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Principles & Practices of Management

Course Material Prepared by

Dr. Vivek Sane


Director, SIBM Pune

Sr. No.
1.

Topics Definitions Forecasting, Planning and Decision-making Organisation and Staffing Direction Controlling Co-ordination Leadership Communication Motivation Morale

Pg. No. 3
5 12 19 23 27 32 34 38 42

INDE X

2. 3. 4. 5. 6. 7. 8. 9. 10.

(I)

DEFINITIONS OF MANAGEMENT
1. Management is Planning, Organizing, Controlling, Directing, and Co-ordinating supported by Leadership, Communication, Motivation, and Morale. 2. Management is getting things done through and with other people. 3. Koontz and ODonell have defined Management as the creation and maintenance of internal environment in an enterprise, where individuals working together in groups can perform efficiently and effectively towards the attainment of group goals. 4. By Peter Drucker, Management is a multipurpose organ that manages a business, manages a manager and manages workers and work. 5. By Appley L, Management is the attainment of pre-established goals by the direction of human performance along pre-established lines. It is management of people and not the direction of things. 6. Management is Management of Men, Money, Machinery, Materials and Information.

Features of Management 1. Management is purposeful and goal oriented (It has definite economic and social objectives). 2. Management is universal (Applied everywhere). 3. Management is situational (Differs from situation to situation). 4. Management is continuous process. 5. Management is creative. 6. Management is multidisciplinary (It includes knowledge/ information from other disciplines like Economics, Maths, Statistics, Psychology, Sociology etc.). 7. Management is dynamic (Changes as per time).

8. Management is what management does (Management is understood by performance). 9. Management is influenced by internal and external environmental factors. Internal External a. b. c. d. Place Labour Machines Money a. Economic factors b. Political c. Legal d. Social e. Cultural f. Climatic g. Technological h. Global i. Ethical j. Moral

10. Management exists at all levels in the organisation. 11. Management is a combination of Arts, Science, Profession. 12. Origin of Management is in the basic Economic problem. Resources are limited. Resources can be put to multiple uses. Wants are unlimited. Wants are satisfied at the point of time they reoccur. Wants need to be prioritized.

So we need to MANAGE Resources. To conclude it can be said that Management is not just a function. Management is not just a discipline. Management is not just a process.

It is and should be WAY OF LIFE.

(II)

FORECASTING, PLANNING AND DECISION-MAKING FORECASTING


Forecasting is considered as the primary function of Management and even precedes planning. Forecasting is defined asVisualizing, anticipating the future based on current analysis and future trends. Forecasting is a scientific process of predicting the future of the business. It can be function-specific such as marketing forecasts, manpower forecasts etc. Analysis of various environmental factors is helpful to predict the future of the organisation. These factors are economic political, social political etc.

Benefits of forecasting:
1) Compels thinking ahead, provides for future. 2) Discloses areas where control may be required in the future. 3) Helps to unify and formulates plans. 4) Brings singleness of purpose to planning. Helps in SWOT (Strengths, Weaknesses, Opportunities and Threats) Analysis.

PLANNING
Introduction:
Planning is a primary function of management. Planning is deciding in advance What is to be done? (Nature of Business) When to do it? (Time Factor) How to do it? (Technology & Strategy) Who to do it? (People Factor) Why to do it? (Objectives)

Where to do it? (Location Factor) If we get answers to the above questions, planning process is complete. Please remember Planning is a thinking process. Planning is based on forecasting. Planning is forward looking. Planning is Long look ahead Broad look around & Searching look within.

Unique Features Of Planning:


It is the most basic of all management functions. Provides a rational approach to achieve preselected objectives. Involves selecting missions and objectives and the required actions. Requires decision-making. Bridges the gap from where we are and where we want to go. An intellectually demanding process.

Planning Is The Foundation Of Management


What kind of organisation structure to have

Which helps us know

What kind of people we need and when

PLANS Objectives and how to achieve them

Which affects the kind of leadership we have and direction

How most effectively to lead people

In order to ensure success of plans By furnishing standards of control

Nature Of Planning
Contribution of Planning to Purpose and objectives Every plan and all its supporting plans should contribute to the accomplishment of the purpose and objectives of the enterprise. Primacy of Planning Since managerial operations in organizing, staffing, leading and controlling are designed to support the accomplishment of enterprise objectives, planning logically precedes the execution of all the other managerial functions. Although in practice, all the functions mesh as a system of action, planning is unique, as it involves establishing the objectives necessary for all group efforts. Pervasiveness of Planning Planning is an integral part of all managers, although the character and breadth of planning will vary with each managers authority and with the nature of the policies and plans outlined by superiors. Efficiency of Plans Plans are efficient if they achieve their purpose at a reasonable cost, where cost is measured not only in terms of money or time or production but also in the degree of individual and group satisfaction.

Components Of Planning
1) Purposes Or Missions It identifies the basic function or task of an enterprise or agency or any part of it. For example purpose of courts is the correct interpretation of laws and their application. 2) Objectives- It is the end towards which activity is aimed, represents not only the end points of planning but also the end towards which organizing, staffing, leading and controlling are aimed. While enterprise objectives are the basic plan of the firm, a department may also have its own objectives. The objectives are consistent yet differ in some ways. 3) Strategies- It is the determination of basic long-term objectives of an enterprise and the adoption of courses of action and allocation of resources necessary to achieve these goals. Strategies do not attempt to outline exactly how the enterprise is to accomplish its objectives but furnishes a framework for guiding, thinking and action.

4) Policies- It is general statements or understandings that guide or channel thinking in decision-making. Policies define an area within which a decision is to be made and ensure that the decision will be consistent with and contribute to an objective. It makes it unnecessary to analyze the same situation every time it comes up by deciding on issues before they become a problem. 5) Procedures- Plans that establish a required method of handling future activities. They are chronological sequences of required actions. They are guides to action rather than thinking and they detail the exact manner in which certain activities must be accomplished. 6) Rules- Spell specified required actions or non-actions allowing no discretion. There is a certain distinction between rules and policies. Purpose of policies is to guide decision-making by marking off the areas in which managers can use their discretion. Although rules also serve as guides, they allow no discretion in their application. 7) Programs- It is a complex of goals, policies, procedures, rules, task assignments, steps to be taken and other elements necessary to carry out a given course of action. A primary major program may call for many supporting programs. 8) Budgets- Statement of expected results expressed in numerical form. As budget is in the form of numbers it forces precision in planning. Budget forces a company to make in advance numerical compilation of expected cash flow, expenses and revenues and capital outlays.

