CHAPTER 1

What is management?
The word Manage is from Italian
word maneggiare means to
handle especially to handle/or
train horses.
This traces back to Latin word
manus means hand.
In 16th century manage was
quickly extended to operations of
war and in sense of taking control,
taking charge, or directing.
Later it became confused with
French words menager means
to use carefully.
In 17th & 18th centuries the word
manage and mnage
overlapped in usage and todays
meaning of Manager is coloured
by these variations.
Management originally used to
indicate the process for managing,
training or directing.
It was first applied to sports, then
to house-keeping and later to
government and business.
(McFarland (1979) Management
Foundations & Practice)
MANAGEMENT AS A PROCESS
Definitions:
1. Management is
therefore defined as
the process by which
managers create,
direct, maintain and
operate purposive
organizations through
coordinated,
cooperative human
effort. (McFarland 1979)
2. Management has been
called the art of
getting things done
through people.
This definition by Mary
Parker Follet, calls
attention to the fact that
managers achieve
organization goals by
arranging for others to
perform whatever tasks
may be necessary not
by performing the tasks
themselves. (James
A.F.Stoner, 1982,
Management)
3. Management is the
process of planning,
organizing, leading and
controlling the efforts
of organization
members and
resources to achieve
the stated goals.

the
organizational
goals. (John Pearce II &
Richard
Robinson,
Jr.
1989 in their book titled
as Management)
5. Management
is
concerned
with
accomplishment
of
objectives through the
efforts
of
other
people. (Mondy, Holmes
and Edwin B.Plippo 1983
in their book titled as
Management:
Concept
and Practices)
For
example:
Pass
courses to get MBA and
then seek job.
For this purpose, you
need to do the following:
Planning
:
Determine what
is to be achieved
Allocate resources and
establish means to
achieve the plans /
goals.
Influencing/Directing:
Motivate and lead
personnel.
Controlling :
Compare results achieved
with the planned goals.
Classic Definition by Henri
Foyal (1916)
6. To Manage is to forecast
and plan, to organize, to
command, to coordinate
and to control.
Definition
by
E.F.L.
Brech
(1957)
Management is a social process
the process consists of
planning, control, coordination and
motivation.
Koontz and ODonnell (1976)
Managing is an operational process
initially
best
dissected
by
analyzing
the
managerial
functions.
The five essential managerial
functions
are:
Planning,
Organizing, Staffing, directing and
leading and controlling.
Terry (1977)
Management is a distinct process
consisting of planning, organizing,
actuating
and
controlling
performed
to
determine
and
accomplish stated objectives by
the use of human beings and other
resources.

MODEL

MANA
GEME
NT
P
L
A
N
I
N
G

C
O
N
T
R
O
L
L
I
N
G
(Smith, Carroll, Kefales
and Watson (1980 in
their book Management
Making Organization
Perform)

4.

O
R
G
A
N
I
Z
I
N
G

L
E
A
D
I
N
G

Management is the
process of optimizing
human, material and
financial
contribution
for the achievement of

Management is a process of
responsibility for deploying
resources to accomplish given
objectives.
For given objectives, the resources
are manpower physical resources
i.e., material and financial.
Terry (1977)
Management as a science:
Management science is body of
systematized
knowledge
accumulated and accepted with
reference to understanding of
general
truths
concerning
management.
Management as Art:
Arts mean personal creative
power plus skill in performance.
Fullet defines Management as an
Art.
Henry Boettinger (1975) argues
that Management is an Art. As
imposition of order on chaos i.e.,
Painting, Poetry requires three
components (i) artists vision, (ii)

1
knowledge of craft and (iii)
successful communication.
Schein
(1968)
argues
Management as a Profession.

Key Characteristics
1. Professionals
based
their
decision
on
general principles e.g.,
praise in public and
criticize in private.
2. Professionals achieve
professional
status
through performance.
(difficult than lawyer
or surgeon)
3. Code of Ethics for
professional
that
protect client whereas
no code of Ethics for
Management.
4. Borje Saxberge
suggest

fourth
characteristic
i.e.,
dedication
and
commitment.
According
to
this
criterion,
countless
managers
are
professionals.
Characteristics
for
understanding Management
1. Management
is
purposeful.
2. Management
makes
things happen.
3. Management
is
an
activity, not a person
or group of persons.
4. Management
is
accomplished by, with
and through efforts of
others.
5. Management
is
intangible.
6. Management is aided
not replaced by the
computer.
7. Management has an
outstanding impact on
human life.
Characteristics of the New
Manager (Fulmer 1989)
1. An orientation towards
people
2. A
concern
with
implementation
3. Competitive spirit
4. An
external
perspective
5. An orientation towards
systems. (Information
based system)
6. Pragmatism, flexibility
and ability to deal with
an ambiguity.
7. An orientation towards
the future.
What Managers Do? (Stoner
1982)
1. Managers work with
and
through
other
people.
2. Managers
act
as
channels
of
communication.
3. Managers
are
responsible
and
accountable.
4. Managers
balance
competing goals and
set priorities.

5.

Managers must think

analytically
and
conceptually.
6. Managers
are
mediators.
7. Managers
are
politicians.
8. Managers
should
develop other political
skills.
9. Managers
are
diplomats.
10. Managers
make
difficult decisions.
A Manager is what manager
does.

CHAPTER NO. 2

The emergence of American

Business and Management
thought

American Manager is
well
known
to
achieve the goals
Skilled Manager can
manage
every
business activity
Skill
is
called
Management
American Managers
are
admired
by
international friends
as well as enemies
Both
men
and
women who valued
the better way to
make
American
industry
more
efficient
and
effective, and lead
to
American into
world
production
leadership
Links in the Management
Chain
American
production
efficiency has worldwide
reputation.

Scientific
Management

Scientific Management
Charles Babbage lived in
1800s and was to first to
make scientific enquiry in
production
area
i.e.,
assignment of jobs various
parts to workers on the
basis of their skills.
Division of labor was useful
for four reasons:
1. Learning
time
is
reduced
because
one worker must
learn only one skill.
2. Less time is lost in
changing from one
skill to another.

3. Workers
become
specialist
due
to
repetition.
4. Because the job is
broken down into
various component
parts, special tools
and equipment are
to be developed.
The Father of Scientific
Management
Federick W. Taylor is usually
known
as
Father
of
Scientific Management
Major areas: Labour and
Management
Gantt and Gilbreths
Elton Mayo Father of
Human Relations
Famous
Hawthorne
Experiment
In
management
history
employees began to have
rights.
Mayo

Industrial
Psychologist from Harvard
University
agreed
to
participate Hawthorne Plant
of Western Electric Co. near
Chicago.
Workers productivity under
different
environmental
conditions light, heat
room,
colour
etc.
Six
women were put in regular
production
and
were
observed.
Mayos assistants
began
gradual
changes of all
variables less
light more rest
time
different
pay scales.
Surprisingly
every
change
resulted
in
increase
in
productivity.
Human
Even
whenRelations
lights
were
like
moonlight,
the
production
Administration
increased.
Special
treatment called
as
Hawthorne
effect can bring
positive
results
because
of
human factor.
Productivity
in
function
of
workers
attitude.
The Hawthorne experiment
demonstrated that:
1. Human,
social
and
psychological
needs are every
bit as effective
as motivators as
money.

