Meaning and definition

Organizations need various resources to accomplish the goals and objectives. The resources are

human, finance, physical and information. Or in another term, to manage men, money,

machine/equipment and information are the most for the success of organizational operation. To

use these available resources efficiently and effectively is the management. Efficiency refers

getting the most output from least amount of input. Managers are concerned with the efficient

use of resources that is without wasting. Effective refers the doing the right thing. Low waste of

resources results the high efficiency, high efficiency means high attainment. So management is

perhaps best understood from a resource based perspective.

Definitions:

According to Henri Fayol, "to manage is to forecast and to plan, to organise, to command, to co-

ordinate and to control.”

Harold Koontz “management is the art of getting things done through and with people formally

organized groups”.

Therefore, jobs are done to perform various activities. They can be production, marketing,

finance, personnel, research and so on. Management coordinates human, financial, physical and

information resources to get the job done.

Principles of management

The practice of management is based on specific disciplines. Many scholars have introduced

many principles in different times through their research and investigation. Henry Fayol has

recommended fourteen principles of management as below;

1. Division of Work – When employees are specialized, output can increase because they

become increasingly skilled and efficient.

2. Authority and responsibility – Authority and responsibility are two interrelated terms in

management. This principle emphasize on the balance between authority and responsibility.

Authority without responsibility can make a person irresponsible and there is possibility of

misuse of power. Similarly responsibility without power or power makes a person ineffective.

3. Discipline – Discipline means obedience to superior and their guidelines. It is also concerned

with following the rules, regulations and procedures of an organization.

4. Unity of Command – Employees should have only one direct supervisor at a time. It means

a subordinate should be accountable for a single superior. When a subordinate receives orders

and instructions from more than one superior at a time, s/he will get confused.

5. Unity of Direction – Teams with the same objective should be working under the direction

of one manager, using one plan. This will ensure that action is properly coordinated.

6. Subordination of Individual Interests to the General Interest – Individual interest means

fulfillment of employees’ objectives, while general interest means the fulfillment of

organizational objectives. This principle concerned on the basic management philosophy that

individual objectives are subordinate to the common objectives because achievement of

group objectives in the long run help to fulfill individual objectives.

7. Remuneration of personnel – Employee satisfaction depends on fair remuneration for

everyone. This includes financial and non-financial compensation.

8. Centralization and decentralization– This principle refers to how close employees are to

the decision-making process. It is important to aim for an appropriate balance. Maintaining

centralization and decentralization depends upon the nature and size of the organization and

also the knowledge and capability of subordinates.

9. Scalar Chain – Employees should be aware of where they stand in the organization's

hierarchy, or chain of command.

10. Order – The workplace facilities must be clean, tidy and safe for employees. Two types of

orders material orders and social order. The placement of material, machines and physical

things in proper place is material order and quantity is material order and placement of right

person to the right job is called social order

11. Equity – Managers should be fair to staff at all times, both maintaining discipline as

necessary and acting with kindness where appropriate.

12. Stability of Tenure of Personnel – Managers should strive to minimize employee turnover.

Personnel planning should be a priority. Instability of employees is the cause of poor

management and failure to attaining organizational goals.s

13. Initiative – Employees should be given the necessary level of freedom to create and carry out

plans. They should not expect any kind of interruption or guidelines from superiors for minor

technical work.

14. Esprit de Corps – It is a proverb that means union is strength. It is possible only through

harmony and mutual understanding among the workers. Organizations should strive to

promote team spirit and unity.

Process and Functions of management

Management is the best defined as a process of using organizational resources effectively and

efficiently to achieve organizational goals through managerial functions.

Various scholars have defined management functions differently. In the early twentieth century,

the French industrial Henri Fayol wrote that managers perform five management activities e.g.

plan, organize, command, coordinate, and control (POCCC). In the mid-1950s, management

function referred as planning, organizing, staffing, directing, and controlling (POSDC) by

two professors in UCLA (University of California and Los Angeles). Following these concepts

and values of the scholars, management operates through basic functions: planning, organizing,

leading and controlling.

Planning: planning is the basic managerial function. It is thinking before doing Deciding

what needs to happen in the future and generating plans for action (deciding in advance).

Managers develop plans to integrate the activities such as what to do, when to do, how to do

and who will do a particular task etc. therefore planning is to set an organization’s goals and

deciding how to achieve them.

Organizing: organizing is to bringing together the human and nonhuman resources for

achievement organizational goals. According to Fayol “to organize a business is to provide it

with everything useful to its functioning-raw materials, tools, capital, and personnel”. In

short, organizing involves determining how activities and resources are go be grouped.

Leading : Leading is the set of process used to get people to work together which includes a

number of different set of processes and activities such as directing, communicating,

influencing, supervision and motivating human resources including communication and

resolving conflict) towards the achievement of organizational goals.

Controlling-monitoring and evaluating: The final activity managers perform is

controlling. After the goals are set, the plans formulated, the structural arrangements

determined, and the people hired, trained, motivated for performing activities for achieving

the set goals. For this, managers should monitor the organization’ performance. Therefore,

the process of monitoring performance, comparing it with goals, and correcting any

significant deviations.

Kinds of managers or level of management

1. First level managers

The lowest level in an organization at which individuals are responsible for the work of

others is called first level managers or first line managers. They are responsible for the

operating employees only and do not supervise other managers. For example, first level

managers are the foremen or production supervisors in a manufacturing plant, the

technical supervisor in a research department, a school principal etc.

2. Middle level managers

The middle level management can include more than one level in an organization. Middle

level managers direct the activities of lower level manager and sometimes those of

operating employees as well. Middle level managers are primarily responsible for

implementing the policies and plans developed by top managers and for supervising and

coordinating the activities of lower level managers. Common middle level titles are plant

managers, operation manager, division head etc.

3. Top level manager

Top level managers make up the comparatively small group of executives who manage

the overall organization. Top level management is responsible for the overall

management of an organization. These people are called executives. An organization’s

top level managers establish the organizational goals, overall strategy, and operating

policies.

4. Management/Managers in different area of the organization

Or functional managers

Regardless of their level, managers may work in various areas within an organization as

below;

Marketing manager:- marketing managers work in areas related to marketing functions,

getting consumers and clients to buy the organization’ products or services. In other

words, the marketing function for example, commonly consists of, promotion,

distribution, and marketing research activities.

Financial managers:- financial managers deal primarily with an organization’ financial

resources. They are responsible for activities such as accounting, cash management, and

investment.

Human resource manager:-

Human resource managers involve in human resource planning, recruiting, and selecting

employees, training and development, designing, compensation, and benefit system,

formulating performance appraisal system and discharging low performance and problem

employees.

Operation managers:- Operation managers are concerned with creating and managing

the system that create an organization’ products and services. Typical responsibilities of

operation managers include production control, inventory control, quality control, plant

layout, site selection etc.

Basic managerial roles and skills

Regardless of their level or area within an organization, all managers must play certain

roles and exhibit skills if they are to be successful.

Managerial roles:

(i)Interpersonal roles Interpersonal roles are roles as Figurehead – As a manager, s/he has

social, ceremonial and legal responsibilities. S/he is expected to be a source of inspiration.

People look up to her/him as a person with authority, and as a figurehead. Leader – This is

where a manager provides leadership for his/her team, the department or perhaps the entire

organization; and it's where the manager manages the performance and responsibilities of

everyone in the group. Liaison – A manager must communicate with internal and external

contacts. S/he needs to be able to network effectively on behalf of the organization s/he

works. Through this role, managers work as a bridge between different units of the

organization and outsiders.

(ii)Informational roles involve receiving, collecting, and disseminating information. The thre

e informational roles include a monitor (the roles receiving information about internal

performance of the organization and also of external events), disseminator (the role involves

transmitting relevant information to the members of the organization), and spokespersons (as

a spokesperson, a manager formally relays information to people outside the organization).

(iii)Decisional roles:- The managers’ informational roles typically lead to the decisional role.

The four decisional roles include entrepreneur (the voluntary initiator for change, a manager

may develop new ideas and strategic models for implementation), disturbance handler (this

role involves taking corrective action when the organizations faces unexpected disturbances

like strike, feud between subordinates etc.), resource allocator (a manager decides how

resources e.g. money, people, time, equipment etc. are distributed, and with whom he or she

will work most closely), and negotiator (a manager must bargain with other individuals,

groups or organizations as a representative of the company for organizational advantage. For

example, a manager may negotiate a union contract, an agreement with a consultant, or a long

term relationship with a suppliers etc.)

Managerial Skills

1. Technical skills

2. Interpersonal skills

3. Conceptual skills

1.Technical Skills – these abilities are based on specialized knowledge or expertise. Such skills

are necessary to accomplish or understand the specific kinds of work being done in an

organization.

2. Interpersonal Skill/Human skill - managers spend considerable time interacting with people

both inside and outside the organization. They need interpersonal skill that is the ability to

communicate with, understand and motivate individuals and groups.

3. Conceptual Skill- it refers the mental ability to analyze and diagnose complex situation. The

managers who have conceptual skills may help managing how things fit together and facilitate

making good decision. Thus managers need the mental capacity to understand the overall

working of the organization and its environment, to grasp how all the parts of the organization fit

together and to view the organization a holistic manner.

For all levels of managers do not need to have the all sorts of abilities as mentioned above. Top

level managers need to be able towards conceptual skill and less technical skills. And the lower

level managers should have capacity of technical more and less of conceptual skill.

Scope and application of management

When most people think of managers and management, they think of profit seeking organization.

In other words, all types of firms and organizations consist and apply the management. However,

the scope to management is not constant, it is changing because of globalization, changing in

environmental forces and demand changing. Indeed, any group of two or more than two persons

working together to achieve a goal and having human, material, financial, or informational

resources at its disposal requires the practice of management. Therefore, the scope of

management is very wide and we need to know the following basic points of scope of

management in general.

1. Principles of management

2. Functions and areas of management

3. Interdisciplinary orientation

4. Demand, constraints and choices

1. Principles of management

Management is universal matter. Everywhere in organization, principles of management are

applied. Profit oriented business firms, government or other social welfare oriented firms – all

they apply the management. International management is spreading its importance worldwide.

In recent years, the importance of international management has increased. The sound

management team is assisting from one country to others. For example, Nepal bank Ltd. was

managed for some years by the foreign management team.

2.Functions and areas of management –functional areas

Management functions refer the planning, organizing, leading and controlling. All these

functions serve as the scope of management. Various functional areas or departments e.g.

production management, material management, marketing management-sales management,

personnel management department (HRM), research and development management etc. all these

need management and apply and perform their functional roles and activities such as planning,

organizing, leading and controlling to achieve the organizational goals.

3. Interdisciplinary orientation

Management concerns to the different discipline such as economic, statistics, sociology, culture,

psychology etc. All organizations need to manage or pay attention on those all disciplines in

course of its operation.

