MGT503 Principle of Management Short

By Sonu Ilyas Mughal

Lecture No.23 to Lecture No.45 for Final-Term Exam

Types of Planning?
Informal Planning
1. Nothing is written down
2.Little or no sharing of goals
3.General and lacking in continuity

Formal Planning
1.Written and defined specific goals
2.Specific action programs exist to achieve goals

Approaches to Planning
Inclusive Approach
Employees at each level develop plans suited to their needs
Employees acquire greater sense of the importance of planning when they
participate in the process
The planning process ‘Setting goals and developing plans that leads to goal
attainment and ultimately, to organisational efficiency and effectiveness.’

How Do Managers Plan?

Steps in Goal Setting
1 - Review the organization’s mission
2 - Evaluate available resources
3 - Determine the goals individually or with input from others
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 4.Should be congruent with the organizational mission and goals in other
organizational areas
5- Write down the goals and communicate them to all who need to know them
6- Review results and whether goals are being met
The planning process
Mission
The organisation’s purpose or fundamental reason for existence.
Goal
Future target or end result an organisation wishes to achieve.
Plan
Means devised for attempting to reach a goal.
Organisational Mission
Mission statement may:
Be unwritten.
Address customers,
products/services, location,
technology, concern for survival,
concern for public image,
concern for employees.
Organisational Goals
Benefits of Goals
Increases Performance
Clarifies Expectations
Facilitates Control
Increases Motivation
Levels of goals
Top Managers Organisational Perspective
Middle Managers Departmental Perspective
1st level Managers Unit/individual Perspective
Goals and Performance

Key Aspects:
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 1.Goal Content
2.Goal Commitment
3.Work Behaviour
4.Other Process Components
5.Possible Problems

Goal Content
Content should be:
Challenging
Specific
Measurable
Attainable
Relevant
Time limited

Goal Commitment
Influenced by:
Supervisory Authority
Peer & Group Pressure
Public Display
Expectations of Success
Incentives & Rewards
Participation

Goals & Work Behaviour

Goals & Commitment affect
Work Behaviour:
Direction
Effort

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Persistence
Planning

Goals & other Process Components

Job process components

affect performance:
Job Knowledge & Ability
Task Complexity
Situational Constraints

Goals & Possible Problems

Possible Problems with Goals:
Excessive risk taking
Increased stress
Undermined self-confidence
Ignored non-goal area
Excessive short-run thinking
Dishonesty & cheating

Levels of Goals and Plans:

Operational
Tactical
Strategic

Linking Goals & Plans

Time span of Goals and Plans:
Short (Operational)
Intermediate (Tactical)
Long range (Strategic)

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 How to Make a Plan That Works Developing Effective Action Plans
Starting at the Top
A Corporation’s Mission Bending in the Middle Finishing at the Bottom
Linking Goals & Plans
Recurring use:
Single use
Standing Plans-
Policies,
Procedures,
Rules

Kinds of Operational Plans

Special-Purpose Plans
Management by Objectives (MBO)
‘Process through which specific goals are set collaboratively for the organisation
as a whole and every unit within it;
The goals are then used as a basis for planning, managing organisational
activities, and assessing and rewarding contributions.’

Steps in the MBO process:

1.Develop organisational goals
2.Establish specific goals for departments
3.Formulate action plans
4.Implement & maintain ‘self-control’
5.Review progress periodically
6.Appraise performance

Strengths:
1.Helps link goals & plans
2.Clarifies priorities, and
expectations
3.Fosters organisational
communication

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4.Builds member motivation

Weaknesses:
1.Needs strong, enduring commitment
2.Requires training of managers
3.May be misused (i.e. for punishment)
4.Risk of dominance of quantitative goals

Strategic Management
Large scale action plan for interacting with the environment to achieve long
term goals.

Concepts of Strategic Management

1.Strategic management process
2.Importance of strategic management
3.Levels of strategy
Strategic Management
Strategic Management Process:
‘Process through which managers Formulate and Implement strategies geared
to optimising strategic goal achievement, given available external and internal
environmental conditions.’
Strategy Formulation
1.Identify Mission & Goals
2.Competitive Situation Analysis (external & internal)
3.Develop / Formulate strategies to achieve identified goals
Strategic Management

Strategy Implementation
1.Implement Plans
2.Control / Monitor execution of Plans

Importance of Strategic Management

Important because:

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 1.Helps organisations to develop a competitive advantage (significant edge over
competition in dealing with competitive forces).
2.Provides a sense of long-term direction for organisation members.
3.Highlights need for innovation.
4.Process involves members and fosters understanding of goals/strategy.

What Would You Do?

You are Head of a Furniture Company…
The furniture industry is highly fragmented and You like to turn
this into opportunities!
What Would You Do?
You like to formulate strategies that include low prices and convenient
packaging.

Will the strategies work on a global basis?

How can You identify opportunities and threats, and select a competitive
advantage strategy?

A way of approaching business opportunities and challenges.

A comprehensive and ongoing management process aimed at formulating and
implementing effective strategies which align the organization with its
environment to achieve major organizational goals.

