Tutor

Notes

CIMA Management Paper E2

Enterprise Management
For exams in November 2011 and May 2012

To be used with the BPP Study Text for exams in November 2011
and May 2012

Third edition July 2011

First edition 2009

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So what are the benefits of our Tutor Notes?

page iv
How do I use the Tutor Notes?
page v

CONTENTS

Teaching session planners

page ix

chapter 1
KEY CONCEPTS IN MANAGEMENT
page 1
chapter 2
CONTROL
page 29
chapter 3
THE FINANCE FUNCTION; CONFLICT
page 51
chapter 4
NEGOTIATION AND COMMUNICATION
page 59
chapter 5
CULTURE
page 69
chapter 6
PROJECT MANAGEMENT
page 83
chapter 7
PROJECT LIFECYCLE AND PLANNING
page 101

chapter 9
PROJECT CONCLUSION
page 135
chapter 10
INTRODUCTION TO STRATEGY
page 145
chapter 11
LEVELS AND CONCEPTS OF STRATEGY
page 159
chapter 12
GENERAL ENVIRONMENT
page 175
chapter 13
COMPETITIVE ENVIRONMENT
page 187
Learning Examples

Answer Bank

chapter 8
PROJECT IMPLEMENTATION
page 113

Introduction

iii

INTRODUCING
BPP LEARNING MEDIAS
TUTOR NOTES
BPP Learning Medias Tutor Notes for the CIMA qualification have been developed under the
guidance of experienced tutors from BPPs classroom courses division and have been written by
tutors and subject experts with many years experience of producing study material for the CIMA
qualification.
The Notes have been specially configured to add value in all the different teaching environments in
which BPP Learning Media materials are used throughout the world. We pilot tested the concept in
front of BPP students using a variety of technologies reflecting the range available in adopting
colleges and we refined them. Whether you are using a chalkboard or a smartboard, we are
confident these notes will enhance any course, help students pass their CIMA exams and that you
will find students recommending your courses to their friends.

So what are the benefits of our Tutor

notes?
Benefit 1: High standard of professional course
presentation
Students remember how their tutors performed in the classroom and they keep the course notes
their college gives them and show them to friends. Our Tutor Notes will enhance the impression you
make on your students and their friends impression of your college.

With notes, graphics and carefully written Learning Examples pre-prepared, you can devote
your preparation time to deciding how to enhance your delivery, motivate interest and help
individual learners.

Because our Tutor Notes are produced by the market-leading CIMA publisher they have a
consistent, professional appearance.

(The Passcards graphics used in the notes are available on request as PDFs, so you can incorporate
multimedia in your classrooms. This format means they can be enlarged and printed for attachment
to chalkboards, made into acetates, projected from beamersor displayed on smartboards.)

Benefit 2: Flexibility, so you can add value as you

see fit
Unlike other course notes, our Tutor Notes do not impose someone elses script on you. Instead
they use Passcards graphics to highlight the essential knowledge elements of each topic and useful
Learning Examples to convey and reinforce the learning. Experienced tutors will add value in their
own ways. And tutors new to the subject have the reassurance of discreet expert guidance on ways
to deliver the topic and the key points to make.

iv

Benefit 3: The right format

The Tutor Notes are designed to be used as part of the tried-and-tested approach of paper media,
text books and good tutors in classrooms. You dont need to register your students with us and we
dont expect them to rely on the Internet to read their books. If you adopt our study materials, the
Tutor Notes can be hosted on your network. On request, we can facilitate this and provide
multimedia support right up to full hosted virtual learning environments. We know you will choose
the formats that are right for you - and we are ready to help.

Benefit 4: Unique integration

Tutor Notes follow the same sequence as our Study Text for the subject. Each topic is covered in
the same consistent way and the Notes provide signposts to you and your students on where to
look in the Study Text for more information and question practice.

Benefit 5: Continuity
Where courses are team-taught, or where tutors change mid-programme, the Tutor Notes provide
continuity because tutors can see how far their colleagues have progressed through the course. And
for students who miss classes, the notes provide a ready record of what they have missed.

How do I use the Tutor Notes?

Your students must bring their BPP Study Texts to each session as we recommend you incorporate
material and features from the Study Text into your teaching.

One set of notes for you, one for your students

You will actually be provided with two sets of notes for each subject.

Student Notes are arranged in double-page spreads, with the Passcards diagram for each
topic on the left-hand side (LHS) and some introductory context and Learning Examples
(essentially classroom questions) on the right-hand side (RHS).

Tutor Notes are page-for-page the same as the Student Notes. They reproduce the content
of the Student Notes but the tutor version also has annotations to the Passcards diagram
and, on the RHS, additional content such as teaching and topic tips and the solutions to the
Learning Examples.

Heres what we recommend you do.

Print out and duplicate the Student Notes and provide one copy to each student as part of
their course material along with the BPP Learning Media Study Text and other adopted
media. The files are arranged so that they print out double-sided (duplex) to save paper.
However they can be printed single-sided without any changes to the PDFs we provide.

Print out one copy of the Tutor Notes for yourself, for your teaching file.

Decide whether to hand out Student Notes as one complete bank at the beginning of the
course, or session by session. Some colleges prefer to hand out Notes in instalments to
ensure that students attend all sessions.

The final chapter of the Student Notes is a bank of solutions to the Learning Examples used
in the teaching sessions. You may prefer to hold these in reserve so that students attempt
the Learning Examples rather than look for answers in the back of the Notes.

Introduction

Session planning
The Notes are arranged as chapters in the same order as the BPP Learning Media Study Text and
other resources for the subject. Chapters are topic based, and because topics vary in complexity
the chapters are of varying length. A teaching session may cover several short chapters or it may
not be long enough to cover a long chapter on a complex topic. Recommended session plans for
condensed (three-day) and full-length (six-day) courses, showing how chapters may be covered,
are shown on page ix onwards. These session plans can be adapted to fit the length of course your
college offers.

Teaching the topic

The Notes were designed, and developed further following pilot sessions, to support tutors
preference for the following approach to teaching.

Step 1

Display the Passcards graphic from the LHS on a screen (more below).

Step 2

Introduce the topic by speaking around the Context note (which is also in the
Student Notes), linking it to the previous topic or explaining why it matters to the
accounting profession, the business environment or particular organisations.

Step 3

Speak about each element of the Passcards using the callouts on the Tutor Notes
version as guidance. (These annotations can be added by hand to the graphic on
screen for the students to copy into their notes (more below).)

Step 4

Return to the RHS of the Tutor Notes and speak around the Key Learning Points to
add emphasis and reassure students on what is important. Students can be
encouraged to take their own notes.

Step 5

Topic Tips can be used in various ways. Stating how and when the topic was
examined focuses the student and provides reassurance that the tutor knows the
exam.

Step 6

The Learning Examples are written especially for the Notes, they do not appear in
any other BPP Learning Media product. They provide illustrations or reinforcement of
the topic. Set them for the class to attempt and then debrief them before moving on
(more below).

Displaying the Passcard graphics

It is not essential that your college has the technology to display the Passcards graphics from the
LHS of the Tutor Notes. The Student Notes do include these and, in pilot testing, tutors were able to
provide perfectly intelligible lectures by referring students to them. The ability to display the
graphics to the class, and - probably more importantly - to annotate them, does improve the quality
of presentation, however.
Tutors in our pilot studies who were not able to display the Passcards graphic used several devices
to help students to understand which part of the graphic was being referred to.

