CEASES TO MOTIVATE. AT THIS POINT (ASSUMING THAT OTHER
PHYSIOLOGICAL REQUIREMENTS ARE ALSO SATISFIED) THE NEXT HIGHER ORDER NEED
BECOMES THE MOTIVATING NEED.
• THUS, SAFETY NEEDS -- THE NEEDS FOR SHELTER AND SECURITY -- BECOME THE
MOTIVATORS
OF HUMAN BEHAVIOR.
O SAFETY NEEDS INCLUDE A DESIRE FOR SECURITY, STABILITY, DEPENDENCY,
PROTECTION, FREEDOM FROM FEAR AND ANXIETY, AND A NEED FOR STRUCTURE, ORDER,
AND LAW.. IN THE WORKPLACE THIS NEEDS TRANSLATES INTO A NEED FOR AT LEAST A
MINIMAL DEGREE OF EMPLOYMENT SECURITY; THE KNOWLEDGE THAT WE CANNOT BE
FIRED ON A WHIM AND THAT APPROPRIATE LEVELS OF EFFORT AND PRODUCTIVITY WILL
ENSURE CONTINUED EMPLOYMENT.
• SOCIAL NEEDS INCLUDE THE NEED FOR BELONGINGNESS AND LOVE.
O GENERALLY, AS GREGARIOUS CREATURES, HUMAN HAVE A NEED TO BELONG. IN THE
WORKPLACE, THIS NEED MAY BE SATISFIED BY AN ABILITY TO INTERACT WITH ONE'S
COWORKERS AND PERHAPS TO BE ABLE TO WORK COLLABORATIVELY WITH THESE
COLLEAGUES.
• AFTER SOCIAL NEEDS HAVE BEEN SATISFIED, EGO AND ESTEEM NEEDS BECOME THE
MOTIVATING NEEDS.
ESTEEM NEEDS INCLUDE THE DESIRE FOR SELF-RESPECT, SELF-ESTEEM, AND THE
ESTEEM OF OTHERS. WHEN FOCUSED EXTERNALLY, THESE NEEDS ALSO INCLUDE THE
DESIRE FOR REPUTATION, PRESTIGE, STATUS, FAME, GLORY, DOMINANCE,
RECOGNITION, ATTENTION, IMPORTANCE, AND APPRECIATION.
• THE HIGHEST NEED IN MASLOW'S HIERARCHY IS THAT OF SELF-
ACTUALIZATION;THE NEED FOR

47. SELF-REALIZATION, CONTINUOUS SELF-DEVELOPMENT, AND THE PROCESS OF BECOMING
ALL
.
THEORY X AND THEORY Y
THEORY X
THIS ASSUMES THAT EMPLOYEES ARE NATURALLY UNMOTIVATED AND DISLIKE WORKING,
AND THIS ENCOURAGES AN AUTHORITARIAN STYLE OF MANAGEMENT. ACCORDING TO
THIS VIEW, MANAGEMENT MUST ACTIVELY INTERVENE TO GET THINGS DONE. THIS STYLE OF
MANAGEMENT ASSUMES THAT WORKERS:
DISLIKE WORKING.
 AVOID RESPONSIBILITY AND NEED TO BE DIRECTED.
 HAVE TO BE CONTROLLED, FORCED, AND THREATENED TO DELIVER WHAT'S
NEEDED.
 NEED TO BE SUPERVISED AT EVERY STEP, WITH CONTROLS PUT IN PLACE.
 NEED TO BE ENTICED TO PRODUCE RESULTS; OTHERWISE THEY HAVE NO AMBITION
OR INCENTIVE TO WORK.
X-TYPE ORGANIZATIONS TEND TO BE TOP HEAVY, WITH MANAGERS AND SUPERVISORS
REQUIRED AT EVERY STEP TO CONTROL WORKERS. THERE IS LITTLE DELEGATION OF
AUTHORITY AND CONTROL REMAINS FIRMLY CENTRALIZED.

48. MCGREGOR RECOGNIZED THAT X-TYPE WORKERS ARE IN FACT USUALLY THE MINORITY,
AND YET IN MASS ORGANIZATIONS, SUCH AS LARGE SCALE PRODUCTION ENVIRONMENT, X
THEORY MANAGEMENT MAY BE REQUIRED AND CAN BE UNAVOIDABLE.
THEORY Y
THIS EXPOUNDS A PARTICIPATIVE STYLE OF MANAGEMENT THAT IS DE-CENTRALIZED. IT
ASSUMES THAT EMPLOYEES ARE HAPPY TO WORK, ARE SELF-MOTIVATED AND CREATIVE,
AND ENJOY WORKING WITH GREATER RESPONSIBILITY. IT ASSUMES THAT WORKERS:
 TAKE RESPONSIBILITY AND ARE MOTIVATED TO FULFILL THE GOALS THEY ARE
GIVEN.
 SEEK AND ACCEPT RESPONSIBILITY AND DO NOT NEED MUCH DIRECTION.
 CONSIDER WORK AS A NATURAL PART OF LIFE AND SOLVE WORK PROBLEMS
IMAGINATIVELY.
COMPARING THEORY X AND THEORY Y

49. MOTIVATION
THEORY X ASSUMES THAT PEOPLE DISLIKE WORK; THEY WANT TO AVOID IT AND DO NOT
WANT TO TAKE RESPONSIBILITY. THEORY Y ASSUMES THAT PEOPLE ARE SELF-MOTIVATED,
AND THRIVE ON RESPONSIBILITY.
MANAGEMENT STYLE AND CONTROL
IN A THEORY X ORGANIZATION, MANAGEMENT IS AUTHORITARIAN, AND CENTRALIZED
CONTROL IS RETAINED, WHILST IN THEORY Y, THE MANAGEMENT STYLE IS PARTICIPATIVE:
MANAGEMENT INVOLVES EMPLOYEES IN DECISION MAKING, BUT RETAINS POWER TO
IMPLEMENT DECISIONS.
WORK ORGANIZATION
THEORY X EMPLOYEES TEND TO HAVE SPECIALIZED AND OFTEN REPETITIVE WORK. IN
THEORY Y, THE WORK TENDS TO BE ORGANIZED AROUND WIDER AREAS OF SKILL OR
KNOWLEDGE; EMPLOYEES ARE ALSO ENCOURAGED TO DEVELOP EXPERTISE AND MAKE
SUGGESTIONS AND IMPROVEMENTS.
REWARDS AND APPRAISALS
THEORY X ORGANIZATIONS WORK ON A ‘CARROT AND STICK’ BASIS, AND PERFORMANCE
APPRAISAL IS PART OF THE OVERALL MECHANISMS OF CONTROL AND REMUNERATION. IN
THEORY Y ORGANIZATIONS, APPRAISAL IS ALSO REGULAR AND IMPORTANT, BUT IS
USUALLY A SEPARATE MECHANISM FROM ORGANIZATIONAL CONTROLS
APPLICATION
ALTHOUGH THE THEORY X MANAGEMENT STYLE IS WIDELY ACCEPTED AS INFERIOR TO
OTHERS, IT HAS ITS PLACE IN LARGE-SCALE PRODUCTION OPERATION AND UNSKILLED
PRODUCTION LINE WORK. MANY OF THE PRINCIPLES OF THEORY Y ARE WIDELY ADOPTED
BY TYPES OF ORGANIZATION THAT VALUE AND ENCOURAGE PARTICIPATION. THEORY Y-
STYLE MANAGEMENT IS SUITED TO KNOWLEDGE WORK AND PROFESSIONAL SERVICES.
ERG THEORY : ERG MOTIVATION THEORY ALDERFER