2
2. The
social
interaction of the
work group is as
influential as the
organization
of
the actual work.
3. The
human
factor can not be
ignored in any
accurate
management
planning.
Henri Fayol (1841-1925)
The Principles as given by
Fayol are enumerated as
under:
1.
Division of work
2.
Authority
and
Responsibility
3.
Discipline
4.
Unity
of
Command
5.
Unity
of
Direction
6.
Subordination
of
individual
interest
to
general interest
7.
Remuneration
8.
Centralization
9.
Scalar
Chain,
that is, Line of
Authority.
10.
Order
11.
Equity
12.
Stability of the
tenure
of
personnel
13.
Initiative
14.
Espirit
de
Corps, that is,
Tean Spirit
CHAPTER 3
Paths
through
the
Management Maze
1.
Manager
is
a
Historian
Empirical theory is based
on the premise that we
must study the past or to
repeat it, e.g., successes or
failures / mistakes made by
the managers in the past
and then we can take
guidance for future. But
there are also pre-condition
e.g. a technique found right
in the past may be proved
worst in the present
Management
is
not
based on precedent like
law. (Courts etc.)
When
employees
walkout, would you,
a. Call
in
an
expert labor
consultant
who
knows
nothing
about
your
industry.
b. Negotiate
and attempt
to
settle

strike
yourself.
c. Or both? and
then
see
what
are
advantages
in
each
alternative.
Past generalizations are
only
guidelines
not
dictators of guaranteed
procedure
to
study
methods of successful
managers.
2.
The Manager is a
Psychologist
Managers deals with people
of
different
nature

Manager is scientific and

Psychologist. They must
have developed theories,
methods and techniques of
behavioral sciences with a
common
sense
understanding of people.
Their approach is called
Human
Relations,
Leadership
and
Behavioral
Sciences
Approach.
An effective manager is
always interested in current
theories, developments in
Psychology, group dynamics
and
inter
personnel
relations.
So efficient manager is
psychologist
but
a
psychologist
is
not
necessarily a manager. e.g.,
a study of job satisfaction.
3.
A good Manager is
a social Scientist
Sociologist people in
groups
and
collective
psychology.
Manager realizes that group
attitude / relationship can
affect outcome.
i.e., Hawthorne experiment
can be useful at right times
rather than recitation of the
experiment.
Barnard, head of New
Jersey
Bell
Telephone
emphasized on cooperation.
Barnard
defined
an
organization
as
any
cooperative
system
in
which people are able to
communicate
with
each
other and are willing to
contribute towards common
purpose.
Simon and others of social
science
school
of
Management stressed on
importance
of
the
cooperation and purposeful
inter relationship.
4.
The Manager is a
social
system
specialist
Managers want to automate
their skills but the systems

can never replace feelings,

innovations
or
human
response.
PERT Chart = Program
Evaluation
and
Review
Technique
e.g.,
Social,
Technical Systems.
Best Managers throughout
history have been Systems
People
5.

The Manager is a
Logician
Economic
decisions
/
decision
theory
helps
Management
thought

Analysis of the case.

6.
Manager is Part
Mathematician or
Management
Scientist
Maths is a tool rather than
a school a part rather
than whole Manager.
7.
The
Communication
Centre Manager
Skills of Communication.
Computer is a tool of
communication.
Effective
Manager is to receive,
store, analyze, reshuffle
and
re-distribute
information.
8.
The
Whole
Manager
(Totality
of
situation)

3.
4.

few wrong decisions, and

that is indecision. (Ray
Lyman Wilbur)
Not to decide is to decide.
(Anonymous)
Decision
making
is
applied every day every
moment in the life.

Theoretical Model
Define Problem/Issue

Measure Results
Collect Relevant
Data

Implement Solution
Develop Alternative
Solutions

Select Optimum Solution

Assess
Consequences

CHAPTER NO. 4
EFFECTIVE DECISION
MAKING
CONCEPTS / TERMS

Decision
The choice made from among
available
alternatives
that
in
expected to lead to a favorable
solution to a problem.
Decision Making
The Process of organizing a
problem generating and weighing
alternatives, coming to a decision,
taking
action
and
assessing
results.
Problem
A situation in which existing
circumstances differ significantly
from preferred situation.
Crises Problem
A situation that urgently requires
an immediate decision.
Non Crises Problem
A problem that requires a decision
in ordinarily business of life.

DEFINITIONS:
1.

Decision Making is a
process by which we
evaluate alternatives and
make a choice among
them. (Mondy et al)

2.

I have many decisions to

make, and some of them
are wrong. But have
learned that there is
something worse than a

Decision Model

ELEMENTS OF DECISION
MAKING
1. Rational
Decision
Making
a. Decision
on
economic
concept
b. Difference
between pain
and pleasure
c. Cost-benefit
analysis
2. Psychological
Dimensions
of
Decision Making
a. Deciding: Past,
Present
and
Future
3. Preventive Problem
Solving
a. Charlie says it
is a mistake to
try to avoid the
unpleasant
things in life.
b. What is right
(to understand
problem)
c. What can go
wrong

Murphys Law
of
Management
If
anything
can go wrong
it will?

4. Problem Solving
a. Problem
solving
is
process to take
decisions-------define
the
problem
etc.
etc.

TYPES OF DECSIONS

Personal
Decisions
(Career Selection)
For example:
o
Decisions
to
study, watch a
T.V, to go bed
early, to play, to
read or write etc.
are
personal
decisions which
are made by a
college student
every day.

Professional
Decisions
o

Every employed
person has to
take decision.

For example

College
Professor
makes
decision
about what
information
will be given
to
the
students.

Physicians
diagnose
and
prescribe
treatment.

Scientists
formulate
hypotheses
and
do
experiment
for
testing
them.
Thus Managers take
decisions as part of
their
professional
lives.
Managers
are
professionals because
they always make
decisions

Routine
V/S Non
Routine Decisions
1.
2.

Routine
Decisions
Non
Routine
Decisions:
deals
with
unique problems
and situation.

DECISION
MAKING
APPROACHES
1.
2.
3.
4.

The centralized V/S

Decentralized
Approach
The
Group
V/S
Individual Approach
The Participatory V/S
Non-Participatory
Approach
The Democratic V/S
The
Consensus
Approach

SUMMARY

Centralized As many
decisions as possible by
Top Management.
Decentralized

The
delegation of authority is
encouraged.

Group Two or more

people work together to
make decision.
Individual

One
manager
takes
the
decisions.
Participatory

Managers
solicit
information from others.
Non-Participatory

Managers do not solicit

information from others.
Democratic Decisions
made on majority rule.
Consensus

Many
participants, but general
agreement is sought.

fundamentally choosing
and a planning problem

arises only when an

alternative
course
of
action
is
discovered.

(Koontz
&
ODonnell
1976)
2. Planning is deciding in

advance what to do, how

to do it, when to do it,
and who is to do it.

