MCO - 01

ORGANISATION THEORY AND BEHAVIOUR

UNIT 1 INTRODUCTION TO ORGANISATION

UNIT 2 ORGANISATION THEORY
UNIT 3 ORGANISATION STRUCTURE AND EFFECTIVENESS
UNIT 4 OVERVIEW OF ORGANISATIONAL BEHAVIOUR
UNIT 5 INDIVIDUAL BEHAVIOUR AND LEARNING
UNIT 6 PERCEPTION
UNIT 7 ATTITUDES AND VALUES
UNIT 8 PERSONALITY AND EMOTIONS
UNIT 9 STRESS MANAGEMENT
UNIT 10 MOTIVATION
UNIT 11 JOB DESIGN AND JOB SATISFACTION
UNIT 12 GROUP FORMATION AND STRUCTURE
UNIT 13 COMMUNICATION
UNIT 14 CONFLICT MANAGEMENT
UNIT 15 TEAM BUILDING AND LEADERSHIP
UNIT 16 POWER AND POLITICS
UNIT 17 ORGANISATIONAL CULTURE AND CLIMATE
UNIT 18 ORGANISATIONAL CHANGE
UNIT 19 ORGANISATIONAL DEVELOPMENT
UNIT 20 EMERGING TRENDS IN OB

by CA MD IMRAN

camdimran.com
UNIT 1 INTRODUCTION TO ORGANISATION
Structure

0.0 Objectives
0.1 Introduction
0.2 Concept of Organisation
1.3 Basics of Management
1.3.1 Meaning of Management
1.3.2 Levels of Management
1.3.3 Basic Principles of Management
1.4 Functions of Managers
1.5 Roles of Managers
1.6 Organisation as a Process of Management
1.7 Types of Organisation
1.8 Features of Modern Organisation
1.9 Let Us Sum Up
1.10 Key Words
1.11 Terminal Questions

1.0OBJECTIVES
After studying this unit, you should be able to:
• explain the concept of organisation;
• discuss the basic concept of management;
• analyse the functions of managers;
• identify the roles of managers;
• discuss various types of organisation; and
• explain the features of modern organisation.

1.1 INTRODUCTION
An organisation is a group of people working together to achieve the specified goal. A manager play a
central role in grouping the people and activities, establishing authority and responsibility and interacting
with people for the achievement of the organisational goal. He performs the functions of planning,
organising, directing and controlling for smooth functioning of the organisation. Moreover, continuous
influence of dynamic environment on the organisation requires new managerial techniques to manage these
changes. The detailed study of various aspects of organisation and management may provide proper
techniques for managing them effectively. In this unit, you will learn the concept of organisation and
management. You will further learn the functions and roles of managers. You will be acquainted with the
types of organisation and the features of the modern organisation.

1.2 CONCEPT OF ORGANISATION

To understand basic concept of organisation, let us learn it through following dimensions of enquiry:

• What? - What do we mean by an organisation?

• Why? - Why is study of organisation needed?
• When? - When are organisations able to serve its purpose
(or otherwise fail)?
• How? - How are organisations formed?
• Where? - Where to find people who can manage organisations well?
• Who? - Who are the people having ability to create excellent organisation?

What do we mean by an organisation?

Stoner, Freeman, and Gilbert describe that at an organisation, two or more people work together in a
structured way to achieve a specific goal or set of goals. Through this description, certain salient features of
an organisation emerge. These are:
• Organisation is a conglomerate of multiple number of persons;
• Relationship among people working together is defined through a structure. Through structure,
communications take place among persons working in the organisation. Such structure may be
relatively rigid, as in the case of formal structure, or the structure may be relatively loose, as in the
case of informal structure;
• Organisation strives to achieve planned goal. The goal(s) may be singular or plural. Goal is one of the
fundamental elements of an organisation.

Robbins describes an organisation as a consciously coordinated social entity, with a relatively identifiable
boundary, that functions on a relatively continuous basis to achieve a common goal or set of goals. The
additional salient features of this description of organisation are following:
• The activities at an organisation are consciously coordinated. It means affairs at organisation are
properly managed. It implies importance of management in organisation;
• The term relatively identifiable boundary implies that organisation works within a flexible yet definable
boundary. Any organisation with a significant size has three layers of boundaries. The innermost
boundary contains of the internal stakeholders i.e. employees, shareholders, and board of directors. The
next layer consists of external stakeholders i.e. customers, competitors, financial institutions, suppliers,
government, labour unions, media, and special-interest group. The outermost boundary consists of major
macro variables like economic variables, technological variables, political variables, legal variables, and
social variables.

Brown and Moburg describe organisations as relatively permanent social entities characterised by goal-
oriented behaviour, specialisation, and structure. This description of organisation suggests that organisations
have four basic features:
• Organisations are relatively permanent social entities though many changes which might be taking place
within the organisation- thus continuity is at the core of existence of any organisation;
• Goals remain an integral part of any organisation;
• Organisations need highly specialised skills to attain goals,
• In order to bring together various work activities, organisations need to have structures.
Hicks describes an organisation as a structured process in which persons interact for objectives. This
description indicates five facts that are common to all organisations:
• An organisation always include persons;
• These persons are involved with one another in some way;
• The interactions among persons can always be ordered or described by some sort of structure;
• Each person in the organisation tries to meet personal objectives also through organisational activities;
• These interactions can also help to achieve compatible joint objectives, i.e. organisational objectives and
personal objectives.

Schein describes organisation as the planned coordination of the activities of a number of people for the
achievement of some common, explicit purpose or goal, through division of labour and function, and through
hierarchy of authority and responsibility. According to this definition, Organisations have following
characteristics:
• Coordination of efforts;
• Common goal;
• Division of labour;
• Hierarchy of authority.

Why is study of organisation needed?

Arguing in favour of rationale for the creation of organisations, Chris Argyris states:
Organisations are usually created to achieve objectives that can best be met collectively. This means that the
sequences of activity necessary to achieve objectives are too much for one individual and they must be cut
up into sequential units that are manageable by human beings. At the individual level the unit are roles; at the
group level the units are departments. These units are integrated or organised in a particular sequence or
pattern designed to achieve the objectives, and the resulting pattern constitutes the organisation structure.

Organisations have become cornerstone of our basic existence. Organisations pursue goals and objectives
that can be more efficiently and effectively achieved by the concerted actions of individuals. Hospitals,
educational institutions, production units, service centres are nothing but organisations. Our civilized life
would perhaps collapse without various organisations around us. Therefore there is need for us to know how
does an organisation work ? Further it is more important to make organisations around us healthier and more
effective for better future.

When are organisations able to serve its purpose (or they otherwise fail)?

Organisations are able to serve its purpose when they are well managed. In fact study of organisation and
study of management of organisation go hand in hand. A well managed organisation is able to utilize human
input and its resources like money, material, machine, motivation of employees, market etc. in an integrated
manner. Organisations are able to survive and excel if they utilize their all resources in tune with the market
needs. Successful organisations also orient themselves towards external factors like economic environment,
political environment, legal environment, social environment, environment of international market etc.

How are organisations structured?

There are various approaches to structure and design organisations. You shall study about this issue in detail
in Unit 3. At this point of time, it would be desirable for you to comprehend that organisational structure or
its design is appropriately chosen to facilitate various factors like flow of communication, decision making,
execution of decision, controlling, and integration of all activities of the organisation.

Where to find people who can manage organisations well?

People who can manage an organisation well may be found within the already existing organisation.
Otherwise in case of a newly established organisation or even in case of old organisation, appropriate people
can be identified from outside. People who are already with the organisation can be further developed for
higher responsibilities through developmental programmes, on the job training, and career planning.
Appropriate people from outside can be identified for positions at various levels through proper recruitment
and selection policies and procedures.

Who are the people having ability to create excellent organisation?

In fact employees are the greatest assets of an organisation. In modern organisations, employees are expected
to possess multiple skills. In order to perform various activities in an organisation, different persons are
expected to possess different skills, so that organisation has an appropriate skills-basket. Normally people
who can create excellent organisation have many desirable skills and traits. Some important skills and traits
are:
• Integrative values i.e., ability to generate faith and trust;
• Organising ability;
• Ability to see further i.e., ability to perceive future trend;
• Ability to put adequate effort;
• Up-to-date skills to perform ever changing nature of task;
• Skills to establish effective human relations with insiders and outsiders;
• Ability to generate adequate resources.

So far you were developing basic understanding of organisation. Through the next section let us develop
basic understanding of management.

Activity A

For appropriate understanding the subject matter dealt in this Unit as well as in all the subsequent units of
this course, apart from reading the course material, you are required to have a direct feel of functioning of
organisations. Visit an organisation near to your place. Such organisation may be a production organisation, a
service organisation, a voluntary organisation, or a cooperative organisation. Through observation, secondary
data, and dialogue with a few persons working there, analyse the following: a) What is the purpose of
existence of the organisation? b) How does the organisation coordinate its various activities of different
departments? c) How are people working in the organisation connected to one another formally, through an
organisational chart?
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1.3 BASICS OF MANAGEMENT

In this section we shall examine the basic meaning of management, levels of management in an
organisation, and basic principles of management.
1.3.1 Meaning of Management

Many experts call management as a process. Some others call it as activity directed towards coordination of
resources. Let us take following descriptions of the term ‘management’. Stoner, Freeman, and Gilbert
describe the term management as the process of planning, organising, leading, and controlling the work of
organisation members and of using all available organisational resources to reach stated organisational goals.
Kimball states that management may be broadly defined as the art of applying the economic principles that
underlie the control of men and materials in the enterprise under consideration.

Koontz defines management as the art of getting things done through and with people in formally organised
group. According to Henry L. Sisk, management is the coordination of all resources through the process of
planning, organising, directing, and controlling in order to attain stated objectives.

Yet another view on management calls management as a body of personnel. The management plans the work,
organises and obtains the production. Emphasizing the importance of management for an organisation,
Urwick states, No ideology, no ism, no political theory, can win greater output with less efforts from a given
complex of human and material resources: only sound management. And it is on such greater output that a
higher standard of life, more leisure, more amenities for all must necessarily be founded.

In the recent era management has emerged as a prominent profession, as management fulfils the following
characteristics of a profession:
• Management is a body of knowledge;
• There is formal teaching of that knowledge;
• There are representative associations and body of members in the field of management;
• There are ethical standards of conduct enforced by the profession;
• There is provision of suitable remuneration to the members in the service of management.

1.3.2 Levels of Management

In order to coordinate various activities in an organisation, various levels of management are created. In
general there are three levels of management:
• Top management;
• Middle-level management
• Supervisory or Junior level management.

Top level management consists of Board of Directors, Chairperson, Managing Director, and General
Managers of functional areas like production, marketing, finance, and human resource management. Top
level management gets involved in all activities like planning, organising, directing, and controlling, however
it focuses more on planning and organising than the other levels of management. The prime concerns of top
management include : enhancing shareholder values, providing vision and mission to organisation, upholding
overall objectives of the organisation, taking policy decisions, review of budget and keeping organisation
financially sound, maintaining progress, profit, and sustainability of the organisation, communicating goals
of organisation to all the members, protecting integrity, and guiding the organisation through sound
leadership. There are more requirements of conceptual skills than human skills or technical skills at the level
of top management.

Middle-level management acts with guidance of top management to accomplish the objectives of the
organisation. The prime concern of the middle management is to carry out organising function in more detail,
in order to keep top management free for doing planning level activities. Some of the functions of middle
management include: creating coordination and cooperation among various departments of the organisation,
to design and operate upon a system in the organisation which would keep various resources in smooth flow
as well as which would ensure motivation and morale of people working in the organisation, to develop staff
at various levels through training and developmental activities, and to creatively control and guide the
personnel at junior level in order to achieve bottom line results. There are more requirements of human skills
than conceptual or technical skills at the level of middle management.

At supervisory or junior level management, there is more requirement of technical skills than conceptual
skills or human skills. However in the modern era when role of service sector is increasing in the economy,
the importance of human skills is increasing at the level of middle management also. People at junior level
management are directly connected to the people who work at operational level. Hence junior level
management is more concerned with direction and control of activities than planning and organising
functions.

All three levels of management : top, middle, and junior play crucial roles in achieving the organisational
goal. The three levels differ only in terms of emphasis on certain activities. Top management is more
concerned with planning and overall organising, middle management is more concerned with detailed out
organising, and junior level is more concerned with directing and controlling. However now we are
witnessing appropriate empowerment at the level of middle level and junior level management, thus the roles
of these two levels are enhancing in the modern organisations.

1.3.3 Basic Principles of Management

Different experts have described principles of management in various ways. However, general principles of
management as propounded by Henri Fayol are one of the most comprehensive principles of management.
The general principles of management as given by Henri Fayol have following components:
Division of Work: It is closely related to specialisation. Division of work promotes more skills on a
particular job, leading to more efficiency.
Authority and Responsibility: Authority is the vested power through the position one holds. Authority and
responsibility go hand in hand. Authority is required to fulfil the responsibilities entrusted.
Discipline: By discipline, Fayol meant obedience, application, energy, and respect. Penalties should be
judiciously applied, and supervision should be competent and fair.
Unity of Command: A subordinate should take orders from only one authority. Fayol apprehended that in
the absence of unity of command, authority is undermined, discipline is jeopardized, order gets disturbed,
and stability gets threatened.
Unity of Direction: Fayol advocated that there should be only one head and only one plan.
Subordination of Individual Interests to General Interests: The interest of organisation should come
before the interest of an individual.
Remuneration: Practice of fair pay should prevail and attempt should be made to arrive at the best scheme
of payment.
Centralisation: For overall control there should be one central point in the organisation. In relatively larger
organisation, appropriate decentralisation may be practiced through delegation of authority.
Scalar Chain: Authority should flow from top to bottom through unbroken chain. Through scalar chain
various people in the organisation are connected in a particular way and the chain determines the direction of
flow of communication. However in many cases, quicker action is possible if people at lower level directly
communicate between themselves.
Order: People and materials should be at right place at right time. A position should be manned with a
person who is most suitable for that job.
Equity: Equity brings forth loyalty and devotion from employees.
Stability of Staff: Stable work force promotes efficiency in the organisation.
Initiative: Initiative should be promoted in the organisation and a climate of sufficiently tolerating mistakes
should be promoted.
Esprit de Corps: Through promoting team spirit and fellow feeling, an organisation can become stronger.
More informality and healthy communication promote unity in the organisation.

Apart from these 14 principles of management given by Fayol, there are some other principles of
management also which you should know. In brief they are:

Harmony of Objectives: Organisations perform more effectively when all functions are directed towards
harmonised grand objective.
Universality of Management: A sound principle of management is applicable to any type of organisation,
engaged in varied activities, and located anywhere.
Primacy of Objectives and Planning: Objectives and planning precede any other activities in an
organisation.
Control by Exception: Subordinate staff should take up routine activities, and management should take up
exceptional control and supervision, having broader impact on the organisation.
Decision by Exception: A manager should take decision within the boundary defined by authority of the
position. The higher authority should decide a matter beyond that boundary.
Equality of Authority, Power, Responsibility, and Accountability: In an organisation, authority, power,
responsibility, and accountability should be in balance. Otherwise the results are hostility, friction,
resentment, dissatisfaction, and strife. If organisation is not balanced, it may be a factor responsible for its
decay in the long run.
Coordination: Coordination is the corner stone of the efficient functioning of the organisation. Each
activity as well as efforts of the people working in the organisation should be coordinated.
The basic principles of management as described above provide a guideline for managing an organisation
effectively. The application of these principles generate efficiency and effectiveness in an organisation.
However we should remember that certain principles of management have universal and eternal appeal
whereas some other principles need to be flexible in nature in order to create healthy flow of activities within
an organisation.

Check Your Progress A

1) Why do we need to study about organisations? How are different activities in an organisation
coordinated for achieving a common goal?
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2) Do the terms ‘organisation’, and ‘management’ go together? Describe purpose of management in an

organisation.
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3) Do you agree with all the 14 principles of management given by Henri Fayol in context of modern
organisations?
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1.4 FUNCTIONS OF MANAGERS
It may be interesting to note that the three terms, organisation, management, and manager are quite different
from each other, yet for practical purposes they are inseparable. We need organisations for various purposes,
as they fulfil different needs of society. Once an organisation exists, there is need for establishing sound
principles of management for its efficient and effective functioning. Then for establishing sound principles
of management, we need managers who have ability, required skills, proper motivation and satisfaction, and
never ending zeal to achieve new heights.

Managers perform certain functions and certain roles. Though the terms function and role are used
interchangeably, there is technical difference between these two terms. Functions of a manager include
the assigned tasks according to the authority level as well according to the job description of the position of
the manager. On the other hand roles indicate what a manager is expected to do as a person of
conscientiousness. Let us learn some important functions of managers.

Main functions of managers include following activities:

• Planning (including creating vision, mission, goal setting, setting objectives);
• Organising;
• Staffing
• Directing;
• Communicating;
• Decision making;
• Controlling.
Let us describe them briefly.

Planning : The planning function includes those activities, which lead to the definition of ends and the
determination of appropriate means to achieve the defined ends. Planning is the process by which a manager
anticipates the future and discovers alternative courses of action open to him.
Vision refers to creating and articulating a realistic, credible, attractive position of the future of an
organisation or organisational unit that grows out of and improves upon the present situation. Mission refers
to the broad purpose that the society expects the organisation to serve. Mission statements are broad and
value-driven.

Goals refer to a future state or condition which contributes to the fulfilment of the mission of the
organisation; when they are realized. The goal is relatively more concrete than mission yet less concrete than
objectives.

Objectives are derived from goals and are ordinary short-run, specific milestones towards goals.

Organising : Organising is the process by which the structure and allocation of jobs are determined. The
organising function includes all managerial activities, which are undertaken to translate the required
activities of plans into a structure of tasks and authority. The organising function involves four sub-functions:
• Defining the nature and content of each job in the organisation;
• Determining the bases for grouping the jobs together;
• Deciding the size of the group;
• Delegating authority to the assigned manager.

Staffing : It is the process by which managers select, train, promote, and retire subordinates. Staffing is
concerned with entire human resource planning activities done by managers.

Directing : It is the process by which actual performance of subordinates is guided toward common goals.
Supervising is one aspect of this function at lower levels of management.

Communicating : It is the process by which ideas are transmitted to others for the purpose of achieving a
desired result.

Decision-making : It is the process by which a course of action is consciously chosen from available
alternatives for the purpose of achieving a desired result.

Controlling : It is the process that measures current performance and guides it toward some predetermined
goal. The controlling function includes activities, which managers undertake to assure that actual outcomes
are consistent with planned outcomes. Three basic conditions must exist to undertake control:
• Standards;
• Information;
• Corrective action.
As explained earlier, functions of a manager directly emerge from the authority of his position as well as
from the job description of the position held by the manager.
Now let us analyse some important roles of managers.

1.5 ROLES OF MANAGERS

Henry Mintzberg has identified ten roles (clubbed under three broad
categories) of managers. The roles of managers are as follow:

Interpersonal Roles
• Leading
• Liaison
• Symbol/Figurehead

In their interpersonal roles, managers act as figurehead, lead, and

interact with members of the organisation, within the department or outside the
department. Now let us understand the three roles: leading, liaison, and symbol/figurehead.

Leading is one of the important roles of a manager. A manager supervises a number of persons reporting to
him/her. The manager is responsible for motivating and directing the subordinates. Through the role of
leading, a manager helps subordinates to visualize the plan of action, and helps them to achieve the result
through committed performance.

Liaison is another role of a manager. Liaison means maintaining a network of interaction with outsiders who
matter. For example a manager heading a production unit need to maintain relationship with external
members of the board, regulating authorities, government officials, police force, civil authorities etc.
Through this role a manager establishes contact with those who matter in managing the activities at hand.

A manager is the symbolic head of a firm, or of an unit, or of a department. You are aware of the role of the
head of a family. In the same way, a manager symbolizes the role of figurehead because he/she has to
perform a number of duties of legal or social nature.
Informational Roles
• Monitoring
• Sharing information
• Spokesperson

In their informational roles, managers seek information from others,

provide information to others, and provide information to people outside the
organisation, in the capacity of representative of the organisation. Now let us understand the three roles:
monitoring, sharing information, and spokesperson.

A manager acts as nerve center for receiving all the external and internal information. Through the role of
monitoring, a manager receives information. The manager utilizes such information appropriately.

Once a manager has gathered information, he/she needs to share information among internal employees for
proper execution of work. Through meeting, e-mail, circular, notice, office order etc. a manager acts as
disseminator of information particularly to subordinates.

As a spokesperson, a manager is authorized to share information about the organisation to outsiders. The
manager may share information with outsiders about plans, strategies, and future direction of the
organisation. The sharing of information may be through conference, meeting the press, board meeting,
interview etc.
Decisional Roles

• Taking initiative
• Handling disagreement
• Allocating resources
• Negotiating

In their decisional roles, managers take proactive actions, sort out differences in opinion amicably, allocate
resources to various departments in optimum way, and negotiate implementation of new projects. Now let us
understand the four roles: taking initiative, handling disagreement, allocating resources, and negotiating.

A manager is required to take initiative and should lead from the front. A manager analyzes the future
opportunities in the business, evaluates alternative opportunities, analyzes internal strength and weaknesses
of the organisation, and also calculates risks before implementing a new idea. In a way a manager need to
explore business opportunities through entrepreneurial skills.

Always going is not smooth in an organisation. At times due to various dissatisfactions among the
subordinates, conflicts may arise. A manager is responsible for handling conflict and disturbances in a way
that would reestablish the confidence of subordinates as well as good productive culture. Disagreements are
handled through periodical meetings, review sessions, collective bargaining, grievance handling machinery
etc.
Manager is custodian of organisational resource. He/she has to allocate resources to various departments in
optimum way. For allocating resources the manager has to do budgeting, scheduling of tasks, authorization
and sanctioning of resource, and approving of significant organisational decisions.

Negotiating is also an important role of a manager. Sometime manager has to negotiate with internal
employees on the matter related to rights, benefits, and sharing of revenue. This is done through internal
bargaining. Sometime negotiation is tripartite including, the management, the employees, and the appropriate
government (Central or the State Government). Negotiation is also done on matter related to contract
assignment, purchase of material etc. A manager plays important role in these activities.

1.6 ORGANISATION AS A PROCESS OF MANAGEMENT

In this Unit you have already studied about basic concepts of organisation and basic concepts of
management. Out of various functions of management, organising is one of them. However before organising
various activities within the organisation, the organisation itself needs to be organised through defined
structure. In this light organising the organisation itself becomes an important process of management.

McFarland describes management as the process by which manager create, direct, maintain and operate
purposive organisations through systematic, coordinated and cooperative human efforts. In order to achieve
desired results in an organisation, process of management should be such that it should lead to effective
achievements of the objectives.

The process of planning, organising, staffing, directing, and controlling need to continue effectively, as long
as organisation needs to achieve its objectives.

1.7 TYPES OF ORGANISATION

Hicks has identified various types of organisations along various parameters. They are:

• Organisations classified according to their structure

Formal and Informal Organisations
Their characteristics can be understood through following continuum:

Table 1.1 : Formal and Informal Organisation

Formal Informal

Structured Loose

Rigid Flexible

Defined Undefined

Durable Spontaneous

Formal and informal define the extremes of a continuum of organisational types. As shown above formal
organisations are structured more rigidly, and processes are more or less defined to the maximum extent. On
the other hand, informal organisations are characterised by more flexible structure, and processes are more
spontaneous than rigid. You may appreciate that arguably in a repetitive production organisation formal
structure may be required, whereas in service organisations, which require more of spontaneous decisions,
informal structure may be more suitable. In actual practice, it would probably be impossible to find a
completely formal or informal organisation.
• Organisations classified according to the emotional involvement of members:

Primary and Secondary organisations

Their characteristics can be understood through following continuum:

Table 1.2 : Primary and Secondary Organisation

Primary Secondary

Complete emotional involvement Contractual involvement

Again, in actual practice, it would probably be impossible to find a completely pure form of organisation.

• Organisations classified according to their principal objectives. On this basis we can broadly identify
following types of organisations:
• Service organisation (e.g., charities, public schools, park, zoo, road etc.);
• Economic organisation (e.g. , cooperations, proprietorships, partnerships etc.);
• Religious organisations (e.g., sects, orders, temple trusts, churches etc.);
• Protective organisations (e.g. ,police, military, fire department etc.);
• Government organisations (e.g. ,central and state government departments, courts, cities etc.);
• Social organisations (e.g., fraternities, clubs, teams etc.).

1.8 FEATURES OF MODERN ORGANISATION

Changing economic environment has always a great impact on organisations. Hence, before understanding
features of modern organisation let us first review the rapid changes taking place in economic environment
particularly during last one decade. Following are the major changes in economic environment:
• The economy has become more competitive. Hence organisations are facing stiffer competition for its
survival and growth;
• Various economies are joining hands together to enjoy higher economy of scale. This has further created
more challenges for organisations in developing countries;
• Giant organisations are joining hands through merger, acquisition, and takeover, thus enjoying economic
benefits of being big. In this situation domestic organisations big or small are finding it tough to survive
and grow;
• International norms, domestic laws, and mood of the policy makers throughout the world are getting
tilted towards letting organisations survive through excellence. Era of protectionism is disappearing;

• Technology is becoming substitute of human power in larger domain of activities;

• Contribution of service sector in national economy is continuously increasing in most of the developing
countries including in India;
• Advent of computer has revolutionized the work place in organisation. It has also created impact on the
interaction pattern of people working in the organisation;
• Continuous product innovation and product differentiation are becoming rules of the game in business;

• With fast growing competition among producers and service providers, it is time for consumers to dictate
the terms in the game of demand and supply;
• Producers are facing stiff competition for reaching to their consumers through speedy supply chain;

• It appears that we have entered era of obsolescence (or era of continuous innovation). Not only a
particular technology is subjected to obsolescence very fast, any idea (managerial innovation) also is
replaced soon by newer idea;
• The world has become a global village, and organisations like multinationals are like one roof beneath
which multicultural society gets nurtured.

Such changes are taking place on continuous basis. The changes listed above are not exhaustive but only
indicative. Such changes in economic environment have created impact on modern organisations. In this
light, some of the salient features of modern organisations are as follow:

• There is tendency towards organisations becoming smaller with respect to the size of manpower;
• Numbers of layers in the organisations are reducing. Taller organisational structure is giving way to
flatter organisational structure- even to the circular organisational structure;
• Average technical skills of modern technical workers is much more than their earlier counterparts;
• Customer satisfaction and enhancing shareholder values are becoming focal points of business;
• Flexi-time, flexi-place are more frequently being applied;
• Quality orientation is being more focussed;
• With the increasing advent of service organisation, there is more empowerment at the level of middle
management as well as at the level of junior management, as they have first hand feel of and information
about customer needs. With this change, apart from upward communication, and downward
communication getting overhauled, more of lateral as well as informal communications within the
organisational structure are being promoted;
• Middle-management and even junior management are being involved more frequently in decision
making at top level;
• Now business ethics is formally emphasized as ethics is basic input for long-term survival of any
organisation;
• Individual learning and organisational learning are emphasized because any technology or any concept,
both are getting subjected to depletion very fast;
• Due to more advent of multinational organisations, cross-cultural issues within and outside the
organisation are gaining importance;
• Concept of permanent departments in the organisation is being replaced by outsourcing the activities of a
department where job is repetitive.
 Now you are aware of some of the features of modern organisations. You shall learn more about the changing
trends of organisations while going through Unit 20.

Check Your Progress B

1) What are various functions and roles of managers?

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2) What are various types of organisations?

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3) Which factors determine that an organisation belongs to a particular type?

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4) What kinds of changes are taking place in the economic environment impacting change on
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5) Identify five new changes taking place in the environment, which have not been mentioned in this
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1.9 LET US SUM UP

An organisation is a group of people working together for the achievement of specific goal. On the other
hand, the management is the art of getting things done through and with people in formally organised group.
It is the process of planning, organising, leading and controlling the activities of an organisation to increase
its effectiveness. The philosophies and principles of organisation and management are widely used for
enhancing the efficiency and productivity of the enterprise. The levels of management are : top level, middle
level and supervisory level. All levels play crucial role in achieving the organisational goal. The general
principles of management propounded by Fayol provide guidelines for smooth functioning of the
organisation.
In an organisation, the managers perform various functions. The major functions performed by the manager
are : Planning, organising, staffing, directing, communicating, decision making and controlling. Managers
also perform various roles in the organisation. The major roles are : Interpersonal roles, informational roles
and decisional roles.

Organisation may be classified into formal and informal organisation, primary and secondary organisation
and principal objectives based organisation. The rapid changes in the environment have led to the
emergence of modern organisation. The features of modern organisation are : smaller size, smaller layer,
higher technical skills, focus on customer satisfaction and shareholder’s value, flexi time and flexi place,
quality orientation, more empowerment at middle level, business ethics gaining ground, continuous learning
orientation, cross cultural management, growing outsourcing business; etc. These features require highly
vigilant and dynamic management styles for the smooth and efficient functioning of the organisation.
1.10 KEY WORDS

Formal Organisation: Organisation, which has more rigid structure and where processes are more or less
defined to the maximum extent.
Functions of Manager: Assigned tasks according to the authority level as well according to the job
description of the position of the manager.
Informal Organisation: Organisation characterized by more flexible structure, and here processes are more
spontaneous than rigid.
Levels of Management: Generally speaking there are three levels of management- top, middle, and junior.
Management: Process of planning, organising, leading, and controlling the work of organisation members
and of using all available organisational resources to reach stated organisational goals.
Organisation: A place where two or more people work together in a structured way to achieve a specific
goal or set of goals.
Organisational Structure: A formal way to relate various persons working in the organisation to facilitate
various factors like flow of communication, decision making, execution of decision, controlling, and
integration of all activities of the organisation.
Principles of Management: Basic philosophy and guidelines around which managerial functions are woven
together for effective management in an organisation.

Roles of Manager: What a manager is expected to do as a person of conscientiousness.

1.11 TERMINAL QUESTIONS

1) Explain basic purpose of existence of various organisations in society.

2) Describe basic features of an organisation.
3) What are various responsibilities of various levels of management in an organisation?
4) What are various principles of management? How are modern organisations different from typical
classical organisations, in terms of practices of various principles of management?
5) Explain various functions and roles of managers. How are they useful in enhancing the efficiency of the
organisation ?
6) Describe various types of organisations. Why do organisations differ from one another?

Note : These questions will help you to understand the unit better. Try to write answers for them. Do
not submit your answers to the university for assessment. These are for your practice only.
UNIT 2 ORGANISATION THEORY
Structure

2.0 Objectives
1.1 Introduction
1.2 Concept of Organisation
1.1.1 Importance of Organisation
1.1.2 Steps in the Organisation Process
2.3 Principles of Organisation
2.4 Classical Theory of Organisation
1.1.1 Bureaucracy
1.1.2 Administrative Theory
1.1.3 Scientific Management
2.5 Neo-Classical Theory of Organisation
2.6 Modern Theory of Organisation
2.6.1 Systems Theory
2.6.2 Contingency Theory
2.7 Contemporary Issues in Organisation Theory
2.8 Let Us Sum Up
9.9 Key Words
9.10 Terminal Questions

2.0 OBJECTIVES
After studying this unit, you should be able to:
• discuss the concept and importance of organisation;
• explain the principles of organisation;
• describe the classical theory of organisation;
• discuss the neo-classical theory of organisation;
• explain the modern theory of organisation; and
• analyse the contemporary issues in organisation.

1.1 INTRODUCTION
We are born in organisation, educated by organisations and most of us spend much of our lives working for
organisations. An organisation is a coordinated social entity, grouped together and interact for the
achievement of the common goal. It refers to the process of identification and grouping of activities,
defining and establishing the authority responsibility relationship and determining the manner in which the
organisational activities are interrelated. Thus the organisation consists of a group of people working
together for the achievement of the organisational goal. Various theories have been propounded which
explain the organisation in terms of closed, open and dynamic system. Traditionally organisation is viewed
as a closed system which does not get affected by external environment . Here the focus is for designing
sound organisational structure which facilitates people to accomplish its objectives smoothly. Contrarily the
modern view of organisation accepts the environment as an integral part of organisational reality. Therefore
to accomplish predetermined goals the organisation must adapt to external environment. The open system’s
view perceives the organisation as a social system which is composed of a number of sub-systems all of
which are independent and interrelated. Man and his organisations are interwoven. Man works in
organisations and seek great benefits from organisations. Successful organisations imply the well
coordinated efforts of two or more persons. These persons may enhance their abilities and reap the benefits
from organisational entities. In this Unit, you will learn the concept and the principles of organisation. You
will further learn various theories of organisation. You will be also acquainted with the contemporary issues
in organisation theory.

2.2 CONCEPT OF ORGANISATION

Organising refers to the process involving the identification and grouping of activities to be performed and
defining and establishing the authority responsibility relationships. This enables people to work most
effectively together in achieving the enterprise objectives. In a general sense, organising consists of
determining and arranging for men, materials, machines and money required by an enterprise for the
attainment of its goals. In a restricted and operational sense, the term organising means defining the duties
and responsibilities of the people employed, and determining the manner in which their activities are to be
interrelated. The end result of organising is the creation of a structure of duties and responsibilities of people
in different positions, grouped according to the similarity and interrelated nature of activities. In other
words, the outcome of the organising process is an Organisation consisting of a group of people working
together for the achievement of one or more common objectives.

Robins has defined organisation as a consciously coordinated social entity, with a relatively identifiable
boundary, that functions on a relatively continuous basis to achieve a common goal or set of goals. Thus, it
can be concluded that an organisation is an economic and social entity in which a number of persons perform
tasks to achieve a predetermined goals. This helps them to accomplish the personal goals like socio-
economic satisfaction which they cannot achieve alone. Similarly it is a system of clearly defined structure
of activities consciously designed to allow organisational participants to work effectively toward common
goal.

The characteristics of an organisation are as follow:

Group of People : An organisation comes into existence when a group of people combine their efforts for
some common purpose and willingly contribute towards their common endeavour.

Division of Work : Setting of an organisation involves division of the total work into various activities and
functions, and assigning the tasks to different persons according to their skill, ability and experience.

Common Purpose : Every organisation comes into existence on the basis of goals of the enterprise which
are separate from the personal goals of the people employed. It is the common purpose of the organisation
which provides the basis of cooperation among the members of the organisation.

Vertical and Horizontal Relationships : An organisation creates cooperative relationships between

different departments and divisions as well as between superiors and subordinates. Different functions and
activities like production, marketing, financing etc. are integrated for the achievement of proper
coordination. The duties and responsibilities of superiors and subordinates in each department or division are
also unified so as to serve the purpose of their joint efforts.
Chain of Command : The superior-subordinate relationships established in an organisation are based on the
authority which flows from the higher levels of management to the next lower levels, thereby forming a
hierarchical chain. This is known as the chain of command, which also determines the line of
communication.
Dynamics of Organisation : Besides the structural relationships among people which are based on their
activities and functions, there exists an organising interactions based on sentiments, attitudes and behaviour
of individuals and groups. These aspects of relationship provide a dynamic element to the organisational
functioning. They are subject to change from time to time.

2.1.1 Importance of Organisation

Sound organisation contributes greatly to the continuity and success of the enterprise. Its importance can be
discussed below:

Facilitates Administration : Sound organisation facilitates management to relate resource flows

continually to overall objectives. It provides an appropriate platform from where management can perform
the functions of planning, direction coordination, motivation and control.

Facilitates Growth and Diversification : It helps in organisational elaboration. Growth and diversification
of activities is facilitated by clear division of work, proper delegation of authority etc. As the organisation
expands to a reasonable proportion, the functional types can be replaced by a more flexible decentralised
organisation.

Permits Optimum use of Resources : Sound organisation permits optimum use of technical and human
resources. The organisation can incorporate the latest technological improvements like computers, electronic
data processing machines etc. It permits optimum use of human efforts through specialisation. It also
develops people by creating appropriate training and promotion opportunities. Thus, organisation gives a
company the greatest possible strength for meeting predicted needs-changing conditions.

Stimulate Creativity : Specialisation provides individuals with well-defined duties, clear lines of authority
and responsibility. Sound organisation structure enables managers to turn over routine and repetitive jobs to
supporting positions and concentrate on important issues where they can exploit their potential better. Thus,
it encourages the creativity of the people.

Encourages Humanistic Approach : People can work in team and not like robots or machines.
Organisation provides job rotation, job enlargement and enrichment. Jobs are designed to suit human needs
and are made meaningful and interesting. Organisation adopts efficient methods of selection, training,
remuneration and promotion of employees. Proper delegation and decentralisation, conducive working
environment and democratic and participative leadership provide higher job satisfaction to the employees. It
enhances the interaction among different levels of the management.

Although we have discussed the importance of the organisation, a sound organisation structure by itself does
not guarantee success. According to Drucker good organisation structure does not by itself produce good
performance-just as a good constitution does not guarantee great presidents, or good laws or a moral society.
But a poor organisation structure makes good performance impossible no matter how good the individuals
may be.

2.1.2 Steps in the Organisation Process

Organising involves the following interrelated steps:
Determination of Objectives : Organisation is always related to certain objectives. Therefore, it is
essential for the management to identify the objectives before starting any activity. It will help the
management in the choice of men and materials with the help of which it can achieve its objectives.
Objectives also serve as the guidelines for the management and the workers. They will bring unity of
direction in the organisation.
Identification and Grouping of Activities: If the members of the groups are to pool their efforts effectively
there must be proper division of the major activities. Each job should be properly classified and grouped.
This will enable the people to know what is expected from them as members of the group and will help in
avoiding duplication of efforts. For instance, the total activities of an individual industrial organisation may
be divided into major functions like production, purchasing, marketing, and financing, and each such
function is further subdivided into various jobs. The jobs then may be classified and grouped to ensure the
effective implementation of the other steps.

Allotment of Duties : After classifying and grouping the activities into various jobs, they should be allowed
to the individuals so that they could perform them effectively. Each individual should be given a specific job
to do according to his ability and made responsible for that. He should also be given the adequate authority
to do the job assigned to him.

Developing Relationships: Since so many individuals work in the same organisation it is the responsibility
of management to lay down structure of relationships in the organisation. Everybody should clearly know to
whom he is accountable. This will help in the smooth working of the enterprise by facilitating delegation of
responsibility and authority.

Integration of these Groups of Activities: Integration can be achieved in all activities in following ways :
(a) through authority relationships – horizontally, vertically, and laterally and (b) through organised
information or communication systems, i.e., with the help of effective coordination and communication. We
can achieve unity of objectives, team work and team spirit by the integration of different activities.

2.3 PRINCIPLES OF ORGANISATION

The principles of organisation are guidelines for planning an efficient organisation structure. Let us discuss
the important principles of organisation :

Unity of Objectives : An enterprise strives to accomplish certain objectives. The organisation and every
part of it should be directed towards the attainment of objectives. Every member of the organisation should
be familiar with its goals and objectives. There must be unity of objective so that all efforts can be
concentrated on the set goals. The principle requires objectives to be clearly formulated and well-
understood.

Division of Work and Specialisation : The entire work in the organisation should be divided into various
parts so that every individual is confined to the performance of a single job. This facilitates specialisation
which in turn leads to efficiency and quality. However, each area of specialisation must be interrelated to the
total integrated system by means of coordination of all activities of all departments.

Definition of Jobs : Every position in the organisation should be clearly defined in relation to other
positions in the organisation. The duties and responsibilities assigned to every position and its relationship
with other positions should be so defined that there is no overlapping of functions.

Separation of Line and Staff Functions : Whenever possible, line functions should be separated from staff
activities. Line functions are those which accomplish the main objectives of the company. In many
manufacturing companies, the manufacturing and sales departments are considered to be accomplishing the
main objectives of the business and so are called the line functions. Other functions like personnel, plant
maintenance, financing and legal are considered as staff functions.
Chain of Command or Scalar Principle : There must be clear lines of authority running from the top to
the bottom of the organisation. Authority is the right to decide, direct and coordinate. The organisation
structure should facilitate delegation of authority. Clarity is achieved through delegation by steps or levels
from the top position to the operating level. From the chief executive, a line of authority may proceed to
departmental managers, to supervisors or foremen and finally to workers. This chain of command is also
known as scalar principle of organisation.

Parity of Authority and Responsibility or Principle of Correspondence : Responsibility should always

be coupled with corresponding authority. Each subordinate must have sufficient authority to discharge the
responsibility entrusted to him. This principle suggests that if a plant manager in a multiplant organisation is
held accountable for all activities in his plant, he should not be subject to seek orders from company
headquarters for his day to day activities.

Unity of Command : No one in the organisation should report to more than one line supervisor. Everyone
in the organisation should know to whom he reports and who reports to him. Stated simply, everyone should
have only one boss. Receiving directions from several supervisors may result in confusion, chaos, conflicts
and lack of action.

Unity of Direction : According to this principle a group of activities that have a common goal should be
managed by one person. There should be one head and one plan for a common objective of different
activities. This facilitates smooth progression towards the achievements of overall organisational goals.

Exception Principle : This principle suggests that higher level managers should attend to exceptional
matters only. All routine decisions should be taken at lower level, whereas problems involving unusual
matters and policy decisions should be referred to higher levels.

Span of Supervision : The term ‘span of supervision’ means the number of persons a manager or a
supervisor can direct. No manager should be required to supervise more subordinates than he can effectively
manage within the limits of available time and ability. The exact number may vary according to the nature of
the job and the frequency of intensity of supervision needed.

Principle of Balance : There should be proper balance between various parts of the organisation and no
function should be given undue importance at the cost of others. Balance should be maintained also
between centralisation and decentralisation, span of supervision and lines of communication, and authority
allocated to department and personnel at various levels.

Communication : A good communication network is essential to achieve the objectives of an organisation.

No doubt the line of authority provides channels of communication downward and upward, still some blocks
in communication occur in many organisation. The confidence of superior in his subordinates and two-way
communication are the factors that unite an organisation into an effectively operating system.

Flexibility : The organisation structure should be flexible so that it can be easily and economically adopted
to the changes in the nature of business as well as technological innovations. Flexibility of organisation
structure ensures the ability to change with the environment without disrupting the basic design.

Continuity : Change is the law of nature. Many changes take place outside the organisation. These changes
must be reflected in the organisation. For this purpose the form of organisation structure must be able to
serve the enterprise to attain its objective for a long period of time.
Check Your Progress A

1) Enumerate the basic characteristics of an organisation.

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2) How do principles of organisation facilitate smooth functioning of the organisation ?

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3) Enumerate five principles of organisation which you find practicising in an organisation.

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2.4 CLASSICAL THEORY OF ORGANISATION

The old theories of organisations are classified as classical theories of organisation. The origin of classical
theories can be traced back to the writings of F.W. Taylor, Max Weber, James Moorey, E.F.L. Beach and Lois
Allen. The impact of classical theory has been profound.

Classical theory was developed in three streams: Bureaucracy, Administrative Theory, and Scientific
Management. These components of classical theory were developed on similar assumptions at about the
same time (1900-1950 AD). These components develop the idea of structure within the connotation of
organisation. Accordingly, organisation was defined as a structure of relationships, power, objectives, roles,
activities, communications and other factors that exist when persons work together. Thus, these streams of
classical theory view organisation as a mechanistic structure. Let us learn these three streams of classical
theory in detail.

1.1.1 Bureaucracy

Bureaucracy is a social invention perfected during the industrial revolution to organise and direct the
activities of a firm. It describes a system where the Government is run by officials, directly or indirectly.
Bureaucracy is defined as a system of organisation in which roles, tasks and relationships among people and
positions are clearly defined, carefully prescribed and controlled in accordance with formal authority and any
deviations from rules and regulations is viewed very seriously. The bureaucratic theory was systematically
developed by Max Weber (1864-1920). Weber termed his formulation of organisation as ideal type.
According to Max Weber, every organisation can be defined as a structure of activities (means) directed
towards the achievement of certain objectives (ends). Every organisation develops a system of specialisation
(division of tasks) and a set of systematic rules and procedures to maximise efficiency and productivity.
Weber stressed that the bureaucratic form is capable of attaining the highest degree of efficiency, and is in
this sense, formally the most rational known means of carrying out control over human beings in any
organisation. It is superior to every other form in precision, stability, discipline and reliability.

Weber tried to identify various factors and conditions that have contributed to the growth of bureaucracy in
modern times. Development of modern Organisation and Corporation led to the development and
considerable spread of bureaucracy in Organisations. Bureaucracy is simply indispensable irrespective of its
inherent evils for the running of complex organisations. Secondly, an important factor responsible for the
superiority of bureaucracy is the role of expanding technical knowledge and the development of modern
technology. Whether the economic system is capitalistic or socialistic a considerable degree of bureaucratic
specialisation is required to attain a high level of organisational efficiency. Thirdly, Weber repeatedly
stressed the fact that the capitalist system has undesirably played a major role in the development of modern
bureaucracy. The proper functioning of a capitalist system necessitated a stable state and a well organised
administration. Besides, capitalism is considered the most rational economic basis for bureaucratic
administration itself.

Characteristics of Bureaucracy

The bureaucratic form of organisation is distinguished by the following structural and behavioural
characteristics:

Division of Labour and Specialisation : Specialisation based on division of labour is the cornerstone of
bureaucracy. It applies more to the job than to the individual. The roles of various officials based on the
division of job work are clearly defined. This leads to the clear definition of the job-content of an individual
and his position in the organisation set up which in turn leads to the clarity of the goals/objectives of the
organisation and helps in designing the hierarchical structure of the organisation. It is based on a specified
sphere of competence which involves: (a) a sphere of applications to perform functions which has been
marked off as part of a systematic division of labour, (b) the provision of the incumbent with necessary
authority, and (c) the necessary means of compulsion are clearly defined and their use is subject to definite
conditions.

Hierarchy : Hierarchy is the second fundamental characteristic which is the feature of any bureaucratic form
of organisation. There is a clear separation between superior and subordinate officers, i.e., each lower officer
is under the control and supervision of a higher one. Remuneration is fixed in accordance with the nature of
the job and the grade of responsibility. Promotion and career advancement is on the basis of seniority and
merit.

Rules : Bureaucracy operates in accordance with a consistent system of abstract rules. The role of rules has
been stressed by Weber so that personal favouritism, arbitrariness or nepotism may not hinder the working
of an organisation. Every act of personal discretion of official must be justified by impersonal ends.

Rationality : Weber’s ideas on efficiency and rationality are closely related to his ideal typical model of
bureaucracy. He observed that bureaucracy is the most rational known means of achieving imperative
control over human beings. It is capable of obtaining a high degree of efficiency since the means used to
achieve goals are rationally and objectively chosen towards the desired ends. An added factor of efficiency is
that personal whims of the leaders and traditional pressures are no longer effective in such a system; it is run
according to rules and there is a clearer demarcation between personal and official affairs. Rationality is also
reflected by the relatively easier means of calculability of results in the organisation.

Impersonality : It should be observed by all officials in decision-making and in overall organisational life.
The bureaucratic form has no place for personal whims, fancies or irrational sentiments. Official activity is
conducted in a business like manner with a high degree of operational impersonality.

Rule Orientation : Rationality and impersonality are mainly achieved through formulation of rules and
procedures which clearly define official spheres of authority and conduct. Employees are expected to follow
the rules in discharging their duties.

Neutrality : Neutrality in decision making and their implementation are the cardinal principles of bureaucratic
way of functioning. Bureaucracy is supposed to be a political and neutral in its orientation. It is committed only
to the work it is meant to perform.
Criticism of Bureaucracy
Max Weber gave the model which is normative in nature and could be followed by any large and complex
organisation. However, the actual practices of bureaucracy often fall short of these ideals. Bureaucracy is a
necessary evil in large and organisationally complex organisation. Following demerits have been pointed
out in the bureaucratic model by various scholars:

Rigidity : A rigid organisation often fails to see innovation as a necessary life giving element to an evolving
adaptive organisation. The ultimate goal of a bureaucracy sometimes seem to be perfect but its excessive
dependence on rules tend to kill initiative and it leads to obsolescence of an organisation.

Impersonality : Relationships in a bureaucracy are secondary and contractual rather than being primary and
personal. The characteristics of impersonality, anonymity, neutrality to values etc. are contradictory to the
very basic nature of organisation where close cooperation between the people and bureaucracy is desirable.
Lack of personal involvement leads to poor productivity levels.
Delegation : It is criticised on the ground of the problems of delegation that crop up in operative stages. The
bureaucratic staff tend to concentrate power at higher positions and very little of delegation of authority and
responsibilities down the rank is seen. In absence of delegation, organisational decisions are unnecessarily
delayed.
Goal Displacement : Excessive adherence to rules and regulations lead to the problem of goal displacement.
The rules and regulations that are meant to facilitate the functioning of the organisation are adhered
irrespective of the fact whether they lead to goal achievement or not.

Strict Categorisation : In bureaucracy, coordination and specialisation are advantageous if there is strict
categorisation or compartmentalisation of activities and persons. The dysfunction of categorisation results
from the tendency of bureaucracy to grant career status to a position. Bureaucracy is not comfortable with
the fact that an adaptive world can never be completely categorised.

Self-perpetuation and Empire Building : Bureaucrat often thinks that holding an office gives him personal
ownership and privileges. Through their desire to perpetuate the old, bureaucracies discourage innovations.
According to Max Weber, Once its is fully established, bureaucracy is among those social structures which
are hardest to destroy, even when it has outlived its usefulness. In bureaucracy, prestige and pay are often
determined by the number of one’s subordinates. Thus, the chief aim of bureaucracy is to increase the
number of people employed under one’s control, this is the familiar empire building.

Cost of Controls : The cost of maintaining rules, regulations and sometime seemingly countless procedures
employed to gain conformity in bureaucracy is dysfunctional. There is frustration from perceived excessive
restrictions and delays imposed by bureaucratic procedures.
Activity A

a) Suppose you wanted to eliminate bureaucracy to avoid its demerits, how could this be done? What
would be the consequences?
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b) Would you like to work in a bureaucracy? Why and why not?
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2.4.2 Administrative Theory

Scientific management was primarily concerned with increasing the productive efficiency of individual
workers at the shop floor. The role of managers and their functions in the total organisation were not given
adequate attention. Around the same time, that is the first quarter of the 20th century Henri Fayol, director
of a coal mining company in France, made a systematic analysis of the process of management. His
approach to the study of management is also known as the process or Functional Approach.

According to Fayol, business activities in any organisation consist of six inter-dependent operations viz.,
technical, commercial, financial, security, accounting and administrative or managerial operations. He
analysed the nature of managerial activities and skill requirements which were so far given little attention by
thinkers. He considered the process of management to be of universal application and distinguished among
five elements of the process viz., to forecast and plan, to organise, to command, to coordinate, and to control.
The concept of management was, thus, defined as the process of performing certain functions like planning,
organising, etc. These functions were expected to be performed by managers at all levels in the organisation
as well as in all types of industries and in all countries.

Fayol emphasized that management involved the application of certain skills which could be acquired by
persons on the basis of systematic instructions and training. Once acquired, the skills could be applied to all
types of institutions including the church, schools, political as well as industrial organisations.

Besides a systematic analysis of the management process and management functions, Fayol formulated a set
of fourteen principles as guidelines for implementing the process of management. These principles were
stated in flexible terms and expected to be of use of managers under all circumstances. The skill and
abilities required for effective management were stated to be dependent on the managers’ position at
different levels of organisation. According to Fayol, administrative skills were more essential for higher
level managers’, while technical abilities were required more at the lower level positions. He also believed
that managerial training was essential for people in all walks of life. He stressed, for the first time, the
necessity of formal education and training in management. In short, Fayol’s analysis provides a set of means
(viz., planning, organising, commanding, coordinating and controlling) for viewing the management process
and guidance (i.e., the principles for implementing the process).

The fourteen principles of management are as follow. You have already learnt them in Unit 1. Let us
recapitulate them.
• Division of work
• Authority and Responsibility
• Discipline
• Unity of command
• Unity of Direction
• Subordination of individual interest to general interest
• Remuneration of Personnel
• Centralisation
• Scalar Chain
• Order
• Equity
• Stability of Tenure
• Initiative
• Esprit de corps

The Administrative Theory of Management and Functional Approach to management may be said to have
developed on the foundation laid by Fayol. He provided a conceptual framework for analysing the process
of management. At the same time, he isolated and analysed management as a separate, distinct activity.
Management as a body of knowledge gained immensely from Fayol’s analysis of managerial skills of
universal relevance, and principles of general management developed by him. Although some critics called
it inconsistent, vague and pro-management based theory, still this theory experts considerable influence on
the practice as well teaching of management the world over.

2.4.3 Scientific Management

The approach of scientific management was formulated by F.W. Taylor and others between 1890 and 1930
sought to determine scientifically the best method for performing any task, and for selecting, training, and
motivating workers. Frederick Winslow Taylor and other contributors notably Frank Gilbreth, Lillian
Gilbreth and Henry Gants investigated the effective use of human beings in industrial organisations,
particularly at shop floor levels. Tayor (1856-1915) an engineer by training is regarded as the father of
scientific management.

Taylor based his management system on production line time studies instead of relying on traditional work
methods. He analysed and tuned steel workers movements on a series of jobs. Using time study as his base,
he broke each job down into its components and designed the quickest and best methods of performing each
component. In this way he established how much should workers be able to work with the equipment and
materials at hand and also encouraged employers to pay more productive workers at a higher rate, using a
scientifically correct rate that would benefit both company and worker. Thus, workers were urged to surpass
their previous performance standards to earn more money Taylor called his plan the differential rate system.

The modern production miracle is just one legacy of scientific management. In addition, its efficiency
techniques have been applied to many tasks in non-industrial organisations, ranging from fast food service
to the training of surgeons. Taylor relentlessly pursued the idea that efficiency at work could be improved
through careful scientific analysis. He advocated an inductive, empirical, detailed study of each job to
determine the one best way to organise work.

Taylor’s concept of scientific management essentially consisted of a scientific approach to management. Its
primary objective was to replace methods based on trial and error and rule of thumb. The new approach
rested on the following principles.

• Development and use of scientific methods in setting work standards, determining a fair day’s work and
best way of doing work.
• Scientific selection and placement of workers best suited to perform the various tasks and provision of
their training and development for maximum efficiency.
• Clear cut division of work and responsibility between management and workers.
• Harmonious relations and close cooperation with workmen to secure performance of work in accordance
with the planned jobs and tasks.
A number of techniques were developed to facilitate scientific management. Taken together the following
techniques constituted the mechanism of the new approach :
• Time study to analyse and measure the time taken in doing the various elements of a job, and to
standardise the operations as well as determining a fair day’s work.
• Motion Study involving close observation of the movements required to perform a job with a view to
eliminate wasteful motions and decide on the best way of doing the job.
• Standardisation of tools, equipments and machinery and working conditions.
• Incentive wage plan with differential piece rate of wages for efficient and inefficient workmen.
• Functional Foremanship involving different specialist foremen supervising machine speed, group work,
repairs, etc.

Taylor presented his ideas on scientific management as a systematic body of thought. His main contribution
to management practices included the following aspects :
• The importance of applying scientific methods of enquiry , observation and experimentation to the
problems of management.
• Separation of planning of work from its execution so as to enable workers to perform at his best and earn
accordingly.
• Emphasizing the aim of management to be the maximum prosperity of the employer along with the
maximum welfare of each employee.
• The necessity of a complete mental revolution on the part of both workmen and management to derive
the benefits of scientific management through harmony and cooperation rather than individualism and
discord.

Merits : The primary benefit of scientific management was conservation and proper use of every ounce of
energy. Moreover specialisation and division of labour have brought about the second industrial revolution.
Time and motion techniques are important tools to organise the tasks in a more efficient and rational way. In
short scientific management is not only a rational approach to solve organisational problems but it also
facilitates the professionalisation of management.

Although the basic principles of scientific management were originally developed by Taylor, several
associates of Taylor like Gantt, Frank and Lillian Gilbreth, and Emerson further elaborated the ideas,
developed new techniques and improved upon the new approach to management. In practice, scientific
management proved to be so fruitful in increasing productivity and efficiency of operations that it was
widely accepted in the USA and Western Europe.

Limitations : Scientific management has its limitations and was criticised on several grounds. Some critics
argue that scientific management is concerned with the efficiency of workers in the technical sense, and it
emphasizes only the importance of production. It assumes that workers are inherently lazy and they require
strict supervision and exercise of authority by managers. It is believed that workers can be motivated by
monetary rewards alone. No importance is attached to social and psychological aspects of work
environment. Other critics have called it unscientific, antisocial, psychologically aspect of work
environment. Other critics is unscientific antisocial, psychologically unfair and anti-democratic. It is
unscientific because there is no valid and reliable method to measure the efficiency and wages of the
workers. It is antisocial because workers are treated as glorified economic tools only. It is psychologically
unfair because each worker is pitted against every other worker in an unhealthy competitive scheme to make
more and earn more. It is anti-democratic because it overshadows the workers independence.
Trade unions have been opposed to scientific management on the ground that it leads to autocratic
management, and raises the workload of employees with a corresponding adverse impact on employment of
men.

Check Your Progress B

1) How does bureaucracy enhance the efficiency of an organisation ?

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2) Enumerate the limitations of Fayol’s principles of management.

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3) How does scientific management enhance the efficiency of an organisation ?

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Activity B

Which of Fayols principles of management do you observe in use of organisations today?

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2.5 NEO-CLASSICAL THEORY OF ORGANISATION

The neo-classical theory (also referred as the human relations school of thought) was built on the basis of
classical theory. It is modified, added to and in some ways extended classical theory. Its basic assumption is
that the psychological and social aspects of the worker as an individual and his work group ought to be
emphasized. In classical view, organisation focussed on structure, order, the formal organisation, economic
factors and objective rationality. Whereas neo classical view emphasized social factors and emotions at
work. Human relation is frequently used as a general term to describe the ways in which managers interact
with their employees. The essence of the human relations contributions is contained in two aspects:
Organisational situation should be viewed in social terms as well as in economic and technical terms, and in
terms of clinical method it is analogous to the doctor’s diagnosis of the human organism.

The Howthorne Experiments

The human relations movement grew out of a famous series of studies conducted at the western Electric Co.
from 1924 to 1933. These eventually became known as the “Hawthorne Studies” because many of them were
preformed at Western Electrics Hawthorne plant near Chicago. The Hawthorne studies began as an attempt
to investigate the relationship between the level of lighting in the workplace and worker productivity.
In some of the early studies, the Western Electric researchers divided the employees into test groups, who
were subjected to deliberate changes in lighting, and control groups, whose lighting remained constant
throughout the experiments. The results of the experiments were ambiguous. When the test group’s lighting
was improved, productivity tended to increase although erratically. When lighting conditions were made
worse, there was also a tendency for productivity to increase in the test group. To compound the mystery, the
control groups output also rose over the course of the studies, even though it experienced no changes in
illumination. Obviously, something besides lighting was influencing the workers’ performance.

In a new set of experiments, a small group of workers was placed in a separate room and a number of
variables were altered. Wages were increased, rest period of varying length were introduced, the workday
and work weeks were shortened. The researchers, who allowed the groups to choose their own rest periods to
have say in other suggested changes. Again the results were ambiguous. Performance tended to increase over
time, but it also rose and fell erratically. Partway through this set of experiments, Elton Mayo (1880-1949)
and some associates from Harvard, including Fritz J. Roethlisberger and William J. Dickson, became
involved.

In these and subsequent experiments, Mayo and his associates decided that a complex chain of attitudes led
to increase in productivity. They had been singled out for special attention, so both the rest and the control
groups had developed a group pride that motivated them to improve their work performance. Sympathetic
supervision had further reinforced their motivation. The researchers concluded that employees would work
harder if they believed management was concerned about their welfare and supervisor paid special attention
to them. This phenomenon was subsequently labeled as the Hawthorne Effect. Since the control group
received no special supervisory treatment or enhancement of working conditions but still improved its
performance, some people (including Mayo himself) speculated that the control group’s productivity gains
resulted from the special attention of the researchers themselves.

The researchers also concluded that informal work groups and the social environment of employee have a
positive influence on productivity. Many of Western Electric’s employees found their work dull and
meaningless, but their associations and friendships with co-workers, sometimes influenced by a shared
antagonism towards the bosses, imparted some meaning to their working lives and provided some protection
from management. For these reasons, group pressure was frequently a stronger influence on worker
productivity than management demands.

The findings of Howthorne studies are as follows :

• Physical environment at the work place do not have any material impact on the efficiency of work.
• Favourable attitudes of workers and work-team towards their work were more important factors
determining efficiency.
• Fulfilment of the workers’ social and psychological needs had a beneficial effect on the moral and
efficiency of workmen.
• Employee groups based on social interactions and common in the rest exercised a strong influence on
workers’ performance.
• Workers cannot be motivated solely by economic rewards. More important motivators are job security,
recognition by superiors, and right to express their opinion on matters which are of concern to them.

The human relations approach to management problems is based on the view that the modern organisation is
a social system in which the social environment and interpersonal relations govern the behaviour of
employees. It emphasizes that the authority responsibility relationship between superiors and subordinates
should relate to the social and psychological satisfaction of employees. It is only by making employees
happy, the organisation can secure their full cooperation and thus increase efficiency. Management should
encourage the development of social groups on the job and provide opportunities for free expression of the
employees’ viewpoints. Managers should recognize the importance of democratic leadership, so that there is
free flow of communication and subordinates may participate in decision-making.
It must be noted that the objective of human relations approach was to make workers more productive. But it
was emphasized that employee satisfaction was the best means of achieving the goals of higher productivity
and efficiency. For this purpose, it was necessary that managers must know why employees act and what
social and psychological factors motivate them. Attempt should be made to create a satisfying work
environment in which people may fulfil their own needs as well as contribute to the achievement of
organisational goals.

According to Mayo, the concept of social man motivated by social needs, wanting, rewarding on the job
relationships, and responding more to work-group pressures than to management control was necessary to
complement the old concept of rational man motivated by personal economic needs. All these findings might
seem unremarkable today. The neo-classical theory examines in detail and has made significant
contributions in the field of human relations for structural adjustments in an organisation. The contribution
of the neo-classical theorists can be categorised as the modification of the classical theory.

The theory recognises the importance of co-ordination and communication for motivation of human
resources. More attention was given on fatigue and monotony than division of labour. They are of the view
that if human beings are not treated well, human problems arise. For example, if authority does not
commensurate with responsibility it will lead to frustration or disfunctionality. The neo-classical theorists
view that participation, recognition of human dignity and communication are the cornerstones of efficient
management. Simultaneously the role of informal organisation should not be undermined in the formal
setting of organisations.