50. CLAYTON P. ALDERFER'S ERG THEORY FROM 1969 CONDENSES MASLOW'S FIVE HUMAN
NEEDS INTO THREE CATEGORIES: EXISTENCE, RELATEDNESS AND GROWTH.
EXISTENCE NEEDS
INCLUDE ALL MATERIAL AND PHYSIOLOGICAL DESIRES (E.G., FOOD, WATER, AIR,
CLOTHING, SAFETY, PHYSICAL LOVE AND AFFECTION). MASLOW'S FIRST TWO LEVELS.
RELATEDNESS NEEDS
ENCOMPASS SOCIAL AND EXTERNAL ESTEEM; RELATIONSHIPS WITH SIGNIFICANT OTHERS
LIKE FAMILY, FRIENDS, CO-WORKERS AND EMPLOYERS . THIS ALSO MEANS TO BE
RECOGNIZED AND FEEL SECURE AS PART OF A GROUP OR FAMILY. MASLOW'S THIRD AND
FOURTH LEVELS.
GROWTH NEEDS
INTERNAL ESTEEM AND SELF ACTUALIZATION; THESE IMPEL A PERSON TO MAKE CREATIVE
OR PRODUCTIVE EFFECTS ON HIMSELF AND THE ENVIRONMENT (E.G., TO PROGRESS TOWARD
ONE'S IDEAL SELF). MASLOW'S FOURTH AND FIFTH LEVELS. THIS INCLUDES DESIRES TO BE
CREATIVE AND PRODUCTIVE, AND TO COMPLETE MEANINGFUL TASKS.

51. RELATIONSHIPS BETWEEN ALDERFER'S ERG THEORY CONCEPTS
THERE ARE THREE RELATIONSHIPS AMONG THE DIFFERENT CATEGORIES IN ALDERFER'S
ERG THEORY:
SATISFACTION-PROGRESSION
MOVING UP TO HIGHER-LEVEL NEEDS BASED ON SATISFIED NEEDS.
WITH MASLOW, SATISFACTION-PROGRESSION PLAYS AN IMPORTANT PART. INDIVIDUALS
MOVE UP THE NEED HIERARCHY AS A RESULT OF SATISFYING LOWER ORDER NEEDS. IN
ALDERFER'S ERG THEORY, THIS ISN'T NECESSARILY SO. THE PROGRESSION UPWARD FROM
RELATEDNESS SATISFACTION TO GROWTH DESIRES DOES NOT PRESUME THE SATISFACTION
OF A PERSON'S EXISTENCE NEEDS.
FRUSTRATION-REGRESSION
IF A HIGHER LEVEL NEED REMAINS UNFULFILLED, A PERSON MAY REGRESS TO LOWER LEVEL
NEEDS THAT APPEAR EASIER TO SATISFY.

52. FRUSTRATION-REGRESSION SUGGESTS THAT AN ALREADY SATISFIED NEED CAN BECOME
ACTIVE WHEN A HIGHER NEED CANNOT BE SATISFIED. THUS, IF A PERSON IS CONTINUALLY
FRUSTRATED IN HIS/HER ATTEMPTS TO SATISFY GROWTH, RELATEDNESS NEEDS CAN
RESURFACE AS KEY MOTIVATORS.
SATISFACTION-STRENGTHENING
ITERATIVELY STRENGTHENING A CURRENT LEVEL OF SATISFIED NEEDS.
SATISFACTION-STRENGTHENING INDICATES THAT AN ALREADY SATISFIED NEED CAN
MAINTAIN SATISFACTION OR STRENGTHEN LOWER LEVEL NEEDS ITERATIVELY WHEN IT
FAILS TO GRATIFY HIGH-LEVEL NEEDS.
MCCLELLAND'S NEED THEORY
MCCLELLAND'S NEED THEORY FOCUSES ON PERSONALITY AND LEARNED NEEDS. HE
CATEGORIZED MOTIVES INTO THREE MANIFEST NEEDS: NEED FOR ACHIEVEMENT, NEED FOR
AFFILIATION, AND NEED FOR POWER.
NEED FOR ACHIEVEMENT
THE NEED FOR ACHIEVEMENT REFERS TO SEEKING EXCELLENCE IN PERFORMANCE AND
DIFFICULT, CHALLENGING GOALS. RESEARCH INDICATES THAT PEOPLE WITH A HIGH NEED
FOR ACHIEVEMENT OUTPERFORM THOSE WITH A MODERATE OR LOW NEED FOR
ACHIEVEMENT.
NEED FOR POWER

53. THE NEED FOR POWER IS CONCERNED WITH MAKING AN IMPACT ON OTHERS, INFLUENCING
OTHERS, CHANGING PEOPLE OR EVENTS, AND MAKING A DIFFERENCE IN LIFE.
MCCLELLAND FURTHER DISTINGUISHED BETWEEN SOCIALIZED POWER (USED FOR THE
BENEFIT OF MANY) AND PERSONALIZED POWER (USED FOR PERSONAL GAIN).
NEED FOR AFFILIATION
THE NEED FOR AFFILIATION EMPHASIZES THE ESTABLISHMENT AND NURTURING OF
INTIMATE RELATIONSHIPS WITH OTHER PEOPLE. IN CONTRAST, INDIVIDUALS with A HIGH
NEED FOR AUTONOMY, AS OUTLINED IN MURRAY’S MANIFEST NEEDS THEORY, VALUE
INDEPENDENCE AND FREEDOM FROM CONSTRAINTS.
HERZBERG'S TWO-FACTOR THEORY

54. THE TWO-FACTOR THEORY EXAMINES THE DEGREE TO WHICH INDIVIDUALS ARE SATISFIED
OR DISSATISFIED AT WORK. HERZBERG'S THEORY PROVIDED TWO LISTS OF NEEDS. FOR
EXAMPLE, WORK CONDITIONS RELATED TO SATISFYING PSYCHOLOGICAL NEEDS WERE
DETERMINED TO BE MOTIVATION FACTORS. ON THE OTHER HAND, HYGIENE FACTORS WERE
RELATED TO DISSATISFACTION AND WERE CAUSED BY DISCOMFORT OR PAIN.
MOTIVATION FACTORS

55. MOTIVATION FACTORS LEAD TO POSITIVE MENTAL HEALTH AND CHALLENGE PEOPLE TO
GROW; YET THE ABSENCE OF THESE FACTORS DOES NOT LEAD TO DISSATISFACTION.
HYGIENE FACTORS
JOB DISSATISFACTION OCCURS WHEN THE HYGIENE FACTORS ARE EITHER NOT PRESENT OR
NOT SUFFICIENT. HOWEVER, BECAUSE THEY CANNOT STIMULATE PSYCHOLOGICAL
GROWTH, THEY DO NOT LEAD TO SATISFACTION.
LEADERSHIP
LEADERS ARE PEOPLE WHO DO THE RIGHT THING; MANAGERS ARE PEOPLE WHO DO THINGS
RIGHT.
– PROFESSOR WARREN G. BENNIS
LEADERSHIP IS THE ART OF GETTING SOMEONE ELSE TO DO SOMETHING YOU WANT DONE
BECAUSE HE WANTS TO DO IT.
– DWIGHT D. EISENHOWER