Referring to the Passcards using a clockface metaphor, such as The points about x at 12
oclock to refer to something at top-centre of the graphic

Reading out the wording from the graphic slowly before talking about it

Holding up the LHS of their Tutor Notes (or those of a student in the front row to avoid the
class seeing the tutors crib notes on the Tutor Notes version)

Other technologies that can be used to display the Notes include:

Tablet PC connected to a beamer. We have found this to be the best technology. Converting the
Student Notes into Journal documents means that you can annotate the graphics and fill in Learning
Example solutions using the tablet, and students can copy your annotations and solutions into their
Notes. To do this open the PDF, select Print, choose Journal Note Writer and then once it has
converted you can save it to the PC. This approach also allows you to save the Journal file from the
lesson with the annotations and solutions. Students might ask for these to be emailed to them but
this raises two problems:

vi

The files are very large and will crash many email accounts.

The student will need to have Journal reader on their PC to read them. Journal reader is
available as a free download from the Microsoft site but obtaining it can present difficulties,
particularly on work machines if the employers IT security policy forbids downloads.

Hosting the Journal files on a colleges virtual learning environment may overcome the problem of
download size. For convenience the Student Notes are provided as a single PDF. This means that
you cannot post individual chapters but will have to re-use the same Journal file at each meeting of
the class and re-post to the VLE.
Conventional PC connected to a beamer. Displaying the PDF of the Student Notes helps
students navigate through their own notes and enables you, the tutor, to point at the Passcards
with a light-pointer or your hands. Without additional software and a tablet to write on it is not
possible to annotate the notes, however.
Printed on to acetate and used on an OHP. This is more effective than using a PC if you are
unable to annotate the projected image from the PC. Putting the acetate under a screen roll or
clean acetate on the OHP means that you can annotate without having to clean or reprint the
acetate with the Passcards graphic on it. You can use colour to emphasise points and you could well
find that your handwriting is better compared to when using PC tablets.
Printed out as an enlarged diagram and attached to chalkboard. The Notes are A4 format.
These can be enlarged to A3 on most photocopiers but even at double-size these are not legible
from a distance. So why not trim round the Passcards graphic, fix it to the middle of the chalkboard
and then write the call-outs at a legible size on the chalkboard outside the paper graphic. Students
can look at their notes, see where you are indicating and add in the call-out.

Using the Learning Examples in the Student Notes

The Learning Examples have been specially written to reinforce the Key Learning Points for each
Passcards graphic. Whilst not necessarily reflecting the types of question that your students could
face in the exam, they are an excellent means within a classroom environment of testing key points
that will form part of the larger questions that appear in exam papers. They also provide you with
an opportunity to encourage discussion and explore issues, and enable you to circulate amongst the
students to check their understanding of topics - for example by looking over their shoulder at what
they are writing or by listening to conversations about discussion Learning Examples.
The icons beside the Learning Examples denote our recommendations on how each may be used.

Pen icon
This denotes a Learning Example where students should produce a written response. This will
probably involve calculations, the completion of pro-formas or the evaluation or discussion of a
problem.
Some Learning Examples require brief written answers that can be fitted into the space provided on
the RHS of the Student Notes. Others will have longer solutions and so you should advise students
to write solutions on file paper and to insert this behind the relevant page of their Notes.
A successful strategy is to set the Learning Example and to provide the students with time to
complete it. Circulate amongst the students and youll be able to determine how the class is coping
with it.

It might be generally understood and you wont need to intervene.

It may be causing general problems for the class. In this case you may decide to call a halt
and to give guidance on how to interpret the question and/or how to develop the solution.

Difficulties might be experienced by a few students. In this case you can help each
individually or, if it is the same difficulty, gather together the students and provide help to
them as a group.

Debriefing written Learning Examples can be done by open discussion, working through on the
board/screen, or by directing students to turn to the solution at the back of the Student Notes. In
each case a vital part of the learning process will be to encourage students to ask questions about
things they are unsure of. In some subjects there will be no single correct solution and so
discussion of alternative answers should be encouraged (providing their interpretation of the
question is right and the points being made are valid).

Introduction

vii

Discussion icon
Discussion Learning Examples are principally for reinforcing knowledge and will be more valuable in
some subjects than others. If students query the value of these Examples, you can emphasise that:

Discussion helps them through the process of analysing the problem and formulating a
solution, which is what they will need to do in the exam, but they should remember that
discussing it is much quicker than writing it down.

Discussion can raise far more points than can a single written solution and many students
fail their CIMA exams because they cannot think of sufficient points.

Explaining their thinking to other students helps them to develop effective

communication.

Hearing about topics in the context of the different work experiences of other students shows
them ways to apply knowledge to unfamiliar contexts in the exam.

Facilitating discussion Learning Examples can be done in several ways and changing the approach
provides variety for students.
Open class discussion. Set the Learning Example and then throw it open to the class for
discussion. It helps if you note down salient contributions on the board/screen. A key tutor skill
here is the ability to listen to what the student says and to develop, articulate or clarify what they
mean without appearing to suggest their contribution is inadequate. Praising them and saying so to
capture that in a quick note. and writing it down in a clearer way is effective. The problem with
this approach is that some students wont contribute because you, the tutor, already know the
answer or because they are too shy to do so. Generally speaking, open class discussions are most
effective with small class sizes.
Small group discussion. Break the class into groups of four or five and set the Learning Example
to each to discuss. Discussion will be better if a time limit is set for the exercise and they are told
that they have to appoint someone to read out what they decide - the person appointed to speak
will ensure the discussion progresses. You should circulate around the groups after a few minutes
and discreetly listen to what is being said. Stir the pot with comments to a group, or to the room at
large, such as one group had an interesting idea or some of you are taking a very interesting
approach to this.. before contributing something to help them (whether or not any group had
actually come up with it themselves). Asking students to prepare and give elaborate presentations
on their findings tends to alienate students; they see it as a waste of time because CIMA does not
assess students using presentations.

Web icon
These denote Learning Examples that require students to research from the Internet. They are used
very sparingly because it may be difficult for colleges to assure Internet access for classes of
students, but they can sometimes be set for homework.

viii

Teaching session planners

Our planners are based on 90-minute sessions this really is as long as you can expect your
students to concentrate without a break over two types of course.

A condensed three day course (so 12 sessions)

A full-length six-day course (so 24 sessions)

Obviously your course might be structured differently but you should be able to adapt the planners
we have provided as necessary.

Condensed course
Session

Chapters

Learning examples

1.1 to 1.5

2.1 to 2.13

3 and4

3.1 to 4.5

5.1 to 5.6

6.1 to 6.6

7.1 to 7.5

8.1 to 8.6

8 (cont) and 9

8.7 to 9.3

10

10.1 to 10.6

10

11

11.1 to 11.7

11

12

12.1 to 12.5

12

13

13.1 to 13.6

Introduction

ix

Standard course

Session

Chapters

Learning examples

1.1 to 1.7

1 (cont)

1.8 to 1.15

2.1 to 2.7

2 (cont)

2.8 to 2.13

3.1 to 3.3

4.1 to 4.5

5.1 to 5.3

5 (cont)

5.4 to 5.6

6.1 to 6.3

10

6 (cont)

6.4 to 6.6

11

7.1 to 7.3

12

7 (cont)

7.4 to 7.5

13

8.1 to 8.4

14

8 (cont)

8.5 to 8.7

15

8 (cont)

8.8 to 8.10

16

9.1 to 9.3

17

10

10. to 10.3

18

10 (cont)

10.4 to 10.6

19

11

11.1 to 11.3

20

11 (cont)

11.4 to 11.7

21

12

12.1 to 12.3

22

12 (cont)

12.4 to 12.5

23

13

13.1 to 13.3

24

13 (cont)

13.4 to 13.6

chapter 1

ROLE OF THE MANAGER

AUTHORITY RELATIONSHIPS

LEADERSHIP

DISCIPLINE, GRIEVANCE AND

TERMINATION

EQUAL OPPORTUNITIES AND DIVERSITY

This chapter deals with a number of topics related to

the nature of management and the roles managers
have in organisations. These ideas are fundamental to
much of the material covered in later chapters.