Steps In Planning
Being aware of opportunity Comparing Alternatives in light of goal sought

Setting objectives or goals

Choosing an alternative

Considering Planning Premises

Formulating supporting plans

Identifying Alternatives

Numberizing plans by making budgets

DECISION-MAKING
Planning and decision-making are closely interlinked. Decision-making is an integral part of planning. Decision-making as a process and function of management is very vital as many critical aspects of management depend upon the right decision at the right time. The following general observations will tell us how complicated, at the same time how challenging decisionmaking is. Every decision is right when it is taken. Not to take a decision is also a decision. The manager is as good as the decision he takes. Decision-making is the most creative activity in the life of a manager. Rationality in decision-making is subjective. Decision-making is conflict-resolving process. Decision-making exists at all levels, but it is so perceptive that people in the middle and lower levels never get an opportunity to take the decisions. Right decision at wrong timing is disastrous. Decision-making is also influenced by gut feeling or intuition (Very difficult to define these words, but it is said that no explanation is necessary if you believe in them and no explanation is possible if you dont) So decision-making is often a function of sixth sense

What is Decision-making?
Decision-making is a process of making a choice out of the best alternatives. intellectual process involving the following steps: Identify the problem (Need for action is felt). Collect information from all possible sources. Develop alternatives. Compare and evaluate these alternatives. Decision-making stage of making a choice among alternatives. Implementation and communication of decisions. It is an

Follow-up and review. Factors affecting the Decision-making Process: Information: (It must be available, authentic, adequate, reliable. It must be available at the right time. It must be analyzed and presented in the right manner.) Time Factor: Decision must be taken at the right time. Some products are introduced ahead of time. For e.g. Dish washers introduced in India. Decisions are also time bound. In business context, introduction of air conditioners, coolers and refrigerators in summers and woolen clothing in winter also suggests the influence of time in decisionmaking. External Environmental Factors: As decision-making is always interactive with the environment, various environmental factors influence decision-making such as economic, political, social, cultural, technical, ethical, legal, global factors. Internal Factors: Rules, regulations, procedures within the organisation or administrative restrictions also affect decision-making. Personality of the Decision Maker or Subjectivity: The decision-making process has a lot to do with who is the decision maker, his attitudes, perceptions, values, style of functioning, the nature of personality and overall way of thinking. Participation, Acceptance and Implementation: Elements of how decisions are taken, how far they are accepted and how they are to be implemented also contribute in the decision-making process. Precedent: In a bureaucratic set up this becomes a ruling factor as questions like Have we done this before?, Is there a precedent of taking such decisions? are often asked before taking a decision. Experience of a Decision Maker: As it is said that experience is the best teacher, maturity in business experience of a manager go a long way in taking effective decisions. Power to Decide: Many times, people know what is wrong in the organisation, but often they do not have the power to decide and act. That is how the concept of empowerment is evolved which talks about decision-making to the lowest possible level. Escalation of Commitment (Point of No-return): After a decision has been taken, it is often felt that the decision is going in a wrong way, but more than half of the work is completed. Therefore, there comes a point of no return and the decision has to be completed in spite of negative feedback. Bounded Rationality: Constructing simplified models that extract the essential features from the problems without capturing all their complexities. The decision maker settles

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for the early solution that is good enough. In Laymans language, decision maker finds out the earliest available alternatives, takes certain things for granted and acts on it. The decision maker takes generalized judgmental shortcuts which are also called Heuristics. For e.g. if two students from a particular management institute show exemplary performance in the job, the judgmental shortcut is every student from this institute is good, and vise versa. Problem Perception: Problems that are visible catch a decision makers decision. These problems become the first to be acted upon, or a priority. For e.g. if at the time of the Chief Executive Officers (CEO) visit, workers start agitating, then this agitation becomes the main problem for the CEO because it is visible for him.

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(III)

ORGANISATION AND STAFFING


ORGANISATION Introduction
Function of organising follows that of planning. It is a complex process that involves authority, responsibility, and accountability of structure so as to understand all aspect of organisation. We need to understand the following definition of organisation 1. Organisation as a process 2. Organisation as a structure of authority 3. Organisation as a relationship 4. Organisation as a corporate citizen 5. Organisation as an establishment Brief explanation of these different words and concepts associated with organisation. 1. Organising as a process It consists of: Preparing the list of activities to be performed Growing of those activities Marketing HR Appointing people & staffing process Giving them authority and assigning responsibility Completion and fulfillment of task and follow up [Narayan Murthy Infosys Yum International- Company that governs Pizza hut in India] 2. Organisation as a structure of authority No organisation is built in a day. It is an evolving process, where over a period of time, structures that bind people by authority, responsibility, accountability and power is created. 3. Organisation as a relationship People are not only formally bound but they interact with each other within the organisation and outside the organisation. This is called informal relationship bound by feelings, togetherness, affection, interaction, informal communication.

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4. Organisation as a corporate citizen Like an individual, an organisation has a personality, represented by name, logo, brand, culture, peoples perception about the organisation etc. It has its own identity as part of the society. 5. Organisation as an establishment Known by its location, factories premises and set-up

Definition of important terms


1. Authority - Right to act or right to act decide 2. Responsibility - Being in charge of the situation and it cannot be delegated 3. Accountability - Inscrutability or giving reasons. e.g. Subordinates are accountable for their actions 4. Power - It is an ability to exercise authority

Five Sources of Authority


1. Formal theory (position) of Authority Individuals get authority from position / designation. 2. Competence theory of Authority Individuals get authority from knowledge. Exporters are also called as professional authority. 3. Acceptance theory /Referent Individuals source of authority is acceptance by others. In Laymans language, popularity is the source of authority. 4. Inheritance of wealth Business families help family scions to be top managers (source of authority is from inheritance). Though it can be debatable, it exists. 5. Networking Theory It is called authority arising out of contacts. In the present day, management networking is advantageous.

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DELEGATION OF AUTHORITY Introduction


To delegate is to confer offer, give, allot, assign, part of authority to the next subordinate. Delegation to the lowest possible level is called decentralization. Normally a person may not be inclined to part with authority but because of limited time, energy, under creation of structure, delegation becomes inevitable.