56. TYPES LEADERSHIP

58. LEADERSHIP THEORY
OVER TIME, A NUMBER OF THEORIES OF LEADERSHIP HAVE BEEN PROPOSED. HERE ARE
SOME OF THE MAIN IDEAS.
 GREAT MAN THEORY
 TRAIT THEORY
 BEHAVIORAL THEORIES
 ROLE THEORY
 THE MANAGERIAL GRID
 PARTICIPATIVE LEADERSHIP
 LEWIN'S LEADERSHIP STYLES
 LIKERT'S LEADERSHIP STYLES
 SITUATIONAL LEADERSHIP
 HERSEY AND BLANCHARD'S SITUATIONAL LEADERSHIP
 VROOM AND YETTON'S NORMATIVE MODEL
 HOUSE'S PATH-GOAL THEORY OF LEADERSHIP
 CONTINGENCY THEORIES
 FIEDLER'S LEAST PREFERRED CO-WORKER (LPC) THEORY
 COGNITIVE RESOURCE THEORY
 STRATEGIC CONTINGENCIES THEORY
 TRANSACTIONAL LEADERSHIP
 LEADER-MEMBER EXCHANGE (LMX) THEORY

59.  TRANSFORMATIONAL LEADERSHIP
 BASS' TRANSFORMATIONAL LEADERSHIP THEORY
 BURNS' TRANSFORMATIONAL LEADERSHIP THEORY
 KOUZES AND POSNER'S LEADERSHIP PARTICIPATION INVENTORY
GREAT MAN THEORY
DESCRIPTION
EARLY RESEARCH ON LEADERSHIP WAS BASED ON THE THE STUDY OF PEOPLE WHO WERE
ALREADY GREAT LEADERS. THESE PEOPLE WERE OFTEN FROM THE ARISTOCRACY, AS FEW
FROM LOWER CLASSES HAD THE OPPORTUNITY TO LEAD. THIS CONTRIBUTED TO THE
NOTION THAT LEADERSHIP HAD SOMETHING TO DO WITH BREEDING.
THE IDEA OF THE GREAT MAN ALSO STRAYED INTO THE MYTHIC DOMAIN, WITH NOTIONS
THAT IN TIMES OF NEED, A GREAT MAN WOULD ARISE, ALMOST BY MAGIC. THIS WAS EASY
TO VERIFY, BY POINTING TO PEOPLE SUCH AS EISENHOWER AND CHURCHILL, LET ALONE
THOSE FURTHER BACK ALONG THE TIMELINE, EVEN TO JESUS, MOSES, MOHAMMED AND
THE BUDDAH.

60. BEHAVIORAL THEORY OF LEADERSHIP
ASSUMPTIONS
LEADERS CAN BE MADE, RATHER THAN ARE BORN.
SUCCESSFUL LEADERSHIP IS BASED IN DEFINABLE, LEARNABLE BEHAVIOR.
DESCRIPTION
BEHAVIORAL THEORIES OF LEADERSHIP DO NOT SEEK INBORN TRAITS OR CAPABILITIES.
RATHER, THEY LOOK AT WHAT LEADERS ACTUALLY DO.
IF SUCCESS CAN BE DEFINED IN TERMS OF DESCRIBABLE ACTIONS, THEN IT SHOULD BE
RELATIVELY EASY FOR OTHER PEOPLE TO ACT IN THE SAME WAY. THIS IS EASIER TO TEACH
AND LEARN THEN TO ADOPT THE MORE EPHEMERAL 'TRAITS' OR 'CAPABILITIES'.

61. TRAIT THEORY
ASSUMPTIONS
PEOPLE ARE BORN WITH INHERITED TRAITS.
SOME TRAITS ARE PARTICULARLY SUITED TO LEADERSHIP.
PEOPLE WHO MAKE GOOD LEADERS HAVE THE RIGHT (OR SUFFICIENT) COMBINATION OF
TRAITS.

62. MCCALL AND LOMBARDO (1983) RESEARCHED BOTH SUCCESS AND FAILURE IDENTIFIED
FOUR PRIMARY TRAITS BY WHICH LEADERS COULD SUCCEED OR 'DERAIL':
 EMOTIONAL STABILITY AND COMPOSURE: CALM, CONFIDENT AND PREDICTABLE,
PARTICULARLY WHEN UNDER STRESS.
 ADMITTING ERROR: OWNING UP TO MISTAKES, RATHER THAN PUTTING ENERGY
INTO COVERING UP.
 GOOD INTERPERSONAL SKILLS: ABLE TO COMMUNICATE AND PERSUADE OTHERS
WITHOUT RESORT TO NEGATIVE OR COERCIVE TACTICS.
 INTELLECTUAL BREADTH: ABLE TO UNDERSTAND A WIDE RANGE OF AREAS, RATHER
THAN HAVING A NARROW (AND NARROW-MINDED) AREA OF EXPERTISE.
THE MANAGERIAL GRID
LEADERS MAY BE CONCERNED FOR THEIR PEOPLE AND THEY ALSO MUST ALSO HAVE SOME
CONCERN FOR THE WORK TO BE DONE. THE QUESTION IS, HOW MUCH ATTENTION TO THEY
PAY TO ONE OR THE OTHER? THIS IS A MODEL DEFINED BY BLAKE AND MOUTON IN THE
EARLY 1960S.
IMPOVERISHED MANAGEMENT
MINIMUM EFFORT TO GET THE WORK DONE. A BASICALLY LAZY APPROACH THAT AVOIDS
AS MUCH WORK AS POSSIBLE.
AUTHORITY-COMPLIANCE

63. STRONG FOCUS ON TASK, BUT WITH LITTLE CONCERN FOR PEOPLE. FOCUS ON EFFICIENCY,
INCLUDING THE ELIMINATION OF PEOPLE WHEREVER POSSIBLE.
COUNTRY CLUB MANAGEMENT
CARE AND CONCERN FOR THE PEOPLE, WITH A COMFORTABLE AND FRIENDLY
ENVIRONMENT AND COLLEGIAL STYLE. BUT A LOW FOCUS ON TASK MAY GIVE
QUESTIONABLE RESULTS.
MIDDLE OF THE ROAD MANAGEMENT
A WEAK BALANCE OF FOCUS ON BOTH PEOPLE AND THE WORK. DOING ENOUGH TO GET
THINGS DONE, BUT NOT PUSHING THE BOUNDARIES OF WHAT MAY BE POSSIBLE.
TEAM MANAGEMENT
FIRING ON ALL CYLINDERS: PEOPLE ARE COMMITTED TO TASK AND LEADER IS COMMITTED
TO PEOPLE (AS WELL AS TASK).
LIKERTS MANAGEMENT