4.Demand, constraints and choices

These all three aspects are determined through management. Demands refer here is manager’

desirers and want that what he/she want to do for the organization. Managers have to work

different sorts of work and activities in the organization. They must meet minimum criteria in

his/her roles as a manger. Constraints refers the mangers in an organization have to face and

managed various difficulties and constraints. Internal and the external environmental constraints

are to be resolved –even the changing of set objectives of firms if constraints occur. Internal

factors such as organizational structure, finance, HR, etc. can be managed and controlled by

management. But out of hands of organization, such as legal, technological, economical etc.

cannot be controllable within the organizational managers. However, they have to be aware and

cautious that what and how to tackle if the circumstances and environment is changed. Next,

Choice refers here is doing work differently. Each person may have the different and distinct

quality, ability or art to perform the given work. No matter how differently the managers do the

work, the results should be gained as set objectives is the important.

Importance of management

“There are no under developed countries. There are only undermanaged countries”.

- Peter Drucker

• Management is indispensable for the successful functioning of every organization. It is said,

organization without management can’t be thought. It is all the more important in business

enterprises. No business runs in itself, even on momentum. Every business needs repeated

stimulus which can only be provided by management. In this regard, Peter Drucker says,“

management is a dynamic life giving element in an organization, without it the resources of

production remain mere resources and never become production”. The importance of

management has been highlighted. It is obvious; the management is inevitable matter for the

organization. The importance of management has been highlighted clearly in the following

points:

(i) Achievement of group goals: A human group consists of several persons, each specializing

in doing a part of the total task. Management creates team-work and coordination in the group.

S/he reconciles the objectives of the group with those of its members so that each one of them is

motivated to make her/his best contribution towards the accomplishment of group goals.

Managers provide inspiring leadership to keep the members of the group working hard. The well

managed organization may achieve its goals and objective when it manages and balances all

those available resources. For achieving the goals, organizations perform its functions Planning,

Organizing, Leading and controlling.

(ii) Optimum utilization of resources: Managers forecast the need for 6M- materials, machinery,

money and manpower, method, market. They ensure that the organization has adequate resources

and at the same time does not have idle resources. They create and maintain an environment

conducive to highest productivity. Managers make sure that workers know their jobs well and

use the most efficient methods of work. They provide training and guidance to employees so that

they can make the best use of the available resources.

(iii) Minimization of cost: In the modern era, no business can succeed unless it is able to supply the

required goods and services at the lowest possible cost per unit. Management directs day-to-day

operations in such a manner that all wastage and extravagance are avoided. By reducing costs

and improving efficiency, managers enable an enterprise to be competent to face competitors and

earn profit.

(iv) Performance control: Management sets the objectives of organization. Target goals, duration,

strategies, policies etc. are decided and implemented through various activities. Then, the

management evaluates the output/result of performed activities whether the result is received or

not as per the set goals. If not, what are the reasons are found and searched the remedy and

correction.

(v) Survival and growth: Modern business operates in a rapidly changing environment. An

enterprise has to adapt itself to the changing demands of the market and society. Management

keeps in touch with the existing business environment and draws its predictions about the trends

in future. It takes steps in advance to meet the challenges of changing environment. Changes in

business environment create risks as well as opportunities. Managers enable the enterprise to

minimize the risks and maximize the benefits of opportunities. In this way, managers facilitate

the continuity and prosperity of business.

(vi) Generation of employment: By setting up and expanding business enterprises, managers create

jobs for the people. People earn their livelihood by working in these organizations. Managers

also create such an environment that people working in enterprise can get job satisfaction and

happiness. In this way managers help to satisfy the economic and social needs of the employees.

(vii) Development of the nation: Efficient management is equally important at the national level.

Management is the most crucial factor in economic and social development. The development of

a country largely depends on the quality of the management. Capital investment and import of

technical knowhow cannot lead to economic growth unless wealth producing resources are

managed efficiently. By producing wealth, management increases the national income and the

living standards of people. That is why management is regarded as a key to the economic growth

of a country.

(viii) Problem solving: Organizational problems are solved by Management e.g. shortages, conflicts-

inter/intra conflicts or any types of problems are solved. And managers need to view a problem as

an opportunity by substituting problem for opportunity.

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Meaning and concept to organization

Meaning:

The term organization derives from the Greek word organ meaning a “tool” or an “instrument”.

A good tool or instrument is one which has precision, efficiency, reliability and predictability

built into it. An organization is built around systems, policies, procedures and technology, which

creates conditions of precision, efficiency and reliability of performance.

Organisation is the foundation upon which the whole structure of management is built.

Organisation is related with developing a frame work where the total work is divided into

manageable components in order to facilitate the achievement of objectives or goals. Thus,

organisation is the structure or mechanism (machinery) that enables living things to work

together. In a static sense, an organisation is a structure or machinery manned by group of

individuals who are working together towards a common goal.

Different authors have defined organisation in different ways. The main definitions of

organisation are as follows:

According to keith Davis, “Organisation may be defined as a group of individuals, large of small,

that is cooperating under the direction of executive leadership in accomplishment of certain

common object.”

According to Chester I. Barnard, “Organisation is a system of co-operative activities of two or

more persons.”

According to Mooney and Railey, “Organisation is the form of every human association for the

attainment of a common purpose.”

The main characteristics or Features of organisation are as follows:

1. Social interaction: An organization consists of people. They interact with each other while

at work. This interaction among organizational members leads to the development of a

network of social relation in work place.

2. Division of work: Division of work means dividing large task into smaller packages of

work to be handled by one person. Sometimes, a combined effort of a person and machine

performs a task. In specific cases, a group of people are assigned a task. An organization

thus brings different people together into a network of interaction to perform different task.

3. Hierarchy of Authority: the jobs to be performed in an organization are arranged in a

ladder like hierarchy. The bases of this hierarchy construction are job responsibility and

accountability, skill demand of the job, and complexity of the job. Higher levels jobs are

more demanding in terms of responsibility, skill and work experience. Thus, a chain of

command is put into oversee the work of lower level jobs. A clear hierarchy of authority

makes direction, supervision and coordination easier and more effective.

4. Coordination of effort: the divided task performed by individuals need to be linked

together to keep the activities of each division goal focused. This is accomplished by

coordination.

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5. Outlining the Objectives: Born with the enterprise are its long-life objectives of profitable

manufacturing and selling its products. Other objectives must be established by the

administration from time to time to aid and support this main objective.

6. Identifying and Enumerating the Activities: After the objective is selected, the

management has to identify total task involved and its break-up closely related component

activities that are to be performed by and individual or division or a department.

7. Assigning the Duties: When activities have been grouped according to similarities and

common purposes, they should be organized by a particular department. Within the

department, the functional duties should be allotted to particular individuals.

8. Defining and Granting the Authority: The authority and responsibility should be well

defined and should correspond to each other. A close relationship between authority and

responsibility should be established.

9. Creating Authority Relationship: After assigning the duties and delegations of authority,

the establishment of relationship is done. It involves deciding who will act under whom,

who will be his subordinates, what will be his span of control and what will be his status in

the organisation. Besides these formal relationships, some informal organizations should

also be developed.

Principles of Organization

1. Objective

Every enterprise, big or small, prescribes certain basic objectives. Organisation serves as a tool

in attaining these prescribed objectives. Every part of the organisation and the organisation as a

whole should be geared to the basic objective determined by the enterprise.

2. Specialization

Precise division of work facilitates specialization. According to this principles division of work

between the employees must be based on their ability, capability, tasks, knowledge and interest.

This will ensure specialization and specialization will lead to efficiency, quality and elimination

of wastage etc.

3. The Scalar chain

The principle is sometimes known as the ‘chain of command’. There must be clear lines of

authority running from the top to the bottom of the organisation. This means the unbroken line of

authority from top levels to the lowest level of an enterprise. This principle clarifies the

authority, responsibilities relationship among superior and subordinates. It is the root of

communication from the top level to the lower level and vice versa. The chain of command must

be clear and short for its effectiveness.

4. Authority and responsibility

Authority is the element of organisation structure. It is the tool by which a manager is able to

create an environment for individual performance. When a person is made responsible for a

particular function, s/he should be given required authority to complete the work efficiently.

Without proper authority, an employee cannot fulfill her/his responsibility effectively.

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5. Unity of Command

One subordinate should be kept in the supervision of one boss only. In other words, an

employee should receive orders and instructions only from one superior at a time. This principle

avoids the possibility of conflicts in instructions and develops the feeling of personnel

responsibility for the work.

6. Span of Control

It is also known as ‘span of management’, ‘span of supervision’ or ‘levels of organisation’, etc.

which refers that there should be a limited number of subordinates so that their work can be

effectively supervised. The narrow span ensures close and effective supervision as there are

limited numbers of subordinates under a supervisor.

7. Definition

The contents of every position should be clearly defined. The duties, responsibilities, authorities

and organizational relationship of an individual working on a particular position should be well

defined.

8. Unity of Direction

The basic rationale for the very existence of organisation is the attainment of certain objectives.

Major objective should be split into functional activities and there should be one objective and

one plan for each group of people.

9. Balance

In every organisation structure there is need for balance. For effective grouping and assigning

activities, this principle calls for putting balance on all types of factors human, technical as well

as financial.

10. Human Element

This principle indicates that the success or failure of an enterprise largely depends on the

handling of human element. If the organisation has sound labor policies along with a number of

welfare activities it is bound to succeed.

11. Discipline

According to his principle, it is the responsibility of the management to maintain proper

discipline in the enterprise. It is considered discipline as ‘respect for agreements which are

directed at achieving obedience, application, energy and outward mark of respect.

Types of organization: Formal and Informal

Formal Organization:

The formal organization is basically goal oriented entity that exists to accurate the efforts

of individuals and it refers the structures of jobs and positions with clearly defined

functions, responsibility and functions.

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Definition:

According to Chester Bernard, “an organization is formal when the activities are

coordinated towards the common objectives.”

In this way, all business organizations are formal organizations they have a system of well-

defined jobs bearing a definite measure of authority, responsibility, and accountability. All this is

designed to enable the people working within the organization to work more effectively for

achieving objectives.

Characteristics of formal organization:

1. The formal organisational structure is created intentionally by the process of organising.

2. The purpose of formal organisation structure is achievement of organisational goal.

3. In formal organisational structure each individual is assigned a specific job.

4. In formal organisation every individual is assigned a fixed authority or decision-making

power.

5. Formal organisational structure results in creation of superior-subordinate relations.

6. Formal organisational structure creates a scalar chain of communication in the

organization.

Advantages of Formal Organization:

1. Systematic Working:

Formal organization structure results in systematic and smooth functioning of an organization.

2. Achievement of Organizational Objectives:

Formal organizational structure is established to achieve organizational objectives.

3. No Overlapping of Work:

In formal organization structure work is systematically divided among various departments and

employees. So there is no chance of duplication or overlapping of work.

4. Co-ordination:

Formal organizational structure results in coordinating the activities of various departments.

5. Creation of Chain of Command:

Formal organizational structure clearly defines superior subordinate relationship, i.e., who

reports to whom.

6. More Emphasis on Work:

Formal organizational structure lays more emphasis on work than interpersonal relations.

Disadvantages of Formal Organization:

1. Delay in Action:

While following scalar chain and chain of command actions get delayed in formal structure.

2. Ignores Social Needs of Employees:

Formal organizational structure does not give importance to psychological and social need of

employees which may lead to demotivation of employees.

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3. Emphasis on Work Only:

Formal organizational structure gives importance to work only; it ignores human relations,

creativity, talents, etc.

Formal organization chart

Informal Organization:

The informal organization consists of the unofficial and unauthorized relationships that

inevitable occur between individuals and groups within the formal organization. Every formal

organization will have informal organizations within its membership.