The neo-classical theory is a definite improvement over the classical theory. It explains various new
variables and concepts like informal organisation. However, the neo-classical viewpoint has also been
criticised on the ground of too much cynical puppeteering of people, a short sighted perspective and lack of
integration among many facets of human behaviour.

2.6 MODERN THEORY OF ORGANISATION

The modern organisation theory considers the dynamic conditions at micro and macro levels. It recognises
the dramatic changes taking place in the society. The modern organisation theory is a collection of views of
different thinkers of organisation. The theory is centred around the concept of a system hence it is termed
synonymous with system theory. For the first time Chester I. Barnard (1938) viewed organisation as a social
system of cooperative interactions among the members; organisation, individuals and customer are parts of
environment. Subsequently Mary Parker Follet (1940) emphasized on the integration of individual and
organisational units through systems approach. Norbert Weiner (1948), a pioneer in cybernetics gave a
crystal clear views of the organisation as a system. Further operational researchers like Churcham (1957),
etc. were also among those who considered the system as an interconnected complex of functionally related
components . Some more social scientists like Katz and Kahn presented a comprehensive theory of
organisation using open systems approach.
2.6.1 Systems Theory

Organisational realities have been investigated from different points of view. Divergent theories have thus
emerged; a need has arisen of looking at the organisation as a whole. Advance in scientific knowledge in
general have made possible the formulation of a general systems theory for the integration of scientific
knowledge.

The systems approach is particularly relevant to the study of complex public organisation that have elaborate
structures and that are embedded in larger social, political and economic environments. According to the
open systems perspective, an organisation survives and grows by drawing inputs from the environment
which are processed internally to produce its output. It is through this input conversion-output processes that
an organisation lives and develops. The systems thinking helps us to have a total view of the organisation
including its different parts and their interrelationships.

The systemic view of organisation was prominent in the writings of M.P. Follet and Chester Bernard. Herbert
Simon’s decision making scheme follows the systems approach which was further elaborated by him and his
associates later. Philips Selznick has used the systems framework in his studies of governmental and other
complex organisations. The most representative writings in this field are: “Organisation theory” by Haire
Norbet Weiner pioneered in the field of Cybernetics. He gave the first clear view of an organisation as a
system consisting of inputs, process, outputs, feed back and environment.

In simple words, a system may be defined as a set of interdependent parts forming an organised unit or entity.
These parts, known as sub-systems, interact with each other and are subject to change. They are interrelated
as well as interdependent. Thus, changes in any sub-system lead to changes in others. Any working
organisation may be said to consist of three broad sub-systems :
• technical sub-system which represents the formal relationships among the members of an organisation;
• Social sub-systems which provides social satisfaction to members through informal group relations, and
• Power sub-system which reflects the exercise of power or influence by individual and groups.

The total system emerges as a result of the interaction of the various sub-systems. The total system and sub-
systems also interact with the environment, which may influence or be influenced by the system or the sub-
systems.

The system approach has the following features :

• System is a group of interrelated but separate elements.
• The arrangement of all the elements must be orderly.
• There must be proper communication facilitating interaction among the elements.
• Finally the interaction should lead to achieve a common goal.

The enterprise operations are viewed in terms of basic elements engaged in procuring and transforming
inputs into outputs. Money, employees and the managers themselves are parts of the system. Inputs are the
materials, information and energy, flowing into the organisation. The outputs are products, services, and
satisfaction provided by the organisation. The organisation transforms input into a variety of outputs (in the
form of products, goods and services) and offers the same to the external environment. Sale of the outputs
provides the necessary energy which is called feedback to repeat this systems cycle. Loot at Figure 2.1
which shows this cycle.

Figure 2.1 : Cycle of Systems Approach

Input Output

Feedback
Organisation systems like social systems are considered to be Cybernetic in their behaviour with regard to
the external environment. This means that they are self steering, using feedback to guide and control their
behaviour. They develop mechanism to collect interpret and apply feed back in their decision making process
so as to acquire the capacity to adapt, evaluate perform and to correct errors.
Look at Figure 2.2 which shows the basic elements of systems theory.

Figure 2.2 : Basic Elements of Systems Theory

Inputs Throughputs Outputs

• Environmental conditions, needs & demands-goals• Societal norms & laws• Human resources•
Material resources OrganisationalTransformationsSub-system functions •
Goods• Services• Manpower• Strategies to influence environment

The systems approach to management view organisations as extremely complex entities subject to changes
from within and outside. To meet various needs of such an organisation, a balanced and integrated approach
to management is required. At the heart of the systems, approach lies a Management Information Systems
and communication network for collection, analysis and flow of information and quantitative data so as to
facilitate planning and control. It emphasizes the importance of decision-making and the primary means of
balancing the different parts of the organisation. Modern thinkers consider management as a system of
integrating activities aimed at making the best use of scarce resources. Management is viewed also as a sub-
system of the social system. As a sub-system management is required to adapt and cope with environmental
changes.

This systems approach has the following advantages :

• It provides a unified focus to organisational efforts.
• It provides managers an opportunity of looking at the organisation as a whole which is grater than the
sum of its parts.
• This theory treats the organisation as an open system. Moreover, the process of interaction between sub-
systems is dynamic.
• Modern theory is based on multilevel and multidimensional approach i.e., it includes both micro and
macro aspect.
• The system is based on multiple variables because an event may be the product of many factors which in
turn may be interrelated and interdependent.
• The feedback mechanism provides an opportunity to organisation to rearrange its parts according to the
change in the environment.

The systems approach is now being widely used in organisational analysis. It has proved to be a very useful
tool for the conceptualisation of the organisation and its external and internal relationships. It has also
facilitated the contingency or situational view of organisation which marks a radical departure from the
traditional approach that emphasized generally the one best way of structuring organisations. Under the
influence of systems theory the current view in organisations analysis is that the structure can vary from
situation to situation depending on such factors as their environmental conditions and technology.
Although system theory has given fascinating appeal still it has some limitation.
In fact, this is not the complete explanation of the whole organisational system. It does not explain how are
the sub-systems of a specific organisation uniquely related in a given environment.

2.2.2 Contingency Theory

The modern approach to organisation theory underlines the importance of dynamic interaction with
environment and other situational factors influencing organisational design.

Two important lines of thought are significant in this context as they seek to determine the key situational
factors. One of these underlies the significance of technology in determining organisational design. The other
line of thought suggests the importance of environment. Technology refers to the techniques used by
organisations in work flow activities to transform inputs into outputs. Technology is a term that is applicable
to all types and kinds of organisations. Irrespective of whether an organisation is production oriented or
service-oriented the role of technology can be seen in the activities that result in the transformation of things.
Looking into the role of environment in managerial functions, management ecology has been developed.
Individual and his organisational environment are in a complex state of interaction with each other and the
organisation itself is in a state of interaction with its environment. Thus, managing an organisation
effectively requires a thorough understanding of its environment.

Contingency approach is based on the view that there is no best way to manage. In fact there are many
effective ways to perform various management functions. This theory emphasizes that the best way to lead,
plans, organise and conduct managerial activities varies with the situation. A particular method may yield
fruitful results in one situation but may drastically fail in other situations. There is no universal principles to
be applied in all situations. Managers must analyse different situations and use the best approach which is
best suitable in that particular situation. For example to improve productivity, supporters of scientific
management may prescribe work simplication and additional incentives, the behavioural scientist may
recommend job enrichment and democratic participation of employees in the decision-making process. But
the supporters of contingency approach may offer a solution which is responsive to the characteristics of the
total situation being faced. Work simplication would be ideal where there is limited resources, unskilled
labour, limited training opportunities and limited products offered to the local markets. Job enrichment
would be ideal for that organisation where there are abundant skilled labour force. This shows that
managerial action depends upon circumstances within a given situation. In this approach managers are
supposed to diagnose a given situation and adopt to meet the conditions present. In short contingency
approach emphasizes on two aspects, 1) It focuses attention on specific situational factors that influence the
appropriateness of one managerial strategy over another, 2) It highlights the importance of developing skills
for managers in situational analysis. Such skills will help managers find out important contingency factors
which influence their managing approach.

Contingency approach has the following features:

• Management action is contingent on certain action outside the system or subsystem as the case may be.
• Organisational action should be based on the behaviour of action outside the system so that organisation
should be integrated with the environment.
• Because of the specific organisation environment relationship, no action can be universal. It varies from
situation to situation.

Contingency theory concentrates on practical, day to day situational puzzle solving assignments the
managers encounter. It has become popular because of several reasons which are as follow :
Conceptual framework : Contingency theory provides a conceptual framework within which managers can
systematically study the characteristics of the major organisational components, as well as their
interrelationship.

Linkage between theory and practice : Contingency theory is a practical way of studying and analysing the
organisations. This theory suggest a host of alternatives that might be applicable to a particular situation.

A basis for introducing changes : Contingency theory explains the dynamic process of organisational
change. It provides information about the relevant changes that occur in the environment from time to time.
It also provides the necessary information to maintain the dynamic equilibrium.

Wide applicability : Wherever there is a need to define or redefine the relationships in an organisation
contingency theory may be useful.

New Micro phase : Contingency approach is called by Scott and Mitchell as new micro phase in
management. Since the primary attention of contingency approach is on problem-solving puzzles and putting
out fires, it has entirely pragmatic flavour. Contingency approach is considered as refreshing breeze in
management literature that away the humanistic and general systems fog.

The main advantage of this contingency approach is that it compels us to be aware of the complexity in every
situation and forces us to take an active and dynamic role in determining what best would work in each case.
Like a system theory it does not only examines the relationships between sub-systems of a specific
organisation in a given environment, but also offers solutions to particular organisational problems.

Inspite of its towering appreciations the contingency theory is fraught with a number of limitations the
scientist cannot ignore. This theory has been criticised on the ground of heavy theoretical complexity. For
example a simple problem has to be analysed on a number of organisational components, each of which
having innumerable dimensions. So its empirical testing becomes very difficult.
Therefore, it is criticised mainly on the grounds of its complexity, paucity of contents, difficulty in empirical
testing, and its reactive nature.
2.7 CONTEMPORARY ISSUES IN ORGANISATION THEORY
Different theories of organisation have been discussed which clearly state that there are three types of
approaches; namely (i) Structural -Functional approach, (ii) Socio-Psychological approach and (iii) System-
Contingent approach. All of them are mutually dependent as they have inherent relationships. Each theory is
incomplete unless it is supplemented by other two approaches. However, at the same time, it is equally
difficult to generalise a single theory of organisation which can explain the organisation in totality. As
mechanistic (structural) approach ignores human problems, the humanistic socio-psychological approach
does not give weightage to closed and formal settings of an organisation. Thus the difference of these
theories is that of focus and emphasis . It is being recognised to consolidate different views to understand an
organisation in view of the recent/contemporary trends in organisation theory. Based on several scholars
research, a synoptic view of contemporary trends/issues in organisation theory has been presented in table
2.1.

Table 2.1 : Contemporary Trends in Organisation Theory

From To

Traditionalism Social dynamics

Job task hierarchy Social process

Efficiency a mechanical process Efficiency as a human process

Organisation as a bureaucratic Organisation as a social

structure institution.

Control through command Control through communication

Authority from the top Authority from the group

Leadership by authority Leadership by consent

Decision as an individual highly Decision as collective and

centralised situational

Regimented work environment Democratic work environment

Technological change by fear Technological change by

consultation

Job as subsistence Job as satisfying experience

Planning as crisis technique Planning as formalised process

Incomplete and delayed information Complete and current information

Policy and administration dichotomy Policy and administration

continuum

Profiteering Profit with social responsibility.

The basic objective of organisation theory is to explain and predict. It attempts to understand social or
human grouping that is designed as an organisation. The theory helps a researcher by providing him an
opportunity to test his ideas about organisation and improve the theories further. In view of the
environmental changes the contemporary issues to be addressed in organisational theory can be enumerated
as under.
• Impact of technology on human side of an organisation.
• Impact of globalisation on organisational designs.
• Impact of different strategies on organisation.
• Impact of behavioural change of human beings on organisation.
• Impact of newer organisations on the society.
• Environment organisation interface.
• Cross cultural impact on organisation.
• Impact of mobility of people and technology on Organisation and
so on.
Check Your Progress C

1) Distinguish between classical and neo-classical theory of management.

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2) How does systems theory operate in an organisation.
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3) What do you mean by contingency theory of organisation ?
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4) Enumerate five contemporary issues in organisation theory.
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2.8 LET US SUM UP

An organisation is an economic and social entity in which a number of persons perform tasks to achieve a
common goal. The structure and activities are clearly defined to facilitate the flow of work. The principles
of organisation provide guidelines for smooth functioning of the organisation. The organisation theory
explains the structure and design of organisations. It helps to understand, diagnose and respond to
organisational needs and problems.

The classical theory of organisation has been developed in three streams : Bureaucracy, Administrative
theory and Scientific management theory. Bureaucracy theory explains that every organisation develops a
system of specialisation and a set of systematic rules and procedures to maximize efficiency and
productivity. The characteristics of bureaucracy include : division of labour and specialisation, hierarchy,
rules, rationality, impersonality, rules orientation and neutrality. The demerits of bureaucracy are :
impersonality, little delegation, goal displacement, strict categorisation, self perpetuation and empire
building and the cost of controls.
Administrative theory divides the activities of an industrial organisation into six groups. They are :
technical, commercial, financial, security, accounting and managerial. This theory stressed that the
managing is a process and can be dissected intellectually by analysing the functions of the manager. The
theory stipulates fourteen principles of management which facilitates the smooth functioning of the
organisation. It has been criticised on the basis of having a closed system and underestimating the human
factors.
The scientific management theory helps in determining scientifically the best method for performing any task
and for selecting, training and motivating workers. The theory emphasizes on the scientific selection of
personnel, incentives and functional foremanship. It stresses on increase in productivity but ignores the
human relations.

The neo classical theory of organisation emphasized the social factors and emotions at the work place. It
advocates that the participative approach, human dignity and the communication are the cornerstones of
efficient management. It is considered as an improvement over the classical theory due to its focus on the
human relations and informal organisation. It is criticised on the ground that it stresses too much on the
people.
Modern theory of organisation considers the dynamic conditions at the micro and macro levels. The systems
theory emphasized on the integration of individual and organisational units through systems approach. It is
reflected in terms of inputs, process, output and feedback. The contingency theory explains that the
management action is contingent in certain action outside the system or subsystem. The behaviour should be
integrated with the environment. The contemporary issues in organisational theory suggests to consolidate
different views to understand an organisation.

2.9 KEY WORDS

Chain of Command : The line of authority running from the top to the bottom of the organisation

Departmentation : Grouping of various activities on some well defined basis.

Differential Piece Rate : Piece rates of wages which apply differently to efficient and inefficient workers.

Formation Organisation : A planned structure which represents the officially established pattern of relationship
among individuals, groups, sections, units, departments and divisions.

Functional Foremanship : Supervision of work by different specialist foremen.

Hawthorne Studies : Experimental studies conducted to find out what factors motivate workers on the shop
floor for improved performance.

Human Relations Approach : Motivating employees with a satisfying work environment and fulfillment of
their social and psychological needs.

Information Organisation : A network of relationship among the participants of an organisation which arises
spontaneously on the basis of psychological needs.

Motion Study : Observation of the movements required to perform a job so as to eliminate wasteful motions
and decide on the best way of doing the job.

Scientific Management : Application of scientific methods to resolve management problems in place of rule
of thumb or trial and error methods.

Span of Control : The number of subordinates a manager can effectively supervise.

Structure : A framework of relationship among parts.

Systems : An arrangement and set of relationship among multiple parts operating as a whole.
Systems Approach : Understanding management as a balancing and integrating system.
Time Study : Technique used to analyse and measure the time taken in doing the various elements of job.

Unity of Command : The principle of every subordinate being under one supervisor.

2.10 TERMINAL QUESTIONS

1) Describe the basic objectives and steps involved in the process of an organisation.
2) Explain the basic principles of organisation.
3) What do you mean by bureaucracy? Discuss its characteristics. Do you think that bureaucracy
enhances efficiency in the organisation. Give your arguments.
4) What is administrative theory of organisation? Is it relevant today? Explain with examples.
5) Discuss the central theme of scientific management. Do you think that the scientific management
enhances productivity in the organisation. Give your arguments.
6) Elaborate the Howthorne Experiments. What are their findings ? How are they relevant in the
modern organisation.
7) What is the contribution of Neo-classical theory of organisation? Do you think that the neo-classical
theory is an improved version of the classical theory. Discuss with examples.
8) Critically examine the modern theory of organisation.
9) Discuss the emerging trends/issues in organisation theory.

Note : These questions will help you to understand the unit better. Try to write answers for them. Do not
submit your answers to the university for assessment. These are for your practice only.

Transformation
Process

Direct-Indirect Feedback about outputs

UNIT 3 ORGANISATION STRUCTURE AND EFFECTIVENESS
Structure

3.0 Objectives
3.1 Introduction
3.2 Concept of Organisation Structure
3.3 Components of Organisation Structure
3.4 Types of Organisation Structure
3.4.1 Functional Structure
3.4.2 Divisional Structure
3.4.3 Adaptive Structure
3.5 Dimensions of Organisation Structure
3.6 Organisational Design
3.6.1 Classical form of Organisation
3.6.2 Alternate Design
3.6.3 Organisational and Mechanistic Design
3.7 Organisational Effectiveness
3.8 Let Us Sum Up
3.9 Key Words
10.10 Terminal Questions

3.0 OBJECTIVES
After studying this unit, you should be able to:
• discuss the concept of organisation structure;
• explain the components of organisation structure;
• analyse the dimensions of organisation structure;
• discuss the model of organisation designs; and
• explain the determinants of organisational effectiveness.

3.1 INTRODUCTION
In an organisation, a number of activities are performed. These activities are required to be coordinated.
Organisation structure is designed for division of tasks, grouping of activities and coordinating and
controlling the tasks of the organisation. The detailed study of all components and dimensions of
organisational structure is required for creation of efficient and stable structure. Well designed organisation
structure facilitates the smooth functioning of the organisation. In this unit, you will learn the concept,
components and types of organisation structure. You will further learn the dimensions of structure and the
models of organisational designs. You will be familiarised with the determinants of the organisational
effectiveness.

2.2 CONCEPT OF ORGANISATION STRUCTURE

Organisation structure may be defined as the established pattern of relationships among the components of
the organisation. Organisation structure in this sense refers to the network of relationships among
individuals and positions in an organisation. Jennifer and Gareth have defined organisation structure as the
formal system of task and reporting relationships that controls, coordinates and motivates employees so that
they cooperate and work together to achieve an organisation’s goals. In fact organisation structure describes
the organisation framework. Just as human beings have skeletons that define their parameters, organisations
have structures that define-theirs. It is like the architectural plan of a building. Just as the architect
considers various factors like cost, space, special features needed etc. while designing a good structure, the
managers too must look into factors like benefits of specialisation, communication problems, problems in
creating authority levels etc., before designing the organisation structure.

The manager determines the work activities to get the job done, writes job descriptions, and organises people
into groups and assigns them to superiors. He fixes goals and deadlines and establishes standards of
performance. Operations are controlled through a reporting system. The whole structure takes the shape of a
pyramid. The structural organisation implies the following things :

• The formal relationships with well-defined duties and responsibilities;

• The hierarchical relationships between superior and subordinates within the organisation;
• The tasks or activities assigned to different persons and the departments;
• Coordination of the various tasks and activities;
• A set of policies, procedures, standards and methods of evaluation of performance which are formulated
to guide the people and their activities.

The arrangement which is deliberately planned is the formal structure of organisation. But the actual
operations and behaviour of people are not always governed by the formal structure of relations. Thus, the
formal arrangement is often modified by social and psychological forces and the operating structure provides
the basis of the organisation.

Significance of Organisation Structure

The organisation structure contributes to the efficient functioning of organisation in the following ways.

Clear-cut Authority Relationships : Organisation structure allocates authority and responsibility. It

specifies who is to direct whom and who is accountable for what results. The structure helps an organisation
member to know what is his role and how does it relate to other roles.

Pattern of Communication : Organisation structure provides the patterns of communication and

coordination. By grouping activities and people, structure facilitates communication between people centred
on their job activities. People who have joint problems to solve often need to share information.

Location of Decision Centres : Organisation structure determines the location of centres of decision
making in the organisation. A departmental store, for instance may follow a structure that leaves pricing,
sales promotion and other matters largely up to individual departments to ensure that various departmental
conditions are considered.

Proper Balancing : Organisation structure creates the proper balance and emphasizes on coordination of
group activities. Those more critical aspect for the success of the enterprise may be given higher priority in
the organisation. Research in a pharmaceutical company, for instance, might be singled out for reporting to
the general manager or the managing director of the company. Activities of comparable importance might be
given, roughly equal levels in the structure to give them equal emphasis.
Stimulating Creativity : Sound organisation structure stimulates creative thinking and initiative among
organisational members by providing well defined patterns of authority. Everybody knows the area where he
specialises and where his efforts will be appreciated.

Encouraging Growth : An organisation structure provides the framework within which an enterprise
functions. If it is flexible, it will help in meeting challenges and creating opportunities for growth. A sound
organisation structure facilitates growth of the enterprise by increasing its capacity to handle increased level
of activity.

Making use of Technological Improvements : A sound organisation structure which is adaptable to change
can make the best possible use of latest technology. It will modify the existing pattern of authority-
responsibility relationships in the wake of technological improvements.

In short, existence of good organisation structure is essential for better management. Properly designed
organisation can help in improving team work and productivity by providing a framework within which the
people can work together most effectively. Therefore, an organisation structure should be developed
according to the needs of the people in the organisation.

2.3 COMPONENTS OF ORGANISATION STRUCTURE

Organisation structure influence the division of the tasks, grouping of activities, coordinating the activities
and the overall accomplishment of the tasks. Since organisation structure relates to relatively stable
relationship and process of the organisation, all influencing factors must be analysed for designing the
organisation structure.

According to Robbins organisation structure stipulates how tasks are to be allocated, who reports to whom,
and the formal coordinating mechanisms and interaction patterns that will be followed. John Ivancevich and
Michael Matteson have also expressed the same view and advocated that manager are required to take
following four decisions for designing organisational structure :
• Divisions of overall task into smaller jobs.
• Distribution of authority among the jobs.
• Bases by which the individual jobs are to be grouped together; and
• The appropriate size of group reporting to each superior.

Let us discuss each of them in detail.

Division of Labour

Adam Smith emphasized on the division of labour in his celebrated work, Wealth of Nation. In the early
twentieth century, Henry Ford used assembly line operations for manufacturing automobiles. He assigned a
specific repetitive task to each worker. The whole tasks were broken into number of smaller steps or
activities. Each step was required to be completed by separate individual. Thus, the individual attained
specialisation in performing that particular activity. The manufacturing sector has been using the work
specialisation extensively all over the world. The division of labour which results in work specialisation
provide following benefits to the organisation.
• The performance of specialised job enhances the work efficiency. Hence, the employees skills can be
used in the most efficient way.
• Since the work cycles of the job are very short, the workers can attain perfection on that job quickly.
• It enhances productivity in the organisation.
• The workers can be trained easily to perform the repetitive work.
• The training costs are reduced.
• It is easier to match workers with the specific job skills.

Despite these benefits, the division of labour has been criticised on the following ground.
• It can not be used for all types of jobs.
• It may lead to monotony and boredom.
• It focuses on physical performance of the job and underestimates the behavioural aspects of the workers.
The positive features of division of labour overshow the negative features. Hence, the work specialisation
has been widely used as an important means for enhancing productivity in the organisation.

Delegation of Authority

Delegation is the process that a manager follows in dividing the work assigned to him so that he performs
that part, which because of his position he can perform effectively. Delegation is legitimate authorisation to
a manager or employee to act in specified ways. It enables him to function independently without reference
to the supervisor but within the limits set by the supervisor and the normal framework of organisational
objectives, policies, rules and procedures. Thus, delegation involves : a) entrustment of work to another for
performance, b) grant of power, right or authority to be exercised to perform the work, c) creation of an
obligation on the part of the person accepting delegation.

Delegation of authority is one of the most important element in the process of organisation. Organisations
are characterised by a network of activities and roles. Delegation is the process through which the
interrelationships are created among individuals in their different roles in the organisation.

Delegation is necessary because it is physically impossible for a single man to look after the affairs of a large
organisation. The success of a manager lies in his ability to multiply himself through other people. The
organisations of today are not only large but also complex in character. No manager can claim to have all the
skills and expertise to perform all the diverse kinds of jobs. Again, large scale business activities are not
confined to one place. It may have several branches and units at several places. Delegation becomes a
necessity for running these branches.

An organisation is a continuity. Managers may go and come but the organisation continues. Delegation
provides continuity of operations in the organisation. The process of delegation helps managerial
development in an organisation.

Thus, delegations is important for any organisation because it reduces the burden of the managers and leaves
him free to look after important matters of the organisation. It is a method by which subordinates can be
developed and trained to take up higher responsibilities. It provides continuity to the organisation and
creates a healthy organisational climate by creating better understanding among the employees.
The major benefits of delegation are :
• Delegation leads to professionalism.
• Managerial decisions may involve creativeness and innovativeness.
• The competitive environment may be created in the organisation.
• The mangers may take quick decisions.
The limitations of delegation of authority are :
• The managers may resist to delegate authority.
• The managers may require training for taking decisions and the costs of training may be higher.
• Every person may not be able to take high level of decision in the effective way.
• The administrative costs may also increase.

Despite these limitations, delegation of authority enhances efficiency in the organisation.

Departmentation

The division of labour divides the jobs into smaller activities. In order to coordinate these activities, they are
grouped together. The basis by which these activities are grouped together are known as
departmentalisation.

It may be defined as the process of forming departments or grouping activities of an organisation into a
number of separate units for the purpose of efficient functioning. This term vary a great deal between
different organisations. For example, in business undertaking, terms are division, department and section; in
Government these are called branch, department and section; in military, regiment, batallion groups and
company.

The impact of departmentation is a delineation of executive responsibilities and a grouping of operating

activities. Every level in the hierarchy below the apex is departmentalised and each succeeding lower level
involves further departmental differentiation.

The major benefits of departmentalisation are :

Specialisation : Departmentation leads to the benefits of specialisation as various organisational activities

are grouped according to their relation with the specific functions or objectives. Every departmental
manager specialises in the tasks assigned to him.

Administrative control : Departmentation helps in effective managerial control because the standards of
performance for each and every department can be laid down precisely. Every department has a specific
objective. This also facilitates keeping expenditure within limits.

Fixation of responsibility : Since organisation work is divided into manageable units, and authority and
responsibility are precisely defined, it is easier to fix the accountability of different managers for the
performance of various tasks.

Freedom or autonomy : The departments created through departmentation are semi-autonomous units.
Their heads are given a sufficient degree of authority to run their departments. This increases the efficiency
of the departments.

Development of managers : Departmentation helps in the development of managerial personnel by

providing them opportunities to take independent decisions and initiative. The executives can develop
themselves for promotion to higher jobs.

Span of Control

The departmentation reflects the types of jobs which are grouped together. Different persons are involved in
performing these jobs. They are required to be supervised closely.
Span of control refers to the number of individuals a manager can effectively supervise. Thus, it is expected
that the span of control, that is, the number of subordinates directly reporting to a superior should be limited
so as to make supervision and control effective. This is because executives have limited time and ability.

It is sometimes suggested that the span of control should neither be too wide nor too narrow. In other words,
the number of subordinates should not be too large or too small. The number of subordinates cannot be
easily determined because the nature of jobs and capacity of individuals vary from one organisation to
another. Moreover, the actual span of supervision affects the organisation in different ways. A wide span
results in fewer levels of supervision and facilitates communication. It permits only general supervision due
to the limited availability of time. Narrow span, on the other hand, requires multiple levels of supervision
and hence longer time for communication. It is more expensive and complicates the process of
communication. A narrow span, however enables managers to exercise close supervision and control.

Although there are certain limits to the span of control, the tendency in recent years has been to avoid
specifying absolute number because it has been recognised that the ideal span depends on a number of
factors. Some of the important factors are discussed below :
Nature of the Work : If the work is simple and repetitive, the span of control can be wider. However, if the
work requires close supervision the span of control must be narrow.
Ability of the Manager : Some managers are more capable of supervising large number of people than
others. Thus for a manager who possesses qualities of leadership, decision-making ability and
communication skill in greater degree the span of control may be wider.
Efficiency of the Organisation : Organisations with efficient working systems and competent personnel
can have larger span of control.
Staff Assistants : When staff assistants are employed, contact between supervisors and subordinates can be
reduced and the span broadened.
Time Available for Supervision : The span of control should be narrowed at the higher levels because top
managers have less time available for supervision. They have to devote the major part of their work time in
planning, organising, directing and controlling.
Ability of the Subordinates: Fresh entrants to jobs take more of a supervisor’s time than trained persons
who have acquired experience in the job. Subordinates who have good judgement, initiative, and a sense of
obligation seek less guidance form the supervisor.
Degree of Decentralisation : An executive who personally takes many decisions is able to supervise fewer
people than an executive who merely provides encouragement and occasional direction.

It should be clear that the size of the span of control is related to numerous variables, and no single limit is
likely to apply in all cases. A variety of factors can influence the resulting number of employees comprising
the optimum span of control in any particular organisation. The span of control also influence the creation of
tall and flat structure. Let us learn the concept of tall and flat structure.

Tall and Flat Structure

A tall organisational structure would have many hierarchical levels There is a long distance between the top
most manager and the bottom most manager. There are large number of job titles and a career path to the
employee. Fewer number of subordinates a particular manager is required to guide, the organisational
structure would be taller. Contrarily, a flat structure would have wide span of management. The number of
hierarchy would be less. Larger the number of subordinates a particular manager is required to guide the
organisational structure would be flatter. Choosing an appropriate span of management is important for two
reasons. First, it affects efficiency. Too wide a span may mean that managers are over extended and
subordinates are receiving too little guidance or control. When this happens, managers may be pressured to
ignore or condone serious errors. In contrast, too narrow a span may mean that managers are underutilized.

Thus, the extent of division of work, the nature of delegation of authority, the process of departmentation and
the requirement of effective supervision i.e., span of control influence the designing of organisation
structure.

3.4 TYPES OF ORGANISATION STRUCTURE

Different types of Organisation structure can be created on the basis of arrangement of activities.
Accordingly, three broad types of structural forms are :
• Functional Structure
• Divisional Structure, and
• Adaptive Structure

Let us learn them in detail.

3.4.1 Functional Structure

When units and sub-units of activities are created in organisation on the basis of functions, it is known as
functional structure. Thus, in any industrial organisation, specialised functions like manufacturing,
marketing, finance and personnel constitute as separate units of the organisation. All activities connected
with each such function are placed in the same unit. As the volume of activity increases, sub-units are
created at lower levels in each unit and the number of persons under each manager at various levels get
added. This results in the interrelated positions taking the shape of a pyramid. Look at figure 3.1 which
shows the functional structure of a medium-size organisation.

Figure 3.1 : Functional Structure

Chief Executive

Manufacturing Marketing Finance

Mechanical Electrical Advertising Sales Accounts Audit

Work Work

Sub-units Sub-units Sub-units Sub-units Sub-units

The main advantage of the functional structure of organisation is that there is functional specialisation in
each unit, which leads to operational efficiency of people engaged, and the organisation as a whole derives
the benefit of specialised operations. The heads of the functional units are in direct touch with the chief
executive who can sort out inter-functional problems, if any, and also coordinate the interrelated functions.
The chief executive is also able to be in direct touch with lower level subordinates and thereby have full
knowledge of the state of affairs in the organisation.
However, while the functional arrangement may be well suited to small and medium size organisations, it is
incapable of handling the problems of an organisation as it grows in size and complexity. Problems of sub-
units at lower levels do not receive adequate attention of higher level managers while some of the activities
tend to be over-emphasized.
Functional units become unwisely and difficult to manage when there are diverse kinds of activities
performed in large number of sub-units. Personal contact between superiors and subordinates become rare,
and flow of communication is slow leading to problems of coordination and control.
2.2.2 Divisional Structure

The divisional organisation structure is more suited to every large enterprise particularly those which deal in
multiple products to serve more than one distinctive markets. The organisation is then divided into smaller
business units which are entrusted with the business related to different products or different market
territories. In other words, independent divisions (product divisions or market division), are created under
the overall control of the head office. Each divisional manager is given autonomy to run all functions
relating to the product or market segment or regional market. Thus, each division may have a number of
supporting functions to undertake. A divisional structure may consist of two or more product divisions or
market or territorial divisions as depicted in the diagrams 3.2 and 3.3.
Figure 3.2 : Product Divisionalisation

Chief Executive

Corporate Planning Finance Personnel

and Control

Chemicals Products Division Textiles Division

Manufacturing Marketing Accounting Personnel

Manufacturing Marketing Accounting Personnel

Figure 3.3 : Territorial Divisionalisaton

Chief Executive

Corporate Planning Manufacturing Finance Marketing Personnel

and Control

Eastern Division Western Division Northern Division Southern Division

Accounting Personnel Accounting Personnel Accounting Personnel Accounting Personnel

Manufacturing Marketing Manufacturing Marketing Manufacturing Marketing Manufacturing Marketing

In a divisional structure each division contributes planned profits to the organisation, but otherwise operates
as an independent business. The functional units are headed by managers while the final authority vests in
the divisional manager, who coordinates and controls the activities of the various functional units in the
division. The top management of the organisation, besides providing funds, determines the organisation
goals and formulates policies.

The divisional structure is characterised by decentralisation of authority. Thus, it enables managers to take
decisions promptly and resolve problems appropriate to the respective divisions. It also provides opportunity
to the divisional managers to take initiative in matters within their jurisdiction. But such a structure involves
heavy financial costs due to the duplication of supporting functional units for the divisions. Moreover, it
requires adequate number of capable managers to take charge of the respective divisions and their functional
units.

3.4.3 Adaptive Structure

Organisation structure are often designed to cope with the unique nature of undertaking and the situation.
This type of structure is known as adaptive structure. There are two types in structures.

i) Project Organisation, and

ii) Matrix Organisation

i) Project Organisation : When an enterprise undertakes any specialised, time-bound work involving
one-time operations for a fairly long period, the project organisation is found most suitable. In
this situation the existing organisation creates a special unit so as to engage in a project work
without disturbing its regular business. This becomes necessary where it is not possible to cope
with the special task or project. Within the existing system, the project may consist of
developing a new project, installing a plant, building an office complex, etc.. A project
organisation is headed by a project manager in charge, who holds a middle management rank and
reports directly to the chief executive. Other managers and personnel in the project organisation
are drawn from the functional departments of the parent organisation. On completion of the
project they return to their parent departments.

The main advantage of such a structural arrangement is that it leaves regular business undisturbed. It is
exclusively concerned with the task of completing the project work on time and in conformity with the
standards of performance relevant to its goal. There is better management and control over the project
activities as the project manager enjoys necessary authority and is alone responsible for the results. But
project organisation may create problems as well. Functional managers often resent the exercise of
authority by the project manager in the functional areas and hence conflict arises. The stability of the
functional departments is disturbed by transfer of personnel to project work from time to time. Shifting
of personnel from project to project disrupts their developments in the specialised fields.

ii) Matrix Organisation : This is another type of adaptive structure which aims at combining the
advantages of autonomous project organisation and functional specialisation. In the matrix organisation
structure, there are functional departments with specialised personnel who are deputed to work full time
in different projects sometimes in more than one project under the overall guidance and direction of
project managers. When a project work is completed, the individuals attached to it go back to their
respective functional department to be assigned again to some other project. This arrangement is found
suitable where the organisation is engaged in contractual project activities and there are many project
managers, as in a large construction company or engineering firm.
 Matrix organisation provides a flexible structure ideally suited to the requirements of changing
conditions. It facilitates pooling of specialised and technical personnel from different functional
departments, who can be deputed to a number of projects. They acquire valuable experience of handling
varied and complex problems in project work. There is speedy exchange of information and decision-
making as they work under the coordinating authority of project managers.

The major drawback of matrix organisation is that the personnel drawn from specialised functional
departments are subjected to dual authority, that of the functional heads and the project managers. The
principles of unity of command is thereby sacrificed. This generates stresses and strains in project
management, because there is simultaneous engagement of the same individual in a number of projects.

3.5 DIMENSIONS OF ORGANISATION STRUCTURE

Robins has identified three dimensions of organisation structure, i.e., formalization, centralisation and complexity.
Let us learn them briefly.

Formalization : It refers to the extent to which the activities, rules, procedures, instructions, etc. are
specified and written. This primarily means that the degree to which the activities of the organisation are
standardised. High division of labour i.e., specialisation, high level of delegation of authority, high degree of
departmentation and wide span of control lead to high degree of formalization. The major benefits of
formalization are as follow :

• Standardised activities reduce the variability in the organisation.

• It promotes coordination. All activities are defined and specified which facilitate the process of
coordination.
• There is least scope of discretion. The decision is taken on the basis of standard rules and procedures;
hence the scope of personal discretion is reduced.
• Operating costs are reduced.
• The standard activities reduce the conflict and ambiguity.

Formalization is criticised on the following ground :

• It prevents creativity and flexibility in the organisation.

• It may be difficult for the organisation to change the rules.
• The formulation and implementation of new rules may face great resistance by the employees.
Despite these limitations formalization has been widely used in the organisation. The formalized structure
helps in smooth functioning of the organisation. Well defined jobs and relationships enhance the efficiency
of the organisation.

Centralisation : There are some organisations, where top management makes all the decisions and middle
and lower level managers merely implement the decisions taken by the top management. At the other
extreme, there are some organisations in which decisions are made at all levels of management. The first
case fits into the centralised structure where as the second one is highly decentralised. One of the fourteen
principles of Henry Fayol happens to be centralisation. According to him, decreasing the role of
subordinates in decision-making is centralisation; increasing their role is decentralisation. Fayol believed
that managers should retain final responsibility but at the same time give their subordinates enough authority
to do their jobs properly. The problem is to find the proper degree of centralisation in each case. Thus,
centralisation refers to the degree to which decision making is centralised in the organisation.
In centralisation little delegation of authority is the rule; power and discretion are concentrated in a few
executives. Control and decision-making reside at the top levels of management. However, absolute
centralisation is untenable because it would mean that subordinates have no duties, power or authority.

Centralisation may be essential in small organisation to survive in a highly competitive world. But as the
organisation becomes more complex in terms of increasing size, interdependence of work-flow, complexity
of tasks and spatial physical barriers within and among groups, a function requisite for efficiency is to move
decision-making centres to the operating level. Thus, the larger the size of an organisation, the more urgent
is the need for decentralisation. This does not mean that decentralisation is good and centralisation is bad.

On the other hand, decentralisation is the systematic effort to delegate to the lowest levels all authority
except that which can be exercised at central points. It is the pushing down of authority and power of
decision-making to the lower levels of organisation. The centres of decision-making are dispersed
throughout the organisation. The essence of decentralisation is the transference of authority from a higher
level to a lower level. It is a fundamental principles of democratic management where each individual is
respected for his inherent worth and constitution.
As you know, decentralisation is a correlate of delegation; to the extent that authority is not delegated, it is
centralised. Absolute centralisation decreases the role of subordinate managers which in turn encourages
decentralisation. Absolute decentralisation is also not possible because managers cannot delegate all their
authority.

Complexity : It refers to the differences among the jobs and units. It reflects the degree of differentiation
existing within the organisation. A variety of jobs and units create more complex organisation structure. The
management of complex structure may be difficult. Based on the complexity of activities, there may be
horizontal differentiation, vertical differentiation and spatial differentiation. Let us learn them briefly.

Horizontal differentiation refers to the number of different units at the same level. This means if the number
of activities which require more specialised skills, the organisation will tend to be more complex.
Specialisation and departmentation are good examples of such differentiation. Another differentiation i.e.,
vertical differentiation refers to the number of levels in the organisation. It reflects the depth of the hierarchy
in the organisation. This means that increase in hierarchical level enhances complexity in the organisation.
In such organisation, coordination and communication become difficult. The process of interaction is
influenced by span of control which determines the number of persons effectively supervised by a manager.
In the wide span, the managers have more persons to be supervised and in the narrow span they have less
persons to be supervised. The supervision depends on number of other factors as well.

The third types of differentiation i.e., spatial differentiation refers to the degree to which location of units
and the personnel are dispersed. As you must be aware that these days activities of the organisation are
located in different areas. The multiple location increases the complexity of the organisation. Coordination
and interaction also become difficult in such organisation.

An increase in above types of differentiation may lead to increase in complexity in the organisation. Thus,
the complexity of the organisation determines the amount of coordination, communication and control. John
Invancevich and Michael Matteson have analysed that the high formalization reflects high specialisation,
delegated authority, functional departments and wide span of control. The high centralisation reflects the
high specialisation, centralised authority, functional departments and wide span of control. The high
complexity reflects high specialisation, delegated authority, territorial, customer and product departments
and narrow spans of control. The low formalization, centralisation and complexity reflect the opposite
characteristics.
3.6 ORGANISATIONAL DESIGN
Organisational design refers to the process of coordinating the structural elements of organisations in the
most appropriate manner. There are three distinct schools; the classical, the neoclassical and the
contemporary. The classical school represented by Max Weber, F.W.Taylor and Henry Fayol; the proponents
of formal hierarchy, clear set of rules and specialisation of labour. The neo-classical represented by
organisational scholar such as McGregor, Argyris and Likert. They emphasize on employee satisfaction
along with economic effectiveness and call for the designing of flat hierarchical structure with a high degree
of decentralisation. The proponents of contemporary design emphasize on the environmental factors in which
the organisations are operating. Let us now learn them briefly.

3.6.1 Classical Form of Organisation

The Simple Structure : A simple structure has low departmentalisation, wide span of control, concentration
of authority in a single person, and little or no formalization. Simple structure is normally flat type of
organisation having two or three vertical levels, a loose body of employees and one individual in whom the
decision-making authority is centralised. Usually, practiced in small organisations having owner manager or
family owned businesses. The advantage of simple structure is in its simplicity. It is fast, flexible,
inexpensive to maintain and accountability is absolutely clear. However, it is very difficult to maintain
especially when the organisations grow larger.

The Bureaucracy : The most common form of organisation is the classical bureaucratic structure. The
structure is inflexible, impersonal and highly standardised. You may observe some of the organisations we
come across very frequently. The banks, where we deposit our money and withdraw cash as and when we
need them. The stores from where we buy large number of items of daily use. The income tax office, we
need to file our income tax returns every year. If you observe these organisations closely, we may find that
they are all having highly routinised work system carried out through specialisation, formally written rules
and regulations, centralised authority, narrow span of control and all decision have to follow the chain of
command. Max Weber (1947), considered it as an ideal form of organisation.

The bureaucracy, though not very ideal form of organisation in modern times but still holds ground. The
strength of bureaucracy lies in its ability to perform standardised functions highly efficiently. However,
obsessive observance of rules and regulations is said to be its major weakness.

The Matrix Structure : Mathematically, matrix is an array of horizontal rows and vertical columns. In order
to understand the Matrix Structure, we first need to understand the Functional Organisation, a form of
departmentalisation in which every member of the organisation engaged in a functional area i.e., employee
engaged in marketing or production is grouped into one unit. The matrix organisation is defined as type of
organisation in which each employee has two bosses or (under dual authority). They have to report to both
functional and divisional manager and also to a project or group manager. This type of structure is most
popular in the advertising agencies, hospitals, Research and Development laboratory and universities. The
matrix structure allows for flexible use of organisations human resources, pooling and sharing of specialised
resources but the major problem is with regard to coordination of task and stress caused by two bosses.
2.2.2 Alternate Design

Robins has classified the structural designs into three broad types; the team structure, the virtual
organisation, and the boundary less organisation.

The Team Structure : The team structure uses the team as the central device to coordinate work activities.
Robins defines work team as a group whose individual efforts result in a performance greater than the sum of
the individual inputs. The primary characteristics of the team structure are that it breaks down departmental
barriers and decentralises decision making to the level of the work team. One of the prerequisites of the team
structure is that the employees have to be both generalists as well as specialists. In India some of the well
known multinationals like Xerox, Motorola and the IT giant H.P uses cross functional teams.

The Virtual Organisation : In the age of specialisation no organisation can survive without outsourcing.
The core activity remains with the main organisation whereas parts are performed by others. The virtual
organisation (also known as network or modular organisation) goes a step ahead by outsourcing major
business function. In structural terms the virtual organisation is highly centralised, with little or no
departmentation. When large organisations use virtual structure, they frequently use it to outsource
manufacturing activities. This is the reason why do some of the very large organisations do business of
crores of rupees without having manufacturing activities.

The Boundary Less Organisation : The credit for coining the term boundary less organisation goes to Mr.
Jack Welch of General Electrics (GE). He wanted GE to become boundary less organisation. The type of
organisation, which seeks to eliminate the chain of command, have limitless span of control and replace
departments with empowered teams.

By removing vertical boundaries, management flattens the hierarchy, status, and ranks are minimized. G.E.
has been using cross-hierarchical teams, participative decision making practices and 360-degree performance
appraisal system to break vertical boundaries. It is the networked computers (with the help of internet and
intra-net), which makes the boundaryless organisation possible by allowing people to communicate across
inter-organisational and intra-organisational boundaries. Electronic Mail for example permits hundreds of
employee to share information simultaneously and allows ranks and file workers to communicate directly
with senior executives.

3.6.3 Organisational and Mechanistic Designs

There are two extreme models of organisational design i.e., mechanistic model and organic model. Let us
learn them briefly. Robins has identified following characteristics of mechanistic and organic model of
organisational design :

Mechanistic Model : The major features of mechanistic model are as follow:

• extensive departmentalisation
• high formalisation
• a limited information network; and
• centralisation

The activities are grouped together based on the strategies of the departmentation like functional, division,
adaptive; etc. There are standardised policies, procedures, rules and decision making styles. The flow of
information is very limited. The decision making style is highly centralised. Thus, the mechanistic model
endevours to achieve efficiency because of its structural characteristics.
Organic Model : The major features of organic model are as follow:
• cross hierarchical and cross functional teams
• low formalization
• comprehensive information network
• high participation in decision making
In the organic model teams emerge from different hierarchy and functional areas. The tasks, rules,
procedures and decision making are in a fluid situation and changeable. The information flow across the
organisation. There exists decentralisation of decision making where participation is sought from the larger
group. This model focuses on flexibility and adaptability. It encourages greater utilisation of human
resources.

3.7 ORGANISATIONAL EFFECTIVENESS

The study of organisational structure is necessary to understand organisational effectiveness. In simple terms
better the structure of an organisation more effective would be the organisation and vice versa. You must be
aware that some organisations perform better and grow more rapidly than other. On the extreme side some
organisations perform badly and within a short period of time go out of business. How can we measure
effectiveness? In order to measure the effectiveness let us analyse following components of organisational
effectiveness.

The different components of organisational effectiveness can be found from the answer to the following
questions.
• Are the employees satisfied with the organisation?
• Are the customers satisfied with the organisation?
• Is the organisation profitable?
• Is the organisation growing in terms of profit, revenue, number of products, expansion into new
locations, line of products etc?
• Is the organisation productive i.e., creating goods and services of high value at minimum cost? and
• Is the organisation innovative or stale?

Determinants of Organisational Effectiveness

Several factors influence the organisational effectiveness. Let us learn them in detail.
Figure 3.4 : Determinants of Organisational Effectiveness

Managerial Policies and Practices

Managerial policies and practices integrate the entire organisation, maintain balance among the interest
groups in the organisation, and accommodate them with the external environment. Managerial policies and
practices have a direct bearing on the Organisational effectiveness. The major managerial policies and
practices are as follow :

Strategy: A strategy is a plan for interacting with the competitive environment to achieve organisational
goals. Goals define where does the organisation want to go and strategies define how will the organisation
reach there. In other words, strategy is the determination of basic long term goals of the organisation, the
adoption of the courses of action and the allocation of resources necessary to achieve them. The strategy is
the most important factor of an organisation which decides the future course of action for the organisation.
New strategy is often selected based upon environmental needs, and then the top management attempts to
redesign the organisation to achieve those ends.

Leadership: It is the process of influencing members towards the achievement of organisational goals. It is
said that managers are people who do things right and leaders are people who do the right thing. Leaders
facilitate the identification of organisational goals. They initiate the development of vision for their
organisation.

Decision-making: Decision-making is choosing among alternatives. It has close relationship with all
traditional management functions. The decision that management makes has a profound impact on the
success of an organisation.

Rewards: Organisational success to a large extent depends on how is management able to gain support of
its team by way of compensating them for the efforts they are making for the achievement of organisational
goals. It is primarily meant to sustain employee morale and improve or maintain productivity.

Communication: It is the linkages among members of the organisation whereby they exchange information.
The organisational structure has to provide for a perfect communication among different members of the
organisation. Organisational communication is the grease that enables any organisational change.

Environmental Characteristics

Organisational effectiveness is influenced to a great degree by the external environmental characteristics. It

is dependent on how is the external environment predictable, complex and hostile to the organisation and its
activity. The major characteristics are as follow :

Predictability: Predictability refers to how certain or uncertain an organisation may be towards supply of
various resources; human, raw material etc. It is an element of external environment.

Complexity: Environment complexity refers to the heterogeneity and range of activities which are relevant
to an organisation’s operations. How many diverse groups from external environment the organisations have
to deal with.

Hostility: A hostile environment is one in which the underpinning of the organisation is threatened. How is
an organisation viewed by the people at large. You may recall the case of Union Carbide after the Bhopal
gas leakage about the hostility of environment.

Employee characteristics

The characteristics of the human resource could make or break an organisation. It is employee
characteristics, which is reflected in the success or failure of an organisation. The major characteristics are
as follow :
Goals: Goals define where the organisation wants to go. Goals are intentions that an individual or an
organisation would like to achieve in the course of their working. Goals provide a directional nature to
people’s behaviour and guide their thoughts and actions.

Skills: Skill is the ability to engage in a set of behaviour that are functionally related to one another and that
lead to a desired performance in a given area. The skill can be technical, managerial, behavioural etc.

Motives: A motive is an inner state of a person that energizes activates, or moves and directs towards the
achievement of a pre defined goal. The motivated employees have high motives to perform better and
achieve the targets.

Attitudes: Attitudes are evaluative statements- either favourable or unfavourable concerning objects, events,
or people. Attitudes influence job behaviour and hence organisational effectiveness.

Values: Values represent basic convictions or a specific mode of conduct. It generally influences an
individual’s attitude and behaviour. The value that a person holds influences his or her motivation and
subsequently behaviour.

Organisational Characteristics
Organisational characteristics refer to the general conditions that exist within an organisation. Various
organisational characteristics influence organisational effectiveness. The major characteristics are as follow
:

Structure: An organisational structure defines how are job tasks formally divided, grouped and coordinated.
For organisational effectiveness, six elements need to be addressed while designing organisational structure.
These are: work specialisation, departmentation, chain of command, span of control, centralisation and
decentralisation, and formalization.

Technology: The term technology refers to how does an organisation transfer its inputs into outputs. Every
organisation has at least one technology for converting financial, human and physical resources into products
or services. The choice of technology and its use influences organisational effectiveness.
Size: In a narrow sense organisational size refers to the number of people in an organisation. But, if we take
a broader view, size refers to the physical capacity of the organisation, the personnel available to the
organisation, the organisational inputs or outputs and the discretionary resources available to an organisation.
It is the size which influences the structure which in turn influences organisational effectiveness.

Benefits of organisational effectiveness:

• Structures and behaviours are aligned with business needs.
• Disruption to business is minimised which reduces operational risk.
• Employee morale is sustained which maintains productivity.
• The right employees and talent are retained.
• Employees objectives and rewards are aligned to business goals.

3.8 LET US SUM UP

Organisation structure refers to the grouping of activities and establishing pattern of relationship among the
various parts of the organisation. It involves the assignment of tasks, establishment of hierarchical
relationship, creation of policies, procedures, coordination and control of all activities in the organisation.
The major components of organisation structure are : division of labour, delegation of authority,
departmentation and span of control.
Different types of organisation structure are created based on the arrangement of various activities. They are
: functional, divisional and adaptive. The adaptive structure consists of project organisation and matrix
organisation. The dimensions of organisation structure are : formalization, centralisation and complexity.

The Organisational structure has been changing over a period of time. There is not one organisational
structure, which is suitable for a particular type of organisation. We find that within the same organisation
there can be more than one structure in vogue. However, from bureaucracy to the matrix organisation there
has been wide variety of structures. As a result of growing outsourcing the organisational structure would
be more towards virtual and boundary less organisation. But bureaucracy in a limited manner shall remain
true in all ages and departmentation has to be done in order to assign task and ascertain accountability.

The Organisational designs are dependent on a wide variety of factors; namely the management philosophy,
the size of the organisation, the type of technology, and the external environmental factors. Therefore, there
cannot be tailor-made solutions for all organisations. The ultimate aim for the organisation is to be effective
and organisational structure is a tool in the attainment of organisational objectives. The components of
organisational effectiveness are managerial policies and practices, employee characteristics, organisational
characteristics and the environmental characteristics.

3.9 KEY WORDS

Bureaucracy: A structure with highly routine operating tasks achieved through specialisation, formal rules
and regulations.

Centralisation: The degree to which decision-making is concentrated in one or a small group of individuals
at the higher level of management.

Chain of Command: The unbroken line of authority that flows from the top of the organisation to the
lowest level and clarifies as to who reports to whom?

Decentralisation: The degree to which decision making power is extended to the lower levels of management
in the organisation.

Departmentation: The basis by which the jobs are grouped.

Division of Labour: The degree to which tasks are sub-divided into separate jobs in the organisation.

Hierarchy: Arrangement of positions in the organisations from higher to lower levels.

Organisation: Two or more people who work together in a structured way to achieve a specific goal or set of
goals.

Span of Management: The number of subordinates a manager can efficiently and effectively direct.

3.10 TERMINAL QUESTIONS

1) What is Organisational Structure? Discuss the significance of Organisational Structure.

2) What are the components of organisation structure. Discuss them and explain how do they help in
smooth functioning of the organisation.
 3) Explain various types of organisation structure. How do they facilitate the smooth functioning of the
organisation.
4) Describe various dimensions of organisation structure. Do you think that the study of formalization,
centralisation and complexity help in enhancing the efficiency of the organisation. Discuss.
5) What is Organisational Effectiveness. Explain different components and determinants of
organisational effectiveness.
6) Write notes on
i) Departmentalisation
ii) Dimensions of Organisation structure
iii) Delegation of authority

Note : These questions will help you to understand the unit better. Try to write answers for them. Do not
submit your answers to the university for assessment. These are for your practice only.

SOME USEFUL BOOKS

Dwivedi R. S., Human Relations and Organizational Behaviour – A Global Perspective, Macmillan, Delhi.
(Recent Edition).

Jennifer M. George and Gareth R. Jones. Understanding and Managing Organizational Behavior, Addisson,
Wesley Publishing Company, New York. (Recent Edition).

John M. Ivancevich and Michael T. Matteson, Organizational Behavior and Management, Irwin, Chicago.
(Recent Edition).

John W, Newstrom and Keith Devis, Organizational Behavior, Tata McGraw, Hill Publishing Company Ltd,
New Delhi. (Recent Edition).

Stephen P Robbins, Organization Behavior, Prentice Hall of India, New Delhi. (Recent Edition).

Steven L. Mcshane and Mary An Von Glinow, Organizational Behavior, Tata McGraw Hill Publishing
Company Limited, New Delhi (Recent Edition).
Organisational Characteristics
• Structure
• Technology,
• Size etc

ORGANISATIONAL EFFECTIVENESS

Managerial Policies and Practices

• Strategy
• Leadership
• Decision making
• Rewards
• Communication etc

Employee Characteristics
• Goals
• Skills
• Motives
• Attitudes
• values

Environmental Characteristics
• Predictability
• Complexity
• Hostility
UNIT 4 OVERVIEW OF ORGANISATIONAL
BEHAVIOUR
Structure

4.0 Objectives
4.1 Introduction
4.2 Concept of Organisational Behaviour
4.3 Genesis of Organisational Behaviour
4.4 Needs for Study of Organisational Behaviour
4.5 Goals of Organisational Behaviour
4.6 Traditional and New Approaches to OB
4.7 Individual Perspective
4.8 Small and Large Group Perspective
4.9 Organisational Perspective
4.10 Integrative Perspective
4.11 Let Us Sum UP
4.12 Key Words
13.13 Terminal Questions

4.0 OBJECTIVES
After studying this unit, you should be able to:
• discuss the meaning, needs, and goals of Organisational Behaviour;
• correlate the study of Organisational Behaviour to its root-subjects;
• identify direction, and degree of changes taking place in the field of Organisational Behaviour;
• explain scope of Organisational Behaviour in basically three dimensions: individual, group, and
organisational;
• integrate Organisational Behaviour with overall effective management of an organisation; and
• develop a sense of sequencing of various issues discussed in subsequent units in this subject.

1.1 INTRODUCTION
In a simple term organisational behaviour refers to the behaviour of persons in an organisation. Everybody
wants to understand others behaviour. Understanding others behaviour help the persons to influence them.
As you must be aware that human behaviour is guided by the internal and external forces. The analysis of
these forces provides an insight for understanding the behaviour. Moreover, managers have been grappling
with the idea of the channelisation of human energy towards the attainment of the organisational goals. The
understanding of human behaviour play very important role in this endeavour as well. Thus the study of
organisational behaviour provides guidelines for influencing the behaviour of the persons in the organisation.
In this unit, you will learn the concept, genesis, needs and goals of the organisational behaviour. You will be
familarised with the approaches of the organisational behaviour. You will further learn various perspectives
of the study of organisational behaviour.

4.2 CONCEPT OF ORGANISATIONAL BEHAVIOUR

Before we begin discussion on the content of this chapter, you should be clear that understanding of
organisational behaviour and understanding of organisation and management developed side by side.
Therefore, it would be beneficial for you to keep in mind the contents of Unit 1 and Unit 2, before
you proceed to understand this chapter. After reading those Units you have understood how
organisation/management theories developed from classical era to modern era. Development of
various schools of thought in various era, throw light on development of behavioural issues in
organisations.

Thorough understanding of this chapter would make your task easier, i.e., you can understand
subsequent chapters in a synchronized way. To understand Organisational Behaviour, let us first take the
two terms involved: organisation and behaviour.

Organisation is a place where two or more people work together in a structured way to achieve a specific
goal or set of goals. Goals are fundamental elements of organisations. According to Gary Johns,
organisations are social interventions for accomplishing goals through group efforts. Various environmental
forces influence organisations. There are two types of environmental forces: direct and indirect. Some of the
main direct forces are: customers, suppliers, competitors, labour market, and regulatory agencies. Some of
the main indirect forces are: economic, technological, socio cultural, political, and international. Behaviour
is anything that the human does. Behaviour is response to stimulation that can be observed, thus it is any
response or reaction of an individual. The basic unit of behaviour is activity. According to Luthans, in
understanding the variable it is extremely important to separate the actual behaviour events from the
outcomes of the events. Specific observable behavioural events and their patterns provide useful data in
order to analyze the interaction, which precedes the behaviour and the consequences that follow the
behaviour.

Running a large company, or even a small one, is no easy task. The field of Organisational Behaviour
provides many helpful insights into understanding the complexities of people’s behaviour on the job.
Organisational Behaviour is the study and application of knowledge about how people act within
organisations. The key elements in an organisation are: people, structure, technology, and external
environment in which the organisation operates. When people join together in an organisation to accomplish
an objective, some kind of structure is required. People also use technology to get the job done. So there is
an interaction of people, structure, and technology. In addition, these elements are influenced by the external
environment, and they influence it.

According to Keith Davis, Organisational Behaviour is an academic discipline concerned with understanding
and describing human behaviour in an organisational environment. It seeks to shed light on the whole
complex human factor in organisations by identifying causes and effects of that behaviour. According to Joe
Kelly, Organisational Behaviour is the systematic study of the nature of organisations: how they begin, grow,
and develop, and their effect on individual members, constituent groups, other organisations, and large
institutions. According to Luthans, Organisational Behaviour is directly concerned with the understanding,
prediction, and control of human behaviour in organisations. According to Robbins, Organisational
Behaviour is a field of study that investigates the impact that individuals, groups, and structure have on
behaviour within organisations for the purpose of applying such knowledge towards improving an
organisation’s effectiveness.According to Baron and Greenberg, Organisational Behaviour is the field that
seeks knowledge of behaviour in organisational settings by systematically studying individual, group, and
organisational processes.

On the basis of definitions stated and various other definitions, we can draw following conclusions related to
nature and scope of Organisational Behaviour:

• Interdisciplinary Approach: Organisational Behaviour integrates knowledge from various relevant

disciplines. This issue will be clear to you after reading the section on genesis of Organisational
Behaviour in this unit.
• An Applied Science: Organisational Behaviour is oriented towards understanding the forces that
affect behaviour so that their affects may be predicted and guided towards effective functioning of
organisation. This issue will be clearer to you after reading the section on goals of Organisational
Behaviour in this section.
• Behavioural Approach to Management: Organisational Behaviour is directly connected with the
human side of management, but it is not the whole of management. Organisational Behaviour is
related with the conceptual and human dimensions of management.
• Concern with Environment: Organisational Behaviour is concerned with issues like compatibility
with environment e.g. person-culture fit, cross-cultural management etc.
• Scientific Method: Organisational Behaviour follows the scientific method and makes use of logical
theory in its investigation and in answering the research questions. It is empirical, interpretive,
critical and creative science.
• Contingency Approach: There are very few absolutes in Organisational Behaviour. The approach is
directed towards developing managerial actions that are most appropriate for a specific situation.
• A Systems Approach: Organisational Behaviour is a systematic vision as it takes into account all the
variables affecting organisational functioning.
• Value Centred : Organisational Behaviour is a value-centred science.
• Utilizes two Kinds of Logic: It utilizes both objective and subjective logic. Objectivity is concerned
with reaching a fact through empirical analyses. Subjectivity is concerned with deciding about an
issue through intuition, common sense, experiences, gut feeling, metaphors, learning from stories
and cases, persuasive literature etc.

Organisational Behaviour focuses on five levels of analysis. They are :

• Individual behaviour
• Inter-personal behaviour
• Group behaviour and group dynamics
• Organisational issues
• Environmental issues.