64. LIKERT'S LEADERSHIP STYLES
DESCRIPTION
RENSIS LIKERT IDENTIFIED FOUR MAIN STYLES OF LEADERSHIP, IN PARTICULAR AROUND
DECISION-MAKING AND THE DEGREE TO WHICH PEOPLE ARE INVOLVED IN THE DECISION.
EXPLOITIVE AUTHORITATIVE
IN THIS STYLE, THE LEADER HAS A LOW CONCERN FOR PEOPLE AND USES SUCH METHODS AS
THREATS AND OTHER FEAR-BASED METHODS TO ACHIEVE CONFORMANCE.
COMMUNICATION IS ALMOST ENTIRELY DOWNWARDS AND THE PSYCHOLOGICALLY
DISTANT CONCERNS OF PEOPLE ARE IGNORED.
BENEVOLENT AUTHORITATIVE
WHEN THE LEADER ADDS CONCERN FOR PEOPLE TO AN AUTHORITATIVE POSITION, A
'BENEVOLENT DICTATORSHIP' IS FORMED. THE LEADER NOW USES REWARDS TO
ENCOURAGE APPROPRIATE PERFORMANCE AND LISTENS MORE TO CONCERNS LOWER DOWN
THE ORGANIZATION, ALTHOUGH WHAT THEY HEAR IS OFTEN ROSE-TINTED, BEING LIMITED
TO WHAT THEIR SUBORDINATES THINK THAT THE BOSS WANTS TO HEAR. ALTHOUGH THERE
MAY BE SOME DELEGATION OF DECISIONS, ALMOST ALL MAJOR DECISIONS ARE STILL MADE
CENTRALLY.
CONSULTATIVE
THE UPWARD FLOW OF INFORMATION HERE IS STILL CAUTIOUS AND ROSE-TINTED TO SOME
DEGREE, ALTHOUGH THE LEADER IS MAKING GENUINE EFFORTS TO LISTEN CAREFULLY TO
IDEAS. NEVERTHELESS, MAJOR DECISIONS ARE STILL LARGELY CENTRALLY MADE.
PARTICIPATIVE
AT THIS LEVEL, THE LEADER MAKES MAXIMUM USE OF PARTICIPATIVE METHODS,
ENGAGING PEOPLE LOWER DOWN THE ORGANIZATION IN DECISION-MAKING. PEOPLE
ACROSS THE ORGANIZATION ARE PSYCHOLOGICALLY CLOSER TOGETHER AND WORK WELL
TOGETHER AT ALL LEVELS.
UNIT-4
MANAGEMENT CHANGE
CHANGE MANAGEMENT (CM) REFERS TO ANY APPROACH TO TRANSITIONING
INDIVIDUALS, TEAMS, AND ORGANIZATIONS USING METHODS INTENDED TO RE-DIRECT THE
USE OF RESOURCES, BUSINESS PROCESS, BUDGET ALLOCATIONS, OR OTHER MODES OF
OPERATION THAT SIGNIFICANTLY RESHAPE A COMPANY OR ORGANIZATION.
THE FOUR CHANGE CONTROL SYSTEMS ARE:

65. SCOPE CHANGE CONTROL SYSTEM – THE PROPOSED CHANGE DIRECTLY AFFECTS
THE PROJECT SCOPE (THIS IS THE MOST COMMON PROPOSED CHANGE). A TYPICAL TYPE OF
SCOPE CHANGE COULD BE THE PROJECT CUSTOMER ASKS FOR ADDITIONAL ITEMS TO BE
INCLUDED IN THE PROJECT SCOPE THAT WERE NOT ALREADY APPROVED AS PART OF THE
PROJECT SCOPE.
COST CHANGE CONTROL SYSTEM – THE SCOPE CONTENTS HAVE NOT CHANGE,
BUT THE PRICE FOR THE ITEMS IN THE SCOPE HAVE INCREASED OR DECREASED. FOR
EXAMPLE, IN A CONSTRUCTION PROJECT THE SPECIFIC MARBLE TILE HAS INCREASED IN
COST.
SCHEDULE CHANGE CONTROL SYSTEM – THE PROJECT SCHEDULE HAS BEEN
AFFECTED SOMEHOW AND EVENTS IN THE PROJECT ARE BEING DELAYED. FOR EXAMPLE,
THE MATERIALS NEEDED FOR THE PROJECT ARE BACKORDERED FROM THE VENDOR.
CONTROL CHANGE CONTROL SYSTEM – FOR PROJECTS WHERE A CONTRACT IS
BEING UTILIZED WITH A VENDOR ANY CHANGES TO THE PROJECT THAT AFFECT THE
VENDOR WILL FLOW THROUGH THE CONTRACT CHANGE CONTROL SYSTEM.
LEWIN'S CHANGE MANAGEMENT MODEL
UNDERSTANDING THE THREE STAGES OF CHANGE
CHANGE IS A COMMON THREAD THAT RUNS THROUGH ALL BUSINESSES REGARDLESS OF
SIZE, INDUSTRY AND AGE. OUR WORLD IS CHANGING FAST AND, AS SUCH, ORGANIZATIONS
MUST CHANGE QUICKLY TOO. ORGANIZATIONS THAT HANDLE CHANGE WELL THRIVE,
WHILST THOSE THAT DO NOT MAY STRUGGLE TO SURVIVE.

66. THE CONCEPT OF "CHANGE MANAGEMENT" IS A FAMILIAR ONE IN MOST BUSINESSES
TODAY. BUT HOW BUSINESSES MANAGE CHANGE (AND HOW SUCCESSFUL THEY ARE AT IT)
VARIES ENORMOUSLY DEPENDING ON THE NATURE OF THE BUSINESS, THE CHANGE AND
THE PEOPLE INVOLVED. AND A KEY PART OF THIS DEPENDS ON HOW FAR PEOPLE WITHIN IT
UNDERSTAND THE CHANGE PROCESS.
ONE OF THE CORNERSTONE MODELS FOR UNDERSTANDING ORGANIZATIONAL CHANGE
WAS DEVELOPED BY KURT LEWIN BACK IN THE 1940S, AND STILL HOLDS TRUE TODAY. HIS
MODEL IS KNOWN AS UNFREEZE – CHANGE – REFREEZE, REFERS TO THE THREE-STAGE
PROCESS OF CHANGE HE DESCRIBES. LEWIN, A PHYSICIST AS WELL AS SOCIAL SCIENTIST,
EXPLAINED ORGANIZATIONAL CHANGE USING THE ANALOGY OF CHANGING THE SHAPE OF
A BLOCK OF ICE.
UNDERSTANDING LEWIN'S CHANGE MANAGEMENT MODEL
IF YOU HAVE A LARGE CUBE OF ICE, BUT REALIZE THAT WHAT YOU WANT IS A CONE OF ICE,
WHAT DO YOU DO? FIRST YOU MUST MELT THE ICE TO MAKE IT AMENABLE TO CHANGE
(UNFREEZE). THEN YOU MUST MOLD THE ICED WATER INTO THE SHAPE YOU WANT
(CHANGE). FINALLY, YOU MUST SOLIDIFY THE NEW SHAPE (REFREEZE).
LEWIN'S CHANGE MODEL: UNFREEZE, CHANGE, REFREEZE
UNFREEZE