Degrees Of Delegation:
From the lowest degree called delegation on paper to another extreme called delegate and disappear, there are variations regarding how much authority is to be delegated. Ideally, the system should be monitored so that the person to whom authority is delegated will keep his superiors informed. In other words, ask subordinate to take decision in exceptional situations, consult and keep authorities informed from time to time regarding implication of decisions being taken.

Process Of Delegation (Steps In Delegation)


1. Decide on Quantum of Authority to be delegated (how much to delegate). 2. Select appropriate subordinate. 3. Ask task and delegate. 4. Communicate and develop accountability system (Reporting system). 5. Monitor the process of delegation. 6. Take appropriate steps if work assigned is not completed. The most important aspect of delegation process is authority is delegated but responsibility is not.

Problems In Delegation
A. From the Superiors View point 1. Tendency to expect that subordinate will refer all matters to him. (Factor of indispensability and reluctance to delegate) 2. Lack of Trust and confidence in subordinate 3. Unwillingness to create second line of authority 4. Fear of loss of control over subordinate 5. Disbelieving benefits of delegation

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B. From Subordinates View point 1. Fear of criticism 2. More delegation is associated with more work, so there is a reluctance on the part of the subordinates 3. Subordinates prefer to refer the matter to superior so that he will not be held accountable for consequence (play safe) 4. Disappointment with paper delegation 5. Subordinate also perceives more work with no reward 6. Overall meritocracy in the organisation, which results in to crippling of decisions making process. Note: As it can be observed from the above, most of these problems are attitudinal problems and interpersonal relationship problems.

Principles Of Effective Delegation Or How To Delegate Effectively


1. Select the right subordinate for delegation (clarify delegation process) 2. Train them 3. Reward them (if delegation is perceived as additional work then incentive system is to be introduced in the delegation process) 4. Motivate and encourage employees 5. Set-up a proper control mechanism (ideal reporting system) 6. Communicate delegation to the lowest possible level 7. Management is an ability to multiply through others so believe in competence and not favouritism (believe in system while delegation) 8. As most of the problems are attitudinal, consult council and understand subordinates problems 9. Principle of exception: This principle says that exceptional matters (sensitive crucial crisis management must be referred to the top authorities) 10. Decide how much to delegate 11. Do not delegate on paper (avoid delegation on paper) 12. Do not delegate and disappear, you being in charge. Please remember that authority can be delegated but responsibility cannot.

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Difference Between
Formal Organisation 1. Created for the completion of Job or work Informal Organisation 1. Created because of Satisfying social needs of people at work place. 2. 3. Relationship, interaction are binding forces. Communication is informal. May take a form of get-together and discussions, sit-outs with no formal agenda. Membership is a result of common interest, likes dislikes, acceptance etc. It evolves over a period of time. Tenure of membership is fluid and flexible. It is uncertain. It extends beyond working hours and can last longer. Intensity of relationship is defined by bonds of relationship and sharing of concern for each other. There is no hierarchy. Relations are based on equality. Leader merges and acceptance is the only criteria. May be different roles at different times are assigned to people in the group.

2. 3.

Authority, Power are binding forces. There exists a formal communication such as business letters, meetings, conferences, reports including toning of such communication which is formal Membership is deliberately applied for. Names are finalized with a scientific selection process. Membership is bound by contract of employment and is permanent. Restricted to working hours, bound by time and nature of Job. Stronger relationship at workplace depends upon clarity of structure and definition of Job profile. There is a hierarchy in relationship. Leader is imposed along with the task and there is no choice to member

4.

4.

5. 6. 7.

5. 6. 7.

8. 9.

8. 9.

Conclusion:
Intensity and roles are complimentary and supportive. Both organisations are different but interdependent. People involved are the same. And they offer strength to each other in terms of bonding and togetherness.

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STAFFING
Introduction:
Staffing has become an integral part of organizing. From right person for right job concept has moved on to right job for right person. Initially job was center point at the time of selection now it is an individual who is the center point at the time of staffing process.

Scope of Staffing function can be ascertained with the help of following topics:
1. Manpower Planning: Forecasting manpower requirement, skill sets, qualities, growth prospects of company, and intake trends in the industry. 2. Recruitment: Positive process of inviting candidates to apply for the jobs. Recruitment sources like Newspapers, Internet, Campus placement, Referrals, Internal promotions are to be explored).

3. Selection: It is the process of making right choice of candidates. Process differs from levels to levels in the organization. Standard process constitutes steps like written test, group discussion and interviews. These days process differs from sector to sector selection process. 4. Induction: Introduction of newcomer to the company and introduction of company to the newcomer. 5. Placement: It is all about designation, deciding on reporting authorities, span of management. 6. Compensation management: pay and salary details, various allowances, incentives, and facilities. 7. Performance Appraisals: Evaluating performance of the candidate. It has changed into performance plus potential appraisal and 360 degree appraisal system in which superior, peer, subordinate, business associate and candidate himself conducts evaluation process. 8. Transfer, Promotion, Career Planning (Regular staffing activities, criteria are to be decided, objectivity to be ensured, principle of equity and justice to be followed. 9. Training and Development: Improving skill enhancement techniques, personality improvement skills. It has an element of updating and moving with time. 10. Welfare: It is considered as positive HR initiative to enhance employee welfare. These days holistic view is taken and includes employees family.

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11. Employer-Employee Relations: It is all about negotiations for salary, perks, benefits understanding of each others roles. 12. Retirement: Staffing is a process of recruitment, retainment and retirement. Company needs to look at retirement age, compensation after retirement medical care. Staffing process believes in the principle of unless people in the organization grow, organization will not grow.

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(IV)

DIRECTION
Introduction
Direction is telling people what to do and seeing that they do it to the best of their ability. It includes making assignments, explaining procedures, seeing that mistakes are corrected, provided on the job instructions, and, of course issuing orders. Direction is that part of management, which actuates the people to work efficiently and effectively. It constitutes the life-spark to the enterprise, which like electric power sets it into motion. Direction has a major concern with the, human element of the organisation. People are actuated through direction. Planning and organizing are only preparations for doing the work and the work actually starts when the direction function of the management is performed. It is the direction function of the management, which is related with the activities that deal directly with influencing, guiding, supervising and motivating the people in the organisation for the attainment of certain objectives. Direction involves communicating and providing leadership and motivation to the people to contribute to the best of the capabilities for the achievements of objectives of the enterprise. Planning and organizing as effectively as they might be, must be supplemented by effective communication and motivation by an able leadership.