Importance of Strategic Management

1.Direction for Organization
2.Competitive Advantage
3.Builds Managers Commitment
4.Supports Innovation
The Basic Strategic Planning Process
The Components of Strategy
1. Distinctive Competence something the organization does exceptionally well!
2. Scope Range of markets in which the organization will compete
3. Resource Deployment. How an organization distributes its resources across
areas in which it competes

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 Competitive analysis in strategy formulation
SWOT analysis:
Method of analysing an organisation’s competitive situation involving
assessing organisational strengths (S), weaknesses (W), environmental
opportunities (O) and threats (T).

Environmental Assessment:

Five Competitive Forces Model (Porter)

Competitive Analysis in Strategy Formulation

1. Rivalry among Existing Firms
2. Bargaining power of Customers
3. Bargaining power of Suppliers
4. Threat of New Entrants
5. Threat of Substitute products/services within the Industry.

Levels of strategy
Corporate Level Strategy:
‘Type of strategy addressing what businesses the organisation will operate, how
strategies of those businesses will be co-ordinated to strengthen the
organisation’s competitive position, and how resources will be allocated
among businesses.’

Business Level Strategy:

‘Type of strategy concentrating on the best means of competing within a
particular business while also supporting corporate level strategy.’
Functional Level Strategy:
‘Type of strategy focussing on action plans for managing a particular functional
area within a business in a way that supports business level strategy.’

Competitive Analysis in Strategy Formulation

Before managers devise an effective strategy for getting a competitive edge, they

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 must analyse the organisation’s competitive situation.
This is done through:
Environmental analysis (external)
Organisational assessment (internal)

Formulating Corporate Level Strategy

Corporate level strategy is the overall strategy an organisation follows.
Its development involves selecting a Grand Strategy and using Portfolio-
Strategy approaches to determine the various businesses making up the
organisation:

Portfolio Strategies:
Method of analysing an organisation’s mix of businesses in terms of both
individual and collective contributions to strategic goals.
1.BCG Growth–Share Matrix
Compares businesses in an organisation’s portfolio on the basis of relative
market market share and market growth rate.
2.Product–Market Evaluation Matrix
Compares businesses’ strength against product/market life-cycle.

Formulating Corporate Level Strategy

Grand Strategies
1.Growth
Concentration
Vertical integration
Diversification
2.Stability
Harvest
Turnaround
3.Defensive
Divestiture
Bankruptcy
Liquidation
Formulating Business Level Strategy

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1.Business level strategy is concerned with how a particular business competes.
2.The best known approach for strategy development is based on Porter’s
research.

Generic Business Strategies:

Porter outlined three generic business level strategies to gain competitive
advantage over other firms operating in the same industry.
Generic Business Strategies (Porter)
1.Cost Leadership Strategy
Emphasises operational efficiency i.e. overall costs are lower than competitors.
2.Differentiation Strategy
Attempts to develop products/services viewed as unique in the industry.
3.Focus strategy
Concentration on a segment, portion of a market.
Functional level strategies spell out specific ways that functional areas can
bolster business level strategy. For example:
Under a product differentiation strategy, the R & D dept. may accelerate the
innovation process to provide new products in advance of competitors.
Strategy Implementation
Strategy implementation involves management activities needed to put the
strategy in motion, institute strategic controls for monitoring progress, and
ultimately achieve organisation goals.

The Nature of Entrepreneurship

Entrepreneurship:The process of planning, organizing, operating, and assuming
the risk of a business venture.
Entrepreneur:Someone who engages in entrepreneurship.

Small Business:
A business that is privately owned by one individual or a small group of
individuals; it has sales and assets that are not large enough to influence its
environment.

Three Basic Strategic Challenges:

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 1. 1.Choosing an Industry in which to compete.
2. Emphasizing, Distinctive, Competencies.
3. Writing a Business Plan.

Writing a Business Plan

A Business Plan is a document that summarizes the business strategy and
structure.
It should include:
1. Business Goals and Objectives.
2. Strategies used to achieve these goals and objectives.
3. A plan of HOW the entrepreneur will implement these strategies.

Financing the New Business

1. Personal Resources
Using your own money and money borrowed from friends and relatives to
finance the business.
2. Strategic Alliances
Partnering with established firms such as suppliers in a mutually beneficial
relationship.
3. Lenders
Obtaining funding from traditional lenders (e.g., banks, independent investors,
and government loans).
4. Venture Capital Companies
Groups of small investors who provide capital funds to small high-growth
potential start-up firms in exchange for an equity position (stock) in the firms.

The Role of Entrepreneurship in Society

Job Creation
1. Small business creates many new jobs in Pakistan.
2. Industry sectors dominated by small business have added the most jobs.
Innovation
Historically, major innovations are as likely to come from small businesses as
from large firms.
Promoting Innovation

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Intrepreneurship:
Encourage the take-up of entrepreneurship roles by organisation members e.g:
Idea generator
Idea champion
Idea sponsor
Promoting Innovation
Innovation is critical to various differentiation strategies.
Forces for Change & Innovation:
Promoting Innovation
Structure’s ability to support strategy can be enhanced by using structural means
to encourage innovation.