In the formal organisational structure individuals are assigned various job positions. While

working at those job positions, the individuals interact with each other and develop some social

and friendly groups in the organisation. This network of social and friendly groups forms another

structure in the organisation which is called informal organisational structure.

The informal organisational structure gets created automatically and the main purpose of such

structure is getting psychological satisfaction. The existence of informal structure depends upon

the formal structure because people working at different job positions interact with each other to

form informal structure and the job positions are created in formal structure. So, if there is no

formal structure, there will be no job position, there will be no people working at job positions

and there will be no informal structure.

Features of informal organisation:

(1) Informal organisational structure gets created automatically without any intended efforts of

managers.

President

Vice president marketing

Vice –President finance

Controller

Vice –President

manufacturing

Sales manager division

Sales manager division

Plant manager electronic

Plant manager electrical

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(2) Informal organisational structure is formed by the employees to get psychological

satisfaction.

(3) Informal organisational structure does not follow any fixed path of flow of authority or

communication.

(4) Source of information cannot be known under informal structure as any person can

communicate with anyone in the organisation.

(5) The existence of informal organisational structure depends on the formal organisation

structure.

Advantages of Informal Organisation:

1. Fast Communication:

Informal structure does not follow scalar chain so there can be faster spread of communication.

2. Fulfills Social Needs:

Informal communication gives due importance to psychological and social need of employees

which motivate the employees.

3.Means of social satisfaction:

Informal organization gives satisfaction and stability to work. Informal organization performs an

important function by providing a sense of belonging and security for the individual.

4. Correct Feedback:

Through informal structure the top level managers can know the real feedback of employees on

various policies and plans.

Disadvantages of Informal organisation:

1. Spread Rumors:

Information spread through informal organisational structures are rumors which may mislead the

employees. In general, rumors tend to be vivid in content, inaccurate representation of facts,

emotional rather than logical in content, and frequently concealed from members of higher levels

of managerial authority.

2. No Systematic Working:

Informal structure does not form a structure for smooth working of an organisation.

3. May Bring Negative Results:

If informal organisation opposes the policies and changes of management, then it becomes very

difficult to implement them in organisation.

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4. More Emphasis to Individual Interest:

Informal structure gives more importance to satisfaction of individual interest as compared to

organisational interest

Organizational chart:

An organizational is a diagram that shows the structure of an organization and the

relationships and relative ranks of its parts and positions/jobs.

Orgnizatoinal charts are important tool of management for indicating the flow of work and

the responsibility for its achievement. Every details of the organization, such as all positions,

officials, line of communication, reporting relationship, and span of control is shown in an

organizational chart. For a smaller organization, only one chart is enough to show its

components. For bigger organization, however, two or more charts may be necessary to give

a complete view. For example, one chart may show only the top management composition.

The other chart may show the composition of the middle management. The third chart may

be necessary to show the bottom level structure.

Thus, there are three levels of organizational charts. According the nature of organization and

its needs, the only or all three levels of chart can be formed.

Types of Organization line/structure:

Line organization is the oldest and traditional form of organization structure. It is also

known as the military organization. Under this structure, there is direct line of authority

from superior to the subordinate level through an unbroken chain.

Line organizaion

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Advantages of line organization:

1. Simple

Line organization is simple to design, understand and operate. There is clear definition of

authority responsibility relationship of all members. Every employee has thee knowledge

about authority and responsibility.

2. Quick decision and implementation

Each manager in line organization has an independent status and can take quick decisions

within his authority. Quick decision and their implementation help to get benefit of

business opportunities.

3. Maintain discipline

In a line organization, there is a chain of command from the top level to the subordinate

level of management. Every employee is responsible to his/her immediate superior. There

is less probability of conflict. Hence, discipline can be maintained in line organization.

4. Fixed responsibility

Unity of command helps to fix the responsibility in line organization. No one can shift

their responsibility to others nor can they avoid it. Every employee is responsible for the

completion of given work.

5. Flexibility

Line organization is structured according to the changing environment of the business.

Thus, it permits flexibility in operation.

6. Effective management

There is a chain of command and span of control in the organization structure. The top

level management can control the entire organization through hierarchy of authority.

Every employee is responsible to his/her immediate supervisor. Besides, this is a fact that

the number of subordinates under every superior is limited.

Disadvantages of line organization:

1. Overload on manager

In line organization, managers have to perform a wide range of functions. In other words,

managers have to involve themselves in jobs of different nature. As such they cannot

devote sufficient time to supervise the subordinate.

2. Lack of specialization

In line organization, there is absolute lack of functional specialization. An employee has

to involve in various types of works. Similarly, a manager has to look after various

departments and functions at a time. Hence, here is where the saying “jack of all trades

but master of none”.

3. Autocratic leadership

The executive authority of the organization is concentrated on the top level management.

Therefore, the executives are willing to adopt a dictatorial approach. Subordinates have

no freedom to do their job. They are bound to follow instruction from their superior.

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4. Problem of coordination

Top level management might face the problems in maintaining coordination in the

functions of various departments.

5. Inefficiency

There is lack of provision of experts and specialists in decision making process. The top

level management takes decisions without taking any suggestion and guidelines from

experts. In such situation, the problem imbalance in the managerial decisions may arise.

6. Lack of stability

Line organizations totally depend upon few executives. They perform all types of works

of creative and innovative nature. The subordinate level employees have no knowledge

and authority about their performance. So there is lack of stability.

Line and Staff Organisational Structure:

Most large organisations belong to this type of organisational structure. These organisations have

direct, vertical relationships between different levels and also specialists responsible for advising

and assisting line managers. Such organisations have both line and staff departments. Staff

departments provide line people with advice and assistance in specialized areas (for example,

quality control advising production department).

Line and staff organization

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The above chart illustrates the line and staff organisational structure. The line functions are

production and marketing whereas the staff functions include personnel, quality control, research

and development, finance, accounting etc. The staff authority of functional authority

organisational structure is replaced by staff responsibility so that the principle of unity of

command is not violated.

Some staffs perform only one of these functions but some may perform two or all the three

functions. The primary advantage is the use of expertise of staff specialists by the line personnel.

The span of control of line managers can be increased because they are relieved of many

functions which the staff people perform to assist the line.

Advantages of line and staff organization:

1. Managerial specialization

In the line and staff organization, work of organization is divided among the line authorities.

Line authorities are efficient in their own sector of business and are also responsible for the

completion of given work.

2. Better coordination

Coordination among all personnel of the organization is one of the of line and staff

organization. Line authorities involve implementing plans and maintaining control over

activities.

3. More operating efficiency

As the work is divided into line and staff functions, the employees devote more time and

energy to perform their own functions. This aids to the efficiency of their work.

4. Better utilization of resources

Line and staff organization facilitates better utilization of organizational resources

including manpower. Here, both line and staff officials perform their functions through

mutual cooperation and coordination.

5. Greater flexibility

The new line departments can be created on the basis of requirement. The authority and

subordinates can be appointed in the department concerned. In similar way, the

management can modify authority and responsibilities of employee according to the

requirement.

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Disadvantages of line and staff organization:

1. Confusion

The staff specialists sometime attempt to force their suggestions and services upon

others. In such a situation, subordinates are confused whether to obey their immediate

superior or the staff manager.

2. Conflict, rivalry and jealousy

The increased complexity of relationships may cause conflict between the line and staff

managers. This division between them leads to conflict, rivalry and jealousy.

3. Suspicion and mistrust

By the very nature of their work, the staff managers are closely involved with top levels

of the management. They are in closer contact with top management than most of the line

managers. The line managers, therefore, suspect that the staff manager occupy influential

positions and obstruct direct relationships between themselves and the top management.

4. Tendency to change the domain

This is the tendency on the part of staff managers to enlarge their domain overstepping in

the area of line managers.

5. Over dependence on staff

In some situation, line executives may be over dependent on staff members for

information and suggestions. In a similar way, they may make plans in accordance with

functional specialists and implement plans according to their own creativity, initiative

and judgment. This may exploit the main theme of line and staff concept and can have a

negative impact on the business line of the organization.

Functional (project) and matrix organizational structure

Functional or Project Organisational Structure:

The line, line and staff and functional authority organisational structures facilitate establishment

and distribution of authority for vertical coordination and control rather than horizontal

relationships. In some functions or projects (complex activity consisting of a number of

interdependent and independent activities) work process may flow horizontally, diagonally,

upwards and downwards. The direction of work flow depends on the distribution of talents and

abilities in the organisation and the need to apply them to the problem that exists. The cope up

with such situations, project organisations and matrix organisations have emerged.

A project/functional organisation is a temporary organisation designed to achieve specific results

by using teams of specialists from different functional areas in the organisation. The project team

focuses all its energies, resources and results on the assigned project. Once the project has been

completed, the team members from various cross functional departments may go back to their

previous positions or may be assigned to a new project. Some of the examples of projects are:

research and development projects, product development, construction of a new plant, housing

complex, shopping complex, bridge etc.

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The chart below illustrates a project or functional organisational structure.

Functional or projects organizational chart

Temporary organisation designed to achieve specific results by using teams of specialists from

different functional areas in the organisation.

Importance of Project Organisational Structure:

Project organisational structure is most valuable when:

(i) Work is defined by a specific goal and target date for completion.

(ii) Work is unique and unfamiliar to the organisation.

(iii) Work is complex having independent activities and specialized skills are necessary for

accomplishment.

(iv) Work is critical in terms of possible gains or losses.

(v) Work is not repetitive in nature.

Characteristics of functional/project organisation:

1. Personnel are assigned to a project from the existing permanent organisation and are under the

direction and control of the project manager.

2. The project manager specifies what effort is needed and when work will be performed

whereas the concerned department manager executes the work using his resources.

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3. The project manager gets the needed support from production, quality control, engineering etc.

for completion of the project.

4. The authority over the project team members is shared by project manager and the respective

functional managers in the permanent organisation.

5. The services of the specialists (project team members) are temporarily loaned to the project

manager till the completion of the project.

6. There may be conflict between the project manager and the departmental manager on the issue

of exercising authority over team members.

7. Since authority relationships are overlapping with possibilities of conflicts, informal

relationships between project manager and departmental managers (functional managers)

become more important than formal prescription of authority.

8. Full and free communication is essential among those working on the project.

Matrix organizational structure

It is a permanent organisation designed to achieve specific results by using teams of

specialists from different functional areas in the organisation.

This type of organisation is often used when the firm has to be highly responsive to a rapidly

changing external environment.

Matrix organizational structure

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It is a type of organizational structure in which people with similar skills are pooled for work

assignments, resulting in more than one manager.

For example, all engineers may be in one engineering department and report to an engineering

manager, but these same engineers may be assigned to different projects and report to a different

engineering manager or a project manager while working on that project. Therefore, each

engineer may have to work under several managers to get his or her job done.

This type of organisation is often used when the firm has to be highly responsive to a rapidly

changing external environment.

Advantages of matrix organization structure:

1. Decentralised decision making.

2. Strong product/project co-ordination.

3. Improved environmental monitoring.

4. Fast response to change.

5. Flexible use of resources.

6. Efficient use of support systems.

Disadvantages of matrix organizational structure:

1. High administration cost.

2. Potential confusion over authority and responsibility.

3. High prospects of conflict.

4. Overemphasis on group decision making.

5. Excessive focus on internal relations.

Authority and responsibility and their relationship Authority:

Authority is the right of power assigned to an executive or a manager to achieve certain

organizational goals.