Planning bridges the gap

from where we are to

where we want to go. It

makes it possible for
things to occur which
would
not
otherwise
happen. (Harold Koontz &
Cyril ODonnell 1976)
3. Planning involves defining
the organizations goals,
TECHNIQUES USED IN
establishing an overall
DECISION MAKING
strategy for achieving

Decision Tree
those
goals,
and

Break-even
developing
a
Analysis
comprehensive
set
of
plans to integrate and
Total Revenue
coordinate organizational
work. Its concerned with
VC
both ends (whats to be
done) and means (how
its to be done). (by
B.E.P
Stephen P. Robbins and
Mary Coulter, 2002)
Profit
4. Planning is the process of
determining exactly what
the organization will do to
accomplish its objectives.
In more formal terms,
Total
planning
is
the
Cost
systematic development
Revenue
Loss
of action programs aimed
at
reaching
agreed
business objectives by
the process of analyzing,
F.O.
evaluating, and selecting
among the opportunities
which
are
foreseen.
Cost
(Samuel C. Certo, 1997)
5. Planning is the selecting
and relating of facts and
the making and using of
assumptions
regarding
the
future
in
the
visualization
and
formulation of proposed
activities
believed
necessary
to
achieve
desired results. (Terry)
It is to determine in advance what
is to be done and how it is to be
done.
Steps in problem Analysis
Five Key Dimensions of
1. State the problem
Business Planning
2. Define present level
3. State
your
objective
SUBJECT
difference
between
Product
present and things should
be
Research
4. List the possible causes
New Product Development
5. Select the most likely
Financial
cause
6. List alternative solutions
Marketing
7. Analysis your alternative
Acquisition
actions
8. Make your decision
Facility
9. Make an action plan
Manpower
10. Accept
the
credit
CHARACTERISTICS
graciously.

Simple/Complex
ORGANIZATION
ELEMENTS
Comprehensive/ Narrow
Coverage
Corporate
Charter
Major
/
Minor
importance
Japanese Decision Making
Peter Drucker (1974) argues that
Subsidiaries
Creed
Quantitative / Qualitative
in America we emphasize the
Functional Groups
Purpose
Strategic / Tactical
answer
while
in
Japan
the
Divisions
Objectives
Confidential
/
Public
emphasis in on the question and
all its implications.
Departments
Strategy
Written / Unwritten
CHAPTER NO. 05
Project/Product
Policy
Prepared
Formally
/
Informally
TIME
THE PLANNING PROCESS
Definitions:
Concept
Program
Ease of Implementation
Short Range
1. As Billy E. Goetz said
Budget Range
Rational
/
Irrational
Medium
years ago Planning is
Procedure
Flexibility / Inflexibility
Long Range
Rule
Economical / excessively
costly
Perpetual

PLANNING PROCEEDS ALL THE

FUNCTIONS OF MANAGEMENT

3.

Identify
Premises
(Premises/assumptions)
Management should consider
The process of Organizing
controllable factors/premises
i.e., salary level, program
1. Establish what is to be
responsibilities
and
accomplished
uncontrollable factors such as
2. Determine the type of
economic
conditions
and What kind of
work that needs to be
political climate.
Organization
accomplished
4. Survey Resources
3. Assessing
human
All
resources
with Structure
resources
limitations.
4. Assessing
physical
5. Establish Policies
resources requirements
Policies
are
defined
as
5. Grouping the functions,
substitute of common sense
helps us to know
physical resources into an
i.e., company policy market
organizational structure
policy, recruitment policy etc.
What kind of people
6. Assigning the obligation
6. Choose
alternative
and
to perform a certain job
we need and when
take action.
(responsibility) and right
7. Create
Procedures
and
Necessary for
to make decisions or take
Rules
action to accomplish job
8. Establish Budgets
7. Assigning specific work
PLANS
9. Establish
Time-tables
activities
(ASAP=
as
soon
as
Objectives
In order and
to assume success of
8. Determining if the job
possible
in
meaningless)
Plans
was
accomplished
how to achieve
10. Decide
on
Standards
(accountability
of
(Standards Performance
them
personnel)
Results, Quantity-Quality,
How most effectively
Time-Cost)
Organizing
includes
the
to lead and
direct
Ten reasons for failure
following activities
1. Corporate planning is not
people
integrated into the total
1. Determining,
grouping
management system.
and structuring activities
2. Planning
is
not
2. Devising and allocating
systematic,
lack
of
roles
arising
from
understanding of different
grouping and structuring
dimensions of planning.
direction
activities
3. Management at all levels
3. Assigning
accountability
is
not
involved
in
for results to both groups
planning.
and individuals
4. Responsibility for planning
4. Determining
detailed
is vested only in planning By furnishing
rules and systems of
department.
standards of control
working including those
5. Management
assumes
for
communication
that as it is planned, it
decision
making
and
will come true.
conflict resolution.
6. Too much is attempted at
5. Organization / efficient
one time.
organization
7. Management plans its
P. Drucker says
work but fails to work its
Plans as the foundation
that
an
plan.
management
Institute/organiz
8. Extradition and financial
ation is like a
planning are confused
PLANNING PROCESS
tune, it is not
with planning.
1. Choose Objectives
constituted
by
9. In-adequate information
Peter Drucker (1974) argues
individual sounds
inputs are used.
for choosing objectives:
but by relation
10. Too much emphasis is
1. Market Standing
between
them.
placed on any single
2. Innovation
So organization
aspect
of
planning.
3. Productivity
is an orchestra
4. Physical Resources
working all team
5. Financial Resources
members
6. Profitability
together.
ORGANZING FOR
7. Human Organization
6. The
Team
V/S
The
ACTION
8. Social Responsibility
function
Objectives are needed in
Organizations
Definition and Concept
every
area
where
have
both
performance
and
results
functional
and
1. Organizing is an activity
directly and vitally affect the
team
of
Management
in
survival and prosperity of the
characteristics
arranging people, tasks
business.
having
and resources.
2. Communicate Objectives
Marketing,
2. Organizing is a process of
To
all
concerned
in
Production,
people working together
organization, e.g.,
Engineering,
towards their common
a. Top
Management
Finance,
goals.
with stress on overall
Personnel
and
3. Organization is defined as
picture
of
profit,
other
functions
two or more people
public,
stockholder
and all functions
working together in a
satisfaction.
are assigned to
coordinated manner to
b. Production
people
groups of people
achieve groups results.
with
their
targets
known as Team
4. Organizing
is
the
cheaper and faster.
work.
establishing of effective
c. Marketing personnel
behavioral
relationships
for
quotas,
among persons so that
businesses
and
7. The Basic elements of
they may work together
commission.
Organization.
effectively
and
gain
d. Finance
folk
for
William Scott has
personal satisfaction in
dividends, interest.
identified
four
doing
selected
tasks
e. Supervisory
factors
termed
under
given
personnel

for
as
basis
of
environmental conditions
satisfying
classical
for
the
purpose
of
management
and
organization
achieving some goals or
keep
workers
theory:
objectives.
working
f.
The workers

i.