Key Concepts
Organizing
Deciding how to best group organizational activities and resources!
Responsibility
Obligation to carry out duties and achieve goals related to a position.
Authority
Right to make decisions, carry out actions, and direct others in matters related
to the duties and goals of a position.
Accountability
Requirement to provide satisfactory reasons for significant deviations from
duties or expected results.
Delegation
Assignment of part of a manager’s work to others, along with both responsibility
and authority necessary to achieve expected results.
Autonomy
Amount of discretion allowed in determining schedules and work methods for
achieving required output.
Feedback
Degree to which the job provides for clear and timely information about
performance results.

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 Organization Chart
Line diagram depicting broad outlines of an organization’s structure!
Nature of Organisational Chart/Structure
Principles of Chart Design:
1. As few hierarchical levels as possible.
2. Charts should show who has authority over who.
3. Charts should show official lines of responsibility & communication.

Organization Structure
Set of building blocks that can be used to configure an organization!
Nature of Organisational Structure
Formal pattern of interactions and co-ordination designed by management to
link the tasks of individuals and groups in achieving organisational goals.
Four elements:
1.Assignment of tasks and responsibilities to individuals and units.
2.Clustering these (units and people) to form a hierarchy.
3.Mechanisms for vertical co-ordination.
4.Mechanisms for horizontal co-ordination.

1. Designing Jobs (Job Specialization)

2. Grouping Jobs (Departmentalization)
3. Establishing Reporting Relationships
4. Distributing Authority
5. Coordinating Activities
6. Differentiating Between Positions

1. Job Design
The determination of an individual’s work-related responsibilities.
Specification of task activities associated with a particular job
Job Specialization
Degree to which the overall task of the organization is broken down into
smaller components.
Benefits
1. Workers can become proficient at a task

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 2. Transfer time between tasks decrease
3. Specialized equipment can be developed
4. Employee replacement becomes easier
Limitations
1. Employee boredom and dissatisfaction
2. Anticipated benefits do not always occur
2. Grouping Jobs: Departmentalization
The process of grouping jobs according to some logical arrangement.
Rationale for Departmentalization
Organizational growth exceeds the owner-manager’s capacity to personally
supervise all of the organization.
Additional managers are employed and assigned specific employees to
supervise.
Departmentalization
4 Basic Types:
1. Functional
2. Product
3. Customer
4. Location
Functional Departmentalization
Functional Structure
Structure in which positions are grouped according to their main functional (or
specialised) area.
Advantages
1. Department can be staffed by experts
2. Supervision is facilitated
3. Coordination within department is easier
Disadvantages
1. Decision making becomes slow and bureaucratic
2. Lose sight of organizational goals/issues
3. Accountability and performance are difficult to monitor

1.Managers specialize,
but have broader experiences

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2.Easier to assess work-unit performance
3.Decision-making is faster.
Customer Departmentalization
Focuses on customer needs
Products and services tailored to customer needs

Geographic Departmentalization
Responsive to the demands of different market areas.
Unique resources located close to the customer
Matrix Departmentalization
Efficiently manage large, complex tasks
Effectively carry out large, complex tasks

3. Establishing Reporting Relationships

Chain of Command
The vertical line of authority in an organization. Clarifies who reports to
whom.
Unity of Command
Each person within an organization must have a clear reporting relationship to
one and only one boss.
Span of Management
(Span of Control)
The number of people who report to a particular manager.
Narrow versus Wide Operative Span - Upto 30 Subordinates Executive Span - 3
to 9 Subordinates
Tall versus Flat Organizations
Tall Organizations
1. More expensive .
2. Communication can be difficult because of the number of channels through
which it must pass.
Flat Organizations
1. Leeds to higher levels of employee morale and productivity.
2.More administrative responsibility for managers.
3.Tall Versus Flat Organizations

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 4. Distributing Authority
Delegation
The process by which managers assign a portion of their total workload to
others.
Reasons for Delegation
1. To enable the manager to get more work done by utilizing the skills and
talents of subordinates.
2. To foster the development of subordinates by having them participate in
decision making and problem solving that allows them to learn about overall
operations and improve their managerial skills.
Centralization of Authority
Primary authority is held by upper management
Decentralization
Significant authority is found in lower levels of the organization
5. Coordinating Activities
The process of linking the activities of the various departments of the
organization.
6. Differentiating Between Line & Staff Positions
Line Positions
Positions in the direct chain of command that are responsible for the
achievement of an organization’s goals/profits.
Staff Positions
Positions intended to provide expertise, advice, and support to line positions.
Staff Authority
The right to advise but not command others. An activity that supports profit
generation.
Job Rotation
Enlargement, and Enrichment Job Rotation Periodically moving workers from
one specialized job to another.
Job Enlargement
Increasing the number of tasks performed by a worker.
Job Enrichment
Adding more tasks and authority to an employee’s job.
Organization Design (OD)