67. THIS FIRST STAGE OF CHANGE INVOLVES PREPARING THE ORGANIZATION TO ACCEPT THAT
CHANGE IS NECESSARY, WHICH INVOLVES BREAK DOWN THE EXISTING STATUS QUO BEFORE
YOU CAN BUILD UP A NEW WAY OF OPERATING.
KEY TO THIS IS DEVELOPING A COMPELLING MESSAGE SHOWING WHY THE EXISTING WAY OF
DOING THINGS CANNOT CONTINUE. THIS IS EASIEST TO FRAME WHEN YOU CAN POINT TO
DECLINING SALES FIGURES, POOR FINANCIAL RESULTS, WORRYING CUSTOMER
SATISFACTION SURVEYS, OR SUCHLIKE: THESE SHOW THAT THINGS HAVE TO CHANGE IN A
WAY THAT EVERYONE CAN UNDERSTAND.
THIS FIRST PART OF THE CHANGE PROCESS IS USUALLY THE MOST DIFFICULT AND
STRESSFUL. WHEN YOU START CUTTING DOWN THE "WAY THINGS ARE DONE", YOU PUT
EVERYONE AND EVERYTHING OFF BALANCE. YOU MAY EVOKE STRONG REACTIONS IN
PEOPLE, AND THAT'S EXACTLY WHAT NEEDS TO DONE.
BY FORCING THE ORGANIZATION TO RE-EXAMINE ITS CORE, YOU EFFECTIVELY CREATE A
(CONTROLLED) CRISIS, WHICH IN TURN CAN BUILD A STRONG MOTIVATION TO SEEK OUT A
NEW EQUILIBRIUM. WITHOUT THIS MOTIVATION, YOU WON'T GET THE BUY-IN AND
PARTICIPATION NECESSARY TO EFFECT ANY MEANINGFUL CHANGE.
CHANGE
AFTER THE UNCERTAINTY CREATED IN THE UNFREEZE STAGE, THE CHANGE STAGE IS
WHERE PEOPLE BEGIN TO RESOLVE THEIR UNCERTAINTY AND LOOK FOR NEW WAYS TO DO
THINGS. PEOPLE START TO BELIEVE AND ACT IN WAYS THAT SUPPORT THE NEW DIRECTION.
THE TRANSITION FROM UNFREEZE TO CHANGE DOES NOT HAPPEN OVERNIGHT: PEOPLE
TAKE TIME TO EMBRACE THE NEW DIRECTION AND PARTICIPATE PROACTIVELY IN THE
CHANGE. A RELATED CHANGE MODEL, THE CHANGE CURVE ADD TO MY PERSONAL
LEARNING PLAN, FOCUSES ON THE SPECIFIC ISSUE OF PERSONAL TRANSITIONS IN A
CHANGING ENVIRONMENT AND IS USEFUL FOR UNDERSTANDING THIS SPECIFIC ASPECT IN
MORE DETAIL.
IN ORDER TO ACCEPT THE CHANGE AND CONTRIBUTE TO MAKING THE CHANGE
SUCCESSFUL, PEOPLE NEED TO UNDERSTAND HOW THE CHANGES WILL BENEFIT THEM. NOT
EVERYONE WILL FALL IN LINE JUST BECAUSE THE CHANGE IS NECESSARY AND WILL BENEFIT
THE COMPANY. THIS IS A COMMON ASSUMPTION AND PITFALL THAT SHOULD BE AVOIDED.
REFREEZE
WHEN THE CHANGES ARE TAKING SHAPE AND PEOPLE HAVE EMBRACED THE NEW WAYS OF
WORKING, THE ORGANIZATION IS READY TO REFREEZE. THE OUTWARD SIGNS OF THE
REFREEZE ARE A STABLE ORGANIZATION CHART, CONSISTENT JOB DESCRIPTIONS, AND SO
ON. THE REFREEZE STAGE ALSO NEEDS TO HELP PEOPLE AND THE ORGANIZATION
INTERNALIZE OR INSTITUTIONALIZE THE CHANGES. THIS MEANS MAKING SURE THAT THE

68. CHANGES ARE USED ALL THE TIME; AND THAT THEY ARE INCORPORATED INTO EVERYDAY
BUSINESS. WITH A NEW SENSE OF STABILITY, EMPLOYEES FEEL CONFIDENT AND
COMFORTABLE WITH THE NEW WAYS OF WORKING.
YOU CAN LEARN ANOTHER 63 PROJECT MANAGEMENT SKILLS, LIKE THIS, BY JOINING THE
MIND TOOLS CLUB.
UNFREEZE
1. DETERMINE WHAT NEEDS TO CHANGE.
SURVEY THE ORGANIZATION TO UNDERSTAND THE CURRENT STATE.
UNDERSTAND WHY CHANGE HAS TO TAKE PLACE.
2. ENSURE THERE IS STRONG SUPPORT FROM UPPER MANAGEMENT.
USE STAKEHOLDER ANALYSIS ADD TO MY PERSONAL LEARNING PLAN AND
STAKEHOLDER MANAGEMENT ADD TO MY PERSONAL LEARNING PLAN TO IDENTIFY AND
WIN THE SUPPORT OF KEY PEOPLE WITHIN THE ORGANIZATION.
FRAME THE ISSUE AS ONE OF ORGANIZATION-WIDE IMPORTANCE.
3. CREATE THE NEED FOR CHANGE.
CREATE A COMPELLING MESSAGE AS TO WHY CHANGE HAS TO OCCUR.
USE YOUR VISION AND STRATEGY AS SUPPORTING EVIDENCE.
COMMUNICATE THE VISION IN TERMS OF THE CHANGE REQUIRED.
EMPHASIZE THE "WHY".
4. MANAGE AND UNDERSTAND THE DOUBTS AND CONCERNS.
REMAIN OPEN TO EMPLOYEE CONCERNS AND ADDRESS IN TERMS OF THE NEED TO CHANGE.
CHANGE
1. COMMUNICATE OFTEN.
DO SO THROUGHOUT THE PLANNING AND IMPLEMENTATION OF THE CHANGES.
DESCRIBE THE BENEFITS.
EXPLAIN EXACTLY THE HOW THE CHANGES WILL EFFECT EVERYONE.
PREPARE EVERYONE FOR WHAT IS COMING.

69. 2. DISPEL RUMORS.
ANSWER QUESTIONS OPENLY AND HONESTLY.
DEAL WITH PROBLEMS IMMEDIATELY.
RELATE THE NEED FOR CHANGE BACK TO OPERATIONAL NECESSITIES.
3. EMPOWER ACTION.
PROVIDE LOTS OF OPPORTUNITY FOR EMPLOYEE INVOLVEMENT.
HAVE LINE MANAGERS PROVIDE DAY-TO-DAY DIRECTION.
4. INVOLVE PEOPLE IN THE PROCESS.
GENERATE SHORT-TERM WINS TO REINFORCE THE CHANGE.
NEGOTIATE WITH EXTERNAL STAKEHOLDERS AS NECESSARY (SUCH AS EMPLOYEE
ORGANIZATIONS).
REFREEZE
1. ANCHOR THE CHANGES INTO THE CULTURE.
IDENTITY WHAT SUPPORTS THE CHANGE.
IDENTIFY BARRIERS TO SUSTAINING CHANGE.
2. DEVELOP WAYS TO SUSTAIN THE CHANGE.
ENSURE LEADERSHIP SUPPORT.
CREATE A REWARD SYSTEM.
ESTABLISH FEEDBACK SYSTEMS.
ADAPT THE ORGANIZATIONAL STRUCTURE AS NECESSARY.
3. PROVIDE SUPPORT AND TRAINING.
KEEP EVERYONE INFORMED AND SUPPORTED.
4. CELEBRATE SUCCESS!
TOOLS FOR CHANGE MANAGEMENT
ALL ORGANIZATIONS ARE DESTINED TO EITHER PERISH THROUGH BUSINESS FAILURE FROM
BEING LEFT BEHIND BY THE COMPETITION OR HAVE TO ACCEPT THAT UNDERTAKING
CHANGE IS A NATURAL PART OF BUSINESS LIFE IN ORDER TO KEEP IN LINE WITH CUSTOMER