Division
of Labor
or
specializ
ed
effort.
The
Neg
ativ
e
sid
e of
spe
ciali
zati
on
job
mo
re
rou
tine
,
me
ani
ngl
ess
,
mo
not
ony
,
bori
ng
etc,
sou
rce
of
diss
atis
fact
ion.
Me
asu
res
to
red
uce
frus
trat
ion
Job
enl
arg
em
ent

opp
osit
e of
divi
sio
n of
lab
or
whi
ch
add
s
mo
re
par
ts
of
job
to
be
perf
or
me
d.
Job
Rot
atio
n
The
par
tici
pati
on
app
roa
ch,
wor
ker

ii.

s to
par
tici
pat
e in
dec
isio
n
ma
kin
g
Scalar
and
function
al
Process
or
the
chain of
comma
nd
Bas
ed
upo
n
ass
um
ptio
n
tha
t
the
re
is
cha
in
of
co
mm
and
thr
oug
hou
t
the
org
ani
zati
on,
e.g.
top
to
bot
tom
ma
nag
em
ent
dec
isio
ns.
Del
ega
tion
in
scal
ar
pro
ces
s.
OD
onn
el,
stat
e
fact
ors
for
effe
ctiv
e
del
ega
tion
a.
Rece
p
t
i
v
e
n
e
s
s

6
(
g
i
v
e
c
h
a
n
c
e
o
f
o
t
h
e
r
s

i
d
e
a
s
)

b.
Willin
g
n
e
s
s
t
o
l
e
t
g
o
(
t
o
g
i
v
e
p
o
w
e
r
o
f
d
e
c
i
s
i
o
n
t
o
s
u
b
o
r
d
i
n
a
t
e
s
)

c.
Willin
g
n
e
s
s

t
o
l
e
t
o
t
h
e
r
s
t
o
m
a
k
e
m
i
s
t
a
k
e

d.
Willin
g
n
e
s
s
t
o
t
r
u
s
t
s
u
b
o
r
d
i
n
a
t
e
s
e.
Willin
g
n
e
s
s
t
o
u
s
e
b
r
o
a
d

iii.

c
o
n
t
r
o
l
s
Span of
Control
or Span
of
Manage
ment
The
phe
no
me
non
tha

t
the
re
is a
limi
t to
the
nu
mb
er
of
per
son
s a
ma
nag
er
can
sup
ervi
se,
eve
n
tho
ugh
this
limi
t
vari
es
dep
end
ing
on
situ
atio
n
and
the
co
mp
ete
nce
of a
ma
nag
er;
the
vari
ous
situ
atio
ns,
or
und
erly
ing
vari
abl
es,
incl
ude
tim
e
ava
ilab
le
for
sup
ervi
sio
n;
trai
nin
g
pos
ses
sed
by,
and
req
uire
d
of,
sub
ordi
nat
es;
clar
ity
of
aut
hori
ty

iv.

del
ega
tion
s;
clar
ity
of
pla
ns;
rate
of
cha
nge
in
an
ent
erp
rise
;
effe
ctiv
ene
ss
of
ma
nag
eria
l
con
trol
s;
effe
ctiv
ene
ss
of
co
mm
uni
cati
ons
tec
hni
que
s;
and
the
ext
ent
to
whi
ch
a
situ
atio
n
req
uire
s
per
son
al
fac
etofac
e
con
tact
.
Oft
en
refe
rre
d to
as
sp
an
of
con
trol
.
Structur
e + Size
and
Comple
xity
which
makes
up
Busines
s

Organiz
ation

CONCEPTS OF
CONTROLING

8
2.

Loading assigning work

to machine or department
DPARTMENTATION BY
in advance
1. CONCEPT
FUNCTION
3. Scheduling determines
1. Effective
Controlling
OR
time
at
which
each
assists in the effort to
ORGANIZATIONAL
operation takes place
regulate
the
planned
STRUCTURE BY FUNCTION
4. Estimating in advance
performance to assure
cost of production
that performance takes
5. Dispatching process of
place as planned.
ordering work to be done
2. According to Koontz and
6. Expediting follow-up and
ODonnell, the managerial
checks whether plans are
function of controlling is
executed
the measurement and
PRESIDENT
b. Inventory Control
correction
of
the
Deals with:
performance of activities
1. Raw Materials
of subordinates in order
2. Work in process
to
make
sure
that
3. Finished goods
enterprise objectives and
Finance
Marketing
Production
Engineering
Personnel
Following
questions are to be
the plans devised
to
answered
by
Inventory
attain them are being
Controller:
accomplished. It is thus
1. What
is
optimum
the function of every
amount of inventory
manager, from president
to carry?
to foreman.
2. What is economic lot
3. According
to
Robert
size for an order?
Mockler, controlling is a
DEPARTMENTATION BY
3. What
is
record
systematic
effort
by
PRODUCT
system for showing
business management to
OR
inventory in hand?
compare performance to
ORGANIZATIONAL STRUCTURE
c. Quality Control
predetermined standards,
BY PRODUCT
To
keep/maintain
quality
plans, or objectives to
standard of the product.
determine
whether
By conducting tests.
performance is in the line
d. Financial Control
with these standards and
VICE PRESIDENT
Budges, Profit Loss and Return
presumably to take any
MARKETING
on Investment.
remedial action required
5. BUDGETS:
to see that human and
a. Budgeting is tool to
other corporate resources
achieve goals:
are being used in the
i.
Revenue
and
most
effective
and
expenses budgets
efficient way possible in
Stereo System
ii. Time, space, material
achieving
Radio Products Division
Television Products
Division corporate
Product Division and product budgets
objectives.
iii. Capital expenditure
budgets
Control Process
iv. Cash budgets and
1. Establishing
the
v. Balance
sheet
standard
budgets
performance
DEPARTMENTATION BY
2. Measuring
the
CUSTOMER
performance
OR
b. Break-even analysis
3. Comparing
the
ORGANZATIONAL STRUCTURE
performance
with
BY CUSTOMER
standard
Total Revenue
4. Correcting
unfavorable deviation
VC
by means of remedial
action.
B.E.P
Measuring
Vice President
Marketing
1. Total Achievements
Profit
2. Output per Direct
Labor
2. PHASES OF CONTROL
Total
Control activity can take
Cost
picture Division
of three points: Consumer Products Division
Industrial Product Division
Govt. Product
Revenue
Loss
before, during and after.
Thus you can prevent the
problem, deal with the
F.O.
problem or see that
problem doesnt happen
again.
Cost
1. Pre-Control
DEPARTMENTATION BY
(Preventive
GEOGRAPHIC TERRITORY
Maintenance)
OR
2. Concurrent controls
ORGANIZATIONAL STRUCTURE
take
place
while
BY GEOGRAPHIC TERRITORY
activity continues
3. Post-Control
(poor
approach
but
common)
4. Correction
of
deviations (to make
corrections
in
incorrect procedure,
VICE PRESIDENT MARKETING
c. Ratio
Analysis
(In
the sooner original
comparing growth rates,
goal
can
be
ratio analysis is helpful.
achieved).
i.
Check list of Financial
3. TYPES OF CONTROL
Ratio Analysis
a. PRODUCTION CONTROL
Southern Region
Western
Region CONTROL Eastern Region
b. INVENTORY
1.
Liquidity Ratio
(measuring ability of firm to meet its
c. QUALITY CONTROL
d. FINANCIAL CONTROL
Current Ratio
a. Production Control
Consists of Six Functions:
Acid Test Ratio
1. Routing Sequence Path
of
Flow
of
material
CHAPTER 07
Cash Velocity
through
series
of
operations

9
Inventory to net working capital

2.

Leverage Ratios (Measuring contribution of financing by ownersPlus

compared with financing provided by creditors)
Debt to Equity
Coverage of fixed charge
Current liability to net worth
Fixed assets to net worth

3.

Activity Ratios

(measuring the effectiveness of the employment of resources)

Inventory Turnover
Net working capital turnover
Fixed assets turnover
Average Collection period
Equity capital turnover

Essentially, ROI is determined by dividing total

investment into earnings to determine a
percentage
rate
of
return
(200,000 500,000 =.40). This more complex
method provides a fuller explanation of how
this figure is determined. Incidentally, a ROI of
40% is fantastic. You might want to buy stock
in this firm. What other conclusions can you
draw about it?