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 OD Concepts
Organizations are not designed and then left intact. Organizations are in a
continuous state of change.
Organization’s design for larger organizations is extremely complex and has
many variations.
OD is a means to implement strategies and plans to achieve organizational goals.
Influences on Organization Design
Core Technology
1. Technology is the conversion processes used to transform inputs into outputs.
2. A core technology is an organization’s most important technology.
3. As the complexity of technology increases, so do the number of levels of
management.
Unit or Small-Batch Technology
Produce custom-made products for customer .
Large Batch/Mass Production
Uses assembly-line production methods to manufacture large quantities of
products.
Continuous Process
Use continuous-flow processes to convert raw materials by processes and/or
machines into finished products.
Influences on Organization Design
Environment
1. Stable environments that remain constant over time.
2. Unstable environments subject to uncertainty and rapid change.
Mechanistic organizations that are bureaucratic and found most frequently in
stable environments.
Organic organizations that are flexible and more informal and usually found in
unstable and unpredictable environments.
Mechanistic Structure
Organic Structure
Emerging Issues in Organization Design
The Team Organization
An approach to organizational design that relies almost exclusively on project-
type teams, with little or no underlying functional hierarchy.

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 Emerging Issues in Organization Design
The Virtual Organization
An organizational that has little or no formal structure with few permanent
employees, and may conduct its business entirely on-line .
Emerging Issues in Organization Design
The Learning Organization
An organization that works to facilitate the lifelong learning and development of
its employees while transforming itself to respond to changing demands and
needs.

Leading Motivating and Leadership

Leadership is a process of influencing others to achieve organisational goals.
Nature of Motivation
Motivation is the force energising, giving direction to, and / or leading Human
Behaviour.
Motivation is a complex interaction of behaviours, needs,
rewards/reinforcement and cognitive activities.
3 Major Types of Motivation Theories
1. Content Theories of Motivation
WHAT motivates us?
2.Process Theories of Motivation
WHY and HOW motivation occurs!
3. Reinforcement Theory
HOW outcomes influence behaviors!
What is Motivation?
The processes that account for an individual’s intensity, direction, and
persistence of effort toward attaining a goal
Intensity: how hard a person tries
Direction: where effort is channeled
Persistence: how long effort is maintained
Unsatisfied Needs develop a tension and creates a drive to fulfill those needs.
When those needs are satisfied, it reduces the tension and a state of relaxation is
achieved.
Types of Motivators

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1. Intrinsic
2. Extrinsic
Intrinsic
A person’s internal desire to do something, due to such things as interest,
challenge, and personal satisfaction.
Extrinsic
Motivation that comes from outside the person, such as pay, bonuses, and other
tangible rewards.

1. Hierarchy of Needs Theory (Maslow)

2. Two-Factor Theory (Herzberg)
3. ERG Theory (Aldefer)
4. Acquired Needs Theory (McClelland)
Maslow’s Hierarchy of Needs
Physiological
It includes hunger, thirst, shelter, sex and other bodily needs.
Maslow’s Hierarchy of Needs
Safety
It includes security and protection from physical and emotional harm.
Maslow’s Hierarchy of Needs
Social
It includes affection, belongingness, acceptance, and friendship.
Maslow’s Hierarchy of Needs
Esteem
It includes internal esteem factors such as self-respect, autonomy, achievement;
and external esteem factors such as status, recognition, and attention.
Maslow’s Hierarchy of Needs
Self-Actualization
The drive to become what one is capable of becoming; includes growth, and
achieving one’s potential.
Weakness of Theory
1.Five levels of need are not always present
2.Order is not always the same
3.Cultural differences

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 Need’s Hierarchy in China…an example:
Belongingness
Physiological
Safety
Self actualizing in service to society
Hygiene Factors
Extrinsic factors when these are adequate, people will not be dissatisfied.
Company policy and administration, supervision, working conditions, and
salary.
Motivating Factors
Intrinsic factors, such as achievement, recognition, the work itself,
responsibility, advancement and growth.
People will be either satisfied or not satisfied.
ERG Theory
1. Existence Needs
2. Related Needs
3. Growth Needs
McClelland’s Theory of Needs
Need for Achievement
The drive to excel, to achieve in relation to a set of standards, to strive to
succeed.
McClelland’s Theory of Needs
Need for Power
The need to make others behave in a way that they would not have behaved
otherwise.
McClelland’s Theory of Needs
Need for Affiliation
The desire for friendly and close interpersonal relationships.
Acquired Needs Theory (McClelland)
Theory stating that our needs are acquired or learned on the basis of our life
experiences.
Needs Classification
Cognitive or Process Perspective Theories

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 1. Equity Theory
2. Expectancy Theory
3. Goal-setting Theory
Process Perspectives
Why people choose certain behavioral options to satisfy their needs and how
they evaluate their satisfaction after they have attained their goals.
Equity Theory
Theory arguing that we prefer situations of Balance or, Equity.
Inputs
Employee contributions to the organization
Outcomes
Rewards employees receive from the organization
Outcome / input (O / I) Ratio
A comparison between self and others Output/Input Ratio Inequity
When Your O / I ratio differ from other’s
Underreward
If other’s O / I ratio is greater than yours, You experience anger or frustration !
Overreward
If other’s O / I ratio is less than yours, You may experience guilt !
Reaction to Perceived Inequity
1. Reduce inputs
2. Increase outcomes
3. Rationalize inputs or outcomes
4. Change the referent
5. Leave
Equity Theory
Implications for Managers:
Communication is essential to assess Equity / Inequity perceptions in
employees.
Expectancy Theory

Theory arguing that we consider three main issues; (Effort-Performance,

Performance-Outcome, and Valence) before we expend effort necessary to
perform at a given level.