KEY CONCEPTS
IN MANAGEMENT

ROLE OF THE MANAGER

The place of managers is taken for granted in organisations. They feature in

organisations almost as part of the furniture. Despite this their role has been studied
by academics and others for over 100 years. This research recognises the importance
of the role of the manager in the organisation.

Role of the
manager

Authority
relationships

Why are managers needed?





Objectives must be set and then achieved

Corporate values must be sustained
Key stakeholders must be satisfied

What do managers do?

Fayol: the classical school






Planning: objectives and methods

Organising: task structure, organisation
structure, feed back
Commanding: giving instructions
Co-ordinating: individual and group activities
Controlling: checking performance and taking
corrective action

Management by
objectives will also
come into your study of
strategy.

Leadership

Discipline, grievance
and termination

Equal opportunities
and diversity

Taylor: scientific management

The essence of Taylors approach was efficiency
in an engineering sense. He treated work people
as tools to be used efficiently. (Note that this
includes caring for them properly.)
Practical implications
 Work study establishes the one best way
no discretion is allowed to the worker
 Work planning is done by a separate team of
experts
 Pay incentives are used to motivate on the
basis of increased output
 The work environment is set up so as to
enable the greatest efficiency

CONTEXT
This is an important session. There are a lot of ideas to absorb.
Management may be defined as getting things done through other people. Organisations
employ managers to direct them.

Key learning points CONTEXT

Management involves using the organisations resources to achieve its goals.

Management is not the same as leadership.

In the private sector managers act on behalf of shareholders. In the public sector
managers act on behalf of the government.

There are various theories and schools of management: Taylor; Fayol; Drucker and Mayo

Learning example 1.1

Do public sector managers have as much power as private sector managers?

Solution 1.1
Of course, this depends on the organisation. However, in a public sector organisation, the
objectives are often set by government, which may mean that the manager has less autonomy.

Learning example 1.2

The management theories known as the 'human relations' school are most closely associated with
which author?

Solution 1.2
Elton Mayo

1: Key concepts in management

ROLE OF THE MANAGER

4

Role of the
manager

Authority
relationships

Leadership

Discipline, grievance
and termination

Equal opportunities
and diversity

Mintzberg: what managers actually do

 Interpersonal roles: hiring, firing, training, motivating, liaising
 Informational roles: the manager has many contacts inside and outside the department and
organisation; he monitors the environment, disseminates information, acts as a spokesman
 Decisional roles:
Entrepreneur, initiating action
Disturbance handler, resolving the unpredictable
Allocator of source resources
Negotiator

Context
Mintzberg is concerned with what managers actually do.

Key learning points

Mintzberg identifies three main roles:

Interpersonal
Informational
Decisional

Learning example 1.3

List Mintzberg's decisional roles.

Solution 1.3

Entrepreneur
Disturbance handler
Allocator of source resources
Negotiator

1: Key concepts in management

AUTHORITY RELATIONSHIPS
6

Make sure you can

distinguish authority and
power they are not the
same thing.

Role of the
manager

Authority
relationships

Leadership

Discipline, grievance
and termination

Equal opportunities
and diversity

Authority is the right to act in a given context: power confers the ability to act
Sources of power (French and Raven)


Coercive power is power based on the ability to impose sanctions.

Resource power depends on the control of resources; managers may utilise this by controlling rewards
and access to information.

Position or legitimate power stems from status or appointment within an organisation and is thus equivalent to authority.

Expert power flows from acknowledged expertise.

Referent power lies in the personal qualities of the individual. It can be important in the workings of the
informal organisation.

Negative power lies in the ability to prevent or disrupt proposed action.

Context
You need to understand authority or power relationships to grasp how leaders, managers and
supervisors get others to do the work required of them.

Key learning points

Power is the ability to get things done.

Power does not exist in isolation it depends partly on whether it is recognised.

Learning example 1.4

There are six types of power listed in the chapter. Discuss these in your groups and try to come up
with examples from your own experience.

Solution 1.4
You could mention expert power which is a type of power held by individuals with particular
expertise including their experience or qualifications. Accountants would come under this
classification. Indeed they may fall into more than one type so that an accountant who is also a
manager may also have legitimate power or referent power if they have a persuasive
personality!

1: Key concepts in management

AUTHORITY RELATIONSHIPS

Responsibility without power, and

power without responsibility are
dangerous in an organisation.
Responsibilities without power leads to
frustration. Power without
responsibility can lead to a manager
being too tyrannical.

Role of the
manager

Authority
relationships

Leadership

Equal opportunities
and diversity

Authority

Responsibility

Accountability

is the right to do something, or to

ask someone else to do it and
expect it to be done.

is the obligation a person has to

fulfil a task he has been given.

is a persons liability to be called

to account for the fulfilment of tasks
he has been given.

Delegation
 Line authority: a manager has line
authority over a direct subordinate.

 Functional authority: specialist

managers have authority to issue
instructions concerning their own
areas of responsibility to managers
and members of other
departments.

 Staff or advisory authority is the

authority a specialist manager has
to give advice to other
departments.

Senior managers delegate

authority to subordinate managers
so that they can be responsible for
specific aspects of the senior
managers spheres of activity. The
juniors are accountable to the
seniors for their responsibility but
the seniors remain fully
accountable to their own superiors.
Authority and responsibility can be
delegated, but not accountability.

Delegation is vital in any organisation. It is

usually the case that individuals cannot do all
of the work expected of them and will ask
others to take on some work. Delegation
involves passing on some authority to make
decisions to the subordinate.

Discipline, grievance
and termination

Empowerment
Is where workers are responsible
for achieving and even setting
work targets, with the freedom to
decide how they are achieved.

Empowerment is a
buzzword, but it does
mean something very
specific in a business
context.

Context
It is important to understand the distinction between the key terms: authority, responsibility,
accountability and empowerment, as people confuse them in everyday contexts. Delegation is
essential to get work distributed throughout the organisation. To be successful, delegation needs
managers to balance trust in subordinates with control over the output.

Key learning points

Power is the ability to get things done.

Authority is legitimate power, that is, the right to take certain decisions within certain
boundaries.

Responsibility is the obligation to fulfil a task given.

Accountability is the liability to be called to account for the completion of tasks given.

Delegation is essential because:

There are physical and mental limitations to the workload of any individual or group.

It frees up managers to concentrate on those aspects of work only they can do.

Increasing organisational complexity and size requires individuals to specialise

Topic tip
A question on sources of power was set under the previous syllabus for this subject.

Learning example 1.5

Delegation can work very well but it may also have problems. In your groups discuss where you
think problems may occur as a result of delegating tasks.

Solution 1.5
Managers may be reluctant to delegate for many reasons including:

Low confidence and trust in staff.

Feeling threatened as their expertise and authority may be questioned.

An organisational culture that doesnt promote effective delegation.

There are several more reasons listed in Section 2 of the chapter and you may have others of your
own.

1: Key concepts in management

LEADERSHIP

Look at the two boxes

here: management and
leadership are different
although many people
think the two are the
same.

Role of the
manager

Authority
relationships

A good leader and may be a

poor manager and vice versa.
UK Prime Minister Winston
Churchill is an example his
management style was
autocratic.

Leadership

Discipline, grievance
and termination

Management





Copes with complexity

Prescribed role and status
Maintaining status quo
Secure compliance with organisational
objectives
 Over resources

Transactional leaders
Exchange rewards in return for service, loyalty
and compliance

10

Equal opportunities
and diversity

Leadership





Copes with change

Through perception of others as followers
New approaches and ideas
Influences others to fulfil organisational
objectives
 Over people

Transformational leaders
Impact and motivate others

Context
Leaders are different from managers. Essentially they are more proactive, inspirational and
capable of coping with complexity and change than managers.
However some writers argue that there is no longer a distinction between leaders and
managers as modern organisations operating in a fast-changing modern world need executives
providing both leadership and management.