Authority and responsibility are closely related and this principle states that these two

must go hand in hand. It means that proper authority should be delegated to meet the

responsibilities.

Authority is the power to give orders and get it obeyed or in other words it is the power to

take decisions.

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According to Henry Fayol, “authority is the right to give orders and the power to exact

obedience.”

Therefore, Authority is the power to give orders and get it obeyed or in other words it is the

power to take decisions.

Responsibility:

Responsibility means state of being accountable or answerable for any obligation, trust, debt or

something or in other words it means obligation to complete a job assigned on time and in best

way.

Authority and responsibility are closely related and this principle states that these two must go

hand in hand. It means that proper authority should be delegated to meet the responsibilities.

A match should be there between these two because of two main reasons:--

Firstly, if a person is given some responsibility without sufficient authority s/he can’t

perform better, and also could not accomplish the desired goal.

Secondly, if there is excess authority being delegated to an individual without matching

responsibility then the delegated authority will be misused in one way or the other.

This is an important and useful principle of management because if adequate authority is not

delegated to the employees they cannot discharge their duties with efficiency and this in turn will

hamper the achievement of the organizational goal. Sometimes the relation between management

and employees is also badly effected by non-delegation of proper authority.

Positive impacts of this principle:

No misuse of authority.

Helps to complete job effectively and efficiently.

Individuals can be held accountable.

Systematized and effective achievement of organizational objectives.

* * *

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Motivation and leadership

Concept and meaning

The term motivation has been derived from the Latin word “movere” which means “to move” or “to

energize” or “to activate”. Its essence is to urge to do or not to do something. Or motivation is force

which leads people to act to fulfill objectives. It cannot be directly observed but can only be inferred

from behavior.

Motivation is a psychological and human aspect. It is the process of creating willingness among the

employees to devote maximum effort to achieve organizational objectives. It makes the key to effective

work performance and the result of interaction between the individuals. Motivation is the act of inspiring

employees.

A motive is what prompts the person to act in a certain way or at least develop an inclination for specific

behavior. For example, when someone eats food to satisfy the need of hunger, or when a student does

his/her work in school because he/she wants a good grade. Both show a similar connection between

what we do and why we do it.

According to Koontz and Weihrich, “Motivation is to do those things which satisfy drives desires and

induce the subordinates to act in a desired manner”.

According to Ricky Griffin, “Motivation is the set of forces that cause people to behave in certain

ways”.

People can choose how hard they work and how much effort they spend. Thus managers need to

understand how and why employees make different choices regarding their own performance. The major

ingredient behind this choice is motivation. When manages understand how important motivation is in

the workplace, they will be success to achieve the goals.

Nature of motivation:

1. Psychological process

2. Continues process

3. Complex and unpredictable process

4. Positive or negative

5. Pervasive/distributive

6. Affected by behavior

7. Goal directed behavior

8. Related to satisfaction

1. Psychological process

It is the process to achieve a desired result by stimulating and influencing the behavior of

subordinates. A manager must be careful to understand the needs, motives and desires of every

worker in the organization. Subordinates differ in their approach and even the two individuals

cannot be motivated with the same technique

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2. Continuous process

A satisfied person may not be satisfied tomorrow. When one need is satisfied, another need

emerges. Therefore, motivation is a never ending process until the completion of objectives. It is

the responsibility of the management to develop new techniques, system and methods to the

fulfill the changing needs of employees.

3. Complex and unpredictable process

Motivation is a complex and unpredictable task. Human wants are unlimited and they are

changeable according to time and situation. A satisfied person of the present may not be satisfied

in the future. In a similar manner, even two persons may not be motivated with similar behavior

and facilities. Therefore, a manager must be more conscious to motivate subordinates and to

achieve objectives.

4. Positive or negative

Motivation may be positive or negative. A positive motivation promises incentives and rewards

to workers. Incentives involves both financial and non-financial. Negative motivation based on

punishment for poor performance of subordinates who do not fulfill her or his give duties.

5. Pervasive/distributive

Motivation is the pervasive functions of all levels of management. Every manager from top to

the bottom level in the management hierarchy is responsible for motivation. A manager primarily

responsible for motivating his/her subordinates.

6. Affected/Influenced by behavior

One of the important parts of motivation is to influence the behavior of subordinates.

Management has to influence the behavior of workers and inspire them to concentrate more on

their works. Therefore, a manager has to play the role of a leader to influence the behavior of

subordinates to achieve common goals.

Types of Motivation

Motivation can be divided into two different theories known as Intrinsic (internal) motivation and

Extrinsic (external) motivation.

Intrinsic and extrinsic motivation

Intrinsic motivation is the self-desire to seek out new things and new challenges, to analyze one's

capacity, to observe and to gain knowledge. It is driven by an interest or enjoyment in the task itself, and

exists within the individual rather than relying on external pressures or a desire for reward. It is related

to the job one is doing. When a skilled operative performs a job well, s/he will derive a sense of

satisfaction. Intrinsic motivation satisfies the creative intrinsic in an individual.

Extrinsic motivation

This motivation is external to the job or task. The motivating factors are external, or outside, rewards

such as money or grades. These rewards provide satisfaction and pleasure that the task itself may not

provide. For example, financial incentive for doing a job well may motive the worker. Other

motivational factors are praise, recognition, admiration, working condition, and other facilities in the

organization.

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Another example, a person will work on a task even when they have little interest in it because of the

anticipated satisfaction they will get from some reward.

The rewards can be something as minor as a smiley face to something major like fame or fortune. For

example, an extrinsically motivated person who dislikes math may work hard on a math equation

because s/he wants the reward for completing it. In the case of a student, the reward would be a good

grade on an assignment or in the class.

Importance of employee motivation :

Motivation is one of the important functions of management. A manager becomes unsuccessful if s/he

fails to motivate her/his subordinates. There is relationship between motivation and performance.

1. High level of productivity

2. Effective use of human resource

3. Minimize disputes and strikes

4. Minimize supervision cost

5. Basis of coordination

6. Satisfaction of employees

7. Stability of workers

8. Achievement of organizational gals

1. High level of productivity and profit

Motivation contributes to develop working efficiency of employees. When employees are

actually motivated, they improve their working efficiency. The development of working

efficiency among workers leads to maximum production and productivity. On the other

hand, motivated workers perform their duties with full responsibility. They contribute for

the best ustilization of available resource like material, money, machine and other. It

results high profit for the organization.

2. Effective use of human resource

Motivation is the main instrument which creates the willingness among workers to do their

work in the best possible way. In other words, motivated employees make the best

utilization of their skill, knowledge, capability etc. in the existing environment.

3. Minimize disputes and strikes

Motivation minimizes misunderstanding and the disputes between the management and

workers. The development of transparency about the internal matters stimulates the

workers to perform their work efficiently. When workers are cleared and transparent of all

the organizational matters they trust the management and perform their own duties and

responsibilities.

4. Minimize supervision cost

Motivated employees perform their work themselves. In other words, the concept of self-

responsibility is developed among them and they perform work smoothly. Therefore,

regular and close supervision is not required to such employees. And motivation indirectly

contributes to minimizing supervision cost.

5. Basis of coordination

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Motivated employees develop a better understanding among themselves. The appreciate

their mutual problems and resolve differences through mutual consent. Thus, motivation

coordinates among employees.

6. Satisfaction of employees

The satisfaction of employees is essential for organizational effectiveness. Motivation is

the most to satisfy employees and develop morality among them. Employees with high

morale become dedicated to the organization.

7. Stability of workers

It is known that to turnover employees frequently is not good for the organization in terms

of cost and image. Motivation directly or indirectly facilitates the stability of employees.

Generally, frustrated employees may think of leaving the organization for better

opportunity. Motivated employees do not want to leave the organization and want to work

for the organization with the best possible way.

8. Achievement of organizational goals

Every organization is established for achieving definite objectives. The main responsibility

of the management is to focus on the organizational objectives. Motivated employees put

their effort towards the attainment of organizational objectives. The best utilization of

human effort contributes for the proper utilization of other resources.

Incentives:

Meaning

Incentive means the motivational value of reinforce. Incentive theory is a pull theory of

motivation. Incentives are the rewards to an employee over and above his/her wage or salary, in

recognition of his/her performance and contribution. The incentive scheme is a plan or programs

to motivate individual or group performance. It can be positive and negative. Positive incentive

e.g. wages, salary, bonuses, vacations etc. and negative incentive e.g. punishment, minimizing

wages, demotion, job termination etc.

Types of incentives

1. Financial incentives: financial incentives or rewards are those which are given tin terms of

money to the employees in addition their regular income. Money is an important motivator

factor. Common uses of money as incentive are in the form of increase wages and salaries,

bonus, allowances, retirement benefits, medical reimbursement, etc. Management needs to

increase these financial incentives making wages and salaries competitive between various

organizations so as to attract and hold force.

2. Non-financial incentives

Non-financial incentive: Man is a wanting animal. Once money satisfies his/her physiological

and security needs, it ceases to be a motivating force. Then, higher order needs for status and

recognition and ego in the society emerge. Therefore, nonfinancial incentives do not involve

monetary outlays. They are intangible, and fulfill psychological or emotional needs of emplyess.

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Non-financial incentives include, achievement, recognition, appreciation, respect, praise,

affiliation, freedom, opportunities for advancement, supportive leadership and supervision.

Types of nonfinancial incentives:

1) Job enrichment

2) Job enlargement

1) Job enrichment

Job enrichment means improvement, or an increase with the help of upgrading/promotion

and development. By job enrichment, an employee finds satisfaction in respect to their

position and personal growth potential. Particularly, the executives working at the higher

levels often prefer to job enrichment because it makes job more challenging. They derive

higher satisfaction by performing more and more challenging jobs.

2) Job enlargement

Job enlargement is non-financial incentives by increasing in job task and responsibilities to

make a position more challenging. It is a horizontal expansion, which means that the tasks

added are at the same level as those are current position. After performing the same position

for a while, employees can get bored. Sometime a change in work tasks can add a much

needed boost of enthusiasm, due to the change in daily activities, and can improve morale.

The employees also need to increase his or her productivity to accomplish the new tasks. So

/he has a chance to implement methods that speed up her or his output. It is also show the

employee that management is aware of the work s/he is doing.

Thus, on the basis of requirement, a manager can use both financial and non-financial incentives

for employees’ better performance.

Theories of motivation

Human needs are two types; primary and secondary. Basic physical needs e.g. food, water, air,

sleep etc. are called primary needs and social and psychological needs, called secondary needs.

Primary needs arise from the basic requirements of life and are important for the survival of the

human race. Therefore, they are virtually universal among people, but they vary in intensity from

one person to another. For example, a child needs much more to sleep than an older person.

Secondary needs are more vague than primary one because they represent needs of the mind and

spirit rather than of the physical body.

The need theories are;

1) Need theory

2) Dual Factoral theory

3) Expectancy and achievement theory

1. The need hierarchy theory

Human needs are not of equal strength, but may emerge in some priority pattern. In particular, as

the primary needs become reasonably well satisfied.