4.3 GENESIS OF ORGANISATIONAL BEHAVIOUR

Behavioural Science or Organisational Behaviour is not an elemental subject, rather than it is like a
compound subject, with integrated weaving of various disciplines. In modern terminology, Organisational
Behaviour is an interdisciplinary approach to the study of human behaviour in organisations. The study of
behaviour can be viewed in terms of various main disciplines. All disciplines have made an important
contribution to the field of Organisational Behaviour. These disciplines are:

Psychology: Psychology is broadly speaking concerned with the study of human behaviour, with traits of the
individual and membership of small social groups. The main focus of attention is on the individual as a
whole person. Organisational Behaviour learns a great deal in issues like personality, perception, emotions,
attitude, learning, values, motivation, and job satisfaction etc. from the field of psychology.

Sociology: Sociologists are more concerned with the study of social behaviour, relationships among social
groups and societies, and the maintenance of order. The main focus of attention is on the social system.
Organisational Behaviour has developed by taking many issues from sociology. Some of them are: group
dynamics, communication, leadership, organisational structures, formal and informal organisations,
organisational change and development etc.

Social Psychology: Social Psychology examines interpersonal behaviour. The social psychologists are
concerned with intergroup collaboration, group decision making, effect of change on individual, individual’s
responsiveness to change, and integration of individual needs with group activities.

Anthropology: Anthropologists are more concerned with the science of mankind and the study of human
behaviour as a whole. Issues like, individual culture, organisational culture, organisational environment,
comparative values, comparative attitudes, cross-cultural analysis, are common to the fields of anthropology
and OB. As far as OB is concerned, one of the main issues demanding attention is the cultural system, the
beliefs, customs, ideas and values within a group or society, and the comparison of behaviour among
different cultures. People learn to depend on their culture to give them security and stability, and they can
suffer adverse reactions to unfamiliar environments.

Political Science: Political Science as a subject has many ingredients, which directly affect human
behaviour in organisations since politics dominates every organisation to some extent. Many themes of
interest directly related to OB are, power and politics, networking, political manipulation, conflict resolution,
coalition, and self-interest enhancement.

Economics: Economic environment influences organisational climate. OB has learned a great deal from such
economic factors as labour market dynamics, cost-benefit analysis, marginal utility analysis, human resource
planning, forecasting, and decision making.

Engineering: Industrial Engineering area has contributed a great deal in the area of man-machine
relationship through time and motion study, work measurement, work flow analysis, job design, and
compensation management. Each of these areas has some impact on OB.

Medicines: Medicines is one of the newest fields which is now being related to the field of OB. Issues like
work related stress, tension and depression are common to both: the area of medicine, and OB.

Semantics: Semantics helps in the study of communications within the organisation. Misunderstood
communication and lack of communication lead to many behaviour related problems in the organisation.
Accordingly, adequate and effective communication is very important for organisational effectiveness.

4.4 NEEDS FOR STUDY OF ORGANISATIONAL BEHAVIOUR

A study of OB is beneficial in many ways. Some of the benefits of studying OB are following:

• It helps an individual understand oneself. It is a systematic study of the actions and attitudes that people
exhibit within organisation.
• It helps managers in getting the work done through effective ways.
• It emphasizes the interaction and relations between the organisation and individual behaviour, thus
making an attempt to fulfil psychological contract between individuals and the organisation.
• It helps to develop work-related behaviour and job satisfaction.
• It helps in building motivating climate.
• It helps in building cordial industrial relations.
• It helps in the field of marketing through deeper insight of consumer behaviour, and managing and
motivating field employees.
• It helps in predicting behaviour and applying it in some meaningful way to make organisations more
effective.
• It implies effective management of human resources.
• It helps to improve functional behaviour leading to productivity, effectiveness, efficiency, organisational
citizenship, and also helps to reduce dysfunctional behaviour at work place like absenteeism, employee
turnover, dissatisfaction, tardiness etc.

Study of OB can be said to be most important contributor towards building managerial skills. After studying
this whole subject you would realize that contributions of OB towards building the following skills and
values are unparalleled:

• Self development
• Personality development
• Development of human values and ethical perspective
• Managing stress and achieving mental hygiene
• Creative use of emotions
• Creating learning individual and learning organisation
• Managing creativity and innovation
• Motivation and morale
• Job satisfaction
• Effective communication
• Interpersonal effectiveness including persuasion, coaching, counselling, mentoring, goal setting, decision
making, politicking, negotiation, conflict handling
• Team building
• Leadership
• Creating effective organisational culture
• Managing change
• Continuous development through behavioural interventions.

Activity A

Meet a training manager working in an organisation, who is responsible for providing behavioural training to
executives. Discuss two issues with him/her: a) What are the five behavioural issues on which training
programmes have been arranged for employees during past one year? b) In his/her opinion how these
training programmes help employees to acquire human skills?
… … … … … … … … … … … … … … … … … … … … … … … ………… …
……… …
……… …
…………

4.5 GOALS OF ORGANISATIONAL BEHAVIOUR

Field of OB faces a special challenge. In the areas of physical science, accounting, mathematics etc. if you
do not know a concept, you would not claim that you know it. However in the field of human behaviour,
though we may not know a fact, yet through our accumulated knowledge it may appear that we know it and,
in this long drawn conclusion you may be far away from the fact. For example it appears that high job
satisfaction would necessarily lead to high organisational commitment but most of the studies have stood
against this apparently obvious hypothesis. One of the objectives of a course in OB is to replace popularly
held notions, often accepted without question, with science-based conclusions.

Since 1950s till date hundreds of thousands of research studies have been done on various aspects of OB,
and several hundreds of research studies still continue to investigate facts. OB attempts to test theories
through scientific research process. Once a theory has been formulated, predictions derived from it are tested
through direct research. If these are confirmed, confidence in the theories is increased. If they are
disconfirmed, confidence is diminished. At this point, the theory is either modified and retested, or
completely rejected. Theory building and empirical research co-exist and reinforce each other. A good theory
has to be of practical use and empirical validation would confirm this. Likewise, a good empirical research
should have its foundation in a viable theory and should add to the body of existing knowledge.
There are mainly three goals of OB:

• Understanding behaviour
• Which variables are important?
• How strong are they?
• How do they interrelate?
• Predicting behaviour
• What patterns of behaviour are present?
• What is the cause effect relationship?
• Controlling behaviour
• What solutions are possible?
• Which variable can be influenced?
• How can they be influenced?
Check Your Progress A

1) What is organisational behaviour ?

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2) How can study of OB lead to managerial effectiveness ?

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3) Why is OB called an interdisciplinary field of study ?

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4.6 TRADITIONAL AND NEW APPROACHES TO OB

Study of human behaviour, being a part of general management, can be traced back to 4,000 B.C., when the
Egyptian pyramids were built or even the dawn of mankind when people hunted in groups and protected their
families or communities against hostile environmental forces. However for the purpose of our study we need
to evaluate how OB developed during last two centuries.
In Unit 2 you have already studied about various theories related to development of organisation as well as
concept of management. We can say here that along with changes in theories of organisation, our
understanding of OB also developed. Before proceeding further you are expected to refresh yourself on
following issues discussed in Unit 2

• The Scientific Management Theories and the School: mainly developed by F.W.Taylor, H.L.Gnatt, Frank
and Lillian Gilberth.
• Classical Organisation Theory School: mainly developed by Henri Fayol, Max Weber, Mary Parker
Follet, Chester Barnard.
• The Human Relations School: mainly developed by Elton Mayo through Hawthorne Experiments.
• The Behavioural Science School: mainly developed by Abraham Maslow, Douglas McGregor, James
March, Herbert Simon.
• The Systems Approach.
• The Contingency Approach.
• Contemporary Approach.

After studying the historical development of organisational theories, you might have noticed that with
passage of time following issues occurred:

• Human factor became more important successively.

• Focus shifted from individual performance to both individual as well as group (team) performance.
• Emphasis given on actualizing the human potential.
• Emphasis on developing managerial and human skills on continuous basis.
• Emphasis on human relationship and informal organisation.
• Emphasis on creating synergy through team work.
• Treating employees with more dignity as a wholesome person.
• Increasing importance to environmental factors influencing organisation.
• Importance to psychological contract between individuals and organisation.
• Increasing concern for people in organisation.
• Continuous effort to establish effective organisational culture and climate.

According to Robert Baron, four major features characterise modern OB:

• It has adopted a somewhat more positive view of human being in work settings than prevailed in the
past.
• By drawing on several related fields, it has attained a high degree of sophistication about human
behaviour.
• It has adopted a contingency approach to behaviour in organisation- assuming that there is nothing like
permanent way of arriving at a particular solution effectively.
• It is integrative in nature. It seeks to comprehend bahaviour in organisations by combining information
from several different levels of analysis.

Apart from the description above, modern OB is concerned with the issues like: managing intelligence
quotient, emotional quotient, and spiritual quotient, improving mental hygiene and overall health of
members, continuous improvement of skills and values through training, managing ethical practices,
accomplishing fulfilment of psychological contract between individuals and the organisation, quest for
quality, behavioural intervention in merger and acquisition as well as in rightsizing, cross-culture
management, managing multinational organisations etc.

According to modern thoughts on OB, it is necessary to understand the interrelationships between human
behaviour and other variables, which together comprise the total organisation. These variables provide
parameters within which a number of interrelated dimensions can be identified - the individual, the group,
the organisation, and the environment- which collectively influence behaviour in work organisations. In the
next four sections, we shall deal in these four issues.

4.7 INDIVIDUAL PERSPECTIVE

OB deals with individual behaviours in organisations, apart from dealing with group behaviours and
behaviours in organisations. You shall get exposure to individual perspective of OB in detail while going
through Block 2 and Block 3, comprising of Units 5, 6, 7, 8, 9, 10, and 11. However it should be clear to you
now that why we study individual perspective in OB, and what are those issues dealing with individual
perspective of OB ?
An organisation is as good as its people. For organisations to grow continuously, there is need for keeping its
individuals growing through following measures:

• Continuous Learning: There are many ways through which an individual learns. Learning is any
permanent change in behaviour, or behaviour potential, resulting from experience. In order to be
effective organisations need to promote that behaviour, which are functional and need to discourage
that behaviour, which are detrimental to effective organisation. The ways learning take place and the
methods through which learning can be converted to desirable behaviour are the subject matters of
Unit 5.

• Creating Right Perception: Perception is the process through which we select, organise, and
interpret input from our sensory receptors. Your five senses (eyes through sight, ears through
audition, nose through smell, mouth or tongue through taste, and skin through touch) are
continuously gathering information from your surroundings. Now, it is your perception, which gives
meaning to various combinations of information those you gather. The field of OB helps us to create
right perception, which is pre-requisite for working effectively with people. This issue will be
discussed in detail in Unit 6.

• Building Positive Attitudes and Values: Attitudes are lasting evaluations of people, groups, objects,
or issues- in fact, of virtually any aspect of the social or physical world. Positive attitudes are
important ingredient of effective relationship. Values are the basic convictions that a specific mode
of conduct or end-state of existence is personally or socially preferable to an opposite or adverse
mode of conduct or end-state of existence. Values are at the base of attitudes and behaviour, hence it
is important to learn values in OB. The issues of attitudes and values shall be more discussed in
Unit 7.

• Having Personality and Emotions Compatible at Work Place: Personality is an individual’s

unique and relatively stable patterns of behaviour, thoughts, and feelings. There is need in
organisations to create a right combination of person and job, so that full potential of an individual
can be utilized. According to the requirements of the work, personality can be also developed.

Emotions are reactions consisting of subjective cognitive states, physiological reactions, and
expressive behaviours. Cognition is the mental activities associated with thought, knowledge, and
memory. An understanding about emotions help for self-development of individuals. You shall come to
know about these issues in more detail while going through Unit 8.

• Maintaining Stress-free Individuals and Environment: Stress is a dynamic condition in which an

individual is confronted with an opportunity, constraint, or demand related to what he or she desires
and for which the outcome is perceived to be both uncertain and important. With growing
competition and survival, and excellence becoming tougher, stress is the managerial discomfort of
modern era. Unit 10 shall help you to know the causes and remedies of stress.

• Keeping Individuals and Teams Motivated and providing Job Satisfaction: Motivation can be
described as perhaps the most important intangible resource of the organisation. Motivation is an
inferred internal process that activates, guides, and maintains behaviour over time. Job satisfaction
is a general attitude towards one’s job. It also depends on the difference between the amount of
rewards workers receive and the amount they believe they should receive. Unit 10 deals in
 understanding motivation and Unit 11 deals in designing jobs, those can boost morale and job
satisfaction.

4.8 SMALL AND LARGE GROUP PERSPECTIVE

In an organisation, an individual does not exist alone. Plurality of people is the essential ingredient of an
organisation. You shall get exposure to small as well as large group perspective of OB in detail while going
through Block 4 comprising of Units 12, 13, 14, and 15. However it should be clear to you now that why we
study group perspective in OB, and what are those issues dealing with group perspective of OB.

An organisation makes continuous effort to create synergy in the group or team, in order to make the team
more productive and more effective. Some of the important measures those OB suggests at group level
interventions are:

• Group Formation and Structure: Group explains the situation where two or more individuals are
interacting and interdependent, who have come together to achieve particular objectives. It deals
with issues like, how groups are formed, how groups develop, when groups become more effective,
what are the undercurrents of group dynamics, and how group decisions are taken. You shall learn
more about groups after going through Unit 12.
• Communication: Communication deals with transference and understanding of meaning.
Organisations make effort through formal structure as well as through informal interaction to
establish sound communication system within and outside organisation. Establishing effective
communication climate through right attitude of people and through modern technology are the
subject dealt in detail in Unit 13.
• Conflict Management : Conflict is a process that begins when one party perceives that another party
has negatively affected, or is about to negatively affect, something that the first party cares about.
Conflict may arise at various levels, like within the person (intrapersonal level), between two
persons (interpersonal level), intradepartmental level, interdepartmental level, interorganisational
level etc. Conflict is not necessarily bad, as it promotes difference of opinions, which may help for
improving quality of decision. Skillful managers make creative use of conflict by turning challenges
to opportunities. You shall learn more about managing conflict effectively through Unit 14.
• Team Building and Leadership: These two are highly sought after issues of OB. Team building
leads to high interaction among team members to increase trust and openness. For team building
effective leadership styles are required. Leadership is the ability to influence a group toward the
achievement of goals. These two issues shall be discussed in detail in Unit 15.

• Power and Politics: Some amount of pushes and pulls are inevitable where more than two persons
exist. Individual tends to exercise power to influence behaviour of others, so that others act in
accordance with the wishes of the individual. Political behaviour deals with use of informal
networking to make an attempt to influence others. When others are influenced for narrow gains,
politics is dysfunctional, when influence is used for achieving overall goals in larger interest,
political behaviour is functional, and also desirable for organisation. You shall enjoy learning more
about power and politics through Unit 16.

4.9 ORGANISATIONAL PERSPECTIVE

Organisational perspective of OB deals with larger issues of the organisations. Such issues influence an
organisation in broader ways. Organisational perspective of OB deal with following issues:
 • Organisational Culture and Climate: Organisational culture explains a common perception held by
the organisation’s members. It depicts a system of shared meaning. A sound culture leads to
conducive organisational climate. For long term effectiveness organisations need to investigate into,
as well as need to take measures for improving organisational climate and culture. You shall learn
about these issues in detail in Unit 17.

• Organisational Change: This is an age of change. It is said that only thing that is permanent is
change. In earlier decades there used to be longer duration of stability with off and on shorter
duration of change in the organisations. Now the mantra itself has changed. We are passing through
an age, where there is longer duration of change interventions in organisations with off and on
shorter duration of stability. In Unit 18 you shall learn about strategies to implement change
management for building effective organisations.
• Organisational Development : Organisational Development explains collection of planned-change
interventions, built on humanistic-democratic values, that seek to improve organisational
effectiveness and employee well being. Such interventions may be applied at individual level, group
level as well as organisational level. Through Unit 19, you would gain insight about managing the
process of organisational development.

Check Your Progress B

1) How views related with managing human factor changed along with changes in concepts of
management?
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2) What is your understanding of flow of sequence of various issues in this subject of OB?
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4.10 INTEGRATIVE PERSPECTIVE

As individuals do not exist in isolation, organisations also do not exist in isolation. There is constant flux of
environmental impact on organisation which in turn stimulate behaviour pattern within the organisation. The
boundaries of organisations are becoming more transparent rather more fragile. If an organisation does not
learn to muster flexibility, it would not perhaps exist for long. In order to integrate it well with the
environmental changes, organisations are required to focus on many emerging issues. Some of them are:
• Continuous improvement of people and process.
• Integrating human factor with grand objectives of the organisation.
• More emphasis on quality of products, services, and process.
• Restructuring to suit requirements of service organisations, task force teams, as well as, in case of
rightsizing and acquisition and merger.
• Managing diversity.
• Product innovation.
 • Managing creativity and innovations.
• Cross-cultural management.
• Managing multinationals.

For combating the challenging situation, OB comes forward with strategies related to people interventions.
Such measures have been debated in Unit 20.

Activity B
Meet with any executive having around 10 years of working experience in organisations. Discuss with him
five changes in the area of human resource management, which took place during last two decades. Also ask
his / her comment on the question: Are we really progressing in the field of Human Resource Management?
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4.11 LET US SUM UP

Organisational behaviour deals with the understanding, prediction and control of human behaviour in an
organisation. It is an interdisciplinary approach to the study of human behaviour. The study of behaviour
can be viewed in terms of various main disciplines like Psychology, Sociology, Social Psychology,
Anthropology, Political Science, Economics, Engineering, Medicines, Semantics; etc. The study of
organisational behaviour helps to improve functional behaviour which leads to productivity, effectiveness,
efficiency and organisational citizenship. At the same time, it also helps to reduce dysfunctional behaviour
at work place like absenteeism, employee turnover, dissatisfaction, tardiness; etc.

The study of OB is the most important contributor towards building managerial skills. The major goals of
OB are : understanding behaviour, predicting behaviour and controlling behaviour. OB basically deals at
individual level, group level, and organisational level. However one more dimension has been added to it,
i.e., integrative dimension, because study of impact of environmental factor on behavioural aspect of
organisation is gaining more importance. This Unit can also be treated as preface of all subsequent Units
those you shall study in this subject. Your proper understanding of this Unit will help you to enjoy reading
remaining Units in this subject.

4.12 KEY WORDS

Behaviour: Anything that the human does.

Contingency Approach: Approach directed towards developing actions that are most appropriate for a
specific situation.

Interdisciplinary Approach: Integrating knowledge from various relevant disciplines.

Organisation: A place where two or more people work together in a structured way to achieve a specific
goal or set of goals.

Organisational Behaviour: The study and application of knowledge about how people act within
organisations.
Systems Approach: Systematic vision taking into account all the variables affecting organisational
functioning.

Variable: A unit or factor of study.

4.13 TERMINAL QUESTIONS

1) What do you mean by organisational Behaviour ? Explain meaning and scope of Organisational
Behaviour.
2) How has study of OB integrated concepts from various fields of knowledge?
3) How is study of OB beneficial for making an organisation effective?
4) How has approach of OB matured over time?
5) Explain individual perspective, group perspective, organisational perspective, and integrative
perspective of OB.

Note : These questions will help you to understand the unit better. Try
to write answers for them. Do not submit your answers to the university for assessment. These
are for your practice only.
UNIT 5 INDIVIDUAL BEHAVIOUR AND LEARNING
Structure

5.0 Objectives
5.1 Introduction
5.2 Individual Behaviour
5.3 Concept of Learning
5.4 Learning and Performance
5.5 Theories of Learning
5.5.1 Classical Conditioning
5.5.2 Operant Conditioning
5.5.3 Cognitive Learning
5.5.4 Social Learning
5.6 Strategies for Change of Behaviour
5.7 Operant Conditioning and Change of Behaviour
5.7.1 Role of Reinforcement
5.7.2 Schedules of Reinforcement
5.8 Social Learning and Change of Behaviour
5.9 Let Us Sum Up
5.10 Key Words
11.11 Terminal Questions

5.0 OBJECTIVES

After studying this unit, you should be able to:

• describe the meaning of individual behaviour;
• explain the concept of learning;
• establish the relationship between learning and performance;
• discuss various theories of learning;
• explain the strategies for change of behaviour;
• examine the role of operant conditioning in change of behaviour; and
• discuss the role of social learning in change of behaviour.

5.1 INTRODUCTION

You must have visited to schools, colleges, offices, markets and other places several times. Sometimes you
come back to your home and share your experiences with your family members and friends saying that the
behaviour of dealing persons or sales persons was very impressive. Have you ever thought what behaviour is
and what makes behaviour impressive or unimpressive? Behaviour is the most common word used in all
walks of life. It refers to the response made by a person. The response of a person may be guided by the
environmental stimulus. The identification and study of the environmental variables becomes very
important for understanding the behaviour of an individual. In this unit, you will learn the meaning of
individual behaviour, concept of learning, learning and performance and the theories of learning. You will be
acquainted with detailed strategies for change of behaviour and the role of operant conditioning and social
learning in change of behaviour.

5.2 INDIVIDUAL BEHAVIOUR

Behaviour refers to the response made by an individual. The response may be the result of influence of
external factors. The external factor is termed as stimulus and the action taken by the individual is known as
response. Both heredity and environment determine the behaviour of an individual. The psychologists say
that man’s heredity determines what kind of person he/she can be and the environment determines what he/
she becomes. Behaviour of an individual is determined by both the heredity and environmental factors.
Heredity refers to the characteristics transmitted by parents to the next generation. Human beings acquire
biological characteristics through genes, which control the development of tissues and organs of the body.
They are determined at the time of the conception. Parents influence hereditary characteristics through the
transmission of genes. Children acquire certain features of physique and psychic qualities out of this genetic
transmission. Research in genetic engineering also suggests that heredity determines physical, mental and
emotional states of the individuals. Physical stature, gender, colour, intelligence etc. are influenced by the
hereditary factors.

The individuals are brought up in a particular environment like family, society, culture, etc. These
environmental factors influence the behaviour of the individuals. Children’s socialisation process start in the
family. Children are made to follow the behavioural pattern of the family. Members of the family compel
children to conform to certain acceptable behaviour and avoid unacceptable behaviour. Thus children
acquire knowledge of acceptable and unacceptable behaviour from their family. Children further start
socialising with a number of social groups like friends, school and other members of the society. Thus they
acquire socially acceptable behaviour and try to avoid socially unacceptable behaviour as a result of their
interaction with these groups. The culture in which children are brought up, determines the decision making
styles, attitudes, independence v/s dependence, soberness v/s aggression, competition v/s cooperation etc. As
a member of a particular culture, children learn norms, values and attitudes which are prescribed by the
culture. Individuals are compelled to behave in conformity to the cultural norms established by the society.
Thus society and culture exert greater influence on the behaviour of individuals.

Individual Differences

Now, it is clear to you that as soon as a child is born, he/she is exposed to a variety of environmental forces.
The biological characteristics clubbed with the environmental forces determine the behaviour of an
individual. The question arises why the behaviour of one person differs from other?

When you visit an organisation, you find that somebody is very polite; someone is sensitive, someone
aggressive, talkative, etc. Thus you realise that the behaviour of one person differs from the others. The
understanding of individual differences helps the managers to analyse the strengths and weaknesses of the
subordinates and their attitude towards the works and the organisation. The manager can examine the
performance pattern of the employees as a result of the individual difference and chalk out the strategy to
exploit the positive behaviour of the employees. A number of factors influence the behaviour of an
individual in the organisation.

John Ivancevich and Michael Matteson have identified major factors influencing individual difference in
behavioural pattern as : demographic factors, abilities and skills, perception, attitudes and personality. Let us
learn them briefly.
Demographic Factors: These factors are socio economic background, education, nationality, race, age, sex,
etc. The persons belonging to good socio-economic background, well educated, young etc. may be preferred
by the organisation because they are likely to perform better. You must be aware that the young
professionals having good academic background and communication skills are in great demand. For
example, a call centre prefers the young professional having excellent command on communication. Thus
the study of demographic factors helps the manager to identify the suitable persons for a particular job.

Abilities and Skills: Ability refers to mental or physical capacity of an individual to do something whereas
skill refers to an ability to act in a way that allows a person to perform well. Ability and skills play very
important role in individual’s behaviour and performance. If a person’s abilities and skills match the job
requirement, he/she is likely to perform better in the organisation. Therefore, the manger has a challenging
job of matching the abilities and skills of the employees to the job requirement.

Perception: Perception refers to the cognitive process meant for interpreting the environmental stimuli in a
meaningful way. Every individual may organise and interpret environmental stimuli based on his/her own
reference. Several factors influence the perception of an individual so their study may be very crucial for the
manager. The manager must create the favourable work environment so that the employees perceive them in
a favourable way. If the employees perceive them in a positive way, they are likely to perform better.

Attitude: Psychologists have defined attitude as a tendency to respond favourably or unfavourably to certain
objects, persons or situations. The formation of attitude is influenced by the family, society, culture, peers
and organisational factors. In an organisation, manager requires to study the variables related to job and
create the work environment in such a favourable way that the employees are tempted to form positive
attitude towards the job. If the employees form positive attitude, he/she may perform better in the
organisation.

Personality: Personality refers to the study of the characteristics and distinctive traits of an individual, the
inter-relations between them and the way in which a person responds and adjusts to other people and
situations. Several factors like heredity, family, society, culture and situation influence the personality of an
individual. As a result, individuals differ in their manner of responding to organisational environment. It is
the most complex aspect of human beings and influences their behaviour immensely. Therefore, the study of
personality traits provides an opportunity to understand the individuals, properly direct their effort and
motivate them for the accomplishment of the organisational goal.

This means that different environmental factors may generate different responses. The study of these
responses is vital for the organisation. Every organisation demands a particular type of behaviour from the
employees. These behaviours can be learnt through observation, learning, exposure, training, etc.
Psychologists have been striving for accurate study of appropriate behaviour of an individual in a particular
situation. How to shape the desired behaviour has been a challenging task before them ? The favourable
circumstances may evoke favourable responses and unfavourable circumstances may evoke unfavourable
responses. The favourable responses may facilitate the performance of an individual in the organisation.

The organisation requires identifying those factors which elicit favourable responses from the employees.
They must create congenial work environment to get the best responses from the employees. Most of the
successful and best-managed organisations have started considering their employees as key assets of the
organisation. The productivity of these organisations has improved significantly as a result of creating
employees oriented working environment. It must be clear to you that the understanding of individual
behaviour is very helpful in creating such working environment. It also helps in improving the performance
of the employees. Most of the best managed organisations have been emphasizing on the continuous
improvement of their employees through learning, adaptation and application of the best practices for the
achievement of the goals. The business environment has been witnessing enormous change. New strategies
are needed to cope up with these changes. Moreover, the expectation of the organisation regarding the
performance of the desired behaviour of the employees has been also increasing. The question arises how to
shape the desired behaviour of the employees? Proper learning strategies may be extremely helpful in
shaping the behaviour of the employees. Thus understanding of individual behaviour may be very helpful in
formulating learning and behaviour modification strategy of the organisation. Employee’s motivation
strategy may also be chalked out based on the analysis of the individual behaviour.

Check Your Progress A

1) What is individual behaviour?

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2) How one individual differ from others?

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3) Enumerate the factors influencing individual difference.

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5.3 CONCEPT OF LEARNING

Different Jobs may require different skills to complete them. The changing dimensions of the job demand
change in skills as well. Learning new skills and upgrading the earlier skills on continuous basis throw
major challenges to the employees. In an article the Future of work written by Paroma Roy Choudhary
(Business Today, January 21, 2001, pp 59 –66) focused that the work of tomorrow will demand a high degree
of formal education or foundation skills, on the Job learning, and more of cutting edge knowledge
accumulation. An organisations competitiveness will lie not in its ability to source raw materials, cheap
capital, or good workers but in its ability to build, enhance, share, and leverage knowledge, in knowing how
to do things better than its competitors. Those employees would be able to match the work scenario who
acquires new skills required for the work. These days most of the best managed organisations encourage
continuous upgradation and development of skills of their employees. These skills can be acquired by
learning. The book Learning Paradox written by Jim Harris also focuses that thriving in the future requires
willingness to being flexible and adaptable, and constantly questioning, learning, and meeting new
challenges. It gives the messages that learn continuously or die. Thus learning is the most vital part of
human behaviour.

Institute for Employment Studies (IES) United Kingdom (1988) investigated the links between industrial and
organisational learning and whether the linkages are more likely to occur within certain kinds of
development intervention in others (Learning to Manage by P. Tampkin and L. Barber, Institute for
Employment Studies, Report 345, 1998). The study examined five UK’s best known organisations and found
that as a result of learning experiences, the managers showed change in the following cognitive areas.
• Strategic overview : A broader view of business.
• Thinking Style : Clear and more informal thinking.
• Action orientation: Became more proactive and started taking more initiative.
 • Reflection : Learning from mistakes.
• Personal Style : More sensitive and caring.
• Self Awareness : Toning down aggressive behaviour as a result of feedback.
• Way of dealing with others : More honest, more team worker and follow more human democratic
management style.
These changes frequently occurred as a result of feedback from peers and subordinates. The study reflects
how learning is important for people.
India’s Best Managed Company – Business Today – AT Kearney study by Devinder, Anshuman and Satyajit
(Business Today, June 22, 2003) shows that conscious steps are taken by companies striving to be amongst
the best managed companies which can be learned and applied. Every one of the 16 best managed
companies in the study holds its position because it has moved consciously and with great deliberation. Each
has necessarily striven to formulate, reformulate and achieve its vision and improve the internal organisation.
The best managed companies believe they control their own destiny and shy away from blaming external
factors. They are focused on achieving certain goals, learn, adapt and apply best practices and take
conscious steps to ensure execution of the vision and strategies. This is one of the key messages for CEOs
intent on improving the overall functioning of their organisation.

The above studies reflect that learning is the most important ways of acquiring new knowledge and skills.
Now the question arises what is learning? Since the very beginning of childhood you keep on learning
different activities at home at the school and at the work place. You learn how to dress yourself, how to
conduct well, how to solve a problem and so on. It can be said that the human beings continue to learn
throughout their life. Have you ever thought what is learning? Psychologists have defined learning as
relatively permanent change in behaviour, which occurs as a result of experience or practice. If you
analyse this definition, you find that learning is a change in behaviour. This change may be favourable or
unfavourable. You may learn how to increase output in your organisation or you may also learn how to
decrease output in the organisation. The second feature of this definition is that the change must be
relatively permanent. It must last for a longer period of time. This means that some times, the change may
be due to fatigue, adaptation, motivation etc. which may be a temporary change. Learning involves
permanent change in behaviour. The third feature involves the change takes place through experience or
practice. The changes through growth and maturation are not considered as learned behaviour. The
experience or practice is required for the purpose of learning to take place. The experience may be acquired
through interaction with the environment in the forms of observation, personal exposure, repetition, etc. The
reinforcement of experience or practice facilitates the learning. Having learnt the concept of learning, the
question arises how performance can be changed through learning. This is the most challenging task before
the managers.

5.4 LEARNING AND PERFORMANCE

Performance is the most important outcome of learning. It refers to the action made by an individual in a
particular situation. All over the world managers have been struggling with the idea that how to make
employees perform better on the job?

BT – Hewitt Study the Best Employers in India (Business Today, January 21, 2001 p 227 –234) found that:
• Almost all surveyed company positioned themselves above market compensation levels; 78% positioned
themselves in the fourth quartile (75% -100%).
• 80% of companies preferred to pay as per internal pay scales and bands and not on the basis of Pay the
person.
• All companies used some method of variable pay.
• All companies conducted formal performance planning and feedback; 80% used multi-source feedback.
• All linked performance management directly to employee development; 90% linked it to pay decisions.
• Individual performance was rewarded to every 12 months at all companies; typically, 25% of base pay
was the average payment amount; typical increase for the top performers could be 2-3 times the overall
performers increase.
• 50% companies used broad based option plan.

All companies recognized achievements of employees; 70% awarded cash.

The above study shows how performance is related to reward. Moreover, the performance is directly related
to learning and upgrading of knowledge and skills. There are several factors which forces the employees to
perform their jobs. Steven and Mary Annvon identified four factors i.e., ability, role perceptions, motivation
and situational contingencies; which influence employee’s voluntary behaviour and their performance. Let
us discuss them in detail :

Ability: This refers to capability of a person to perform the job. It involves aptitudes and skills required for
completion of the work. For example, when you appear in the competitive examination, you are tested for
your aptitude, skill, comprehension, knowledge, etc. These tests are meant for assessing your capability
which is required for the completion of the Job. Thus, the ability of the person must match the performance
requirement of the Job. Therefore as a learner you must keep on trying to develop your ability for meeting
the challenges of the changing environment.

Role Perceptions: Every task involves appropriate behaviour for successful completion. This appropriate
behaviour is termed as role perception. The identification and learning of this appropriate behaviour is a
great challenge for the employees. This means that what are you expected to do in a given situation? You
must understand them in such a way that your behaviour satisfies the requirement of the situations. For
example, communication strategy and convincing power of salespersons may result in successful completion
of sale. This appropriate behaviour of sales persons is known as role perceptions. In order to introduce role
perceptions, the manager requires defining the jobs clearly and providing adequate training and appropriate
feedback to the employees. The proper understanding of role perceptions certainly facilitates the
performance of the job.

Motivation: This is the most important aspect of performance. Robbins has defined motivation as the
process that account for an individual’s intensity, direction and persistence of effort toward attaining a goal.
Here, intensity refers to how much effort a person makes to perform the job. Moreover, the effort must be
made in a proper direction. If the effort produces desired result, the person tends to sustain his behaviour.
The manager requires identifying the reinforcing factors which encourages the employees to make strong
effort for the completion of the job and sustain them over a longer period. Thus the effort in a right direction
and desired result motivate the employees to perform well.

Situational Contingencies: Every Job is performed in a particular situation. The situation may be
favourable or unfavourable for the completion of the task. If the manager provides favourable environmental
condition, the employee may perform better. Favourable working condition, well structured task, better
resources, good marketing strategy, etc. may facilitate the performance of the employees.

These factors are important determinants of performance. If they are favourable, the action of the persons
leads to success. Moreover, except the inherent capabilities, other factors may be learnt. Learning facilitates
the performance. Therefore, the managers must explore the ways and means of making the employees learn.
Learning theories may provide good insight in this direction.

5.5 THEORIES OF LEARNING

Several learning theories have been propounded by the psychologists which explain the process of learning.
Let us learn some important theories of learning.
5.5.1 Classical Conditioning
You must be aware about the stimulus and response. In classical conditioning, learning takes place through
the connection between unconditioned stimulus and conditioned stimulus. These two stimuli are paired to
elicit the desired response. Let us take an example of food which elicits the response of salivation. The food
is termed as unconditioned stimulus and the salivation is known as unconditioned response. A conditioned
stimulus is a mental stimulus that does not elicit the response. A response which is elicited by the
conditioned stimulus is termed as conditioned response. When conditioned stimulus is paired with
unconditioned stimulus, the conditioned stimulus also starts eliciting the response. In this process a stimulus
– response bond is developed between a conditioned stimulus and a conditioned response through the
repeated linking of a conditioned stimulus with an unconditioned stimulus.

Pavlov conducted this experiment on the dog. He presented the food to the dog and the dog salivated. Here
the food is the unconditioned stimulus and the salivation of the dog is the unconditioned response. Pavlov
used a bell as conditioned stimulus. When he rang the bell, the dog did not do any thing. Pavlov started
paring of the conditioned stimulus (bell) with the unconditioned stimulus (food). He presented the food to
the dog and rung the bell. This was repeated several times. After some time, he found that the bell also
elicited the same response as the food. Here the conditioned stimulus (bell) elicited the response of
salivation even when the unconditioned stimulus (food) was not present. He rings the bell and the dog
salivates without the presentation of food as well. Thus the dog learnt the ringing of the bell with the
salivation. The focus of this theory is building up an association between an unconditioned stimulus and
a conditioned stimulus.

The training of airplane pilot regarding the use of a newly installed warning system is a good example of
classical conditioning. In this training, whenever the plane drops below critical altitudes, the warning light is
shown and the pilot increases the plane’s altitude. Over the period, the pilot learns to adjust the plane’s
altitude in response to the warning light without the presence of the trainer.

This theory has been criticised on the ground that it considers the learner as a passive element. The learner
notices the connection between the unconditioned stimulus and the conditioned stimulus and forms an
association. Another noticeable point is that it explains the simple reflexive behaviour. In most of the
organisation, people are not passive; they are actively involved in executing their behaviour. Moreover,
behaviours are also not elicited, they are emitted. These behaviours are under worker’s control. Despite
these limitations, the principles of association, as an important phenomenon of learning can not be
undermined.
5.5.2 Operant Conditioning
Skinner gave the theory of operant conditioning. This theory advocates that a learner’s response is
instrumental in producing a reinforcing stimulus. This means that the response which produces the
reinforcement becomes stronger and the response which does not produce reinforcement becomes weaker.

Skinner box was used for demonstrating the operant learning. It is a simple box having a liver fitted at the
end of the box. The liver is a switch which operates as a food-delivery mechanism. A hungry rat is placed
inside the box. Initially the rat sits idle in the box, gradually it starts exploring inside the box to search for
food. While exploring inside the box all on a sudden it presses the liver. As the liver is pressed it releases a
piece of food. After pressing the liver a number of times, the rat realises that it releases the pieces of food
and the rat starts eating them. Now the rat presses the liver and eats the food. The delivery of food
constitutes the reinforcement and reinforcement is contingent upon the operation of the lever.

The box can be arranged in such a way that every response i.e., pressing of liver may not release the food.
Some response may release the food and some may not release. This is termed as partial reinforcement. It
may also be arranged in such a way that pressing of lever may result in a shock to the rat. This is termed as
negative reinforcement. Thus the response which fulfils the desired need of the rat is known as positive
reinforcement. At the same time, the response may also lead to escape from the painful situation which is
known as negative reinforcement.
The focus of this theory is the reinforcement follows a response. So the response becomes instrumental in
achieving the appropriate goal. The manipulation of response and reinforcement may increase, reduce or
lead to the extinction of the behaviour.

You must be aware of Thorndike’s law of effect which states that the responses which are accompanied or
closely followed by reinforcement will be more likely to occur. At the same time, the responses which are
accompanied or closely followed by discomfort will be less likely to occur. This means that the behaviour
which leads to positive outcome will be likely to be repeated whereas behaviour which leads to
negative outcome will be avoided.

Hull proposed three components of learning theory i.e. drive, habit and reinforcement. A drive refers to the
internal state of disequlibrium which becomes a motive for learning. A drive stimulates the person to
perform the desired act. Habit refers to the association between stimulus and the response. The appropriate
link is formed between environmental stimulus and behaviour of a person. The formation of this connection
play very important role in learning.
Reinforcement refers to the feedback received by the person as a result of his behaviour.

Thus appropriate understanding of connection between behaviour and consequences by the person makes
him to learn about the situation. The focus of the operant theory is to make the learner to operate in the
environment to acquire reinforcement. This means that the behaviour may be directed by appropriate
reinforcement. For example when ever you perform well in the office, your boss appreciates you. This
appreciation helps you in strengthening the behaviour of performing well in the office.
5.5.3 Cognitive Learning
The cognitive theory was given by Tolman. It focuses on the fact that learning takes place by thinking about
the problem, from insight of the individual and from integrating different cues or pieces of information.
Acquisition of information plays important role in the learning process. The cognitive theory advocates that
the association between cognitive environmental cues and expectations lead to learning. According to
cognitive theory, learning takes place as a result of stimulus –stimulus association. Here, two stimuli are
repeatedly paired. The presentation of one stimulus arouses an image, idea or some process representing the
second stimulus, even when it is not presented. When more than two stimuli are presented, whole stimuli
may become associated. The process of association leads to formation of cognitive map. This cognitive map
is especially applicable to the learning of spatial relationships of objects in the environment. Tolman tested
the cognitive learning phenomenon on rats through a complicated maze structure in the laboratory. He found
the rats ran through the maze structure towards the food. Rats developed expectations at every point of the
maze and reached to the goal. Thus the relationship between cues and expectancy got strengthened and
cognitive map was formed. The formation of cognitive map was the result of the learning. In day to day life
also you form a cognitive map of the way you go to the college, market and other places or about the
persons, things etc.
5.5.4 Social Learning
This theory advocates that the people learn through observation and direct experience. It emphasizes an
interaction among cognitive, behavioural and environmental determinants of behaviour. People learn by
observing others behaviour. They model those behaviours that lead to favourable outcomes. At the same
time, they try to avoid those behaviours that lead to unfavourable outcomes. If you analyse your behaviour,
you will find that your behaviours are influenced by your parents, friends, teachers, movies, television,
achievers, successful persons, etc. you try to imbibe their behaviour because their behaviour lead to positive
consequences. This theory focuses on learning the consequences of behaviour and self reinforcement.

Check Your Progress B

1) How does learning influence the performance of an individual?

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2) Distinguish between classical conditioning and operant conditioning

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3) What is cognitive learning?
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4) What do you mean by social learning?

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5.6 STRATEGIES FOR CHANGE OF BEHAVIOUR

Several scholars have applied theories of learning for modification of behaviour. In fact, the principle of
operant conditioning has been widely applied for modification of employee’s behaviour in an organisation.
Jennifer and Gareth have identified following steps for modification of behaviour. Let us learn them in
detail.

Identify the Behaviour to be Learnt: The first step of behaviour modification requires identification of the
behaviour which the organisation wants to learn by the employees. The behaviour to be learnt must be
specified and clearly defined by the management. In fact, there are specific determinants of performance of
the job. These determinants required to be studied in depth. For example, if the manager realizes that
salesmen are not able to increase the sale. Now, the manager wants the salesmen to increase the sale. Here,
the manager identifies that the sales are to be increased hence the steps involved in increasing the sales
requires to be learnt by the salesmen.

Baseline Performance: The manager analyses the present status of the behaviour. He studies the job
performance of the salesmen. The manager finds out that the salesmen are able to sell less number of
quantities than the standard decided by the organisation.

Functional Analysis: In this step, a detailed analysis of existing behaviours and their consequence is
undertaken. Here the manager evaluates the impact of existing behaviour on the output of the salesmen. The
manager finds that the output of salesmen is 25% less than the standard output. The manager evaluates the
pre behaviour circumstances, actual behaviour on the job and the consequences at great length. Lack of
encouragement or poor working environment, inadequate training etc. may be the pre behaviour
circumstances which may have resulted in the poor performance of the salesmen.

Intervention Strategy: In this step, the manager devices the strategy for strengthening the desired
behaviour and weakening of the undesired behaviour. The manager chooses positive reinforcement strategy
like praise, appreciation, bonus, additional benefit for enhancement of output. For example, if the salesmen
conform to the standard sale or closer to it, they get appreciation, bonus, or additional benefit. Thus they are
reinforced to complete their work. At the same time they are also discouraged for their poor performance.

Evaluation of Performance: The manager evaluates the performance of the salesmen. He finds that the
salesmen have started to perform up to the standard sales norms. Thus the manager realizes that the
introduction of positive reinforcement makes the worker learn the desired behaviour of the organisation. In
order to maintain the behaviour of the salesmen, the manager keeps on introducing positive reinforcement to
the salesmen.

Several Organisations have used behaviour modification programme for improving the performance of the
employees. In fact, managers require undertaking the depth analysis of job and the factors which encourage
performance of the job by the employees. They have to choose appropriate reinforcement which encourage
the workers to complete the work. Now it must be clear to you that the behaviour modification strategy
helps in improving the performance of the employees.

There are several limitations for the behaviour modification programme. First the observable behaviour like
good attendance, punctuality, selling work etc. may be modified than the non-observable behaviour like
decision making strategy. Second the employees are trapped into the re-inforcement cycle. They tend to
perform that behaviour which is reinforced. Third ethical issues involved in modification of behaviour
which is concerned with the manipulation of the worker’s behaviour. This manipulation may curtail the
freedom of employees. Despite these limitations, positive reinforcement strategies have been considered as
an important means of behaviour modification programme.

5.7 OPERANT CONDITIONING AND CHANGE OF BEHAVIOUR

Every employer wants that the employee should conform to the required behaviour in the organisation. This
raises the question that can the behaviour of a person may be modified? Several studies have shown that the
behaviour may be modified through the detail study of antecedents, behaviour and consequences.
Antecedents are activities which precede the behaviour. For example if the manager informs the
subordinates that those persons who complete the tasks same day would get the recognition of high
performer. Here the instruction of task completion is the antecedent, the completion of task is the behaviour
and the recognition of high performer is the consequence. This means that the manager requires analysing
the pre behaviour condition, during the behaviour condition and after the behaviour condition. The
circumstances which influence the execution of these three stages of behaviour required to be analysed at
great length. Moreover, reinforcement is introduced to elicit the desired behaviour. The reinforcement play
very important role in changing the behaviour of the person.

1.1.1 Role of Reinforcement

If you recall the theory of law of effect which stresses that the repetition of behaviour depends on its
consequences. This means if the behaviour is followed by pleasant consequences, the behaviour tends to be
repeated. On the other hand, if behaviour is followed by unpleasant consequences the behaviour may be
avoided. Thus, it must be clear to you that reinforcement plays important role in strengthening or weakening
of the behaviour. Let us now learn about the reinforcement in detail.

Positive Reinforcement: Positive reinforcement refers to providing favourable outcome of a desired

behaviour. If a person’s behaviour matches the expectation of the organisation, the person is rewarded.
Here, the favourable outcome helps in repeating the behaviour of the person. For example, if you perform
job well, your boss appreciates you. As a result of the appreciation you try to perform well so that you get
appreciation. This means that positive reinforcement reinforces you to do the job in the best possible way.

Negative Reinforcement: In negative reinforcement, an unpleasant outcome is introduced after performing

a desired behaviour so that the person avoids performing the behaviour. The person learns to avoid
unpleasant outcome by behaving in a desired way. For example, if an employee follows the order of his boss
and completes his work in time he may not be harassed or criticised by his boss. Here harassment or
criticism works as a negative reinforcement which the employee learns to avoid by completing his task and
following the order of his boss.

Extinction: When reinforcement is not introduced as a result of performing undesired behaviour, this
behaviour may decline or leads to extinction. Some of the scholars have called it do nothing strategy. For
example, if one student keeps on telling story in your counselling session and others stop paying any
attention towards his story, he may be refrained to narrating the story further. Lack of praise or
reinforcement abstains the student in narrating the story in the counselling session.

Punishment: In punishment, an undesired behaviour is followed by an unpleasant outcome. It decreases

the occurrence of the behaivour. For example, if a salesperson does not complete his target, his boss
withdraws bonus or perks or demotes him. The fear of withdrawal or demotion makes the salespersons to
complete their tasks.
5.7.2 Schedules of Reinforcement
You have learnt that reinforcement strengthens or weakens the behaviour of persons. Now the question
arises whether all responses should be reinforced or some responses should be reinforced : When all
responses are reinforced, it is called continuous reinforcement : When some responses are reinforced, it is
called partial reinforcement. The schedule used for reinforcing a response is termed as the schedule of
reinforcement. The schedule of reinforcement is very helpful for managers to select a reward for enhancing
the performance of his subordinates. You may provide reinforcement after every 5th response; this is termed
as ratio schedule. You may also provide reinforcement after every 5th minute; this is termed as interval
schedule. Let us learn them in detail.

Fixed Interval Schedule: In this schedule, reinforcement is produced after a fixed interval of time. For
example, salary of an employee is paid after working for a week or a month. This technique does not lead to
high levels of performance because it does not provide incentive for higher performance.

Fixed Ratio Schedule: In this schedule, the reinforcement is produced based on the number of responses.
This means that the person is expected to make certain number of responses to get the reinforcement. Here
the rewards are associated with the performance of the person and it is given in a ratio of rewards to
performance. For example in a piece wage rate system, the payment is made based on each unit of output
produced by the employees. The employee knows that if he produces more number of units, he will get more
rewards.

Variable Interval Schedule: In this schedule, the person is reinforced after one interval of time, then after
another interval of time and so on. This means that the reinforcement is provided after a varying length of
time which may be based on an average. For example, you may get your first promotion after 3 years,
second promotion after 4 years and third promotion after one year. You get these promotions after varying
interval of time.

Variable Ratio Schedule: In this schedule, reinforcement is produced after a variable number of responses.
The reinforcement may be produced after four responses, again after twelve responses and again after tenth
responses, and so on. This means that reinforcement is given after varying number of times. The
reinforcement is provided on the basis of a ratio of number of responses to rewards. The reward varies in
relation to the response of the person. For example, a salesperson may get a reward after tenth sale and the
second reward after fifteenth sale.

Several studies have shown that the performance based reward schedules generally lead to better
performance than the time based reward schedule. Moreover, variable schedule also leads to great resistance
to extinction. This schedule also provides steady rates of responses.

5.8 SOCIAL LEARNING AND CHANGE OF BEHAVIOUR

People keep on observing the behaviours of others. They model those behaviours which result in favourable
outcomes. At the same time, they avoid those behaviours that result in unfavourable outcomes. Since the
very beginning of childhood, people observe the behaviour of parents, teachers, achievers etc. They try to
model those behaviours which influence them most. This theory advocates that the people learn their own
behaviour themselves by observing the environment. This theory focuses on cognitive process of learning
where learners integrate the environmental factors and try to select the favourable outcome oriented
behaviour. Steven and Mary Annvon mentioned three features of social learning theory. These features are
behavioural modeling, learning behaviour consequences and self-reinforcement. Let us learn them in detail.

Behavioural Modeling : Individual keeps on observing or interacting with a number of persons in the
environment. He/she observes behaviour and tries to model those behaviours which have favourable
outcomes. The modeling depends on the impact of particular behaviour on the individual. For example, the
oganisation develops the training programme of sales person based on role model. Here, the high performer
sales persons are rewarded in terms of extra bonus, praise, appreciation, recognition, etc. The role of high
performers is highlighted by the organisation. The salesperson observes the behaviours of high performer
and tries to model them.

Learning Behaviour Consequences: In the social learning theory, the cognitive process play very
important role in learning the new behaviour. In fact, individuals actively analyse the situations and learn
those behaviours which result in favourable outcome. Here the thought processing activities get activated.
The person applies logic and evaluates the favourable and unfavourable consequences of the behaviours. In
this way, the desired behaviours may be activated by associating them with the favourable outcomes. For
example, if you complete job target, your boss appreciates you. You learn the consequences of completing
the job in time which brings favourable outcome.
Self Reinforcement: This is the most important aspect of social learning theory. When the individual
analyses the impact of reinforcements on the behaviour and finds the positive outcome, he/she tries to learn
positive outcome oriented behaviours. Gradually he/she may develop self reinforcement technique for his
own behaviour. He may start setting his own goal and reinforcing himself after achieving the goal. The
development of self reinforcement strategy is the most challenging task before the organisation. This
provides freedom and control to the employees to manage his own behaviour. Moreover, he/she recognizes
his/her own ability to complete the job.

Social learning theory is very important in formulating the training programme of the organisation. In the
training programme, the importance of high performer, high achievers etc. is highlighted. These behaviours
are also reinforced. The employees observe their behaviours and also realize that these behaviours lead to
success. Thus, they are encouraged to model the favourable behaviours.

Robbins has identified four processes that determine the influence of a model on the behaviour of a person.
They are discussed below:
Attentional Processes: In order to learn from the behaviour of the model, people need to pay attention on
the behaviour. This means that observable behaviour must be designed in such a way that catches the
attention of the people.

Retention Process: When the person observes others behaviour, the question arises how much he is going
to retain? The process of retention depends on the degree of influence people have on other’s behaviour.
For example, people may easily retain the unique behaviour of the model.

Motor Reproduction Process: This is a technique of converting observed behaviour into action. The
person must learn the process of reproducing the observed behaviour. Therefore, the ideal performance
technique must be shown in such a manner that people learn to reproduce the performance.

Reinforcement Processes: People are encouraged to perform the observed behaviour if they are provided
adequate incentives or rewards. The reinforcement motivates them to act in that fashion. The positive
reinforcement is an important technique for enhancing the attention and retention process and improving the
performance of the people.

Check Your Progress C

1) Enumerate the steps involved in the modification of behaviour.

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2) Distinguish between positive reinforcement and negative reinforcement.

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3) Distinguish between fixed interval schedule and variable interval schedule.

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4) What is behaviour modeling?

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5) What is self reinforcement?

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5.9 LET US SUM UP

Behaviour refers to the response made by an individual. It is determined by both the heredity and
environmental factors. Behaviour of one individual differs from others. Several factors like demographic,
abilities and skills, perception, attitudes and personality etc. influence the individual difference and their
pattern of behaviour. Therefore, understanding of individual’s behaviour is very important for mangers to
elicit favourable response from subordinates.

Learning which refers to relatively permanent change in behaviour and occurs as a result of experience or
practice helps in imbibing favourable behaviour to meet the challenges of the environment. Learning
improves the performance of the persons. Several factors like ability, role perceptions, motivation and
situation contingencies, etc. influence the performance of the employees. The favourable factors may lead
to favourable action from the employees. Several learning theories have been propounded to explain the
process by which an individual acquires behavioural patterns. The major learning theories are classical
conditioning, instrumental learning, cognitive learning and social learning theory. These theories explain the
role of stimulus, response, environmental cues and observation in the process of learning.

Theories of learning are very helpful in modifying the behaviour of employees as well. The steps involved
in behaviour modification include: identify behaviour to be learnt, baseline performance, functional analysis,
intervention strategy and evaluation of performance. The analysis of pre-behaviour, actual behaviour and
consequences help in modifying the behaviour. The theory of operant conditioning has been widely applied
for the change of behaviour. The reinforcement play major role in modifying the behaviour. The positive
reinforcement, negative reinforcement, extinction and punishment are applied for this purpose. The
schedules of reinforcement which are used for strengthening or weakening of behaviour include: fixed
interval, fixed ratio, variable interval and variable ratio. Another learning theory social learning which is
primarily based on observation and modeling has been frequently used for behaviour modification. The
major features of social learning include: behavioural modeling, learning behaviour consequences and self
reinforcement.

5.10 KEY WORDS

Behaviour : Anything a person does.

Classical Conditioning : Building up an association between an unconditioned stimulus and a conditioned

stimulus.

Cognition : A conscious process of acquiring knowledge.

Extinction: Lack of reinforcement leads to extinction.

Fixed interval Schedule: Providing reinforcement after a fixed interval of time.

Learning: A relatively permanent change in behaviour which occurs as a result of experience or practice.
Negative Reinforcement: Introduction of unpleasant outcome after performing a desired behaviour so that
the person avoids performing the behaviour.

Operant conditioning: Recognition of connection between behaviour and its consequences.

Positive Reinforcement: Providing favourable outcome of a desired behaviour.

Punishment: Introduction of unpleasant outcome as a result of undesired behaviour.

Reinforcement: The process by which the probability that a desired behaviour will occur is increased.

Variable Interval Schedule: Providing reinforcement after one interval of time, then after another interval
of time and so on.

Variable Ratio Schedule: Providing reinforcement after a variable number of responses.

5.11 TERMINAL QUESTIONS

1) What is individual behaviour? Discuss various factors influencing the individual
difference.
2) Do you think that learning results in change in behaviour ? Discuss and state how does learning
enhance the performance?
3) Describe the factors which influence employee’s behaviour and their performance.
4) Critically examine the classical conditioning theory of learning.
5) Discuss the operant conditioning theory of learning. How does it differ with the classical
conditioning theory of learning?
6) Describe the strategies for behavioural change. Do you think that these strategies are useful for the
organisation? Discuss.
7) Write notes on :
i) Role of Reinforcement
ii) Schedule of Reinforcement

Note : These questions will help you to understand the unit better. Try to write answers for them. Do
not submit your answers to the university. for assessment. These are for your practice only.
UNIT 6 PERCEPTION
Structure

6.0 Objectives
6.1 Introduction
6.2 Concept of Perception
6.3 Process of Perception
6.4 Factors Influencing Perception
6.5 Barriers to Accurate Perception
6.6 Theory of Attribution
6.7 Managerial Uses of Perception
6.8 Developing Perceptual Skills
6.9 Let Us Sum Up
6.10 Key Words
6.11 Terminal Questions

6.0 OBJECTIVES
After studying this unit, you should be able to:

• define the term Perception;

• analyse the determinants of Perception;
• describe process of Perception;
• identify uses of Perception in the field of human interaction;
• explain the reasons for biases in Perception; and
• identify ways to develop sound perceptual skills.

1.1 INTRODUCTION
Individuals are exposed to varieties of stimuli of the environment. They process these stimuli and interpret
them. The process of receiving information and making sense is known as perception. It refers to the way
the world sounds, looks, feels, smells, tastes to the individual. The individual’s behaviour is determined to a
large extent by the way the environment is perceived by him/her. Therefore, the conducive organisational
environment must be created for favourable perception. The persons who perceived the environment in a
favourable way may contribute their best to the organisation. In this unit, you will learn the concept,
process, the factors and barriers to the accurate perception. You will be exposed to the theory of attribution
and the managerial uses of perception. You will be further familiarised with the process of developing
perceptual skills.

6.2 CONCEPT OF PERCEPTION

We have mainly five sensory organs viz. eyes, ears, nose, tongue, and skin. The basic five sense organs help
us to collect information through their respective tasks. Through eyes we see, through ears we listen, through
nose we can identify smell, through tongue we take taste, and through skin we touch. Through these sense
organs, as an average human being, you collect several thousands of impressions everyday. However you pay
selective attention to particular information collected by your sense organs. Let us have four situations.

Situation-one: Remember one orchestra programme you had visited recently. You were listening attentively
a favourite song of yours, and each word and tune was audible to you. Suddenly you listened your name
pronounced through a familiar voice coming from backside. Lo! There was your fast friend, with whom you
are meeting after a gap of few years. You joined him and both of you got lost in intimate nostalgic talk. The
song of the orchestra was still on, but you were not listening! What happened? You were listening
selectively. In first instance you were listening the song, and in the second instance, you were listening the
words of your friend.

Situation-two: Remember when you were in the mid of your teen age, when most of you were interested in
watching clouded sky. Do you remember, you used to perceive a particular shape (like, a football player, an
elephant, map of a country or a state etc.) in the cloud, but your friend had witnessed some other shape?

Situation-three: Remember, one crucial football/cricket match you were playing sometime back. There was
a garden close to playground. Do you remember, you could realize aggressive smell of manure in the garden
only when the match was over, but not during the tense moment of the match?

Situation-four: Remember, some years back you had developed some misunderstanding with one of your
close friends. Earlier you had completely confided in him, but no more thereafter. You saw him talking with
your friend. You thought he was talking ill about you to your friend. Later on you found it was not so.

The situation-one depicts that we tend to listen what we choose to listen; situation-two depicts, we tend to
see what we choose to see; situation-three depicts, we tend to smell what we choose to smell, and situation-
four depicts, we tend to infer what we are inclined to infer.

All the four examples suggest that our mental focus captures only a portion of sensory stimuli present in the
environment. This capturing depends on our preferences. Thus perception is more than the sum of all the
sensory input supplied by our sense organs. Process of perception helps us to select, organise, and interpret
sensory input to achieve a meaningful grasp of our surroundings. Perception yield final products that differ
from raw, unprocessed sensations in important ways.

The dictionary meaning of the word ‘perceive’ is- to take in mentally, to become aware through the senses. In
simple language Perception may be defined as the way a person sees the universe, he feels about certain
elements in a situation. Baron defines Perception as the process through which we select, organise, and
interpret input from our sensory receptors. Robbins defines Perception as a process by which individuals
organise and interpret their sensory impressions in order to give meaning to their environment. Nord
defines Perception as the manner in which a person organises, interprets, and processes various stimuli that
are transmitted into a psychological experience. Each person gives meaning to stimuli, different individuals
will see the same thing in different ways.
Reitz defines Perception as those processes by which an individual receives information about his
environment- seeing, hearing, feeling, tasting, and smelling. The study of these perceptional processes shows
that their functioning is affected by three classes of variables- the objects or events being perceived, the
environment in which perception occurs, and the individual does the perceiving.
Importance and Uses of Perception

As a concept, perception has important place in the subject of Organisational Behaviour (OB). OB deals with
human behaviour at work place, and perception is an important determinant of behaviour. People behave on
the basis of their perception of the reality, not on the basis of the reality itself. We may say, the world does
not appear to us as it is, but it appears as painted by our perception of the world. This statement establishes
the importance and uses of perception on the one hand, and limitations of perception on the other. We shall
first examine importance and uses of perception.

Perception helps us adapt to a complex and ever-changing environment through perceptual constancies.
Constancies refer to our tendency to perceive physical objects as unchanging despite shifts in the pattern of
sensations these objects induce. Perceptual constancies suggest that our perception of the world doesn’t
change as much as variations in the sensory information registered by our receptors might lead us to expect.
Three types of constancies are more common: size constancy, shape constancy, and brightness constancy.
The principle of size constancy relates to the fact that the perceived size of an object remains the same when
the distance is varied, even though the size of the image it casts on the retina changes greatly. The principle
of shape constancy refers to the fact that the perceived shape of an object does not alter as the image it casts
on the retina changes. The principle of brightness constancy refers to the fact that we perceive objects as
constant in brightness and colour even when viewed under different lighting conditions. These three
principles suggest that the gap between sensations and the perceptions provided by the constancies is clearly
beneficial.

Limitations of Perception

Unfortunately, perception can provide false interpretations of sensory information. Incorrect perceptions are
called illusions. Illusions may take place in two ways: due to physical processes (e.g. mirages), and due to
cognitive processes. For our purpose illusions through cognitive processes are more relevant. Illusions
through cognitive processes fall in two categories: illusions of size, and illusions of shape or area.

Check Your Progress A

1) What is your understanding of the term Perception?

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2) What are uses and misuses of Perception?

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6.3 PROCESS OF PERCEPTION

The model of process of perception describes four stages. The model has been shown in Figure 6.1, depicting
the four stages. The model can be understood through input-throughput-output approach.

Stage 1: It describes perceptual inputs. Perceptual inputs encompass all stimuli that exist in our environment
including information, objects, events, people etc. The perceiver receives these inputs.
Stage 2: It describes perceptual mechanisms or throughputs. This is the transformation of perceptual inputs
to outputs. It involves the three processes of selecting, organising, and interpreting the stimuli that are in the
environment. Though all individuals go through the same three steps, while transforming the perceptual
inputs to outputs, they differ in how do they select, organise and interpret stimuli based on their own
personality predispositions and biases.

Figure 6.1: A Model of Process of Perception

Stage 1: Perceptual Inputs of Stimuli-

Information, Objects, Events, People etc.

Stage 2: Perceptual Mechanisms-

Selection, Organisation, Interpretation

Stage 3: Perceptual outputs-

Attitudes, Opinions, Feelings, Values

Stage 4: Pattern of Behaviour

Stage 3: Perceptual outputs are derived through the processing of perceptual throughputs. These include
one’s attitudes, opinions, feelings, values, and actions. Perceptual errors may adversely affect the outputs.
Hence, managers should enhance their perceptual skills.