Who is to Direct?
Direction is concerned primarily with the people who put the plan into action. It is the duty of the managers at each level to achieve co-operation of the subordinates for the achievements of organisational objectives. It should not be thought that only the managers at the lower levels, who deal directly with the operative employees, perform the direction function. Direction is also done by the top-level managers and middle level managers.

Elements of Direction:
It consists of four elements: 1. Issuing of orders that are clear, complete and within the capabilities of subordinates to accomplish; 2. Continuous training activity in which subordinates are instructed to carry out the particular assignment in the existing situation; 3. Motivation of subordinates to try to meet the expectations of the manager and; 4. Maintaining discipline and rewarding those who perform properly. 19

Features of Direction:
Nature of Direction function is explained in the following features: 1. Managerial Function: Direction as a managerial function is the Interpersonal aspect of management process by which organisational members are led to understand and contribute effectively and efficiently to the accomplishment of organisational objectives. Direction is an important function of management. A good plan may have been chalked out, a sound organisation may have been evolved and a sound team of personnel may be employed, but all these will be ineffective unless there is a proper direction of the people in the use of planning and organisation. 2. Continuous activity: Direction is a continuous activity. It does not stop as long as the execution of plan is in process. A manager, who issues an order and thinks his function is complete, is committing a very serious error. He is supposed to continuously supervise the execution of his orders or instructions. He also has to lead and motivate the subordinates. 3. Pervasive function: Like other functions of management, Direction is also performed by the managers. The managers may elicit two types of behaviors from his subordinates when they issue orders, viz. linear and circular.

Importance of Direction:
Direction is the life-spark of an organisation. Directing is the spark of management process because it sets the organisational machine into motion. Theo Haimann has said, In order to make any managerial action, which the manager accomplishes by directing, without this managerial function, nothing or at best very little is likely to come about it. The importance of Direction in an organisation can be described under the following headings. 1. Heart of Administration: The heart of administration is the directing function, which involves determining the course, giving orders and instructions providing the dynamic leadership. 2. Initiates Action: An organisation can make good plans, set up a sound organisation structure but nothing will happen unless it is directed into operation. 3. Helps to Achieve Objectives: Through direction a manager can utilize peoples skills, time and energy to achieve organisational objectives. 4. To Execute the Decision: Policies and procedures of the organisation are executed through direction provided by the managers.

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5. Irreplaceable Task: Even in the presence of robots and computers guidance to people in their work will always be necessary. According to John Seymour, Direction in business is similar to strategy in war. 6. Helps Utilize Capabilities: maximum out of them. It helps to explore the talents of individuals and get

7. Crucial to an Organisations Success: It provides a test of managerial capability in running a business enterprise successfully and is very important in determining the organisations success. 8. Other benefits: a) It integrates individual efforts. b) It facilitates change in the organisation. c) It ensures stability and balance in the organisation. d) It is helpful in securing employees co-operation. e) It develops human resources and future managers.

Principles of Direction:
1. Principle of Objective: This principle states that the more effective the direction process, the greater will be the contribution of subordinates to organisational goals. 2. Principle of Harmony of Objectives: An organisation functions best when the goals of its members are in complete harmony with the goals of the organisation. Effective direction should facilitate integration of individual goals with organisational goals. 3. Principle of Direct Supervision: Direction succeeds when it maintains face-to-face or direct contact with subordinates. Direct supervision improves the loyalty and morale of employees. 4. Principle of Effective Leadership: This principle requires that managers should adopt an appropriate style of leadership to make direction effective. It should invite the views and opinion of employees. 5. Principle of Communication: Direction becomes effective when the manager knows the feelings and difficulties of his subordinates. The manager should ensure that the policies, plans and procedures are effectively communicated to his subordinates. 6. Principle of Unity of Command: To avoid disorder and confusion there should be unity of command. This implies that a subordinate get orders from just only one boss i.e his immediate boss. 7. Principle of Maximum Individual Contribution: Success is achieved when every person in the organisation contributes to the organisational objectives in the maximum

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way. Therefore the techniques of direction should be such as to enable the subordinates to do their best to attain enterprise goals. 8. Principle of Human Relations: This principle states that a managers success in directing depends on his ability to create a healthy human relations climate. 9. Principle of Participation: Effective direction can be achieved by involving subordinates in decision-making process. Hence the manager should invite ideas and suggestions. It will also produce a sense of commitment towards the directions given. 10. Principle of Follow-Through: Direction cannot be fully effective without an efficient control and feedback system. Mere issuing of orders is not enough; the managers should monitor the information on behavior and performance of their subordinates. Follow-up mechanism will help in keeping a check on deviations and wrong behavior.

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(V)

CONTROLLING
It is the managerial function of measurement and correction of performance in order to make sure that enterprise objectives and the plans devised to attain them are accomplished.

Control Process and those activities involved in


1. Setting standards. 2. Measuring performance against these standards and 3. Correcting or adjusting for deviations from the standards.

1. Objective 2. Standards 6. Corrected Performance 3. Performance

5. Corrective Action (if necessary)

4. Measurement

Purpose of Control
Basically there are four purposes of control. 1. Adapting to environmental change- In todays complex and turbulent business environment if managers could establish goals and achieve them instantaneously control would not be needed. But many things happen in the organisation and its environment, to disrupt movement towards the goals. A properly designed control system can help managers anticipate, monitor and respond to changing circumstances. 2. Limiting the accumulation of error- Small mistakes and errors do not often seriously damage an organisations health. But over a time, small errors may accumulate and eventually become very serious. Controlling helps in limiting the accumulation of error.

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3. Coping with organisational complexity. - When a firm purchases only one raw material, produces one product, its managers can maintain control with a very basic and simple system. But a business that produces many products and has a large market area needs a sophisticated system to maintain adequate control. 4. Minimizing costs- When practiced effectively, control can also help reduce costs and boost outputs. Effective control systems can eliminate waste, lower labour costs, and improve output per unit of input.