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 Effort-Performance Expectancy
Our assessment of our efforts that will lead to the required level of
performance.
Performance-Outcome Expectancy
Our assessment of our performance that will lead to desired outcomes.
Instrumentality
Perceived relationship between Performance and Rewards / Outcomes.
Valence
Our assessment of anticipated value of various outcomes or rewards.
Expectancy Model of Motivation
Expectancy Theory
M=ExIxV
For motivated behavior to occur:
1. Effort-to-performance must be greater than 0
2. Performance-to-outcome must be greater than 0
3. Sum of valences must be greater than 0
Motivating with Expectancy Theory
1.Systematically gather information to find out what employees want from
their jobs
2.Clearly link rewards to individual performance
3.Empower employees to make decisions which enhance expectancy
perceptions
Goal-setting Theory
It works by focussing attention on action, mobilising effort, increasing
persistence, & encouraging the development of strategy to achieve goals.
Goal Difficulty
Extent to which a goal is challenging and requires effort.
Goal Specificity
Clarity and precision of the goal.
Goal Acceptance
Extent to which persons accept a goal as their own.
Goal Commitment
Extent to which an individual is personally interested in reaching a goal.
Performance Feedback

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Information on goal progress
Motivating with Goal-Setting Theory
1. Assign specific, challenging goals
2. Make sure workers truly accept organizational goals
3. Provide frequent, specific performance-related feedback
Integrated Model
Reinforcement THEORY
It explains the role of rewards as they cause behavior to change or remain the
same over time.
Reinforcement Process
Positive Reinforcement
It strengthens behavior by providing a desirable consequence.
Punishment
It weakens behavior by providing an undesirable consequence.
Reinforcement THEORY
Extinction
It weakens behavior by not providing a desirable consequence.
Current Issues In Motivation
Open-Book Management
1. Involve employees in workplace decisions by opening up the financial
statements.
2. Workers treated as business partners.
3. Get workers to think like an owner.
4. May also provide bonuses based on profit improvements.
Current Issues In Motivation
Motivating Professionals
1. They are more loyal to their profession than their employer ?
2. They value challenging jobs and need the support for their work.
Current Issues In Motivation
Motivating Professionals
Professionals tend to derive intrinsic satisfaction from their work and receive
higher pay.
Social Learning Theory
Theory arguing that learning occurs through continuous reciprocal interaction

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of our behaviours, various personal factors and environmental forces.
Other Motivational Strategies
1. Empowerment
2. Participation
3. Variable Work Schedules
Compressed work schedule
4. Flexible Work Schedules
Flextime
Job Sharing
Telecommuting
Designing Effective Systems
Reward system must meet an individual’s needs.
Rewards should compare favorably with other organizations.
Distribution of rewards must be perceived to be equitable.
Designing Effective Systems
Reward system must recognize different needs.
Merit system.
Incentive system.

Leadership
Leader
Someone who can influence others and who has managerial authority.
All managers should ideally be leaders
Not all leaders have the ability to be an effective manager.
Leadership is a process of influencing others toward the achievement of goals.
A heavily researched topic
Nature of Leadership
Leadership is an ability to influence and motivate others toward organizational
goals.
What leaders actually do!
Process behaviors include:
1. Influencing organizational goals;
2. Motivating behavior toward goals;
3. Helping define organizational culture.

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 Leadership Property!
Set of characteristics attributed to individuals perceived to be leaders.
How Leaders influence others?
Sources of Leadership Power:
1. Legitimate power
Power stemming from a position’s placement in the managerial hierarchy.
2. Reward power
Power based on the capacity to provide valued rewards to others.
3. Coercive power
Power based on the ability to punish others.
4.Expert power
Power based on the possession of expertise valued by others.
5. Information power
Power based on access and control over the distribution of information.
6.Referent power
Power resulting from being liked, admired or identified with.

Effective use of Power

Likely reaction to use of power! = Resistance
= Compliance
= Commitment
Leadership Schools
1. Trait Model
2. Behavioral Models
--Michigan Studies
--Ohio State Studies
--Leadership Grid
3. Situational (Contingency) Models
Leadership Continuum
Least Preferred Coworker Theory (Fiedler)
Path Goal Model
Vroom Model
The Leader-Member Exchange Approach
Search for Leadership Traits

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 Approach assumes that some basic traits (individual qualities) differentiated
leaders from non-leaders.
Search for Leadership Traits
Approach eventually determined to be impractical- the list of suggested traits
grew too long to be useful.
Search for Leadership Traits
Despite weaknesses, leaders today are often chosen on various traits.
Traits
1.Intelligence
2. Supervisory Ability
3. Initiative
4. Drive
5. Individuality
Traits
6. Self Confident
7. Risk Taker
8. Motivated
9. Hard Working
10. Self Assurance
Leadership Behaviour
Michigan Studies
Employee centred leaders superior to Job centred leaders.