Stage 4: Behaviour is a resultant factor. The perceiver’s behaviour, in turn, generates responses and these
reactions give rise to a new set of inputs.

Out of four stages of process of perception, stage 1 and stage 4 are simpler to comprehend which describe
inputs and final outcomes respectively. You need to gain more insight with respect to stage 2, and stage 3 of
the process. You shall understand stage 2, and stage 3 in better way after going through sections 6.3 and 6.4
respectively.

6.4 FACTORS INFLUENCING PERCEPTION

Perception is influenced by mainly three sets of factors:

i) Factors in the perceiver (perceiver variables);

ii) Factors in the target (subject characteristics);
iii) Factors in the situation (situational variables).

Factors in the perceiver include following issues:

• Self-concept of the perceiver;
• Attitudes of the perceiver;
• Motives of the perceiver;
• Interests of the perceiver;
• Experience of the perceiver;
• Expectations of the perceiver.
Factors in the target include following issues:

• Physical appearance;
• Verbal and Nonverbal Communication;
• Status;
• Occupations;
• Personal characteristics;
• Novelty of the target;
• Motion of the target;
• Sounds of the target;
• Size of the target;
• Background of the target;
• Proximity of the target.

Factors in the situation include following issues:

• Social context;
• Organisational role;
• Work setting;
• Location of event;
• Time.

Collectively, these three sets of factors determine our perceptions about others.

Activity A

In your living room, for a minute look for everything that is black in colour. Now stop reading this unit, just
look for everything that is black in colour for a minute. After a minute of watching black things, write about
few things those were black in colour.
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Now come out of your living room and write about those things in the living room, which were brown in
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Congratulations for writing about something, which were brown. However if you got stuck, do not worry. It
is a natural phenomenon. We tend to perceive anything according to our pre-decided preferences. However
we should make attempt to come out of preconceived notion if we want to become more effective at work
place.
6.5 BARRIERS TO ACCURATE PERCEPTION
The perceiver’s own mindset and tendency to use shortcuts in judging others may become the barriers to
accurate perception. Barriers to accurate perception create wider gap between ‘what things actually are’, and
‘what you think the things are’. Hence you should be vigilant about such barriers. Some of the important
barriers to accurate perception are following:
• Stereotyping: It is judging someone on the basis of one’s perception of the group to which that
person belongs. Though such generalisations help to simplify complex world, its overuse mostly
leads to wrong conclusion.
• Halo Effect: This perceptual bias means, drawing a general impression about an individual on the
basis of single characteristics.
• Similar-to-me Effect or Projection: It is another common type of perceptual bias, which involves
the tendency for people to perceive more favourably others who are like themselves than those who
are dissimilar.
• Selective Perceptions: It explains that people selectively interpret what they see on the basis of their
interests, background, experience and attitudes.
• Distortion: It is distorting what we see (or even totally avoid seeing what actually exists) if we
encounter data, which is threatening or incongruent to our self-concept.
• Contrast Effects: It is evaluations of a person’s characteristics that are affected by comparisons with
other people recently encountered who rank higher or lower on the same characteristics.

6.6 THEORY OF ATTRIBUTION

Attribution is an important concept for understanding perception, as it is related to judging the causes of
others’ behaviour. An inaccurate attribution may lead to inaccurate perception. Our perceptions of what is
happening in the environment depend very much on the attributions we make.

Attribution theory describes that when individuals observe behaviour, they attempt to determine whether it is
internally or externally caused. Internally caused behaviour is those that are believed to be under the personal
control of the individual. Externally caused behaviour is seen as resulting from outside causes over which the
individual has no control.

Kelly’s Theory of Causal Attribution explains that in determining whether others’ behaviour stems mainly
from internal or external causes, we focus on three types of information: a) Distinctiveness; b) Consensus;
and c) Consistency.

Distinctiveness is extent to which a person behaves in the same manner in other contexts. If one behaves the
same way in other situations, distinctiveness is low; if one behaves differently, distinctiveness is high. If a
particular behaviour is unusual, an observer is likely to give the behaviour an external attribution. If the
action is not unusual, it will be perhaps judged as internal.

Consensus is the extent to which other people behave in the same manner as the person we are judging. If
others do behave similarly, consensus is considered, high; if they do not, consensus is considered low. If
consensus were high, you would be expected to give external attribution, and if consensus is low, you tend to
give internal attribution.

Consistency is tendency to respond the same way over time. Consistency also may be high or low. The more
consistent the behaviour, the more the observer is inclined to attribute it to internal causes and vice-versa.
When we make judgements about the behaviour of other people, we have tendency to underestimate the
influence of external factors and overestimate the influence of internal factors, in case of less than optimum
performance by the others. This is called the fundamental attribution error. There is also a tendency for
individuals to attribute their own successes to internal factors such as ability or effort while putting the
blame for failure on external factors such as luck. This is called the self-serving bias.

6.7 MANAGERIAL USES OF PERCEPTION

Perception is an important concept for managers or for any decision maker. There are many situations in
which a proper understanding of perception and its various uses help a decision maker to take quality
decision. Now we shall examine some important managerial activities where concept of perception can be
applied.

Advertising: Advertisers use the concept of perception to draw attention of the prospective customers.
According to concept of perception, selective attention helps us to maximize information gain by reducing
inference from irrelevant sensory sources. Therefore you find hoarding of advertisements are so designed
with respect to shape, size, and brightness, that they should be able to attract attention of prospective
customers.

Maintaining Safety: Concept of perception is used to draw proper attention towards message of warning,
through proper design of content and proper display of the message. Message content should include: signal
word, hazard statement, consequences, and instructions. Message characteristics should have characteristics
such as: attention getting, comprehensible, concise, and durable.

Managing Impression: Everyone attempts to make favourable impression of self in the mind of others. This
business of impression management becomes more important when you face employment interview. While
facing an interview if you happen to create positive impression in the beginning, most likely you happen to
establish an early lead. In the beginning, if you do not help experts to create a positive perception or
impression for yourself, it becomes difficult to turn the table in later part of the interview. Hence during
employment interview it is in your favour to create positive first impression. On the other hand, evidence
indicates that interviewers make perceptual judgements that are often inaccurate. However, more matured
experts or evaluators do not give undue importance to first impression.

Impression management is done in various other organisational activities. Whereas efforts at impression
management may improve the quality of social functioning, overdoing of such actions may occur at the cost
of information accuracy and high quality decision making.

Building Corporate Image: Not only individuals, but organisations as a whole also, attempt to manage
positive impression. This is termed as corporate image. Organisations, just like individuals, stand to benefit
by positive impressions.

Managing Performance: Theories suggest that people start behaving as you expect them to behave. The
result is that the expectations become reality. Concept of Self-fulfilling Prophecy or Pygmalion Effect
characterizes the fact that people’s expectations determine their behaviour. Self-fulfilling Prophecy states
that when one person inaccurately perceives a second person the resulting expectations cause the second
person to behave in ways consistent with the original perception. The message is: if you want people to
achieve high performance, do expect high performance of them, and let them know your level of
expectations. Substandard perceptions tend to produce substandard performance.

Evaluating Performance: In organisations, performance is evaluated against both objective and subjective
criteria. Perception particularly plays its role when performance is evaluated against subjective criteria.
Future career of a manager depends considerably on performance evaluation, so perception plays important
role in advancing in career and getting right deployment. For you the point of caution is that if you are
evaluating a person merely on your perception, challenge the base of your own perception, and ensure that
your perception is as far as possible free of any bias.

Judging Employees’ Loyalty: Whether an employee is ultra-loyal, just loyal, or sub-loyal, may depend on
the perception of the perceiver. One may perceive a person who does not think beyond one’s organisation as
very loyal, but the other may think of the person as conformist. A whistle-blower (who reports unethical
practices by their employer to outsiders) may be perceived as ethical and person of guts by one, but may be
perceived as troublemaker by the other.

Self-Assessment and Development: Our values, attitude, and perception, influence each other. For
development of self as a manager, you should have your correct self-assessment picture, intelligently verified
through multiple sources. Some of the checks you should do for yourself are:
• Are you perceived as person having positive attitude or negative attitude?
• Are you perceived as aggressive, or as submissive, or as a balanced assertive?
• Are you perceived as a person who respects others’ views?
• Are you perceived as a person having own pivot yet having required flexibility?
• Are you perceived as a person respecting high effort or as a happy-go-lucky?

Thus, concept of perception is a strong tool for self-development. If there is congruence between how you
perceive yourself, and how others perceive you, it is an indication that you are going effective way, and vice-
versa.

Building Relationship: Positive perception helps to build effective communication and trust, leading to high
performing relationship within managerial group, within employees, and between managers and junior
employees.

Check Your Progress B

1) What are the five main characteristics of a person who can be called as matured perceiver?

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2) How can the concept of perception be gainfully used in managerial activities?
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6.8 DEVELOPING PERCEPTUAL SKILLS

We have already observed that when our perceptions are distorted, our judgement of the objects, persons, or
of the situations may go wrong. Therefore there is need to develop our perceptual skills, so that the gap
between our perceptions and the actual facts may be minimized. Now, we shall discuss some of the
techniques to enhance our perceptual skills.
Giving Feedback and Receiving Feedback: Perceptual skills can be improved by knowing about ourselves
through receiving feedback, and let people know how do you feel about them through giving feedback. Joe
Luft and Harry Ingham developed the technique of Johari Window (Johari representing the combination of
their first names). The techniques explain that there are four aspects of the self:
• I know the self
• I do not know the self
• Others know the self (about me)
• Others do not know the self (about me).

Combining the four aspects differently produce four windows (areas) of the self:
• Public Area: The aspects of me which I know as well as others also know
• Blind Area: The aspects of me which I do not know but others know
• Private Area: The aspects of me which I know but others do not know
• Dark Area: The aspects of me that I do not know as well as others also do not know.
Public area does not create problem in perceptual process, but other three areas do, hence these should be
reduced. Receiving feedback from others can reduce blind Area, and giving feedback and information about
self to others can reduce Private area. Reducing dark area is concerned more with self-purification.
Having Empathy: Empathy is not sympathy. Sympathy to some extent is to feel pity about others, whereas
empathy means rising above our perceptual frame and making an attempt to comprehend the issues from
others’ perspective.
Having Positive Attitudes: Positive attitudes create right perspective, and helps perceiver to perceive
without distortion.
Enhancing Self-Concept: Enhancing self-concept and self-esteem help one to treat others with respect and
with right perspective.
Avoiding Common Biases: A conscious effort to get rid of common biases helps to get rid of distorted
perceptions.
Communication: Lack of communication is a common cause of distorted perception. Creating an
atmosphere of open and authentic communication help to develop perceptual skills of individuals.
Correct Use of Attribution: Wrong attributions lead to distorted perception. Attributing success and failures
correctly to internal or external factors, lead to right judgements for future course of action.
Thus, understanding the perceptual process and dealing with perceptual biases are essential aspects for
taking right decision in any walk of life.
Activity B
List your own plan of actions for improving your perceptual skills. Suggest the activities those you would do
and also suggest a timeframe for developing such skills. You may discuss this issue with one of your friends.
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6.9 LET US SUM UP

Perception refers to the process by which individuals organise and interpret their sensory impressions in
order to give meaning to their environment. It is an important determinant of human behaviour. The process
of perception includes : perceptual inputs of stimuli, perceptual mechanisms, perceptual outputs and pattern
of behaviour. Perception is influenced by mainly three sets of factors which are : factors in the perceiver,
factors in the target and factors in the situation. As the perception facilitates the understanding of human
behaviour in the organisation; the perceiver’s own mindset and tendency in judging others may become the
barriers to accurate perception. Some of the important barriers to accurate perception are : stereotyping, halo
effect, similar to me effect or projection, selective perceptions, distortion and contrast effects.

Attribution is an important concept for understanding perception. The attribution theory describes that when
individuals observe behaviour, they attempt to determine whether it is internally or externally caused.
Perception is an important concept for managers. Some important managerial activities where concept of
perception can be applied include : advertising, maintaining safety, managing impression, building corporate
image, managing performance, evaluating performance, judging employee’s loyalty, self assessment and
development and building relationship. The techniques involved in enhancing perceptual skills are : giving
feedback and receiving feedback, having empathy, having positive attitudes, enhancing self concept,
avoiding common biases, communication and correct use of attribution.

6.10 KEY WORDS

Attribution: Judging the causes of others’ behaviour- external and internal causes.
Consensus: Extent to which other people behave in the same manner as the person we are judging.
Consistency: Tendency to respond the same way over time.
Constancies: Our tendency to perceive physical objects as unchanging despite shifts in the pattern of
sensations these objects induce.

Corporate Image: Creating positive impression of an organisation.

Distinctiveness: Extent to which a person behaves in the same manner in other contexts.
Fundamental Attribution Error: Tendency to underestimate the influence of external factors and
overestimate the influence of internal factors, in case of less than optimum performance by others.
Illusions: Incorrect perceptions.
Managing Impression: Attempts to make favourable impression of self in the mind of others.
Perception: The way a person feels about certain elements in a situation.

Stereotyping: Judging someone on the basis of one’s perception of the group to which that person belongs.
Self-fulfilling Prophecy: People start behaving as you expect them to behave.
Stimuli: External triggers those exist in our environment including information, objects, events, people etc.
Whistle Blowing: Reporting unethical practices of employer to outsiders.

6.11 TERMINAL QUESTIONS

1) What do you mean by perception? What are the uses of studying about perception?
2) What are uses and misuses of perception?
3) Explain process of perception. What are the factors those influence perception?
4) What are the barriers to accurate perception? How those barriers can be removed?
5) Explain Theory of Attribution.
6) Describe managerial situations in which concept of perception can be applied.
7) Explain techniques for developing perceptual skills.

Note : These questions will help you to understand the unit better. Try to write answers for them. Do
not submit your answers to the university for assessment. These are for your practice only.
UNIT 7 ATTITUDES AND VALUES
Structure

7.0 Objectives
7.1 Introduction
7.2 Concept of Attitude
7.3 Process of Formation of Attitude
7.4 Process of Change in Attitude
7.4.1 Changing Attitude through Persuasion
7.4.2 Changing Attitude through Cognitive Dissonance
7.4.3 Methods of Effecting Attitude Change
7.5 Relationship between Attitude and Behaviour
7.6 Work Related Attitudes
7.7 Values: Meaning and Importance
7.8 Types of Values
7.9 Designing Value-Based Organisation
7.10 Let Us Sum Up
7.11 Key Words
7.12 Terminal Questions

7.0 OBJECTIVES
After studying this unit, you should be able to:

• describe concepts of attitudes;

• analyse the components of attitudes;
• describe importance of attitudes in behavioural science;
• explain process of formation of attitudes;
• explain process of change of attitudes;
• establish relationship between attitudes and behaviour;
• discuss the work related attitudes;
• describe the concept of values;
• examine the bases for formation of values; and
• develop a design for value-based organisation.

1.1INTRODUCTION
Attitudes refer to tendency to respond to certain objects, persons or situations. They are the feelings and
beliefs that determine the behaviour of the persons. They provide framework for responding in a particular
fashion. The attitudes may be positive or negative. The positive attitudes yield favourable behaviour and the
negative attitudes yield unfavourable behaviour. Therefore all variables must be identified and analysed
which help in the formation of favourable attitudes. The persons having positive attitudes towards the job
and organisation may contribute their best to the organisation. Another important indicator of behaviour is
value which provides basic foundation for understanding a person’s attitude, perception and personality. It
contains judgmental element of right, wrong, good, bad, etc. The individuals having high value system may
be involved in constructive activities and refrained to the destructive activities. Therefore the organisations
must inculcate high value system to their members. In this unit, you will learn the concept of attitude, the
process of formation and change in attitude. You will be exposed to various work related attitudes. You will
further learn the meaning, importance and types of values and the values across the culture. You will be
familiarised with the process of designing the value based organisation.

7.2 CONCEPT OF ATTITUDE

Consider following three statements:
Statement 1 : Male executives are high achievers in comparison to female counterparts;
Statement 2 : Anything with a tag “Made in Japan” is reliable;
Statement 3 : Discipline can be established through coercion only.

You might have heard the statements mentioned above, or you might have yourself used such statements
sometime in recent past. In all the three statements you are inclined to evaluate something. The first, second,
and third statements are attempts to evaluate groups (male versus female), objects (anything made in Japan),
and an issue (maintaining discipline) respectively. These statements may or may not be true in overall sense.
However a person giving such statements is revealing his/her own attitude towards the groups or objects or
the issue.

There are three basic components of Attitudes:

• evaluative component (how do you feel)

• cognitive component (what do you believe)
• behavioural component (a predisposition to act in a certain way).

Attitudes reflect past experience, shape ongoing behaviour, and serve essential functions for those who hold
them. Attitudes lead individuals to react in certain ways to events or situations they encounter. Gordan and
Allport opine that Attitude is Social Psychology’s most central concept.

Definition of Attitude

According to Baron, Attitude is defined as, lasting evaluations of people, groups, objects, or issues- in fact,
of virtually any aspect of the social or physical world.
Petty and Cacioppo state, Attitudes are general evaluations people make about themselves, other persons,
objects, or issues. Breckler and Wiggins state, Attitudes are enduring mental representations of various
features of the social or physical world. They are acquired through experience and exert a directive influence
on subsequent behaviour.
Functions of Attitude
According to Katz, Attitudes serve four important functions for individuals:
• Adjustment Function: People tend to develop favourable attitude towards rewarding and beneficial
functions as well as relationship. Similarly people develop negative attitude towards such functions and
relationships, which shall attract punitive actions.
• Ego-defensive Function: Attitude can serve as devise for protecting self-image.
• Value-expressive Function: Attitude supports expression of core values.
• Knowledge Function: Attitude serves as standard or frame for understanding and interpreting people and
events around them.

7.3 PROCESS OF FORMATION OF ATTITUDE

There are basically two sources of formation of attitude: a) Social Learning, and, b) Direct Experience:
a) Social Learning : It is acquiring attitudes from others. There are broadly three processes of
acquiring attitudes through social learning: Classical Conditioning, Instrumental Conditioning, and
Modeling.

• Classical Conditioning is a basic form of learning in which one stimulus regularly precedes another. It is
learning based of association, that when first stimulus is present, the second would follow. Prejudices
and preferences are created through classical conditioning. Classical Conditioning can play a role in the
development of attitudes.

• Instrumental Conditioning is concerned with learning to express the “right” views. Instrumental
Conditioning is created through rewarding a desirable behaviour and discouraging an undesirable
behaviour. Thus a particular type of attitude is created towards a particular type of action through
Instrumental Conditioning.

• Modeling as a concept, deals with individuals acquiring new behaviours through observing the actions of
others. Individuals tend to do what others do, not what others say. Thus attitudes may be transmitted from
one person to another, or from one group to another, or from one generation to another.

b) Direct Experience : Attitudes are also formed through real life experience, which may be also called
as direct experience or personal experience. Various studies suggest that strength of the attitudes
acquired through direct experience is stronger than the strength of attitudes acquired indirectly. Attitudes
acquired through direct experience are held more confidently and are more difficult to be subjected to
change. If you hold strong attitude about an object, issue, or a person, and you want others to properly
understand your stand, it is better to let others have direct experience with the attitude object.

7.4 PROCESS OF CHANGE IN ATTITUDE

There is continuous effort around us to change the attitude of individuals, so that there may be possible effect
on their behaviour. Advertisements, publicity, appeals, announcements etc. in various media are attempts to
change our attitude towards objects, people, or issues, so that our behaviour towards them may be directed in
desired direction. There are broadly two processes of change in attitude: a) Persuasion, and ii) Cognitive
Dissonance. Persuasion influences us from outside, and Cognitive Dissonance influences us from within.
7.4.1 Changing Attitude through Persuasion
Changing attitude through persuasion is a difficult task. Our ability to resist persuasion is considerable due
to three factors. These factors are: i) Reactance, ii) Forewarning, and iii) Selective Avoidance. Reactance
refers to the negative reactions we experience whenever we feel that someone is trying to limit our personal
freedom. In some cases individuals shift away from a view advocated even if it is one they might normally
accept. Forewarning refers to tendency of building counter-arguments against a persuasive argument. These
help receivers resist the conclusions recommended by the message. Selective avoidance refers to a tendency
to direct our attention away from information that challenges our existing attitudes.

However, persuasion is a fact of modern life. Every day we are exposed to countless attempts at persuasion.
Persuasion is effort to change attitudes through various types of communications such as advertisement or
speeches. We shall examine issues like, factors those influence success of persuasion efforts, and, the extent
to which such efforts are effective. There are two approaches of analysing effect of persuasion on attitudes: i)
Traditional Approach, and ii) Cognitive Approach.

The Traditional Approach : According to this approach, there are three elements of persuasion:

• Source: the communicator or sender;

• Message: the communication;
• Target audience: the receiver.

The traditional approach focussed on a basic question: “Who says what to whom and with what effect?” The
most notable findings of this approach are:

• Experts are more persuasive than non-experts;

• Messages which do not appear to be designed to change our attitudes have more impact than those
appearing to be designed so;
• Popular and attractive communicators are more effective in changing attitudes than unpopular or
unattractive ones;
• Individuals with relatively low in self-esteem tend to get persuaded more easily than those high in self-
esteem, especially by persuasion from high-status or attractive sources;
• Two-sided approach is more successful than one-sided approach;
• Persuasion can be enhanced by messages that arouse strong emotions in the audience.

The Cognitive Approach : Cognitive approach attempts to explain what do people think about when
exposed to persuasive appeals. Several theoretical models have emerged to explain this phenomenon, but the
most widely known among them is Elaboration Likelihood Model (ELM).

ELM explains that there are two distinct routes to persuasion, depending on how important or relevant the
issues are to the persons who are the targets of persuasions. The two routes are called- Central Route, and
Peripheral Route. If we focus considerable attention on a message and its argument, because persuasive
message appears to be important, persuasion occurs through central route. In this case degree of attitude
change depends on quality of arguments. To the contrary, if we find the persuasive message to be of little
interest, we may not pay considerable attention on the message. Yet such messages can change our attitude, if
we find that message or the argument was more balanced rather tilted one-sided, or if we find that the source
(communicator) has expertise and commands high status. In such case, persuasion occurs through peripheral
route. There are two implications of ELM. First, attitude may or may not change either through central route
or through peripheral route. Second, attitude is more likely to change if persuasions come from multiple
sources as well as the arguments are strong, because in this case information receives greater scrutiny by the
receivers.

Another model that explains the cognitive approach to persuasion is the Heuristic Model of Persuasion. This
model deals in one question: When individuals overhear the reactions of an audience to a persuasive
message, does this influence the extent to which they, too, are persuaded? Studies on this model suggested
that audience reaction would be influential when the individuals in question had little involvement in the
issue. In contrast, when the issue is important to the persons involved, audience reactions would make little
difference- in this case systematic processing would occur and persuasion would depend on quality of
arguments.
Cognitive approach provides insight for choosing message in advertisements for different types of products.
Some products serve utilitarian function- people buy and use them because they are required to be used. In
contrast, some products serve social identity function- people buy and use them because they boost the
personal image of the users. For the utilitarian products, users are more persuaded by advertisements, which
describe features of the products. For the social-identity products, they are more influenced by
advertisements, which have glamorous appeal.

Cognitive approach to persuasion explains why are people in a good mood easier to influence. It states that
perhaps when people are in a good mood, they are less able to engage in careful, systematic processing than
when they are in a neutral mood. Therefore, they may be more easily influenced, particularly by strong and
convincing arguments.

Cognitive approach to persuasion also explains the relation between individual differences and its influence
on persuasion. Take one aspect of personality, self-monitoring. Persons high in self-monitoring tend to make
an attempt for creating positive impression in the minds of others. Such persons are more likely to be
persuaded, if the message is coming from attractive sources, and get relatively less effect of persuasion if the
message is coming from expert sources. On the other hand, persons low on self-monitoring are less interested
in creating positive impressions on others, and, more concerned with reflecting their true and inner feeling.
They are persuaded less by attractive sources, and, more by expert sources.

7.4.2 Changing Attitude through Cognitive Dissonance

Cognitive Dissonance is the internal state that occurs when individuals notice inconsistencies among their
attitudes or between their attitudes and their overt behaviour. Such inconsistencies create unpleasant feeling,
which produces pressures that may result in change in attitudes. The weaker the reasons for acting in
attitude-discrepant ways, the stronger these pressures are. Dissonance is a motivational state- people who
experience it want to reduce it. Earlier, inconsistency was identified as the basic feature of cognitive
dissonance. However, recent studies suggest that inconsistency is not the essential ingredient in dissonance.
Rather, dissonance- and the motivation to reduce it- stems primarily from feelings of responsibility for
negative events or outcomes.

7.4.3 Methods of Effecting Attitude Change

Richard M. Steers has described the following methods of effecting attitude change.

• Providing New Information: New information, especially coming from accurate sources, may alter belief
structure, subsequently leading to expected attitude changes.
• Fear Arousal and Reduction: Both can lead to change in attitude. However excessive arousal of fear may
lead to rejection of message by the individuals. Studies suggest that fear reduction is more appropriate
for changing attitudes than fear arousal.
• Dissonance Arousal: Dissonance leads to inconsistencies among individual’s attitude or between his/her
attitudes and overt behaviour. This creates unpleasant feeling which results in change in attitudes.
• Position Discrepancy: The greater the discrepancy between the individual’s own position and the position
advocated by others, the more the individual will move towards the position held by others.
• Participation in Decision Making: Attitude change can be brought about by involving the individual in
the process by which decisions are made.

Kelman has identified three processes that act as instruments of change in attitude.

• Compliance: It is application of subtle pressure either through reward or punishment in order to change
the behaviour, and expecting this change to be lasting.
• Identification: It is identification with the person who is affecting the change and is acting as a change
agent.
• Internalisation: This means that the new attitude is integrated with the other attitudes and becomes a part
of the person’s total personality. It is more permanent in nature. This change may occur due to desire to
change that comes from within.

Check Your Progress A

1) What do you mean by attitude ?

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2) How are attitudes towards a person formed?

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3) Can attitudes be changed? If so, how?

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7.5 RELATIONSHIP BETWEEN ATTITUDE AND BEHAVIOUR

The basic purpose of your studies on attitudes is to know the degree of impact of attitude on work behaviour.
Early research works suggested that attitudes simply influence behaviour. However in the late 1960s,
researchers had different tone. They opined that behaviour is far from simple, but it is understandable, and
certainly not random. It was found that attitudes and behaviour are at best only weakly related. Now the more
recent research works suggest that the influence of attitude on behaviour is significant, provided that we
choose to focus on specific, relatively narrow attitudes (well defined) rather than more general ones. In other
words, in presence of certain moderating variables (conditional factors), impact of attitude on behaviour is
significant. Following are the factors, which determine degree of influence of attitudes on behaviour.

• Attitude Specificity: Specific attitudes are much better predictors of behaviour than general ones.
• Attitude Strength: Intense or strong attitudes are generally much better predictors of overt behaviour than
weak ones.
• Attitude Relevance: It means the extent to which attitude objects actually have an effect on the life of the
person holding various attitudes. The stronger such effects, the stronger the link between attitudes and
behaviour.
• Attitude Accessibility: It is the ease with which specific attitudes can be brought into consciousness from
memory. The greater such accessibility, the stronger the effect of various attitudes on behaviour.
• Existence of Social Pressure: When social pressures hold exceptional power, individuals’ overt behaviour
follows the pattern set by such pressures, though there may be discrepancies between attitudes and
behaviour.
• Direct Experience: Attitude may influence behaviour more strongly if an attitude refers to something with
which the individual has direct personal experience.

So, do attitudes influence behaviour? Systematic research on this question indicates that they do.
Researchers have shown interest in other direction also- whether or not behaviour influences attitudes?
Interestingly higher correlation has been found in this direction, and it has been concluded that behaviour
influences attitudes more strongly than attitudes influence behaviour. This view is called Self-perception
theory. This theory proposes that attitudes are used after the fact to make sense out of an action that has
already occurred, rather than as devices that precede and guide action. This concept appears to be in opposite
tune with respect to the theory of Cognitive Dissonance. However, it may be beneficially used to shape the
attitudes of individuals by encouraging them to participate in certain actions. For example if students are
made to visit an institution engaged in providing vocational training to handicapped, students’ attitude
towards handicapped may be positive in future. Taking help of our understanding on influence of attitudes on
behaviour, as well as, influence of behaviour on attitudes- and making best use of both- we can say that in
formative years (when experience is limited) there is significant influence of behaviour on attitudes. Once
attitudes are formed after exposure to sufficient experience, attitudes start influencing behaviour in
significant way.

7.6 WORK RELATED ATTITUDES

Field of Psychology deals in hundreds of attitudes. Organisational Behaviour is concerned with work-related
attitudes and behaviour. There are primarily three work-related attitudes which have significant influence on
the organisation.

• Job Satisfaction: The various attitudes people hold towards their jobs are referred to as job satisfaction. It
is individuals’ cognitive, affective, and evaluative reactions towards their jobs.
• Job Involvement: It indicates how far individuals identify themselves with the job, and whether outcome
of the work is attached to self worth.
• Organisational Commitment: It explains how people feel toward their organisations. It is an attitude,
which reflect the extent to which people identify with and are involved with their organisations and are
unwilling to leave them.
Organisations should attempt to continuously gauge the attitudes of personnel at work place, so that
corrective measures may be taken in proactive manner, for ensuring desirable behaviour at work place.

It is important to study attitudes, as attitudes influence behaviour. Now we shall focus our attention toward
another issue -values- that influences attitudes, and in turn also determine choice of action as well as
behaviour.

Activity A

Ask about your attitude towards a junior employee (or a younger family member) while talking to the person
directly. Get the feedback about your behaviour towards the person. Such feedback would give you
indications about your attitude towards that person. Also discuss with the person what he expects of you for
building effective relationship. You may also express, what you expect of him / her for building effective
relationship.
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7.7 VALUES : MEANING AND IMPORTANCE

Values provide the basic foundation for understanding a person’s attitudes, perceptions and personality.
Values contain judgmental element as to what is right, good, or desirable. Values have both content and
intensity attributes. Content attribute describes- what is important; intensity attribute describes- how much is
it important. When individual’s values are ranked in terms of their intensity, we obtain that person’s value
system. Value system is a hierarchy based on a ranking of an individual’s values in terms of their intensity.
All of us have a hierarchy of values that forms our value system. However everyone does not hold the same
values. Edward Spranger defines the values as the constellation of likes, dislikes, viewpoints, shoulds, inner
inclinations, rational and irrational judgements, prejudices, and association patterns that determine a person’s
view of the world. M. Rokeach defines values, as a specific mode of conduct or end-state of existence,
personally or socially preferable to an opposite or converse mode of conduct or end-state of existence.

It is important to study values, as it influences attitudes, perceptions, motivation, evaluations, interpersonal

relationships, behaviour, conflict handling styles, leadership patterns etc. In nutshell, values are at the core of
bahaviour pattern of an individual.

7.8 TYPES OF VALUES

G.W. Allport and his associates have identified six types of values.

• Theoretical: high importance to discovery of truth through critical and rational approach.
• Economic: Emphasis on useful and practical.
• Aesthetic: Highest value on form and harmony.
• Social: Highest value to the love of people.
• Political: Emphasis on acquisition of power and influence.
• Religious: Concerned with the unity of experience and understanding of the cosmos as a whole.
Jones and Gerard have broadly identified two types of values- positive and negative. According to them
anything for which the individual strives, or approaches, extols, embraces, voluntarily consumes, incurs
expense to acquire is a positive value. Anything that the individual avoids, escapes from, deplores, rejects, or
attacks is a negative value.

M. Rokeach identified two sets of values. One set is called terminal values, which refers to desirable end-
states of existence. These are the goals that a person would like to achieve during his or her lifetime e.g. a
sense of accomplishment, family security, self- respect, social recognition etc. The other set, called
instrumental values, which refers to preferable modes of behaviour or means of achieving one’s terminal
values.

Several studies suggest that values differ across culture. Various cultural factors influence values of a
particular society; in turn they also influence perceptions, attitudes, motivation, behaviour, relationship
patterns, leadership styles etc. of the people of the society. As far as findings of cross-cultural studies are
concerned, they are more indicative than deterministic, at a particular point of time. You shall study about
cross-cultural values in detail in Unit 20.

Check Your Progress B

1) What is the degree of influence of attitude on behaviour?

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2) Do values of a person influence his / her behaviour? If so, how?
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7.9 DESIGNING VALUE BASED ORGANISATION

Organisations should be so designed that they ensure high productivity, high satisfaction of all stakeholders,
and low negative factors such as absenteeism, employee turnover etc.

A value-based organisation promises sustainability and prosperity to its endeavours. For designing value-
based organisation, based on suggestions of Tannenbaum and Davis, following points may be useful.

• Treat people with trust.

• Be respectful to human being.
• Treat people as dynamic entity.
• Accept and utilise human differences.
• Treat individual as a whole person.
• Encourage appropriate expression of feelings.
• Promote authentic behaviour.
• Use authority and networking for benefit of organisation.
• Encourage appropriate confrontation.
• Encourage willingness to take calculated risks.
• Set process which shall take care of effective accomplishment.
• Emphasise collaboration.

Activity B

Discuss with your three friends about two issues: a) what do they want to achieve in next one decade? b)
how do they like to achieve? You also share your own views on two issues.
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7.10 LET US SUM UP

Attitudes are enduring mental representations of various features of social or physical world. They are
acquired through experience and exert a directive influence on subsequent human behaviour. The attitudes
are formed by the process of social learning and direct experience. There is continuous effort around us to
change the attitude of the persons in an organisation. The attitude can be changed through persuation and
cognitive dissonance. The methods of effecting attitude change include : providing new information, fear
arousal and reduction, dissonance arousal, position discrepancy, participation in decision making,
compliance, identification and internalisation. The factors which determine the degree of influence of
attitude on behaviour are: attitude specificity, attitude strength, attitude relevance, attitude accessibility,
existence of social pressure and direct experience. There are three primarily work-related attitudes which
have significant influence on the organisation. They are : job satisfaction, job involvement and
organisational commitment.

Values provide the basic foundation for understanding a person’s attitudes, perception and personality. It
contains judgmental element as to what is right, good, or desirable. There are six major types of values.
They are : theoretical, economic, aesthetic, social, political and religious. Values differ across culture.
Various cultural factors influence values of a particular society. Organisations should be so designed that
they ensure high productivity, high satisfaction of all stakeholders, and low negative factors such as
absenteeism, employee turnover, etc. A value based organisation must be designed which promises
sustainability and prosperity to its endeavours.

7.11 KEY WORDS

Attitudes: General evaluations people make about themselves, other persons, objects, or issues.
Classical Conditioning: A basic form of learning in which one stimulus regularly precedes another.
Cognitive Approach: Attempts to explain what do people think about when exposed to persuasive appeals.
Cognitive Dissonance: Internal state that occurs when individuals notice inconsistencies among their
attitudes or between their attitudes and their overt behaviour.
Compliance: Application of subtle pressure either through reward or punishment.
Instrumental Conditioning: Learning to express the right views.
Instrumental Values: Preferable modes of behaviour or means of achieving one’s terminal values.
Modeling: Acquiring new behaviours through observing the actions of others.
Persuasion: Process of influencing.
Self-Monitoring: Tendency to make attempt for creating positive impression.
Self-perception Theory: Behaviour influences attitudes more strongly than attitudes influence behaviour.
Terminal Values: Desirable end-states of existence.

7.12 TERMINAL QUESTIONS

1) What do you mean by the term attitude? Describe process of formation of attitude.
2) How attitude can be changed? Is it easy to change attitude? Discuss with suitable examples.
3) Explain how attitudes influence behaviour, and how behaviour influence attitudes?
4) For a manager, what are the uses of learning about attitudes?
5) What do you mean by values? How value-based organisation can be created?

Note : These questions will help you to understand the unit better. Try to write answers for them. Do
not submit your answers to the university for assessment. These are for your practice only.
UNIT 8 PERSONALITY AND EMOTIONS

Structure

8.0 Objectives
1.1 Introduction
1.2 Definition of Personality
1.3 Determinants of Personality
1.4 Personality Traits and Types
1.4.1 Personality Traits
1.4.2 Personality Types
8.5 Personality Theories
8.5.1 Psychoanalytic Theory
8.5.2 Self Theory
8.5.3 Social Learning Theory
8.6 Models of Men
8.7 Personality Attributes Influencing Organisational Behaviour
8.8 Definition of Emotion
8.9 Applications of Emotion
8.10 Let Us Sum Up
8.11 Key Words
8.12 Terminal Questions

8.0 OBJECTIVES
After studying this unit, you should be able to:
• define personality;
• explain the determinants of personality;
• identify the traits and types of personality;
• examine various theories of personality;
• describe the characteristics of various men;
• identify the attributes influencing the organisational behaviour;
• define emotions; and
• analyse the applications of emotions.

8.1 INTRODUCTION
Personality is the complex set of various factors. The general meaning of personality is the external
appearance. However, mere external appearance does not determine the personality of an individual. A host
of factors determines individuals’ personality. Interestingly personality is not developed spontaneously. It is
developed over a period of time. A man is born with certain physical and mental qualities and the
environment further shapes his or her personality. Several personality theories have been developed to
provide an understanding of the personality of an individual. In this unit, you will learn the definition and
determinants of personality, the personality traits and types, theories of personality and the nature of man. It
also explains the attributes that influence personality. You will further learn the concept and the applications
of emotions in the organisation.
2.2 DEFINITION OF PERSONALITY
Personality is an important aspect in understanding the human beings that are the most important resources
of an organisation. They provide life to other resources for the accomplishment of goals and objectives.
Human energy makes all the difference in organisations. Personality determines the human energy. It
provides an opportunity to understand the individuals, properly direct their energy and motivate them in a
proper manner. Personality is the study of the characteristic traits of an individual, the inter relations between
them and the way in which a person responds and adjust to other people and situations. Gordon Allport
defined personality as the dynamic organisation within the individual of those psychophysical systems that
determine his unique adjustments to his environment. Kolasa defined personality as a broad, amorphous
designation relating to fundamental approaches of persons to others and themselves. It is the study of the
characteristic traits of an individual, relationships between these traits, and the way in which a person adjust
to other people and situations. Stephen P. Robbins has defined personality as the sum total of ways in which
an individual reacts and interacts with others.

These definitions reveal that the personality has the following characteristics.

• Personality refers to both physical and psychological qualities of an individual.

• It is unique in the sense that no two individuals are same in terms of their personality.
• Personality is the manner of adjustment of individual to the organisation, environment and the group.
• It is a qualitative aspect. Certain techniques exist to quantify it indirectly.
• Personality is dynamic. It changes with the time and situation.
• Personality is a system. It has input, processing and output mechanisms.
• Personality influences goal achievement and performance of an individual.

2.3 DETERMINANTS OF PERSONALITY

Personality is an intangible concept. It is complex as it is related to the cognitive and psychological process.
It is believed that a man is born with certain physical and mental qualities but the environment in which he is
brought up shapes his personality. A number of factors determine the personality of individual i.e., biological
factors, family factors, environmental factors and situational factors. Let us learn them in detail.

Biological Factors: Biological factors are related to human body. Three factors: heredity, brain and physical
features are considered as relevant. They are explained below.

i) Heredity: Heredity refers to those qualities transmitted by the parents to the next generation. These
factors are determined at conception. Certain factors of personality inherited are : physical stature, facial
attractiveness, gender, colour of skin, hair and eye balls, temperament, muscle composition, sensitivity,
skills and abilities, intelligence, energy level and biological rhythms.
ii) Brain: Brain is influenced by biological factors. Structure and composition of brain plays an
important role in shaping personality. There are few empirical findings to state that the brain influences
the personality.
iii) Physical Features: The physical features and rate of maturation influence personality. The rate of maturity
is related to the physical stature. It is believed that an individual’s external appearance has a tremendous
effect on personality. For instance height, colour, facial attraction, muscle strength influences ones’ self-
concept.

Family Factors: The family factors are also important in determining personality of an individual. Three major
factors: viz., the socialisation process, identification process and birth order influence the personality.

i) Socialisation Process: Socialisation is a process of acquiring wide range of behaviour by an infant

from the enormously wide range of behavioural potentialities that are open to him at birth. Those
behaviour patterns are customary and acceptable according to the standards of his family and social
groups. Members of the family compel the infant to conform to certain acceptable behaviour.

ii) Identification Process: Shaping of personality starts from the time the identification process
commences. Identification Process occurs when a person tries to identify himself with some person
whom he feels ideal in the family. Normally a child tries to behave as his father or mother.

iii) Birth Order: Birth order is another significant variable influencing the personality of an individual.
For instance first born are likely to be more dependent, more rational, ambitious, hardworking,
cooperative, and more prone to guilt, anxiety and are less aggressive.

Environmental Factors: Environmental factors are those, which exists in and around the individual. They
are social and cultural factors. Culture determines human decision-making, attitudes, independence:
dependence, soberness: aggression, competition, co-operation and shyness. There are two vital aspects of
culture. Firstly, conformity by the individual and secondly, acceptance by the larger group. Culture
establishes norms, values and attitudes, which are enforced by different social groups. Individuals are
compelled to behave in conformity to the culture established by the society. Thus, culture and society exert
greater influence in shaping the personality of an individual.
Situational Factors: In recent years, the influence of situational factors on personality is increasingly
recognised. Generally an individual’s personality is stable and consistent, it changes in different situations.
A study conducted by Milgram suggested that actions of an individual are determined by the situation. He
states that situation exerts an important influence on the individual. It exercises constraints and may provide
push to the individual.

Thus it is clear from the above discussion that hosts of factors exert influence in shaping the personality of
an individual. Therefore, one has to understand personality as a holistic system.

8.4 PERSONALITY TRAITS AND TYPES

Identification of personality is closely associated with the identification of traits. It is based on the
proposition that personality is a culmination of whole person. Traits are combination of actions and
reactions of an individual. It can be understood as relatively distinguishable characteristics that describe
behaviour. Let us learn personality traits and types in detail.
8.4.1 Personality Traits
1) Allport’s Trait Theory: Gordon Allport has identified a number of traits to describe complex
behaviour of human personality. He classified traits into two categories. Common traits and Personal
dispositions.

While common traits are used to compare people, personal dispositions are unique and the most
pervasive attributes describing the complexity of human personality. For providing comparison, six
distinguishing trait orientations are used. They are social, political, economical, aesthetic, religious and
theoretical. For instance social traits emphasises love and affection, care and interest on others and
expression of sympathy. Political trait is related to power consciousness. While economic traits place
emphasis on practical approach and cost and benefits of situation, aesthetic trait is concerned with
creative and artistic aspects. Whereas, religious trait is related to unity and integrity. On the other hand,
theoretical trait consists of use of rationality and empirical approach. A person possessing theoretical
trait is characterised by the discoverer of critical truth.

2) Cattel’s Trait Theory: Cattels’ theory has developed on a new approach. The traits are identified
into two categories. Surface traits and Source traits. Surface traits are visible outside and appear on the
surface of personality. They are determined largely by underlying source traits. While source trait is a
cause, surface trait is effect. Surface trait is symptom of source trait. Trait theories have recognised the
continuity of personality. The theories have shown the utility of quantitative application in behavioural
sciences. They have great deal of intuitive appeal.

8.4.2 Personality Types

Personality traits provide an understanding of the personality types. Certain personality types identified are
described below :
1) The Myers-Briggs Type Indicator: This is called MBTI framework. Sixteen personality types are
identified with the help of answers to 100 questions provided in the test. Some of them are Extroverted
vs. introverted, sensing vs. intuitive, thinking vs. feeling, and perceiving vs. judging etc.
Qualities of a personality type ‘introverted, intuitive, thinking and judging’ possess certain qualities. They
are:
• Possess vision,
• Thinks with original mind,
• Have original ideas,
• Have great drive,
• Skeptical, critical, independent, determined and stubborn.

2) The Big Five Personality Types : Personality dimension is identified in terms of the big five
factors. The types of personality are:
• Extraversion: Giving importance to relationships.
• Agreeableness: Thinking in a different manner.
• Conscientiousness: Possession of reliability.
• Emotional stability: Ability to withstand stress.
• Openness to experience: Interested and fascinated by novelty.
3) Physiognomy Personality Types : William Sheldon has propounded three types of personality based on
the human anatomical or physical structure of persons and psychological characteristics. Physical size of
the body influences the human behaviour and temperaments. The personality types are.

a) Endomorph: Certain characteristics of personality and behaviour associated with the body type are
friendly, concern to people, helping others in troubles, very slow reaction to stimuli. They seek
comfort, have strong inclination to delicious food, etc. The persons who posses these personality
characteristics, are liked by all.

b) Mesomorph: Persons having moderate physical characteristics are known as Mesomorph. The body
is strong and tough. Some of the personality characteristics of this type are: seeks physical
adventure, enjoys body building, feels restless, shows high aggression and self assertiveness, likes to
take risk and develops competitive spirit. The person is liked by virtue of his physique.

c) Ectomorph: Ectomorph body type is characterised by a thin and flat chest. The person is intelligent,
feels shy and avoids social contacts. However, he is typically anxious, ambitious, and dedicated to
his work. He is quick to react and hypersensitive to pain and pleasure.

4) Extrovert-Introvert Personality Types : Carl Jung is the proponent of the theory. The theory used
analytical psychology approach. According to the theory, personality is developed as a process of
creativity. It consists of four phases: thinking, feeling, sensation and intuition. Individual personality is a
mixture of these factors. The theory proposed two personality characteristics on two extreme ends. They
are extrovert and introvert type personality. While extrovert persons are more sociable, introvert persons
are more self-confident and they are guided by their own individual thinking. Extroverts are sociable
and reality oriented individuals. They are performers. On the other hand, introverts are less risk taking
and directive oriented. They require strong motivation and specific directions. While extroverts think in
terms of objective and interactive relationships, the own philosophy and ideology guide the thinking of
introverts.

This theory is very useful in the management of organisational behaviour. Job design, motivation,
leadership styles, career development, training, organisational change, organisational development and
organisational effectiveness are based on the personality characteristics. Introvert is more likely to
perform better in repetitive jobs. Extrovert performs better in dynamic and environmental centred jobs.
Similarly extrovert needs democratic style of leadership and introvert needs more directive oriented
leadership. Thus, the theory is used in developing organisational strategies to deal with individual
employees for increasing organisational effectiveness.

5) Type A and Type B Personality : Type A personality is defined by Friedman and Rosenman as
aggressively involved in a chronic, incessant struggle to achieve more and more in less and less time,
and, if required to do so, against the opposing efforts of other things or other persons. They have
defined Type B personality as rarely harried by the desire to obtain a wildly increasing number of things
or participate in a endless growing series of events in an ever decreasing amount of time.

Check Your Progress A

1) List the major characteristics that shaped your personality.

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3) Identify the personality types and their characteristic using the Big Five types.
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4) Identify the personality types and their characteristic using the introvert and extrovert types.
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8.5 PERSONALITY THEORIES

In the previous section, you have learnt about the traits and types of personality. Personality theories have
been developed to provide an understanding of the personality of an individual. They help in understanding
the elements that shape out personality. Interestingly society also plays a major role in shaping the
personality of an individual. Personality theories were developed in three streams of thought. They are
psychoanalytic theory, self-theory and social learning theory. While psychoanalytic theory considers that
certain elements in the human brain are responsible for shaping the personality, self-theory explains the
impact of environment on the individual personality. Similarly social learning theory provides that situation
determines the personality. Let us learn them in detail.

1.1.1 Psychoanalytic Theory

i) Sigmund Freud developed psychoanalytic theory. According to him human mind consists of three
elements that are responsible for shaping the personality. They are preconscious, conscious and
unconscious elements. The unconscious state of mind is influenced by hedonistic principle.
Unconscious mental activity determines behaviour. Conscious element is guided by reasoned reality
principle. Freud developed a structure of human mind in order to explain personality. It consists of
three elements known as : Id, Ego and Super ego.

Consciousness is guided by principle of reasoned reality and unconsciousness is ruled by hedonistic

principle of pleasure. According to this approach, personality determines the behavior. The personality
systems of human mental activity are : The Id, The Ego, The Super Ego, and The Libido. They are described
below:

i) The Id: Id is the totality of instincts oriented towards increasing pleasure, avoiding pains and
striving for immediate satisfaction of desires. The personality characteristics of an individual are built
on the foundation of the Id.
ii) The Ego: Ego is the executive part of the personality. It selects the features of the environment and
stores them. It is rational and logical. It is the conscious mediator between realities of world and the
id’s demands.

iii) The Super Ego: Super ego is a moralistic segment of human personality consisting of noblest
thoughts, ideals, feelings developed through absorption of cultural values and attitudes.

iv) The Libido: It is a psychic energy. It makes any system to function. It is dynamic.

According to this theory, wishes are generated by the Id. It compels immediate gratification of these desires.
Otherwise, tension is generated for their gratification. It tries to gratify them by primary process and reflex
action. For example, if an employee is negative, the superior scolds him for not performing the given task.
He is hurt by the words of the superior. Since he cannot be harsh with the superior, he tries to bear
discomfort by withstanding his emotion. He does this by grinding his tooth and bears it. If he fails to
withstand his emotion he tries to share the emotions with his close friends. This is called as primary process
of overcoming the tension. If the primary process fails, energy flows to ego, which provides perception,
thinking, judgment and memory. Then individual decides a particular action. However, while applying
secondary process super ego acts as a judge. Hence, wishes are satisfied by ego according to the values
established by super ego. If ego is able to integrate id and super ego individual gets satisfaction, otherwise it
results into frustration because super ego tries to punish the ego. To continue the example, the employee tries
to introspect himself and learns to work to avoid any discomfort in future. The theory is helpful in
understanding the personality of an individual.

8.5.2 Self Theory

Carl Rogers contributed the self-theory. It is also known as Organism theory or Field theory. The theory
emphasises individual as an initiating, creating, and influenting the determinant of behaviour within the
environmental framework.

Elements of self-theory are explained below:

a) Organism: Organism is the individual. It is the storage of all experiences. Thus forms locus of
reference. It is guided by conscious and unconscious elements. So individual behaviour is caused
by self-evaluation and by experiences.

b) Phenomenal field: Phenomenal field represents totality of all experiences gathered by environmental
interaction. According to the theory fulfilment of self-actualization need is the basic motivator. It is
controlled by environment in which individual lives.

c) Self-concept: Self-concept is an outcome, which forms basis for individual behaviour and personality.
Self is a combination of perceptions, attitudes, beliefs, values and traits. It characterises the concept
of ‘I’ and “Me”. In this context, ‘I’ indicates one’s own psychological process. Hence it is called
personal self. ‘Me’ is related to the thinking of an individual as to how he appears to others. So, it is
called social self. Thus both personal self and social self determine individual behaviour.

Self-theory provides valuable guide in understanding behaviour. The theory is organised around individual
and not around environment, which is uncontrollable.

8.5.3 Social Learning Theory

Albert Bandura developed social learning theory. It states that personality is determined by the situation in
which a person interacts. The following are the assumptions of the theory.

According to the theory, a person’s behaviour is determined by the modelling and observational learning
from the environment. A person interacts with the environment. He observes and imitates the stimuli in the
environment. He experiences certain cognition. This cognition is retained. When the same conditions are
reinforced he shows actions. These actions are called behaviour. Bandura described that : It is largely
through their actions that people produce the environmental conditions that affect their behaviour in a
reciprocal fashion. The experiences generated by behaviour also partly determine what a person becomes?
In addition, what he can do? Which in turn affects subsequent behaviour?

Social learning theory provides valuable insights into understanding of personality. The theory considers
environment as determinant of behaviour, rather than an unconscious element, which is considered as
determining behaviour. Thus, it suggests that by controlling environment, behaviour can be modified
suitable to organisational process.

Check Your Progress B

1) Observe persons you know very closely and write down the characteristics of Id, Ego, and Super
Ego.
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2) Mention certain personality characteristics you have learnt from the experiences of society.

Social Experience Personality characteristics

8.6 MODELS OF MEN

Individuals are vital resources in any organisational activity. Therefore, their behaviour considerably
influences the functioning of an organisation. Assumptions made about people to larger extent help the
practicing manager to understand, predict and control the behaviour. Edgar Schein has identified four model
of man. They are: Rational Economic man model, Social man model, Self-actualising man model, and
Complex man model . William Whyte used organisation man model. Let us learn them in detail.
i) Rational Economic Man Model: Classical theories have coceptualised the rational economic man model.
It is the oldest model. It is based on the principle of maximisation of self-interest. According to this
model, an individual makes a balance between costs and benefits of his actions. He is more
concerned with calculation of value for his effort in terms of economic rewards and maximising it.
Economic rewards regulate the behaviour. Rational Economic model presumes that man is
motivated by economic rewards and his behaviour can be controlled by variation in economic
rewards. Thus, it is relevant in designing appropriate strategies of motivation and control. It is
helpful in determining reward systems. It suggests that human energy is extracted by providing more
monetary rewards. As increased economic rewards induce production, there is no conflict between
management and workers. This leads to creation of good industrial relations system. This model
considered as a realistic description of human behaviour. Even today, this model is relevant for
understanding man.

ii) Organisational Man Model: William Whyte advocated the concept of organisational man. An
organisational man sacrifices for the sake of organisations’ interest. An individual possessing a belief
that social satisfaction is powerful tool to achieve objectives instead of competitive struggle falls under
this category. Organisational man model suggests that individual behaviour is oriented towards loyalty,
belongingness, conformity and sacrifice of individual interest in the realisation of organisational goals.
So individual attitude is developed towards resolving conflicts. Organisational man model is helpful in
creation of an organisational structure to provide satisfaction to individuals. Therefore, organisational
strategies take care of people’s interest. Leadership is highly democratic. Communication is open and
controls are based on self-controls rather than fact controls. Motivation is positive and commitment is
ensured.

iii) Social Man Model: Social man model is an outgrowth of empirical behavioural research and
development of human relations movement. Elton Mayo, Kurt Lewin, McGregor have popularised and
used this model. It is based on the concept of social relationships. According to this model group
pressures, norms and sanctions direct individual actions. Individual is motivated by social rewards and
his satisfaction is measured in terms of his status among group members. Therefore, employees accept
 management orders as long as they are congruent with group norms. Social man model is helpful in
designing the organisation structure, communication techniques, motivation systems, and rewards. It
suggested an organisational structure based on employees concern and freedom oriented rather than strict
division of labour as suggested by the rational economic model. The leader should be facilitator,
supporter and creator. His attitude is supposed to be democratic or consultative in order to motivating
people. The communication should be two ways. The behaviour is analysed with reference to groups.
Hence, according to this model greater output can be achieved by showing more attention to employee’s
welfare and diverting the system to employees concern than structure.

iv) Self Actualizing Man Model: Concept used in organisation man model and social man model gave
rise to the development of self actualizing man model. Self-actualizing means to use the capacity of
becoming what an individual is capable of becoming. Therefore, it suggested that men engage in
innovations, creations, and dynamism. Individual releases his full potential energy to achieve his final
goal.

Self-actualizing model suggested that the organisation structure is to be designed based on autonomy.
The reward and incentive system is based on intrinsic factors rather than physical energy. The leadership
style practiced is democratic or participation oriented in order to use creativity of people to the utmost
possible extent.

v) Complex Man Model : Complex man model is of recent origin. It assumes that an individual is
unpredictable in his behaviour. According to the model human being is complex mixture of needs, goals,
aspirations, perceptions, attitudes, learning, values and beliefs. A host of complex and unpredictable
variables influence human behaviour. A man is complex because of lack of cause and effect relationship
in his behaviour and due to individual difference. Complex man model is relevant in the present day
context as it suggested that there is no universal way of understanding behaviour and managing the
individuals. Management is required to adopt contingency organisational design and situational
management approach. Manager should be capable of distinguishing among individuals and diagnose
their behaviour in order to adopt appropriate leadership style, motivation pattern, and communication
techniques and control strategy. Hence, organisational design and management philosophy is to be
changed to suit to situational demands.

8.7 PERSONALITY ATTRIBUTES INFLUENCING ORGANISATIONAL

BEHAVIOUR
Personality attributes of employees are used in understanding the behaviour of employees and design
suitable strategies to deal with their behaviour. Some of the traits that influence the behaviour in
organisations are described below :

1) Authoritarianism: Authoritarianism is an attribute used to describe the persons having certain

negative beliefs about the work and workers. Taking this concept, behaviour of employees in
organisation is explained by using the following traits.
• believes in the formal authority.
• compels obedience to the authority.
• adheres to the conventional values and does not give preference to the new ideas.
• conforms to the rules and regulations.
 • believes in directing the subordinates than listening to them.
• tries to be rigid and prefers structured environment.

Taking these characteristic traits, a leadership style of superiors was developed, known as authoritarian.
Employees possessing the authoritarian attributes will command respect and achieve production targets
in the short run. In the end, these people cannot maintain the level of motivation and satisfaction.

2) Locus of Control: Locus of control is the belief regarding the outcome of their actions. Certain
people believe that their skills and abilities influence the outcome of the action. Others believe that
some external factors like fate or chance influence their result. According to Robbins, individuals who
believe that they control what happens to them are called Internals and individuals who believe that what
happens to them is controlled by outside forces such as luck or chance are called Externals.

Certain implications of locus of control behaviour of the individuals in organisations are described
below:

a) Absenteeism: People having internal locus of control possess a belief that the health is under their
control. They inculcate good health habits and take proper care of their health. Thus, they have
lower rate of sickness. Therefore, absenteeism is less in these people.

b) Turnover: With respect to turnover, internals tend to take action and thus might be expected to
quit the jobs more readily, but they tend to be more successful on the job and more satisfied.

c) Decision-Making: People having external locus of control are more oriented towards intuitive
decision making. On the other hand, internals consider more information before taking
decisions. They are motivated by the achievements. They would like to control the outcome of
the decisions.

d) Motivation: Internals possess achievement motivation than externals that are just satisfied with
the available rewards.

e) Job Satisfaction: People having external locus of control are more dissatisfied on the jobs. This
is because of the belief that the outcome is not under their control. In the case of internals, job
satisfaction is more due to the belief that outcomes are the results of their actions.

f) Psychological Commitment: Externals are less involved in the jobs. Internals possess
commitment that is more psychological.

g) Social interactions: People having internal locus of control are more sociable and excited to have
social relationships to keep their identification and esteem.

The locus of control influences the job selection also. People having internal locus of control are
successful in the sophisticated jobs. Jobs having professional and managerial nature require complex
information processing ability, needs quick learning, initiative and independence of actions are suitable
to the people having internal locus of control. On the other hand, people having external locus of control
are suitable to well-structured and routine jobs. They are also successful in those jobs that require
complying the directions.

3) Machiavellianism: Niccolo Machiavelli has introduced the concept. The term refers to the degree
of individual effort to gain control over organisational tasks. According to Robbins, Machiavellianism is
 the degree to which an individual is pragmatic, maintains emotional distance, and believes that ends can
justify means. The characteristics of Machiavellianism personality attributes are:

• They are active to participate in organisational politics.

• They manipulate more, win more and persuade less.
• They are adept at interpersonal game playing, power tactics and identifying influence system in
organisations.
• They consider ethics.
4) Self-esteem: Self-esteem is a feeling of liking or disliking of one self. It is related to the individual
desire for success. A person having a greater desire for success is rated as high self-esteem person. He
believes that he possesses required abilities to succeed on the jobs. People with high esteem are risk
takers. They tend to choose risky and challenging jobs. They have internal locus of control. They give
preference to pride, recognition, flair, success, independence, and are satisfied with higher order needs
than simple monetary motivation. On the other hand, people having low self-esteem are influenced by
the external factors. They give more respect and importance to the opinions of others. They do not want
to face unpleasant situation. Thus, they try to please others.

5) Self-monitoring: Self-monitoring is the ability to adapt to the situational demands. Individuals

possessing high score on self-monitoring observe the behaviour of others from close angle in order to
adjust their behaviour. They like mobility in their career. They are more successful in discharging
contradictory roles. Simply they can wear a mask suitable to the situation. Thus, there is high degree of
behavioural inconsistency in high self-monitoring people. Therefore, self-monitoring attribute helps
managers to understand the personality and behaviour of their subordinates in order to direct,
communicate, motivate and regulate them on the jobs.

6) Risk taking Attitude: Risk taking is an attitude. Persons differ in the attitude towards assuming the
risk. The propensity to take risk influences the decision-making. High-risk takers are likely to take rapid
decisions. Risk taking is also related to the job demands. High-risk taking is found in certain caste,
religion, nationality and gender. In organisations, risk-taking behaviour is related to the ability of
employees to take up challenging tasks and possess high achievement motivation.

Therefore, a number of personality attributes influence the behaviour of person in the organisational
behaviour.

Check Your Progress C

1) If you were an economic man, what are the characteristics you would have observed in you?

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2) What are the characteristics of organisational man?

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3) What are the characteristics of authoritarianism?

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8.8 DEFINITION OF EMOTION

Emotions are related to psychology of an individual. They are related to the inner feelings expressed in a
situation. When a person experiences stimuli, he is likely to develop an inner feeling. Facial expressions,
verbal sounds and body actions are used to express the inner feelings. Emotion can be defined as an
expression of a feeling of fear, anger, joy, love, hate, grief, frustration, satisfaction or any other similar
feelings. Emotions are important in understanding employees’ behaviour in an organisation.
Stephen P. Robbins defined emotions as intense feelings that are directed at someone or something.
Understanding emotions require understandings two components. One is affect: it is a broad range of
feelings that people experience. Second are moods: they are feelings that tend to be less intense than
emotions and that lack a contextual stimulus.

8.9 APPLICATIONS OF EMOTION

Emotions are important determinants of employee behaviour in organisations. Managers use the knowledge
of emotions for directing their subordinates in an effective manner and achieve organisational objectives.
Let us learn the applications of emotions in organisations.

1) Employee Selection: Organisations generally look for the persons who possess the ability to cope up
with others. Working with the group and inter personal attraction are becoming popular in organisations.
The ability to adjust with job demands, environmental pressures and go along with other persons is an
absolute requirement for the success in any job. Emotional stability implies controlling aggression.
Employees often conceal their real emotions and display emotions suitable to the demands of the
environment. Organisations select employees who possess this quality. It is also known as emotional
intelligence. According to Robbins, Emotional Intelligence is an assortment of noncognitive skills,
capabilities, and competencies that influence a person’s ability to succeed in coping with environmental
demands and pressure. It is composed of five elements: Self-awareness, self-management, self-
motivation, empathy and social skills.