70. REQUIREMENTS, THE NEED FOR IMPROVEMENTS OR CUSTOMER OR FASHION DEMANDS.
HOWEVER BEFORE CONSIDERING CHANGE - WHAT TYPE OF CHANGE, HOW TO DO IT,
IDENTIFYING WHO IS TO BE INVOLVED OR WHO IS AFFECTED BY ANY CHANGE TWO POINTS
NEED TO BE MADE. FIRSTLY IT IS ABSOLUTELY CRUCIAL TO GAIN THE MOST SENIOR LEVEL
SUPPORT AND COMMITMENT AS ANY CHANGE MANAGEMENT PLAN IS DESTINED TO FAIL
UNLESS SUPPORTED BY A MAIN SPONSOR, OFTEN THE SENIOR MANAGEMENT OF THE
ORGANIZATION, THE ORGANIZATION’S STAKEHOLDERS AND IN SOME CASES ITS CUSTOMER
BASE TOO. SECONDLY, ACCEPTANCE IS NEEDED WITHIN THE ORGANIZATION THAT SUCH
RECOMMENDED CHANGE IS SEEN AS BEING APPROPRIATE FOR THE SPECIFIC ORGANIZATION.
THE FIRST PHASE COVERS ORGANIZATIONAL PRE-POSITIONING WITH A FOCUS ON THE
PREPARATIONS FOR CHANGE THROUGH COMMUNICATIONS WITH STAFF AND
STAKEHOLDERS, IT CONCENTRATES ON PREPARATION FOR THE INTRODUCTION OF A
CHANGES TO THE ORGANIZATIONAL STRUCTURE AND THE DELIVERY OF GENERAL CHANGE
MANAGEMENT AWARENESS TRAINING TO STAFF. THIS IS AN IMPORTANT PHASE AIMED AT
PREPARING THE ORGANIZATION FOR CHANGE, GAINING COMMITMENT FROM THOSE
INVOLVED AND MANAGING THE ASSOCIATED RISKS. THIS PRE-POSITIONING PHASE
TYPICALLY TAKES AROUND SIX MONTHS ON ANY MEANINGFUL SIZE PROGRAM.
THE SECOND PHASE IS THAT OF THE IMPLEMENTATION OF THE CHANGE MANAGEMENT
PLAN. THIS PHASE CONCENTRATES ON BRINGING INTO THE REALITY THE CHANGES IN
ACCORDANCE WITH THE AGREED PLANS AND THE BUSINESS OBJECTIVES. OFTEN THIS PHASE
DOES NOT JUST ABOUT INCLUDE THE INTRODUCTION OF NEW WORKING METHODS AND
PROCESSES BUT COVERS ANY NEW SENIOR MANAGEMENT APPOINTMENTS WHICH NEED TO
BE INITIATED AS PART OF A NEW ORGANIZATIONAL STRUCTURE. THIS SECOND PHASE CAN
BE UP TO A YEAR IN DURATION.
THE THIRD AND FINAL PHASE HAS A FOCUS ON CONTINUAL SUPPORT AND IMPROVEMENTS
AS THE CHANGES BECOME EMBEDDED WITHIN THE ORGANIZATION AND REGARDED AS THE
“WAY TO DO BUSINESS”. THIS LONGER-TERM THIRD PHASE LEADS TO THE LONGER TERM
AND MORE DIFFICULT CULTURAL CHANGE AND IN PROGRAMME TERMS IS TYPICALLY OF
THE OVER OF 18 MONTHS. THIS PHASE IS IMPORTANT FOR THE CHANGES TO BE SUCCESSFUL
WITHIN THE TRANSFORMED ORGANIZATION AND FOR EMPLOYEES TO UNDERSTAND THEIR
NEW ROLES AND THEIR CONTRIBUTION TO SUCCESS OF THE ORGANIZATION.
THERE ARE A NUMBER OF FACTORS THAT SHOULD BE CONSIDERED BY MANAGEMENT IN
CHOOSING HOW TO IMPLEMENT THE NECESSARY CHANGES, AS EACH APPROACH WILL BE
APPROPRIATE IN DIFFERENT CIRCUMSTANCES. IN AGREEING AN APPROPRIATE STRATEGY OR
COMBINATION OF STRATEGIES FOR CHANGE, THE ORGANIZATION’S MANAGEMENT WILL
NEED TO TAKE INTO ACCOUNT THE FOLLOWING FACTORS:
THE DEGREE OF THE OPPOSITION EXPECTED;
THE POWER BASE OF THE CHANGE INITIATOR;

71. THE NEED FOR INFORMATION, COMMUNICATION AND COMMITMENT WHEN PLANNING
AND CARRYING OUT THE CHANGE.
THE NATURE OF THE CURRENT ORGANIZATION’S CULTURE AND ITS LIKELY RESPONSE TO
CHANGE.
AFTER CONSIDERING THE ABOVE FACTORS THERE ARE FIVE BROAD OPTIONAL APPROACHES
WHICH CAN BE DEPLOYED IN CHANGE IMPLEMENTATION.
DIRECTIVE STRATEGY: HERE THE MANAGEMENT CAN USE ITS AUTHORITY TO IMPOSE
THE CHANGES REQUIRED AND WILL BE ABLE TO CARRY THEM OUT SPEEDILY. HOWEVER,
THE DISADVANTAGE OF THIS APPROACH IS THAT IT IS LIKELY TO INCREASE RESISTANCE OR
EVEN UNDERMINE CHANGE IMPLEMENTATION.
EXPERT STRATEGY: THIS APPROACH IS USUALLY APPLIED WHEN A ‘TECHNICAL’
PROBLEM REQUIRES SOLVING, SUCH AS THE INTRODUCTION OF A NEW IT SYSTEM.
NEGOTIATING STRATEGY: THIS APPROACH INVOLVES A WILLINGNESS TO NEGOTIATE WITH
INDIVIDUALS AND TEAMS AFFECTED BY THE CHANGE AND TO ACCEPT THAT ADJUSTMENTS
AND CONCESSIONS MAY HAVE TO BE MADE. CHANGING WORK PRACTICES IN RETURN FOR
INCREASED PAY AND/OR OTHER BENEFITS IS A CLASSIC EXAMPLE OF THE NEGOTIATING
STRATEGY.
EDUCATIVE STRATEGY: THIS APPROACH INVOLVES CHANGING PEOPLE’S VALUES
AND BELIEFS SO THAT THEY SUPPORT THE CHANGE AND ARE COMMITTED TO A SHARED SET
OF ORGANISATIONAL VALUES. WINNING HEARTS AND MINDS IS A COMPLEX PROCESS THAT
INVOLVES A MIXTURE OF ACTIVITIES, SUCH AS: COMMUNICATION, PERSUASION,
EDUCATION, TRAINING AND SELECTION. THE ADVANTAGE OF SUCH AN APPROACH, IF
SUCCESSFUL, IS THAT PEOPLE WILL BE POSITIVELY COMMITTED TO THE CHANGE. IN
GENERAL THIS APPROACH TYPICALLY TAKES MUCH LONGER AND REQUIRES MORE
RESOURCES THAN THE PREVIOUS THREE STRATEGIES.