A hierarchy needs of Abraham Maslow who focused on five different levels of human needs.

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1. Physiological needs—food , water, shelter/sleep, sex, and others bodily requirements or

essential for survive. In organization adequate wages, and a good working environment.

2. Safety and security/protection- from physical/ emotional, financial and medical

Personal/physical security e.g. fire, accident, any danger in course

of working

Financial security e.g. insurance, pension after retirement

Health and well-being e.g. facility of medial

Organizations fulfill security needs by providing stable job with medical facilities and retirement

benefits.

3. Social needs/affiliation, belongingness (happy, feeling secure), acceptance, and friendship

Employees with high affiliation need to enjoy working closely with others. When an

organization does not fulfill affiliation needs, employee dissatisfaction appears

regularly in different forms like frequent absenteeism, low productivity, stress related

behavior, and emotional breakdown. Social need depends on organizational culture

too.

4. Ego/Esteem needs--- prestige, success, self -respect, (and valued by others)

Ego or esteem needs are psychological in nature and represent higher level of needs. These

needs include internal factors such as self-respect, autonomy, and achievement and external

factors such as status, recognition, attention and achievement.

Individuals seek to look good to others – health club, gym club –improves health physically,

education training centers – achieve knowledge, increase skills and ability –prestige

In order to satisfy these needs people seek opportunities for achievement, promotion,

prestige, and status. Management can fulfill ego needs by defining position and by

developing a system of reward and punishment.

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5. Self - actualization

These needs are related to personal growth, self-fulfillment and the realization of one’s full

potential. Self-fulfillment drives to become what one is capable of becoming -"What a person

can be, s/he must be.”

In this level of hierarchy of needs, an individual seeks challenging work and advancement.

Self -actualized individuals are creative independent and spontaneous and have good

perception of reality. Management can motivate such employees by providing challenging

work with sufficient freedom to take decisions.

2. Dual factoral/ Two factor Theory

Another important theory of motivation is the dual factoral or two factors theory, which is also

called motivation hygiene theory developed by Frederick Herzherg in the early of 1960. In this

two factor motivation theory, the two types of need factors are;

i) Hygiene Factors and

ii) Motivating factors

i) Hygiene factors- (or dissatisfier factors or maintenance factors)

Hygiene factors are also known as dis-satisfiers or maintenance factors. Hygiene factors

includes;

i. company policy

ii. technical supervision

iii. relationship with supervisors and peers

iv. working conditions

v. salary

vi. personal life

vii. job security

viii. status

When these factors are adequate, people will not be dissatisfied but they will not be satisfied either.

These factors are needed to maintain a minimum level of need satisfaction. If managers do not focus on

maintenance or hygiene factors, the desired behavior will not obtained from employees.

ii) Motivating factors (also called satisfier factors)

Herzberg called the motivating factors from other name, satisfiers because these factors satisfy

employees’ needs for self-actualisation. The motivator or satisfier factors are;

i) achievement

ii) recognition

iii) advancement

iv) the work itself

v) personal growth

vi) responsibility

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According to Herzberg’s two factor theory, satisfaction is affected by motivators and

dissatisfactions by hygiene factors. It should be noted that one’s hygiene factors may be the

motivating factors for others. Therefore, a manager needs to know the behavior of subordinates to

inspire them to get things done. s/he needs to understand the psychology of workers and treat them

accordingly.

Note:

Hygiene factors - related with basic (lower 3 hierarchy) levels of Maslow’ need theory

and motivating factors- related to the top level needs of hierarchy- self actualization

3. Expectancy theory

Expectancy theory of motivation is also called value theory of motivation. This motivation

theory says the people choose how to behave from among alternative courses of behavior, based

on their expectations of what there is to gain from each behavior. David Nadler and Edward

Lawler describe four assumptions about behavior in an organization on which the expectancy

approach is based.

These assumptions become the basis for expectancy mode, which has three major components

are:

1. Performance outcome expectancy

2.Valence

3.Effort performance expectancy

1. Performance outcome expectancy:

Individual expect certain consequences of their behavior. These expectations, in turn, affect

their decisions on how to behave. For example, a worker who is thinking about exceeding

the sales quota may expect praise, a bonus, no reaction or even hostility from colleagues.

2. Valence

The outcome of a particular behavior has a specific Valance, or power to motivate, which

varies from individual to individual. For example, to a manager who values money and

achievement, a transfer to a higher paying position in another city may have higher valence.

To a manager who values affiliation with colleagues and friends, the same transfer may have

low valence.

3. Effort performance expectancy

People’ expectations of how difficult it will be to perform successfully affect their decisions

about their behavior. Given a choice, individual tend to select the level of performance that

seems to have the best chance of achieving an outcome they value.

From the above three assumptions of expectancy or value theory of motivation, we can think the

three questions such as if I do this, what will be the outcome? Is the outcome worth the effort to

me? What are chances to achieving an outcome that will be worthwhile for me?

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Thus, according to expectancy theory, individuals are motivated when they see a favourable

combination of what is important to them and what they expect as a reward for their efforts, and

they behave accordingly.

Leadership style

Leader and leadership

Leader is someone who can influence others and who has managerial authority. Leadership is the ability

to persuade others to seek defined goals enthusiastically. Or leadership is the ability that inspires and

influences to make sound decisions and to do other to perform well.

Leadership is t both a process and a property. It is the human factor which binds a group together and

motivates it towards goals. The objective of leadership is to influence others so that important goal is

achieved. Leaders are people who can influence the behavior of others without having to rely on force.

The terms leader and manager are not necessarily interchangeable because leadership is a subclass of

management. Managers perform the functions of creating, planning, organizing, motivating,

communicating and controlling. Included within these functions is the necessity to lead and to give

direction. Therefore, a manager’s ability to lead effectively may affect his or her ability to manage, but a

leader needs only to influence the behavior of others.

According to Stephen Robbins, “leadership is the ability to influence a group towards achievement of

goals”.

Managers Versus Leaders:

Leadership is an important part of management but it is not the whole story. Generally, the two terms,

managers and leaders are used as synonymously. However they aren’t necessarily same. Managers are

appointed, they have legitimate power that allows them to reward and punish. Their ability to influence

is based on the formal authority inherent in their positions. And managers plan activities, organize

appropriate structures and control resources. In contrast, leaders may either be appointed or may emerge

from within a group. Leaders can influence others to perform voluntarily to seek defined objectives

enthusiastically. Managers hold formal positions. Managers achieve result by directing the activities of

others, whereas leaders a create vision and inspire others to achieve this vision and to stretch themselves

beyond their normal capabilities. Because there is a difference between management and leadership,

strong leaders may be weak managers if poor planning causes their group to move in the wrong

direction. In fact, an individual can influence others does not mean that s/he can also plan, organize, and

control. Therefore, leaders mean those who are able to influence others and who possess managerial

authority

Nature and characteristics of leadership

Leadership is an important function of management. It plays a vital role in management. It is said that

leadership is the heart of management. Someone in the organization has to tell employees what to do.

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Organizational success depends on the quality of leadership. The nature and characteristics of leadership

as below:

1) Followers

2) Ability to influence

3) Common Objectives

4) Unequal distribution of authority

5) Continuous process

6) Situational

1) Followers

No one can be leader without having followers. A leader drives his/her authority from the

followers who him/her as their leader. Hence, without follower leadership cannot be imagined.

2) Ability to influence

Leadership is the ability to influence the behavior and efforts of followers. A person is said to

have an influence on others when they are willing to accept and carry out his/her instructions

enthusiastically.

3) Common Objectives

A leader and followers should have common objectives. Leadership guides and directs the

behavior of followers to achieve the common objectives.

4) Unequal distribution of authority

Leadership involves an unequal distribution of authority among leaders and followers. Leaders

can direct the activities of followers and the followers obey the leader’s direction. But the

followers cannot similarly direct leaders’ activities

5) Continuous process

Leadership is an ongoing process. It requires regular communication between the leader and

his/her group.

6) Situational

Leadership is related to particular situation. A particular style of leadership may be successful in

one situation but may fail in another situation. Hence, its style differs in different situation. The

effective leader should change his/her leadership style depending upon the requirement of

situation.

Leadership style

Leadership style is the typical pattern of behavior that a leader uses his/her own style to influence

employees to achieve organizational goals. And leadership style varies widely among leaders

and among organizations. Here, among various leadership styles, the three different styles are as

below:

1. Participative management

2. Management By Objective (MBO)

3. Management By Exception

1) Participative management (group centered leadership style) (Democratic leadership)

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Meaning:

Participative leadership style is group centered leadership style. It is also called democratic or

consultative leadership style. It refers a leader draws ideas and suggestions from his/her group by

discussion, consultation and participation. Group members are duly encouraged to demonstrate

initiative and creativity and take intelligence interest in setting plans and policies and decision

making. Under this leadership style, power and authority is decentralized. A manager may tell

his/her subordinate in democratic or consultative way for example- “there are the results we have

to achieve, this is the job to be done. Let us agree together how best to do it. Let us agree on

what we are to do”. The leader seeks to mainly by persuasion and example rather than by force,

fear or power.

Advantages of participative leadership

1. Greater employee and group cooperation

2. Greater employee and group satisfaction

3. Higher employee morale

4. Improved decision making, planning and organizing

5. Recognition of human relation

6. High personal growth and development of employees

In participative leadership, the leaders share information and encourage discussion. Active participation

in the management by all employees or members assures rising productivity and satisfaction. However,

in this leadership needs favorable conditions. Labor or subordinates must be literate (it means

knowledge, experience), informed and organizes. Democratic or participative leadership rely on reward

than punishment. As well as leaders rely heavily on non-financial incentives.

2) Management By Objective (MBO)

Management by Objectives (MBO) sometime it is also called Management by result, is a personnel

management technique where managers and employees work together to set, record and monitor goals

for a specific period of time. Organizational goals and planning flow top-down through the organization

and are translated into personal goals for organizational members. The technique MBO was first

explored by management expert Peter Drucker and became commonly used in the 1960s.

The core concept of MBO is planning, which means that an organization and its members are not merely

reacting to events and problems but are instead being proactive. MBO requires that employees set

measurable personal goals based upon the organizational goals. For example, a goal for a civil engineer

may be to complete the infrastructure of a housing division within the next twelve months. The personal

goal aligns with the organizational goal of completing the subdivision.

MBO is a supervised and managed activity so that all of the individual goals can be coordinated to work

towards the overall organizational goal.

Advantages

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MBO has some distinct advantages. It provides a means to identify and plan for achievement of goals. If

you don't know what your goals are, you will not be able to achieve them. Planning permits proactive

behavior and a disciplined approach to goal achievement. Goals are measurable so that they can be

assessed and adjusted easily. Organizations can also gain more efficiency, save resources, and increase

organizational morale if goals are properly set, managed, and achieved. MBO concerns the rule of

SMART where ‘S’ for specific, ‘M’ for measureable, ‘A’ for achievable, R for realistic and T for

timeframe. This adds the need for achievable and realistic objectives to alleviate any concerns that the

objective is unobtainable, which would provide little or no efforts to accomplish the objective. MBO

only works when used correctly and the team is engaged in the process of creating, monitoring and

measuring the objectives. The process of introducing MBOs in to an organization that has never

measured objectives can cause issues if not properly communicated and implemented.