2) Decision-Making: Decision-making is an integral part of every employee in organisation. Decision-

making must be rational if it has to yield the intended results. However, while taking decisions such
emotions as fear, anxiety, frustration, doubt, excitement, angry, stress, coolness etc., dominate the
rationality. Managers overlooking the importance of negative emotions in the decision making process
are likely to overlook number of alternatives also. They also overlook information processing rather use
more intuitiveness in the decision making. Similarly, positive emotions increase the ability to solve
complex problems and deal with the complex persons. In the process of group decision-making
emotional stability is required to develop a feeling in the employee that their suggestions are considered
for arriving at a final decision. Manager who can balance between rationality, intuition and emotions is
likely to make sound decisions acceptable to subordinates. Psychological commitment is more to those
decisions, which are arrived by considering the feelings of employees.

3) Leadership: Leadership is concerned with communication of directions, motivation of subordinates

and resolving inter personal conflicts. Emotions play a vital role in all these aspects. Let us learn them.

i) Communication: Communication is the process of making others to understand the message in an

intended manner. Simply appropriate use to words, medium, language, technology and environment
do not convey the message. Appropriate use of facial expressions, body moments and tone of the
 communication conveys meaning as intended. This is related to the emotions of the sender. In fact,
leaders will be able to convey sense of efficacy, competence, optimism, and enjoyment and energise
their subordinates by their excitement, enthusiasm and communication of emotional attachment.

ii) Motivation: Motivation is the feeling of an inner drive and enthusiasm to act in a predetermined
way in the expectation of certain desired outcomes. Emotions influence the desired outcomes.
Managers use emotional content to motivate their subordinates in a proper direction.

iii) Inter personal conflicts: Misunderstanding of communication in the situations of emotion leads to
conflicts. So emotions are interwoven in conflicts. However, these emotions do not appear outside
in a situation of conflict. Manager has to address the emotional component in order to resolve the
conflict and increase harmony among the subordinates. On the other hand addressing to the task and
structural aspects of the conflict alone does not redress the conflict. A successful manager learns to
consider the emotions in the resolution of inter personal conflicts.

4) Management of Change: Change is a common phenomenon. Employees resist change due to

vagueness in the goals. Thus, emotional attachment to the goals elicits positive attitude towards change.
Managers elicit positive response to change by the evocation, framing and mobilisation of emotions.
Thus, proper linking of emotions with the change is necessary for bringing down the resistance to
change.

5) Deviant Workplace Behaviour: Emotions influence the moods and consequently employees
engage involuntary actions of deviations of norms, rules, authority and cause damage to the property of
the organisation. Ignoring the presence of the boss is also one of the ways of employee deviation.
Certain observed deviations are slow working, sabotage, politicking, recriminations, harassment,
aggressions etc. Another negative emotion that causes stress and anxiety in the individual behaviour is
enviousness. It is resentment for not possessing something, which is strongly desired. Promotion of
positive emotions controls enviousness.

Check Your Progress D

1) What is emotion ?

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2) Enumerate the applications of emotion.

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10.10 LET US SUM UP

Personality is a vital aspect influencing the employee behaviour in organisational settings. Understanding of
personality arises because human beings provide life to all other resources in organisations. Proper
motivation and direction of these resources are more important for realisation of the goals of an enterprise. A
number of definitions exist to describe the personality. They advocate that the personality is unique,
qualitative and dynamic physio-psychological system in the individuals. Personality is shaped from the child
hood days. It also believed that it exists even at the time of birth. Heredity, composition of brain and
physical features determine the personality. Shaping of personality is explained by the theories of
personality. Sigmund Freud propounded psychoanalytic theory, which focuses on the Id, the Ego, the Super
Ego and the Libido. Carl Rogers explained the self-concept to explain the personality. Social learning theory
states that the personality is determined by the situational interaction.
Rational economic model, Organisational man model, Social man model, Self-actualizing man model and
Complex man model made different assumptions and propositions to understand the nature of a man.
Personality attributes of employees are important in understanding the behaviour of organisational member
and design suitable strategies to direct their effort towards attainment of organisational goals.

Emotions are related to the psychology of individuals. They are expression of inner feelings of fear, anger,
joy, love, hate or grief. Emotions are stimulated by cognition, arise a feeling in the individuals and expressed
through facial or body gestures. In organisations understanding emotions are useful in decision making,
leadership, communication, motivation, inter personal conflict, management of change and understanding
deviations in the work place behaviour.

8.11 KEY WORDS

Emotion: Expression of inner feeling of fear, anger, love, hate, grief, frustration and other similar feelings.
Emotional Stability: Ability to withstand stress.
Extraversion: Giving importance to relationships.
Extrovert: Persons who are sociable are known as extrovert.
Extrovert: Person who is optimist and sociable.
Heredity: Characteristics inherited from one generation to the other generation.
Introvert: Self confident and pessimistic are known as introvert.
Introvert: Self-confident persons are known as introvert.
Locus of Control: Belief that outcome of action are influenced by the internal strength or external factors.
Machiavellianism: The degree of individual effort to gain control over organisational tasks.
Modeling: The process of imitating and building abstraction of a reality.
Personality: Pattern of responses of an individual in a given situation.
Phenomenal Field: Totality of all experiences gathered by the interaction of the environment.
Rational Economic Man: A person who undertakes actions based on maximisation of economic benefits.
Self-actualization: Realisation of full potential for becoming what one is capable of becoming.
Self-esteem: Feeling of liking or disliking of one self.
Self-monitoring: Ability to adopt to the situational demands.
Socialisation: The process of acquiring qualities congruent to the society
Social Man: A person who undertakes actions motivated by social rewards.
Source Traits: Traits that cause the behaviour.

8.12 TERMINAL QUESTIONS

 1) Define personality. ‘Individual personality is wholistic’. A host of factors determine it’ Discuss.
2) Distinguish between rational economic man model and organisational man model.
3) What are the propositions of Trait theories? Explain Cattel’s Trait theory.
4) ‘Every individual is a social man and he possess self actualizing motive’. Explain.
5) Explain the personality traits used to determine introvert and extrovert personality.
6) ‘Personality is shaped by the physical structure of the body’. Elucidate.
7) What are emotions? Explain the applications of emotions.
8) ‘Emotions are essential determinants of behaviour. They are variedly applied in understanding
organisational behaviour’ Discuss.
9) Critically examine the psychoanalytic theory and self theory of personality.
10) How does social learning theory help in shaping of personality.
11) ‘Personality development takes place in various stages and a host of factors influence the
development’ Discuss.

Note : These questions will help you to understand the unit better. Try to write answers for them. Do
not submit your answers to the university for assessment. These are for your practice only.
UNIT 9 STRESS MANAGEMENT
Structure

9.0 Objectives
9.1 Introduction
9.2 Definition of Stress
9.3 Causes of Stress
9.3.1 Intra Organisational Factors
9.3.2 Extra Organisational Factors
9.4 Consequences of Stress
9.5 Techniques of Managing Stress
9.5.1 Individual Management
9.5.2 Organisational Management
9.6 Creating a Stress Free Environment
9.7 Let Us Sum Up
9.8 Key Words
9.9 Terminal Questions

9.0 OBJECTIVES
After studying this unit, you should be able to:
• define stress;
• identify the causes of stress;
• analyse consequences of stress;
• develop individual strategies of coping up the stress;
• explain the organisational strategies of stress reduction; and
• suggest creation of stress free environment.

9.1 INTRODUCTION
Stress is a psychological condition and body discomfort. Stress is a common phenomenon. Every individual
experiences stress at some or other time. Employees experience stress in the process of meeting the targets
and working for long hours. When the person experiences a constraint inhibiting the accomplishment of
desire and demand for accomplishment, it leads to potential stress. Anxiety is converted into stress and
ultimately it leads to job burnout. In fact for most of the time individuals are responsible for stress.
However, organisations also create stress in the individuals. Why one should be concerned about stress? The
reason is that the stress has more negative consequences than positive. In this unit, you will learn the
definition, causes and consequences of stress. You will be exposed to the techniques of managing stress.
You will further learn the process of creating stress free environment.

9.2 DEFINITION OF STRESS

Stress is a state of discomfort experienced by an individual. Loss of emotional stability is the general
expression of stress. It is generally apparent when the individual experiences a biological disorder. Stress has
a positive association with the age, life styles, time constraints and the nature of occupation. Certain
occupations are more prone to the stress than the others. For instance, drivers of vehicles, doctors, lawyers
and managers are more likely to get stress than teacher, bankers and operating personnel. Individuals feel
stress when the needs or desires are not accomplished in the normal expected ways. This is because of the
natural constraints operated on the individuals. The more the intensity of the desire and greater is the
uncertainty associated with the achievement of the goal, the greater is the degree of stress. Employees are
working for longer hours, taking on the work once done by laid-off colleagues, meeting tighter deadlines and
cutting back on expenses are some of the causes of stress. Combined to this with the double-income family
demands of monthly mortgages, childcare issues and aging parents, and the result for many is anxiety,
sleeplessness, irritability, and physical and mental deterioration. Perhaps these are the potential reasons for
stress in the employees. Let us first learn what is stress?

In the words of Fred Luthans, stress is defined as an adaptive response to an external situation that results in
physical, psychological, and/or behavioural deviations for organisational participants. Ivancevich and
Matteson define stress as the interaction of the individual with the environment. It is an adaptive response,
mediated by individual characteristics and/or psychological processes that are consequence of any external
action, situation or event that places special physical and / or psychological demands upon a person. Schuler
defines stress as a dynamic condition in which an individual is confronted with an opportunity, constraint, or
demand related to what he or she desires and for which the outcome is perceived to be both uncertain and
important.

The following are the features of stress.

• Stress is both psychological and physical aspect.
• It is common to both the genders.
• It results from the deviation of expectations from actual situation.
• It is symptomatic. Potential stress appears with the symptoms. If the potential stress is ignored it leads to
actual stress.
• Stress is treated to be negative. Nevertheless, it has positive consequences. This is called as eustress.
• Stress is an interactive concept. It does not spring from the internal organs of the individual. It comes
from the interaction of the human being with the environment. Thus, environment has a profound
influence on the stress.
• Stress is generic term. If it is applied to the context of organisation, it is known as work stress or job
stress.
• Stress occurs only when the human being feels mediation of the internal or external factors.
• Stress is related to the attitude of the person. Stress does not occur when the person is having an
indifferent attitude to the opportunity.
• Stress is associated with certain common biological disorders such as heart attack, stroke, diabetic, blood
pressure, neurological disorders etc.

The stress is caused when a person has needs, desires, wishes and expectations and certain forces prevent the
person from doing the desired activities.
Stress and anxiety are not similar concepts. Anxiety occurs as a result of emotions caused by the interactions
of environmental stimuli. Thus, it is confined to the psychological disturbance. On the other hand, stress is
originated by the psychological tensions and slowly leads to physical or biological breakdown. While stress
is accompanied by anxiety, the latter need not always lead to stress.
Similarly, stress and burnout are different concepts. Prolonged stress leads to burnout. It is a state of mind. It
results from a continuous feeling of emotional stress. An individual feels physical, mental and emotional
exhaustion. Job burnout is characterised by emotional exhaustion, depersonalisation, and diminished
personal accomplishment. Burnout is also closely associated with the so-called helping professions such as
nursing, education, and social work.

9.3 CAUSES OF STRESS

Stress is a psychological state of imbalance coupled with biological disorder. Individual experiences
deviation in his biological system which is called potential stress. Potential stress moderated by individual,
organisational and environmental variable leads to actual stress. The variables that convert potential stress
into actual stress are known as stressors. Thus, stressors can be intra- organisational and extra
organisational. Intra-organisational stress arises out of individual, group, and organisational factors. Extra
organisational factors relate to environment of the organisation. The intra organisational factors causing
stress are divided into individual factors and organisational factors. Let us learn them in detail.

9.3.1 Intra Organisational Factors

Individual Factors: Individual factors, which cause stress include: personality and individual differences,
family problems, economic problems, life styles and role demands.

i) Personality and individual differences: Individual basic dispositions are the main reason for
potential stress. Introversion, extroversion, masculinity, rigidity, locus of control, personal life,
demographic differences such as age, health, education and occupation are some of the reasons causing
stress in individuals. It is found that type A personality is prone to more stress than type B personality.
Type A personality is characterised by emotion and sensitivity to organisation goals, competitive spirit
and achievement oriented behaviour. This leads to frustration even for small deviations from the
expectations, thus feeling of more stress. Type B personality is typically relaxed, carefree, patient and
less serious in achieving objectives. Thus, he never feels stress. Some propositions of personality and
individual stress are:
• Age is positively related to stress. When a person grows older, his expectations also go up. If he is
unable to find avenues for realising expectations, he feels stress.
• Sound health enables a person to cope up stress better than unsound health.
• Education and health are related positively and negatively. Better education provides an
opportunity to understand things in a better manner. Even the level of maturity increases with better
education. So better educated persons are less prone to stress. Poorly educated people in relation to
the jobs are likely to feel more stress due to the poor adaptability on the jobs.
• The nature of the occupation and stress are related. Certain occupations are inherently stressful than
the other occupations. For instance, doctors, lawyers, politicians etc. At the same time occupation
also gives enough stress tolerance ability. Politicians are found to posses more stress tolerance
ability.
• Strong urge for satisfaction of needs compel people to over work and may lead to stress.
• Greater degree of locus of control leads to stress. A person is less likely to feel stress as he believes
that he can exercise control over external factors.
 • Self-efficacy and stress are negatively related. Higher degree of self-efficacy elevates motivation
levels. Therefore people with greater self-efficacy remain calm and effectively face stressful
situation. Perception of capacity to bring changes provides greater ability to withstand stress.
• Another personal disposition related to stress is psychological hardiness. Hardiness is the ability to
withstand provocation from others. People with greater psychological hardiness are able to survive
and withstand stressful environment. For instance, people who remain calm even at the provocation
of others and ignore the esteem are less likely to feel stress.

Individual differences in perception, job experiences, social support, hostility etc., are some of the reasons
that cause stress.
• Perception helps in understanding the environment. Person possessing a positive perception
understands reality and appraises the events objectively. Thus, he feels less stress.
• Job experience and stress are negatively related. As one gains experience he develops adaptability to
various job and organisational demands. He realises the job expectations. He develops a mechanism to
deal with stress situations. Therefore more experienced people remains cool, calm, and ignore stressors
than young and inexperienced employees.
• Hostility and aggressive behaviour is positively related to stress. A person who becomes aggressive and
gets quick anger is cynical and does not trust others. He feels more stress than others who are cool and
calm.

ii) Family Problems: Family issues influence the personal life of individuals. Sound marital
relationships, marital discipline, early and healthy children may lead to happy personal life. They enjoy
the life and become positive in their attitudes. So they do not tend to greater stress. On the other hand,
poor marital relationships, nagging wife, family separations, extra marital relationships, disturbing
children, poor settlement of family members, aging parents, dual working couple, death of spouse or
other close family member are some of the reasons for greater stress in the individuals.
iii) Economic Problems: Economic difficulties are the main cause of stress. Poor management of
personal finances, heavy family expenditure, and constant demand for money, poor incoming earning
capacity and slow financial growth in the job are some of the economic reasons responsible for greater
stress. For instance, an increasing family expenditure, increased expenditure on children education and
health create heavy demand for income. This creates greater stress in the individuals.
iv) Life Styles: Life Styles of individuals can cause stress. The following situations of life style cause
stress:
• Sedentary life styles cause greater stress.
• Individuals experiencing certain unique situations may be compelled to alter their attitude,
emotions and behaviour. These are known as life trauma. Life trauma is potential reason for
stress.
• Faster career changes bring more responsibilities to the individuals. Persons occupying higher
positions in the younger age are likely to get heart attacks due to greater stress. This is because of
inability to adapt to the new carrier responsibilities.
v) Role Demands: Individuals play multiple roles in their personal life and organisations. In their
personal life, they play the roles of family head, husband, father, brother and son. In social life
they play the roles of club members, informal community group members, members of recreation
groups, religious groups and a number of other social groups. Similarly in organisations,
employees play the role of superior, subordinate, co-worker, union leader, informal group leaders
etc. Incidentally, all these roles are performed simultaneously. Thus, they cause anxiety and
 emotion. Another potential reason is role conflict. It arises because of poor role perception, role
ambiguity, role overload and role overlapping. Role ambiguity and stress are positively related.
The greater the role conflict, individual experiences more stress.

Organisational Factors: An organisation is a combination of resources, goals, strategies, and policies. In

order to make people to work, organisations create structure, process and working conditions. In modern
organisations, number of factors create an environment of stress. The changing environmental dynamics,
globalisation, organisational adjustments like mergers and acquisitions lead to stress among employees. In
addition, a number of internal organisational factors cause employee stress. Some of them are poor working
conditions, strained labour management relations, disputed resource allocations, co-employee behaviour,
organisational design and policies, unpleasant leadership styles of the boss, misunderstandings in
organisational communication, bureaucratic controls, improper motivation, job dissatisfaction, and less
attention to merit and seniority. Let us learn the organisational stressors in detail.

i) Working Conditions: Working conditions and stress are inversely related. Employees working with
poor working conditions are subject to greater stress. The factors that lead to more stress are crowded
work areas, dust, heat, noise, polluted air, strong odour due to toxic chemicals, radiation, poor
ventilation, unsafe and dangerous conditions, lack of privacy etc.

ii) Organisational Tasks: Organisational tasks are designed to meet the objectives and goals. Poorly
designed tasks lead to greater stress. Task autonomy, task inter-dependency, task demands, task
overload are some of the potential reasons for stress in organisations. For instance greater the
task interdependence, greater is the coordination required. This requires employees to adjust
themselves to coworkers, superiors, and subordinates, irrespective of their willingness. They
are expected to communicate, coordinate, exchange views, with other people irrespective of
caste, creed, gender, religion and political differences. Lack of adjustment and poor tolerance
to others lead to greater degree of stress.
iii) Administrative Policies and Strategies: Employee’s stress is related to certain administrative
strategies followed by the organisations. Down sizing, competing pressure, unfair pay
structures, rigidity in rules, job rotation and ambiguous policies are some of the reasons for
stress in organisations.

iv) Organisational Structure and Design: As pointed out earlier organisational structure is designed to
facilitate individual’s interaction in the realisation of organisational goals. Certain aspects of
design like specialisation, centralisation, line and staff relationships, span of control, and
organisational communication can severely create stress in organisations. For example, wider
span of management compels the executive to manage large number of subordinates. This may
create greater stress. Similarly, frequent line and staff conflict lead to obstacles in the work
performance. Inability to resolve the conflicts lead to stress.

v) Organisation Process and Styles: A number of organisational processes are designed for meeting
organisational goals. Communication process, control process, decision making process,
promotion process, performance appraisal process, etc. are designed for realising
organisational objectives. These processes limit the scope of functioning of employees.
Improper design of various organisational processes leads to strained relationships among the
employees. They may also cause de-motivation and job dissatisfaction. Consequently,
employee feels stress in adapting to the processes.

vi) Organisational Leaderships: Top management is responsible for creation of a sound organisation
climate and culture by appropriate managerial style. The climate provided should be free of
 tensions, fear, and anxiety. Authoritarian leadership style creates a directive environment in
which employees are pressurised to attain targets. They work under impersonal relationships
and tight controls. This creates greater work stress to employees. On the other hand, a climate
of warm and friendliness, scope for participation in decision making, non financial motivation
and flexibility are encouraged under democratic leadership style. This relieves stress in the
employees. Therefore, employees working under authoritarian leadership styles experience
stress than employees working under democratic leadership style.

vii) Organisational Life Cycle: Every organisation moves through four phases of organisational life
cycle. They are birth, growth, maturity and decline. In each of these stages the structure and
the design of organisation undergoes frequent changes. In addition, human beings are subject
to metamorphosis to adapt to the stages in the life cycle. In this process, employees are subject
to job stress. For instance in the initial stages of organisational birth, stress is caused because
of ambiguous policies and designs. In the growth stage, employees experience stress due to
failure to meet conflicting demands. At the time of decline, stress is caused due to down
sizing, retrenchment and loss of financial rewards and changing organisational systems.

viii) Group Dynamics: Groups are omni present in organisations. Groups arise out of inherent desire of
human beings and spontaneous reactions of people. In organisations both formal groups and informal
groups exist. A formal group exist in the form of committees, informal group exit among different levels
of organisation. Groups have a number of functional and dysfunctional consequences. They provide
social support and satisfaction, which is helpful in relieving stress. At the same time, they become the
source of stress also. Lack of cohesiveness, lack of social support, lack of recognition by the group and
incompatible goals cause stress.

Thus a number of organisational factors cause stress in the individuals. Now let us learn about the extra-
organisational factors.

9.3.2 Extra-Organisational Factors

Environmental Factors: Environmental factors are extra organisational. Nevertheless, they create job
stress in the individuals. These are internal and external factors. Most of the internal environmental factors
relate to the organisational goals, management systems, structure, processes and design of organisations.
They are discussed in the preceding section. External environmental factors relate to the general
environment of the organisation. They are political, economical, technological, legal, ecological,
governmental, social, cultural and ethical. Certain propositions describing the impact of environment on
stress are presented below:

i) The political party in power as per their ideology enacts legislation in the Parliament. As the new
laws and regulations are enacted by the new political party, the political changes bring uncertainty in
the environment. This compels employees to adapt to the new legal order. This creates stress.
ii) Economic environment deals with income levels, demand and supply,
inflation etc. Changes in these factors may require more work or better
strategy to cope up with the environment. This creates stress when the
employees are unable to adjust to the new situations. For instance,
increase in inflation levels creates pressures on the employee income
levels leading to stress.
iii) Technological changes bring new methods of production and new ways
of handling the organisational tasks. Employees are required to learn
new skills in order to discharge their jobs effectively. Unable to cope up
 with the new technology creates stress in the employees. For example,
bank employees felt stress when the bank management decided to
introduce computers.
iv) Legal environment consists of complex web of laws and regulation
intended to control the business operations. Organisations are required
to follow the legal provisions otherwise they are subject to prosecution.
Practical difficulties arise in the implementation of the legislative
framework. Employees who are unable to respond properly to the laws
and regulations find themselves in stressful situation.
v) The government is enacting legislation to protect the ecological
environment in the country. Organisations are compelled to adapt to the
legislative framework protecting the ecological environment. Protecting
the ecological balance becomes a cause for potential stress.
vi) Government Administration is composed of the administrative
machinery and institutions that enforce the laws, regulations, policies
and other government instructions. The bureaucratic practices of the
administrative machinery can create stress in the executives.
vii) Social, cultural and ethical environment can bring stress in the
individuals. Social factors influence the life styles of employees.
Certain social security measures such as health protection, civic
facilities and social groups reduce stress in the employees. Certain
sociological variables such as race, sex, social class, gender etc., and
cultural factors such as beliefs, customs and traditions cause potential
stress.
Certain other environmental factors that result in stress in recent times are stock market crashes, frequent
elections, down sizing, information technology and the related changes in the business. Career oriented
couples, racial and gender discriminations, health hazards due to pollution and imbalance in the natural
environment etc. are contributing to stress.

Check Your Progress A

1) Distinguiwh between stress and anxiety.

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2) List the individual stressors you have experienced recently.

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4) Give examples of organisational environmental factors of stress.

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9.4 CONSEQUENCES OF STRESS

An individual experiences stress through psychological emotions and is disseminated through physiological
breakdown or biological changes. However stress is not negative always. Stress has also positive
consequences. The positive form of stress is known as eustress. The word taken from Greek language
means good stress. Mild stress elevates body metabolic and biological rates. The increase in the metabolism
leads to secretion of juices from body glands that will increase the inner drive for achievement.
Achievement motivation comes from deep intention, mild tensions, inner urge, fire and feeling of
restlessness to achieve objectives. Stress helps in the development of people too. In its mild form it enhances
job performance, leads to excellence and provides impetus to work hard and perform better. Individuals
involved in the discharge of professional oriented jobs, jobs involving creativity, challenge, interpersonal
communications and certain managerial jobs, will be benefited by stress, which leads to positive
performances. However, jobs involving physical effort do not get benefit out of stress. As indicated above
mild levels of stress increases job performance. It stimulates body and increases reactivity. Thus,
individuals perform tasks better and in a rapid way. Inverted-U relationship illustrates this phenomenon.
Some positive consequences are: increased productivity, positive response to target, development of proper
perception in the decision making, increased motivation and performance, increased adaptability to change
and increased quality of job performance. For instance, employee experiencing a moderate stress of
repetitiveness on the job finds new ways of discharging jobs. Thus, stress promotes creativity in the
employees.
However, in the modern organisations the negative consequences of stress are creating more problems. As
pointed out by Schuler, Khan and Byosiyere, stress leads to high blood pressure, ulcer, cancer, accident
proneness and irritation. Though there is no perfect association between stress and its consequences, stress
itself demonstrates into physiological, psychological, behavioural, job and organisational consequences. The
positive and negative consequences are discussed below:

Physiological Consequences: Stress influences the biological system of the human being. Certain visible
forms of stress are increased blood pressure, proneness to heart disease, cancer, sweating, dry mouth, hot and
cold flashes, frustration, anxiety, depression, increased level of cholesterol, ulcer, arthritis etc. Physical
stress increases the body metabolic rate. This results into malfunctioning of internal gland and consequently
the body disorder. This is felt in the form of increasing heart beating, increase in breathing rate and
headache. This creates biological illness. The physical stress also creates psychological problems. In fact,
physical stress and physiological disorders are interrelated. However, physical disorders and stress always
need not associate positively. This is because of complexity of symptoms of physical stress and lack of
objective measurement of impact of stress on bodily disorders.
Psychological Consequences: Psychological consequences are interrelated to biological consequences.
They are invisible, but affect the employees’ job performance. Psychological stress creates a pressure on
human brain. This is expressed in terms of certain psychological symptoms such as anger, anxiety,
depression, nervousness, irritation, tension, boredom, aggressiveness, moodiness, hostility and poor
concentration. Tensions, anxiety, and emotions lead to procrastination. Psychological stress produces
interpersonal aggressions, misunderstanding in communication, poor interpersonal communication and low
interpersonal attraction. This is demonstrated through aggressive actions like sabotage, increased
interpersonal complaints, poor job performance, lowered self-esteem, increased resentment, low
concentration on the job and increased dissatisfaction. Psychological stress produces harshness in the
behaviour and may lead to assumption of authoritarian leadership style by the superior executive.

Behavioural Consequences: Stress has an impact on employee’s behaviour. An abnormal behaviour is

observed in those individuals who are prone to stress. A change in eating habits, sleep disorder, increased
smoking, alcoholism, fidgeting and aloofness are some of the behavioural changes observed in stressful
employees. Sometimes stress leads to anxiety, apathy, depression and emotional disorder. This leads to
impulsive and aggressive behaviour and frequent interpersonal conflicts. Under eating, overeating, drug
abuse and sleeplessness are some of the behavioural consequences. The following are some propositions
relating to stress and behaviour:

i) Perception: Stressful individuals develop tension and anxiety. As a result, their level of understanding
considerably decreases. When perceptual distortions occur in the employees, it may adversely
affect decision making process, interpersonal understanding, interpersonal communication and
capacity to work with groups. They become stress intolerable. All these lead to increased levels
of interpersonal conflicts.

ii) Attitudes: Continued stressful environment creates certain permanent negative impressions in the
mind of the employees. These permanent impressions adversely influence their work
performance. For example, an employee developing a negative attitude on work, superior,
working conditions, organisational climate and culture intentionally decreases his output. He
also becomes demoralised and the motivation level decreases.

iii) Learning : Employees in organisations continuously learn new skills and techniques. Learning new
methods and techniques to adapt themselves and discharge their jobs effectively is inevitable to
employees. Stressful employees can not learn the things quickly.

Organisational Consequences : Stress has negative impact on the performance of the job. Organisations
face the problems of poor performance and other negative consequences. Some of them are described
below:

i) Absenteeism: Employees subject to stress were found to addict to drugs and alcohol. Thus, they
abstain from the jobs frequently. This creates discontinuity in the jobs and adversely effect performance
of other employees.

ii) Turnover: Turnover and stress have shown some relationships. An employee experiencing
continued stress develops disgust and frustration. Therefore, they are likely to change their jobs.

iii) Decision-Making: Excessive stress distorts perception of managers. This adversely effects their
capacity to take decision. Thus, stressful executives become irrational in the decision making. This leads
to loss of organisational resources and reputation.
iv) Disturbed Customer Relationships: Employees experiencing excessive stress develop irritation,
looses emotional stability and emotional tolerance. Intolerance impels them to pick up conflicts easily
due to misunderstandings. Employees dealing with the customers and the public disturb relationship
due to their inpatient behaviour. For instance sales persons, bank employees, public relation
executives are required to be more emotionally stable. Otherwise, customers dealing with them will
have trouble in dealing with the company. This also creates poor impression on the corporate image of
the organisation.

The consequences of stress are multifaceted. Stress has a vicious circle. Most of the consequences of the
stress are interdependent. One has roots into the other. For instance, psychological consequences result in
physiological disorders, the later will produce behavioural consequences and ultimately the organisation
suffers from adverse effects. The ill effects of stress are more dangerous. Addiction to smoking, drinking
alcohol, narcotic drugs, perverted sex, atrocities on women and children, criminal attitude, terrorism and
indecent behaviour are some of the social consequences of stress. It is in this context that stress received
more attention of the organisations, psychologists and the medical practitioners in recent times. A number of
strategies exist to overcome stress. Most of them suggest leading a peaceful, calm and regulated life.
Interestingly people overlook their life styles and suffer from stress. However, stress is not difficult to
overcome.

Check Your Progress B

1) Identify the forms of eustress.

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2) List out the consequences of stress in any organisation with which you are familiar.

Physiological Psychological Behavioural Organisational

3) Enumerate the organisational consequences of stress.

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9.5 TECHNIQUES OF MANAGING STRESS

Stress management has assumed greater importance in the modern organisations. More than organisations,
individuals are concerned with the stress reduction. As the saying goes ‘prevention is better than cure’,
prevention of stress is better than attempting to cure stress. This is because stress once experienced has
negative consequences. Though employee possesses negative perception of stress, there is a need to induce
moderate levels of stress for better performance. The question arises what should be the acceptable levels of
stress? More over, there is a wide gap between theoretical and actual practice of stress management. For
instance, practicing yoga early in the morning and doing exercise is considered very effective way of fighting
stress. However, how many people really sacrifice morning comfortable sleep for the sake of yoga and
exercises. When a problem occurs, people resort to yoga. Otherwise, they feel that taking allopathic medicine
is easy than yoga and exercises.

Individual and organisational stimuli causes stress, and the implications are more negative at individual and
organisational levels. It needs to be managed both by adopting individual and organisational strategies. The
individual management techniques are more popular than organisational management techniques. Let us
learn the strategies of stress management in detail.

9.5.1 Individual Management

Individuals assume automatic responsibility and look for ways and means of dealing with their stress.
Individuals are more concerned about their health. There is an increasing rate of health clinics and health
consciousness observed in recent times. Following are some of the techniques which individuals can adopt
for reducing stress :

1) Time Management : Time management and stress are inversely related. Improper and poor
management of time are the root cause of a greater degree of stress. Improper and inadequate utilisation
of time cause anxiety. The following principles of time management can help in combating stress.
• Identifying and listing of daily activities in a logical order.
• Arranging the activities of the day based on importance and urgency.
• Preparing logical schedule of activities.
 • Analysing and understanding the daily cycle and nature of the job.
• Allocating time properly to various activities based on time demands.
• Delegating minor tasks to the subordinates in order to make use of the time in a better manner.
• Discouraging unwanted visitors.
• Setting unfinished tasks on the top of list for tomorrow.

2) Physical Management : Management of stress relates to understanding one’s own biological and
body conditions. Examining hereditary characteristics habits like smoking and drinking, life styles and
body conditions help in understanding one’s physiological conditions. Overcoming stress is possible
with managing physiological relaxation. Physical exercises greatly help in relieving tension and stress.
When body is conditioned with physical exercise, oxygen is inhaled properly and blood circulation
increases. This promotes healthy secretions from glands and the supply of blood to all the parts of the
body keeps every organ active. Consequently, immunity to withstand stress increases. Physical exercises
could be reactive or proactive. Non competitive physical exercises like walking, jogging, swimming,
riding, aerobics and playing games considerably increases heart capacity, provide mental diversion from
work pressures and increases heart capacity to withstand stressful situations. The chances of heart
attack, adverse blood pressure and diabetics reduce.

3) Psychological Management : Most of the stresses arise because of psychological tensions.

Therefore, it is suggested that managing psychological activities lead to effective management of stress.
The following are some of the psychological management techniques.
i) Relaxation : Relaxation of mind through meditation, hypnosis and biofeedback can effectively reduce
mental tensions. Meditation involves silently sitting on the ground taking deep inhalation and
chanting mantra. This takes the mind into deep relaxation. This technique relaxes muscles and
mind. It also brings significant changes in heart rate, blood pressure, lung capacity and other
biological organs of the body. Transcendental Meditation, Soul management, Atma yoga,
Anthahakarana, Silence sitting posture, Shavasana, Bhavathetha meditation and praying the God
are some of the relaxation techniques practiced for reducing stress.
ii) Behavioural Self-control: Stress also results from behavioural disorders. Exercising proper control
over behaviour in dealing with others can bring down the chance of stress. Self-introspection
brings self-awareness of the individual. Similarly knowing the antecedents and consequences of
own behaviour enables behavioural self-control. Stress can be relaxed by developing proper
perception, practicing good listening, maintaining calm and tension free mind empathy and
positive attitude are some of the behavioural self control techniques.
iii) Cognitive Therapy: It is a technique of clinical psychology. Cognitive therapy involves knowing
ones’ own emotions to release anxiety and tension. In this technique, people are made to
understand the reasons causing stress in them by the process of self-observation. For example, if
an employee develops a feeling that he is incompetent to handle a new job, counselling is
provided to develop a confidence of competence to handle all the new jobs. Thus, with the help
of cognitive therapy, a positive impact is created for the mental satisfaction. Cognitive therapy
enables people to exercise self- control for relaxing stress.
iv) Yogic Management : In recent times, yoga is an effective technique of relieving stress. Yoga
practice involves Asana, Pranayama, Mudra and Kriya. Practicing a number of yogasana relaxes
muscels, reduces blood pressure, controls asthma, relieves neurological problems, improves lung
capacity, enhances proper flow of blood and helps relax tensions and strains. Certain asanas which
help stress relaxation are pada hasthasana, vajra asana, sashanka asana, camel asana, lotus asana,
crocodile asana, sarvanga asana, shava asana .
4) Social Management: Developing good social networks involves grouping of people who are good
listeners and confidence builders. This increases social support to individuals. Encouraging informal
groups to share information without inhibitions, developing free exchange of ideas, views and distasteful
experiences, promoting confidence of social support decrease tensions and stress. Social clubs,
recreation clubs, friendship clubs, informal gatherings, birthday parties, and family are some of the
social networks that increase social support and reduce stress.

5) Self-awareness Management: Self-awareness is similar to self-audit or personal audit. Managers

are required to understand themselves in a free and fair manner. They should encourage open
communication and willing to listen to others especially on their deficiencies. Being aware of self is a
difficult task, as individuals are unprepared to accept their defects. Self-awareness management involves
three stages.
• Stage – I: Identify, understand and analyse one’s own skills, capacities, limitations and defects.
• Stage – II: Encourage feed back from others viz., subordinates, peers, superiors, friends, family
members and other social associations. This requires patient hearing without inhibitions.
• Stage -III: Develop self program to improve the skills, capacities to overcome the limitations in a
scientific way. Attend self-management-training programs to develop the personality for all round
development of self.

6) Inter Personal Management: One of the most successful techniques of stress management is
developing inter personal understanding. Inter- personal communication, inter personal attraction and
inter personal knowledge improve understanding of others behaviour. Most of the organisational stresses
are created due to misunderstanding, organisational politics, setting one self-aloof from others and
encouraging unreliable comments. Thus, maintaining openness of communication and valuing proper
comment enable development of inter personal understanding. Transactional Analysis, Johari Window
and Grid techniques help in the development of inter personal understanding and consequent relief from
stress.

9.5.2 Organisational Management

In modern organisations, human resources are vital resources. Most of the organisational stresses are caused
by the structure and design of the organisation, policies, programs and procedure of the administration and
due to managerial styles and strategies. Thus organisations are interested in finding out the organisational
stressors and remove them as far as possible. Organisations adapt the following techniques of stress
management.

1) Selection and Placement Policy: Stress and personality characteristics of employees are closely
related. Thus selecting the employees by a proper personality fit suitable to jobs minimise the chance of
stress in the individuals. For instance a sales person jobs requires extensive travelling rather than
experience. If a person having a poor attitude of travelling is selected, he is likely to experience more
stress in performing the job. Therefore, proper recruitment and selection policy should be followed by
the organisation to reduce stress.
2) Goal Setting: Goal ambiguity, lack of proper perception of goals, challenging goal and unattainable
goals cause stress in individuals. Therefore, organisations should follow a strategy of participation
in goal setting to provide motivation, reduce frustration and ambiguity of goals. Management by
Objectives (MBO) is an appropriate technique of goal setting which reduces stress.
3) Job Enrichment and Job Design: Job enrichment provides motivation to the employees. It enriches
job factors such as responsibility, recognition, and opportunity for advancement, growth and self-
 esteem. Routine, unstructured and poorly designed jobs cause greater stress in individuals. Job
redesign provides more responsibility, more meaningful work, more autonomy and increased feed
back. This provides greater control over work activities and reduces dependence on others.
Therefore, job enrichment and job redesign provide an effective way of reducing stress.
4) Role Clarity: Organisational stress is associated with role ambiguity, role overlap, lack of role
clarity and role conflict. Proper role definition helps employees understand their role in organisation
and appraise interpersonal roles. This reduces the chance of role conflict and increases role
compatibility. This eliminates stress in the individuals. Wherever role conflict arises, counselling and
negotiation can be used to resolve inter- personal role conflict to avoid stressful situations.
5) Communication and Counselling: Barriers in communication are potential moderators of
organisational stress. In organisations formal communication creates a number of problems of inter
personal misunderstandings. Thus redesigning the formal communication channels can improve
understanding and consequently reduce stress caused by communication bottlenecks. Counselling is
exchange of ideas and views in a free and fair manner. It is intended to share problems of employees
and cope up with the stressful situation. Counselling consists of advice, reassurance, communication,
and release of emotional tensions, clarified thinking and reorientation. The techniques of counselling are
non-directive, participative and directive.
6) Carrier Planning and Development: Employees in general are free to plan their careers. However,
organisations also aim at employee development. The employee development is aimed at the enrichment
of skills and the development of personality for undertaking future managerial jobs. Stress is caused
when employees’ expectations of their career in organisation are not fulfilled and when employees get
promotion without the development of corresponding skills. Organisations take less interest in career
planning of the employees. Designing appropriate career plans, education programs, development
programs and organisation development considerably reduce employee’s stress.
7) Democratic Leadership: Democratic leaders create confidence in the subordinates and allow
participation in the decision making process. They create an atmosphere of warmth, friendship, and
supportive climate. Under such climate employees feel satisfied, motivated and psychologically
committed to the achievement of objectives. In addition, communication is open, conflicts are avoided
and coordination improved. This enables employees to relieve stress and promote healthy work.
8) Organisation Climate: Organisation design is the basic reason for job stress. Bureaucratic,
directive and ambiguous administration and poor organisational climate leads to greater stress. A sound
organisation climate and culture characterised by sound administrative policy, good organisational
communication, participative culture and supportive climate ensure reduction of stress.
9) Wellness Programmes: Programmes that focus on employee’s physical and mental condition
organised by the management are known as wellness programmes. As part of these programmes,
workshops, seminars and counselling sessions are conducted to help the employees understand the
dangers of smoking, alcoholism and drug abuse. They promote a positive attitude for eating better stuff,
fighting obesity, doing regular physical exercise and developing positive personality. However, these
programmes are successful only when the employee himself takes personal interest in his physical and
mental health. Organisations act as only a catalyst to promote programmes that facilitate reduction of
stress.
10) Quality of Work Life: The concept has been increasingly recognised in the recent years. This
technique involves improving the working conditions and other internal and external aspects of work
life. In addition, providing good housing facilities, living conditions, social and recreational facilities,
training and development of employees for overall development of human resources in the organisation
will develop quality of work life.

Stress is a multi faceted phenomenon. The cause and effect relationship in stress is difficult to obtain
because it is a qualitative psychological phenomenon. Moreover, individuals overlook the symptoms of
stress until they experience physiological break down. Otherwise, they resort to a number of uncongenial life
habits and addict to them. Changing their attitudes and addiction is not an easy task. Moreover, in large
organisations functioning in a competitive and dynamic environment, organisational redesign, job redesign
and administrative reorientation are more theoretical than practical. Even personal strategies sound
theoretically good, but lack implementation. Hence, stress management programmes must be implemented
carefully for the reduction of stress.
9.6 CREATING A STRESS FREE ENVIRONMENT
Stress is both positive and negative. You have already learnt that mild to moderate levels of stress helps in
developing positive behaviour in the organisation and it is good for the organisational health. However
negative consequences of stress always overweigh the positive ones. Thus, it is generally agreed that stress
reduction is a serious concern to the management and individuals. The individual’s responsibility should
always be greater than organisational responsibility. This is because of the dictum that protecting ones
health is their responsibility alone. Organisations perhaps help in developing certain programmes for stress
reduction. It is not out of context to mention that theoretical management of stress should be distinguished
from practical management. Most of the individual techniques relate to the personality of the individuals.
Certain techniques require the individuals to sacrifice the self concept and comfortable levels. Thus, it is
difficult to promote the individuals to adapt the strategies of stress reduction. Nevertheless, it should be
understood that it is not an impossible task. Creating a stress free environment requires a thorough
investigation of the stressors, understanding, analysing the implications, appraising the costs and benefits
and above all bring commitment to the programmes by changing the attitude. Look at Table 9.1 which shows
various stressors and the related techniques which help us in understanding the creation of stress free
environment.
Table 9.1 Stressors and Related Techniques

Individual stressors Stress Management Organisational Stressors

Stress Management
Family troubles Family counselling Task and role demands Job redesign and role
clarification
Economic problems Increased earning potential Inconsistent organisation
structure, process and functions Redesign of organisational structure
Personality characteristics Personality Development Square peg in a round hole
Redesign recruitment and selection policy
Unable to cope up time demands Time management Goal ambiguity Goal feedback
Suffering from lowered self esteem and lack of recognition Democratic and participative
management Role ambiguity Role redesign
Aloofness and lack of social support Promote informal group membership Corporate policies Develop
sound organisational culture
Physical conditions Redesign organisational
climate
Economic problems Restructure pay and promotion
polices
Communication Transactional analysis
Career ambiguity Career planning
Check Your Progress C

1) Mention the principles of time management you observe in your daily life to reduce stress.
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9.7 LET US SUM UP

Stress is psychological concept leading to both biological and behavioural disorders. Stress and personality,
occupations, age, life styles and time demands are related to each other. Stress is symptomatic. Interestingly
prolonged stress leads to burnout. Stress is caused by a host of factors. Stressors are the factors that cause
stress in individuals. Stressors can be intra organsiational and extra organisational. While individual
stressors and organisational stressors are intra organisational, environmental stressors are known as extra
organisational. Individual factors include personality, individual differences, family problems, and economic
problems, life styles and role demands. A number of organisational factors cause stress in individuals. They
include: poor working conditions, poor task design, unfair administrative policies and strategies, improper
organisational structure and design, organisational process and design, organisational leadership,
organisational life cycle, and group dynamics. Environmental factors are: political, economical,
technological, legal, ecological, government and social, cultural and ethical environment.

Stress is considered as negative. Nevertheless, it is not always correct. Eustress is a positive stress. Mild
levels of stress promote good performance. However, the negative consequences are more than the positive
consequences. Physiological consequences are : increase in blood pressure, heart attack, cancer, sweating,
frustration, anxiety and depression. Psychological consequences are: anger, aggressiveness, moodiness,
hostility, poor concentration, tensions and anxiety. Abnormal behaviour is observed in stressful situations.
Poor perception, inconsistent attitudes and poor learning are some of the behavioural consequences.
Absenteeism, turnover, irrational decision making, disturbed customer relationships and consequently
negative corporate image are observed due to stress.

Stress management has assumed paramount importance in the modern organisations. Individual management
techniques are always better than organisational management techniques. Certain individual strategies are:
time management, physical management, psychological management, yogic management, social
management, self-awareness management and inter personal management. However, the role of
organisations in the management of stress cannot be undermined. Organisations play a catalystic role in the
management of stress. Organisations follow techniques such as proper selection and placement policy, goal
setting, job enrichment and job design, role clarity, communication and counselling, career planning and
development, democratic leadership, organisational climate and wellness programmes.

Creating a stress free environment requires diagnosing and analysing the stressors. It aims at changing the
attitude of the employees. However, it should be remembered that practice of stress management is not as
sound as theoretical management techniques. This is because most of the techniques require sacrifice of
personal comfort. However, stress must be managed in a proper manner.

9.8 KEY WORDS

Anxiety: A state of psychological disturbance.
Burnout : A feeling of emotional exhaustion
Eustress : Good form of stress is called as eustress.
Job enrichment : Redesigning the jobs to provide more responsibility, recognition and self-esteem.
Organisational Life Cycle : The birth, growth, maturity and decline stages in the existence of organisation.
Psychological hardiness : The ability to withstand provocation from others.
Relaxation : Meditation to take deep relaxation of human mind.
Self-efficacy : It is a perception of capacity to bring changes.
Social Networks : Informal groups that provide social support to share feelings, emotions and distasteful
experiences.
Stress : An internal experience, which creates physiological and psychological disorders.
Stressors: Factors that convert the potential stress into actual stress.

9.9 TERMINAL QUESTIONS

1) ‘Stress is both physiological and psychological’. Discuss with examples.

2) ‘Stress is moderated by anxiety and burnout’. Discuss with examples
3) Examine intra organisational factors of stress. How do they influence the organisation?
4) What do you mean by the extra organisational stressors? Discuss various extra organisational factors
which create stress in the organisation.
5) ‘Stress has positive consequences and negative consequences. Negative consequences have adverse
impact on biological, psychological and behavioural systems, apart from organisational systems’
Explain.
6) Discuss individual management strategies of stress. Do you think that they can reduce stress in the
organisation? Discuss.
7) How organisations respond to bring down employee stress and make them better use in the
organisation? Elucidate.

Note : These questions will help you to understand the unit better. Try to write answers for them. Do
not submit your answers to the university for assessment. These are for your practice only.
UNIT 10 MOTIVATION
Structure

10.0 Objectives
10.1 Introduction
2.2 Concept of Motivation
2.3 Motivators
10.4 Theories of Motivation
10.4.1 Maslow’s Need Hierarchy Theory
10.4.2 Herzberg’s Two Factors Theory
10.4.3 Similarities and Distinctions between Maslows’ Need Hierarchy and Herzberg’s Two Factors
Theories
10.4.4 Theory X, Theory Y and Theory Z
5.5.5 ERG Theory
5.5.6 McClelland Theory of Need
5.5.7 Expectancy Theory
5.5.8 Porter and Lawler Theory
10.5 Managerial Approaches to Motivating Employees
10.6 Let Us Sum Up
10.7 Key Words
8.8 Terminal Questions

10.0 OBJECTIVES
After studying this unit, you should be able to :
• define the term motivation;
• describe the characteristics of motivation;
• identify different types of motivators;
• examine various theories of motivation;
• identify different types of needs and factors contributing to motivation;
• distinguish between Maslow and Herzberg’s theories of motivation;
• explain the motivational strategies suggested by Theory X,Y and Z;
• describe ERG theory of motivation;
• describe achievement motivation model;
• identify the components of expectancy theory of motivation;
• draw a model of motivation suggested by Porter and Lawler; and
• discuss various approaches of motivating employees in an organisation.

10.1 INTRODUCTION
Motivation is a psychic force that drives an individual towards goal realisation. It is a process of inducing the
individuals’ desires towards goals. Human beings derive satisfaction when goal is realised. Both financial
and non-financial factors motivate employees. Motivating employees and driving their energy towards
organisational goals have been a major question for managers. A number of theories of motivation have
emerged to answer this. These theories have focussed on different aspects of human motivation. In this
Unit, you will learn the concept of motivation and the motivators. You will further learn various theories of
motivation which help in understanding human nature and designing strategies for developing work culture
in the organisation. You will be familiarised with the managerial approaches to motivating employees.

10.2 CONCEPT OF MOTIVATION

It is a known fact that motivation is a psychological concept. It inspires a person to intensify his efforts for
the achievement of certain objectives. It motivates a person in action and induces him to continue in the
course of action enthusiastically. It is described in a number of qualitative ways. The Encyclopedia of
Management has defined motivation as the degree of readiness of an organism to pursue some designated
goal, and implies the determination of nature and locus of the forces including the degree of readiness. In
the words of Dalton E. Mc Farland, Motivation refers to the way in which urges, drives, desires, aspirations,
strivings, or needs, direct, control or explain the behaviour of human beings. Koontz and O’Donnell stated
that motivation is a general term applying to the entire class of drives, desires, needs, wishes, and similar
forces. Dubin referred motivation to the complex of forces starting and keeping a person at work in an
organisation. Motivation starts and maintains an activity along a prescribed line. Motivation is something
that makes the person to action and continues him in the course of action already initiated. These definitions
show that motivation has following characteristics.

• Motivation is an inner feeling and psychological aspect. However its reaction is physical.
• Motivation is a process. It is continuous and contains system orientation.
• It stimulates the human being to release his energy and the behaviour is directed to realise goals.
• Motivation can be positive or negative.
• It is complex. It is influenced by many variables at a time.

Motivation arises from the needs and desires of individuals. Human energy is directed towards realisation of
goals. Realisation of goals produces satisfaction and relief from tensions. This re-energises the individual
and leads to new goal formation. If the desired goal is not realised, individual gets dissatisfaction.
Dissatisfaction enhances tension. Interestingly this also re-energises the individual. Here goal strengthening
takes place and individual tries to realise the goal. If the goal is not realised, there are two possibilities. One
is that the goal displacement occurs, which leads to alternative goal formation. The second is that entirely
new goal formulation takes place. Thus, motive determines behaviour and behaviour leads to goal
realisation.

10.3 MOTIVATORS
Motivators are stimulants that drive individual into action. They are related to physical or psychological
aspects of human behaviour. Motivators are classified into financial or non-financial. They are described
below:

Financial Motivators: Financial motivators relate to money or any other benefits that can be converted or
expressed into monetary unit. In the present day context, money has become a means to satisfy the physical
needs. It is an instrument of obtaining social position and power. Thus, money became a basic incentive for
individuals. Wages, salaries, allowances, bonus, financial incentives, commission etc. are financial
motivators. These financial motivators motivate individuals to join the organisations. The financial package
should motivate the present and prospective employees.

However, it should be borne in mind that money is not an end but a means of an end. It can satisfy both
physical and safety needs. Interestingly some people place a little emphasis on money irrespective of their
possession. However, certain people are continuously driven by the desire to acquire more money even if
they have possessed wealth to satisfy their basic needs. This may be to satisfy their desire for status, esteem
and self-actualization. This reveals that money is an instrument by which a person can satisfy various types
of needs. Even research supports use of money in satisfying esteem and recognition needs too, as well as
basic physiological needs.

The above discussion makes it clear that money is a motivator. Its role in motivation is unquestionable.
However behavioural theories placed importance on non-monetary rewards and suggested that if money only
motivates, there could have been human machines and not human beings.

Non Financial Motivators: General hypothesis is that financial incentives motivate employees for higher
work. However, individuals have variety of needs that they want to satisfy while working in the
organisations. People attach more importance to socio-psychological needs that cannot be satisfied by money
alone at higher level of managerial hierarchy. Thus management provides non-financial incentives to
motivate people in the organisation in addition to the financial incentives. However, the emphasis of non-
financial incentives is to provide psychological and emotional satisfaction rather than financial satisfaction.
For example, receiving promotion in the organisation gives psychological satisfaction. This is because one
gets better status, more challenging job, authority etc., which are more worth than getting more pay by way
of promotion. Some important non-financial incentives include: status, promotion, responsibility,
recognition, job security, etc.

Check Your Progress A

1) Mention various forms of financial incentives

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10.4 THEORIES OF MOTIVATION

Motivation has been ever challenging to the managers and even to leaders who are responsible to bring
commitment of their followers towards common tasks. Motivating requires understanding human nature and
designing strategies for getting the work done. In this direction, a number of motivation theories have been
advanced. Let us learn them in detail.

10.4.1 Maslow’s Need Hierarchy Theory

Abraham Harold Maslow advocated the theory of motivation based on various needs. Maslow identified
five distinct categories of needs. He arranged these needs into a hierarchy, and stated that individuals wish
to satisfy particular need to a moderate extent, and then tries to satisfy the next need in the hierarchy.
Maslow identified human needs into five distinct categories. They are arranged in the order of their
importance forming a hierarchy. Look at Figure 10.1 which shows five distinct categories needs.
 Figure 10. 1 : Maslows’ Need Hierarchy

SelfActualization Needs
Self-esteem Needs
Social Needs or Belonging and love and affection needs
Security Needs
Physiological Need or Basic Needs

According to Maslow, certain concepts are relevant for understanding the needs. They are pre-potency,
deprivation, domination, gratification and activation. Pre-potency is the strength associated with the needs.
Physiological needs have greater pre-potency. Deprivation is the perception of an obstacle for satisfaction of
a need. Thus, deprived need has high pre-potency. Domination is attaching importance to a need. A
deprived need dominates the individual. In order to reduce dissonance associated with the deprivation,
individuals try to gratify by undertaking some action. Therefore, gratification is the satisfaction of the need.
Gratified need does not dominate. At the end, activation of need determine motivation. Need satisfaction
activates the needs from one level to next higher levels. Maslow believes that these repeat as a cycle until
the highest level need is satisfied. Based on the concept Maslow identified five categories of needs and their
role in motivating individuals. They are described below:

1) Physiological Needs: Basic and primary needs required for human existence are physiological
needs. They relate to biological and are required for preservation of basic human life. These needs are
identified to the human organ in the body. They are finite needs. They must be satisfied repeatedly until
human beings die. They are not associated with money alone. They are hunger, thirst, sleep, shelter,
sex, and other bodily needs. The proposition relating to the basic needs is that they are primary
motivators to any individual and once they are satisfied, they no longer motivate. The next level need
becomes important for satisfaction until the basic need is dormant. Provision of adequate monetary
rewards to satisfy these needs motivate employees in organisations.

2) Safety Needs: Individuals seek protection from natural environment, biological danger, economic
deprivation and emotional threat from other beings and animals. For this purpose, he wishes security for
himself. The protection may be in the form of seeking a shelter and forming into primary groups to
combat threat from the natural beings. The motivational proposition are that the safety needs dominate
as soon as physiological needs are satisfied, and after individual seeks to satisfy fairly the security needs
they do not motivate him. In order to motivate employees, organisations provide fringe benefits, health
and accident insurance, housing loans, etc.

3) Social Needs: Basically individual is a social being. He cannot live in isolation and silence. Thus, he
intends to establish relationship with other human beings and some times wish to rear animals. Social
needs emerge from the basic urge of individuals to associate, belong with others, make friendship, make
companionship, desire to be accepted by others and seek affection. These needs are secondary in nature.
The propositions relating to social needs are that these needs are satisfied by symbolic behaviour and
through physic and psychic contact with others in the society. They are substantially infinite and exist
until the end of human life. Organisations should provide scope for formation of informal groups,
encourage working in teams, and provide scope for interpersonal communication, interpersonal
relationships and interpersonal understanding to motivate employees.

4) Esteem Needs: Maslow believes that people seek growth. They have natural desire to be identified
and respected by others. This instinct is called as esteem. Esteem needs are associated with self-esteem
and esteem from others. The need for power, self respect, autonomy, self confidence, achievement,
recognition of competence, knowledge, desire to have freedom, status and secure attention of others,
appreciation are some of the esteem needs individual wishes to satisfy. Maslow identified them, as
 higher order needs. The nature of esteem needs is that they are dormant until basic, security and social
needs are fairly satisfied. Satisfaction of esteem needs produce a feeling of self-confidence, strength,
capability and adequacy in the individuals.

5) Self-actualization Needs: Self-actualization is transformation of perception and dream into reality.

Individuals have inner potential to do some thing different from others. Realising the full inner potential,
one wishes to become what he is capable of becoming. Attaining to the level of fulfilment of self-
actualization needs is a difficult task as individuals are not clear about their inner potentials until an
opportunity is perceived. Moreover these needs change with a change in human life. The intensity of
self-actualization changes over life cycle, vary from person to person and environment.

The following propositions are made about the motivation of individuals based on the Maslow hierarchy of
needs.
i) Five needs are classified into lower order needs and higher order needs. While physiological, safety
and security needs are lower order needs, esteem and self actualization needs are higher order needs.
ii) Lower order needs are satisfied externally and higher needs are satisfied internally.
iii) Individuals start satisfying lower order needs first and proceed to satisfy higher order needs later.
iv) No need is fully satisfied during the life period of individuals. A need substantially satisfied no
longer motivates.
v) A need when substantially satisfied produces satisfaction and it becomes dormant. Immediately the
next level need becomes active. So Individual is continuously motivated to satisfy unsatisfied needs. So,
motivation is a continuous process.
vi) Satisfaction of lower order needs does not produce contentment. In fact, they produce
discontentment to satisfy other needs.
vii) Not all individuals have the same priority to satisfy the needs. Priorities differ from country to
country and from situation to situation.
viii) Individuals are aggressive in the satisfaction of basic needs and unconsciousness demands the
satisfaction. However, they use social consciousness in the satisfaction of other needs.
Maslow’s need hierarchy theory of motivation was considered logical and simple to understand human
motivation. The theory has received attention of practicing managers as they feel that identification of needs
of employees provides an insight to motivate them. This theory suggested that giving same reward more than
individuals’ desire will have diminishing marginal utility. This has specific significance to the practicing
manager.

Check Your Progress B

1) List the motivational propositions of Maslow model.

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2) Mention the characteristics of general and organisational context of Maslow’s needs from your
experience.

Needs General context Organisational context

10.4.2 Herzberg’s Two Factors Theory

Herzberg identified two sets of distinct factors. They are known as intrinsic factors and extrinsic factors.
Intrinsic factors exist within the job. They relate to the job content. They occur at the time of performing the
job. They relate to the positive feeling about the job. Thus, they provide job satisfaction. Hence, they provide
strong motivation. They are called motivational factors. These factors are needed to keep high levels of job
satisfaction and job performance.

Extrinsic factors are external to the job. They are hygiene factors or maintenance factors. They are related to
the conditions under which job is performed. Therefore, they are environmental centred. They relate to the
job context. They occur after the work is completed. They are identified as job dissatisfiers and are
associated with the negative feeling of the employees. They do not provide any growth in the productivity of
the employee. Therefore, they provide no motivation. This is the reason that the theory is also known as two
factors or duel factor theory. It is also called as motivation-hygiene theory.

The central concept of the theory is that factors which contribute to the job satisfaction are motivators and
the factors contributing to job dissatisfaction are hygiene factors which do not provide any motivation.
Existence of hygiene factors only prevent employees being dissatisfied. Thus, managers eliminating these
factors only make the employees satisfied in the job. Therefore, it is suggested that managers should
concentrate on the motivators than the hygiene factors.

Herzberg’s theory also received considerable attention because of the identification of the factors that are
needed to motivate employees. It suggested that environment is also important factor in deciding the
motivation of employees. The theory was appreciated on the ground that it suggested to identify the factors
causing boredom and monotony in the job. It also suggested that managers should eliminate the factors of
boredom in order to motivate the employees. In addition, redesigning the jobs by providing an opportunity
for sense of achievement, advancement, growth and personal development motivate them further. The factors
identified by Herzberg are shown in Figure 10.2.

Figure 10.2 : Herzberg’s Two Factors

Hygiene Factors: The job context factors that are environmental centered. Motivational
Factors: Internal factors that relate to job content.

Company policy and administrationSupervisionRelationship with SuperiorWork

conditionsSalaryRelationship with peersPersonal lifeRelationship with subordinatesStatusSecurity
AchievementRecognitionWork itselfResponsibilityAdvancementGrowth

Presence Help in preventing dissatisfaction Leads to satisfaction and motivation

Absence Increases dissatisfaction Prevents both satisfaction and motivation

10.4.3 Similarities and Distinctions between Maslows’ Need Hierarchy and Herzberg’s Two
Factors Theories

Maslow’s theory of need hierarchy and Herzberg’s two-factors theories are similar and dissimilar in certain
respects.

Similarities: The following points of similarities are observed in both theories.

Nature of Motivation: Maslow and Herzberg’s theories have identified that motivation is a process and it
results in to performance.

Human Needs: Both the theories have considered the totality of needs. Herzberg considered certain needs
as motivators. Maslow considered the same needs as esteem and self-actualization.

Behaviour: Both theories have considered that needs determine motivation and motivation determines the
behaviour of individuals.
The similarity of needs in Maslow and Herzberg are depicted in Figure 10.3

Figure 10.3 : Similarity of Maslow & Herzberg’s Need

Self
Actualization

Esteem

Social

Security

Physiological

Look at Table 10.1 which shows distinction between Maslow and Herzberg’s theories.

Table 10.1 Distinction between Maslow’s and Hergberg’s Theories

Differences Maslow’s Need Hierarchy Herzberg’s Two Factors Theory

Nature Descriptive Prescriptive
Arrangement of Needs Sequential arrangement No sequential arrangement
Classification Higher order and Lower Order needs Hygiene and Motivators
Relationship Unsatisfied need causes behaviour and behaviour causes performance. S a t i s f i e d
need causes performance
Motivation Satisfied need is not a motivator. Higher order needs are
motivators
Financial factors Pay and financial benefits are motivators. Financial benefits are not
motivators
Applicability Macro view and applicable to general motivation. Considers micro view
and applicable to work motivation
Relevance All individuals White collar and professional workers
Both the theories of motivation provide a basic framework for understanding human motivation. The theories
are relevant in work group settings. However, the theories have not considered individual differences.
10.4.4 Theory X, Theory Y and Theory Z

Douglas McGregor is the pioneer of theory X and theory Y. He explains the pre-dispositions or attitudes
toward people in organisations. These theories explain the nature of human beings and the relevant
motivational style of the leader to put them into action for the purpose of realisation of organisational
objectives. Theory X is the conventional approach to understand motivation. It is based on traditional
assumptions about the nature of people.