Leadership Behaviour
Ohio State Studies
Suggested that the ideal was for leaders to combine job-centred-ness with an
ability to build mutual trust with subordinates.
Leadership grid
Behavioral Theories
Knowing the ways how effective leaders behave
would provide basis for training other leaders !
Leadership Schools
2. Behavioral Models
--Iowa Studies

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 --Michigan Studies
--Ohio State Studies
--Leadership Grid
Leadership Behaviour
Iowa Studies
( By Kurt Lewin)
Explored three leadership styles related to performance!

Leadership Styles
1. Autocratic
Leader dictated the work methods.
2. Democratic
Involved staff in decision making.
3. Laissez-Faire
Gave the group complete freedom.
Leadership Behaviour
Michigan Studies
Employee centred leaders superior to Job or Production centred leaders?
Ohio State Studies
Suggested that the ideal was for leaders to combine
job-centred-ness (Initiating Structure) with an ability to build mutual trust with
subordinates (Consideration).
Leadership grid
Contingency Theories Of Leadership
Basic Assumptions
1. Leader’s effectiveness depends on the situation.
2. Must isolate situational conditions or contingencies.
Leadership Schools
3. Situational (Contingency) Models
1. Fiedler’s Model
2. Path Goal Model
3. Hersey and Blanchard Leadership approach
4. Leaders Member Exchange Model
Situational Theory

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 Theories of leadership taking into consideration important situational factors
and related leadership styles.
Fiedler’s Contingency Theory
Putting Leaders in the Right Situation:
Leadership Style:
Least Preferred Coworker
Leadership style is the way a leader generally behaves toward followers.
Style is measured by the LPC Scale!
Relationship-oriented Style
Task-oriented Style
Situational Favorableness
How a particular situation affects a leader’s ability to lead
Three factors
1. Leader-member relations
2. Task structure
3.Position power
Situational Favorableness
Matching Leadership Styles to Situations
Path-Goal Theory
Leadership Styles
1. Directive
Clarifying expectations and guidelines
2. Supportive
Being friendly and approachable
3. Participative
Allowing input on decisions
4. Achievement-Oriented
Setting challenging goals

Four leadership styles defined by the two dimensions i.e.

1. Task Behavior and
2. Relationship Behavior!

Tests of the theory have yielded disappointing results

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 LMX Leadership Model
Leader Member Exchange approach stresses the importance of variable
relationships between supervisors and each of their subordinates.
Leaders form unique independent relationships with each subordinate in which
the subordinate becomes a member of the leader’s out-group or in-group.

Cutting-Edge Approaches To Leadership or Strategic Leadership

Transactional Leadership
Transactional Leaders guide or motivate their followers in the direction of
established goals by clarifying role and task requirements!
Transformational Leaders inspire followers to transcend their own self-interests
for the good of the organization!
1. Capable of having profound effect on followers.
2. Pay attention to concerns of followers.
3. Change follower’s awareness of issues.
4. Excite and inspire followers to put forth extra effort.
5. Built on top of Transactional leadership
6. good evidence of superiority of this type of leadership!

Goes beyond Charismatic leadership.

Different than Transactional leadership!
Components of Transformational Leadership
Charismatic leadership or idealized influence.
Inspirational motivation.
Intellectual stimulation.
Individualized consideration.
Charismatic Leadership
Charismatic leaders are enthusiastic, and self-confident leader whose
personality and actions influence people.
Charismatic leaders creates an exceptionally strong relationship between leader
and followers.

Kinds of Charismatic Leaders

Ethical Charismatics

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 1. Provide developmental opportunities.
2. Open to positive and negative feedback.
3. Recognize others’ contributions.
4. Share information.
5. Concerned with the interests of the group.
Unethical Charismatics
1. Control and manipulate followers.
2. Only want positive feedback.
3. Motivated by self-interest.
Visionary Leadership
Visionary leader has the ability to:
1. Explain the vision to others.
2. Express the vision verbally and behaviorally.
3.Apply the vision to different leadership contexts.

Team Leadership
It requires skills such as:
1. Patience to share information.
2. Ability to trust others and give up authority.
3. Understanding when to intervene.
Gender and Leadership
When rated by peers, employees, and bosses, women executives score better
than male counterparts
Explanations of difference in effectiveness include:
1. Flexibility, teamwork, trust, and information sharing are replacing rigid
structures, competitive individualism, control, and secrecy
2. Women managers listen, motivate, and provide support
better than men
There is still no “one best” leadership style
Can’t assume that women’s style is always better

Leadership Styles in Different Countries

Effectiveness of leadership style influenced by national culture
Most leadership theories developed in the U.S.