The essence of MBO is “participative goal setting,” “choosing course of actions” and decision making.

An important part of the MBO is the measurement and the comparison of the employee’s

actual performance with the standards set.

3) Management By Exception (MBE)

Management by exception (MBE) is a style of managerial leadership that gives employees the

responsibility to take decisions and to fulfill their work or projects by themselves. It consists of focus

and analysis of statistically relevant anomalies in the data. If an unusual situation or deviation in the

recorded data appears, which could cause difficulties for the business and can’t be managed by the

employee at his/her level, the employee should pass the decision on to the next higher level. For

example, if all products are selling at their expected volumes for the quarter, except one particular

product which is underperforming or over performing at a statistically relevant margin, only the data for

that product will be presented to the managers for further investigation and discovery of the root cause.

Management by exception can bring forward business errors and oversights, ineffective strategies that

need to be improved, changes in competition and business opportunities. Management by exception is

intended to reduce the managerial load and enable managers to spend their time more effectively in

areas where it will have the most impact.

Exception management also has an IT application. When writing code, if the programmer sees that there

will be an exceptional case where a predefined assumption of the application will be breached, the

programmer will need to deal with that exception programmatically from the outset.

Management by exception here is the practice of investigating, resolving and handling such occurrences

by using skilled staff and software tools. Good management can contribute to efficiency of business

processes. Often in these cases the process will be called exception management, as exceptional cases

are not the sole focus of the managerial policy, and exception management (as opposed to management

by exception) denotes a more moderate application of the process.

Process of Management by objectives (MBE)

Primarily, it is necessary to set objectives or norms with predictable or estimated results.

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Standard performance or standard result is set to get

The performance is assessed and get equated to the actual performance.

Next, the deviations are analysed.

With an insignificant or no deviation, no action is required and senior managers can

concentrate on other matters.

If actual performances deviate significantly, the concern needs to be passed to the senior

managers, as an “exception has occurred”.

The aim is to solve this “exception” immediately

Nature and Functions of MBE

To forecasting the result of objectives

To find/calculate the variance

Focus more on adverse variance

Efficient and economic or time saving

To find the reasons of deviance

To correct the deviations

Importance of MBE

In practice, the accounting department is responsible for the forecasting of budgets and cost performance

reports. The difference between the estimated and actual figures is defined as variance. To understand

the cause of the difference, managers need to investigate the questions how the variance differs from last

period and what are the causes for not reaching the estimated figures. Managers consider two types of

variances: adverse variance and favorable variance. Adverse variance exists when the difference

between the budgeted and actual figure leads to a lower than expected profit. Favorable variance exists

when the difference between the budgeted and actual figure leads to a higher than expected profit.

Rather than considering all variances, managers establish criteria to determine which variances are

significant to focus on. Management by exception focuses mainly on large adverse variances, to find the

areas of business, which deviates from predetermined standards in a negative way

Advantage of Management by Exception (MBE)

Problematic issues are identified rapidly and

Managers are able to use their time and energy more wisely for important issues

Less important ones that could provoke delays in their daily operations.

As managers take fewer decisions, employees have more responsibility, which increases their

motivation.

Disadvantages of Management By Exception (MBE)

Occurrences of mistakes in calculating budgets results in large variance differences and finding

the errors can be time-consuming.

Furthermore, financial analysts responsible for calculation variances are increasing overhead

cost of a company.

If the financial analysts are not performing well, it will become a waste of time and money.

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Another disadvantage is that only managers have the power over really important decisions,

which can be demotivating for employees at a lower level.

Furthermore, the time taken for passing the issues to managers can be time-consuming.

Learning Organization

A learning organization is one that can adapt to change in the external environment through

continual renewal of its structure and practices. A learning organization is an organization skilled

at creating, acquiring, and transferring knowledge, and at modifying its behavior to reflect new

knowledge and insights. This means that organizations engage in systematic problem solving,

experimenting, and continuously searching for new knowledge.

Peter Senge who popularized the concepts of learning organization suggesting five technologies

(named fifth discipline) those help the organization to learn. These are;

1. System thinking

2. Personal mastery

3. Mental model

4. A shared vision and

5. Team learning

The learning organization generally associated with concepts such as sharing the vision of the

enterprises, considering radically new organization structure, creating learning teams, and

establishing linkages with parties outside the enterprises for generating new ideas and perspectives.

In an organization dedicated to creating a learning environment, training is a top priority. Learning

organizations do not simply appear. They are fostered by devoting time, energy, and resources on a

continuous basis to the training and development of employees (managerial and non-managerial).

Human Resource Management (HRM)

The management functions of staffing and human resource management concentrate on

management of employees. Employees are taken as an important resource of the organization as

they play a major role in mobilizing other resources. Both staffing and human resource

management is used simultaneously. However, human resource management is vague term and

staffing is a part of it.

Staffing is the process of obtaining and maintaining capable and competent employees to fill all

position from the top to the subordinate levels. It includes recruiting, selecting,

appointing/placement, training, appraising, and maintaining in the organization. The main idea

behind staffing is to hire skilled employees in the organization on the basis of requirement to

achieve goals.

Human Resource Management (HRM) is a broad term and it involves all the activities

necessary for manpower management. It refers to the philosophy, policies, procedures and

practices concerned with management of employees of the organization. It is designed to

maximize both employees and organizational effectiveness. It combines together organizational

and individual interests of employees through effective use of human resources.

Its objectives of HRM are:

1. Effective utilisation of human resources;

2. Desirable working relationships among all members of the organisation; and

3. Maximum individual development.

Human Resource Management (HRM) is all about balancing the organization’s people and

processes to best achieve the goals and the strategies of the organization, as well as the goals

and the needs of employees. In order to operationalize a firm’s mission, goals, strategies, and

policies, the major functional areas in human resource management are:

1. Planning,

2. Staffing, or recruitment

3. Employee development

4. compensation

5. performance management

1. Planning

Human resource (HR) planning involves determining future human needs and job

requirements. HR planning is both a process and a set of plans. HR planning determines

the numbers and types of employees to be recruited into the organization. HR plans are

derived from the organization’s goals, strategy, conditions faced by the firm in the

external environment and the nature of the current employees’ knowledge.

2. Staffing

The managerial function of staffing is defined as filling, and keeping filled, positions in

the organization structure. This is done by identifying the workforce requirements,

inventorying the people available, and recruiting, selecting, placing, promoting,

appraising, careering planning, compensating, and training or both candidates and job

holders so that they can accomplish their task effectively and efficiently. It is clear that

staffing must be closely linked to organizing that is, to the setting up of intentional

structures of roles and position. It is the job of managers to fill the positions in their

organization and keep them filled with qualified people.

3. Training and development

The human resource (HR) department is responsible for providing on the job as well as

training for all employees. This is the most important functions of HRM. Lack of training

increases frustration among employees. To develop the employees existed and newly

should be provided training for their skill development. Measurement and monitoring is

another vital aspect of training in order to foster adoption of their new skills.

4. Compensation

The compensation function facilitates retention of employees and also serves to attract

potential employees to the organization. A company is more likely to be successful, if

it adapts new ways of providing benefits to employees. Some benefits that can attract and

retain new skilled employees are:

Remuneration, allowances

Flexible working hours or workdays

Extended vacation time

Paternity leave or childcare

Insurance

Continuing education/skill development

Award and recognition

5. Performance management

The HR manager’s job is to lead and motivate employees to perform at acceptable level.

At the end of each performance period, such as the end of the year, the HR manager

evaluates each employee’s performance. This creates a management control system that

establishes performance goals, then rewards or penalizes the individual based on the

performance level.

6. Labour Relations The term labour relations refer to interaction with employees who are represented by

a trade union. Or employees relation with the management of organization. Unions are

organisation of employees who join together to obtain more voice in decisions affecting

wages, benefits, working conditions, and other aspects of employment. With regard to

labour relations, the personnel responsibility primarily involves negotiating with the

unions regarding wages, service conditions, and resolving disputes and grievances.

Recruitment Recruitment refers to organizational activities that influence the number and types of

applicants who apply for a job and whether the applicants would accept jobs that are

offered. The recruitment process begins with an attempt to find employees with the

abilities and attitudes desired by the organization and to match them with the tasks to be

performed. Whether potential employees will respond to the recruiting effort depends on

the attitudes they have developed toward those tasks and the organization on the basis of

their past social and working experiences. Their perception of the task will also be

affected by the work climate in the organization.

Job Analysis

Job analysis or work analysis is a procedure to find the content of a job in terms of

activities involved and attributes or job requirements needed to perform the activities of

an organization. Job analysis provides information to organizations which helps to

determine which employees are best fit for specific jobs.

The process of job analysis involves the analyst describing the duties of the incumbent,

then the nature and conditions of work, and finally some basic qualifications. Job analysis

is crucial that helps individuals to develop their careers, and also help organizations

develop their employees in order to maximize talent. Job analysis has the two parts; Job

specification and job description

Job description Generally, a job description includes the following factors’

The title of the job

Location and geographical are to work

Duties and responsibilities-the task which will be expected of the new recruit.

To whom s/he will report

Degree of autonomy- the degree to which the selected employee will be able to

control her/his own work program

Job specification A job specification describes the knowledge, skills, education, experience, and abilities

which are essential to performing a particular job. The job specification is developed

from the job analysis and also developed from a detailed job description. The job

specification describes the person who is wanted to hire for a particular job. The job

specification provides detailed characteristics, knowledge, education, skills, and

experience needed to perform the job, with an overview of the specific job requirements.

A Job Specification consists the following elements

Education: in the recruitment process, the organization should state what degrees, training,

or certifications are required for the position.

Required Skills, Knowledge and Characteristics: The skills, knowledge, and personal

characteristics, interest of individuals who have successfully performed this job should be

mentioned.

Experience: Number of years of experience in the job that the organization is seeking to fill.

Number of years of work experience required for the selected candidate.

Once generated, the job description will act as the blueprint for the personnel specification

which outlines the type of applicant the company is seeking.

Thus, a job specification cuts to the quick with the organization’s requirements whereas the

job description defines the duties and requirements of an employee’s job in detail.

Sources or methods of recruitment

1. Internal recruiting

2. External recruiting

1. Internal recruiting

Within organization -own staff: Organizations can make effective use of skills

inventories for identifying internal applicants for job vacancies. It is difficult, however,

HR managers to be aware of all current employees who might be interested in the

vacancy.

Personal contact, friends, acquaintances, former employees, current employees

2. External recruiting

i) Recruitment/employments agencies

These agencies will provide lists of potential recruits for a fee

Reputed agencies application are screened

ii) Educational establishment (college and universities students)

Various companies recruit employees directly from college and universities who have

gone through industrial training

For example, from higher education , personnel who have as part of their degree, worked

in industry and commerce.

iii) Advertisement (communication) Newspaper

A careful prepared newspaper advertisement attracts well qualified applicants.

A well written adv. should describe the job requirements and spell out the

opportunities

All information should be accurate

advertisement is the most common, however it is costly

iv) Unemployed

Individuals who are unemployed and seeking for a jobs may apply for the required

job

v) Other sources

Personal contact, friends, acquaintances, former employees, current employees

some employees positions are filled through personal contact

7. Internet

In the 21st century technology and information advancement, internet is the

most common or sources of recruitment

Email, social medias, websites etc.