The theory, explains that management is responsible for providing facilities to the members of the
organisation; direct them to get the work done with active intervention. This is because average human
beings are indolent, prefers to avoid responsibility and resists changes and he wants to be led by others.
Hence, without intervention of management, people would be passive and indifferent towards organisational
goals. This theory explains that money, fringe benefits, threats and punishment motivate people. The theory
states that traditional division of work, specialisation, strict rules and regulations, multi-layered
communication system develops the organisation structure. This results in communication blocks,
distortions and negative morale of the people.

Motivational implications of McGregor Theories

According to theory ‘x’ superior sets objectives for subordinates and there will be a little participation of the
subordinates in setting objectives and plans. Hence, there is low commitment towards the plans. The
organisation structure is developed on traditional lines of hierarchical structure, communication channels,
centralised decision making, specialisation etc., Leadership is autocratic and communication is one way
upward. There will be little feed back. The superior acts as a judge for controlling the performance. The
primary process will be to find fault and give punishments. Therefore motivation is through threats and
punishments and it is purely monetary.

This theory was criticised on the ground that it is based on faculty assumptions and misconceptions of
human nature. Accepting the critics McGregor developed theory ‘y’ based on the human relations approach
developed by Hawthorne studies.

According to theory ‘y’ subordinates are allowed to participate and explore alternatives in the development
of plans and objectives. This enables superior and subordinate to set objectives and plans jointly resulting
into high motivation and commitment to objectives and plans. Organisation structure is developed on human
relations and emphasizes human needs. Leadership is democratic, participative and communication is two-
way. So, individual feel responsibility, accountability and committed to perform well due to positive
motivation. There is high trust in appraisal of performance. People try to learn from past experience. The
system of feed forward control emphasizes problem solving. Thus, the motivation is positive and mostly non-
financial.

Theory Z

Theory Z has received considerable attention as a theory of motivation in the recent years. It has originated
from Japanese management philosophy. Japanese management is characterised by the optimum use of
human energy. Some other notable features of Japanese organisations are : increase in productivity, lower
rates of absenteeism and turnover and high degree of organisational commitment. William Ouchi and Alfred
Jaeger have propounded the theory.
William Ouchi made an integration of characteristics of American organisations ‘Type A’ and Japanese
organisations ‘Type J’. The integrated theory is known as theory Z. The characteristics of the organisations
are presented in Table 10.2.
Table 10.2 : Integration of Characteristics

Characteristics Type AOrganisations(American) Type Jorganisations(Japanese)

Theory Z
Decision Making Individual managers make decisions Group decision making Emphasis
on group participation and consensus
Responsibility Assigned on individual basis Shared collectively by the group
Assigned on an individual basis
Control Explicit and formal controls Implicit and informal control. Based on
trust and good will Attention on informal controls and existence of explicit performance measures
Performance evaluation and promotion of personnel Very fast promotions. Job hopping
Very slow promotions. Slower promotions. Emphasis on evaluation and training than promotion
Career paths Very specialised career. People stick to one area of specialisation. Very general.
Employees are allowed to learn all areas of operations. Very general. Job rotation and broad-based
training is given to feel that they are suitable in part of the organisation.
Concern for personnel Concerned with work life Concerned with whole life, business and
social Concern for workers whole life

Some specific characteristics of theory Z are as follows:

i) Selection, Compensation and Promotions: Selection of employees is considerably for a long time. The
sources of selections are schools, institutions and other organisations. People of all ages are
selected. Selections are based on job related formal education and specialised skills. Promotions are
based on the productivity performance.

ii) Organisation Structure: The organisation structure is hierarchical. It emphasizes on moderate job
specialisaton and decentralisation, job enlargement, quality circles and matrix form of organisation.
Organisations are built around groups.

iii) Decision-Making: Decision making is less centralised. Emphasis is on the informal and consensus
opinion. Verbal communication is encouraged. Written communication is used only to verify
execution of decisions.

iv) Management Systems: Management tries to harmonise individual and organisational goals to achieve a
high degree of goal congruence. Employees are considered as valuable assets. Employees show
inherent liking to work and supervision is remote. Self-controls are exercised.

v) Employee Relationships: High concern is shown to employee and his welfare. Relationships are
paternalistic type. Employment is lifetime. Joint problem solving is followed by employer and
employee.
vi) Human Resources Development: Potential skills are recognised. Job enlargement and career planning
are given due emphasis. Organisational socialisation, technical training, research and development
are given priority.

Thus theory Z advocates establishment of motivational oriented organisational cultures with special
emphasis on employee development and participative culture.

Check Your Progress C

1) List the motivational implications of theory x and theory y.

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2) Distinguish between the characteristics of American and Japanese organisations.

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3) Mention the characteristics relating to organisation structure, management, motivation, controls,

leadership styles, decision making and communication in the following theories of motivation.

Theory X Theory Y Theory Z

10.4.5 ERG Theory

Clayton Alderfer propounded ERG theory of motivation. The theory is an out growth of Maslow and
Herzberg’s motivation theories. ERG theory is based on the concepts of existence needs, related needs and
growth needs used in the model. The model assumes the following assumptions.
Assumptions
• Needs are classified into distinct categories.
• Basic distinction exists between lower and higher order needs.
• Needs proceed on a continuum rather than a hierarchy.
• Poorly satisfied need is more desired.
• Desire for satisfaction of higher order needs arise after lower level needs are satisfied.
• Motivation arises out of need frustration.
• More than one need motivate an individual.

The ERG theory has identified the needs into following three categories.

i) Existence Needs: Existence needs relate to the basic survival of human beings. They are similar to
the physiological and safety needs suggested by Maslow. Monetary rewards, working conditions, job
security, incentives are some of the examples of existence needs.

ii) Related Needs: individual has a natural desire to develop social relationships. He wishes to belong
with others and develop friendship and warmth relationships. He gives importance to interpersonal
belongingness. He wants to identify and get recognition for himself. These needs are related needs.
These needs are similar to social and esteem needs enunciated by Maslow.
iii) Growth Needs: Individual has an intrinsic desire to grow in organisational career and in his personal
life. He wishes to grow beyond his potential and learn new skills and capabilities. These are growth
needs. They are similar to self-actualization needs suggested by Maslow.

According to ERG theory, all the three needs may operate simultaneously. The theory propounded a new
dimension known as ‘frustration regression’. Accordingly, a person tries to satisfy a lower order need, if he
is frustrated with satisfaction of a higher order need. Therefore, unsatisfied higher order need brings back to
lower order need. Thus, The concept of need satisfaction arising out of frustration is the basic concept of
ERG theory. The theory made the following propositions:

• Individual intends to satisfy a need, when he feels deprived of satisfying it. Therefore, deprivation is
motivation.
• Needs are not satisfied in an order as suggested by Maslow. For example, an employee may have strong
desire to occupy a higher position because of his higher qualification, even before he satisfied basic
needs.
• Two relationships are important to understand motivation. One is relationship between satisfaction and
motivation and the second is the relationship between frustration and motivation. An example makes this
clear. Giving promotion motivates an employee who has been deprived of promotion. This is motivation
from frustration. Having promoted, employee will be motivated towards unsatisfied need. As such he
works hard to realise his potential to get the next promotion.

ERG theory is applicable to work motivation. The theory has been considered workable and realistic. This
approach provides a clear understanding of human behaviour by recognising individual differences. The
theory lacks adequate empirical research support. It was questioned on the universal applicability.

Check Your Progress D

1) List the assumptions and proposition of ERG theory.

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2) Mention the similarities and dissimilarities in the needs stated in the following theories.

Need Hierarchy Theory Two Factors Theory ERG Theory

10.4.6 McClelland Theory of Need

David C McClelland advocated achievement motivation theory. It is also known, as three needs theory. Let
us learn them in detail.

i) Need for Achievement: It is the desire to excel, to achieve in relation to a set of standards.
According to the theory, certain people have inner urge to succeed and do something different from
others. This is achievement goal. Thus, employees possessing an inner desire to achieve derive
satisfaction from achieving goals. Therefore, challenging goals become motivators. People with high
need for achievement are high achievers. The characteristics of high achievers are as follows:

• Monetary rewards do not motivate high achievers.

 • High achievers create situations in which they can attain personal responsibility for finding solutions
to problems.
• They always set moderately challenging goals in order to prevent dissatisfaction. At the same time,
they are not satisfied with easy tasks.
• High achievers do not depend on chance. They assume responsibility.
• They are willing to work independently. They wish to establish relationship between their effort and
success.
• They always wish to overcome the difficulties by themselves.

According to McClelland need for achievement does not spring from individuals internally. It can be
developed and learnt. The theory suggested certain techniques for enhancing achievement motivation.
They are described below:

Feedback: Feedback is the process of providing information to the employees. Regular comments on the
employee’s performance enable them to assess their performance and learn from their mistakes. This helps
them to set challenging goals.

Model Building: Employees who are high achievers can be shown as models.
Employees attaining challenging goals are selected and their characteristics are told to others. This allows
other employees to emulate the characteristics of the model employees. This provides an opportunity to
develop high achievement oriented goals.

Job Redesign: One way to develop achievement motivation is to redesign the tasks by adding additional
responsibility and setting challenging goals. If jobs are very easy to achieve, employees do not feel
motivated. Similarly, employees who are unable to attain difficult jobs feel frustration and de-motivation.
Therefore, jobs should be designed to provide moderately challenging goals. In addition, jobs should be
made independent. Therefore, employees feel autonomy in realisation of goals. The job should be
redesigned in such a way that the outcome of the job is measurable and employee’s contribution is
identifiable. This provides contentment to the employees.

Attitude Change Management: Since, McClelland states that achievement motivation can be taught.
Employees’ attitude should be changed to think positively, innovative and imaginative. This enhances their
achievement motivation.

Measurable Outcomes: As you know that high achievers believe in personal success. They wish that
outcomes should be measurable and identifiable to their individual performance. This provides identity to
employee’s skills and performance which leads to achievement motivation.

Therefore, the theory stated that enhancing employee’s achievement potentials could motivate them. At the
same time, McClelland stated that need for power and need for affiliation influence motivation.

ii) Need for Power: Certain people derive satisfaction by exercising control over others. They believe
that they have ability to control others. They desire that means to achieve goals should be related to the
exercise of power. The individuals with high need for power prefer competitive and status oriented
situations.

iii) Need for Affiliation: It is the desire for friendly and close interpersonal relationships. McClelland
suggested that need for affiliation is based on the concept of belongingness needs advocated by Maslow.
 Affiliation oriented individual’s exhibit high preferences towards inter-personal relationships, establish
psychological contact with others and crave for social acceptance. They always strive for friendship and
prefer cooperative situations. They desire relationships involving high degree of mutual understanding.

Therefore, the theory states that a relationship oriented climate, inter personal understanding and inter
personal communication develops motivation. Some of the propositions of the theory derived from
experimental research can be stated as follows:
• High achievers will be strongly motivated when they find the job offering personal responsibility,
feedback and moderate degree of risk in achieving goals.
• High achievement motivation leads to success in entrepreneurial careers. They are successful in
running their own business.
• Managers with high achievement needs are not successful managers in large organisations. They are
best suited to perform the jobs independently. According to McClelland, the two essential
ingredients of managerial success, especially at the higher levels in an organisation are emotional
maturity and a democratic coaching style of managers.
• Need for affiliation and need for power is closely related. Successful managers possess high need
for power and low need for affiliation.
• High power motive is a requirement for managerial success.
• As individuals climb higher in the hierarchy, their need for power increases.
• Training can stimulate achievement need in employees.
• Individuals are motivated to succeed, and this motivation stems from achievement or power needs.
Thus, it is important for an individual to believe that his effort will result in successful performance
which brings reward.

Achievement motivation theory propounded by McClelland has been considered as more practicable theory
than Maslow and Herzberg’s theories. The concept of overlapping needs has significance for organisations
in designing motivational strategies. Similarly recognising that achievement needs could be created through
training has brought new dimension in managerial motivation.

10.4.7 Expectancy Theory

Victor Vroom propounded Expectancy theory to explain motivation. It is a process theory. It explains that
motivation is a process of eliciting a positive satisfaction. The central concept of the theory is that individual
is motivated and the strength of his action depends on close association between his preference to a specific
outcome and the actual outcome. He stated that motivational force is the sum of the product of valence and
expectancy. The theory established relationship between effort, performance and rewards. They are
explained hereunder:

i) Effort-Performance Relationship: It is the probability perceived by the individual that exerting a

given amount of effort leads to performance.
ii) Performance-Reward Relationship: This is the degree to which the individual believes that
performing at a particular level will lead to the attainment of a desired outcome.
iii) Rewards-Personal Goals Relationship: It is the degree to which organisational rewards satisfy an
individual’s personal goals or needs and the attractiveness of those potential rewards for the individuals
These three relationships are referred to valence, instrumentality and expectancy. Thus, the theory is also
known as VIE theory of motivation. The concepts used in the theory are explained below:

Valence: Valence is the strength of an individual’s preference for a particular outcome. Every individual
believes that his effort leads to certain definite outcome. This is expected utility or value. The greater the
strength or the expectation of the outcome the greater would be the level of motivation. For instance, if an
employee believes that working hard and producing better leads to payment of bonus, he will work hard to
get more bonus. Thus, valence can be positive or negative. It is positive when employee has a strong
preference to reward. It will be zero if he is indifferent. Similarly, it will be negative if employee does not
prefer to attain the outcome.

Instrumentality: Instrumentality refers to the strength of the belief about the certainty of outcome. Thus, it
is the expression of probability between performance and reward. This varies between ± 1. The
performance reward relationship is positive, in case of positive instrumentality and vice versa. Employee
tries to estimate the probability about the reward associated with performance. For example, instrumentality
is high when employee feels certainty of bonus. If he is doubtful about the payment of bonus,
instrumentality will be low.

Expectancy: Expectancy is the belief that effort will lead to outcome and performance. Therefore,
expectancy determines the strength of performance rather than the outcome. It is based on the self-efficacy.
Employee with a high level of self-efficacy are more likely to believe that exerting effort will result in
satisfactory performance. A high level of self-efficacy has high expectancy, while low level of self-efficacy
has low expectancy. Persons suffering from low level of self-efficacy exhibit a phenomenon known as
‘imposter phenomenon’. This means that individuals are capable, as they appear to be. They are afraid of
their inferiority, which may be revealed in public if they exert high effort. Imposters have low expectancy, as
they believe that they lack the necessary competence. Expectancy is evaluated as a probability. It varies
from 0 to 1. Zero is associated with complete uncertainty. As the performance is assured the expectancy
rises and it will be high if the performance is certain. It is interesting to note that both internal and external
environment influence expectancy. Other factors influencing expectancy are: personality, self-efficacy,
experience, learning and perception. Thus, motivation is also influenced by these factors.

Thus according to expectancy theory, motivation is the result of the sum of the products of valence,
instrumentality and expectancy. It can be stated in the form of the following mathematical formula.

Motivation = Σ( Valence X Instrumentality X Expectancy)

It should be observed here that all the variables are multiplicative in nature. They are not additive.
Therefore, the following propositions can be made.

• Motivation is positive only when all variables are positive.

• Motivation is negative when all or any one of the variables is negative.
• Motivation is zero even when any one of the variables is zero.
• Motivation is also low even when any one of the variables is low.

The relationship among various variables in the expectancy model and the impact on motivation can be
shown in Table 10.3.

Table 10.3 : The Level of Motivation

Valence Instrumentality Expectancy Motivation

High High High Strong motivation
Low High High Moderate motivation
High Low High Strong avoidance
Low Low High Moderate avoidance
High High Low Moderate motivation
Low High Low Weak avoidance
High Low Low Moderate avoidance
Low Low Low Strong avoidance

Expectancy theory has brought new dimensions to understand motivation. Managers can motivate
employees by manipulating any one of the factors in a positive way and avoiding negative ways. However,
expectancy theory has introduced complex and critical variables, hence its understanding is difficult.

Check Your Progress E

1) Write the four proposition of Expectancy theory.

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2) Mention the mathematical characteristics of valence, instrumentality and expectancy.

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10.4.8 Porter and Lawler Theory

Porter and Lawler have developed more comprehensive model of motivation. This theory is also known as
performance-satisfaction theory of motivation. The model of motivation emerges based on the assumptions
of content theories of motivation. The content theories have assumed that satisfaction leads to performance
and dissatisfaction limits the performance of individuals. Porter and Lawler model is an out growth of Victor
Vrooms’ model of motivation. The assumptions of Porter and Lawler model of motivation are as follows:

Assumptions
• Motivation is not equal to satisfaction or performance.
• Motivation, satisfaction and performance are independent variables but there exists some relationship.
• The relationships between motivation and satisfaction can be expressed diagrammatically rather than
mathematically.
• More than valence and expectancy, some more variables and the cognitive process play a major role in
determining the motivation.

Motivation model suggested by Porter and Lawler is a multi-variable model and explains the complex of
relationship among motivation, performance and satisfaction. According to the model, motivation is the
result of effort when abilities, traits and role perceptions accompany it. Rewards and the perception of
rewards determine satisfaction of an individual. Thus, Porter and Lawler model is concerned about the result
of performance. It suggested that performance leads to satisfaction.

The concepts of the model are described below:

Value of Rewards: Individual evaluates the reward that he is likely to receive after the performance of a task.
The value can be expressed in monetary terms or non-monetary terms.

Perceived Effort Reward Probability: Individuals place a probability of the reward for the effort. The
perception determines the effort. If individual perceives greater probability for the reward, his effort will be
greater.

Effort: It is the effort individual intended to put in relation to the rewards perceived by him.

Abilities and Traits: Individual’s effort depends on his intrinsic ability and the characteristic traits possessed
by him.

Role Perception: Role is the expected way of behaviour of an individual. The way he perceives his role in
the organisation determines his motivation.

Performance: It is related to the accomplishment of tasks or achieving the goals. Individuals who are
properly motivated show greater performance.

Intrinsic Rewards: The reward that comes within the job is called intrinsic reward. It is received when the
job is performed. Recognition, esteem, responsibility etc. are intrinsic rewards.

Extrinsic Rewards: The rewards that are received after the job is completed is known as extrinsic rewards.
For instance, salary, fringe benefits, incentives are some of the examples for extrinsic rewards.

Perceived Equitable Rewards: Individuals’ feeling that the reward is fair and equitable to the effort
determines the individuals’ willingness to put forward his effort. A positive perception about the fairness of
reward leads to greater effort and vice-versa.

Satisfaction: This is the outcome of the process. It is the degree of contentment that individual feels about
the job. Satisfaction is an intangible aspect. It can only be measured in terms of expressions and emotions.
If individual is satisfied, he will show greater performance on the job.

This model suggests that the organisation should evaluate and redesign the policies relating to the
motivation. It also suggests that the level of satisfaction and level of performance are to be related to elicit
greater performance on the job. Thus, the model is considered to have greater impact in understanding the
relationship between performance and satisfaction. The model suggests the following guidelines for
motivating the employees.
i) Job Placement: Individuals’ abilities and personality traits should be matched with the requirements of
the job. A best fit between perceived attitudes and the job provides best motivation. Thus, the principle
of right person in the right job should be followed. A misfit de-motivates the employees.

ii) Job Role Specification: Organisations should provide clear communication to clarify the roles of
employees. It should be ensured that the employees have clearly understood their jobs, responsibilities,
rewards and outcomes. The expectations of the organisation should be communicated to the employees
in a clear and unambiguous manner.

iii) Job Rewards: Employees should be made clear about the rewards they will receive from the
completion of the job. They should also value these rewards and perceive that the rewards are beneficial
to them.
Apart from these, the following suggestion would also help the managers in motivating the employees. These
suggestions are related to the relationship between motivation and performance and performance and
satisfaction. They are depticed in Table 10.4.
Table 10.4 : Relationship between Performance and Satisfaction

Relationship between motivation and satisfaction Relationship between

Performance and satisfaction
• Clarify all doubts about ability, skill or knowledge• Remove
ambiguity in the job requirement• Provide interdependence of the job with other people or
activities• Clarify physical or practical possibility of the job • Determine
the rewards that each employee values• Define the desired
performance• Make the desired performance attainable• Link valued rewards and
performance
Check Your Progress F

1) List the variables in Porter and Lawler motivation model.

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10.5 MANAGERIAL APPROACHES TO MOTIVATING EMPLOYEES

You have learnt the concept of motivation and various theories of motivation. The environmental factors and
other considerations influence the application of motivational strategies. There are variations across
organisations and individuals in the application of motivation. Even within the organisation, there are
variations at different levels in the managerial hierarchy. The commonly used approaches to motivate
employees are discussed below :

Money is a Powerful Motivator: Money is a powerful motivator even in the modern day society. It is
believed that social status, position, power, prestige, recognition etc. are associated with money. Employees
receiving higher salary can lead luxurious life and commands respect from society. Organisations use
financial incentives to motivate employees. Some of the financial approaches to motivate employees include
: variable pay packages, piece rate plans, incentives based on the performance, profit sharing plan, gain
sharing schemes, skill based incentive schemes, and knowledge based financial incentive plans and flexible
benefits.

Job Re-design: Job redesign is one of the strategies to motivate employees in organisations. Some job
redesign techniques include : job enlargement, job enrichment and job rotation. Job enlargement is adding
more tasks and job responsibilities. Thus, providing an opportunity to employees to spend more time on the
job and still feel comfortable. Job enlargement motivates employees as they are allowed to perform variety
of tasks. The work modules are made meaningful. Job redesign allows scope for utilisation of abilities and
provides feedback. Job enrichment is enriching the jobs by adding motivators such as challenging goals,
creativity and innovative process, making it more exciting and incorporating growth opportunities in the job.
This motivates employees and provides satisfaction. Job rotation is another strategy. It involves changing the
employees from one job to another job.

Involvement of Employees : Participation in management decisions have been proved as an effective way
of motivating employees. Participation allows employees to express their views. It helps in developing
greater communication among superiors and subordinates. Employees develop a feeling that their suggestion
is accepted in the process of decision making. It improves acceptance of decisions and acts as a motivating
force. Some commonly used participation schemes are allowing representative participation, quality circles
and employee ownership plans commonly known as Employee Stock Option Plan. (ESOP)

Quality of Work Life (QWL): Quality of work life is relatively new concept that received attention of the
managers today. It has different meaning to different people. As a motivation technique it includes :
provision of adequate and fair compensation and safe and healthy work environment, continuous effort of
employees development, provision of growth potentials in the job, protecting self esteem, creating a sense of
identity, up-keeping self respect, equity and dignity of employees and integration of job with family life.

Management by Objectives (MBO): Management by objectives is technique of allowing setting the goals
by participation and actively involving manager and subordinates at every level. This allows them to feel
personal responsibility and a sense of achievement.

Performance Appraisal: Performance appraisal is a technique of assessing the employee performance at

regular and continuous intervals in order to appraise their abilities. It helps in appraising the merits and
deficiencies of employees performance. This appraisal suggests feedback to employees and they are
allowed to overcome their deficiencies.

Check Your Progress G

1) Enumerate the techniques for enhancing achievement motivation.

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2) What do you mean by need for affiliation?

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3) How employee’s involvement motivates the employees.

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4) How quality of work life motivates the employees.

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10.6 LET US SUM UP

Motivation is defined as an act of stimulating someone to secure commitment towards a desired course of
action. Motivators are those inducements, which make the individual direct his energy. As motivation is a
complex process, its understanding is a difficult task. For the purpose of understanding the motivation, a
number of theories have been proposed. Maslow propounded need hierarchy theory of motivation. He has
classified needs as basic needs, safety needs, social needs, esteem needs and self-actualization needs.
According to him, motivation comes from unsatisfied need. Fredrick Herzberg found that two factors
determine motivation and satisfaction of employees. He has identified hygiene and motivational factors.
The company policy and administration, supervision, relationship with superior, work conditions, salary,
relationship with peers, personal life, relationship with subordinates, status and security are hygiene factors,
achievement, recognition, work itself, responsibility, advancement and growth are motivators. According to
the theory hygiene factors prevent dissatisfaction and motivators alone help in motivating employees.
McGregor formulated certain assumptions about human nature and suggested theory X and theory Y. Theory
X assumes that average human being dislikes work. Hence, coercion, financial rewards, punishments
motivate him. Inculcating a sense of belongingness and self-control can motivate employees as theory Y
assumes that average human being learns to accept responsibility. William Ouchi tried to integrate the
characteristics of American and Japanese organisations and formulated Z theory. The theory identified
distinctions between American and Japanese organisations with respect to decision making, assumption of
responsibility, exercise of control, promotion opportunities, career paths and concern for personnel. The
ERG theory focuses on existence needs, relatedness needs and growth needs.

Achievement motivation theory advocated by McClelland is a break through in motivation. The theory
believed that achievement motivation can be taught and learnt. The theory also identified three needs. They
are need for achievement, need for power and need for affiliation. The theory states that achievement can be
enhanced with the help of feedback, model building, job redesign, change of attitude and determining
measurable outcomes. According to the theory managers should motivate their subordinates by manipulating
relationship between motivation and satisfaction and relationship between performance and satisfaction. The
expectancy theory advocates that the motivation is the result of the products of valence, instrumentality &
expectancy. Porter and Lawler theory explains the complex of relationships among motivation, performance
and satisfaction.

The strategies of motivating employees include : money, incentives, flexible benefits, job redesign, job
enlargement, job enrichment, job rotation, and participation, quality of work life, MBO and regular
performance appraisals.

10.7 KEY WORDS

Achievement Goal: Need to excel and attain challenging goals.
ESOP: Employee Stock Option Plan in which employees are given option to take equity stock in the
company in lieu of monetary incentive.
Esteem: Desire to be recognised by others in the group.
Existence Needs: Needs related to the basic survival of human being.
Expectancy: The belief that effort leads to outcome and performance.
Expectancy Motivation: The sum of the product of valence, instrumentality and expectancy.
Frustration Regression: Tendency to go back to satisfy lower order needs with the deprivation of satisfying
higher order needs.
Hygiene factors: Job context factors, which are environmental centred that cause satisfaction.
Instrumentality: The strength of the belief of the certainty of outcome.
Job security: Feeling that job is secured and permanent.
Motivation: A process of stimulating one’s desire to produce goal directed response.
Non-financial motivators: Stimulants that appeal to individuals’ psychological and emotional appeal.
Pre-potency: The strength associated with the needs.
QWL: Quality of Work Life is redesigning of all aspects of work and environment to upkeep the dignity of
the employee.
Self-actualization: transformation of perception into reality by realising the full potential.
Valence: Strength of an individual preference for a particular outcome.
8.8 TERMINAL QUESTIONS
1) ‘Non-financial motivators play a significant role in motivation’ . Discuss. What are the limitations
of financial motivators.
2) Critically examine the need hierarchy theory of motivation. Do you think that the assumptions
of Maslow are hypothetical?
3) Distinguish between hygiene factors and motivators. Examine the applicability of two factors
theory in Indian context.
4) Bring out the similarities and distinctions between Maslow and Herzberg’s theories of
motivation.
5) ‘Theory X and Theory Y are dialectically opposite in their assumptions about the pre-
dispositions of the individuals’. Discuss.
6) What are the characteristics of high achievers? What are the strategies of enhancing
achievement motivation.
7) Critically evaluate the need for achievement theory of motivation.

Note : These questions will help you to understand the unit better. Try to write answers for them. Do
not submit your answers to the university for assessment. These are for your practice only.
Achievement
Recognition
Work itself
Responsibility
Advancement

Inter personal relations

Company policy and administration

Working conditions
Supervision
Job security
Salary
UNIT 11 JOB DESIGN AND JOB SATISFACTION
Structure

11.0 Objectives
1.1 Introduction
1.2 Job Design
1.3 Factors of Job Design
1.4 Models of Job Design
11.5 Job Re-design
1.1.1 Job Enrichment
1.1.2 Job Enlargement
1.1.3 Job Rotation
1.1.4 Job Reengineering
1.2 Concept of Job Satisfaction
1.3 Determinants of Job Satisfaction
1.3.1 Organisational Determinants
1.3.2 Personal Determinants
1.4 Measurement of Job Satisfaction
1.5 Let Us Sum Up
1.6 Key Words
1.7 Terminal Questions

11.0OBJECTIVES
After studying this unit, you should be able to :
• explain the meaning of job design;
• analyse the importance of job design in modern organisations;
• identify different factors of job design ;
• describe models of job design;
• distinguish between job enrichment and job enlargement;
• describe the concept of job rotation and job reengineering;
• explain the factors of job reengineering;
• define job satisfaction;
• describe the determinants of job satisfaction;
• examine various methods of job satisfaction; and
• examine the impact of job satisfaction on organisational and individual performance.

11.1 INTRODUCTION
Modern organisations are highly complex and competitive. In order to attain the objectives, organisation
structures are created and maintained. Organisation structure consists of jobs and tasks. The design of jobs
and tasks is essential to direct the human energy in a proper manner. Job design is structuring of the jobs
suitable to the realisation of organisational objectives. It includes instructions, detailing of tasks and
clarifying the roles. A properly designed job motivates the employees. Interestingly designing the jobs is not
an easy task. A number of internal and external factors influence the process of job design. In this unit,
you will learn the meaning, importance and models of job design. You will be exposed to the concept of job
enrichment, job enlargement, job rotation and job reengineering. You will further learn the concept,
determinants and measurement of job satisfaction. You will also be familiarised with the influence of job
satisfaction on performance.

11.2 JOB DESIGN

Organisations are created for attainment of goals. For this purpose, an organisation structure is created and
jobs are designed to meet the goals. F. W. Taylor suggested that jobs should be designed based on scientific
principles to attain higher productivity. However Human Relations approach has taken a different view and
suggested that job design should provide human satisfaction. Research also revealed that employees
performing properly designed jobs showed high motivation and satisfaction levels. Conversely poor job
design kindles boredom, monotony, ambiguity, conflicts and the result is dissatisfaction. Thus, job design
helps in directing human energy for organisational effectiveness. In addition, job design has an influence on
employee’s behaviour and organisational behaviour. Moreover, job design changes with the change in
internal and external factors. Organisational objectives, environmental factors, social aspects, employee
skills, training, status, job expectations, and individual goals and objectives are some of the factors
considered in the process of job design.

According to Taylor ‘job design is complete written instructions describing in detail the task to be
accomplished. The task specifies what is to be done, how is it done and exact time allowed for doing it.’
Job design is making components and sub components of job clear, so that employee understands the goals
of the job.
The paradigm of job design has changed remarkably over years. Traditionally job design is viewed as
designing standard procedures, clarifying specific job descriptions for increasing productivity and efficiency.
The job design is viewed from the perspective of total quality management. The jobs are designed to involve
innovation, empowerment, autonomy and teamwork. Thus, job design as a quality of work life is concerned
with the product, process, tools and techniques, design, plant layout, work measurement, standard operating
procedures, human process, machine interaction and other activities related to job performance.

The major features of job design are as follows :

• Job design is structuring of job tasks and responsibilities.

• Job design and quality of work life are related.
• Job design is both technical and managerial.
• It is concerned with job, motivation and behaviour of individuals.
• It is concerned with standardisation of job functions.
• The goal of job design is to maximise human efficiency in jobs.

Importance of Job Design

Job design is essentially a strategy of human resource management. It has a number of potential benefits.
They are:

• Job design clarifies the tasks and roles. Thus, it avoids ambiguities in the performance of jobs.
• Job design removes overlapping in responsibilities. This leads to rationalisation of tasks. Conflicts
among personnel are avoided.
• Job design allows proper placement of employees. Thus, an appropriate job fit may be achieved.
• It allows operational control over work performance and results.
• Job design allows incorporation of environmental changes in the job.
• It provides flexibility. Thus, employees are prepared to accept changes
without much resistance.
• It inculcates work motivation. Job design allows managers to understand organisational behaviour.
• Proper job design leads to better quality of work life among employees.
• Job design relieves stress and improves performance and organisational effectiveness.

11.3 FACTORS OF JOB DESIGN

Job design encompasses a number of factors. Let us learn them in detail.
1) Goals: Job design aims at goal setting and communication to the employees. Goals provide
direction and help in exercising control. They also influence human behaviour, motivation and
satisfaction.

2) Task accomplishment: Task accomplishment is related to job design. Jobs are designed to
accomplish tasks. Task accomplishment is viewed in terms of productivity. Other outcomes of task
accomplishment are economy in operations, efficiency and effectiveness. While efficiency is related to
the attainment of more output with minimum input, effectiveness is related to the attainment of goals
 with utmost economy. Economy is related to the rational utilisation of physical, financial and human
resources. Thus, job design should be done to economise resources, and maximise the output.

3) Employee Response: The ultimate objective of job design is to maximise employee’s satisfaction.
Job design should encourage employees to perform well. For the purpose of good job design and
redesign employees’ opinion about the job is important. This can be obtained by feed back.

4) Task Variety: Basically tasks are different though they are dependent. They require variety of skills.
Repetitive tasks do not require variety of skills. The challenging tasks require a range of skills.
Repetitive tasks are considered monotonous and boring. Job design should provide an opportunity to
demonstrate skills of employees.

5) Task Identity: Task identity refers to the identification of individual’s contribution in the organisation.
Employees want that their contribution should be recognised and rewarded. This is possible only when
the tasks are identified. This gives them a sense of satisfaction.

6) Task Significance: Employee feels that his role in the organisation is important if his task is considered
significant by the organisation. Job design should provide adequate information to employees
concerning the importance of their contribution to the organisational goals.
7) Task Complexities: Task complexity relates to the perception of employees. If employees feel that
task is difficult, and beyond their capabilities, they get de-motivated. At the same time easy jobs also
do not provide adequate motivation. The feelings that jobs are challenging but not complex provide
achievement motivation.
8) Job Functions: Job functions are designed as part of job design. These include : specification of
authority, responsibility, work methods, co-ordination, control, feed back; etc. Job designs should
include clarity about job functions for the realisation of mutual expectations of employees and
organisation.
9) Job Relations: Most of the organisational tasks require teamwork. This demands establishing
relationship among various organisational members. Good interpersonal relationships create sound
organisational climate.
10) Job Techniques: Organisational jobs require continuous redesigning. Redesign of jobs relates to
both breadth and depth of jobs. While job breadth means provision for inclusion of different jobs, job
depth relates to giving more power, responsibility and control. Job design should include various
techniques for making job interesting and meaningful to the employees. This is achieved by redesign of
 jobs. Some of the techniques of redesign are : job enrichment, job enlargement, job rotation and job
reengineering.
Check Your Progress A

1) List out the characteristics of Job design.

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2) What are the importance of job design?

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11.4 MODELS OF JOB DESIGN

Job design is a continuous process. It aims at increasing the harmony between human effort and job. A
number of factors influence the process of job design. Several models are developed to explain the influence
of these factors. Let us learn some important models.

Task Characteristics Theory : Task Characteristics theory was the outcome of the studies conducted by
Turner and Lawrence. In these studies, an assessment was made about the effect of different kinds of jobs on
employee satisfaction and absenteeism. The task characteristics were identified and scores were given. Higher
scores on the characteristics indicate that the jobs are more complex and vice versa. The major findings of the
theory reflect that employees prefer complex and challenging tasks. The challenging jobs provide more
satisfaction. The result is lower absenteeism rate. In the process, the theory identified certain task characteristics.
They are : variety, autonomy, responsibility, knowledge and skill, social interaction and optional social interaction.
Job Characteristics Model: Based on the pioneering work of Turner and Lawrence, Hackman and Oldham
propounded job characteristics model. The model identified certain job characteristics. It also identified the
relationships between job characteristics and motivation, and performance and job satisfaction.

The model showed that core dimensions viz., skill variety, task identity and task significance determine the
meaningfulness of the work. The presence of these characteristics lead to the importance and valuability of
the Jobs. While autonomy provides a feeling of responsibility for the outcome, feed back provides them an
opportunity to evaluate their performance. According to the model, internal rewards are obtained when
employees learn that they have performed well on a task. The more of these three psychological states are
present, the greater will be employee’s motivation, performance and satisfaction and the lower their
absenteeism and turnover. It should be noted that employee’s need for growth determine psychological state
and corresponding motivation and satisfaction.

Motivating Potential Score Model: Motivating Potential Score Model was developed based on job
characteristics model. The model stated that three potential scores on the three core dimensions of job
characteristics model possess additive property. The autonomy and feed back are multiplicative in nature.
Thus, a motivating potential score is calculated. The motivating potential score is equal to the product of the
average scores of skill variety, task identity and task significance and autonomy and feed back.
Accordingly, the model proposes that people who work on jobs with high core job dimensions are generally
more motivated, satisfied and productive. Job dimensions operate through psychological states in influencing
personal and work outcome variables rather than influencing them directly. The model received appreciation
for its mathematical properties.

Social Information Processing Model: Individuals are part of the society. They have inherent desire to
associate and belong to others. Obviously, they wish to work in the groups rather than in isolation. Moreover,
individuals focus on observational learning. They develop attitudes by social learning. According to the
Model, Employees adopt attitudes and behaviour in response to the social cues provided by work and other
groups with which they associate. The groups are co-workers, superiors, subordinates, reference groups,
friendship groups, family and customers. Therefore, information provided by the group on job aspects is
more relevant than the basic job characteristics, employees’ psychological states and outcomes of the jobs.

Thus, the managerial strategy of job design is to consider information shared by the groups about the job.
They can also influence the employee’s attitude positively even to the poorly designed job by continuously
counselling them about the jobs.

Socio Technical Model: Socio-technical model emphasised on the assumption that employees are important
in organisations. They should be given a good quality of working environment. Individual’s development is
essential for organisational development. Thus, the model suggested that jobs should be designed and
redesigned to the needs of the employees. The central tenet of the model is that job design should be
developed based on the technical as well as social factors. Technical factors relate to the factors in the input,
processing and output mechanism. Social factors relate to the relationships prevailing among employees and
management. An appropriate job design makes a best balance among employees, jobs, technology and
environment. Further, the model assumes that these factors change continuously. Thus, job design should
include three important elements. They are socio-technical impacts, work teams and flexible work
schedules. The model was considered as appropriate in developing job design because it considered
technical and structural aspects along with human aspects. It was also found that labour management
conflicts reduced and quality of the product improved. The cost reduction, increased turnover, quality of
work life, innovation and creativity, product quality and positive behavioural changes are some of the
benefits of this model. However, the model was criticised for the assumption that employees are matured
enough to work as teams and adopt flexible work schedules.

Contingency Model: A contingency model of job design was developed to explain the impact of job design
on the performance and satisfaction. It considered quality of work life as a significant factor. The model
suggested that techniques and knowledge be given more emphasis in job design. The model identified that
certain factors considered in the job design lead to satisfaction. They are:

• Job scope perceived as simple or complex.

• The high or low degrees of individual need strength.
• The nature and type of overall organisational design. The two organisational designs are organic or
mechanistic.

Thus according to this model a combination of perception of job scope, the degrees of individual need
strength and the type of organisation structure determines the performance and satisfaction. Therefore, job
design should be developed considering a number of permutations and combinations of these factors. The
model has been used in developing social information processing model.
Employee Development Model: Modern organisations considered that organisational development is
possible with employee development. They considered employees as human assets. They have a need for
career growth and development. Therefore, it is not just enough to consider technical and social issues in the
job design. Accordingly, jobs are designed keeping in view the long run interest of the employees. The
central tenet of the model is that employees should be competent, responsible and satisfied. It identified
several aspects in the redesign of jobs. Some of them are scope for alcoholism treatment, non-
discrimination, encouraging discipline, creating consciousness, responsibility and providing generic
monitoring and direction.

Integrative Job Design Model: Integrative job design model considered that job design is dynamic. The
purpose of job design is to make the work interesting and employee satisfying. Thus, the model developed an
integration of all the factors such as cultural, social, technical and other situational factors in the process of job
design. Some of the factors of the job design are : core design factors; individual factors; organisational factors
and situational factors.

Overall, the model suggested that job design is developed based on the contingency of a situation. Jobs
designed ignoring situational factors do not produce effectiveness and satisfaction.

Check Your Progress B

1) Mention the propositions of Task Characteristics Theory.
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2) Mention the propositions of SIP model of job design.
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3) What are the organisations practicing the socio-technical model.

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4) Mention the variables of core design, individual, organisational and situational factors in the
Integrative Job Design Model.
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11.5 JOB RE-DESIGN

You have learnt the concept, factors and models of job design. Let us now disucss various techniques of job
re-design.

1.1.1 Job Enrichment

Job enrichment is vertical expansion of jobs. According to Hackman and Oldham, an enriched job organises
tasks to allow the worker to do a complete activity, increases the employees freedom and independence,
increases responsibility and provides feedback. Herzberg has suggested the concept of job enrichment.
Fred Luthans defined that job enrichment is concerned with designing jobs that include a greater variety of
work content; require a higher level of knowledge and skill; give workers more autonomy and responsibility
in terms of planning, directing and controlling their own performance; and provide the opportunity for
personal growth and a meaningful work experience.

The job should be designed to provide opportunity for achievement, recognition, responsibility,
advancement and growth. The following are the characteristics of an enriched job.

• Decision making power

• Relationships
• Opportunity for Learning
• Freedom
• Uniqueness
• Resource Control
• Communication
• Achievement orientation
• Responsibility
• Accountability
• Opportunity for personal growth and development
• Feedback

Job enrichment is not a single time activity. It is a process containing certain activities. They are combining
tasks, creating natural work units, establishing relationships among personnel, expanding job vertically and
providing feed back channels. The advantages of job enrichment are:
• Increase in quality and productivity
• Enhanced motivation and job satisfaction
• Development of additional skills
• Less work load on employees
• Enhanced creativity in employees
• Increase in pay and perquisites
• Decreased absenteeism and turnover
• Less number of grievances
• Optimum use of human energy
• Increased social benefits due to increase in quality and productivity.

1.1.1 Job Enlargement

Job enlargement refers to making the job with a variety of tasks. In the recent past, there has been an
increase in the number and variety of jobs performed by the employees in the organisations. When the
employee feels that the job he is currently performing is less challenging, oversimplified, lack diversity and
less meaningful, the answer is perhaps job enlargement. Thus, Job enlargement is the horizontal expansion
of jobs to include more variety of tasks within the scope of the job. For instance, a worker is assigned with
the job of counting the finished products, finds it boring and repetitive; the job can be enlarged by including
certain tasks connected to the job. They are checking the products before counting, packing and delivering
the products at the finished goods warehouse. etc. The following are the potential benefits of job
enlargement.

• Reduction in the Level of Boredom: Job enlargement provides scope of increasing the number of
tasks performed by the employee. It reduces employee’s monotony.

• Utilization of Skills: Job enlargement enhances the scope of use of employee’s skills and abilities. A
feeling of proper utilisation of employee’s skills provides greater satisfaction and consequent
motivation to the employees.

• Quality and Efficiency: Job enlargement leads to increased efficiency of employees as they receive
training to do all the newly added jobs. This results in the increase in the quality of production and
the overall effectiveness.

• Job Enjoyment: In an enlarged job, employee feels less fatigued. Employees try to enjoy the
enlarged work because of the greater variety of the job tasks.

• Feedback: Job enlargement provides for the feedback to the employee. Thus, he can know where he
stands in the performance. This enables him to develop his career and provides right motivation.

However, job enlargement has the following drawbacks.

• Job enlargement enhances the training costs.

• Job enlargement needs introduction of new systems. This may considerably reduce the
productivity of employees.
• It creates a feeling of overburden of tasks among the employees.
• Job enlargement requires retrenchment of redundant employees.

Inspite of certain drawbacks, job enlargement is one of the best techniques of job design.

3.3.3 Job Rotation

Job rotation refers to the periodical shifting of an employee from the existing job to another job at the same
level of skill requirements. It is also known as cross training. The need for job rotation arises out of
overroutinised jobs, boring jobs, non-challenging jobs and jobs with poor achievement orientation. If an
employee is performing one aspect of the job, job rotation helps him to perform all tasks in the job. The
benefits of job rotation are :

• Reduction of boredom and employee turnover.

• Better diversification and development of wide range of skills that helps building competent employees.
• Greater challenges in the job leading to variety of jobs.
• Increased flexibility of jobs providing scope for better job scheduling.
• Greater adaptability to change.
• Increased motivation and job satisfaction.

Some of the drawbacks of job rotation are :

• Increased costs of training in all related jobs.

• Cost of time overruns in performing the job increases.
• Decrease in the productivity because of rotation of the jobs.
• Greater disruptions in social contacts as frequent rotation require adjustment to social groups.
• Increased monitoring and controlling of employees require additional costs of supervision.
Inspite of certain drawbacks job rotation is considered as a motivational process and a technique for human
resource development.

4.4.4 Job Reengineering

Job reengineering is another technique of job redesign. It refers to redesigning jobs based on feed back.
Jobs are performed continuously. The reactions, level of satisfaction and contribution to the goals are
evaluated continuously. There may be discrepancies in the organisational objectives, job goals and finally
outcomes of the jobs. Thus, jobs should be reengineered to make them suitable to employees. Job
reengineering is defined as reallocation of jobs to achieve congruence of goals of individual and
organisation.

Michel Hammer defined job reengineering as the fundamental rethinking and radical redesign of business
processes by application of variety of tools and techniques focussing on related customer oriented core
business process to achieve dramatic improvements in critical and contemporary measures of performance
such as cost, quality, service and speed. He considered that though job reengineering can be applied to any
level of management, customer oriented designing and reengineering are more important for the survival and
growth of the company. Job reengineering involves use of new technology and changes in the process of
work. The basic objective of job reengineering is attaining corporate objectives and goals through increased
employee satisfaction. Some of the corporate goals achieved through job reengineering are customer
satisfaction, profit maximisation, growth and enhancing corporate image.

The nature of job, personality, experience of employees, job performance and satisfaction are some of the
factors which are considered in reengineering the jobs. It varies from person to person, job to job and
company to company. Thus, it depends on different levels and nature of job. Edward E Lawler advocated
that organisations must recognise the importance of treating people differently and placing them in
environments and work situations that fit their unique needs, skills and abilities. Job reengineering leads to
job enrichment.

The following are the principles of job reengineering.

i) Allocation of jobs according to employees’ interest.

ii) Employees preferring routine jobs are allowed to perform routine jobs.
iii) Low skilled employees are given jobs requiring low skills.
iv) Achievement oriented employees are given challenging jobs.
Several factors are considered in the process of job reengineering. They are : information system,
government policies, organisational policies, technology, competition, appraisal of costs and benefits and
prospective challenges.

Job reengineering is an important technique of job redesign in the modern organisations. It has a number of
potential benefits. Some of them are : improved customer service, increased growth opportunities, improved
decision making, and learning skills, easy and comfortable attainment of tasks, effective inter personal
interaction, inter personal communication and improved inter personal relationships.

Finally, it should be noted that changes brought by globalisation, liberalisation and privatisation have forced
organisation to go for job reengineering. This is because of the fact that successful redesigning of
managerial practices and orgnanisation structure adds value to the product and service of the organisation.
Moreover, reengineering dispenses with traditional methods of work process.

Check Your Progress C

1) Mention the points of distinctions of job enrichment and job enlargement you have observed in the
organisation.
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2) Enumerate the benefits of job rotation.

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3) Enumerate the principles of job engineering.

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11.6 CONCEPT OF JOB SATISFACTION
Job satisfaction is a psychological aspect. It is an expression of feeling about the job. Job satisfaction is an
attitude. It is a permanent impression formed about the job. Employees interact with people and other
resources while working with the job. In the process, they experience positive or negative feelings about the
job context and content. The concept of job satisfaction has gained importance ever since the human
relations approach has become popular.

Job satisfaction is an intangible variable. It consists of a complex number of variables, conditions, feelings
and behavioural tendencies. Roberts Dictionary of Industrial Relations defined job satisfaction as those
outward or inner manifestations which give the individual a sense of enjoyment or accomplishment in the
performance of his work. According to Locke, job satisfaction is a pleasurable or positive emotional state
resulting from the appraisal of one’s job or job experience. Andrew Brin stated Job satisfaction as the
amount of pleasure or contentment associated with a job. Further, he stated that if one likes a job intensely
he will experience high job satisfaction and if he dislikes the job intensely he will experience job
dissatisfaction.

The characteristics of job satisfaction are :

• Job satisfaction is an inner feeling. It can be inferred through the expression of behaviour.
• Job satisfaction is an attitude. It is a sub set of attitude.
• Job satisfaction influences the skill and energy of individual.
• It can be positive or negative. It is expressed in a high or low degree.
• Job satisfaction is associated with the emotional state of human mind.

Having known about the concept of job satisfaction. Let us now learn the determinants of job satisfaction.

11.7 DETERMINANTS OF JOB SATISFACTION

Job satisfaction is intangible and it is multi-variable. A number of factors influence job satisfaction of
employees. They can be classified into two categories. They are organisational and personal variables. They
are discussed below:

11.7.1 Organisational Determinants

Employees spend most of the time in organisations. Therefore, a number of organisational factors determine
job satisfaction of the employees. Organisations can increase job satisfaction by organising and managing the
organisational factors. Let us learn the organisation determinants of job satisfaction.

i) Wages: Wage is the amount of reward worker expects from the job. It is an instrument of fulfilling
the needs. Every one expects to get a commensurate reward. The wage should be fair, reasonable and
equitable. A feeling of fair and equitable reward produces job satisfaction.
ii) Nature of Work: The nature of work has significant impact on the job satisfaction. Jobs involving
intelligence, skills, abilities, challenges and scope for greater freedom make the employee satisfied on
the job. A feeling of boredom, poor variety of tasks, frustration and failure leads to job dissatisfaction.

iii) Working Conditions: Good workings conditions are needed to motivate the employees. They
provide a feeling of safety, comfort and motivation. Poor working conditions give a feeling that health is
in danger.

iv) Job Content: Job content refers to the factors such as recognition, responsibility, advancement,
achievement etc. Jobs involving variety of tasks and less repetitive result in greater job satisfaction. A
job, having poor content produces job dissatisfaction.

v) Organisational Level: Higher level jobs are viewed as prestigious, esteemed and opportunity for
self-control. Employees working at higher level jobs express greater job satisfaction than the lower level
jobs.

vi) Opportunities for Promotion: Promotion is an achievement in the life. Promotion gives more pay,
responsibility, authority, independence and status. Therefore, opportunities for promotion determine the
degree of satisfaction to the employees.

vii) Work Group: Existence of groups in organisations is a common phenomenon. It is a natural desire
of human beings to interact with others. This characteristic results in formation of work groups at the
work place. Isolated workers dislike their jobs. The work group exerts a tremendous influence on the
satisfaction of employees. Satisfaction of an individual depends largely on the relationship with the
group members, group dynamics, group cohesiveness and his own need for affiliation.

viii) Leadership Styles: Leadership style also determines the satisfaction level on the job. Democratic
leadership style enhances job satisfaction. Democratic leaders promote friendship, respect and warmth
relationships among the employees. On the other hand, employees working under authoritarian leaders
express low level of job satisfaction.

11.7.2 Personal Determinants

Job satisfaction relates to the psychological factors. Therefore, a number of personal factors determine the
job satisfaction of the employees. They are mentioned below:

i) Personality: Individual psychological conditions determine the personality. Factors like perception,
attitudes and learning determine the psychological conditions. Therefore, these factors determine the
satisfaction of individuals.

ii) Age: Age is a significant determinant of job satisfaction. Younger age employees possessing higher
energy levels are likely to feel more satisfied. As employees grow older, aspiration levels increase. If
they are unable to find their aspiration fulfilled, they feel dissatisfied.

iii) Education: Education provides an opportunity for developing one’s personality. It enhances
individual wisdom and evaluation process. Highly educated employees possess persistence, rationality
and thinking power. Therefore, they can understand the situation and appraise it positively.

iv) Gender Differences: The gender and race of the employees determine Job satisfaction. Women are
more likely to be satisfied than their counterpart even if they are employed in small jobs.
Certain other factors that determine job satisfaction are learning, skill autonomy, job characteristics,
unbiased attitude of management, social status etc. Managers should consider all these factors in assessing
the satisfaction of the employees and increasing their level of job satisfaction.

11.8 MEASUREMENT OF JOB SATISFACTION

Job satisfaction is an intangible and psychological concept. It is a qualitative aspect. It is not understood in
strict quantitative terms. Therefore, job satisfaction should be measured through survey of employees’
attitudes. In most of the organisations, there is a practice of conducting surveys of employee’s intentions in a
regular manner. Some of the techniques employed to measure job satisfaction are discussed below:

i) Rating Scales: Rating scales are the most commonly used method of measuring the job satisfaction.
Rating scale consists of certain statements describing the attitude of the employees with respect to the
job, organisation and personal factors. For each statement, the employee is asked to express his opinion
on a scale consisting of different expressions.

ii) Personal Interviews: Another important method of measuring job satisfaction is conducting
personal interview with the employees. Experts conduct interviews with the employee in which they are
asked to express their opinion on job satisfaction. These responses are analysed to find out their levels
of job satisfaction. However, this method is likely to have personal bias of the interviewer.

iii) Tendencies: Employees are asked to describe their tendency or inclination on several aspects.
Employees tendency reveals their satisfaction or dissatisfaction.

iv) Critical Incidents: Herzberg developed this approach to measure job satisfaction. In this method,
employees were asked to describe incidents on their job when they were particularly satisfied or
dissatisfied. These incidents were analysed to determine their positive and negative attitudes.

Check Your Progress D

1) Mention the organisational and personal determinants of job satisfaction.

Organisational determinants Personal determinants

2) What are the techniques of measurement of job satisfaction ?

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9.9 LET US SUM UP

Job design is a process of developing complete written instructions, task characteristics and job components.
A proper job design is needed for effective performance. Job design clarifies the roles and responsibilities,
removes overlapping of responsibilities and rationalises tasks, enables operational control over performance
and provides flexibility for adoption of environmental changes. Thus, job design is important in directing
the employees’ energy towards realisation of goals. Job design is complex and difficult process.

A number of factors influence the job design. These factors are classified into internal and external. A
number of theoretical propositions have been developed that help the process of job design. These theories
have suggested that job design should consider the task characteristics, environmental contingencies and
motivational potential. Job redesign attempts to restructure the jobs suitable to the employees and
organisational demands. Job enrichment, job enlargement, job rotation and job reengineering are some of
the job redesigns techniques. While job enrichment is vertical expansion of jobs, job enlargement is
horizontal expansion of jobs. Job rotation aims at moving employee from one job to the other. Job
reengineering is reallocation of jobs suitable to achieve objectives and at the same time enhance employee’s
satisfaction. A number of factors are considered in the process of job reengineering. They are : information
systems, government policies, organisational policies, technology, and competition, appraisal of costs and
benefits and prospective challenges.

Job satisfaction is a psychological concept. It is an impression formed about the job, working conditions,
organisation, superior and subordinates and peers. Every employee develops certain impression about the
job and organisation. A number of factors determine job satisfaction. They are organisational and personal.
Organisational determinants are : wages, nature of work, working conditions, job content, organisational
level, opportunities for promotion, work group and leadership styles. Similarly, personal determinants
include : personality, age, education and gender difference. As job satisfaction is an intangible concept, it is
measured in indirect manner. There are number of methods used in the measurement of job satisfaction.
These include : rating scales, personal interviews, observation of tendencies and critical incidents. Job
satisfaction has both negative and positive effect on the job, worker and organisation. Job satisfaction is
positively related to productivity of organisation.

10.10 KEY WORDS

Job Design: The process of structuring the job elements, duties and tasks.
Job Enrichment: Vertical expansion of jobs to include greater task variety.
Job Enlargement: Horizontal expansion of jobs to make the job with a variety of tasks.
Job Reengineering: The fundamental rethinking and radical redesign of the business process.
Job Rotation: Periodical shifting of employee from the existing job to a new job at the same level of skill
requirements
Job Satisfaction: A psychological expression of contentment on the job.
MPS: The motivating potential score, which is equal to the product of average scores of skill variety, task
identity and task significance and autonomy and feed back.
Rating Scales: A measurement scale containing certain statements with specific answers.
Task Identity: Identifying individual contribution in the output.
Task Significance: Recognising the importance of task performed by the employee.

11.11 TERMINAL QUESTIONS

1) Define job design. What are the characteristics of job design?
2) ‘Job design is essentially a strategy of human resource management’ Elucidate.
3) ‘Job design encompasses a number of factors: organisational context factors, task factors, job context
and content factors, and employee factors.’ Discuss with examples.
4) Examine the task characteristic theory of job design.
5) What is MPS? Explain its mathematical properties of motivating potential score.
 6) Explain the social information-processing model.
7) ‘Socio technical impacts, work teams and flexible work schedules determine the job design’ Discuss.
8) Discuss the employee development model of job design.
9) ‘Job design is developed to integrate all the factors such as cultural, social, technical and other situational
factors’. Explain.
10) Examine various job redesign strategies. Do you think that they help in improving the organisational
efficiency. Discuss.
11) Distinguish between job enrichment and job enlargement.
12) ‘Several environmental factors are considered in the job reengineering’. Discuss.
13) Define job satisfaction. Explain its characteristics.
14) ‘Job satisfaction is an inner feeling; it is influenced by various organisational and personal variables’.
Elucidate.
15) How do you measure job satisfaction? Explain.
16) ‘Job satisfaction has both positive and negative impacts’. Explain.

Note : These questions will help you to understand the unit better. Try to write answers for them. Do
not submit your answers to the university for assessment. These are for your practice only.

SOME USEFUL BOOKS

Robbins P Stephen, Organization Behaviour, Prentice Hall of India, New Delhi. (Recent Edition)

Ivancevich M. John, Human Resource Management, McGraw-Hill Irwin, Boston(Recent Edition)

Luthans Fred, Organisational Behaviour, Irwin, McGraw-Hill, Boston, (Recent Edition)

John W, Newstrom and Keith Devis, Organizational Behaviour, Tata McGraw, Hill Publishing Company Ltd,
New Delhi. (Recent Edition)

Dwivedi R. S., Human Relations and Organisational Behaviour – A Global Perspective, Macmillan, Delhi.
(Recent Edition)

Steven L. Mchane and Mary An Van Glinow, Organizational Behaviour, Tata McGraw- Hill Publishing
Company Limited, New Delhi (Recent Edition)
UNIT 12 GROUP FORMATION AND STRUCTURE
Structure

12.0 Objectives
12.1 Introduction
12.2 Concept of Group
12.3 Significance of Group Behaviour
12.4 Factors of Group Formation
12.5 Types of Work Groups
12.5.1 Formal Work Groups
12.5.2 Informal Work Groups
12.5.3 Small Groups vs Large Groups
12.6 Development of Group
12.7 Group Cohesiveness
12.8 Group Structure
12.9 Group Norms
12.10 Group Dynamics
12.11 Group Decision Making
12.12 Let Us Sum Up
12.13 Key Words
12.14 Terminal Questions

12.0 OBJECTIVES
After going through this unit, you should be able to:
• describe the concept of the group;
• discuss the significance of group behaviour;
• classify different types of groups;
• explain different stages of group development;
• describe the concept of group cohesiveness;
• explain the concept of group norms;
• discuss group dynamics; and
• explain the merits and limitations of group decision-making.

12.1 INTRODUCTION

We are all social beings. We are born and brought up in the society. When we join an organisation, we have
to join as individual employee. After joining the organisation, as social beings we cannot remain alone and
aloof from others. Therefore, an individual forms or joins a group. It is because, an organisation is a society
in miniature. It is collection of individuals, who are usually assembled or clustered into groups or team to
perform different activities of the organisation. Organisations use groups or teams because certain tasks are
difficult to be performed alone by the individuals. A group is more than the sum of its parts. In fact, groups
are the basic building blocks of an organisation. No doubt, individuals are clustered into groups to fulfill
several needs but it also helps organisations to achieve organisational goals and gain competitive advantage.
The effective functioning of any organisation depends on the performance of the various groups in the
organisation. In this Unit, you will learn the concept of group, significance of group behaviour, factors of
group formation and various types of groups. You will be further exposed to the process of development of
group, group cohesiveness and group structure. You will be familiarised with the concept of group norms
and group dynamics and the process of group decision making.

12.2 CONCEPT OF GROUP

A group refers to the association of two or more persons interacting among themselves for the achievement
of common goal. Jennifer and Gareth have defined a group as set of two or more people who interact with
each other to achieve certain goals or to meet certain needs. Here group interaction and common goal are
very important elements of group. The interaction reflects regular discussions and communication which
may influence the behaviour of the group members. Moreover, the group members agree to achieve some
common goal which is termed as group goal. The group goal binds the members together for making effort
in the direction of realisation of the goal.

Given the important role that groups play in organisations, let us concentrate our focus upon the meaning of
a work group. In true sense and for our purpose of studying group behaviour, the collection of individuals is
called a group, when:
• They have a common goal;
• The members of the group constantly interact with each other, so that one person’s actions affect and
are being affected by the action of another person;
• Each member of group identifies with other member of the group;
• The member of the group is psychologically aware of each other;
• The behaviour of each member is interdependent on others.

Thus, a group is a set of two or more people who continuously interact with each other to achieve certain
goals or meet certain needs. Accordingly, only gathering of individuals cannot be called a group.

Sometime we are confused that a group is also a team. A group can be called a team when it is formally
formed by the organisation. Katzenbach & Smith have defined a team as a small number of people with
complementary skills who are committed to a common purpose, set of performance goals, and approach for
which they hold themselves mutually accountable. Thus, major difference between the team and group is
that the group can also be informally formed without any complementary skills and formal efforts of the
organisation ; team is always constituted by the organisation. It so happens because it is practically
impossible for a formal organisation to meet the informal needs of its employees.

12.3 SIGNIFICANCE OF GROUP BEHAVIOUR

As a manager, it is important to understand the behaviour of the group. As you must be aware that the
behaviour of a single individual is complex, complicated and unpredictable; therefore, it is difficult to
understand the behaviour of a group. The manager has to understand the behaviour of several people
together to manage them. More interestingly , people behave differently when they work in a group than
when they work individually. Although groups can wonders for an organisation, as they have done in IT
companies today, but they can also wreak havoc in an organisation when they function improperly.
Therefore, let us learn the significance of the group behaviour as discussed below :
Group Goals : It is also interesting to note that although group member may have one or more goals in
common, this does not mean that all their goals are identical. They may agree on the common goal providing
the best customer service, but in deciding what constitute the best, the group may differ. In a firm, the
production department may consider the best engineered and quality product as the best. The finance
department may consider the reasonable cost as the best. The marketing department may consider the
marketing strategy as the best. The personnel department may consider the high level of satisfaction level of
the group as the best. Despite these different views, the best customer service may be the common goal of all
departments. Normally group goal refers to the goal which most members or all members of a group usually
agree as a common goal.