Total Capital turnover

4
.

Profitability Ratio

(indicating degree of success in achieving desired profit levels)

Gross Margin
Net operating margin

InventoriesSales margin
100,000

Sales
1,000,000

Productivity of assets

Turnover
2.0

Return on capital
Net profit on working capital

Accounts
Working capital
Receivable
200,000
50,000
c. Return on Investment.
Figure: The concept
return on investment.

Cash
50,000
Plus

Total investment
500,000

of

Permanent
Investment
300,000

Divided by
Product Cost
500,000

Sales
1,000,000
Plus

Earnings
200,000

Plus
Multiplied by=

Selling Expense
150,000

Earnings as percent
of sales
20%

Cost of Sales
800,000

Sales
1,000,000
Plus
Minus
Delivery Expense
50,000

Divided by
Administration
expense
100,000

Plus

5.
DIRECT
MANAGEMENT
CONTROL (Control by Manager)
It
is
based
on
four
assumptions:
1. Trained Managers make
few errors
2. Managerial activities can
be reduced
3. Principles of Management
can serve clear standard
for
comparison
with
status quo.
4. Manager with expertise
following
good
management rules.
6.
DIRECT CONTROL (Through
key Result Areas: Eight Areas)
1.
2.
3.
4.
5.
6.
7.
8.

Competence
gains
authority.
e.g,
Professor holds both
formal
and
acceptance authority
on
the
basis
of
competence.

3. Authority Relationships
(Can make departments and
delegation)

Types of authority
relationships (Line
staf
and
functional)
1.

Profitability
Market Position
Productivity
Product Leadership
Personnel Development
Employees Attitudes
Public Responsibility and
Balance between short
and long-range goals

7.
CHARACTERISTICS OF A
GOOD
CONTROL
SYSTEM
(Koontz & ODonnell)
1. Controls must reflect the
nature of activity
2. Controls should report
deviations promptly
3. Controls should focus on
the future
4. Controls should point up
exceptions
at
critical
points
5. Controls
should
be
objective
6. Controls
should
be
flexible
7. Controls should reflect the
organized pattern
8. Controls
should
be
economical
9. Controls
should
be
understandable
10. Controls
should
avoid
obsolescence
11. Controls
should
seek
employee commitment
12. Controls
should
seek
rapid feedback
13. Controls should indicate
corrective action
CHAPTER NINE
THE QUESTION OF AUTHORITY
1.
2.
3.
4.
5.

Sources of Authority
Competence Authority
Authority Relationships
Dangers in Using Staf
The Future of Authority

What is Authority?
1. Sources of Authority

Formal
authority
theory (obedience or
compliance is natural
consequence
of
authority)

Pure
acceptance
theory (The soldier
has
to
obey
commands
as
alternative is firing
squad)
2. Competence Authority

Besides formal and

acceptance authority,
the authors argue
that
competence
authority is the type
bestowed
on
individuals, who have
obvious expertise in
their
field,
e.g.,
engineers,
economists,
and
doctors is called good
example
of
acceptance theory.

2.

3.

Line
Relationships:
are those that
deal with basic
process of the
business
(i.e.,
production, sales
and
finance
under this, He or
She
receives
orders
from
above and gives
orders to those
below.
Thus
supervisor
exercises direct
supervision over
subordinates in a
direct
line
relationship.
Staf
Authority:
(service
or
support Staf)
under
this,
Manager can not
give orders to
other
departments

staff
managers
have
a
few
subordinates and
they give few
orders. The task
of Staff Manager
is
to
assist,
advise and do
any
thing
to
facilitate
the
work but not by
direct command.
Functional
Relationships:
(Project
Approach
in
business
and
government)
e.g.
line
authority of the
President

10

Authority after
Delegation

Financial
Procedures

Director
Finance

Manager
Western
Division

4. Dangers in Using Staf:

(Staff departments are necessary
for success of organizations)
Datton (1966) identified several
limitations
for
use
of
staff
functions:
1. Tending to undermine line
authority
2. Allowing both line and
staff to shift blame to the
other
3. Making
impractical
recommendations
4. Causing
management
complications
and
disunity of command
5. Failing to understand the
different
authority
relationships of line and
staff
6. Giving advice that is
ignored by line managers
7. Making recommendations
which
are
unrealistic,
obscure, erroneous and
indecisive
8. Trying to take credit for
the success of line
managers who follow staff
recommendations.
5. The Future of Authority
(Should be different than the past
due to increased challenges, and
technological development)
CHAPTER 12
COMMUNICATION
The Idea Transplant

1.
2.
3.
4.
5.
6.
7.
8.
9.

The Process
The Pitfalls
No Panaceas
Media
to
carry
Messages
Philosophies
of
Communications
Transactional Analysis
the Ups and Downs of
Communication
Communication
Systems
The
Cs
of
Communication

1. THE PROCESS

The person with the idea

i.
Decides to
share. Next the idea is
encoded
ii.
Into some
form of written, Purchasing
spoken
Personnel
or
otherwise
Procedures
Procedures
communicable
language capable of
being transmitted
iii.
By
symbols, sounds or
expression to receiver
iv.
Ready
to
receive the message
Director
Director
which can be affected
Personnel
Purchasing
by
environmental
noises
and
other
distractions
2. The Pitfall
Common
pitfall
for
communicator
is
assumption that because a
message was sent, a
Manager
message
must have been
Central
received.
The
greatest
enemy Division
of communication
is the illusion of it.
Every
time
you
communicate message, at
least
six
different
messages can come to life;
1. the
message
you
intend to send
2. the
message
you
actually send
3. the message the other
person receives
4. the
other
persons
interpretation of what
was received
5. the
other
persons
response
6. the difference between
the response expected
and
the
response
received
3. NO PANACEAS
It is well known that
communication is problem
communication may be
effective, correct efficient
or
poor,
vague
and
incorrect.
Thus
poor
communication
affects
business performance. For
example,
here
is
a
difference between right
word and almost the right
word this can make a
considerable difference.
Of
course
each
new
method of communication
proclaims itself to be the
long
awaited
cure

all. The Panacea

for our all pitfalls and
misunderstanding.
Questions
helpful
in
communication process.

What is idea?

Who is the one to

whom the idea is
directed?

What channels will

carry the message
most clearly to
that person?

What factors are to

distort
the
message?

How can I avoid

those directions?