Characteristics of Effective Control


1. Integrating with planning- Control should be linked with planning. The more explicit and precise this linkage, the more effective the control system. The goals are to be set during the planning process; attention should be paid to developing standards that will reflect how well the plan is realized. 2. Flexibility- The control system itself must be flexible enough to accommodate change. Consider, for e.g. an organisation with diverse product line. Now when a change in product line changes, the number of raw materials needed, or when the required quantities of the existing materials change, the control system should be flexible to handle the revised requirements. 3. Accuracy- It has been found that managers make a surprisingly large number of decisions based on inaccurate information. Field representatives may hedge their sales estimates to make themselves look better. Production managers may hide costs to meet their targets. In each case the information the other manager receives is inaccurate. By proper controlling we can keep check on all these practices. 4. Timeliness- Timeliness does not necessarily mean quickness; it rather describes a control system that provides information as often as is necessary.

Resistance of Control
Managers sometimes make a mistake assuming that the value of an effective control system is self evident to employees. Many employees resist control, especially if they feel over controlled, if they think that control is inappropriately focused or reward inefficiency, or if they are uncomfortable with accountability. 1. Over Control- Occasionally, organisations try to control too many things. This becomes especially problematic when the control directly affects employee behavior. An organisation that instructs its employees when to come to work, where to part, when to have the morning coffee, exerts considerable control over peoples daily activities. People feel that these efforts to control their personal behavior were excessive.

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2. Inappropriate Focus- The control system may be narrow or it may focus too much on quantifiable variable and leave no room for analysis or interpretation. Example a sales standard that encourages high-pressure tactics to maximize short-run sales may do so at the expense of goodwill from long-term customers. Such a standard is too narrow. 3. Rewards for Inefficiency- Imagine two operating departments in a single organisation approaching the end fiscal year. Department 1 expects to have Rs.5000/- of its budget left over while department 2 is already Rs.3000/- in the red. As a result, department 1 is likely to have its budget cut for the next year and department 2 is likely to get a budget increased. Thus, department 1 is punished for being efficient and department 2 is rewarded for being inefficient. As with inappropriate focus people resist the intent of this control and behave in ways that run counter to the organisation. 4. Too much accountability - Effective controls allow managers to determine whether employees successfully discharge their responsibility. People who do not want to be answerable for their mistakes or who do not want to work as hard as their boss might therefore resist control.

Overcoming Resistance of Control


Perhaps the best way to overcome resistance to control is to create effective control to being with. If control systems are properly integrated with organisations planning and if the controls are flexible, accurate, timely, and objective, the organisation is less likely to over control. Two ways to overcome resistance are encouraging participation and developing verification procedure. 1. Encourage employee participation- When employees are involved in planning and implementing the control system, they are less likely to resist it. 2. Develop verification- Multiple standards and information systems provide checks and balances in control and allow the organisation to verify the accuracy of performance indicators. Resistance to control declines because these verification procedures protect both employees and management.

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TYPES OF CONTROL

Forms Of Operations Control


Preliminary Control Focus is on inputs to the organisational system. Screening Control Screening Control focuses on meeting standards for product and / or service quality or quantity during the actual transformation process itself. Screening Control relies heavily on feedback processes. The periodic quality checks provide feedback to workers so they know what, if any, corrective actions to take. Because they are useful in identifying the cause of problems, screening controls tend to be used more often than other forms of control. Post action Control Monitors the outputs or results of the organisation after the transformation process is complete. Although post action control alone may not be as effective as preliminary or screening control, it can provide management with information for future planning. For example, if a quality check of finished good indicates an unacceptably high defect rate, the production manager knows that he or she must identity the causes and take steps to eliminate them. Post action control also provides a basis for rewarding employees. Recognizing that an employee has exceeded personal sales goals by a wide margin, for example, may alert the manager that a bonus or promotion is in order. Financial Control Financial Control is the control of financial resources as they flow into the organisation (i.e., revenues, share holder investment,) as held by the organisation (i.e. working capital, retained earnings) and flow out of the organisation (i.e. pay, expenses). Businesses must manage their finances so that revenues are sufficient to cover costs and still return a profit to the firms owners. Budgetary Control Budgeting is the formulation of plans for a given future period in numerical terms. As such, budgets are statements of anticipated results, either in financial terms- as in revenue and expense and capital budgets or in non-financial terms - as in budgets of direct-labour hours, materials, physical sales volume, or units of production. It has often being said, for e.g. that financial budget represents the dollarizing of plants.

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(VI)

CO-ORDINATION
Co-ordination is the orderly synchronization of group efforts to provide the proper amount, timing, directing and co-operation of execution resulting in harmonious and unified actions to a stated objective. Co-ordination should be rightly considered as the essence management because each of the managerial functions of planning, organisation, staffing, controlling and directing is an exercise in co-ordination. It is the process of integrating activities of separate departments in order to pursue organisational goals more effectively. Without proper co-ordination, people would loose sight of their roles within an organisation and be tempted to pursue their own departmental interests at the expense of the organisational goals.

Need for Co-ordination


The extent of co-ordination needed in an organisation depends on the nature of tasks and degree of interdependence of people in various units performing them. When these tasks require or can benefit from communication between units, then a high degree of co-ordination is the best. When information exchange is less important, work may be completed with less interaction between units. Also a high degree of co-ordination arises because of the following factors. 1. Division of Labour: When managers divide work into specialized functions or departments, they at the same create the need for the co-ordination of these activities. Generally, the greater of the division of the labour, the greater the need for coordination. If two people in one unit do all the work of an organisation, it is clear that there is little need for co-ordination. But if the work has been divided into ten units with hundred employees, the need for co-ordination is much greater. Co-ordination ensures proper synchronization between activities of different units, avoids interruptions in operations due to reasons such as delay to introduce co-ordination into the plan at a later stage when the damage has already been done. 2. Direct Interpersonal Horizontal Relationship: Co-ordination can be secured effortlessly and effectively by direct interpersonal horizontal relationship. Such a direct personal communication brings about agreement on methods, actions and ultimate achievements and removes misunderstandings and conflicts. This will involve a system in formal communication embracing all ranks and status. 3. Continuity: Co-ordination must be regarded as a continuous process and must be carried out at all times. It starts from planning and runs through the functions of organizing, directing and controlling.

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4. Efforts of Manager: One should not be under the wrong impression that co-ordination can be achieved merely by giving an order. Co-ordination is something, which cannot be ordered. On the contrary, it must be brought about by the efforts of the managers by integrating all efforts, ideas, and interests to some common purpose. 5. Dynamism: Co-ordination should not be rigid. Its essence lies in constant experimentation with all phases of organisation and operations. Good co-ordination will remove the critical points as they arise, excellent co-ordination will anticipate them and prevent their occurrence. The maintenance and operation departments of an airline company provide an example of this kind of relationship. Obviously, this close interrelationship leads to the strongest need for co-ordination.