Key learning points

Key elements of leadership include:

Interpersonal influence.

Securing willing commitment to shared goals.

Creating direction and energy

An orientation to change.

The difference between leadership and management may be seen as:

Leadership is setting a new direction for the group and the group will follow the leader.

Management is controlling and directing according to established principles and values.

Learning example 1.6

In your groups discuss why you think modern organisations need leaders rather than managers.

Solution 1.6
Your discussion should cover how the qualities of leaders we have already looked at in this session
suit the fast-moving turbulent world of modern organisations. Leaders are able to set direction and
cope with change. Managers control resources using established principles.

1: Key concepts in management

11

LEADERSHIP

There are many exceptions,

even allowing that this is a
continuum. For example, if
a project is urgent, a
manager who normally sells
or consults may simply tell.

Role of the
manager

Authority
relationships

Leadership

Discipline, grievance
and termination

Equal opportunities
and diversity

1. Style approaches to leadership

THE SPECTRUM OF MANAGEMENT STYLES

Authoritarian
Task
Manager
makes
decisions and
enforces
them

Manager
makes
decisions and
announces
them

Manager
sells his
decisions to
subordinates

Manager
suggests own
ideas and
asks for
comments

Manager
sketches
ideas, asks
for comments
and amends
his ideas

Manager
presents a
problem,
asks for
ideas, makes
a decision
from the
ideas

Democratic
Relationship
Manager
presents a
problem to
subordinates
and asks
them to solve
it

Manager
allows his
subordinates
to act as they
wish within
specified
limits

(Tannenbaum and Schmidt)

Theory X

Theory Y

People dislike work and must be coerced into doing

it.

Work is as natural as play or rest and can be

satisfying.
(McGregor)

Likerts four management systems

Exploitative
authoritative

Benevolent
authoritative

Consultative

Participative

 No confidence or trust in
subordinates
 Decisions imposed
 No delegation of
decision-making
 Threats used to motivate
 Little communication or
teamwork with
subordinates

 Superficial,
condescending
confidence and trust
 Decisions imposed
 Rewards used to
motivate
 Paternalistic involvement
of subordinates

 Substantial confidence
and trust in subordinates
 Consults but controls
decision-making
 Some motivation by
involvement
 Uses subordinates ideas

 Great trust in
subordinates
 Delegation of decisionmaking
 Goals set participatively,
achievement rewarded
 Ideas and opinions shared

(Likert)
Likert suggested that effective managers naturally use participative or consultative styles.
Ashridge Management College studies found a similar spread. Their model is tabulated on the next two pages.
Note particularly that this model summarises the strengths and weaknesses of the various styles: these may be
applied to the models above.

Again, no manager sits

permanently within one
category.

12

Context
We now look at different styles of management.

Key learning points

There is a spectrum of management styles ranging from authoritarian (task) to democratic

(relationship): Tannenbaum and Schmidt.

Likert suggests four management systems:

Exploitative/ authoritative
Benevolent/ authoritative
Consultative
Participative

Learning example 1.7

Which style of management is the most effective, according to Likert?

Solution 1.7
Effective managers favour the participative or consultative style.

1: Key concepts in management

13

LEADERSHIP

Sometimes called a
'contingency' approach.

Role of the
manager

Authority
relationships

Leadership

Discipline, grievance
and termination

Equal opportunities
and diversity

Ashridge Management College model

Style

Characteristics

Strengths

Weaknesses

Tells
(autocratic)

The manager makes (1) Quick decisions can be made when

all the decisions, and
speed is required.
issues instructions
(2) It is the most efficient type of leadership
which must be
for highly-programmed routine work.
obeyed without
(3)
It
is the most efficient type of leadership
question.
for highly-programmed routine work.

(1) Quick decisions can be made when

speed is required.
(2) It does not encourage initiative and
commitment from subordinates.

Sells
The manager still
(1) Employees are made aware of the
(1) Communications are still largely onereasons for decisions.
way. Sub-ordinates might not accept
(persuasive) makes all the
decisions, but
the decisions.
(2) Selling decisions to staff might make
believes that
them more committed.
(2) It does not encourage initiative and
subordinates have to
commitment from subordinates.
(3) Staff will have a better ideas of what to
be motivated to
do
when
unforeseen
events
arise
in
their
accept them in order
work because the manager will have
to carry them out
explained his intentions.
properly.

Consults

The manager confers

with subordinates and
takes their views into
account, but has the
final say.

(1) Employees are involved in decisions

before they are made. This
encourages motivation through
greater interest and involvement.
(2) An agreed consensus of opinion can
be reached and for some decisions
consensus can be an advantage
rather than a weak compromise.
(3) Employees can contribute their
knowledge and experience to help in
solving more complex problems.

(1) It might take much longer to reach the decisions.

(2) Subordinates might be too inexperienced to
formulate mature opinions and give practical
advice.
(3) Consultation can too easily turn into a facade
concealing, basically, a sells style.

Joins
(democratic)

Leader and followers

make the decision on
the basis of
consensus.

(1) It can provide high motivation and

commitment from employees.
(2) It shares the other advantages of the
consultative style (especially where
subordinates have expert power).

(1) The authority of the manager might be

undermined.
(2) Decision-making might become a very long
process, and clear decisions might be difficult to
reach.
(3) Subordinates might lack enough experience.

No one style is best.

14

Context
This section also looks at management styles, specifically the Ashridge Management College model.

Key learning points

Leadership styles are clusters of leadership behaviour that are used in different ways in different
situations.
The Ashridge studies found that:

Subordinates prefer the consult style of leadership.

People led by a consult manager had the most favourable attitude to their work.
Most subordinates feel they are being led by a tells or sells manager.
Consistency is very important.

Learning example 1.8

Listed below are three weaknesses from tone of the Ashridge Management College model:

It does not encourage subordinates to give their opinions when these might be useful.
Communication between the leader and subordinates will be one way.
It does not encourage initiative and commitment from subordinates.

Which style's weaknesses are being described?

A

Tells

Sells

Consults

Joins

Solution 1.8
A

Tells. This is also called autocratic.

1: Key concepts in management

15

LEADERSHIP

Intended as an appraisal
and managerial
development tool.

Role of the
manager

Authority
relationships

Concern for both task and

people is desirable.

Leadership

Discipline, grievance
and termination

Equal opportunities
and diversity

The Managerial Grid (Blake and Mouton)

Extreme cases
1.1 impoverished: manager is lazy: little
interest in either staff or work
1.9 country club: manager attentive to staff
needs, has developed satisfying
relationships: little attention to achieving
results
9.1 task management: almost total
concentration on achieving results.
People's needs are virtually ignored
5.5 middle of the road: adequate
performance balancing work results with
maintaining satisfactory morale
9.9 team: high work accomplishment through
leading committed people

2. Contingency approaches to leadership

Appropriateness of action depends on the circumstances

Action-centred leadership (Adair)

Leadership activities must satisfy 3 sets of varying needs in
accordance with the priorities inherent in the prevailing situation.
Leadership lies in performing leadership functions or roles
related to the 3 sets of needs. Adair rejects the notion that
leadership depends on inherent personal qualities.

Group maintenance
roles
 Encouraging peace-keeping,
 Clarifying, Standard-setting

Adair has a military

background.