How will I be able

to feel if they have

11
received
correct idea?

the

4. MEDIA TO CARRY THE

Public
MESSAGES
RelationsMarshal
Mchuhaus
Procedures that the medium is
statement
the message.
Human
modes
of
processing information of a
communication include many
more than we usually consider:
1. Thinking:
is
most
important
process
but
Director
often
Publicis over looked within
the
modes
of
Relations
communication people
immediately identify the
sending modes.
2. Action: like Umpire. Actions
speak louder than words.
3. Observation:
Freud
suggested that people all
tend to practice selective
Manager
reception,
seeing
only
Eastern
those incidents or parts of
Division
incidents that they want to
see.
4. Speaking: the average rate
of speaking is 125 words to
200
per
minute.
The
objective
should
be
accomplished with fewer
words; Fewer words take
less time and have a less
opportunity to confuse the
issue
5. Listening: See Table 12.1 P260.
6. Writing: it is relatively
small % out of total
communication, but is the
most important mode of
communication.
7. Reading
5.
PHILOSOPHIES
OF
COMMUNICATION
Four Philosophies of
communication:
i. The
Developmental
Communicator Two
way communication is
good
for
developmental
communicator.
ii. The
Controlling
Communication one
way
communication,
no alternative. They
assume
that
their
ideas are best.
iii. The
Relinquishing
Communicator They
make few contributions
and allow other to
contribute
iv. The
withdrawn
communicator:
is
interested
in
maintaining Status
quo.
The
person
believes that nothing
can
be
done
to
improve the situation.
Style
1. Controlling

2. Relinquishin
g

Approach
I want to
have
the
most
influence.
(me)
I want to
give you the
influence.
(you)

3. Developme
nt

4. Withdrawn

I want to use
my influence
and yours to
solve
a
problem.
(us)
I want to
stay
uninvolved
and neither
exert
nor
respond
to
influence

6.
TRANSACTIONAL
ANALYSIS (TA)
Tom Harris has developed
transactional analysis in
his book I am o.k. You
are o.k.
Transactional Analysis is a
tool for helping us to
understand what happens
when any two persons
interact. According to this
theory, every one has
three typical modes of
behavior:
i. the parent ego state
ii. the adult ego state
iii. the child ego state
i.

The Child: feelings of

frustration,
helplessness
inadequacy exists in
childhood.
Brain contains
experience of job,
curiosity, imagination:
Thus child is called
felt concept of life
Carefree
himself
insecure but other is
ok.
ii. The
Parent:
Your
parents your mother,
father and other big
people
having
experience
of
your
early life.
iii. The Adult: is called
thought concept of
life in this age you
suggest alternatives to
a proposal rather than
reacting emotionally,
your adult has taken
charge:
The Three Faces of
Me:
a. I am not O.K. and
you are O.K.
b. I am O.K. and you
are
not
O.K.
(control
over
others & dominate
others)
c. I am not O.K. you
are not O.K.
d. I am O.K. and you
are O.K. (rational
life position adult
decision made by a
self
actualization
person).
7. THE UPS AND DOWN OF
COMMUNICATION
1. The chain of command
is assumed.
2. A grievance procedure:
to
be
heard
and
problem is solved.
3. a complaint system
(suggestion Boxes /
Question Boxes)

Counseling: to avoid
costly cure
5. Questionnaires: about
morale & other topics
and contribution in
future
6. The open door policy:
always talked but less
applied
7. An exit interview
8. The
grapevine:
provides
accurate
information and avoids
irrelevant things.
9. Labor representatives
10. An informer: has low
respect but may be
necessary for co.
11. Special meetings: can
be
helpful
for
betterment.
12. An Ombudsman
8.
COMMUNICATION
SYSTEM
1. Human System
2. Mechanical System

12

4.

human
side
Enterprise
X

Theor
y

Y
Theor
y

9.
THE
Cs
OF
COMMUNICATION
Murphys
Law
of
management if any thing can
go wrong, (it will) is applicable
in communication process:
1. Clarity
2. Completeness
3. Conciseness
4. Concreteness

concrete facts
5. Correctness
6. Cohesiveness
7. consistency

CHAPTER 13
The Mystique of
Motivation

1. X-Y Theory (McGregor)

McGregor theory X and
theory Y in his book The

Employee
s are lazy
Require
control
and
coercion
Avoiding
responsib
ility
Seeking
security
Employee
s
like
work as
rest
or
play
Not
require
control
and
coercion
Committe
d to the
organizati
ons
objective
s
Under
proper
condition
s,
they
not only
accept
but seek
more and
more
responsib
ility.

Sel

In other words, motivation is

a general term applying to the
entire class of drives, desires,
needs, wishes, and similar
forces. Likewise, to say that
managers
motivate
their
subordinates is to say that
they do those things which
they hope will satisfy these
drives and desires and induce
the subordinates to act in a
desired manner.

Theories of Motivation
1. X-Y Theory (McGregor)
2. Maslows Hierarchy of
Needs Theory
3. Herzbergs Two Factors
Theory
4. Alderfers ERG Theory

the

2.
Maslows Hierarchy of
Needs

As Berelson and Steiner have

defined the term, a motive is
an inner state that energizes,
activates, or moves (hence
motivation), and that directs
or channels behavior toward
goals.

Motivation
is
defined
as
feeling inside the body to do
something or not to do
something for achievement of
goal voluntarily.

of

1.

2.

3.

4.

Lov

Physiological
Needs: Need for
food, sleep, shelter
etc.
Safety
Needs:
Safety of job or
safe
working
environment, free
from threats.
love
/
Social
needs affection
with
colleagues
and family
Esteem Need
Self respect, self-

esteem
and
esteem of others
5. Selfactualization

self-confidence,
self-fulfillment
3. Herzbergs Motivation
Hygiene theory
200
engineers
and
accountants were studied
and asked to recollect their
experiences when they
were
satisfied
and
dissatisfied and concluded
that certain factors tended
to lead to job satisfaction
and other factors led to
dissatisfaction.
The
factors
led
to
satisfaction
called
Motivators
The
factors
led
to
dissatisfaction
called
hygiene factors
Motivators:

Achievement

Recognition

Work itself

Responsibility

Advancement
(Positive effects)

Led to satisfaction
Hygiene factors

Company Policy &

Administration

Supervision
Technical Aspects

Salary

Interpersonal
Relations

Supervision

Working Conditions

Prevented
dissatisfaction:
Hygiene
Motivation
Factor
Factor
Company
Achievement
Policy &
s
Administration
Supervision
Recognition
Salary
Work itself
Interpersonal
Responsibility
relations
Working
Advancement
Conditions
Hygiene Factor
Motivation
led to prevent
factor led to
dissatisfaction
satisfaction
4.

Alderfers
ERG
Theory
Clayton Alderfer responded
to some of the criticisms of
Maslows
work
by
conducting his own study
of
human
needs.
He
defined
three
basic
categories of needs:
1. Existence needs the
need for physical wellbeing.
2. Relatedness needs
the need for satisfying
interpersonal
relationships.
3. Growth needs the
need for continuing
personal growth and
development.
Alderfers ERG theory is
similar to Maslows theory
except in three major
respects.

First, Alderfer
identified only

three orders of
human needs,
compared
to
Maslows five
orders.

Second,
in
contrast
to
Maslow,
Alderfer found
that
people
sometimes
activate their
higher-level
needs
before
they
have
completely
satisfied all of
their
lowerlevel needs.

Third, Alderfer
concluded that
movement in
his hierarchy of
human needs
is not always
upward.
For instance and this
is reflected in his
frustration regression
principle he found
that
a
worker
frustrated by his failure
to satisfy an upperlevel
need
might
regress by trying to
fulfill
an
already
satisfied
lower-level
need.
Alderfers
work,
in
conjunction
with
Maslows,
has
implications
for
management.
Employees frustrated
by work that fails to
provide opportunities
for
growth
or
development on the
job might concentrate
their energy on trying
to make more money,
thus regressing to a
lower level of needs. To
counteract
such
regression,
management
might
use job enrichment
strategies designed to
help people meet their
higher-order needs.