Group Function : The work that a group performs for the accomplishment of organisational goals is called
group function. The functions of a formal group is different from the functions of an informal group. A
formal group has to perform the assigned tasks of the organisation. For example, in a car manufacturing
plant, one group’s function may be to make the automobile bodies, another’s function is to fit engine in the
body, and another’s could be to fit the accessories in the body. In fact, we can say that the entire organisation
consists of a series of groups linked with each other depending upon their functions they perform in order to
help the organisation to achieve its goals. Thus, group function is important both for the group as well as for
the organisation. The function of a group influences the behaviour of its group members. The group provides
them a sense of purpose of their work and motivates them to achieve the target.

Social Facilitation : The presence of group members may either facilitate the performance or create obstacle
in performing the task. The presence of other members may stimulate the effort of the individual because he/
she may think that others are evaluating his/her performance. This feeling induces the desire of the
individual to perform better in the group. In the same way, if the task is not liked by group members, the
individual may show little interest in performing such task. Therefore, the leader must create such
environment at the work place, where the group influences the better performance of the individuals.

12.4 FACTORS OF GROUP FORMATION

There are various factors, which influence the formation of groups in organisations. Let us learn following
important factors of group formation:

Psychological Factors : After joining the organisation, individual joins a particular group in which he/she
finds him/her interest, attitude, personality, perception etc. matching with other individuals within the
department or the organisation. As a result, group is formed.

Social Factors : Individuals also form or join the group based upon their social class, caste, and religion to
satisfy their social needs. They do it primarily for satisfying their love, affection and care needs, which
initially they feel deprived after leaving their families.

Security Factors : As an individual, sometimes one can feel insecure over unexpected developments such as
sudden health problem, termination, suspension, local problems etc., therefore, everyone likes to be in a
group to feel secured to work. Especially in a new place, for a new employee, the security need could be one
of the major factors for joining a group.

Economic Factors : When an individual works in an organisation, he/she gets all types of economic
incentives and benefits available within the rules and regulations. Sometimes organisations cannot meet an
individual’s accidental or obligatory needs like money for marriage, house construction, medical care and
other proposes. So he/she gets associated with those people who help him/her at the time of need.
Cultural Factors : Individuals come to work from different society and culture. In case the place at which
they work are far away from their place of origin , region and culture; they feel like a fish out of water. It
may be due to the absence of cultural celebrations. This is one of the reasons for which people coming from
same culture, tradition and speaking similar language usually form the group.
Proximity, Interaction, Interest and Influence : This is one of the common and logical reason for which
people form the group in the organisation. Some people have to work together. Due to the similarity of
nature of job, they have to interact with each other for this purpose. In course of interaction, interest
develops which ultimately influences each other to sit, eat, discuss and share besides working together.

Check Your Progress A

1) What is Group ?
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2) Distinguish between group and team.

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3) Why do people form groups in organisations ?

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12.5 TYPES OF WORK GROUPS

Whatever may be the causes for which groups are formed, the formation of groups has become inevitable
phenomenon in every organisation. There exists different types of groups in organisations. Each group plays
crucial role in achieving organisational effectiveness. There are different ways through which we can classify
the groups. One broad way to classify the group is on the basis their formation. Accordingly, the group can
be formal group or informal group.

1.1.1 Formal Work Groups

Formal work groups are formed by the organisations. These groups are formed in order to help the
organisation to achieve its specific goals. The goals of formal work group are determined according to the
needs of the organisation. For example, purchase committee, quality control group, disciplinary action
committee are the formal groups constituted by an organisation. These groups are established to accomplish
certain organisational goals such as increasing product quality, safety, discipline, etc. in an organisation.

Types of Formal Work Groups

There are different types of formal groups in an organisation. Four important kinds of formal groups are
command groups, the committees, teams, and self-managed work teams. Let us learn them in detail.
Command Group : It is the collection of employees who report to the same supervisor. Command
groups are based on the basic reporting relationship in organisations. The existence of formal groups is
represented on organisational charts as departments (such as finance, personnel, marketing, sales, or
accounting). Command groups help an organisation to accomplish variety of tasks. They have tremendous
impact upon the extent to which an organisation is able to achieve its goals. The leaders of the command
group play an important role in determining the effectiveness of these groups.

The Committees : It is the collection of people who are brought together by the organisation to accomplish
a specific goal. Once the goal is achieved, the organisation disbands the committees. In case such committees
are dealing with long term problems, in that case they may not be disbanded but the members in the
committees can be changed or rotated on the basis of seniority and other criteria. These kinds of committees
are known as standing committees.

The Team : It is a formal work group. People work in a group does not mean that they work in a team. A
team is formed by the organisation for some specific purpose. In a team, there is a high level of interaction
among its members. The members of the team work together very intensely to achieve a common goal. In
course of working together, the member of the team learn the abilities and experiences of their members to
accomplish things that could not be achieved by individuals working separately or by any other kinds of
work groups.

Self-Managed Work Teams : Self-managed work teams are little different from normal teams . The
members of self-managed work team are responsible for ensuring that the team accomplishes its goals.
Leader of this team is identified by its members. The performance of leadership tasks is assigned to
individual group members. The team is empowered to discipline its members who are not performing at an
adequate level. There is coordinating efforts across group members, and even hiring and firing for and
within the team is done by the team itself. In the recent years self-managed teams are gaining popularity and
they have created a dramatic impact on organisations as well as on their members.

1.1.2 Informal Work Groups

Informal work groups emerge naturally in organisations. It is just like the shadow of the formal organisation.
It is because organisational members perceive that it is difficult for their organisations to formally fulfill
some of the bare needs and feel that membership in a group can help them to achieve their goals and meet
their needs. For example, when a group of five factory workers who go for a picnic, movie, or booz together
to satisfy their common need for affiliation and friendship this is the case of an informal group. Even
sometimes, some employees form informal group.due to their ideological similarity.

Types of Informal Work Groups

Informal groups can be broadly divided into two types They are : (i) friendship groups; and (ii) interest
groups.

i) Friendship Groups : It is a group of employees in an organisation who enjoy each other’s

company and love to socialise with each other. They may socialise on the job and off the job. For
example, a group of workers in a company who go for a picnic or a group of ladies staff who frequently
have lunch together. Friendship groups help its members to meet the needs of social interaction. It also
acts as an important source of social support to them. It contributes to its members to experience positive
moods at work which can ultimately enable them to be satisfied with their respective jobs.
ii) Interest Groups : Employees may form interest groups when they have a common interest or goal to
achieve in the organisation. The interest of the members may be sometimes ignored or neglected by the
organisation. The members of this group try to achieve their goal by uniting their efforts. Because of the
common interest, it helps the members to voice their concerns, which some times provides an important
pressure for organisational changes.
12.5.3 Small Groups vs Large Groups

Group size is an important determinant of the way group members behave. The size of a group is normally
measured by the number of full-time members who are involved in achieving the group’s goals. However, a
group can be composed of just two or more people. On the basis of number of members, a group can be a
small or large group. Let us learn them.
Small Groups : In a small group, members are likely to know everybody and interact regularly. In a small
group, it is relatively easier for members to share information and recognize individual’s contribution to the
group. The members of a small group identify themselves easily and quickly with group’s goals. The
motivation and commitment of its members to group goals is very high hence, the member of this group
derive higher levels of satisfaction.
Large Groups : In a large group, there are so many members. Because of many members, they are less
likely to know one another and may have little personal contact with each other on a day-to-day basis. As a
result, there exists lower level of interaction among members of this group and it makes information sharing
difficult among them. Some times, the factors which individuals consider lead to their own contributions to
the group, may become unimportant to the group, which ultimately reduces their motivation and commitment
towards group. Therefore, people normally tend to be less satisfied in larger groups.

12.6 DEVELOPMENT OF GROUP

Groups, which we find in organisations in our day-to-day life, are not formed over night. Employee turnover,
new selection, transfers and promotions of the employees in the organisation have impact upon the group
status and may bring change in the existing group. As a result, group tasks and goals also change. How do
groups change over time? It is very interesting and significant. In order to increase group performance, it is
very important to manage these changes effectively. For example when a new batch of employees joins an
organisation, and starts forming group on the basis of various factors discussed earlier, they face lot of
difficulty to form a group. In fact, initially at each stage the group faces many difficulties. Similar is the case
with work groups, from their inception to adjournment , they undergo important changes. Tuckman has
divided the developments of a group in to five stages. They are forming, storming, norming, performing
and adjourning. Let us learn them in detail.
Forming : The first stage of group development is called forming. At this stage, members try to know each
other and establish a common understanding among them. They struggle to clarify group goals and determine
appropriate behaviour within the group. The forming stage is completed once individuals within the group
feel that they are truly the members of the group.

Storming : As its name implies, this stage is characterised by considerable amount of conflict. At this stage,
group members try to resist for being controlled by the group very often, the members disagree about who
should lead the group. They also have difference of opinion over how much power should the leader of their
group have, etc. This stage is completed when group members no longer resist the group’s control and there
is mutual understanding and agreement about who will lead the group. Normally this stage is completed
when group members consider that is it is better to work together for the achievement of the group goals.
Norming : This is the third stage in the group development. At this stage, group members really start feeling
that they belong to the group. They develop a very close intimacy and relationship with one another. A
feeling of friendship develops among them. A well-developed sense of common purpose of the group
emerges among the members. In this stage, group members agree on standards to guide the behaviour in the
group.
Performing : When this stage reaches, the group is ready to tackle all types of group tasks. The members of
the group work toward achievement of the group goals. The real work of the group gets accomplished at this
stage. To arrive at this stage, groups should not take very long time.

Adjourning : This is the last stage of the group development. At this stage, a group disbands after having
accomplished its goals. However, ongoing work groups in organisations do not go through this stage rather
they remain at the performing stage.

Thus, the five-stages model of group development forming-storming-norming-performing-adjourning though

sounds logical, research reveals that not all groups go through each of the stages and groups do not
necessarily go through the stages sequentially. There can be considerable levels of conflict throughout their
existence. As a result, the elements of storming stage continue for a long time.

Check Your Progress B

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12.7 GROUP COHESIVENESS

With the passage of time, a group develops maturity and becomes cohesive. Cohesiveness is achieved in a
group when the group appears to be very attractive to its members, individuals value their group
membership and have a very strong willingness to remain members of the group. Thus, group cohesiveness is
nothing but it is the attractiveness of a group to its members. A highly cohesive group very much appeals to
their members. The cohesiveness of a group affects its performance and effectiveness. There are a large
number of factors, which influence the level of cohesiveness of a group. Those factors can be broadly
categorised into five types. They are : size of the group, homogeneous character of group members, success
of the group, competition with other groups, and the exclusiveness of the group. Let us learn them in detail.

Size of the Group : Just like small family is more cohesive, similar is the case with a group. In case the size
of the group is large, their members tend to be less satisfied and do not tend to be cohesive. Normally in a
large group, only a few members of the group try to dominate every thing such as suggestion, opinion, its day
to day functioning without giving opportunities for participation to the other members in the group.
Therefore, the large groups are more prone to conflict, and members find it difficult to form close ties with
each other, than a small or medium size group in which there exists cohesiveness.
Homogeneous Character of Group Members : More similarity the member feel with each other, better the
chances that they will well get along with, and feel comfortable to communicate with each other. The most
cohesive group is one where members are more homogeneous in terms of age, sex, education, marital status
etc. and they share certain attitudes, values, experiences, and other characteristics, which are common to
each other.

Success of Group : It is the success of the group which can make it cohesive. A realisation develops among
its members to avoid differences for achieving group goals. When groups are successful in achieving their
goals, they become especially attractive to their members, and group cohesiveness enhances.

Competition with Other Groups : Competition between groups in an organisation increases group
cohesiveness when it motivates members of each group to band together to achieve group goals. For this
reason, organisations often promote group cohesiveness by having work groups competition in the
organisation between /among groups over sales target, zero defect production, minimization of wastages;
etc. A group of production workers may compete to see which group can maintain the highest quality
standards, and groups of maintenance workers may compete to have the best attendance record. Giving
groups names and publicising also encourage healthy competition, which groups are doing extraordinarily
well.

Exclusiveness : A group’s exclusiveness is indicated by how is it difficult to become a member of the

group, the extent to which outsider look up to group members. The exclusiveness of a group gives status in
the organisation. It also provides special rights and privileges to its group members.
Thus, in cohesive group members become more active participants in the group activities and the level of
communication within the group increases. They share a common goal, develop high group loyalty and get
united to perceive threat. Moreover, in a cohesive group information flows through the group very fast.

12.8 GROUP STRUCTURE

In order to establish and maintain norms every group needs to develop a structure of its own. The structure of
the group will enable it to create position and power in the group. Though leadership may be rotated
throughout the membership but structure requires a leader to lead the group. It will determine who is to do
what in the group. Of course, status in a group is earned by its members by furthering the interest of the
group . The group structure shades and influences the behaviour of its members. It facilitates communication
with in the group. When the need arises, it is only because of the structure, the group leader will be in a
position to control the behaviour and activity of its members. When there is meeting of the group, structure
enables to maintain discipline and cooperation throughout the meeting. Various structural variables which
govern groups are : formal leadership, norms, roles, group size and group cohesiveness. Let us learn them
in detail.

Group Size : Group size is an important determinant of group structure . Size of the group is determined by
the number of members who constitute a group. The size of group influences group’s overall behaviour. In
case size of group is large, it affects the productivity, commitment of group members towards group, which is
called social loafing.
Social Loafing : When individuals work in a group, it sometimes becomes difficult to assess and identify an
individual’s contribution to group performance by the other group members or by the supervisors under
whom they work. For example, group of workers who are jointly responsible for quality control in an
organisation can not be individually assigned to particular areas but have to work together. When individuals
work in groups, where their performances are not readily observable, there is a strong possibility for social
loafing, i.e., the tendency of individuals to exert less effort when they work in a group than when they work
alone.
Social loafing has tremendous impact upon group effectiveness. The efforts, and performance of individuals
in a group tend to be highest when outcomes of such as praise and pay are administered to members
individually contingent on the level of their individual performance. Since in a group, so many people are
working together, their individual levels of performance cannot be identified easily and evaluated by a
supervisor; therefore, members in a group realize that he will not receive any positive outcomes for
performing at a low level. Due to nonexistence of connection between inputs and outcomes, the motivation
level of member in the group can be lower.

Social loafing also occurs in workers who think that their own efforts are unimportant or not really needed,
and this belief lowers their level of motivation. Thus, social loafing is a serious problem for work groups
because it results in a process loss that lowers group performance. When social loafing occurs, actual group
performance is lower than potential performance. An individual develops an attitude to work individually
than the group.

Due to social loafing, sometime, some group members suggest other members of the group to reduce their
efforts as well. Which is consistent with the equity theory of motivation, and suggests that workers who
perceive inequity are motivated to try to restore equity by balancing their input/output ratios with the ratios
of the members of other group with whom he feels as equal competitor. In order to reduce the social loafing,
the groups are kept as small as possible.

Group Composition : The composition of a group is influenced by several characteristics, which are similar
among the group members. In a homogeneous group, several common characteristics can be demographic
characteristics such as age, sex, socioeconomic and cultural environment, education background and
psychological characteristics such as; personality traits, skills, abilities, attitudes, values, belief influence
them to form the group. However, in a heterogeneous group, there exists a lot of differences over these
characteristics. Therefore, while a homogeneous groups is characterised by similarity, a heterogeneous
group is characterised by diversity. The effects of group composition on the behaviour and performance of
individual members are too complex to ascertain and there is less research on it. However, it is true that
employees who are alike and similar to each other get along well with others. Therefore, the members of
homogeneous groups find it simple to share information, have lower levels of conflict, and have relatively
fewer problems in communication and coordination than the members of the heterogeneous groups.
Therefore, the performance and goal attainment of homogeneous groups is too high than that of
heterogeneous groups. Since group members normally like to get along with each other in homogeneous
groups, their motivation and satisfaction level is high.

Group Status : Depending upon the tasks performed by a group in an organisation; it has its importance
and status in an organisation. Though it is not expressed but status of a group is implicitly agreed-upon. For
example, a top-management team has a very high status as it not only sets organisational goals but also
determines how has the organisation to achieve them. Thus, more important a task performed by a group or a
group’s, the higher is its status in the organisation. The status of group in organisation motivates its members
to perform at a high level.
Group Roles : The structure of the group specifies the rules of its roles of the members to facilitate the
control of behaviour. It is the role, which tells group members about what are they expected to do. Role
enables the group to hold its members accountable for their behaviour and provide the group with a standard
through which the behaviour of the individual member and the group as a whole can be evaluated. Role
relationships may be formally specified in a written job description that describes about how is a role
occupant expected to interact with others to accomplish the group’s or organisation’s goals.

Written Rules : To control the behaviours of its members, to ensure high levels of performance and the
attainment of group goals, every effective group need to establish written rules. Written rules specify
behaviours that are required by group members and behaviours that are forbidden. Written rules have several
advantages in controlling and managing behaviour and performance of the members of the group. Rules help
the groups to ensure that when and how will their members perform their assigned task that contribute to
group and organisational effectiveness and avoid behaviours that impair performance and goal attainment.
The rules help newcomers to learn the right way to perform their roles. It develops at any stage of its
development. Normally rules developed at early stages are often changed or abandoned as the nature of the
group’s work, group goals, or organisational goals changes.

12.9 GROUP NORMS

When there are more than one individual in a group, there is every possibility of tension, confusion and
conflict over the rights, duties and status of the group among its members. For the smooth functioning of the
group, every group, develops its role norms, and rules irrespective of its type. Roles and rules help the group
members as well as managers not only to control the member’s behaviour in group but also specify what
behaviours should group members engage in, so that the group will be effective, perform at a high level, and
achieve its goals. Roles and rules are formal requirements to facilitate the smooth functioning of group.
Norms on the other hand are unwritten rules and regulations, which govern the behaviour and actions of its
members. It is the acceptable standards of behaviour of a group which is commonly shared by its members.
We can only call a group effective groups, which control the behaviour of its members through its norms
and channelise their effort for the attainment of group as well as the organisational goals. Group rewards its
members who conform to the norm in a specified manner through verbal praise and they also get help from
other members. Group also punishes its members when somebody in the group deviates from the norm.

Norms develop when members in a group share a common idea of acceptable behaviour, which, monitor
each other’s behaviour in the group. Many norms develop because several members bring their past
experiences from other groups and from other organisations. Sometimes some critical incidents in the life of
the organisation may also set the norm for the group.

The first and the most commonly used criteria for conformity of the group norms is compliance. It is
assenting to a norm in order to attain rewards or avoid punishment. A realisation is developed among them
that the compliance of norm will bring certain benefits and ignoring it will bring certain costs. Groups put
tremendous pressure on the members to change their attitude and behaviour for the conformity of group
norms.

Following are the advantages of norms for a group:

• Norms enables a group to accomplish its goals.
• Norms help the group to control and regulate the behaviour of its members without external influence.
• Norms enable a group to survive in the face of threat and competition from other groups. They protect
the group and its members from outside pressure and interference.
• Norms help the group and its member to express group’s value and give the group a unique identity of its
own.
• Norms of the group enhance the predictability of group members in terms of performance, appearance etc.

12.10 GROUP DYNAMICS

Starting from the inception to maturity, a group is expected to pass through different stages and may find
many ups and down in the process. No group can be built overnight. It is also not possible for a group to be
static for ever. In case a group remains static, it may not achieve effectiveness on its own and may not be
very useful for the organisation and for the group itself. Group dynamics is defined as the interactions and
forces between group members in a social situation. It refers to changes which takes place within groups and
is concerned with the interaction and forces obtained among group members in a social setting. In the
context of organisational behaviour, it is concerned with the dynamics of members of both formal and
informal groups which exist in organisations. Kurt Lewin has popularised the term group dynamics in the
year 1930s. There are different views about group dynamics. One view is that group dynamics encompasses
the internal structure , formation and process of the group which influences the group itself and the other
groups in the organisation. Another view considers it as a set of techniques and equates it with role playing,
group therapy sensitivity training and other techniques. Another view is that group dynamics involves the
discussion of internal and external determinants of a group change and theories of group formation .

12.11 GROUP DECISION MAKING

Decision making is one of the most important function of a manager. Decision can be taken alone or by a
group. When decision is taken alone by a manager, we call it individual decision making and when a group
takes a decision, it is called group decision making. Though depending upon the time, nature of the problem
and situation, decision can be taken individually or in group. Group decisions may be better than the
individual decisions. As a result, today organisations are constituting teams, groups and committees to take
decisions. Group decisions has its own merits and limitations.

Merits of Group Decisions : Following are the merits of group decision making:
• The old saying, two heads are better than one also applies to group decision making . While taking the
decisions an individual has limited knowledge, capability, ideas and alternatives. In case there is
consensus among the members of a group, group decision can be better than the individual decisions.
• Group decisions are based on more knowledge, experiences and information of several members of the
group . As a result, it improves the quality of decision. At the time of decision making, they take into
account more alternatives.
• As more people are involved in the decision making process, it develops we feeling among the
members, which ultimately enhances the commitment, satisfaction and participation level of members to
implement the decision.

• Group decision facilitates personality development and awareness of the members of the group about the
on going activities of the organisation. It also exposes them to the constraints existing in the organisation.
As a result, they work to implement the decision whole heartedly in order to achieve the group as well
as organisational goals.
Limitations of Groups Decisions : Group decisions are not free from their limitations. Following are some
of the major limitations of group decisions.
• It is time consuming to arrive at a consensus when decision is to be taken by the group. It happens due
to complexity of the problems, personality differences and politics within the group.
• Confidentiality may not be maintained in case of group decisions.
• Group decision can be dominated by a few members, which ultimately affects its spirit and effectiveness.
• In group decision, no body likes to share any responsibility, that is why sometimes it comes out to be a
heartless, ineffective and delayed decision.
• The problem of group think where members may avoid to be too harsh towards the fellow member
could also hinder the group decision making. It is possible when the group is more cohesive.

Check Your Progress C

1) What is Group Cohesiveness?

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2) What do you mean by social loafing?

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3) Distinguish between group roles and group norms.

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4) Distinguish between homogeneous groups and heterogeneous group.

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5) Compare the merits and limitations of group decisions.

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12.12 LET US SUM UP

When an employee joins an organisation, he\she joins as an individual. After joining the organisation , an
individual either joins a group or form a group to satisfy various needs such a psychological, social, safety,
economic and cultural needs, which otherwise may not be fulfilled by the organisation. Thus, groups are
inevitable phenomena in the organisation. As it is difficult to understand, predict and control the behaviour of
an individual in the organisation, it becomes more difficult and challenging for a manager to understand the
behaviour of a group.
There exists different types of groups in the organisation. They can be broadly divided into two types such as
formal and informal. While formal groups are created by the organisation for some specific purpose;
individual employees themselves form informal groups. Informal groups are just like shadows of the formal
organisation. It is difficult to stop the formation of informal groups because no management can fulfil all
types of needs of their employees. Though team is a type of formal group but a team has to posses some
unique features of its aim such as; it always consists of the best employees of the organisation, the members
of team are supposed to be master piece of their own area of work and specialisation, which may not be the
case with a formal group. It is often formed on the basis of seniority, statutory requirements etc.
A group passes through different stages of its development such as storming, forming, norming, performing
and adjourning. With the passage of time a group achieves its cohesiveness to face the threat competition and
achieve its effectiveness. As a result, a structure develops in the group to give a formal shape to its existence
and monitor its day to day activities. Group also develops its norm. A stable group can not be effective for
itself as well as the organisation, so needs to have dynamism of its own. Since individual decisions have its
own limitations, organisation are today forming team and groups to take the advantages of group decision.

12.13 KEY WORDS

Formal Group : A group established by the organisation for the achievement of the specified goal.
Group : A set of two or more persons interacting among themselves for the achievement of a common goal.
Group Dynamics : The interactions and forces between group members in a social situation.
Group Goal : A goal that most members or all members agree on as a common goal.
Group Norms : The formal rules of conduct of behaviours which govern the behaviour and actions of the
group members
Group Think : The tendency of cohesive group to value consensus at the cost decision quality by avoiding
conflict.
Informal Group : A group that emerges when members think that the group will help them achieve their
goal or meet their needs.
Social loafing : The tendency of individuals to exert less effort when they work in a group than working
alone.
Team : A formal work group consisting of people who work intensely together for the achievement of a
common goal.

12.14 TERMINAL QUESTIONS

1) What is a group ? Why do people form groups in organisation? Do you think that formation of
group serve their purpose. Discuss.
2) How is group different from team? Explain the features of different types of formal work group.
3) What do you mean by group development? Explain different stages of the development of a group.
4) What is group structure? Why do a group needs a structure? How does the structure serve the
purpose of group members?
5) What is group decision? Explain its merits and limitations. Do you think that group decision is
better than individual decision ? Give your arguments.
6) Write notes on :
a) Group norms
b) Social loafing
c) Group dynamics
d) Small and large groups

Note : These questions will help you to understand the unit better. Try to write answers for them. Do
not submit your answers to the university for assessment. These are for your practice only.
UNIT 13 COMMUNICATION
Structure

13.0 Objectives
13.1 Introduction
13.2 Definition of Communication
13.3 Nature and Characteristics of Communication
13.4 Communication Process
13.5 Communication Network
13.5.1 Formal Communication
13.5.2 Informal Communication or Grapevine
13.6 Communication Directions
13.7 Principles of Good Communication
13.8 Barriers to Communication
13.9 Methods of Overcoming the Barriers
13.10 Significance of Communication in an Organisation
13.11 How to Make Communication Effective
13.12 Interpersonal Dynamics: Transactional Analysis
13.13 Let Us Sum Up
13.14 Key Words
13.15 Terminal Questions

13.0 OBJECTIVES
After studying this unit, you should be able to:
• discuss the meaning and characteristics of communication;
• explain the process of communication;
• identify the barriers to communication;
• describe the communication network;
• state the significance of communication in an organisation;
• explain the communication direction;
• discuss the principles of communication; and
• explain the methods of overcoming the barriers to communication.

13.1 INTRODUCTION
You must be aware that in order to achieve the objectives of an organisation, the role of all the functions of
management is very important. Apart from these functions, the achievement of objectives largely depends
upon the fact that human efforts are properly coordinated and integrated. Thus, the persons engaged to the
business perform different functional related activities. We can say that working and maintaining of these
relationships is possible through communication, which provides for exchange of information and sharing
ideas. So the communication becomes an essential element in human relationship which provides the
foundation for human interaction. To be more specific and clear, communication performs the energizing
function in the organisation by transmitting information, facts, feelings and ideas thereby making
coordinated efforts possible. In this unit, you will learn the meaning of communication, significance and
process of communication. You will be further apprised with the barriers of communication that obstruct the
flow of proper and effective communication. You will be further exposed to the Interpersonal dynamics in
communication.
2.2 DEFINITION OF COMMUNICATION
The communication can be defined as the process through which two and more persons exchange ideas and
develop understanding. Two aspects are important in communication, first is the transmission of ideas,
feelings, facts, etc. It implies that there must be a receiver if communication is to occur. The sender of
message must consider the receiver while structuring his message from a technical standpoint as well as in
delivering it. When the receiver is not considered, there is either no response or there may be wrong
response. Secondly, it emphasizes the understanding element in the communication. Sharing of
understanding would be possible only when the person, to whom the message is meant, understands it in the
same sense in which the sender of the message wants him to understand.

3.3 NATURE AND CHARACTERISTICS OF COMMUNICATION

In an organisational set up, communication is the means by which people are linked together for a common
purpose, to establish a common interest or mutual understanding. Thus, communication does not simply
involve sending of a message by one person. It also involves the receiver listening to it, interpreting it, and
responding to it or acting according to it.

Communication is essentially a two-way process. It is not completed unless the receiver of the message has
understood the message and his reaction or response is known to the sender of the message. The basic
purpose of communication is to create mutual understanding and unity of commonness of purpose. It may
involve exchange of facts by way of information, thought, or ideas, opinion or point of view, feeling or
emotions. Communication is a continuous process in management. No manager can avoid communicating
with his superior and subordinates in the course of his activities. Inadequate or ineffective communication is
often responsible for making managerial performance unsatisfactory. Managers at all levels and in all
departments must communicate to keep the wheels of operations running smoothly. Thus, communication
pervades the entire organisation.

The characteristics of communication in a business enterprise may be outlined as follows :

• It is a cooperative process involving two parties, one who transmits and one who receives the message.
• The respective parties to a communication must have the ability to convey and listen to what his
counterpart has to communicate.
• Communication includes sending the message as well as receiving the reaction or response to the
message and therefore is a two-way traffic.
• The response to a communication is as essential as the initial communication because response indicates
the impact of the communication.
• The message to be communicated may be conveyed verbally, in writing, by means of signs, gestures or
symbols. More than one means may be adopted to make the communication effective.
• The purpose of communication is that of passing information and understanding, to bring about
commonness of purpose, interest and efforts.
• Communication is a continuous process for effectiveness and efficiency of on going operations, planning
and policy making.
• Communication may flow vertically upward or downward between superiors and subordinates,
horizontally between persons occupying similar ranks in different departments, as well as diagonally
between persons at different levels and in different parts of the organisation. Hence, communication
flows pervade the entire organisation.
3.4 COMMUNICATION PROCESS
The process of communication implies the existence of a sender, a receiver, a message and a motivating
climate for it. The process includes the following steps :
• Clear Perception of the Idea or Problem : No message can be transmitted properly unless the idea or
problem is formulated with clarity of thought and perception on the part of the communicator. It is only
on the basis of clear thinking that the communicator can decide on the means to be adopted to convey
the message.
• Participation of others Involved : The next step is to secure the participation of other persons in the
decision to communicate a message. This may be helpful in clarifying the ideas through interaction with
others, gathering new ideas and suggestions, and in creating a motivating climate for securing positive
response to the message.
• Transmission of the Message : What to communicate to whom, when and how are expected to be decided
before actual transmission of the message. Actual transmission involves preparing the matter and the
form of communication (known as ‘encoding’ the message) and selecting the medium or means of
communication (oral or written) keeping in view the nature of persons or groups to be addressed.
• Motivating the Receiver of the Message : The communicator cannot depend on the message alone to get
an appropriate response from the receiver. He/she must ensure that the receiver of the message is not
only able to interpret the message correctly but is also prepared to act according to it. Thus, apart from
the clarity of the message, it must inspire the receiver to do or behave as desired by the sender of the
message.
• Evaluation of the Effectiveness of the Communication : After the message has been transmitted and
accepted by the receiver, it remains for the communicator to ascertain and evaluate the nature of the
communication. This determines whether and to what extent the receiver has positively responded to the
message.

Elements in the Communication Process

The process of communication may be better understood if we take into account the basic elements in the
communication process. The elements are shown in Figure 13.1.

Figure 13.1 : Elements of Communication Process

Communicator Encoding Message Medium

Feedback Receiver Decoding

Let us now discuss them one by one .

• Communicator : The communicator plays an important role in the process of communication as the
message originates from him/her. Communicators may include managers, subordinates, clients,
customers, as well as outside parties.
• Encoding : Encoding the matter to be communicated is the second element. It refers to preparing the
subject of communication (idea, fact, information, etc.) in a suitable language.
• Message : The encoded message needs to be transmitted by appropriate means. It may be in verbal or
written form depending on the purpose.
• Medium : The medium of communication carries the message from the communicator to the receiver.
Face-to-face verbal communication, use of telephone, inter-com facilities, issue of memorandum, notice,
circulars, statements, telegraphs, telex, etc. are the various means available as media of communication.
Besides, non-verbal media like signals, gestures, etc. may also be used. The choice of medium is an
important aspect of communication, since proper medium also determines its effectiveness.
• Decoding : Decoding refers to the conversion of the message by the receiver into meaningful terms so as
to make it understandable. This is another important element of communication because the receiver’s
response depends upon his understanding of the content and purpose of the message.
• Receiver :The receiver of the message has an equally vital role to play as the communicator. Indeed,
communication to be effective must be receiver oriented, for it is the receiver, his ability to decode the
message and understand it, that contribute to a positive response from the receiver.
• Feedback : The actual response of the receiver to the message communicated to him is known as
‘feedback’. This is an important element to the communication process because it reduces the possibility
of a difference between the intention of the communicator and the interpretation of the message by the
receiver. Two-way communication requires feedback to the initial message sent and enables the sender
to check whether the message received has been properly understood by the receiver.

13.5 COMMUNICATION NETWORK

In an organisation, there are a number of channels or paths connecting various positions for the purposes of
communication. The sum-total of these channels is referred to as communication network. This is made up
of two types of channels, which are interrelated and interdependent, viz. formal and informal. The existence
of these channels is necessary for the execution of organisational communication. Further, these channels
also determine to a very significant extent the smoothness, rapidity, and correctness with which the messages
flow to the organisation.

1.1.1 Formal Communication

The formal channel, as the name implies, is deliberately created, officially prescribed path for flow of
communication among the various positions in the organisation. It is a deliberate attempt to regulate the
flow of organisational communication so as to make it orderly and thereby to ensure that information flows
smoothly, accurately and timely to the points to which it is required. Further, it is also intended to prescribe
for filtering of the information to various points to ensure that information does not flow unnecessarily
thereby causing the problem of overload.

This officially prescribed communication network may again be designed on the basis of single or multiple
channels. A single channel communication network prescribes only one path of communication for any
particular position and all communications in that position would have necessarily to flow through that path
only. Ordinarily, this path is the line of authority linking a position to its line superior. This is what is
commonly referred to as ‘through proper channel’, i.e. through the line of superior-subordinate authority
relationships and its implication is that all communications to and from a position should flow through the
line of superior or subordinate only.

The channel of communication under this system is, no doubt, narrow, but ordinarily, it does allow for flow
of essential information. Besides, it is easy to maintain, supports the authority of the superiors and provides
for closeness of contact thereby reducing channels of miscommunication. It helps in exercising control over
subordinates and in fixation of responsibility in respect of activities carried out by a person in the
organisation.

It has certain basic limitations as well such as, bottlenecks in the flow, enhancing organisational distance,
greater possibilities of transmission errors, screening at various filtering points, etc. These limitations can be
overcome by providing a number of communicating channels linking one position with various other
positions, the system of multiple channels. An unlimited use of this system may however cause confusion
and also undermine the superior’s authority.

13.5.2 Informal Communication or Grapevine

The informal channel of communication, also known as grapevine, is the result of the operation of social
forces at work place. The term grapevine arose during the days of U.S. Civil War. At that time, intelligence
telephone lines were strung loosely from tree to tree in the manner of a grapevine, and the message there on
was often distorted: hence any rumour was said to be from the grapevine. While formal communication
exists to meet the utilitarian needs of the organisation, informal communication is the method by which
people carry on social, non-programmed activities within the formal boundaries of the system. It, thus, exists
outside the official network, though continuously interacting with it. This informal channel is generally
multiple in natures: same person having social relationships with a number of people working in the same
organisation.
This channel also satisfies the communication needs of the various persons in the organisation, more
particularly those persons who mix up with others freely and rely upon informal relationships. Informal
communication is thus a need-fulfillment device generated when it is found that the existing formal
communication is inadequate or insufficient. The requirement of speedier communication creates conditions
for informal communication, which is supplement to the formal one. Chester Barnard opines that
communication function of the executives help the maintenance of informal executive organisation. The
functions of informal executive organisation are the communication of intangible facts, suggestions that
cannot pass through formal channels without the requirement for decisions, without dissipating dignity and
objective authority. L.M. Prasad found in his study that between 50 and 100 percent subordinates
communicating unfavourable work performance, problems relating to work, unfavourable reactions to
various organisational practices, used to communicate through informal channel. The major reasons for
using informal channel for such communication were: it being more convenient and such subject matter of
upward communication did not require formal channel.
Types of Grapevine
Four types of informal communication channels have been identified: They are : single strand, gossip, probability
and cluster. Look at Figure 13.2 which shows the types of grapevine.
Figure 13.2 : Informal Communication Network
In single strand network, the individual communicates with other individuals’ through intervening persons.
In the gossip network, the individual communicates non-selectively. In probability network, the individual
communicates randomly with other individuals according to the law of probability. In the cluster network,
the individual communicates with only those individuals whom he trusts. Out of these informal networks,
the cluster is most popular.

Sometimes word rumour is used as a synonym for the whole informal communication, but there is a
difference between the two. Rumour is grapevine information that is communicated without secure standard
of evidence. It is the injudicious and untrue part of the grapevine. Since, in most cases, it is incorrect
information, it is presumed to be the most undesirable feature of grapevine. Rumour is a product of interest
and ambiguity in a situation. Since perception of interest and ambiguity differs among individuals, rumour
tends to change from person to person. Depending upon the interest, each person subtracts or adds
something to the original message through the process of elaboration and assimilation.

Informal communication, on the other hand, has certain basic limitations. It is less orderly and less static
also. Sometimes, messages communicated through the informal channel are so erratic that any action based
on these may lead to a difficult situation in the organisation. In this case, the irresponsibility of the persons
communicating through the informal channel is the most important factor. Since origin and direction of the
flow of information is hard to pinpoint, it is difficult to assign responsibility for false information or morale
lowering rumours. Moreover, as each person conveying the message may add, subtract or change the
original message according to his motive, informal communication problems multiply. There is a chance that
by the time a communication completes a complex journey, it may be completely distorted.

Check Your Progress A

1) What is the concept of communication process?

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2) Prepare a chart of communication process followed in your organisation

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3) Prepare a list of most frequently used informal channel of communications.

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13.6 COMMUNICATION DIRECTIONS

You have learnt the process and channels of communication. You will also agree that communication of a
general nature is not very responsive. The communication should therefore satisfy the instincts of
individuality and self-respect of the people. Hence, all communications should be directed to the individual
employee as far as possible with the flavour or personal touch in official decorum. Let us learn the directions
of communication which are discussed below :
Communication must move in Both Directions : Communication is a two-way traffic; if forced to be only
one way, it is bound to collapse. The management should be prepared to listen, interpret, amend and
implement in the same manner as to ask, command and direct his employees to implement. Communication
will acquire greater effectiveness if the executive encourages the subordinate to participate in the process
mechanics of achieving the desired goal. This will provide confidence to implement and the inspiration to
respond to the will of the supervisor.

Supervisor’s Role : Supervisors are the most effective chain between the management and the operating
force. It is the supervisors who may interpret and misinterpret the communication from management meant
for the employees. Similarly, they are the persons who know intimately the pulse of the people and it is
through them the management may know the attitude and the thinking of people to make necessary
amendment in their commands, which could be implemented without opposition.

Under the circumstances the selection and training of supervisor is very vital to the functioning of an
enterprise. The supervisor may be trained not only as a post office to communicate the commands of
management received by him to the subordinates but to act as a vital chain between the management and
employees. He should have the capacity to receive communication and communicate in the same spirit to
the subordinates. He should also have the competence to put communication in the manner that it stimulates
employees to respond quickly to the command of supervisors.

Line of Communication should be as Direct as Possible : Communication is apt to be diluted or even

distorted when it passes through different levels of management. It has already been pointed out that
communication is interpreted differently at each level according to the attitude and thinking of persons. In
this process it is possible that by the time the communication reaches the implementing stage it is completely
changed both in letter and spirit. To ward off such an exigency, the communication should be as direct as
possible.

Communication must Reflect the Policies and Practices of Management : Employees with the passage of
time are not merely influenced by what management states but what management does. They become
conversant with the way of functioning with the result that they execute many tasks without reference to the
superiors. It means effective communication is not what is said but what is done. In other words it is not
what people are told but what they accept.

13.7 PRINCIPLES OF GOOD COMMUNICATION

Principles are those fundamental rules, which guides the management in the formulation of policies.
Following are the major principles of communication.
Clarify the Ideas before Communication : The problem to be communicated to the subordinates should be
clear in all perspectives to the executive himself. The entire problem should be studied in depth, analyzed
and stated in such a manner that it is intelligible to the subordinates. For this purpose the competence and
skills of subordinates, their attitudes and aspirations and their environments of work have to be taken into
account before they are asked to respond. Further, if some queries are made by the subordinates, the
executive should answer each of them besides providing the needed guidance for implementing the tasks into
actual practice.
Object of Communication : The object of communication should be crystal clear to the communicator.
What object he proposes to achieve by transmitting a message to the communicatee? Whether he wants
certain information or initiate certain action or change the attitude of the subordinates? The object is related
to the mechanics of communication. It is the object, which will determine the language, tone, and the style
of communication. Such object should be clear for each communication.
Environmental Factors : Environments in which the communicator and the communicatee have to interact
influence the process of communication. Environments within the organisation will determine the attitudes
and aspirations of superiors and subordinates. Whether the environments inter se permit communication
both ways? To what extent are subordinates permitted to participate in the communication process?
Whether the subordinates are responsive to commands of superiors? – all these variables depend on
environmental factors. Even the socio-political environments determining the behaviour pattern of unions
are ultimately related to effectiveness of the communication system.

Consultation with Others : Before actually communicating the message, it is better to involve others in
developing a plan for communication. The consultation will be helpful in crystallising the problem and the
methodology for its execution. Persons consulted shall feel motivated because it may satisfy his/her ego
needs.

Tone and the Contents of the Message : The contents of the message and the tone i.e., the language used,
the manner in which the message is to be communicated, are the other important elements of effective
communication. The language used should be such that it does not offend the sentiments and self-respect of
the listeners. It should be stimulating to evoke response from the listeners. Similarly, your choice of
language particularly your awareness of the words you use, predetermines the reaction of the listeners. It is
said that the word of mouth may turn the best friend into an enemy.

Convey Things of Help and Value to Listeners : While conveying messages to others, it will be better to
know the interests and needs of the people with whom to communicate. If the message relates directly or
indirectly to such interests and needs it will certainly evoke response from the communicatees.

Follow-up Communication : Follow-up action helps communication to be effective. The communicator

may ensure the success of communication by asking questions regarding the efficiency of communication.
The receiver of communication may also be encouraged to respond to communication. If need arises, the
communication process may be improved by the feedback received to make it more responsive.

Communication for Present and Future : Generally communication is needed to meet the existing
commitments. To maintain consistency the communication should aim at future goal of the enterprise as
well. For instance, if you postpone pointing out shortcomings to loyal subordinates, it will create problems
in future. The subordinates will not only feel embarrassed but also feel insulted if such shortcomings are
pointed out in future. The enterprise on the other hand will get a setback in its plan of action. Hence, it will
be consistent to long-term goal that the subordinates should be properly educated as to their shortcomings
immediately when they are noticed.

Correlation between Action and Communication : There should be no contradiction between action and
communication. The effective communication is not merely what you say but more importantly what you do.
This requires good supervision, clear assignment of authority and responsibility, proper reward system and
the enforcement of sound policies.

Be a Good Listener : Communication depends not only on commands but the ingenuity of patient listening.
Subordinates may experience problems of understanding, execution and coordination. These problems could
be removed if you could listen to the queries of the subordinates with patience and then render necessary
advice and guidance if needed.
13.8 BARRIERS TO COMMUNICATION
The prominent barriers to communication are delay, distortion and dilution. Delay is caused by the faulty
working of the distribution system. Distortion of information or message is caused by personal
idiosyncrasies of the intermediate communicators, by impatient or faulty listening of the communicatee,
inadequate vocabulary, badly chosen and empty words. Psychological barriers caused by prejudice,
preconceived notion, distrust of the communicator, misinterpretation of his intention and so on. Status
consciousness among managerial personnel may cause distortion and dilution in communication. Sharing
information with subordinates is interpreted as loss of status because status is equated with the possession of
greater knowledge. Dilution of communication is caused by a yes man telling the boss what does he want to
hear rather than giving him a correct feedback.

Communication barriers may be personal, physical and semantic. Personal barriers arise from human
emotions, values and poor listening habits. Our emotions act as filters in all our communications. We see
and hear what we are emotionally tuned to see and hear, so communication cannot be separated from our
personality. We communicate our interpretation of reality instead of reality itself. One psychological barrier
to communication is the egocentric tendency of all human beings to view every activity from a highly
personal point of view. Communication is not the simple speaking and hearing of words and sentences.
Each man creates for himself a set of filters which affect the transmission of communication from one
individual to another. The sender’s filter causes him to project ideas which are related to his personal frame
of reference and the receiver receives the message from his point of view.

Another personal barrier to communication is the tendency to evaluate and judge others. This can be fault of
both sender and receiver, although it is mostly the receiver who evaluates and judges the sender. The
evaluation is made not only of the communication but also of the sender himself, his dress, speech habits and
physical appearance. Instead of listening to the actual communication, the receiver analyses other irrelevant
facts and often rejects the message on such grounds.

Hierarchy and status can be barriers to communication. The existence of excessive hierarchy creates
physical distance between people. Effective communication exists where anyone in the organisation is
allowed to contact anybody who can help him solve his problems. But organisational hierarchy restricts
channels through which communication should move officially. Members have to contact others through
formal channels. Which may cause hardships. In the organisational hierarchy, a certain status is attached to
a position, which boosts the ego of the incumbent. Subordinates become aware of the existence of such
status in their relationships with their superiors. This may distort the upward communication process.
Subordinates do not report their problems and shortcomings because of status, they cannot be frank with
their boss.

Communication can be thwarted if the potential content of the message threatens the psychological or
economic well being of the recipient. People hear only what they want to hear but if the message has a bad
content, the receiver pretends of not hearing it. This gap can be eliminated by removing fear and distrust.
Many companies use AVOs (Avoid Verbal Orders) to stress the importance of using written rather than oral
communication in order to prevent this type of problems. As mentioned by Koontz and O’Donnell, in oral
communication something in the order of 30 per cent of the information is lost in each transmission.
Therefore, in large scale enterprise, it is impossible to rely on oral communication from one level to another.

Lastly, semantic barriers widen communication gap. Semantics is the science of meaning as contrasted with
phonetics – the science of sounds. Nearly all communication is symbolic; that is, it is achieved using
symbols (words, pictures and actions) that suggest certain meanings. Semantic barriers arise from
limitations in the symbols with which we communicate. Words have different meanings for different
persons. It is rightly said that the meanings of words are not in the words, they are in use. As far as possible
use words which the receiver can understand. Words having more than one use should be avoided in order to
remove misunderstanding.

Check Your Progress B

1) What kind of barriers do you experience while communicating in your organisation.

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13.9 METHODS OF OVERCOMING THE BARRIERS

Considering the importance of effective communication in the successful functioning of business
organisations, it is essential on the part of the management to overcome these barriers. Though it may not be
possible to eliminate these barriers altogether, yet suitable managerial actions in this direction can minimize
the effect of these barriers to such an extent that adequate and objective information flows in different
directions. Following measures can be adopted to check the barriers.
• It is imperative that organisational policy must be clear and explicit and encouraging the communication
flow so that people at all levels realize the full significance of communication. The organisational policy
should be expressed in clear and unambiguous terms that organisation favours the promotion of
communication in the organisation.
• The policy should also specify the subject-matter to be communicated. This does not mean that contents
of communication are to be prescribed in a completely exclusive manner but the list should be
illustrative and it should emphasize that the subject-matter of communication should be determined by
the needs of the organisation.
• Though communication through proper channel is essential for orderly flow of information, it should not
always be insisted upon. The system of communication through proper channel serves the purpose
adequately so far as routine types of information are concerned. However, when and whatever the
situation so warrants, to be overlooked and persons concerned should be told explicitly that insistence
on proper channel is not necessary in all cases.
• Every person in the organisation shares the responsibility of good communication; however, persons at
the top have special responsibility in this regard. A successful communication system will only be
achieved if top management is determined to do so. It must set good examples itself, clearly expects
others to follow them, and check from time to time that there are no bottlenecks.
• Organisation should have adequate facilities for promoting communication. Adequate provision of these
facilities is not sufficient, but proper attention must be given towards their proper and effective use.
They should be carefully looked into and it should be the responsibility of superior managers to
encourage the use of these facilities through the adoption of supportive attitude and behaviour needs
must be emphasized.
• Communication being an inter-personal process, the development of inter-personal relationships based
on mutual respect, trust and confidence is essential for its promotion. In large organisations, status
differentials and class distinctions get overemphasized making interpersonal relationships amongst the
executives highly impersonal and official. The organisational climate, therefore, should be radically
modified to make it more intimate and personal. A modification in the attitude and behaviour of persons
is essential for promotion of communication. Towards this end, an educative programme in
communication should be organised for managers at all levels. In this programme, managers should be
instructed about the need and significance of communication and need for developing close personal
contacts amongst individuals.
• There should be continuous programme of evaluating the flow of communication in different directions.
This would highlight problem in this area, identify their causes and thereby enable the adoption of
suitable corrective actions.

The above suggestions, if incorporated effectively, may help in making the communication more result
oriented.

13.10 SIGNIFICANCE OF COMMUNICATION IN AN ORGANISATION

Effective communication is a basic prerequisite for the attainment of organisational goals. No organisation,
no group can exist without communication. Coordination of work is impossible and the organisation will
collapse for lack of communication. Cooperation also becomes impossible because people cannot
communicate their needs and feelings to others. Every act of communication influences the organisation in
some way or other. It is a thread that holds the various interdependent parts of an organisation together.
When it stops, organisation activity ceases to exist. Even a great idea becomes until it is transmitted and
understood by others.

When communication is effective, it tends to encourage better performance and job satisfaction. People
understand their jobs better and feel more involved.

It is through effective communication that an executive ultimately gets work done by others. Therefore, a
successful executive must know the art of communication. Moreover, communication is a means whereby
the employee can be properly motivated to execute company plans enthusiastically. It is the means by which
behaviour is modified, change is effected and goals are achieved.

The first executive function is to develop and maintain a system of effective communication. It is commonly
said that what nerves are to human organism, communications are to an industrial system. Since
management has been described as getting works done by people, it is necessary to communicate what the
management wishes to accomplish by the various tasks which the organisation has undertaken.
Communication is also an intra management problem. It is the force that binds the people of an organisation
together. Through communication they can attain a common viewpoint and understand and cooperate to
accomplish organisational objectives. Good communication presupposes a two-way flow of information
from the top down and from the bottom up. It can be compared to a mighty river on the banks of which
business life is built.

McGregor sees all communication as a major factor in influencing others. All social interactions involve
communication. In organisation communication is a two-way traffic whereby objectives, orders and policies
are transmitted downward and desires and dis-satisfactions are transmitted upward. A successful executive
should have the ability to receive, analyse and transmit information. Thus, effective communication is an
important skill of management.
Communication is the link between knowledge and information. Possession of knowledge is of no use until
it is converted into information. Hence, knowledge alone is not adequate for managerial success; what is
required is knowledge plus ability to communicate accurately. The popular saying ‘knowledge is power’
should be modified to ‘applied knowledge is power’, and to apply it requires effective communication.

In organisation, communication transmits orders for work, aids in doing the work, buying raw materials and
in advertising and selling the product. It is the means used for hire, fire, promote, praise, urge, censure,
persuade and so on. Communication plays a major role in dealing with employer-employee relations
problems, employee productivity, in short, with all human relations matters. Bad communication is often the
root cause of many problems. Secrecy breeds rumours and hush-hush attitude breeds harmful rumours. As
far as possible, management should supply all relevant information to employees. The employees of an
organisation have great curiosity to know what the company is going to do with, say, computers or bonus or
DAs. If the management does not provide information, the employees will concoct information through
grapevine rumours, which may have damaging results for the company. In order to avoid such problems, it is
the duty of the management to supply all the relevant information through appropriate media at the right
time.

Communication is not confined solely to employees. Management must communicate with its customers,
owners, the community as well as its prospective and present employees. But our discussion is restricted to
interpersonal communication and the organisational communication process.

13.11 HOW TO MAKE COMMUNICATION EFFECTIVE

The principles or guidelines to making communication effective are of a general nature, operationally
speaking a number of more specific suggestions can be made to ensure the effectiveness of communications.
Following measures should be considered for making the communication effective.
• Regulating the Flow of Communications : Planning communication should involve determining the
priority of messages to be communicated so that managers may concentrate on more important message
of high priority. Otherwise, there is a possibility of managers being overloaded with the task of
communication. Similarly, incoming communication should be edited and condensed, if possible, to
reduce the chances of overlooking or ignoring important messages received.
• Feedback : Along with each communication there is need for feedback, that is, communication of the
response or reaction to the initial message. Feedback may include the receiver’s acceptance and
understanding of the message, his action or behavioural response, and the result achieved. Two-way
communication is thus considered to be more helpful in establishing mutual understanding than one-way
communication.
• Language of the Message : Use of appropriate language is essential for effective communication. While
preparing the message, its sender must keep in view the climate, as well as the ability of receiver to
interpret the message accurately. Abstract ideas should be explained and vague expressions avoided.
He/she must keep in view the semantic problem, that is, the possibility of particular words having more
than one meaning. Experimental studies have shown that oral communication accompanied by its
written version is more effective in bringing about the desired response.
• Importance of Listening Carefully : Listening to verbal messages carefully implies an active process.
Half-hearted attention to the communication is often the cause of misunderstanding and confusion. A
listener has to be patient, mentally composed, and avoid distractions while receiving the message. He/
she should be in a position to concentrate on the message and seek clarification, if necessary. On the
other hand, the sender of the message must also be prepared to listen to what the receiver has to say and
respond to his questions, if any.
• Restraint Over Emotion : Strong feelings and emotional stress on the part of either the sender or
receiver of messages are serious handicaps in the communication process. To avoid any negative impact
of emotion on the content of the message, the sender may defer the communication for sometime or
consult to exercise restraint over his psychological feelings to avoid misinterpretation of the message
and to be able to respond to it with a composed mind.
• Non-verbal Signals of Compliance : Verbal messages are generally accepted orally by the receiver. But
whether action will follow the acceptance of the message is not certain. It is, therefore, suggested that in
the case of verbal communication the sender should observe the action of the receiver to ascertain
whether the actions are in conformity with the intent and understanding of the message.
• Mutual Trust and Faith : No amount of seriousness of the parties involved can make the process of
communication effective unless there is mutual trust and faith between them. The best means of
developing these among people in an organisation are honesty of purpose and openness of the managers.
However, it takes time to build such a climate. Both managers and subordinates have to cooperate for the
purpose so that individuals feel free to make suggestions and correct each other’s views without
misunderstanding.

13.12 INTERPERSONAL DYNAMICS : TRANSACTIONAL ANALYSIS

As it is evident that the most potent use of Transactional Analysis is in interpersonal communications both
within an organisation and with its contacts with customers of an organisation.

Within an organisation, TA gives a new way of looking at management and leadership style which can
contribute to the development of appraisal and counselling skills and help to develop the creativity, problem-
solving and decision making skills of groups.

The most valuable use of TA is in team building i.e. the development of the interpersonal skills and goal
planning abilities of a section or department of staff.
Apart from team building, TA has a general contribution to Organisational Development (OD) in which
many concepts can be used at a ‘macro’ level to look at the style of an organisation. TA has also been used
to examine the origins and nature of the mid-life crisis.

Some more diverse areas for the application of TA in organisations include : the training of trainers in group
handling skills, a new approach to the old problem of effective time management (using time structuring), a
possible explanation of some forms of accident proneness (using strokes and games), and as an aid to the
development of influencing and assertive skills for executive in management and for racial minority groups
in organisations. TA has a jargon which can be off-putting and misleading. Where a group is being exposed
to TA for the first time it may be worth for the trainer’s while keeping the jargon to a minimum and to be
sure of using examples, which will be of immediate relevance to the course.
TA implicitly values autonomy (i.e., people being responsible for themselves and their feelings) and
assertiveness (i.e., people being direct about their wants and needs). If autonomy and assertiveness are not
valued by the organisation then the trainee may find it difficult to fit in after training and equally his boss
may find him more difficult to manage.
One of the major strengths of TA is its versatility. It can be used simply as a theory, or as the basis of helping
people to develop interpersonal skills for example, if the group requires the trainer readily accepts the theory
and can make an on-the-spot decision to go more deeply by introducing some exercises.
TA can be related to management theories and ideas viz. Maslow’s Hierarchy of Needs, McGregor’s Theory
X and Y, Herzberg’s Motivation-Hygiene Theory, Likert’s Management systems; Blake’s Managerial Grid,
etc. All of them can be positively integrated with TA.

TA provides an integrated view of personality (ego states), communication (strokes and transactions) and
destiny (scripts). The trainer and the trainees therefore have the opportunity, if they want it, to go beyond a
person’s behaviour and look at the motivation for it. TA also provides an integrated model of thinking,
feeling and doing three basic human characteristics. It also gives people a common language for analyzing
behaviour. TA clearly identifies the ways in which they relate to others. TA also values experimentation
rather than right answers. It therefore implicitly encourages people to try things out and decide what makes
sense. In nutshell, it may be concluded that TA improves the interpersonal relations on various aspects cited
above significantly.

Check Your Progress C

1) Identify four methods of overcoming communication barriers.

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2) What are the significance of communication in an organisation ?

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3) What do you mean by transactional analysis ?

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4) How do transactional analysis help in improving the communication in the organisation.

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13.13 LET US SUM UP

Communication is the process of transferring information and ideas from one person to another. Successful
and effective communication aims at imparting ideas and making one self understand by others.
Communication has occupied a pivotal place in the modern civilization and the success of any organisation/
venture depends on good communication. No managerial activity is possible without communication of
some kind, and the major part of a manager’s working time is devoted to communicating. The true purpose
of communication is to convey the right message, establishing coordination, development of managerial skill
and to maintain good industrial relations by executing programmes and policies of the organisation.
Communication is accomplished by continuous and dynamic process in which the sender encodes an idea,
which is transmitted through a channel to a receiver who decodes the message and gains an understanding of
the idea of the sender. The reverse process of feedback also follows the same pattern. During the entire
process, the disturbance such as noise has been experienced at different stages, which can lead to distortion
of the communication.
Communication takes place either orally or in writing. It could be just one-way or two-way, which allows
the sender and receiver to interact with each other. A two-way communication is regarded well as it brings
about understanding through clarity of the message. In an organisation, communication may take place in
several directions-upward, downward, lateral and diagonal. Words either written or oral convey a very small
part of the communication: most of it is transmitted through non-verbal gestures. A manager ought to be
careful lest his non-verbal gestures contradict his verbal message.

Communication within an organisation flows either through formally designed authority channels or through
informal channels spontaneously formed and cutting across authority levels. Informal channels can have
both positive and negative sides. Cluster chain network of informal communication permits a rapid flow of
information through the formation of a grapevine. Formal communication is transmitted through several
kinds of networks. The choice of a network will depend upon considerations of the complexity of a task,
speed in decision-making in order to adapt to a change, and the satisfaction of members.

Semantic, psychological and organisational barriers cause interference in communication. In order to

achieve effectiveness in communication, managers should consciously try to lower these barriers. Effective
communication tends to encourage better performance and job satisfaction. Principles of good
communication confirm the fact that the tones, contents, and object of the message must be clear and the
communicator must be a good listener. Recent changes in the field of communication have brought the
people nearer to each other.

13.14 KEY WORDS

Communication: It is a process of imparting ideas and making oneself understood by others.
Communication Barriers: Factors that interfere with the process of communication. The barriers include
the distortion of messages due to attributes of the receiver, selective perception, semantic problem, timing
and information overload.
Communication Network: Network formed when a small number of people exchange information in a
well-defined pattern for the purpose of resolving a specific problem or issue.
Communication Process: It is a process by which a sender reaches a receiver with a message.
Formal Communication: Transmission of information direction in the formal organisation structure.
Grapevine: An informal communication network in an organisation that by-passes the formal channels of
communication synonymous with rumour.
Semantic: Is the science of meaning as contrasted with phonetics – the science of sound.
13.15 TERMINAL QUESTIONS

1) Define Communication: Point out the salient features of communication in an organisation.

2) Discuss the various steps in the communication process.
3) What are the main barriers to communication? How can these barriers be removed?
4) How can we make goods communication in our organisation?
5) What is effective communication? Discuss the significance of communication in an organisation.
6) What is grapevine? What are its causes? How would you tackle the problems of grapevine?

Note : These questions will help you to understand the unit better. Try to write answers for them. Do
not submit your answers to the university for assessment. These are for your practice only.

Single Stand Gossip Probability Cluster

UNIT 14 CONFLICT MANAGEMENT

Structure

14.0 Objectives
14.1 Introduction
14.2 Nature and Types of Conflict
14.3 The Conflict Process
14.4 Impact of Conflict
14.5 Levels of Conflict
14.5.1 Intra-Personal Conflict
14.5.2 Inter-Personal Conflict
14.5.3 Inter-Group and Organisational Conflict
14.6 Management of Conflict
14.7 Conflict Resolution Strategies
14.8 Let Us Sum Up
14.9 Key Words
14.10 Terminal Questions

14.0 OBJECTIVES

After studying this unit, you should be able to:

discuss the meaning and nature of conflict;
explain various types of conflict;
describe the process of conflict;
analyse the levels of conflict;
identify the sources of conflict;
explain the process of management of conflict; and
discuss the conflict resolution strategies.

14.1 INTRODUCTION

The work of people in organisations is intensely based on communication and

interpersonal relationships. Managers must therefore have excellent interpersonal
skills to work well with others so as to work effectively in situations that are often
complicated and stressful. Communication in interpersonal relationships frequently
lets in differences and disagreements that can create interpersonal difficulties. In
order to overcome these difficulties, one needs to have a good understanding of the
fundamentals of conflict.

Conflict often occurs when groups interact in organisations. In its simplest form,
conflict is disagreement among parties. When people, groups or organisations
disagree over significant issues, conflict may arise. Particularly, conflict occurs when
a person or a group beJieves its attempts to achieve its goal are being blocked by
another person or a group.

Conflict can be a serious problem in any organisation. Conflict can and does create
such situations that it makes it nearly impossible for people to work together. Before
we conclude that conflict is all bad, it must be stated that conflict also has a positive
side. Although conflict is often considered harmful, it can have some benefits. A total
absence of conflict can lead to apathy and lethargy. A moderate degree of conflict can
stimulate new ideas, promote healthy competition and energize behaviour. In this
unit, you will learn the nature, types, process, impact and the levels of conflict. You
will be further exposed to the management of conflict and various strategies for
resolution of conflicts.

14.2 NATURE AND TYPES OF CONFLICT

Over the years conflict has acquired divergent meanings. Certain commonalities can
be identified there: the conflicting parties must perceive it; that is, it is a perception
issue. Another commonality is the opposition or incompatibility and some form of
interaction. Conflict is disagreement in a social situation over issues of substance or
whenever interpersonal emotions create frictions between individuals or groups.
Issues of substance essentially mean any fundamental disagreement over ends or
goals to be pursued and the means for their accomplishment. Emotional conflict
involves interpersonal difficulties that arise over feelings of anger, mistrust, dislike,
fear, resentment etc.