16

Task roles
 Initiating, Information-seeking,
 Diagnosing, Opinion-seeking,
 Evaluating, Decision-making

Individual maintenance
roles
 Goal-setting, Feedback
 Recognition, Counselling,
Training

Context
We now move on to examine another theory of leadership Blake and Mouton's Managerial Grid,
together with John Adair's situational leadership model.

Key learning points

Leaders need to adapt their style to suit the needs of the team and situation.

Blake's grid is little use in practice.

Adair sees the leadership process as being made up of three interrelated variables. These
variables include task needs, group needs and individual needs. These needs should be
examined in the context of the situation in which the leader finds himself/ herself.

Learning example 1.9

Is the following statement true or false?
Blake and Mouton carried out research into managerial behaviour and noted that concern for
production and concern for people seem to correlate either positively or negatively.

Solution 1.9
False. Blake and Mouton carried out research into managerial behaviour and noted that concern for
production and concern for people do not seem to correlate either positively or negatively.

1: Key concepts in management

17

A management style is
not set in stone but must
adapt to the team
members.

Role of the
manager

Authority
relationships

Leadership

Discipline, grievance
and termination

Equal opportunities
and diversity

Situational leadership (Hershey and Blanchard)

Team members are ranked on ability and willingness to complete a task successfully. Based on this,
managers need to adapt their leadership style. There are four types of team:

1 High readiness. Able and willing. The most appropriate leadership style here is delegation.
2 High moderate readiness. Able but unwilling or insecure. A manager needs to be supportive and the
most appropriate style is participating.

3 Low moderate readiness. Lack ability but are willing and confident. A manager needs to be directive
and supportive. The most appropriate style is selling.

4 Low-readiness. Lack ability and confidence. A manager needs to be directive and so the most
appropriate management style is telling.

Fiedlers contingency model

Fiedler investigated the link between
leadership and organisational
performance. He found that style of
leadership could be linked to the extent to
which the situation was favourable or
unfavourable, as determined by 3 main
factors:
 Position power is the degree of
formal authority possessed by the
manager
 Task structure: clear, unambiguous
tasks are easier to control than vague
unstructured ones
 Leader subordinate relations: trust
and confidence in the manager ease
his task.

Fiedler's model, like

Adair's, is an example
of contingency theory.

18

The 3 variables determine the ease with which the

manager can influence subordinates behaviour.
The implications for management style are shown below.

Context
We conclude our study of management and leadership styles with two theorists, who emphasise
adapting to the context.

Key learning points

In Hershey and Blanchard's theory of situational leadership, team members are ranked
on ability and willingness to complete a task successfully.

Fiedler states that there is a link between leadership and performance.

Learning example 1.10

Match the following concepts to the theorist.
A

High-readiness

Hershey and Blanchard/ Fiedler

Favourableness of the situation

Hershey and Blanchard/ Fiedler

Solution 1.10
A

Hershey and Blanchard

Fiedler

1: Key concepts in management

19

DISCIPLINE, GRIEVANCE AND TERMINATION

Note the escalation in

penalties applied so that
employees are given ample
opportunity to amend the
behaviour leading to the
breach of discipline.

The purpose of discipline

is to secure a range of
desired behaviours from
employees.

Role of the
manager

Authority
relationships

Leadership

Discipline, grievance
and termination

Equal opportunities
and diversity

Discipline
Positive: aid safety and successful completion of tasks
Negative: sanctions designed to make people choose to behave in a desirable way.

ACAS Code of Practice

In the UK, discipline in most organisations is governed by the ACAS Code of Practice. This specifies the requirements
of good disciplinary procedures (eg they should be in writing; they should be non-discriminatory) and lays down how
disciplinary incidents should be dealt with.



Any incident must be thoroughly investigated and a written record made. Minor cases are disposed of informally.
First warning: oral or written depending on the gravity of the case. A first written warning is also appropriate when
a first oral warning has been disregarded.

 Final written warning: warns of punitive action and explains appeal procedure.
Formal warnings have a limited period of validity, eg 12 months.

Employment Act 2002

A new statutory disciplinary procedure was introduced in the UK on 1 October 2004.
1 Manager writes to employee inviting attendance at meeting to discuss matter. Employee has right to be
accompanied.
2 At meeting manager explains problem and invites response. After meeting manager explains decision and
right of appeal.
3 Employee may appeal to more senior, or, at least, different, manager and has right to be accompanied at
appeal.

Disciplinary sanctions
Sanctions should be:
 Immediate: very difficult if the ACAS procedure is followed
 Consistent: subject to mitigating circumstances, an offence should always be treated the same way
 Impersonal: no element of personal malice or favour should appear
There should also be advance warning (eg in induction training) so that everyone knows what to expect.

Consistency is important because inconsistency can lead to allegations of discrimination.

20

Context
Discipline is to do with sensible behaviour, acceptable standards of conduct, and orderliness. In
some definitions there is also a distinction between methods which are cooperative (positive)
and those which are coercive (negative) in maintaining discipline.

Key learning points

Positive discipline refers to procedures, systems and equipment that are designed so that
the employee has no option but to act properly in their duties. A safety guard on a machine
is an example here.

Negative discipline refers to sanctions to make people behave in a certain way. For
instance, this could be punishment or deterrents.

Learning example 1.11

In your groups discuss examples of positive discipline and negative discipline. Refer to the Study
Text for definitions if you are still unclear.

Solution 1.11
Positive discipline. You could have said a safety guard on a machine, rules on dispensing
medicines in hospitals, tachographs in lorries.
Negative discipline. Examples may include safety signs stating fines for trespass on the railways
(this applies universally rather than just to employees) or suspending sales reps who incur
speeding fines.

1: Key concepts in management

21

DISCIPLINE, GRIEVANCE AND TERMINATION

Grievance is, in effect, the

mirror image of discipline,
in that it is the employee
who initiates it. The
procedure is every bit as
formal and fair.

Role of the
manager

Authority
relationships

Regard must be had to the

law and the correct
procedure. A dismissal may
be morally fair yet fail to
comply with a procedural
matter and be judged unfair.

Leadership

Discipline, grievance
and termination

Equal opportunities
and diversity

UK statutory grievance procedure

From 1 October 2004.
1 Employee sets out grievance in writing.
2

Meeting: employee has right to be accompanied. Manager announces decision and informs employee of right of
appeal.

Employee may appeal to more senior, or, at least, different, manager and has right to be accompanied.

Potentially fair grounds for dismissal







Redundancy: selection must be fair

Legal impediment: retention would break the
law (eg a struck-off doctor)
Inadequate capability, provided training and
warnings have been given
Misconduct after adequate warning
Other substantial reason

Termination of employment
Dismissal includes:
1

Termination of an employees contract by the

employer

The ending of a fixed term contract without

renewal of the same terms

Resignation when the employers conduct

breaches the contract of employment: this is
constructive dismissal.

Automatically unfair grounds for dismissal



Unfair selection for redundancy

Trade union activity or membership

Pregnancy

Certain health and safety related activities

Insisting on documented employment particulars

or payslips

Wrongful dismissal
Wrongful dismissal is dismissal that breaches the
terms of the contract of employment (eg if
inadequate notice is given).

Unfair dismissal
Unfair dismissal is any dismissal that does not fall
into the statutorily defined categories of fair
dismissal. Some dismissals are automatically
unfair.

Redundancy
Is defined as dismissal when
The employer has ceased business or part of business where the employee worked.
The requirements for particular work have ceased or diminished or are expected to.

Wrongful dismissal is
more straightforward
than unfair dismissal.

22

Context
Managers must comply with the law as well as good practice. Failure to do so can result in costly
and damaging employment tribunals.

Key learning points

Grievance procedures embody an employees right to appeal against unfair conduct on

the part of the employer.

As with discipline, the procedure is progressive, starting with the line manager and going
higher if the problem cannot be resolved.