CHAPTER 15
TRAINING &
DEVELOPMENT FOR
TOMORROW
What is training?
concept)

(The

ADVANTAGES OF TRAINING
1. Increased
Executive
Management Skills
2. Development
in
each
Executive
of
board
background
and
appreciation of overall
companys
operations
and objectives.
3. Greater
delegation
of
authority because lower
executives can take the
responsibilities.
4. Creation of a reverse of
qualified
personnel to
replace the old ones.
5. Improved selection for
promotion.
6. Minimum delay in staffing
new positions.

13
7.

Combination of youth and

experience
in
topmanagement.
8. Improved
executive
morale.
9. Attraction to company of
ambitious people who
wish to move ahead
rapidly.
10. Increased
effectiveness
and
reduced
costs
resulting
in
greater
assurance of continued
profitability.
TYPES OF TRAINING
1. On-the-Job Training
2. Vestibule Schools initial
training in a class room of
semi-skilled and clerical
workers (bank clerks /
Machine Operators)
3. Apprenticeship Programs
higher level of skills,
e.g., Engineering
4. Internship
Training:
students undertake this
type of training.
5. Special
Courses
/
Teaching Machines
6. Class room Instructions
7. Retraining
STAGES
IN
DESIGNING
TRAINING PROGRAM
1. Set
overall
training
objectives
2. Select relevant training
material
3. Decide training methods
4. Assess
training
time
periods
5. Construct the time table
6. Brief the trainer
7. Monitor
and
evaluate
training
WHAT CAUSES CHANGE?
1. Environment
(business,
economy, climate world
conditions
etc.
govt.
regulations, competition,
changes in morals and
values of the society
fashion)
2. Technological
Developments
3. Organizational
change,
size, board level.
4. Managerial
change
is
important type of change.
Managers are source of
many
changes
that
managers face.
WHAT CAUSES RESISTENCE TO
CHANGE?

Economic factors, workers

resist
automation
because they fear loss of
jobs.

Inconvenience

Uncertainty

Threats
to
social
relationships

Resentment of control
REDUCING
RESISTING
TO
CHANGE
1. Recognize the social and
psychological factors in
change.
2. Participation
brings
support.
3. Authority of Trust
4. Force-Field Analysis (to
increase pressure to gain
accept change force field
situation can be inspiring
for managers who are
confronted
with
resistance.
5. Make
only
necessary
changes.
STEPS OF CHANGE

Unfreezing: willing to
learn and change.
Changing: takes place
when
there
is
identification
or
(internationalization)
is
the process of trying,
adopting and using new
attitudes or techniques.
Refreezing:
is
final
acceptance
and
integration of the desired
attitudes.

SPECIFIC
TRAINING
TECHNIQUES
1. Lecture
2. cases
(Case
Study
Method)
3. Incidents:
shorter
description of a situation
(two pages short case /
simple cases)
4. Role Playing participants
play different roles (10-30
minutes) under guidance
of trainers.
5. Self-Development
Programs
a. Programmed
learning
and
reading
assignments
in
management,
development
Seminars
b. Reading
materials
6. Group
Dynamics

Leadership
Techniques,
Techniques
of
communications, conflict
is involved in training
program

individual
decisions and then asked
to work in groups of 5 and
reach consensus.
7. Simulation Exercises: to
create a situation and
handle it like a real one
e.g., computerized games
MANAGEMENT DEVELOPMENT
Creativity and innovation are
required
in
Management
Development Programs.
1. Planned
Progression:
young manager receives
an idea about path to the
top (promotion)
2. Job Rotation: popular form
of
training
in
management (but more
disadvantages
than
advantages)
3. Assistants to Positions
4. Serving on Committees
5. Junior Boards
6. Outside
Experiences:
conferences,
formal
University
courses,
leading
speakers
at
conferences.
7. Psychological approaches:
young managers in selfanalysis and self training
via role playing, group
discussions.
ORGANIZATIONAL
DEVELOPMENT
(OD)
Organizational structure and its
flexibility
Diference
between
Management Development and
Organizational Development
1. Time
Frame:
Management Training is
short-term
and
Organizational
Development
is
permanent and flexibility
is encouraged to adopt
changes of technology
etc.
2. Need for specialists:
professionals
from
universities or consultants
to conduct management
growth sessions.

3.

4.

Continuity:
Organizational
Development needs to be
well planned, consistent
and settled in for the
duration.
Attitude
towards
change
Management
Development: approach
expects to change the
leader to solve problems
while
Organizational
Development approaches
problem from a systems
point of view i.e., every
fact of organization needs
to be considered.

FUTURE OF TRAINING

In year 2000, average

executive will spend one
day per week i.e., full
time study.

That average executive

will return to universities
for
formal
studies,
degrees, short courses
and seminars.

Development
of
Executive
MBA
Programs i.e., IBM insists
that
every
manager
should receive 40 hours
of Management Training
annually.

LEARNING TO LEAD
LEADERSHIP
Concept of Leadership:

According to Samuel
C.
Certo
the
leadership is the
process of directing
the
behavior
of
others towards the
accomplishment of
objectives. Directing,
in this sense, means
causing individuals
to act in a certain
way or to follow a
particular
course.
Ideally, this course is
perfectly consistent
with such factors as
established
organizational
policies, procedures
and job descriptions.
The central theme of
leadership is getting
things accomplished
through people.
According to Coulter,
the leadership is the
process
of
influencing a group
towards
the
achievement
of
goals.
According to Koontz
and ODonnell the
leadership
is
generally
defined
simply as influence,
the art or process of
influencing
people
so that they will
strive
willingly
towards
the

14
achievement
of
group goals. This
concept
can
be
enlarged to imply
not only willingness
to work but also
willingness to work
with
zeal
and
confidence.

LEADER
TASKS/GOALS
Skills
Knowledge
FIG.
Personality
The Key Leadership
Variables ENVIRONMENT
SUBORDINATES
Skills
/ SITUATION
Motivation
Leader
According to coulter the
leader is someone who can
influence others and who
has managerial authority.
Types of Leaders
1. Charismatic
leader
(whose
influence
springs
mainly
from
personality
e.g.,
Napoleon,
Hitler,
Churchill, Billy Graham
and others)
2. Traditional
leader
(whose
position
is
assured by birth e.g.,
kings, queens and tribal
chieftains)
3. Situational
leader
(whose influence can
only be effective by
being in the right place
at the right time.
4. Appointed
leader
(whose influence arises
directly
out
of
his
position
e.g.,
most
managers
and
supervisors)
5. Functional
leader
(who
secures
their
leadership position by
what he or she does,
rather than by what
they are)
What is Power?
Power is capacity to effect the
decision.
1. Legitimate Power
Legitimate power represents
the power a leader has as a
result of his or her position in
the organization.
2. Coercive Power
The power a leader has
because of his or her ability to
punish or control.
3. Reward Power
The power a leader has
because of his or her ability to
give
positive
benefits
or
rewards.
4. Expert Power
Influence thats based on
expertise, special skills, or
knowledge.
5. Referent Power
Power that arises because of a
persons desirable resources or
personal traits.

Leadership Theories

1.
2.
3.
4.