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 1.Emphasize follower responsibilities rather than rights.
2. Stress rationality rather than spirituality.
What Would You Do?
You are the CEO of Unique Food Co…
1. Your success is based on your reputation and your staff.
2. But, business is down and employee benefits expenses are increasing.
3. You have three options: eliminate health benefits, find a cheaper plan, or pass
the cost to the employee!
How can you best make the tough decision?
How involved should your employees be in making it?
Understanding Group
Behavior
Why People Join Groups ?
1. Interpersonal Attraction
People are attracted to one another.
2. Group Activities
Activities of the group appeal to them.
3. Group Goals
Group’s goals motivate them.
4. Need Satisfaction
Satisfies an individual’s need for affiliation.

Foundations of Work Groups

Two or more interdependent individuals interacting and influencing each other
in collective pursuit of
a common goal.
What is a Group?
Two or more interacting and interdependent individuals who come together to
achieve particular goals!
Types of Groups?
Formal Groups
Informal Groups

Formal Groups

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 Group officially created by an organisation for a specific purpose.
1. Command/Functional
2. Task Groups:
Permanent.
Temporary.

Task Group
A group created by the organization to accomplish a relatively narrow range of
purposes within a stated time horizon.

Informal Groups:
Group established by employees (not the organisation) to serve members’
interests or social needs.
Interest groups
Friendship groups
Groups and Teamsin Organizations
Basic Group Concepts
1. Group Size
Effect on behavior of group depends upon the type of outcome and number of
persons in group.
1. Large groups - good for getting diverse input
2. Small groups - good at making use of information
3. Dispersion of responsibility in large groups leads to free rider tendency !
2. Group Role.
Set of expected behavior patterns attributed to someone who occupies a given
position in a social unit or group.
1. Group members have particular roles oriented towards task accomplishment
or maintaining group member satisfaction.
2. Individuals play multiple roles.
3. Group Norms
Acceptable standards or expectations that are shared by the group’s
members.
1. its own unique set of norms.
2. Common norms related to levels of effort and performance.

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 3. Exert powerful influence on performance.
4. Group Cohesiveness
Degree to which members are attracted to a group and share the group’s goals.
The group effectiveness depends upon the alignment of group and organizational
goals.
Effectiveness and Efficiency of Group Decisions
1. Size of group affects effectiveness.
2. The groups of 5-7 are the most effective.
3. Odd number of members helps avoid deadlocks.

Steps must be taken to avoid Group Think.

Conformity marked by withholding different or unpopular views in order to give the
appearance of agreement.
Stages of Group Development
1. Forming
People join the group either because of a work assignment or for some other
benefit.
Define the group’s purpose, structure, and leadership.
2. Storming
Acceptance of the group’s existence.
Conflict over who will control the group !
3. Norming
Relationships and a sense of group identity develops.
Group assimilates a common set of expectations and defines correct member
behavior.
4. Performing
Group structure is functional and accepted!
Group energy has moved to task performance!
5. Adjourning
Group prepares to disband!
Attention devoted to wrapping up activities.
Group Development
Turning Groups into Effective Teams
Teams versus Groups

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 Work Group
A group that interacts primarily to share information and to make decisions to
help each other perform within his or her area of responsibility.
Work Team
A group whose individual efforts result in a performance that is greater than the
sum of those individual inputs.
What Is a Team?
Work Team is a formal group made up of interdependent individuals who are
responsible for the attainment of a goal
work teams are popular in organizations
Why Have Teams
Become So Popular?
1. Performance on complex tasks
2. Utilization of employee
talents
3. Flexibility and responsiveness
4. Motivational properties

Developing And Managing Effective Teams

Characteristics of Effective Teams
1.Clear Goals - members understand and support the goals to be achieved.
2.Relevant Skills - members have the necessary technical and interpersonal skills.
3. Mutual Trust - members are confident in each others’ ability, character, and
integrity.
4. Unified Commitment - loyalty and dedication to the team.
5. Good Communication - messages are readily understood.

Types of Teams
1. Problem Solving Team
Comprises knowledge workers who gather to solve a specific problem, then
disband.
2. Management Team
Consists mainly of managers from various functions, who coordinate work
among other teams.

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 3. Work Team
Responsible for the daily work of the organization and, when empowered, are
self-managed teams.
4. Quality Circle
Consists of workers and supervisors, who meet to discuss workplace problems.

Special Kinds of Teams

Cross-Functional Team
Employees from different functional areas.
Attack problems from multiple perspectives.
Generate more ideas and alternative solutions.
Project Teams
Created to complete specific, one-time projects within a limited time.
Often used to develop new products, improve existing products, roll out new
information systems, or build new factories/offices.

Understanding Managerial Communication

What is Communication?
Everything that a manager does … involves communication!
Ineffective communication is the basis for many managerial problems.
Communication
The process of transmitting information from one person to another.
Effective Communication
The process of sending a message so that the message received is as close in
meaning as possible to the message intended.
Interpersonal Communication
It occurs between people.
Organizational Communication
All the patterns, networks, and systems of communication in an organization.
Communication in Management

Communication Process
Information Richness of Channels
Managerial Communication

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Verbal
Written or oral use of words to communicate.
Non-Verbal
Communication by means of elements and behaviours that are not coded into
words.
Communication Channels
Patterns of communication flow through which managers and other
organisation members can send and receive information.
1. Vertical communication
2. Horizontal communication
3. Informal communication
Vertical Communication
1. Downward Communication
Managers overuse downward communication.
Filtering
(deliberate or accidental).
2. Upward Communication
Can be distorted by ‘only’ favourable messages going up.
Managers don’t encourage upward flow.
Horizontal Communication
Lateral or diagonal message exchange within work-unit boundaries, involving
peers reporting to the same supervisor, or across work-unit boundaries,
involving individuals who report to different supervisors.
Informal Communication
Communication which takes place without regard to hierarchical or task
requirements.
Problems Can carry gossip/distorted information.
Benefits Valuable tool for continuation/propagation of culture.