Learning example 1.12

How might grievances at work be avoided? Discuss in your groups.

Solution 1.12
The main way to avoid grievance procedures on the part of employees is to treat all employees
fairly and secure their commitment. The text chapter discusses a psychological contract
between the organisation and the individual:

The individual expects to derive certain benefits from membership of the organisation, and is
prepared to expend a certain amount of effort in return.

The organisation expects the individual to fulfil certain requirements and is prepared to offer
certain rewards in return.

Employee commitment is secured when the psychological contract is viewed in the same way by the
organisation and by the individual.

1: Key concepts in management

23

EQUAL OPPORTUNITIES AND DIVERSITY

In UK, women still earn

about 70% of male
earnings in same
occupations

Role of the
manager

Diversity goes further than

equal opportunities

Authority
relationships

Discrimination

Discipline, grievance
and termination

Equal opportunities
and diversity

Maternity rights

Direct discrimination: one group is treated less

favourably than another.
Indirect discrimination: a substantial proportion
of a group cannot comply with requirements or
conditions, to their detriment.
Positive discrimination gives preference to a
protected group.

Sexual harassment

 Time off for antenatal care

 Statutory maternity leave is 52 weeks
 Statutory Maternity Pay for up to 52 weeks
(from April 2010)
 Return to previous job on same terms
Employer refusal to consider part time working is
likely to constitute indirect discrimination.

Diversity

Sexual harassment is any unwanted conduct with

sexual connotations. In the UK, most sexual
harassment is likely to constitute unlawful sex
discrimination.

Equal opportunities is about removing unfair

discrimination. Diversity as a concept is about
taking advantage of heterogeneity in order to thrive
in a diverse global business environment.

Equal opportunities
at work is based on equal access and fair treatment, regardless of gender, race, age, disability, sexual orientation or
religious belief.

Equal opportunities legislation in the UK



The Sex Discrimination Act 1986 and Sex Discrimination and Equal Pay Regulations 1996 outlaw discrimination
on grounds of sex, marital status or sex change.
 The Race Relations Act 1996 outlaws discrimination on grounds of colour, race, nationality and ethnicity.
 The Race Relations (Amendment) Act 2000 requires larger organisations to draw up plans for achieving racial
equality.
 The Disability Discrimination Acts 1995 and 2000 protect the disabled against discrimination, though failure to
make reasonable adjustments (eg to premises) can be justified on grounds of cost or disruption.
 The Employment Rights Act 1996 gives minimum maternity rights.
 The Employment Equality (Sexual Orientation) Regulations 2003 protect against discrimination, harassment and
victimisation in employment and training based on sexual orientation.
 The Employment Equality (Religion or Belief) Regulations 2003 protect against discrimination, harassment and
victimisation on the grounds of religion or belief.
 The Employment Equality (Age) Regulations 2006 prohibit unjustified age discrimination in employment and
vocational training.
Practical implications of legislation for employers are set out in Codes of Practice.

Rather than remember all the

dates, try to remember what
the Acts are about.

24

Leadership

Context
Diversity and equal opportunities are important for the managers of any organisation for two main
reasons. Firstly in most countries there are extensive rules and regulations governing
discrimination at work. Secondly, an effective equal opportunities approach to the management of
people at work will be beneficial to the efficiency and effectiveness of any organisation.

Key learning points

Equal opportunities is an approach to the management of people at work.

Some areas of discrimination are covered by law and others are just best practice (this will
vary from country to country).

Discrimination may occur not just in recruitment but throughout the whole HR cycle.

Topic tip
Legislation in many countries allows for exceptions to equal opportunities legislation. In
many cases a reasonableness test can be applied. Ask the students to prepare a list of jobs where
it may appear reasonable to discriminate between candidates on the grounds of gender:
Examples here may include:

religious minister where the religion requires gender specific roles

entertainment industry e.g. Father Christmas

where there is limited accommodation and it is not reasonable to provide accommodation for
both sexes e.g. fruit pickers

Learning example 1.13

Equal opportunities and diversity are sometimes criticised as being excessive external interference
with organisations. In order to demonstrate the problems of ignoring equal opportunities and
diversity imagine an organisation that only employed people like you i.e. the same gender, race,
ethnicity, age, sexual orientation, religion etc. What would be the implications for your
organisation?

Solution 1.13
This will vary between organisations but may include:

Inability to attract and retain the best people for the job

Non-compliance with relevant legislation

A small pool of potential employees

A negative image with stakeholders

1: Key concepts in management

25

EQUAL OPPORTUNITIES AND DIVERSITY

26

An organisation
sometimes uses words
like dynamic, when it
means under 30.

Role of the
manager

Authority
relationships

Equal opportunity in recruitment

Leadership

Discipline, grievance
and termination

Equal opportunities
and diversity

Management of equal opportunities

 Advertising material must not indicate

any discriminatory preference nor may its
distribution restrict its availability to
preferred groups.

 Support from the top is needed.

 A policy on equal opportunities is helpful, perhaps
prepared by a working party with wide
representation.

 Application forms and interviews must

not ask non-work related questions.

 Monitoring: applications, starters, leavers, transfers,

promotions and training should be monitored for their
impact on disadvantaged groups.

 Selection tests should be culturally nonspecific.

 Rejection: reasons should be recorded.

 Resources will be needed for practical action, which

might include:
Flexible work patterns for women
Equal opportunities managers
Awareness training for managers
Childcare arrangements
Encouragement of job applications from
members of disadvantaged groups

Equal opportunities should not be seen as a burden, as

it enables the organisation to recruit and train on merit.

Context
Equal opportunity legislation aims to ensure that there is no discrimination between people.

Key learning points

Discrimination is a situation where people are treated differently because of factors that
are not job related.

Organisations need to take great care to avoid indirect discrimination.

Learning example 1.14

Refereeing at the top level in a particular sport requires very high levels of fitness because referees
need to be able to keep up with play. The governing body of a sports organisation has, therefore,
decided that its referees must retire after 45.
Is this discriminatory?
Yes / No

Solution 1.14
Yes. Individuals are being discriminated against on the basis of their age. It is acceptable, however
to discriminate on job related criteria. E.g. it is acceptable to have a fitness test for all employees.

Learning example 1.15

XYZ Plc is a large multinational organisation in the financial services industry. The majority of its
employees are women who work part-time in call centres based in the south of England. It is
planning a major increase in its workforce. The managing director has suggested that XYZ Plc
should place adverts for the new vacancies in just one magazine - New baby and mother
magazine as this will be an effective way to reach the sort of employees that they currently employ.
What type of discrimination is this?
A

Direct discrimination

Indirect discrimination

Victimisation

It is not discrimination

Solution 1.15
B

Indirect discrimination

1: Key concepts in management

27

Reinforcement
Study Text Chapter 1

28

Now turn to the back of the text and attempt Question 1 from the longer
questions

Attempt the Quick Quiz

chapter 2

CONTROL THEORY

PERFORMANCE MANAGEMENT

HEALTH AND SAFETY

LEADING TEAMS

MENTORING

ETHICS AND CORPORATE GOVERNANCE

This chapter deals with aspects of control. Control is a

major function of management and we begin with
coverage of some basic control theory. Appraisal is a
very important practical aspect of the application of
ideas about control in the organisational setting.
Health and safety is a vital aspect of control through
compliance with legal requirements. Then we look at
teams and mentoring which report the human side of
control. Finally, the organisation is considered in its
wider context in society through ethics and corporate
governance.

CONTROL

29

CONTROL THEORY

Words like control and feedback make this

topic sound rather technical, but really it is
just a way of formalising what goes on in
any organisation, no matter how small.