Types of Co-ordination
Co-ordination can be broadly classified into one of the following four types: 1. Internal co-ordination: Co-ordination among the employees of the same department or section, among workers and managers at different levels, among branch offices, plants and departments and sections is called internal co-ordination. 2. External co-ordination: Co-ordination with customers, suppliers, Government and outsiders with whom the enterprise has business connections is called external coordination. 3. Vertical co-ordination: Vertical co-ordination is what exists in a department where the departmental head is called upon to co-ordinate the activities of all those placed below him. 4. Horizontal co-ordination: Horizontal co-ordination takes place sideways. It exists between different departments such as production, sales, purchasing, finance, personnel etc.

Principles of Co-ordination
1. Early Introduction: Co-ordination must be visualized right from the early stages of planning and policymaking. At the preparation of planning stage, mutual consultation, co-operation and give-and-take become necessary. In case a plan is prepared and put into practice without considering the required co-ordination, it is not possible to supply the materials and allocation of duties. This may result into overlapping.

2. Individual interest Vs Organisation interests: The need for co-ordination is also felt to integrate the activities and objectives of an organisation in order to effectively achieve organisational goals. Without co-ordination, individuals and organisations would begin to pursue their own specialized interests at the expense of organisation goals. Coordination reconciles differences in approach, interest or efforts of various departments

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by avoiding inconsistencies in their priorities and objectives and policies. It harmonizes corporate and individual goals by making individuals see how their jobs contribute to the dominant goals of the enterprise. 3. Interdependence of Units: The need of co-ordination in an organisation also arises because of the interdependence of various units. The greater the interdependence of units the greater the need for organisation. Interdependence among units can be of the following types: a. Pooled Interdependence: Units linked by pooled interdependence make contributions to the total organisations but are not directly related. The need for co-ordination between them is minimal. All product based departmentalization, where there are separate self-contained units for manufacturing and marketing of each products are examples of pooled interdependence. b. Sequential Interdependence: In this kind of linkage, one organisational unit must act before the next. Greater co-ordination is needed in sequential than in pooled interdependence though here, creating buffer in inventories can reduce the dependence of units. c. Reciprocal Interdependence: In this relationship the input of one unit become the output of other and vise versa.

Techniques of Co-ordination
The following are important techniques to achieve co-ordination 1. Hierarchy: The oldest as well as the simplest device for achieving co-ordination is hierarchy or chain of command. By putting inter-dependent units under one boss, some co-ordination among their activities is ensured. The system of hierarchy makes individuals depend upon, passive towards and subordinate to the leader. 2. Effective Communication: Organisation is consistently being modified by internal and external changes. Communication through letters, procedures, reports, bulletins and a number of modern mechanical devices ensures that people in the organisation are well informed of the changing situation and provided with information necessary to ensure co-ordination. Co-ordination is concerned with the inter-relationship of separate activities and so it can be no better than the transfer of information about those activities to some common points, where dovetailing takes place. 3. Indoctrination: Indoctrination of organisation members with the goals and mission of the organisation a device used commonly in the religious and military organisations is still another co-ordination device. According to Selznick, the major task of a leader is not only to make a policy but to build it into the organisations social structure a situation where everybody in the organisation spontaneously protects or advances its

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official aims and methods, succeeds in the transformation by indoctrination or other means, the neutral body of men into a committed body. 4. Induction: Inducting a new employee into the new social setting of his work is also a co-ordinating mechanism. This device familiarizes the new employee with the organisations rules and regulations, its dominant norms of behavior, values and beliefs and integrates his personal goals with the organisational goals. 5. Rules, procedures and policies: The specification of rules, procedures and policies is another coming policy to co-ordinate sub-units in the performance of their repetitive activities. Standard policies, procedures and rules are laid down to cover all possible situations. But as some critics point out, this device leads to a vicious cycle syndrome in which the dysfunctional consequences of this device leads to a still stronger reliance on it. 6. Boundary Spanning: When the number of contacts between departments decreases dramatically it may be best to create a permanent liaison between departments. Such a liaison is said to fulfill boundary-spanning roles. Effective boundary spanning understands the needs, responsibilities and concerns of both departments and can help the departments communicate. 7. Reducing need for co-ordination: When the need for co-ordination is so great that the methods discussed so far are ineffective, the best approach may be to reduce the need for tight co-ordination. Jay Galbraith describes two ways to do this: a) Creating slack resources: Providing slack (additional) resources gives units flexibility in meeting each others requirements. Suppose Mercedez Benz managers anticipate that 10,000 cars will be bought in a given region of US over a period of three months. The managers of the company may establish a production quota of 12,000 cars, in case demand is larger than anticipated and production deadline be set so as to give them a safety margin, should production and transportation difficulty arise. Without this safety margin having enough cars at the right time might require close co-ordination between production and sales. b) Creating independent units: Another way to reduce the need for co-ordination is to create independent units whose members can perform all the necessity aspects of a task rather than relying on other departments.

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Difficulty of Co-ordination
Large business enterprise consists of a number of departments, such as production, purchase, sales, finance, personnel etc. These departments find it hard to collaborate with each other due to the differences in the attitudes and working styles. Paul R. Lawrence has identified four such differences: 1. Difference in orientation towards particular goals: Members of different departments develop their own views about how best to advance the interest of the organisation. To sales people, product variety may take precedence over product quality. 2. Difference in time orientation: Some members of an organisation such as production managers will be more concerned with problems that have to be solved immediately or within a short period of time. Others like members of research and development team may be pre-occupied with problems that may take years to solve. 3. Difference in interpersonal orientation: In some organisational activities such as production, there may be more formal ways of communicating and decision-making. In other activities such as R & D, the style of communication and decision may be informal. Everyone may be encouraged to have a say and to discuss his ideas with others. 4. Difference in formality of structure: Each unit in the organisation may have different methods and stands for evaluation process toward objectives and for rewarding employees. In a production department, for e.g. where quantity and quality are rigidly controlled, the evaluation and reward process might be quite formal. Employees will be judged quickly on how they will meet or exceed welldefined performance criterion. To conclude, it can be said that Co-ordination includes 1. Co-operation 2. Balancing 3. Timing 4. Communication 5. Integration and Synchronization