Trait Theory
Style Theory
Behavioral Theory
Contingency Theory
1. Trait Theory: The
trait approach to
leadership is based
on early leadership
research
that
seemed to assume
that a good leader is
born, not made. The
mainstream of this
research attempted
to
describe
successful
leaders
as
precisely
as
possible.
The
reasoning was that,
if a complete profile
of the traits of a
successful
leader
could be drawn, it
would be fairly easy
to
identify
the
individuals
who
should and should
not be placed in
leadership position.
Many of the early
studies
that
attempted
to
summarize the traits
of successful leaders
were
documented.
One
of
these
summaries
concludes
that
successful
leaders
tend to possess the
following
characteristics:
a. Intelligence,
including
judgment and
verbal ability.
b. Past
achievement
in scholarship
and athletics.
c. Emotional
maturity and
stability.
d. Dependability
, persistence,
and a drive
for continuing
achievement.
e. The skill to
participate
socially and
adapt
to
various
groups.
f. A desire for
status
and
socioeconomi
c position.
Evaluations of these
trait
studies,
however,
have
concluded that their
findings
are
inconsistent.
One
researcher says that
50 years of study
have
failed
to
produce
one
personality trait or

set of qualities that

can
be
used
consistently
to
discriminate leaders
from nonleaders. It
follows, then, that
no
trait
or
combination of traits
guarantees
that
someone will be a
successful
leader.
Leadership
is
apparently a much
more complex issue.
Contemporary
management writers
and
practitioners
generally agree that
leadership
ability
cannot be explained
by an individuals
traits or inherited
characteristics. They
believe, rather, that
individuals can be
trained to be good
leaders.
In other
words, leaders are
made, not born. That
is why thousands of
employees
each
year
are
sent
through leadership
training programs.
2. Style
Theory:
(Authoritarian Style,
Democratic
Style)
The interest in the
human
factor
at
work
which
was
stimulated by the
researchers
of
Human
Relations,
and taken up by the
social psychologists
who followed them,
led logically to an
interest
in
leadership as an
aspect of behavior
at work, rather than
of
personal
characteristics since
the
1950s,
in
particular,
several
theories
about
leadership,
or
management, style
have
been
put
forward. These have
tended
to
be
expressed in terms
of
authoritarian
versus
democratic
styles, or people
orientation
versus
task orientation. In
some cases, despite
acknowledged
inconsistencies
in
the
theories
themselves,
style
has led to quite
useful devices for
improving
training
for leadership.
AuthoritarianDemocratic: Three
examples of this

15
approach
to
management
style
are as follows:
a. D.
McGregors
Theory
X
manager

tough,
autocratic
and
supporting
tight controls
with
punishmentreward
systems the
authoritarian.
The
contrasting
style is that
of the Theory
Y manager
benevolent,
participative
and believing
in
selfcontrols the
democrat.
These styles
flow from the
assumptions
about people
that are the
original basis
of Theory X
and Theory Y.
b. Rensis
Likerts four
management
systems:
System 1
the
exploitiveauthoritative
system,
which is the
epitome
of
the
authoritarian
style.
System 2
the
benevolentauthoritative
system,
which
is
basically
a
paternalistic
style
System 3
the
consultative
system,
which moves
towards
greater
democracy
and
teamwork.
System 4
the
participativegroup
system,
which is the
ultimate
democratic
style.
3.
Behavioral
Theories:

dramatize this concern. This

grid, shown below has been
used widely throughout the
world as a means of
managerial training and of
identifying
various
CONCLUSION
combinations of leadership
Democratic styles.

Leadership theories that identified

behaviors that differentiated effective
leaders from ineffective leaders.
There are four main leader behavior
studies. The major leader behavior
dimensions and the conclusions are:

University
of Iowa

Ohio State

BEHAVIORAL
DIMENSION
Democratic
Style: involving
subordinates,
delegating
authority, and
encouraging
participation
Autocratic
Style: dictating
work methods,
centralizing
decision
making,
and
limiting
participation.
Laissez-faire
style:
giving
group freedom
to
make
decisions and
complete work

University
of
Michigan

Managerial
Grid

style
of
leadership was
most effective,
although later
studies
showed mixed
results.

Consideration
:
being
considerate of
followers ideas
and feelings
Initiating
structure:
structuring
work and work
relationships to
meet job goals

High-high
leader (high in
consideration
and high in
initiating
structure)
achieved high
subordinate
performance,
and
satisfaction,
but not in all
situations.

Employee
oriented:
emphasized
interpersonal
relationships
and taking care
of employees
needs
Production
oriented:
emphasized
technical
or
task aspects of
job

Employeeoriented
leaders were
associated
with high group
productivity
and higher job
satisfaction.

Concerns for
people:
measured
leaders
concern
for
subordinates
on a scale of 1
to 9 (low to
high)
Concern
for
production:
measured
leaders
concern
for
getting
job
done
on
a
scale of 1 to 9
(low to high)

Leaders
performed best
with a 9.9 style
(high concern
for production
and
high
concern
for
people).

The
Managerial
Grid
One of the most widely
known
approaches
to
dramatizing
leadership
styles is the managerial
grid, developed some years
ago by Robert Blake and
Jane Mouton. Building on
previous
research
that
showed the importance of a
managers having concern
both for production and for
people, Blake and Mouton
devised a clever device to

16

depending
on
circumstances.
High
b. Task functions, directed
1.9 Management Thoughtful attention to needs of people leads to a friendly and comfortable organization atmosphere and work
towards
task
needs,
tempo9.9 Management Work accomplished is from committed
peopleactivities
with interdependence
through a common stake in organization
include
such as
the setting
objectives,
purpose and with trust and respect5.5. Management Adequate
performanceofthrough
balance of work requirements and maintaining
the planning of tasks, the
satisfactory morale.1.1 Management Exertion of minimum effort is required to get work done and sustain organization morale9.1
allocation
of
Management Efficiency results from arranging
work in such away that
human
elements have little effect
responsibilities
and
the
setting
of
appropriate
standards of performance.
c. Group
maintenance
functions, directed towards
group
needs,
include
activities such as teambuilding and motivation,
Low 1
2
3
communication, discipline,
4
5
and
acting
as
group
6
7
representative to others
8
9 High
outside the boundaries of
the unit.
Concerned for
d. Individual
maintenance
production
functions, directed towards
the needs of individuals,
include activities such as
coaching,
counseling,
motivation
and
development.

4. Contingency Theory
Functional, or Action-centered
Leadership. This concept of
leadership was developed in
the
United
Kingdom
by
Professor John Adair. It is based
on the theory that leadership
is
more
a
question
of
appropriate behavior than of
personality or of being in the
right place at the right time.
Adairs model of leadership
below
incorporates
the
concern for task and concern
for people that has featured in
all the theories which we have
just mentioned. The functional
model, however, distinguishes
the concern for individuals
from the concern for groups,
and stresses that effective
leadership lies in what the
leader does to meet the needs
of task, group and individuals.
The key features of the
functional
model
can
be
summarized as follows:
a. Task, Group and Individual
Needs are fulfilled in the
context
of
a
total
leadership situation. The
circumstances
of
each
situation affect the priority
which attaches to each
area of needs. An effective
leader is one who is aware
of these priorities and who
can act accordance with
them. For example, in a
situation of great urgency
task
needs
must
predominate over group
and individual needs. In
another situation, such as
the re-building of a football
team, it is group needs
which must come first,
then individual needs with
task needs last. The model
thus encourages a flexible
style of leadership, which
may be relatively taskoriented or group-oriented
or
individual-oriented,

Task Needs

Group
Needs
Individ
ual
Needs

17