Control
theory

Performance
management

Health
and safety

Mentoring

Leading teams

Ethics and corporate

governance

Types of control
Ouchi has identified 3 types of control
 Market control assigns revenues and costs to profit centres and control is exercised via financial performance. It
works well with autonomous trading units but not for centrally provided services.
 Bureaucratic control uses formal structures and procedures. It is impersonal, rational and efficient but relies on
objective measurement. It is less useful where subjective impressions are important (eg where outputs are difficult
to measure).
 Cultural or clan control works through shaping values, attitudes and commitment. It is useful for complex,
abstruse or highly specialised work (such as research) where outputs are difficult to measure or to price.
Control system

A major function of organisation

structure is the provision of a
mechanism through which
control can be exercised. A
feedback or cybernetic control
system works like this.

Objectives

Levels of control (Anthony)

Control action?

Ouchi. Three basic control strategies are

used in organisations.
Market control
Bureaucratic control
Clan control

On target.
No corrective
action required

Control action?
Deviations
identified

Effective control systems Internal control systems

For control systems to be
effective they must satisfy six
criteria.
Acceptability
Accessability
Adaptability
Action orientation
Appropriateness
Affordability

Control strategies and processes

Comparison
of performance
with plans/standards

Actual
performance

Plans and
standards

Turnbull Report
Suggests that internal controls are
policies, processes, tasks,
behaviour and other aspects that:
Facilitate effective and efficient
operation
Help ensure quality of internal
and external reporting
Help ensure compliance with
laws and regulations.

Johnson and Scholes. Two types of

control processes exist in organisations
Input-focused or output-focused
Direct or indirect

You will see that effective internal

controls aid compliance with external
controls. An obvious example of this is
a good accounting system, which aids
the external audit process.

30

Context
Control is a key function of management because management is accountable to owners and other
stakeholders. It covers individuals and resources, from performance appraisal to comparison of
actual and budgeted costs.

Key learning points

Strategic control is concerned with direction setting, policy making and crisis handling, and
is the role of top management.

Tactical management is carried out by middle management and is concerned with finding
new ways to achieve corporate goals.

Operational management is concerned with routine activities to carry out tactical plans.

Control systems should have six attributes, all starting with A (the 6 As).

Control strategies should be distinguished from control processes.

Internal controls help organisations counter risk by improving reporting and compliance.

Learning example 2.1

Below are three of the 6 As the criteria for effectiveness of a control system.
Acceptability
Action orientation
Affordability.
What are the other three?

Solution 2.1
Accessibility
Adaptability
Appropriateness.

2: Control

31

PERFORMANCE MANAGEMENT

Principles for devising performance measures:

Essential for employees to

know what is expected
from them

Control
theory

Performance
management

Health
and safety

Job related

Controllable

Objective and observable

Data must be available

Leading teams

Mentoring

Ethics and corporate

governance

Appraisal techniques
Overall assessment in narrative form: value depends on quality
of writing and guidance on standards and what to cover.

Behavioural incident methods give examples of behaviour for

each grade and characteristic.

Grading using numerical or graphical rating scales for specified

characteristics.

Results oriented schemes review performance against specific

targets previously agreed between appraiser and appraisee.

Appraisal
is the systematic review and assessment of an employees performance, potential and training needs.
Reasons for formal appraisal
 Force managers to undertake a full and
rational review rather than relying on random
impressions
 Force managers to give adequate feedback to
subordinates
 Force managers to consider development
needs and potential for promotion

Appraisal is part of the system

of performance management,
including goal setting,
performance monitoring,
feedback and improvement
planning

32

Purposes of appraisal
 Performance review: feedback on
performance and identification of training or
development needs
 Reward review: assess appropriateness of
pay increases and bonuses
 Potential review: more senior staff are best
placed to assess potential

General purpose can be

summarised into three
components:

Reward review

Performance review

Potential review

Context
Performance management aims to get better results for the organisation via the measurement and
evaluation of individual performance. In this section we look at the key features of performance
management and the reasons behind having a formal performance appraisal system.

Key learning points

Understand the purposes and hence advantages of performance appraisal

Formal appraisal systems support objective, positive, relevant, consistent feedback by

managers.

Topic tip
In order to make performance appraisal relevant ask the students to look at the Purposes of
performance appraisal checklist on the facing page. Ask them to identify from their own work
experience of performance appraisal, how many of these objectives are actually met.

Learning example 2.2

List the advantages to an individual within an organisation of formal appraisals.

Solution 2.2
Advantages for the individual include:

Objectives are established in relation to the whole organisation

Key results and timescales are established

Comparisons are made between past performance and future activities against standards

They act as bases for performance related pay schemes

Learning example 2.3

Insert the correct words from the list below into the following sentences:
_______ review is used for planning and following up training and development programmes.
_______ review measures the extent to which an employee is deserving of performance related
bonuses or pay increases.
_______ review attempts to predict the level and type of work the individual will be capable of in
the future.
Reward, Performance, Potential

Solution 2.3

Performance review is used for planning and following up training and development
programmes.

Reward review measures the extent to which an employee is deserving of performance

related bonuses or pay increases.

Potential review attempts to predict the level and type of work the individual will be
capable of in the future.

2: Control

33

PERFORMANCE MANAGEMENT

Employee

Control
theory

Performance
management

Health
and safety

Leading teams

The appraisal interview

Mentoring

Ethics and corporate

governance

Appraisal schemes

Maier identifies 3 approaches:

Tell and sell: manager announces assessment and
tries to gain acceptance of verdict and improvement
plan
Tell and listen: manager announces assessment
but invites response and discussion
Problem-solving: manager acts as counsellor to
assist employees self development.
Managers should be well prepared for the appraisal
interview since it can be stressful for both
participants. Training and pay implications and
possibilities should be researched in advance.
Any agreed action should be followed up to ensure
that it happens.

 Traditional schemes rely on the

assessment of employees by their managers
 Self appraisal saves management time and
can enhance employee commitment
 Upward appraisal of managers by
employees brings an important new
perspective, especially where there is a high
degree of consistency of opinion
 360 appraisal extends this principle by
seeking input from peers and co-workers,
customers (including internal customers)
and the appraisees themselves

Appraisal barriers
 Potential for confrontation and hostility based on disagreements on role, performance, objectivity and
presentation.
 Inadequate participation by appraisees who see the process as over-judgmental.
 Lack of firmness by appraisers who avoid criticism and achieve little.
 Bureaucratic, time bound, paper based nature of the appraisal process interferes with its real purpose.
 Failure to incorporate appraisal into a wider spectrum of continuing performance management.
 Agreed targets become irrelevant as time passes if appraisals are no more frequent than annually.

Like any other programme

effectiveness of appraisal
should be evaluated. Is it a
waste of time?

34

Context
The appraisal interview is an important part of performance appraisal. Traditionally performance
appraisal has been by the appraisee's immediate superior. Recently multi-source feedback has
become more popular.

Key learning points

Learn the advantages and disadvantages of different types of performance appraisal.

Understand the steps involved in an appraisal interview.

Appraisals have often been seen as something unpleasant being done to employees!

The effectiveness of appraisal needs to be assessed. Just like any other process the
benefits must outweigh the costs.

Topic tip
In order to relate this section to the students ask them for their experiences, both good and bad of
appraisal.
If there are a significant number of bad experiences ask the students to suggest ways to improve
the current process.

Learning example 2.4

List five criteria that might be used to evaluate appraisal schemes.

Solution 2.4
1.

Relevance

2.

Fairness

3.

Serious intent

4.

Cooperation

5.

Efficiency

2: Control

35

HEALTH AND SAFETY

The Health and Safety at

Work Act 1974 is the
most important of these.