72. PARTICIPATIVE STRATEGY: THIS STRATEGY HAS A NUMBER OF ADVANTAGES:
CHANGES ARE MORE LIKELY TO BE WIDELY ACCEPTABLE OVER THE OTHERS, IT PROMOTES
THE ACTIVE INVOLVEMENT OF PEOPLE AND IS LIKELY TO INCREASE THEIR COMMITMENT TO
AND ENTHUSIASM FOR THE CHANGE PROCESS. ADDITIONALLY THERE WILL BE
OPPORTUNITIES FOR BOTH MANAGERS AND EMPLOYEES TO LEARN FROM THE EXPERIENCES
AND SKILLS OF THIS WIDE PARTICIPATION. WHILST THIS HAS A NUMBER OF ADVANTAGES
DUE TO THE PARTICIPATION OF STAFF, THE IDENTIFIED CHANGES ARE LIKELY TO TAKE
LONGER AND REQUIRE ADDITIONAL RESOURCES TO SUPPORT THE CHANGE.
STRESS MANAGEMENT
STRESS MANAGEMENT REFERS TO THE WIDE SPECTRUM OF TECHNIQUES AND
PSYCHOTHERAPIES AIMED AT CONTROLLING A PERSON'S LEVELS OF STRESS, ESPECIALLY
CHRONIC STRESS, USUALLY FOR THE PURPOSE OF IMPROVING EVERYDAY FUNCTIONING.
UNHEALTHY WAYS OF COPING WITH STRESS
THESE COPING STRATEGIES MAY TEMPORARILY REDUCE STRESS, BUT THEY CAUSE MORE
DAMAGE IN THE LONG RUN:

73.  SMOKING
 DRINKING TOO MUCH
 BINGEING ON JUNK OR COMFORT FOOD
 ZONING OUT FOR HOURS IN FRONT OF THE TV OR COMPUTER
 WITHDRAWING FROM FRIENDS, FAMILY, AND ACTIVITIES
 USING PILLS OR DRUGS TO RELAX
 SLEEPING TOO MUCH
 PROCRASTINATING
 FILLING UP EVERY MINUTE OF THE DAY TO AVOID FACING PROBLEMS
 TAKING OUT YOUR STRESS ON OTHERS (LASHING OUT, ANGRY OUTBURSTS, PHYSICAL
VIOLENCE)
UNIT-6
STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT INVOLVES THE FORMULATION AND IMPLEMENTATION OF THE
MAJOR GOALS AND INITIATIVES TAKEN BY A COMPANY'S TOP MANAGEMENT ON BEHALF OF
OWNERS, BASED ON CONSIDERATION OF RESOURCES AND AN ASSESSMENT OF THE
INTERNAL AND EXTERNAL ENVIRONMENTS IN WHICH THE ORGANIZATION COMPETES.
STRATEGY - DEFINITION AND FEATURES
THE WORD “STRATEGY” IS DERIVED FROM THE GREEK WORD “STRATÇGOS”; STRATUS
(MEANING ARMY) AND “AGO” (MEANING LEADING/MOVING).
STRATEGY IS AN ACTION THAT MANAGERS TAKE TO ATTAIN ONE OR MORE OF THE
ORGANIZATION’S GOALS. STRATEGY CAN ALSO BE DEFINED AS “A GENERAL DIRECTION SET
FOR THE COMPANY AND ITS VARIOUS COMPONENTS TO ACHIEVE A DESIRED STATE IN THE
FUTURE. STRATEGY RESULTS FROM THE DETAILED STRATEGIC PLANNING PROCESS”.
A STRATEGY IS ALL ABOUT INTEGRATING ORGANIZATIONAL ACTIVITIES AND UTILIZING
AND ALLOCATING THE SCARCE RESOURCES WITHIN THE ORGANIZATIONAL ENVIRONMENT
SO AS TO MEET THE PRESENT OBJECTIVES. WHILE PLANNING A STRATEGY IT IS ESSENTIAL TO
CONSIDER THAT DECISIONS ARE NOT TAKEN IN A VACCUM AND THAT ANY ACT TAKEN BY A

74. FIRM IS LIKELY TO BE MET BY A REACTION FROM THOSE AFFECTED, COMPETITORS,
CUSTOMERS, EMPLOYEES OR SUPPLIERS.
FEATURES OF STRATEGY
STRATEGY IS SIGNIFICANT BECAUSE IT IS NOT POSSIBLE TO FORESEE THE FUTURE. WITHOUT
A PERFECT FORESIGHT, THE FIRMS MUST BE READY TO DEAL WITH THE UNCERTAIN EVENTS
WHICH CONSTITUTE THE BUSINESS ENVIRONMENT.
STRATEGY DEALS WITH LONG TERM DEVELOPMENTS RATHER THAN ROUTINE OPERATIONS,
I.E. IT DEALS WITH PROBABILITY OF INNOVATIONS OR NEW PRODUCTS, NEW METHODS OF
PRODUCTIONS, OR NEW MARKETS TO BE DEVELOPED IN FUTURE.
STRATEGY IS CREATED TO TAKE INTO ACCOUNT THE PROBABLE BEHAVIOR OF CUSTOMERS
AND COMPETITORS. STRATEGIES DEALING WITH EMPLOYEES WILL PREDICT THE EMPLOYEE
BEHAVIOR.
STRATEGY IS A WELL DEFINED ROADMAP OF AN ORGANIZATION. IT DEFINES THE OVERALL
MISSION, VISION AND DIRECTION OF AN ORGANIZATION. THE OBJECTIVE OF A STRATEGY IS
TO MAXIMIZE AN ORGANIZATION’S STRENGTHS AND TO MINIMIZE THE STRENGTHS OF THE
COMPETITORS.
PROCESS OF STRATEGY MANAGEMENT

75. STRATEGIC ANALYSIS TOOLS
DEFINITION AND CONCEPT
STRATEGIC ANALYSIS IS:
‘… THE PROCESS OF CONDUCTING RESEARCH ON THE BUSINESS ENVIRONMENT WITHIN
WHICH
AN ORGANISATION OPERATES AND ON THE ORGANISATION ITSELF, IN ORDER TO
FORMULATE
STRATEGY.’
BNET BUSINESS DICTIONARY
‘… A THEORETICALLY INFORMED UNDERSTANDING OF THE ENVIRONMENT IN WHICH AN
ORGANISATION IS OPERATING, TOGETHER WITH AN UNDERSTANDING OF THE
ORGANISATION’S
INTERACTION WITH ITS ENVIRONMENT IN ORDER TO IMPROVE ORGANISATIONAL
EFFICIENCY AND
EFFECTIVENESS BY INCREASING THE ORGANISATION’S CAPACITY TO DEPLOY AND REDEPLOY
ITS
RESOURCES INTELLIGENTLY.’
1. IDENTIFICATION AND EVALUATION OF DATA RELEVANT TO STRATEGY FORMULATION.
2. DEFINITION OF THE EXTERNAL AND INTERNAL ENVIRONMENT TO BE ANALYSED.
3. A RANGE OF ANALYTICAL METHODS THAT CAN BE EMPLOYED IN THE ANALYSIS.
EXAMPLES OF ANALYTICAL METHODS USED IN STRATEGIC ANALYSIS INCLUDE:
• SWOT ANALYSIS
• PEST ANALYSIS
• PORTER’S FIVE FORCES ANALYSIS
• FOUR CORNER’S ANALYSIS
• VALUE CHAIN ANALYSIS
• EARLY WARNING SCANS
• WAR GAMING.
SWOT ANALYSIS