Human Resource Development (HRD)

Training

Training is the extremely important for organizational members to develop competencies for

the new assignment and major change for organization.

The human resource (HR) manager’s job is to get results through personnel by making

decisions and seeing to it that others carry them out. The HR managers are greatly interested

in the factors influencing individual personnel to achieve given performance levels.

Thus, training is the effort put forth by an employee or management to provide the

opportunity for the employees to acquire job-related attitudes, concepts, rules and skills that

result in improve performance. Basically, training changes or reinforces behavior to make

employees more efficient in achieving job goals. In addition, training reinforces successful

work/job practice.

Methods of training

1. On the job training (OJT) or in the field training method

It is most popular method of employees training. Under this method, the employees

are given training on the job itself. An employee is given opportunities of performing

the role of the position she/he holds. Usually such on the job training is made under

the supervision of a HR manager or senior supervisors. The senior supervisor points

out her/his mistakes or defects and explain the ways to correct them.

OJT consists the areas;

a) Job rotation

b) Coaching

c) Job instruction

2. Off the job

i) Lecture/classroom method

Under this method, employees are trained in a classroom. The trainer in the class

speaks about various aspects of works which to be performed by employees. The

trainees listen to such lectures and make note of the important aspects. In case of any

doubt, they ask questions and clarify. The lecture method with question answer

facility is the best method to pass on idea, concept, information and knowledge. But

the lecture should possess a good voice, attractive appearance, fluency in speaking

and clarity of expression.

ii) Case method A case is a real life illustration for studying a problem. Trainees are asked to analyse

situation, identify problem and opportunities and make recommendation for dealing

with them. The case helps in developing skills of analysis in discussion situation, in

applying knowledge to the situation and decision making. For example, to sale a

product ‘making a call to a customers’ what difficulties a salesperson faced and any

new ideas or methods s/he found.

iii) Role playing (drama) method

Under method, an employee plays a role of a customer or service receiver and

another employee plays a role of an employee and tries to convince the service

receiver. By witnessing such act, the employee is able to know the art of dealing with

various types of customers/service receiver after the drama is over, a general

discussion can be made and the newly recruited employees can be given necessary

instructions by a trainer or a HR manager. Thus, trainee employee may gain enough

knowledge of own job.

iv) Meeting and conference method

HR managers’ meetings are usually held at regular intervals, for example, weekly,

monthly, or even half yearly as requirement of organization. Such conferences are

generally held once or twice in a year. The members of the HR department attend

such meetings and conferences. These meetings and conferences of employees and

executives are meant for educating workers about various aspects of jobs. The

participants express their views and opinions about the present and future working

policies.

Industrial relation, Trade union and employee relation

Meaning

Industrial relation (IR) also called labor relation) refers the relationship between the management of

a company and a trade/labor union chosen by its employees to be their representative or

• The industrial relation (IR) commonly refers “employee –employer relation” in both

organized and non-organized areas of business companies

• It is also called the labor relation or labor management or labor relation

• Industrial relation (IR) (also called labor relation) refers the relationship between the

management of a company and a trade/labor union chosen by its employees to be their

representative

• Definition of IR—according to Dale Yoder “IR is the designation of a whole field of

relationship that exists because of the necessary collaboration of men and women in the

employment process of industry.”

• Definition of IR—according Armstrong, “IR is concerned with the system and procedures

used unions and employers to determine the reward for effort and other conditions of

employment, to protect the interests of the employed and their employers and regulate the

ways in which their employers treat their employees’:

• Thus, from the meaning and definition, IR clears that it is a coin having a two faces:

cooperation and conflict

• Relationship starts from cooperation and soon changes into conflict and after its resolution

again changes into cooperation.

• This changing process becomes continuous feature in industrial system and make IR concept

dynamic and evolving

Objectives of Industrial relation (IR):

The primary objective of IR is to maintain and develop good and healthy relations between

employees and employers or operative management, and other objectives of IR are;

1. Fostering relationship -between or among workers and management by safeguarding their

welfare or interests

2. Fostering the economic status- avoiding and strikes, lockouts, antagonism, the both

employer and employees to be benefited

3. Avoidance of conflict- by developing mutuality among the interest of the concerned parties,

the arose conflicts are avoided

4. Avoidance of unnecessary interference – IR initiate and avoids the interference of the

government interference in the matters of relationship between employees and management

5. Participation- IR provide the opportunity to the employees to participate in management

and decision making process

6. Productivity- IR minimize employees turnover and absenteeism which result the higher

productivity of a company

Scope of Industrial relation (IR):

• IR is dynamic and developing socio-economic process. It sprouts out of employment

relations and it has broader meaning and wider scope

1. Lobour relation – relation between trade union/labor union and management of an

organization

2. Employer –employee

3. The role of various parties

4. The mechanism of resolving conflicts between employer and employees, in case of conflict

arise

Trade union

Meaning

• Trade union is an organization whose membership consists of workers and union leaders,

united to protect and promote their common interests.

• A trade union is a continuous association of wage earners for the purpose of maintaining or

improving the conditions of their working lives.”

Features of trade union

• The trade union is an association either of employees or of independence workers

• It is permanent association of workers, not temporary or causal

• It is voice raiser for welfare and interests of its members

• In it not stable, rather dynamic or changing –ideology, methodology or style,

• Progress or growth of it depend on ideology and role of its members and leaders

• The trade union is an association either of employees or of independence workers

• It is permanent association of workers, not temporary or causal

• It is voice raiser for welfare and interests of its members

• In it not stable, rather dynamic or changing –ideology, methodology or style,

• Progress or growth of it depend on ideology and role of its members and leaders

Purpose of Trade union

The principal purposes of IR or trade union/labor union are;

1. Negotiate wages and working conditions

2. Regulates relations between workers (its members) and the employer

3. Take collective actions to enforce the terms of collective bargaining

4. Raise new demands on behalf of its members

5. Help to settle their members grievances

Functions of trade union

• Economic

• Control

• Demand

• Building self –confidence

Collective bargaining

• It is necessary to maintain the good relationship between workers and employees for success

of industry

• For maintaining the relation, the industrial disputes or conflicts should be settled immediately

when it occurs

• Industrial dispute/conflict means the different thought and understanding between employees

and employers.

• Thus, one of the ways or methods in resolving the disputes is collective bargaining

Thus, it is said, collective bargaining is a process in which the management and employees

representatives meet together at place and negotiate the terms and conditions of

employment for mutual benefits

• In collective bargaining, the discussion is held between two groups (management and

representatives of workers) and reach in negotiation point regarding the terms and condition

to be followed by workers and employers

• Why collective and bargaining?

• Because of act in a group- the employers’ negotiators and employees- not individually action

• Bargaining ? Because of reaching at a point of negotiation through various stages of demand

and proposals by both party-employees and employer

In is to be known, there should not be involvement of nay outsiders in the process and

duration of collective bargaining

Types of bargaining

1. Distributive bargaining (win-loose bargaining)

• Bargaining over the distribution of surplus

• Wage, salary, bonus and other financial issues

2. Integrative bargaining (interest based bargaining)

• When no demands are made from both parties, employees and employer

• Collaboration of both parties—win- win resolution of problems or disputes

• Agreements on mutual benefits

Objectives of collective bargaining

• Cordial relation-between employees and employer

• Protect the interest of employees

• Participation of trade union in industry

• Promote industrial democracy

• Avoidance of government intervention

Process of collective bargaining

• Five stages:

1. Preparation :

• Involvement and composition of negotiation team

• Team- representative of both parties having adequate knowledge on issues of the dispute

• Knowledge e.g. operation, working conditions, production norms and rules, and other relevant

conditions

• Screening and filter the issues-arrangement of important issues some are cancelled

2. Discuss:

• Attempt – to reach an agreement point through mutual trust and understanding

3. Propose:

• Called brainstorming stage because of exchanging of message and opinion expression from

both parties

4. Bargain:

• This stage is crucial and may be tough

• If not problem solving oriented bargaining

• It is easy when parties concentrate and have the intention on negotiation

5. Settlement (win-win or lose –lose)

Through the bargaining process, parties reach an agreement state by resolving their problems

Employees Grievances

• A grievance is a complaint raised by an employee which may be resolved by procedures

provided for a collective agreement

• An employment contract or by other mechanism established by an employer

• Such a grievance may arise from a violation of a collective bargaining agreement, the terms of

a contract, the treatment by others in the workplace or violations of the law, such as

workplace safety regulations.

• A collective grievance is a complaint raised by two or more employees in a unionized

workplace.

• Under some jurisdictions it may also be known as a collective or labor dispute.

• The difference between a grievance and a complaint, in the unionized workplace, is whether

the subject matter relates to the collective bargaining agreement.

• If the dispute cannot be resolved through discussion and negotiation between labor and

management, mediation, arbitration or legal remedies may be employed.

• Where a collective dispute cannot be resolved it may lead to a strike action

Employees Discipline

Meaning:

In simple words, the word discipline connotes orderly behaviour by the members/employees. In other

words, discipline implies behaving in a desired manner. By that we mean that employees confirm to

the rules and regulations framed by the organisation for an acceptable behaviour. Following

definitions of discipline will make its meaning more clear.

According to Richard D. Calhoon’, “Discipline may be considered as a force that prompts individuals

or groups to observe the rules, regulations and procedures which are deemed to be necessary for the

effective functioning of an organisation”.

In the opinion of Ordway Tead, “Discipline is the order, members of an organisation who adhere to

its necessary regulations because they desire to cooperate harmoniously in forwarding the end which

the group has in view”. Employees conduct themselves in accordance with the organisation’s rules

and standards of acceptable behaviour.

Features:

1. Discipline is self-control:

It refers to one’s efforts at self-control to conform to organisational rules, regulations and procedures

which have been established to ensure the successful attainment of organisational goals.

2. It is a negative approach:

It means discipline encourages people to undertake some activities, on the one hand, and restrains

them from undertaking others, on the other.

3. It is a punitive approach:

It means that discipline also imposes penalty or punishment if the rules and regulations framed by the

organisation are not obeyed or ignored by the members. Punishment is imposed not to change past

behaviour but to prevent its recurrence in future.

Objectives of discipline:

The objectives of discipline are to:

1. Motivate an employee to comply with the company’s performance standards:

Employee receives discipline after failing to meet some obligation of job. The failure could be either

directly related to the tasks performed by the employee or ignoring rules and regulations that define

proper conduct at work.

2. Maintain respect and trust between the supervisor and employee:

Discipline if not properly administered can create problems like low morale, resentment, and ill-

will between the employees. In such case, improvement in employee’s behaviour, if any, will be

relatively short-lived and the supervisor will need to discipline the employee again and again. On the

contrary, properly administered discipline will not only improve employee behaviour but will also

minimize future disciplinary problems through good relationship between the supervisor and the

employee.

3. Improve the performance of the employee:

Discipline for poor task performance should not be applied while employees are on training or

learning the job. Nor should employees be disciplined for problems beyond their control, for

example, failure to meet output standards due to the lack of raw materials. Yes, discipline should be

exercised when employees are found responsible for unsatisfactory performance.