Control
theory

Performance
management

Health
and safety

Mentoring

Ethics and corporate

governance

Legal framework
Legislation governing health and safety at work.
Include
Health and Safety at Work Act 1974
The Management of Health and Safety at Work Regulations 1992
Health and Safety (Consultation with Employees) Regulations 1996
The Workplace (Health, Safety and Welfare) Regulations 1992
The Manual Handling Operations Regulations 1992
The Health and Safety (Display Screen Equipment) Regulations 1992
Working Time Regulations 1998

UK legislation

The impact of health and safety

Employers duties








Work practices must be safe

Work environment must be safe and healthy
Risk assessments must be carried out
At-risk employees must be identified
Health and safety advisers must be competent
Plant and equipment must be maintained to the
proper standard
 Training and information to encourage safe
working practices should be provided
 Controls should reduce risks
 Safety policies should be introduced and
regularly revised

Senior manager
must be specified as
responsible

36

Leading teams

Accidents and illness increase costs.

Public image is influenced.
Employers have legal obligations.
Employees duties
 Take reasonable care of themselves and
others
 Allow the employer to carry out his duties,
including enforcing safety rules
 Use equipment properly
 Report potential hazards
 Not interfere recklessly with machinery or
equipment

Note that employees

have duties as well as
rights

Context
Health and safety can be seen as an aspect of management control, this time over people, who are
often an organisations greatest asset. This asset therefore needs to be protected and any risk and
danger to people must be actively managed. If people are exposed to excessive risks then there
may be considerable costs to the organisation.

Key learning points

Learn the duties of employer and employee.

Consider the impact of health and safety legislation on businesses.

Topic tip
One way to make this very factual section more memorable is to consider a case study:
Read the following article and then consider how such a disaster could have been avoided.
On 26 April 1986 at 01:23:44 a.m. reactor number four at the Chernobyl plant, near Pripyat in
Ukraine, exploded. Further explosions and the resulting fire sent a plume of highly radioactive
fallout into the atmosphere and over an extensive geographical area. Nearly thirty to forty times
more fallout was released than had been by the atomic bombings of Hiroshima and Nagasaki.
The Chernobyl disaster, or simply Chernobyl, was a nuclear reactor accident in the Chernobyl
Nuclear Power Plant in the Soviet Union. It was the worst nuclear power plant accident in history
and the only instance so far of level 7 on the International Nuclear Event Scale, resulting in a
severe release of radioactivity into the environment following a massive power explosion which
destroyed the reactor. Thirty people died in the explosion, but most deaths from the accident were
attributed to fallout.
The plume drifted over extensive parts of the western Soviet Union, Eastern Europe, Western
Europe, Northern Europe, and eastern North America. Large areas in Ukraine, Belarus, and Russia
were badly contaminated, resulting in the evacuation and resettlement of over 336,000 people.
(Source: Wikipedia June 2008)

Learning example 2.5

Many employers have a health and safety policy for their staff. State four features that you might
expect to find in such a policy.

Solution 2.5
Features may include a statement of principles, details of safety procedures, compliance with the
law, detailed instructions on how to use equipment, and training requirements.

Learning example 2.6

Many employers have an accident reporting system. State three features that you might expect to
find in such a system.

Solution 2.6
Features may include accidental report forms, monitoring of statistical trends, follow up, risk audit
or sampling to prevent accidents.

Web
For a bit of light relief, watch the video here of a health and safety demonstration an example of
how not to do it!
http://www.youtube.com/watch?v=kYWhhEiQ9kI&feature=PlayList&p=50C11E633946C29C&index=
17=PL
2: Control

37

LEADING TEAMS

Most of us are part of groups at

work. These can be formal or
informal such as the fantasy
football league. Teams are groups
that have goals and are focussed
on a particular task or tasks.

Control
theory

Performance
management

Health
and safety

Later, a team may become

complacent. This is called
'dorming'.

Leading teams

A group differs from a random collection of people in that its

members perceive themselves to be a group. They have:
A sense of identity
Loyalty to the group
Purpose and leadership
A team is more than a group having objectives and accountabiltiy

Multidisciplinary team
Members have different skills, knowledge and experience.
Such teams can solve problems with cross-disciplinary aspects.

Multi-skilled team

Forming. The team is still a

collection of individuals jockeying for
position. Aims, norms and
personalities are probably unclear and
no leader is likely to have emerged.

Storming. There may be open conflict

as objectives and norms are set and
revised. Trust increases.

Norming. The team settles down and

creates norms for output, worksharing
and individual needs.

Performing. The team is sufficiently

integrated to perform its task.

Members all have a range of skills, enabling greater flexibility of

work patterns.

Rewarding effective teams

Characteristics of effective and ineffective teams

Effective teams

Ineffective teams

Labour turnover

Low

High

Absenteeism

Low

High

Quality of output

High

Low

Individual targets

Met

Not met

High

Low

Free and open

Mistrust

High

Low

Quantifiable

Qualitative
Commitment to
organisational goals
Communication between
team members
Job satisfaction

Take note of the measures used to assess how well

the team is doing. These can be numerical
(quantitative) or non-numerical (qualitative).

38

Ethics and corporate

governance

Development of the team (Tuckman)

Groups and teams

Factor

Mentoring

Team-based rewards and

incentives may be used to
encourage co-operation and
mutual acountability, as well
as team performance.

Context
In the first section of this chapter some useful concepts for understanding individuals were
introduced. Individuals are recruited to organisations but generally, they find themselves working
as part of a group or team. Understanding the concepts of groups and teams is useful to the
manager of any organisation.

Key learning points

There is a clear distinction between a group and a team.

Effectiveness of teams can be measured as follows:

Task performance includes the fulfilment of the task and organisational goals.

Team functioning consists of the constructive maintenance of team working and managing
the demands of team dynamics, roles and processes.

Team member satisfaction relates to the fulfilment of individual development and

relationship needs.

Topic tip
Much of this section is common sense and students may be able to work out answers from their
own experiences.
To reassure the students about this topic area ask the following question BEFORE any discussion
on this topic.
How do you know a team is working effectively?

Learning example 2.7

One of the limitations of team working is that team consensus and cohesion prevent consideration
of alternatives or constructive criticism, leading the team to make risky, ill considered decisions.
What is this an example of?
A
B
C
D

Group norms
Team working
Group think
Group conflict

Solution 2.7
C

Group think

Learning example 2.8

Which of the following is the correct order of team development, according to Tuckman?
A

Forming, norming, storming, performing

Forming, performing, storming, norming

Forming, storming, norming, performing

Forming, performing, norming, storming,

Solution 2.8
C

Forming, storming, norming, performing

2: Control

39

LEADING TEAMS

Note: Belbin suggested

eight rules, not eight
members of a team.

Control
theory

Performance
management

Health
and safety

Leading teams

Mentoring

Ethics and corporate

governance

Team roles (Belbin)

Effective teams have members who between them are capable of fulfilling nine vital roles:
 Co-ordinator
Presides and co-ordinates; balanced, disciplined, good at working through others.
Mature and confident.
 Shaper
 Plant

Highly strung, dominant, extrovert, passionate about the task itself, a spur to action.
Introverted, but intellectually dominant and imaginative; source of ideas and
proposals but with disadvantages of introversion.

 Monitor-evaluator

Analytically (rather than creatively) intelligent; dissects ideas, spots flaws; judges
accurately.

 Resource-investigator

Sociable, extrovert, relaxed; source of new contacts, but not an originator; explores
opportunities.

 Implementer

Practical organiser, turning ideas into tasks; trustworthy and efficient, but not
excited.

 Team worker
 Completer
 Specialist

Supportive, understanding, diplomatic; popular, uncompetitive and mild.

Attends to details and delivery; conscientious and anxious.
Dedicated, knowledgeable, single minded.

Research was in 1991

at Henley Management
College

40

All roles required for a

fully functioning team.