Communication Networks
Patterns through which members of a group or team communicate.
Grapevine
An informal network that is active in almost every organization.
1. Important source of information.

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 2. Identifies issues that employees consider important and anxiety producing.
3. Can use the grapevine to disseminate important information.
4. Grapevine cannot be abolished.
Rumors can never be eliminated entirely.
Barriers to Communication
Individual Barriers
Conflicting or inconsistent cues.
Credibility about the subject.
Reluctance to communicate.
Poor listening skills.
Predispositions about the subject.
Organizational Barriers
Status or power differences.
Different perceptions.
Noise.
Overload.
Improving Communication Effectiveness
Individual Skills
1. Encourage two-way communication.
2. Be aware of language and meaning.
3. Be sensitive to sender’s and receiver’s perspective.
4. Develop good listening skills.
Organizational Skills
1. Follow up.
2. Regulate information flow
3. Understand the richness of media.

How Technology Affects Managerial Communication!

Communication Channels
Information Technology has changed organizational communication.
1. Disseminates more complete information
2. Provides more opportunities for collaboration
3. Employees are fully accessible
Effects of IT

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1. Networked Computer Systems
Linking computers through compatible hardware and software.
1.e-mail - instantaneous transmission of written messages
7. Intranet - Internet technology that links organizational employees
8. Extranet - Internet technology that links an organization with customers and
suppliers
9. Internet-based voice communication - allows users to talk with each other
2.Wireless Capabilities
Depends on signals sent through space without any physical connection.
Based on microwave signals, satellites, radio waves, or infrared light rays.
Control as a Management Function
Process of regulating organisational activities so that actual performance
conforms to expected organisational standards and goals.
Planning-Controlling Link
What Is Control?
Control is the process of monitoring activities to ensure that they are being
accomplished as planned and of correcting significant deviations.
Control systems are judged in terms of how well they facilitate goal achievement
Control as a Management Function
Role of Controls:
1. Coping with uncertainty
2. Detecting irregularities
3. Identifying opportunities
4. Handling complex situations
Control as a Management Function
Levels of Plan Levels of Control
The Control Process
The Control Process
Steps in the control process:

Five Eras of Management Control

Primary Types of Organizational Control
Managerial Approaches
Bureaucratic control

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 Organic/Clan control
Market control
Quality & Innovation
Managerial Approaches
Bureaucratic Control
Managerial approach relying on regulation through rules, policies, supervision,
budgets, schedules, reward systems and other administrative mechanisms
aimed at ensuring employees exhibit appropriate behaviours and meet
performance standards.
Market Control
Managerial approach relying on market mechanisms to regulate prices for
certain clearly specified goods and services needed by an organisation.
It emphasizes the use of external market mechanisms to establish standards of
performance.
1. Useful where products and services are distinct
2. Useful where marketplace competition is considerable
3. Divisions turned into profit centers and judged by the percentage of total
corporate profits each contributes
Organic/Clan Control
Managerial approach relying on values, beliefs, traditions, corporate culture,
shared norms and informal relationships to regulate employee behaviours and
facilitate reaching of organisational goals.
Quality & Innovation:
Levers for strategic control/innovation:
1. Belief Systems
Mission, core values
2. Performance Management Systems
Critical goals, evaluation & feedback
3. Interactive Monitoring System
Networking, continuous search & learning based system
Traditional Financial Controls
The budgets provide quantitative standards against which to measure and
compare resources consumption.
Other

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 Financial Controls
Other Financial Control Measures increasing in popularity;
1. Economic Value Added (EVA)
Economic value created with the firm’s assets less any capital investments
made by the firm in its assets.
2. Market Value Added (MVA)
Stock market’s estimate of the value of the firm’s past and expected capital
investment projects.

Automation Based Controls

Management Information Systems
MIS are used to provide management with needed information on a regular
basis.
1.Organizes data in a meaningful way
2. Can access the information in a reasonable amount of time

Quality-Related Characteristics
ISO 9000
1. A series of international standards:
ISO 9000 to ISO 9004
2. Certifies quality processes
3. Customers are increasingly demanding ISO 9000 certification
HRM Process
Job Analysis and HRM
Value Chain Management
Value
Performance characteristics, features, and attributes, and any other aspects of
goods and services for which customers are willing to pay resources.

value Chain is the entire series of work activities that add value at each step of
the transformation process.
Value Chain Management is the process of managing an entire sequence of
activities along the entire value chain.
Focuses on both incoming materials and outgoing products and services.

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 Goal of Value Chain Management
Better the collaboration among chain participants, better the customer solutions!

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