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(VII)

LEADERSHIP
What is leadership?
Leadership is a process of influencing people to direct their efforts towards the attainment of some particular goal or goals. Leadership is 1) 2) 3) 4) 5) A process of influence Power Fundamental understanding of followers The ability to inspire followers to achieve common goals Leader and his style of leadership

As Harry Truman puts it, Leadership is the ability to get other people to do what they dont want to do and like it. A good leader is one who essentially possesses the following characteristics or qualities. a) b) c) d) e) f) g) h) i) j) Courage. Clarity Communication Character Creativity Controlling Common Sense Credibility Charisma Crises management

Leadership is imbibed, not inculcated, it is said. A leader should be mentally and physically fit. Leaders need to exhibit total integrity with themselves and with those around them. A leader should have the courage to take challenges, to make choices, focus and prioritize. He should be able to take initiative. He must not be reckless, and must act with prudence. A leader should be a good listener and must have an eye for detail.

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Leadership Styles:
1) Autocratic or Authoritarian:- Where decision making is kept solely with the leader. An autocratic leader may be a hard-boiled autocrat, or a benevolent autocrat or a manipulative autocrat. 2) Democratic or Participative:- Where the leader leads mainly through persuasion and example, rather than through fear, status or force. 3) Laissez faire or free Rein:- Where the leader prefers to give little or no direction, and allows his subordinates a great deal of freedom. 4) Paternalistic:- Where the leader adopts the paternalistic or fatherly attitude, and helps, guides and keeps the followers happy. 5) Bureaucratic:- Where the leader sticks to rules and procedures in dealing with his followers. A good leader should be able to place the right job to the right man. This may transform the group dynamics every man sees his aspirations merging with the teams goals. Team-building, motivation, innovation and talent spotting are the hallmarks of a leaders plan.

Conclusion:
Leadership is not a position, but an action. From the oldest concept of leadership, it is associated with qualities, later it was associated with styles and situations and today it is all about transformational leadership. To sum up, I am impressed by the leader not one who performs great deeds but one who makes me believe that I can perform great deeds.

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(VIII)

COMMUNICATION
Introduction
There are many functions in the management process. Some appear very simple, easy to understand, some intense and complicated. Communication falls into both these categories. Apparently simple but sometimes very complicated. Many organisational problems have their root cause in lack of communication or misunderstanding. Many mergers, acquisitions, joint ventures and takeovers have run through bad weather because of communication problem at various levels. We have communication revolution in the world with information technology and its application in business - Internet, Intra net, Internet Telephony, Fax etc. Todays business managers, proudly state that with communication revolution, distance is dead. Though we agree with what has been stated the most disturbing fact of our social life is that the desire to communicate is on the decline where human nature and tendencies revolt and are disturbed. Complications arising from lack of communication, distorted communication takes the center stage. Entire organisation revolves around communication system.

Definitions:
Communication is meaningful interaction. Communication is information sharing. Communication is a link force. Communication is understanding. Communication is fundamental requisite of life.

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Process of Communication
To understand the process of communication, we must look at the following chart:

B. Encoding (Message Formulation)

A. Ideation (Source)

C. Transmission (Through Media)

F. Response (Action)

D. Receiving

E. Decoding (Message Interpretation)

Communication is a two way process


It starts with the Communicator (Ideation, Encoding, Transmission) Received by the Communicatee (Decoding, Response, Action) Process of any communication includes: 1. 2. 3. 4. Communicator Communicatee Message Medium

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Barriers to Communication
Organisational communication and also communication in social life is hampered because of a number of barriers. These barriers create distortions, misunderstandings and problems. These barriers are: 1. Physical barriers like noise, time and distance. 2. Semantic barriers (Science of words) For e.g. wrong interpretation of words or grammatical errors. 3. Wrong medium of communication. 4. Psychological barriers like closed mind, status consciousness, attitudes, ego, values etc. 5. Barriers resulting from inattentiveness, faulty transmission or poor retention. 6. Barriers due to information gaps or due to lack of information. 7. Barriers resulting out of difference in perceptions, outlook, approach. 8. Barriers resulting from illiteracy, ignorance, and superstition in a country like India. Lack of communication leads to: 1. Information gap 2. Alienation 3. Problems in relationship 4. Misunderstandings 5. Crisis situations 6. Deviation from performance 7. Loss of trust and confidence 8. Emergence of organisational conflicts. 9. Birth of organisational politics or it increases 10. Disintegration

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Ten Principles of Effective Communication


1. Remember that communication is a two way process. 2. Be sure of what you want to communicate and why. 3. Provide the right attitude. 4. Be clear in the use of language. 5. Listen attentively. 6. Speak to the point and avoid communication garbage (irrelevant communication). 7. Be sure your actions do not contradict your communication (fulfill the promises you have made). 8. Use right medium. 9. Remember the various barriers to communication. Avoid mental blocks, closed mind, ego problems. 10. Desire to communicate is the essence of communication.

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(XI)

MOTIVATION
What is Motivation?
Simply put it, Motivation is nothing but the willingness to exert high levels of effort towards organisational goals, conditioned by the efforts ability to satisfy some individual need. The three key elements in this definition are effort, organisational goals, and needs. The effort element is a measure of intensity. When some one is motivated he or she tries hard. But high levels of effort are unlikely to lead to favourable job performance outcomes unless the effort is channeled in a direction that benefits the organisation, therefore, we must consider the quality of the effort as well as its intensity. Need means some internal state that makes certain outcomes appears attractive. An unsatisfied need creates tension that stimulates drives within the individual. So we can say that motivated employees are in a state of tension. To relieve this tension they exert effort. The greater the tension, the higher the effort level. If this effort successfully leads to the satisfaction of the need, tension is reduced.

Theories of Motivation
Hierarchy of needs Theory Perhaps this is the most well known theory of motivation. Its exponent is Abraham Maslow. It is also known as Maslows theory of motivation. He stated that within every human being there exists a hierarchy of five needs. These needs are: 1. Psychological Includes hunger, thirst, shelter, sex and other bodily needs. 2. Safety- Includes security and protection from physical and emotional harm. 3. Social-Includes affection, belongingness, acceptance and friendship. 4. Esteem- includes internal esteem factors such as self-respect, autonomy and achievement and external esteem factors such as status, recognition and attention. 5. Self-actualization- The drive to become what one is capable of becoming includes growth achieving ones potential and self-fulfillment.