4. Increase the morale and working efficiency of the employees.

5. Foster industrial peace which is the very foundation of industrial democracy

Employee health and safety

It is the employer’s responsibility to ensure that employees are safe in the workplace. Knowing and

understanding the Occupational Health and Safety laws will help you avoid the unnecessary costs and

damage to your business caused by workplace injury and illness.

All employees

It is important to inform all employees about the health and safety requirements in your workplace. It

is part of the occupational health and safety responsibilities and obligations for employers and

employees.

Duty of care in the workplace

Each person has a duty of care to ensure their action, or failure to take action, does not harm others.

As an employer, a manager’s duty of care extends to ensuring that all employees are aware of:

any risks to their health and safety;

the procedures that are in place to ensure they do not suffer injury or illness while at work; and

any instructions and relevant protective equipment that are required.

New employees

New employees are most at risk of being injured, primarily due to a lack of experience or familiarity

with workplace and processes. A manager needs to make sure that the experienced staff members

provide proper training and supervise the new employee that they are competent enough to be left

unattended or unsupervised.

A manager also needs to make sure that the new employees have the required experience and are

familiar with safety procedures even if they have worked in similar jobs or workplaces.

Migrant workers

Managing safety and health issues for migrant workers should be considered within the context of

health and safety management for all workers. As an employer, a manager or supervisor has a general

duty to provide and maintain, as far as practical, a working environment where workers are not

exposed to hazards.

Issues to consider for migrant workers may include:

language barriers;

cultural or religious differences;

literacy difficulties;

limited knowledge of local legislation and safety standards; and

reluctance to engage with authority figures.

Compensation and its relation with industry

Workers' Compensation

A system whereby an employer must pay, or provide insurance to pay, the lost wages and medical ex

penses of anemployee who is injured on the job.

Compensation includes direct forms such as base, merit, and incentive pay and indirect forms such as

vacation pay, deferred payment, and health insurance. Compensation does not refer, however, to

other kinds of employee rewards such as recognition ceremonies and achievement parties. The

ultimate objectives of compensation administration are: efficient maintenance of a

productive workforce, equitable pay, and compliance with federal, state, and local regulations based.

Compensation definition and types

Compensation can be defined as all of the rewards earned by employees in return for their labour.

This includes:

1. Direct financial compensation consisting of pay received in the form of wages, salaries,

bonuses and commissions provided at regular and consistent intervals

2. Indirect financial compensation including all financial rewards that are not included in direct

compensation and can be understood to form part of the social contract between the employer

and employee such as benefits, leaves, retirement plans, education, and employee services

3. Non-financial compensation referring to topics such as career development and advancement

opportunities, opportunities for recognition, as well as work environment and conditions

In determining effective rewards, however, the uniqueness of each employee must also be

considered. People have different needs or reasons for working. The most appropriate

compensation will meet these individual needs. To a large degree, adequate or fair compensation

is in the mind of the employee

1

Human behavior and conflict management

Behavior is the most important keys for success as a manager to use his/her ability to generate energy &

commitment among people within an organization and to channel that energy and commitment toward

critical organizational goals. Doing this requires a thorough understanding of the root causes of human

attitudes & behavior and how they are influenced by your actions as a manager and by the

surrounding organizational context. Thus, the course seeks an understanding of human behavior in

hopes that such an understanding will enhance management practice.

Human behavior (HB) concerns with organizational Behavior (OB) which is "the study of human

behavior in organizational settings, the interface between human behavior and the organization, and the

organization itself."

Fundamental Concepts of Human Behavior

The basic fundamental concepts of organizational behavior revolve around the nature of people and the

organization.

Individual differences:

All people are different from each other and behave different under similar conditions.

Thus, people have to be treated differently and managers should realize this and eliminate any

stereotypes they hold for workers.

Whole Person:

Companies should consider its employees as the whole person, not just a pair of hands. Employees

should be treated as people with wants and needs, which should be addressed accordingly. It

should be noted that employees interact with each other, and the behavior of one employee may

influence the behavior of others, and the entire community.

Motivation:

If managers respect their employees, they'll get respect in return.

Human Dignity:

This concept is very philosophical. Every human being needs to be treated with dignity and

respect, whether it's the manager or CEO of the company or a labour.

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Models of Organizational Behavior:

Autocratic Custodial Supportive Collegial

Model Depends on: Power. Economic resources. Leadership. Partnership.

Managerial

orientation:

Authority. Money. Support. Teamwork.

Employee

orientation:

Obedience. Security. Job performance. Responsibility.

Employee

psychological

result:

Dependence on

boss.

Dependence on

organization.

Participation. Self-discipline.

Employee needs

met:

Subsistence. Maintenance. Higher-order. Self-actualization.

Performance

result:

Minimum. Passive cooperation. Awakened drives.

Moderate

enthusiasm.

Human Behavior (HB) or OB can be divided into three levels. The study of :

(a) individuals in organizations (micro-level),

(b) work groups (meso-level),

(c) how organizations behave (macro-level).

Conflict arises when behaviors of individuals occur differently in the workplace and an individual

opposes to another individual.

Conflict management

Conflict management is the process of limiting the negative aspects of conflict while increasing the

positive aspects of conflict. The aim of conflict management is to enhance learning and group

outcomes, including effectiveness or performance in organizational setting.

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Types of conflict management

In the world of business, the presence of conflict can be a serious issue that needs immediate

attention. If workers in the company appear not to be interacting as cooperatively as a manager

expects, there may be some problem or conflict with employees . At such situation, managers

need to search the conflict resolution to remedy this problem.

1. Discussion

Often, conflict arises simply due to a lack of communication. If a manager feels that his/her r employees

are having conflict because they are not talking with each other, needs to set up time for a discussion, to

encourage the employees to talk through the problem, particularly if the manager suspect that it simply

stems from the fact that they have failed to communicate effectively up to this point.

2. Written Communication

If an issue has escalated or one of the employees has a hot temper, written communication may be a more

effective way of breaking down the wall and resolving conflict. Ask each employee to write a letter to the

other, outlining the problem. By writing letters instead of talking face to face they benefit from the

opportunity to more carefully select their words. Additionally, letter writing provides a means to

document the communication easily.

3. Mediation

Sometimes, two individuals in a conflict simply can't work it out together without the aid of third party. If

the firm’s workers' conflict has escalated to the point where outside intervention is necessary, it is needed

to set up a mediation session. Providing training a staff member in the art of mediation. Then allowing

the staff to sit down with the feuding individuals and assist them in working through their problems in a

productive manner.

4. Compromise

A manager can ask each person to give a little and take a little by arranging a compromise between the

two. Asking both of the members to come to the manager’s offer and talking the problem through with

them, presenting potential compromises and allowing them to mull these options over. By arranging a

compromise instead of just selecting one member's interests over the other, a manager can reduce the

likelihood that one staff member feels slighted by the way in which the conflict was resolved.

5. Voting

If the manager simply must put a conflict to bed, voting can be an effective method. If, for example, two

employees are arguing over a potential advertising campaign or other business endeavor, setting up a

vote and allowing other employees to weigh in. The numbers will solve the conflict and serve as a once-

and-for-all answer.

Conflict management and its impact in HRM

Organizations should promote a positive approach to resolving problems in the workplace through

both informal and formal conflict management. Consultative services are offered to managers,

supervisors and non-represented employees on a variety of issues that impact the workplace.

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When individuals work together, they may have different goals and work styles. Because of this,

conflict can result. If the conflict is handled effectively, a potential destructive force can be turned

into an opportunity for creativity and greater productivity.

Examples of situations that can cause conflict:

Misunderstandings or lack of information

Changes in the workplace

Actions taken by a supervisor

Evaluation of work performance

Personal situations that affect work performance

Informal Conflict Management

Informal conflict management can be initiated at an early stage, in an open manner, by the supervisor or

employee or can be facilitated by employee relations.

Formal Conflict Management

If a conflict can’t be resolved informally, or if an employee chooses not to resolve it informally, the

employee can initiate a formal conflict management process by filing a complaint or grievance. Steps in

formal conflict management may include a fact-finding investigation and a hearing or arbitration. This is

facilitated by Labor Relations or industrial relations (IR) –the concerning trade union leader’s roles is

necessary.

Thus, the conflict management is the must for an organization’s smooth operation and success. If conflict

is not resolved soon, it will result not only in production or economy but the bad image in the society. As

well as, the employees may leave the company or they may go more opposition mood against the

organization. In this way, to resolve the conflict immediate is the beneficial for all employees,

organization, society and as a whole for nation.

Modes of conflict management

Conflict can come from a variety of sources:

Goals. Conflict can happen as a result of conflicting goals or priorities. It can also happen when there

is a lack of shared goals.

Personality conflicts. Personality conflicts are a common cause of conflict. Sometimes there is no

chemistry, or employees haven’t figured out an effective way to click with somebody.

Scarce resources. Conflict can happen when employees competing over scarce resources.

Styles. People have different styles. Their thinking style or communication style might conflict with

somebody else’s thinking style or their communication style.

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Values. Sometimes a manager will find conflict in values. The challenge here is that values are

core. Adapting with styles is one thing, but dealing with conflicting values is another. That’s why a

particular business, group, or culture may not be a good fit for manager. It is like the saying “a bird’s

of a feather flock together” and why “opposites attract, but similarities bind.”

1. Negotiation : negotiation is a bargaining relationship among the opposing parties.

Negotiations are voluntary and require that all parties are willing to consider the others'

interests and needs. If negotiations are hard to start or have reached an impasse, the

conflict parties may need assistance from a third party.

2. Facilitation

The most basic conflict resolution procedure for business involves bringing in a neutral

party to facilitate an exchange of listening between parties who disagree--and blame each

other for the disagreement--but want to (or must) work together anyway. The facilitator

begins by speaking with each party separately and privately. The facilitator invites each

party to explain their own issues, to analyze their issues from the other sides' points of

view, and to try to explain and analyze the other sides' issues.

3. Mediation

Mediation is the process whereby an acceptable third party who has limited or no

authoritative decision-making power assists the principle parties in a conflict to resolve

their dispute through promoting conciliation and facilitating negotiations. As with

negotiation, mediation leaves the decision-making power primarily in the hands of the

conflict parties. They enter into a voluntary agreement, which they themselves, and not the

mediator, implement.

4. Arbitration

Arbitration is a process whereby the parties submit the issues at stake to a mutually

agreeable third party, who will make the decision for them. Arbitration is an informal,

private procedure, unlike adjudication, in which the resolution process is shifted to the

public domain. In adjudication, the disputants usually hire lawyers to act as their

advocates, and cases are argued in front of judges or other officials from provincial

authorities or technical ministries with adjudicative authority in land disputes. These

representatives of public law take into consideration the disputants' concerns, interests and

arguments, and make a decision based on the norms and values of a society and in

conformity with legal statutes. The disadvantage of this is that the decision is premised on

one party being right and one wrong. The outcome therefore tends to produce a winner and

a loser. The advantage is that the results of the process are binding and enforceable because

the judge is socially sanctioned to make the decision.

5. Legal action

The action provides resolutions for many different types of disputes. However, some disputants

will not reach agreement through collaborative processes. Some disputes need the coercive power

of the state to enforce a resolution. Perhaps more importantly, many employees/people want a

professional advocate when they become involved in a dispute, particularly if the dispute involves

perceived legal rights, legal wrongdoing, or threat of legal action against them.

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