76. A SWOT ANALYSIS IS A SIMPLE BUT WIDELY USED TOOL THAT HELPS IN UNDERSTANDING
THE STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS INVOLVED IN A PROJECT OR
BUSINESS ACTIVITY. IT STARTS BY DEFINING THE OBJECTIVE OF THE PROJECT OR BUSINESS
ACTIVITY AND IDENTIFIES THE INTERNAL AND EXTERNAL FACTORS THAT ARE IMPORTANT
TO ACHIEVING THAT OBJECTIVE. STRENGTHS AND WEAKNESSES ARE USUALLY INTERNAL TO
THE ORGANISATION, WHILE OPPORTUNITIES AND THREATS ARE USUALLY EXTERNAL.
OFTEN THESE ARE PLOTTED ON A SIMPLE 2X2 MATRIX. SWOT ANALYSIS DIAGRAM
PEST ANALYSIS
PEST ANALYSIS IS A SCAN OF THE EXTERNAL MACRO-ENVIRONMENT IN WHICH AN
ORGANISATION EXISTS. IT IS A USEFUL TOOL FOR UNDERSTANDING THE POLITICAL,
ECONOMIC, SOCIO-CULTURAL AND TECHNOLOGICAL ENVIRONMENT THAT AN
ORGANISATION OPERATES IN. IT CAN BE USED FOR EVALUATING MARKET GROWTH OR
DECLINE, AND AS SUCH THE POSITION, POTENTIAL AND DIRECTION FOR A BUSINESS.

77. POLITICAL FACTORS. THESE INCLUDE GOVERNMENT REGULATIONS SUCH AS EMPLOYMENT
LAWS, ENVIRONMENTAL REGULATIONS AND TAX POLICY. OTHER POLITICAL FACTORS ARE
TRADE RESTRICTIONS AND POLITICAL STABILITY.
ECONOMIC FACTORS. THESE AFFECT THE COST OF CAPITAL AND PURCHASING POWER OF
AN ORGANISATION. ECONOMIC FACTORS INCLUDE ECONOMIC GROWTH, INTEREST RATES,
INFLATION AND CURRENCY EXCHANGE RATES.
SOCIAL FACTORS. THESE IMPACT ON THE CONSUMER’S NEED AND THE POTENTIAL MARKET
SIZE FOR AN ORGANISATION’S GOODS AND SERVICES. SOCIAL FACTORS INCLUDE
POPULATION GROWTH, AGE DEMOGRAPHICS AND ATTITUDES TOWARDS HEALTH.
TECHNOLOGICAL FACTORS. THESE INFLUENCE BARRIERS TO ENTRY, MAKE OR BUY
DECISIONS AND INVESTMENT IN INNOVATION, SUCH AS AUTOMATION, INVESTMENT
INCENTIVES AND THE RATE OF TECHNOLOGICAL CHANGE.
PORTER’S FIVE FORCES
PORTER'S FIVE FORCES OF COMPETITIVE POSITION ANALYSIS WAS DEVELOPED IN 1979 BY
MICHAEL E. PORTER OF HARVARD BUSINESS SCHOOL AS A SIMPLE FRAMEWORK FOR
ASSESSING AND EVALUATING THE COMPETITIVE STRENGTH AND POSITION OF A BUSINESS
ORGANISATION.
THIS THEORY IS BASED ON THE CONCEPT THAT THERE ARE FIVE FORCES WHICH DETERMINE

78. THE COMPETITIVE INTENSITY AND ATTRACTIVENESS OF A MARKET. PORTER’S FIVE FORCES
HELPS TO IDENTIFY WHERE POWER LIES IN A BUSINESS SITUATION. THIS IS USEFUL BOTH IN
UNDERSTANDING THE STRENGTH OF AN ORGANISATION’S CURRENT COMPETITIVE
POSITION, AND THE STRENGTH OF A POSITION THAT AN ORGANISATION MAY LOOK TO
MOVE INTO.
STRATEGIC ANALYSTS OFTEN USE PORTER’S FIVE FORCES TO UNDERSTAND WHETHER NEW
PRODUCTS OR SERVICES ARE POTENTIALLY PROFITABLE. BY UNDERSTANDING WHERE
POWER LIES, THE THEORY CAN ALSO BE USED TO IDENTIFY AREAS OF STRENGTH, TO
IMPROVE WEAKNESSES AND TO AVOID MISTAKES.
THE FIVE FORCES ARE:
1. SUPPLIER POWER. AN ASSESSMENT OF HOW EASY IT IS FOR SUPPLIERS TO DRIVE UP
PRICES. THIS IS DRIVEN BY:
• THE NUMBER OF SUPPLIERS OF EACH ESSENTIAL INPUT
• THE UNIQUENESS OF THEIR PRODUCT OR SERVICE
• THE RELATIVE SIZE AND STRENGTH OF THE SUPPLIER
• THE COST OF SWITCHING FROM ONE SUPPLIER TO ANOTHER.

79. 2. BUYER POWER. AN ASSESSMENT OF HOW EASY IT IS FOR BUYERS TO DRIVE PRICES
DOWN. THIS IS DRIVEN BY:
• THE NUMBER OF BUYERS IN THE MARKET
• THE IMPORTANCE OF EACH INDIVIDUAL BUYER TO THE ORGANISATION
• THE COST TO THE BUYER OF SWITCHING FROM ONE SUPPLIER TO ANOTHER.
STRATEGIC ANALYSIS TOOLS TOPIC GATEWAY SERIES
IF A BUSINESS HAS JUST A FEW POWERFUL BUYERS, THEY ARE OFTEN ABLE TO DICTATE
TERMS.
3. COMPETITIVE RIVALRY. THE KEY DRIVER IS THE NUMBER AND CAPABILITY OF
COMPETITORS IN THE MARKET. MANY COMPETITORS, OFFERING UNDIFFERENTIATED
PRODUCTS AND SERVICES, WILL REDUCE MARKET ATTRACTIVENESS.
4. THREAT OF SUBSTITUTION. WHERE CLOSE SUBSTITUTE PRODUCTS EXIST IN A MARKET, IT
INCREASES THE LIKELIHOOD OF CUSTOMERS SWITCHING TO ALTERNATIVES IN RESPONSE TO
PRICE INCREASES. THIS REDUCES BOTH THE POWER OF SUPPLIERS AND THE
ATTRACTIVENESS OF THE MARKET.
5. THREAT OF NEW ENTRY. PROFITABLE MARKETS ATTRACT NEW ENTRANTS, WHICH
ERODES
PROFITABILITY. UNLESS INCUMBENTS HAVE STRONG AND DURABLE BARRIERS TO ENTRY,
FOR EXAMPLE, PATENTS, ECONOMIES OF SCALE, CAPITAL REQUIREMENTS OR GOVERNMENT
POLICIES, THEN PROFITABILITY WILL DECLINE TO A COMPETITIVE RATE.