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Maslow says, as each of these needs becomes substantially satisfied, the next need becomes dominant. Maslow separated the five needs into higher and lower orders. Psychological and safety needs were described as lower-order and social esteem, and self-actualisation as higher order needs. Theory X and Theory Y Douglas McGregor proposed two distinct views of human beings. One basically negative, labeled theory X, and other basically positive, labeled theory Y. After viewing the way in which managers dealt with employees, McGregor concluded that a managers view of the nature of human beings is based on a certain grouping of assumptions and that he or she tends to mould his or her behaviour toward subordinates according to these assumptions. Under Theory X, the four assumptions held by managers are: 1. Employees inherently dislike work and whenever possible, will attempt to avoid it. 2. Since employees dislike work, they must be coerced, controlled, or threatened with punishment to achieve goals. 3. Employees will avoid responsibilities and seek formal direction whenever possible. 4. Most workers place security above all other factors associated with work and will display little ambition McGregor also listed the four positive assumptions that he called Theory Y. 1. Employees can view work as being as natural as rest or play. 2. People will exercise self-direction and self-control if they are committed to the objectives. 3. The average person can learn to accept, even seek responsibility. 4. The ability to make innovative decisions is widely dispersed throughout the population and is not necessarily the right of managers alone. Theory X assumes that lower-order needs dominate individuals. Theory Y assumes that higher-orders needs dominate individuals. Motivation- Hygiene Theory Frederick Herzberg proposed hygiene theory. According to Herzberg, the factors leading to job satisfaction are separate and distinct from those that lead to job dissatisfaction. Therefore, managers who seek to eliminate factors that create job dissatisfaction can bring about peace, but not necessarily motivation. Herzberg divided his theory mainly around two factors - Hygiene and Motivator factors.

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Characteristics such as company policy and administration, supervision, interpersonal relations, working conditions, and salary have been characterized by Herzberg as hygiene factors. When they are inadequate, people will be dissatisfied with their job. Herzberg emphasizes on motivating factors such as achievement, recognition , the work itself, responsibility and growth. Hygiene factors are those whose presence is a must. Its presence does not motivate but absence creates dissatisfaction. Motivators are those, which directly encourage, motivate people to work. * Learnings Why motivators become hygiene factors after sometime? McClellands Theory of Needs McClellands theory of needs focuses on three needs: Achievement, Power and Affiliation . They are defined as follows. 1. Need for achievement: The drive to excel, to achieve in relation a set of standards, to strive to succeed. 2. Need for power. The need to make others behave in a way that they would not have behaved otherwise. 3. Need for affiliation: The desire for friendly and close interpersonal relationships. As described above, some people who have a compelling drive to succeed are striving for personal achievement rather than the rewards of success per se. They have a desire to do something better or more efficiently than it has been done before. This drive is the achievement need. The need for power is the desire to have impact, to be influential, and to control others. Individuals high in this category enjoy being in-charge, strive for influence over others, prefer to be placed into competitive and status oriented situations, and tend to be more concerned with prestige and gaining influence over others than with effective performance. The third need stated by McClelland is Affiliation. Affiliation can be viewed as the desire to be liked and accepted by others. Individuals with a high affiliation motive strive for friendship, prefer co-operative situations rather than competitive ones, and desire relationships involving a high degree of mutual understanding. Vrooms Expectancy Theory The expectancy theory argues that the strength of a tendency to act in a certain way depends on the strength of an expectation that the act will be followed by a given outcome and on the attractiveness of that outcome to the individual. It includes three variables or relationships.

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Attractiveness: The importance that the individual places on the potential outcome or reward that can be achieved on the job. This considers the unsatisfied needs of the individual. Performance-reward linkage: The degree to which the individual believes that performing at a particular level will lead to the attainment of a desired outcome. Effort-performance linkage: The probability perceived by the individual that exerting a given amount of effort would lead to performance. * Behavior rewarded is behavior repeated. Rewarded behavior is repeated again.

Ten Types of Motivators:


1. Financial (Related to monetary aspects) 2. Non-Financial (Related to non-monetary aspects like Recognition, Status, Respect) 3. Internal (Factors that drive you from within) 4. External (Factors that are outside what we work for or influenced by) 5. Open (What we disclose? Factors that can be easily identified) 6. Hidden (What we do not disclose? But still aim for secretively) 7. Positive (Reward, incentives, promotion, commission) 8. Negative (Fear, punishment, demotion, reprimand) 9. Ethical (virtues of ethics honesty, integrity etc.) 10. Unethical (controversial and debatable factor that questions basic assumption of Human Behavior. Is corruption a source of motivator? If dishonesty is rewarded can it be a source of motivator.

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(X)

MORALE
Morale is a state of mind and emotions affecting the willingness and attitude to work, which, in turn, effect the achievement of individuals and organisational objectives. Motivation is associated with the force within an individual. Morale is associated with a group and its influence on organisational work. Morale is a feeling of enthusiasm, zeal and confidence in every individual or group that they will be able to cope up with the tasks assigned to them. It is very difficult to quantify morale. Normally, it is associated with the concept of high or low morale.

Indicators of low morale


Employee unrests. Absenteeism and tardism. Employee turnover. Frequent complaints and grievances. Fatigue and monotony. Overall disinterest in the work. Organisational politics. Employees being critical of the organisation. Unproductive gossip. Lack of discipline.

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Measures to improve morale


It is said that demoralization is an effect of organisational policies, rules systems, certain injustices meted out to employees and their reflection on others. The following measures are steps to be initialized by management to improve morale in an organisation. Transparency in decision making. Grievance handling systems. Employee participation in decision-making. Job enrichment. Brain storming and organisational assessment programmes (where employees get an opportunity to express their views and concerns about the organisation.) Positive human relations initiatives such as financial and non-financial incentives and proper reward systems. Job relation. Delegation of authority and responsibility. Open communication system. Commitment of top management towards vision and mission statements of the company.

Conclusion
It is said that individuals are very sensitive towards organisational surroundings. The acts of courage, confidence, resolution and resilience are all a reflection of the attitudes of the top management. Individual perception of benefits to be received and organisational objectives are the two balancing factors, which should be considered while discussing the concept of MORALE.

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