Robbins defines conflict "as a process that begins when one party perceives that
another party has negatively affected or is about to negatively affect, something that
the first party cares about". The definition encompasses a wide range of conflicts that
people experience in organisations.

There is increasing evidence that not all conflicts are bad for performance and
productivity. Some conflicts do support the goals of the group and improve the
group's performance. These have been labeled functional constructive forms of
conflict. The conflicts that decrease and obstruct group performance are known as
dysfunctional or destructive forms of conflict. Look at Figure 14.1 which shows
functional and dysfunctional conflict.

To gain a perspective on what differentiates a functional conflict from a dysfunctional

one, we need to understand the type of conflict. In organisations, there are three types
of conflicts:
1) Task Conflict
2) Relationship Conflict
3) Process Conflict
 Figure 14.1 : Functional and Dysfunctional Conflict

Adapted from Schermerhorn, Hunt & Osborn "Organisational Behaviour" John Wiley
& Sons, New York.

Task Conflict relates to the content and goals of the work; relationship conflict
focuses on interpersonal relationships and process conflict relates to how does the
work get done.

Research shows that relationship conflicts are almost always dysfunctional. The
dysfunctionality is because the friction and interpersonal hostilities inherent in the
relationship conflicts which increase ego clashes and decrease mutual understanding,
thereby blocking the completion of jobs. The functionality of low levels of process
conflict come about when task roles are clear and adequate time to complete the task
is given; a low-to-moderate level of task conflict consistently demonstrates a positive
effect on group performance because it stimulates discussion of ideas that help groups
perform better.

14.3 THE CONFLICT PROCESS

In order to understand the nature of conflict, one needs to examine the conflict
process. The process consists of four stages which is presented in Figure 14.2

Stage I : Antecedent conditions for conflict exist at the interpersonal level. One party
plans to block the attempts of another party from achieving a goal. In organisations
some potential danger and harm threaten the harmonious functioning and their
existence. This stage is referred to the source of conflict. Examples of these
antecedent conditions are scarcity of resources, heterogeneity of members and
diversity of goals, values. perception; also the degree of dependence between groups
and insufficient exchange of information .
 Figure 14.2: The Conflict Process

Adapted/rom Stephen Robbins "Organisational Behaviour" 9th Ed, 2003.

Stage II : The antecedent conditions must be perceived as threatening for conflict to

develop. The person whose attempts are sought to be thwarted perceives the harm that
might be done to him and feels/realizes the potential damage. When the conflict is
personalised it is termed as felt conflict. Realisation makes him emotionally involve
himself. Emotional involvement makes him feel frustrated, anxious and tense all of
which are symptoms of conflict. The same pattern previously seen in two groups or
departments in an organisation.

Stage III: In this stage, a party engages in action that was planned in Stage I. That is,
he now blocks the other party's attempts in attainment of goals. The conflict is now
out in the open.

Overt conflict covers a full range of behaviours from the subtle, indirect and highly
controlled forms of interference to direct aggressive, violent and uncontrolled
struggle. At the organisational level, strikes or lockouts are the result.

Stage IV: The interplay between different forms of overt conflict behaviour and
conflict handling strategies of stimulation or resolution influence the consequences.
The conflict finally results in an outcome that may be functional or dysfunctional. If
the conflict is handled well, the result is functional conflict. If it is mismanaged the
result is dysfunctional conflict.

The four-stage conflict process model is a very useful framework to understand the
various forms of conflict. Now we are in a position to rephrase Robbins' definition, as
"conflict is the process which begins when A perceives that B is making some
conscious efforts to frustrate A in pursuing his interest. A and B may be an individual
or a group.

14.4 IMPACT OF CONFLICT

Conflict can have both positive and negative impact on individuals, groups and
organisations. On the basis of certain research findings Schein (1980) has compiled a
list of changes.

Intergroup conflict may produce some changes within the group which are:
Group cohesiveness increases
Group becomes task-oriented
Leadership becomes more directive
Rigidification of organisational structure
Group unity is stressed
Prolonged conflict is likely to affect the relationship between groups in the following
manner:
Groups become antagonistic toward each other
Perceptual distortion
Ineffective or absence of communication
Groups apply a double standard
The potential benefits of intergroup conflicts are:
Conflict clarifies the real issue
Conflict increases innovation
Intergroup conflict produces cohesiveness within the group
Conflict serves as a catharsis
Conflict resolution solidifies in group relationships
Schein concludes that conflict is neither inherently good nor bad, but has the potential
to improve or impair the organisation's performance through consequences, Conflicts
that result in increased performance and hence organisation to realize its goals are
known as functional conflicts. Those that hinder its growth and performance may be
termed as dysfunctional conflicts. Therefore, conflict in certain forms can be
functional or dysfunctional depending upon its nature, intensity, duration and the
manner in which it is handled.

This brings us to the very important question of how to distinguish between

functional and dysfunctional conflict? The criteria for differentiating functional from
dysfunctional are neither clear nor precise. No particular level of conflict can be
adopted as acceptable or by the impact it has on the group's performance. Rather the
criteria to base judgment is unit performance. Since a group exists for certain
predetermined goals, the functionality can be measured by the impact it has on group
performance, rather than on a single individual.
There is an optimal high functional level of conflict at which the group's performance
is at its maximum. This is because at that level of conflict the group's internal
environment is characterised by self-criticism and innovativeness. When the conflict
level is low, it may turn dysfunctional, as the group's performance is low due to
apathy, stagnation, lack of new ideas and no responsiveness of the group's members
to change. In these situations conflict may be introduced to stimulate the group. When
conflict is too high, it is again dysfunctional, as the survival of the group is threatened
owing to diversion of energies away from performance and goal attainment activities
of the members.

Check Your Progress A

1) Distinguish between functional and dysfunctional conflict.

2) Why are relationship conflicts dysfunctional?

3) Draw a flow chart of conflict process.

14.5 LEVELS OF CONFLICT

In organisational life, we can distinguish three levels of conflict:

Intra-Personal Conflict
Inter-Personal Conflict
Inter-Group and Organisational Conflict
Let us learn them in detail.

14.5.1 Intra-Personal Conflict

Intra-personal Conflict is conflict within the individual. This arises from frustration,
numerous roles which demand equal attention and goals having both negative and
positive aspects. Of these, goal conflicts assume significance.
Goal Conflict : Goal conflict occurs when the attainment of one goal excn.des the
possibility of attaining another. Three forms are identified:
Approach-approach conflict
Approach-avoidance conflict
Avoidance-avoidance conflict

Approach-Approach Conflict arises when the individual is caught between two or

more positions but mutually exclusive goals. Approach-approach conflict is hardly a
conflict at all, because whichever choice the individual makes, he will attain a
positive outcome.

Approach-Avoidance Conflict occurs when an individual is simultaneously attracted

to and repelled by a single goal object. Generally, approach-avoidance conflicts are
most pervasive and difficult to resolve .

Avoidance-Avoidance Conflict occurs when an individual is forced to choose

between two mutually exclusive, each of which possesses unattractive qualities. Two
kinds of behaviour are likely in these conflicts: vacillation and an attempt to leave the
conflict situation. The forces of attraction and repulsion of the goal, makes the
individual vacillate. Another common behaviour in this situation is an attempt to
escape.
Role Conflict: The final reason for intra-personal conflict is the need of an individual
to play several roles simultaneously but finding time and resources inadequate to do
so.

14.5.2 Inter-Personal Conflict

Interpersonal conflict occurs between two or more individuals in an organisation. It

arises mainly because of differences in perception, temperament, personality, value
systems, socio-cultural factors and role ambiguities. Most managers who have
conflict with other members of the organisation, most often attribute the cause to a
personality problem or defect in the other. A research study (Whetten and Cameron,
1991) proposes that there are four sources of interpersonal conflict. They are:

Personal Differences: Individual differences contribute to uniqueness in people.

These differences can be a major source of conflict. Disagreements stemming
from the differences often become highly emotional and take on moral overtones.
A disagreement about who is factually correct easily turns into a bitter argument
over who is morally right.
Information Deficiency: This source of conflict results from communication
breakdown in the organisation. It may be possible that two people in conflict are
using different information or that one or both have misinformation. Unlike
 personal differences, this source is not emotionally charged and once corrected,
there is little resentment.
Role Incompatibility : This type of conflict draws from both intra individual role
conflict and intergroup role conflict. In the present organisations, many managers
have functions and tasks that are interdependent. However, the individual roles of
these managers may be incompatible.
Environmental Stress: A stressful environment can amplify the above types of
conflict. When scarce resources, downsizing, competitive pressures or high
degrees of uncertainty characterize the environment, conflict of all kinds will be
more probable.

Inter-personal conflict may be understood and analysed with the help of the Johari
Window framework, developed by Joe Luft and Harrington Ingham in the 1960s and
Transactional Analysis of Eric Berne and Thomas Harris.

14.5.3 Inter-Group and Organisational Conflict

Inter-group conflict, which is also referred to organisational conflict refers to conflict

between two groups, departments or sections in an organisation, Conflict between
groups is frequent and highly visible. Many reasons exist for inter group conflict, the
most important of them are discussed below:

Task Inter-Dependence: It refers to the extent to which two departments depend on

each other for assistance, information, compliance or other co-coordinative acts in the
performance of their respective tasks. Task dependence exists when two groups
function with relative independence but their combined output contributes to the
overall performance. Sequential dependence occurs when one group's performance
depends on another group's prior performance. In reciprocal inter dependence
departments exchange outputs and hence are mutually inter-dependent in
accomplishing their tasks. In all the three, conflict arises from differences in'
performance expectations, Generally, conflict will worsen when (a) the more the
activities of one group affect the performance of other groups, (b) the wider the range
of activities in a group that are affected by another, and (c) work flow is more
unstructured.

Task Ambiguity: When it is not clear which group is responsible for performing .
certain activities, it becomes a source of inter-group conflict, leading to the point
where both groups are upset with each other for the task left undone. Task Ambiguity
arises when the organisation is growing or its environment is changing fast. Task
ambiguity can also occur from unstructured and non-directive leadership.
Goal Incompatibility: This often leads to inter-group conflict. Even with positive
managerial efforts to avoid incompatibility for different organisational units, they do
exist leading to conflict.

Competition for Limited Resources: When resources are limited, inter-group

conflict arises in competition.

Competitive Reward Systems: A common belief is that better performance can be

achieved through competition and this belief is reflected in the reward systems.
Competition does increase performance, where the tasks are independent of one
another. However, when tasks require high levels of inter-dependence, competition
can hurt cooperation among members and work groups.

Line and Staff: The traditional organisational structure that has line officers being
assisted by staff officers at different levels has inherent potential for conflict.

Check Your Progress B

1) Distinguish between intra-personal conflict and inter-personal conflict.

2) Distinguish between approach - approach conflict and approach avoidance

conflict.

3) What do you mean by inter-group conflict?

14.6 MANAGEMENT OF CONFLICT

One must know when to resolve conflict and when to stimulate it if one is to avoid its
potentially disruptive effects. When a potentially harmful conflict situation exists a
manager needs to engage in conflict resolution. Conflict should be resolved when its
focus is on the group's internal goals rather than on organisational goals. If the
conflict becomes excessive or destructive the manager needs to adapt a strategy to
reduce or resolve it.
First attempt to determine the source of the conflict. If the source of destructive
conflict is a particular person or two, it might be appropriate to alter the membership
of one or both groups. If it is due to differences in goals, perceptions of the difficulty
of goal attainment or the importance of the goals to the conflicting parties, then the
manager can attempt to move the conflicting parties into one of the five types of
reactions to conflict (i.e., avoidance, accommodation, competition, collaboration and
compromise), depending on the nature of the conflicting parties.

To foster collaboration, it might be appropriate to try to help people see that their
goals are really not as different as they seem to be. The manager can help groups
view their goals as part of a super ordinate goal to which the goals of both conflicting
parties can contribute. If the goals are very incompatible, the manager may need to
develop ways to help the conflicting parties avoid each other. Similarly,
accommodation, competition or compromise might be appropriate for the conflicting
parties.

Let us now briefly examine the various modes through which conflict can be handled
so as to result in optimal unit performance, It has been pointed out that when the
conflict level is too low, the group performance is also likely to be low. A perceptive
manager may recognize that if he were to stimulate conflict it may enhance.
performance. First a brief discussion on stimulating functional conflict is presented
and is followed by a summary of the conflict resolution strategies.

Stimulating Functional Conflict

The tendency to avoid conflict is not always productive and there are times when
there is a need to stimulate conflict. Research studies concur with the idea of
functional conflict. The following are some of the findings of multiple studies:

Situations where conflict is needed for enhanced performance:

The organisation is filled with "yes" men
Employees are afraid to admit ignorance
Compromise is emphasized in decision-making
Managers stress on harmony and peace
Popularity is given more importance than technical competence
People show great resistance to change
There is unusually low rate of employee turnover
Once the need for conflict has been identified one may adopt one or more of the
following techniques:

Manipulate Communication Channels

Deviate messages from traditional channels
Suppress information
Transmit too much information
 Transmit ambiguous or threatening information
Organisational Restructure (Redefine jobs/tasks, reform units/activities)
Increase a unit's size
Increase specialisation/standardisation
Include, exclude or transfer members
Increase interdependence between units
Alter Behaviour Patterns
Attempt to change personality characteristics
Create role conflict
Develop role incongruence

14.7 CONFLICT RESOLUTION STRATEGIES

When the level of conflict is too high, conflict needs to be resolved so as to restore
high performance and optimal level of conflict. In most organisations where the
manifest conflict is high, knowledge of different strategies of conflict resolution is
essential.

Research studies have contributed immensely in this area. A comprehensive package

of conflict resolution strategies has been suggested by Feldman (1985). These may be
classified as follows:
1) Conflict-avoidance strategies
2) Conflict-diffusion strategies
3) Conflict-containment strategies
4) Conflict-confrontation strategies
Let us learn them in detail.

Conflict-Avoidance Strategies: The strategies are characterised by an attempt to

avoid the conflict. There is an absence of action from the part of the manager. This
would usually result in the situation becoming even worse over time. However, there
are some situations in which it is a reasonable way of dealing with the problem. For
example, when the issue seems to be symptomatic of other more basic conflicts - i.e.,
two groups may experience conflict over office space; this may reflect in a deeper
problem about relative power and status. Resolving the space problem would not
address the key issues. In such a situation, the office space conflict may be ignored,
but the basic concern should be dealt with.

Another way in which conflicts are avoided is to force the conflicting parties to
accept a solution decided by a higher-level manager. By this sort of forceful
imposition of solution the conflict is suppressed, the parties do not have an
opportunity to air their grievances, resulting in ineffective resolution. The gains are
short-lived, because the underlying issues are not addressed. Usually the conflict
appears in another form.
Conflict-Diffusion Strategies: The strategies are aimed at keeping the conflict in
abeyance and to let the situation cool-off before any resolution is attempted.
Smoothing is the tactic that has been used to smooth things over by playing down its
importance. The groups are persuaded that their views are not very different and that
there are many similarities in their positions. Hurt feelings are catered to and
smoothing the conflict plays down the importance of the issue. Generally smoothing
is rather ineffective because it does not address the key points of the conflict.
Smoothing is useful in serving as a stopgap measure, letting people cool down and
regain perspective. Escalation is avoided and the disagreement is brought down to
manageable levels. It is also appropriate for non-work issues.

Conflicts may be diffused by focusing on super ordinate goals, that is, higher goals
that the groups share or the long-range objectives that they have in common. This
usually makes the current problem seem insignificant. However, identifying super
ordinate goals is not easy. Achieving these goals requires cooperation between the
groups, so the rewards for achieving the goals must be significant. The most
frequently used super ordinate goal is organisational survival.

Conflict-Containment Strategies: The strategies use representatives to contain

conflict. The manager meets with the representatives of the opposing groups, rather
than the entire membership of the groups to decide the issue. Though this seems
reasonable, in most cases the use of representatives as a means of resolving a group
conflict is consistently negative. This is because the representatives are not entirely
free to compromise and are usually motivated to win. A representative who is not
able to win is likely to be rejected by the group so generally he will try to deadlock a
solution. A way out is to use group representatives from each side to help overcome
individual anxiety about group rejection.
Use of representatives as a means of conflict resolution is most effective before
positions become fixed or are made public.

Managers have tried to increase interaction to decrease conflict. Sometimes increased

interaction can add more fuel to the fire and make the situation worse. However,
structuring the interaction between the groups can be effective in resolving conflict by
providing a framework in which issues are to be discussed and the manner in which
they are to be resolved. Structuring interaction is especially useful in two situations:
(a) when previous attempts to discuss issues openly led to conflict escalation rather
than problem solution; and (b) when a respected third party is available to provide
and enforce some structure in the interactions between the groups.

Bargaining is another strategy, where concessions are exchanged until a compromise

solution is reached. Usually each side begins by demanding more than it really
expects to get. Both sides realize that concessions are necessary in order to reach a
solution, but neither side wants to make the first concession because it may be
perceived as a sign of weakness. Bargaining often results in a compromise agreement
that fails to deal with the problem in a rational manner and is not in the long-term
interests of either group.

Conflict-Confrontation Strategies: An attempt is made to achieve resolution by

confronting the problem. Problem solving is aimed at finding a solution that
reconciles or integrates the needs of both parties who work together to define the
problem and identify mutually satisfactory solutions. Here there is open expression of
feelings as well as exchange of task-related information. For problem solving two
preconditions are necessary: (a) a minimal level of trust between the groups. Without
trust each group will fear manipulation and may not reveal its true preferences, (b)
integrative problem solving takes a lot of time and can succeed only in the absence of
pressure for a quick settlement.

Restructuring the organisation can be an effective conflict resolution strategy. This

works very well when the issue at stake is coordination of work among different
departments. Redesigning the organisation can be used both to resolve the conflict
and to stimulate it. Reducing task inter-dependence between groups and to assign to
each group clear work responsibilities can achieve organisational redesign. Another
way to deal with conflict is to develop over-lapping or joint work responsibilities.
This helps in maximizing the use of the different perspectives and abilities of the
different departments. Look at Table 14.1 which shows strategies for resolving
conflicts.

Table 14.1 : Strategies for Resolving Conflicts

Intra-Personal Conflict
Frustration
Removal of barriers that evoke frustration
Diversion into competitive channels
Goal Conflict
Approach-approach conflict may be tackled by applying concepts from the
theory of Cognitive Dissonance
Approach-avoidance conflict can be resolved by refusing to select either
choice
Avoidance-avoidance conflict may be resolved by examining and solving the
problems causing the conflict
Role conflict can be resolved by minimizing the number of roles and fixing
priorities for them
Most of the intrapersonal conflict can be resolved by developing compatibility
between the conflictee's personal and organisational goals.
 Inter-Personal Conflict
Lose-Lose: In a lose-lose approach both the parties stand to lose.
Win-Lose: In this strategy one party tries to marshal all the resources to win
and the other party loses.
Win-Win: It is probably the most desirable from the human and
organisational standpoint. Energies and creativity are aimed at solving the
problems rather than beating the other party.
Transactional Analysis: The conflict can be resolved by encouraging as
many complimentary transactions as possible.

Inter-Group and Organisational Conflict

Problem Solving: The attempts are made to find a solution that reconciles the
needs of both the parties.
Organisation Redesign: The changing structure, particularly when the
sources of conflict come from the coordination of work among different
departments or divisions.
Super ordinate goals: It is a common goal of both conflicting parties and the
combined efforts of both parties will be needed to realize the goal.
Expansion of Resources: By removing resource scarcity will help resolve the
conflict.
Avoidance: When the issue is trivial, avoidance strategy will be useful.
Smoothening: The process of playing down the differences between groups
and highlighting their common interests.

Check Your Progress C

1) Distinguish between conflict avoidance strategy and conflict diffusion strategy .

2) What do you mean by conflict confrontation strategy?

3) Enumerate the strategies for inter-group conflict resolution .

Activities
1. Conduct a group discussion with your colleagues/group members on the issue of
functionality of conflicts. Assume positions for and against functionality of
conflicts. Collect data/information to substantiate your position, Encourage others
to hold the opposite position and prove lheir view. After the discussion session is
over, reflect and report regarding the conflict between you and your colleagues on
the issue of functionality.

2 Think about a conflict episode in your work place between two parties about
whom you have some knowledge. What were the antecedent conditions which led
to the conflict? How did the two parties perceive the conflict situation? What were
their feelings? In conflict, what sort of manifest behaviour did they show? How
was the conflict resolved? Prepare an analytical report.

3 Which sources of conflict have contributed most in your experience of conflict?

Make a comprehensive list of sources of conflict.

14.8 LET US SUM UP

Conflict often occurs when groups interact in organisations. In its simplest form,
conflict is disagreement among parties. When people, groups or organisations
disagree over significant issues, the disagreement may result into conflict. Conflict
can be a serious problem in any organisation. Before we conclude that conflict is all
bad, it must be stated that conflict also has a positive side. A total absence of conflict
can lead to apathy and lethargy.

Over the years conflict has, acquired divergent meanings. Some conflicts do support
the goals of the group and improve the group's performance. These have been labeled
functional constructive forms of conflict. The conflicts that decrease and obstruct
group performance are known as dysfunctional or destructive forms of conflict.
Task Conflict relates to the content and goals of the work; relationship conflict
focuses on interpersonal relationships and process conflict relates to how the work
gets done.

Antecedent conditions for conflict exist at the interpersonal level. This stage is
referred to as the source of conflict. When the conflict is personalized it is termed as
felt conflict. The conflict is now out in the open. The interplay between different
forms of overt conflict behaviour and conflict handling strategies of stimulation or
resolution influence the consequences. If the conflict is handled well, the result is
functional conflict. If it is mismanaged the result is dysfunctional conflict.

Conflict can have both positive and negative impact on individuals, groups and
organization. Intergroup conflict may produce increased group cohesiveness, the
group become task oriented and unity within the group is stressed.

Prolonged conflict is likely to affect the relationship between groups by clarifying the
real issue, conflict may increase innovation and cohesiveness, conflict may be
cathartic and finally conflict solidifies intergroup relationships.

In organisational life, three levels of conflict are identified -inter-personal,

intrapersonal and inter-group conflict. Intra-personal conflict is conflict within the
individual. Interpersonal conflict occurs between two or more individuals in an
organisation. Inter-group conflict, which is also referred to organisational conflict,
refers to conflict between two groups, departments or sections in an organisation.
Conflict between groups is frequent and highly visible.

When a potentially harmful conflict situation exists a manager needs to engage in

conflict resolution. Conflict should be resolved when its focus is on the group's
internal goals rather than on organisational goals. Managers should first attempt to
determine the sort of the conflict. A perceptive manager may recognize that if he
were to stimulate conflict it may enhance performance. The tendency to avoid
conflict is not always productive and there are times when there is a need to stimulate
conflict. Research studies concur with the idea of functional conflict. When the level
of conflict is too high, conflict needs to be resolved so as to restore high performance
and optimal level of conflict. The conflict resolution strategies include: conflict
avoidance, conflict-diffusion, and conflict-containment and conflict-confrontation
strategies.

14.9 KEY WORDS

Antecedent Conditions: The source of conflict where cause for conflict exists in a
potential form, but it need not lead to actual conflict.
Approach-approach Conflict: Conflict is between two equally attractive choices.

Approach-avoidance Conflict: Conflict between the attractive and repulsive aspects

of a single goal object.

Avoidance-avoidance Conflict: Conflict between two equally unpleasant choices

Avoidance: Withdrawal from or suppressing conflict.

Bargaining: A strategy that involves mutual compromise and concession.

Conflict Resolution: Refers to the manner in which a manager addresses himself to a

conflict situation.

Conflict Stimulation: Refers to a situation when common values are challenged.

Confrontation Strategy: A strategy where the issues of conflict are uncovered and
mutually acceptable solutions found; may be accomplished through the openness of
problem solving, or through a comprehensive organisation redesign.

Containment Strategy: A strategy of controlled conflict management where issues

are selectively discussed through mediating representatives, or structuring the
interaction patterns through bargaining.

Defusion Strategy: Attempts to keep conflict in abeyance and cool tempers through
smoothing or by an appeal to super ordinate goals.

Dysfunctional Conflict: Conflict that hinders group performance.

Felt Conflict: Emotional involvement in a conflict creating anxiety, tension

frustration or hostility.

Functional Conflict: Conflict that supports the goals of the group and improves its
performance.

Inter-Group Conflict: Conflict between the various constituent units of an

organisation.

Inter-Personal Conflict: Conflict between various individuals in an organisation.

Intra-Group Conflict: Conflict within a group between various individuals due to

lack of consensus or inability to conform to group norms.
Intra-Personal Conflict: Conflict within the individual.

Problem Solving: Bringing about change or resolving conflict through interpersonal

discussion.

Smoothing: Conflict defusion by playing down its importance.

Superordinate goals: The long-range aims or higher goals that are common to all in
an organisation.

14.10 TERMINAL QUESTIONS

1) What do you mean by conflict? Explain the process of conflict in an organisation.

2) Discuss the impact of conflict in an organisation. Do you think that conflict
reduces the efficiency and productivity in the organisation? Discuss.
3) Explain various levels of conflict. How do these level influence the organisational
efficiency? Discuss with examples.
4) How can you manage the conflict. Illustrate with examples.
5) Explain various strategies meant for resolution of conflicts, Do you think that
these strategies remove conflicts in the organisations. Discuss with examples.

Note: These questions will help you to understand the unit better. Try to write
answers for them. Do not submit your answers to the university for
assessment. These are for your practice only.
UNIT 15 TEAM BUILDING AND LEADERSHIP
Structure

15.0 Objectives
15.1 Introduction
15.2 Concept of Team
15.3 Types of Team
15.4 Team Development
15.5 Team Building
15.6 Team Effectiveness
15.7 Concept of Leadership
15.8 Importance of Leadership
15.9 Theories of Leadership
15.9.1 Trait Theory
15.9.2 Behavioural Theory
15.9.3 Situational Theory
15.10 Leadership Styles
15.10.1 Autocratic Style
15.10.2 Democratic Style
15.10.3 Laissez-Faire Style
15.10.4 Continuum of Leader Behaviour
15.11 Functions of Leadership
15.12 Leadership Effectiveness
15.13 Qualities of an Effective Leader
15.14 Let Us Sum Up
15.15 Key Words
15.16 Terminal Questions

15.0 OBJECTIVES
After studying this unit, you should be able to :
• discuss the concept of team;
• identify various types of team;
• describe the process of team development;
• explain the team building process;
• analyse the effectiveness of team;
• discuss the concept of leadership;
• describe the importance of leadership;
• explain the theories of leadership;
• describe the functions of leadership;
• analyse the effectiveness of leadership; and
• identify qualities of an effective leader.

15.1 INTRODUCTION
In order to achieve the objectives of an organisation, the restoration of conducive work culture is very
important. Hence, there is a need to work in a team spirit. Managers who act as a key person at different
levels have to coordinate and channelise the efforts of all subordinates and followers in a positive ways.
Leaders are responsible for not only to show the way to the subordinates to work as a team/group towards the
attainment of goals but they are supposed to lead the group/team as well. P.F. Drucker considers leadership
as a human characteristic, which lifts a man’s vision to higher rights, raises man’s performance to higher
standards and builds a man’s personality beyond its normal limits. In this unit, you will learn the concept
and types of team, team development, team building and team effectiveness. You will further learn the
concept and importance of leadership, theories and styles of leadership. You will be exposed to the
functions, effectiveness and qualities of an effective leader.

15.2 CONCEPT OF TEAM

If you visit an organisation, you will find that most of the activities of the organisation are performed by a
group of persons. In an organisation, activities are arranged in such a way that require collective
contribution. Every individual contributes for the achievement of a common goal. The individuals interact,
collaborate, coordinate and influence among the members. Thus, most of the time individuals work in a
team. A team may be defined as a group of two or more people who interact and influence the members for
the achievement of common goal.

Steven and Mary Ann Von have defined team as groups of two or more people who interact and influence
each other, are mutually accountable for achieving common objectives, and perceive themselves as a social
entity within an organisation. Based on this definition, the characteristics of the teams may be elaborated as
under :
• a group of two or more persons
• regular interactions among members
• influence the behaviour of team members
• mutually accountable
• interdependent
• social entity
• achievement of common goal

The frequency of interactions, influence and the nature of task may determine the formation of group, i.e.,
long-term, short-term, formal, informal etc.

15.3 TYPES OF TEAM

Formal teams or groups are created deliberately by managers carrying out specific tasks to help the
organisation achieve its goals. The most prevalent type of formal group is the command team, which
includes a manager and all employees who report to that manager. In some organisations that want to de-
emphasize hierarchy, the titles may change.
Another type of formal team is the committee, which generally lasts a long time and deals with recurrent
problems and decisions. For instance, your university or college probably has a committee for student affairs
to deal with recurring issues that involve students’ lives. While members of this committee may come and
go, the committee remains in place over time.

A quality circle is a kind of team. At Reynolds Metal Company’s McCook Sheet & Plate Plant, based in
McCook, IIIinois, quality circles have been a significant component of a quality programme that has
dramatically improved productivity and quality since 1981. In a programme called Cooperative Hourly and
Management Problem Solving (CHAMPS), quality circle teams meet for an hour weekly to discuss work-
related problems, investigate the causes, recommend solutions, and take corrective action. When a team has
completed its investigation and identified a solution, it makes a formal presentation to the plant
management and staff. Of the almost 475 solutions offered in the first four years of the programme, almost
400 were approved. The total savings from the ideas has been eight times their cost, a significant amount in
a major manufacturing facility where cost control is very important. Over a three-year period, McCook was
able to double the pounds of aluminum per employee that it shipped and deliver more than 2,000 items to a
specific customer without a single rejection.

Some formal teams are temporary. They may be called task forces or project teams. These teams are created
to deal with a specific problem and are usually disbanded when the task is completed or the problem is
solved.

Informal teams or groups emerge whenever people come together and interact regularly. Such groups
develop within the formal organisational structure. Members of informal teams tend to subordinate some of
their individual needs to those of the team as a whole. In return, the team supports and protects them. The
activities of informal teams may further the interests of the organisation. Saturday morning games, for
example, may strengthen the players ties to each other. Or a women’s group may meet to discuss various
actions that can make the organisation a better place for women to work.

For example in 1990, female employees at the telephone giant, NYNEX Corporation, formed mentoring
circles to assist women in moving up the corporate advancement leader. NYNEX women created these
informal groups independently and outside management auspices. The groups encourage, recognize, and
strengthen the bonds of women at all levels of the company. The NYNEX employees turned to the group
format because there was a shortage of female upper-level managers to serve as mentors. However,
participants believe the group process is actually better than individual mentoring. In the circles, which
have a minimum of eight participants and a maximum of twelve, the mentored women have an increased
exposure to different ideas and an increased network. You have already learnt about various types of team in
unit 12.
.
4.4 TEAM DEVELOPMENT
As you have already learnt that the team is formed as a result of interactions and influence of members who
strive for the achievement of common goal. In this process, the team members try to understand others
behaviour, realise the appropriateness of the behaviour and the roles of the team members. This is an on
going process because the composition of team may keep on changing. The new members may join and the
old members may leave the team. Thus, the team members pass through several stages for the development
of team. Bruce Truckman has identified five stage model of team development. You have already learnt this
process in unit 12. Let us learn them briefly :
Forming : This is the first stage of team development. In this stage the members try to explore and
understand the behaviour of the team members. They make their efforts in understanding the expectations of
the team members. At this stage they are polite and try to find out how to fit into the team.
Storming : In the second stage, members start competing for status, leadership and control in the group.
Individuals understand others behaviour and assert their role in the group. As a result inter-personal conflict
starts. Members try to resolve the issues related to the task and working relations. They also resolve the
issues related to the role of the individual in the group.
Norming : The members start moving in a cohesive manner. They establish a balance among various
conflicting forces. They develop group norms and consensus for the achievement of the group goal. At this
stage, cooperative feelings develop among the team members.
Performing : In this stage, the team makes effort for the performance of task and accomplishment of
objectives. The established pattern of relationships improves coordination and helps in resolving conflicts.
Members trust each other and extend their full cooperation for the achievement of the group goal.

Adjourning : As you must be aware that the team is formed for some purpose. When this purpose is
fulfilled, the team may be adjourned. Thus, the breaking up of the team is referred to adjournment.

Kormanski and Mozenter have identified following stages of team development :

• Awareness
• Conflict
• Cooperation
• Productivity, and
• Separation

4.5 TEAM BUILDING

Team building refers to shaping of the team for smooth functioning. Steven and Mary Ann Von have defined
team building as any formal intervention directed toward improving the development and functioning of a
work team. Thus, the process of team building aims at enhancing the effectiveness of a team. Pareek Udai
has suggested following approaches for team building.

The Johari Window Approach : This approach aims at helping members to express their feelings, opinions
reactions and accept feedback from team members. This enhances their sensitivity towards the team
members.

The Role Negotiation Approach : This approach focuses on understanding the expectations of the team
members and accommodating their behaviour according to the expectations. This enhances the collaborative
effort of the team members.

The Team Roles Approach : This approach advocates that there are certain roles which each team members
are expected to perform. Belbin has identified eight roles. They are : Chairman/coordinator, shaper, plant,
monitor/evaluator, company worker, resource investigator, team worker and completer/finisher. Smooth
performance of these roles brings harmony in the effort of the team members.

The Behaviour Modification Approach : This approach focuses on examining members behaviour
towards the team. The individual member evaluates his/her own behaviour and finds out the most suitable
behaviour. Now he/she adopts the most suitable behaviour for the performance of the team.

The Simulation Approach : In this approach an artificial team is formed where members interact, discuss,
deliberate and learn from other members behaviour. In this situation, the team members learn the most
effective way of dealing with the challenges and meet the requirements and the expectations of the team
members.
The Action Research Approach : In this approach, the whole range of behaviour is analysed and evaluated.
The researcher interacts with the team members and evaluates their behaviour. The effort is made to find out
most suitable behaviour of the team members.

The Appreciative Inquiry Approach : This approach focuses on the identification of positive qualities in
the team members. The effort is made to channelise these positive qualities towards the achievements of the
team goal.

Pareek Udai has integrated the above approaches and further suggested following approaches for team
building which are discussed below :

Projection into Future : In this approach, the team members prepare common vision of the team. Several
small teams may prepare their own vision which may be further developed as a broader organisational vision.
The team members may be encouraged to make effort towards realising them,.

Linkage with Individual Goals : As you must be aware that the building block of the team is individual.
Each person has his/her individual goal as well as team goal. Therefore, the individual goal must be
integrated with the team goal. This brings harmony in the team effort and enhances the performance of the
team.

Force Field Analysis : Several forces influence the performance of the team. Team members are required
to analyse these forces and identify the positive forces. These favourable forces are channelised for the
achievement of the team goal.

Strengthening Positive Forces : The positive forces are identified and further reinforced. The
reinforcement of behaviour motivates the members for making efforts towards the realisation of team goal.
This further strengthens the positive behaviour of the team members.

Reducing Negative Forces : In this approach, the forces which inhibit the performance of the team are
identified. The efforts are made to remove these negative forces.

Monitoring : The team members chalk out detailed plans and targets to be achieved. The mechanisms for
achieving these targets are spelt out. The steps are devised to monitor them at each step. The proper
monitoring mechanism facilitates the process of accomplishment of team goal.

While building the team, the managers must take into account those factors which contribute to effective
accomplishment of the team goals. The integrated view of the above approaches may provide better insights
for enhancing the effectiveness of the team.

Check Your Progress A

1) Distinguish between formal team and informal team.

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3) Enumerate five most suitable process of team building.

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15.6 TEAM EFFECTIVENESS

In an organisation, you may find that some teams are very successful and work effectively than others. The
question arises what is team effectiveness? Steven and Mary Ann Von have defined team effectiveness as the
extent to which the team achieves its objectives, achieves the needs and objectives of its members and
sustains itself over time. This means that the effective team has following parameters:
• The degree to which the objectives of the team are achieved;
• The degree to which the team achieves the needs and well being of its members; and
• The ability of the team to survive.

Steven and Mary Ann Von have suggested following elements of team effectiveness:

1) Organisational and Team Environment : Organisational and team environment

relates to the following elements:
• Reward System
• Communication
• Systems
• Physical Space
• Organisational Environment
• Organisational Structure, and
• Organisational Leadership

2) Team Design : It involves following elements:

• Task Characteristics
• Team Size; and
• Team Composition

3) Team Processes : It includes:

• Team Development
• Team Norms
• Team Roles; and
• Team Cohesiveness

Kormasnski and Mozenter have identified following elements which contribute to team effectiveness:
• Members understand and are committed to group goals;
• They are friendly, concerned and interested in others;
• They acknowledge and confront conflicts openly;
• They listen to others and understand them;
• They involve others in the process of decision making;
• They recognize and respect individual differences;
• They contribute ideas and solutions;
• They value ideas and contributions of others;
 • They recognize and reward team efforts; and
• They encourage and appreciate comments about team performance.
These are the major elements contributing to the team effectiveness. Moreover, there may be several factors
which influence the team effectiveness. Managers are required to make detailed analysis of these factors and
find out broader perspectives of the team effectiveness. The proper management and implementation of
these elements may certainly improve the effectiveness of the team.

15.7 CONCEPT OF LEADERSHIP

Leadership may be defined as a process of influencing group activities towards the achievement of
certain goals. Thus, the leader is a person in a group who is capable of influencing the group to work
willingly. He guides and directs other people and provides purpose and direction to their efforts. The leader
is a part of the group that he leads, but he is distinct from the rest of the group. As defined by George R.
Terry “Leadership is the activity of influencing people to strive willingly for group objectives”. Leadership
naturally implies the existence of a leader and followers as well as their mutual interaction. It involves inter-
personal relation, which sustains the followers accepting the leader’s guidance for accomplishment of
specified goals.

Managers have to guide and lead their subordinates towards the achievement of group goals. Therefore, a
manager can be more effective if he is a good leader. He does not depend only on his positional power or
formal authority to secure group performance but exercises leadership influence for the purpose. As a leader
he influences the conduct and behaviour of the members of the work team in the interest of the organisation
as well as the individual subordinates and the group as a whole. But leadership and management are not the
same thing. Management involves planning, organising, coordinating and controlling operations in
achieving various organisational goals. Leadership is the process which influences the people and inspires
them to willingly accomplish the organisational objectives. Thus, a manager is more than a leader. On the
other hand, a leader need not necessarily be a manager. For instance, in an informal group, the leader may
influence the conduct of his fellow members but he may not be a manager. His leadership position is due to
the acceptance of his role by his followers. But, the manager, acting as a leader, has powers delegated to him
by his superiors. His leadership is an accompaniment of his position as a manager having an organised group
of subordinates under his authority. Thus, managerial leadership has the following characteristics.
• It is a continuous process whereby the manager influences, guides and directs the behaviour of
subordinates.
• The manager-leader is able to influence his subordinates behaviour at work due to the quality of his own
behaviour as leader.
• The purpose of managerial leadership is to get willing cooperation of the work group in the achievement
of specified goals.
• The success of a manager as leader depends on the acceptance of his leadership by the subordinates.
• Managerial leadership requires that while group goals are pursued, individual goals are also achieved.

8.8 IMPORTANCE OF LEADERSHIP

The importance of managerial leadership in an organisation arises from the basic nature of the managerial
leadership roles of managers. Combination of these roles invariably leads to not only effective task
performance and fuller achievement of organisation goals but also human satisfaction alround. This is
because management is based on the formal authority of managers. Whereas, being leaders of work group
enables managers to achieve results on the basis of inter-personal relations. The leader manager identifies
himself with the work group. He acts as an intermediary between his subordinates and the top management.
He takes personal interest in the development of his subordinates, helps them in overcoming individuals
problems through advice and counselling, creates appropriate work environment and builds up team spirit.
As a result the leader manager is able to develop better team work. The subordinates willingly accept his
advice, guidance and direction and are inspired as a group to accomplish the specific goals.

15.9 THEORIES OF LEADERSHIP

There are a number of theories which provide explanations regarding various aspects of the leadership
phenomenon. Let us examine some of the theories.
15.9.1 Trait Theory

This is the earliest theory based on a distinction between the personal qualities or traits of successful leaders.
The theory suggests a list of personality traits or characteristics which must be present in a person for his
success as a leader. According to this theory, leaders must be physically strong and well-built, intelligent,
honest and mentally mature. He must have initiative, self-confidence, ability to take decisions, and so on.
Since all individuals did not have these qualities, only those who had them would be considered potential
leaders. Following are the limitations of this theory :
• The trait theory is not accepted as a valid theory.
• There is no universally agreed list of traits associated with successful leaders.
• It is difficult to measure the traits and, therefore it is not always possible to distinguish between leaders
and followers.

2.2.2 Behavioural Theory

The behavioural theories of leadership are based on the belief that leaders can be identified by reference to
their behaviour in relating to the followers. In other words, it is suggested that leadership can be described in
terms of what leaders do rather than what they are. Behavioural theories have been presented mostly on the
basis of research studies. According to the studies conducted in the State of Michigan, USA, leaders who
treat their subordinates as human beings, are concerned about their well-being, and encourage and involve
them in goal setting, are more effective. They are described as ‘employee-centred’ leaders. On the other
hand, leaders who are ‘production-centred’ emphasize job performance in conformity with prescribed
standards. He exercises close control over the employees as if they were tools of production. Such a
leadership is associated with unsatisfactory work performance due to the low morale of employees.

Studies conducted in Ohio State University showed two dimension of leader’s behaviour viz., Initiating
structure and Consideration. Initiating structure refers to the leader’s behaviour in delineating the
relationship between himself and members of the work group and in endeavouring to establish well defined
pattern of organisation, channels of communication and methods of procedure. Whereas, consideration
refers to behaviour indicative of friendship, mutual trust, respect and warmth in the relationship between
leader and the members of his staff.

Figure 15.1 : Combination of Initiating Structure and Consideration

High High
Consideration Structure
and and
Low Structure Low Consideration
 Low Structure High Structure
and and
Low Consideration Low Consideration

(Low) Initiating Structure (High)

Look at Figure 15.1 which shows that the behaviour of a leader may be described as any mix of both
dimensions.
2.2.3 Situational Theory

In the situational theory of leadership the success of leadership depends upon the situation in which the
leader operates.

According to leadership contingency model developed by Fred E. Fiedler, the leader’s effectiveness depends
upon three situational factors:

• Leader followers relations, that is the degree of follower’s trust, confidence and respect for the leader.
• The extent to which the task performed by subordinates is routine or non routine (known as task
structure).
• The position power of the leader, that is, the power associated with the rank and position of the leader in
the organisation. He defined favourableness of a situation as the degree to which the situation enables
the leader to exert his influence over his group.

The most favourable situation for leaders to influence their group is one in which they are well liked by the
members, the task is highly structured (i.e. ,routinised and predictable) and the leader has enormous power
attached to his position. On the other hand, the most unfavourable situation for leaders is one in which they
are disliked, the task is highly unstructured and he will have little position power.

Figure 15.2 : Appropriateness of Leadership Behaviour for various

Group situations

Task Oriented Relationship Oriented Task Oriented

Very favourableleadership situation Intermediate favourableleadership situation
Very unfavourableleadership situation

Look at Figure 15.2 which shows that task oriented leaders tend to perform best in group situations that are
either very favourable or very unfavorable to the leader. On the other hand, relationship-oriented leaders
tend to perform best in situations that are intermediate (medium) in favourableness.

Another situational theory is the Path-Goal Theory. According to this theory, leaders are effective due to
their influence on followers’ motivation, ability to perform, and their satisfaction. Subordinates are
motivated by the leader to the extent he is able to influence their expectancies relating to the performance
and attractiveness of the goal. Further, individuals are satisfied with their job if they believe that (a)
performance of the job will lead to desirable outcomes, and (b) with hard work they will be able to achieve
the desirable outcomes.
Check Your Progress B

1) What do you mean by team effectiveness ?

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15.10 LEADERSHIP STYLES

The dominant behaviour pattern of a leader-manager in relation to his subordinates is known as leadership
style. There are three basic styles of leadership as follows:

1) Autocratic or Authoritative Style

2) Democratic or Participative Style, and
3) Laissez-faire or Free-rein Style

15.10.1 Autocratic or Authoritative Style

An autocratic leader centralises power and decision making in himself and exercises complete control over
the subordinates. In this style subordinates are compelled to follow the orders of the leader under threat or
penalties. They have no opportunity to take part in goal setting, or take initiative or make suggestions. They
are subject to close supervision and, thus have a tendency to avoid responsibility. The autocratic manager
has little concern for the well being of employees, who suffer from frustration and low morale. They do not
have any sense of belonging to the organisation and try to work as little as possible.

Limitations: It should be clear from the above that there are several limitations of the autocratic style of
leadership.
• It results in low morale due to the inner dissatisfaction of employees.
• Efficiency of production goes down in the long run.
• It does not permit development of future managers from among capable subordinates.

Despite the above limitations, autocratic leadership can be successfully applied in the following situations:
• When subordinates are incompetent and inexperienced.
• The leader prefers to be active and dominate in decision-making.
• The company endorses fear and punishment for disciplinary techniques.
• There is a little room for error in final accomplishment.
• Under conditions of stress when great speed and efficiency are required.

Since the leader manager takes all decisions in autocratic style, there is uniformity and consistency in
decision-making.

15.10.2 Democratic or Participative Style

The democratic style is also known as participative style. In this style, decisions are taken by the leader in
consultation with the subordinates and with their participation in the decision-making process. The
participative leader encourages subordinates to make suggestions and take initiative in setting goals and
implementing decisions. This enables subordinates to satisfy their social and ego needs, which in turn, lead
to their commitment to the organisational goals and higher productivity. Frequent interactions between the
manager and subordinates help to build up mutual faith and confidence.
Several benefits can be derived from the participative style of leadership as listed below:
• It helps subordinates to develop their potential abilities and assume greater responsibilities.
• It provides job satisfaction and improves the morale of employees.
• The group performance can be sustained at a high level due to the satisfied and cohesive nature of the
group.

However, the democratic style cannot be regarded as the best style under all circumstances. Its limitations
are as follows:
• Decisions taken through consultation may cause delay and require compromises to meet different
viewpoints.
• A few vocal individuals may dominate the decision-making process.
• No one individual may take the responsibility for implementing the decision taken by the group as a
whole.

Despite the above limitations, democratic style is suitable in the following situations:
• When subordinates are competent and experienced.
• The leader prefers participative decision-making process.
• Rewards and involvement are used as the primary means of motivation and control.
• The leader wishes to develop analytical and self-control abilities in his subordinates.
• The organisation has clearly communicated its goals and the objectives to the subordinates.

15.10.3 Laissez Faire Leadership Style

Laissez faire leadership style is just the opposite of autocratic style. A manager, who adopts this style,
completely gives up his leadership role. The subordinate group is allowed to make decisions and it is left to
the members of the group to do as they like. The role of any leader is absent. The group members enjoy full
freedom as regards goal setting and acting on it. Hence, there is chaos and mismanagement of group goals.
However, laissez faire leadership is found to be quite suitable where the subordinates are well-trained,
competent and the leader-manager is able to fully delegate the powers of decision-making and action to the
subordinates.
Laissez faire style is suitable in the following situations:

• when leader is interested in delegating decision-making fully.

• Subordinates are well trained and highly knowledgeable.
• Organisation goals have been communicated well.

Despite a few suitability, this style should be adopted rarely because it may lead to chaos and
mismanagement.

Look at Figure 15.3 which shows diagrammatic representation of all these leadership styles :

Figure 15.3 : Diagrammatic Representation of Leadership Style

O O O

O O O O O O

O O O O O O

O O O

Autocratic Style Democratic Style Laissez Faire Style

15.10.4 Continuum of Leader Behaviour

Robert Tannenbaum and Warren Schmidt depicted a broad range of leadership styles on a continuum which
moves from authoritarian or boss-centred leader behaviour at one end to democratic or subordinate-centred
behaviour at the other end.

Figure 15.4 : Continuum of Leader Behaviour

(Democratic)_____________________________________________(Authoritarian)

Relationship Oriented _______________________________________Task Oriented

Leader permitsSubordinates to function within limits defined by superior Leader presents
problem, getsSuggestions and makes decision Leader presents ideas and invites questions
Leader sells decision Leader makes decision and announces it
Leader defines limits; asks group to make decision Leader
presentstentative decision subject to change

Look at Figure15.4 which shows that leaders who are at the authoritarian end of the continuum tend to be
task-oriented and use their power to influence their followers. He enjoys a high degree of control and
delegates very little authority. On the other hand, leaders who are at the democratic side tend to be group
oriented and provide their followers considerable freedom in their work.

The Figure 15.4 presents a range of leadership behaviour available to a manager. Each type of action
represents the degree of authority used by a leader and the degree of freedom which a subordinate enjoys in
relationship to his superior. The left side shows a style where control is maintained by a manager and the
right side shows the release of control. However, neither extreme is absolute and authority and freedom are
never without their limitations. Thus, a question is pertinent: At which point along with the continuum
should a manager adopt his behaviour? In fact, there is no ready-made answer, but it depends upon three
particular.
1) Forces in manager, that is, his value system, his confidence in his subordinates, his own leadership
inclinations, and his feeling of security in an uncertain situation.
2) Forces in subordinates, that is, their need for independence, readiness to
assume responsibility for decision making, level of tolerance for ambiguity,
understanding and identifying organisational goals, interest in the problem,
knowledge and experience to deal with the problems and learning to expect
to share in decision-making.
3) Forces in the situation, that is, type of organisation, group effectiveness, the
problem itself and the pressure of time.

Although the leader continuum approach provides a wide range of leader’s behaviour. It identifies the
number of behavioural alternatives available to a manager. Moreover, the success of the leadership style
depends on the modification of the leader to the needs of the situation. Its major limitation is that it supports
undimensional thinking. It has been found that employees orientation and task-orientation are not opposite
ends on a continuum.

Tannenbaum and Schmidt developed another pattern of choosing leadership behaviour. They feel that
because of changes in social system, organisational environment, the old continuum pattern is no long valid.
Organisations do not exist in vacuum, but are affected by changes that occur in the society. Thus there
would be more factors in situational variables affecting the leadership pattern. These forces lie outside the
organisation interacting continuously with the organisational environment. Thus, new continuum of
leadership pattern is more complex as compared to previous one.
Figure 15.5 : Continuum of Leader Behaviour
 Manager Power
and Influence

Area of Freedom for

Manager

Area of Freed
non-mana

Manager able to
make decisions Manager must sell
which non-managers his decision before
Manager presents
adopts gaining acceptance
tentative decision Manager present
subjects to change after problems, get inputs Look at Figure 15.5
non-manager inputs non-managers then de
Manager presents
tentative decision Manager presents Ma
subjects to change after decision but must mana
non-manager inputs respond to questions decisi
form non-managers defined
Resultant manager and non-m
anager behaviour

The Organisational Environment

The Social Environment

which shows that the total area of freedom shared by manager and non-manager is constantly redefined by
interaction between them and the forces in the environment. The arrows indicate the continual flow of inter
dependence influence among systems and people. The points on the continuum designate the types of
manager and manager’s behaviour that become possible with any given amount of freedom available to
them. This continuum is more complex and dynamic reflecting the organisational and societal realities.
A Successful leader is one who is keenly aware of those forces, which are more relevant to his behaviour at
any given time. He accurately understands himself, the individuals and the group he is dealing with, and the
organisation and the broader social environment in which he operates. However, merely understanding these
factors correctly is not enough but he can be successful only when he is able to behave appropriately in the
light of these perceptions and understanding. Thus, Tannenbaum and Schmidt have observed that “The
successful manager can be primarily characterised neither as a strong leader nor as a permissive one.
Rather he is one who maintains a high batting average in accurately assessing the forces that determine what
his most appropriate behaviour at any given time should be and in actually being able to behave accordingly.
Being both insightful and flexible, he is less likely to see the problem of leadership as a dilemma.”

15.11 FUNCTIONS OF LEADERSHIP

A leadership functions of a managers are closely related with his managerial functions. But they are
somewhat different as well as overlapping. Essentially, the leader as a manager has to set the group goal,
make plans, motivate and inspire subordinates and supervise performance. But has to perform several other
functions as leader. The more important to these functions are given below: :

1) To develop team work : One of the primary functions of the leader is to develop his work-group as
a team. It is his responsibility to create a congenial work-environment keeping in view the subordinates
competence, needs and potential abilities.

2) To act as a representative of the work-group : The leader of a work-group is expected to act as a

link between the group and top management. When necessary, the leader has to communicate the
problems and grievances of his subordinates to the top management.

3) To act as a counsellor of the people at work : Where the subordinates face problems in connection
with their performance at work, the leader has to guide and advise the subordinates concerned. The
problems may be technical or emotional in nature.

4) Time management : The leaders’ functions include not only ensuring the quality and efficiency of
work performed by the group, but also checking on the timeliness completion at different stages of work.

5) Proper use of power : While exercising power or authority in relation to his subordinates, the leader
must be careful about using his power in different ways according to the situation. It may be necessary
to use reward power, coercive power, or expert power, formal or informal power, depending on what will
stimulate positive response from the subordinates.

6) Secure effectiveness of group-effort : To get the maximum contribution towards the achievement
of objectives the leader must provide for a reward system to improve the efficiency of capable workmen,
delegate authority, and invite participation of employees in decision-making, ensure the availability of
adequate resources, and communicate necessary information to the employees.
15.12 LEADERSHIP EFFECTIVENESS
We have discussed above how different styles of leadership reflect the behaviour pattern of the leaders. The
manager leader may be effective or ineffective depending upon the leadership style adopted by him. He may
be employee-centred (i.e., relations-oriented) or production centred (i.e., task oriented). In other words,
the style may reflect leaders concern for people or concern for production. But in reality, the manager-
leader may combine his concern for people and concern for production with different degrees of emphasis on
each. This idea was developed in the form of what is known as ‘Managerial Grid’, which is briefly
outlined below.
Managerial Grid : The managerial grid refers to a diagrammatic representation of the possible
combinations of concern for people and concern for production which may be reflected in the style of
leadership. The concept of managerial grid was developed by Blake and Mounton in 1964.

Figure 15.6 : Diagrammatic Representation of Managerial Grid

1,9(Country club) 9,9(Team)

51,1(Impoverished) 59,1(Task)
(Low) Concern for Production (High)

As shown in the Figure 15.6 , there are nine degrees of concern each for people and production. Combining
lower degrees and higher degrees of concern, five basic styles of leadership are presented as follows (No. 1
representing minimum concern, and No. 9 maximum concern):
• 1,1 style, where the manager has minimum concern for people as well as production, is known as
impoverished management. This represents a casual attitude of the manager towards his job and the
organisation cannot be expected to survive”.
• 9,1 style reflects the manager’s highest concern for production but least concern for people. It is known
as task management.
• 1,9 style in which the manager has the maximum concern for people and minimum concern for
production is described, as country club management. It implies that the manager is inclined to keep
people happy expecting that happiness will make them more efficient, which is not true for business
enterprises.
• 5,5 styles represents moderate concern for both people and production and therefore known as middle
of road management. This style of leadership is preferred by many managers whose approach to
management is that of “live and let live”.
• 9,9 style is the best combination of concerns for people and production with maximum concern for both.
In this case, the manager tries to integrate the objectives of the organisation with the objectives of the
people employed. This style therefore represents team management. It may be suggested that 9.9
management style is likely to be most effective.

Effective and Ineffective Styles

Effectiveness depends on the situations demands of a specific environment. When the style of a leader is
appropriate to a given situation, it is termed effective. On the other hand, when the style is inappropriate to
a given situation it is termed ineffective. Look at Figure 15.7 which shows the effective dimension of
leadership.

Figure 15.7 : Diagrammatic Representation of Effectiveness Dimension

Effective Dimension
 Task Behaviour Dimension

The basic styles of leadership are further divided into eight styles according to their degrees of effectiveness
i.e., as more effective and less effective styles. The following are regarded as more effective styles.

Executive : Used by a manager this style attaches maximum importance to work as well as the people.
Such a manager is able to motivate people and utilise the team effectively. He sets high standards of
performance and can accomplish the goals successfully.

Developer : The manager adopting this style attaches greatest importance to the people at work and has
minimum concern for work. He devotes maximum attention to the development of individual subordinates
and believes in their capability.

Benevolent Autocrat : The manager whose attitude and style are those of a benevolent autocrat has high
concern for work and low concern for people. But he is able to achieve the goals without causing any
resentment among the subordinates.

Bureaucrat : With a bureaucratic style the manager is able to control the work-situation and achieve goals
by means of rules and procedure. He has minimum concern for people and work as such.

The less effective (or ineffective) styles are stated to be those which are not appropriate to the situation,
these are as follows:

Compromiser : A manager who is equally concerned with people and work in a situation which requires
emphasis on one of these, is a poor decision-maker due to pressures on both counts. Thus, he is ineffective
manager leader.

Missionary: The missionary manager is one who aims at harmonious relations among people as an ideal
and is little concerned with work, although the situation requires greater emphasis on work. He is unable to
get results.
Autocrat: An autocratic manager is interested only in work and results thereof, whereas the situation
requires relation-orientation. Such a manager lacks confidence in his subordinates and depends on high-
handed management. So his leadership fails in the long-run.

Deserter : The manager who is concerned with neither people nor work reflects a passive attitude towards
his job. He is an escapist.

Factors Influencing Leadership Effectiveness

Taking an overall view of the question of effectiveness of leaders, some writers have identified a number of
factors that influence the leader and his effectiveness. These factors are:
• The leader’s own personality, past experience and expectations.
• The expectations and behaviour of his superiors.
• The subordinates’ characteristics, expectations and behaviour.
• The requirements of tasks to be performed by subordinates.
• Expectations and behaviour of fellow managers (peers).
• Organisational culture (climate) and policies.

13.13 QUALITIES OF AN EFFECTIVE LEADER

A leader cannot be effective unless he possesses certain qualities of head and heart. Irrespective of the
nature of the manager-leader’s own responsibilities of the job and the style adopted by him, a number of
qualities are generally found to be possessed by the effective leader. The more important of these qualities
are listed below:
• Mental and physical health: To be able to bear the pulls and pressures of leadership, it is essential for
the leader to have sound health both mental and physical. Along with a balanced temperament and
optimistic outlook, he must possess stamina and sound health.
• Empathy: A leader must have the capacity to appreciate others and look at things from his subordinates’
angle. This attitude of the leader motivates his subordinates.
• Self-confidence: Confidence about one’s leadership ability makes it possible for a leader to analyse and
face different situations and adopt a suitable style. Lack of self-confidence often prevents managers to
adopt participative style and repose trust in his subordinates.
• Awareness of others’ opinion about himself : A leader having self-confidence should not ignore how
others perceive him as a leader. He must be aware of his strength and weakness in relation to his
subordinates.
• Objectivity: A leader who is effective does not get carried away by emotions. He is fair and objective in
his dealings with subordinates.
• Knowledge and Intelligence: A leader to be effective must have knowledge of group behaviour, human
nature, and activities involving technical and professional competence. He must have intelligent
perception of human psychology and ability to think clearly and argue cogently on points of dispute.
• Decisiveness: Decision making is a necessary but difficult task for every leader. A leader often has to
take initiative, exercise mature judgement while taking decisions. Besides, he has to have foresight,
imagination and creative ideas for effective decision making. Open mindness is yet another essential
quality for that purpose.
• Ability to Communicate: The skill of effective communication of goals and procedure of work is
extremely important in leadership. To achieve desired results and coordination of efforts in a group, oral
communication is of great significant.
• Sense of purpose and responsibility: A leader must have clarity of purpose and responsibility to be able
to inspire his subordinates to achieve specific goals.
• Other Qualities : Enthusiasm, courage, sense of direction, judgement, tact, courtesy and integrity are also
regarded as necessary qualities for a leader to be effective.

Emerging Leadership Qualities

As you must be aware that several changes like globalisation, liberalisation, technological revolution,
increasing participative styles of functioning, decreasing hierarchical structure and gradual transformation of
organisation structure; etc. are taking place very fast. These changes require new leadership quality to
manage the dynamic situations. Pareek Udai has grouped the characteristics of leaders of tomorrow into
two categories : Personal qualities and role related qualities. They are as follow.

Personal Qualities include :

• Internality
• Maverick Mindset
• Optimism
• Self restraint
• Value orientation
• Social concern
• Rootedness; and
• Empowering

Role Related Qualities include :

• Envisioning
• Strategy
• An enabling structure
• Customer orientation
• Networking competence
• People first
• Synergy building; and
• Culture building

Check Your Progress C

1) Distinguish between Autocratic style and Democratic style of leadership.

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2) Enumerate five most important functions of leadership.

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3) What do you mean by leadership effectiveness ?

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4) Enumerate five most important role related qualities of leader.

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15.14 LET US SUM UP

One of the most important functions of a manager is to create team spirit among his subordinates. Team
building is a difficult task and requires dynamic leadership. It is difficult because people with individual
differences join organisation with different personalities, value system, attitude and needs. The individuals
have a tendency to feel close to those who have similar values and attitude, therefore, people like the
company of those who are alike them. To integrate and polymerize the efforts of the people it is therefore
important that leader must understand their need, hierarchy, their problems, attitude and value system.
Leadership is a process of influencing group activities towards the achievement of certain goals. It is a
continuous process whereby the manager influences, guides and directs the behaviour of subordinates to
secure willing cooperation of the group. Combination of the managerial and leadership roles in the manager
leads to not only effective task performance but also human satisfaction all round.

The trait theory of leadership suggests that the success of a leader depends mainly on his personality traits
or characteristics. Whereas the behavioural theory of leadership is based on the belief that leaders can be
identified by reference to their behaviour in relations to the followers. In the situational theory of leadership
the success of leadership is said to depend upon the situation in which the leader operates. The situational
factors which influence leader’s effectiveness include leader-follower relation, the task structure and the
position power of the leader.

The dominant behaviour pattern of a leader-manager in relation to his subordinates is known as leadership
style. There are three basic styles of leadership : Autocratic, Laissez faire and Democratic style.

An autocratic leader centralises power and decision making in himself and exercises complete control over
the subordinates. Hence it results in low morale, and decline of productivity in the long run. In democratic
style of leadership decisions are taken by the leader in consultation with members of the group and with their
participation in the decision-making process. It helps subordinates to develop their potential abilities,
provides job satisfaction and improves morale. In laissez faire style, subordinates are left to take the
decisions and perform their work as they like. Hence there may be chaos and mismanagement under this
leadership style.

The functions of a leader manager include : developing teamwork, representing the group and acting as a link
with top management, advising and counselling subordinates, managing the time schedule of work
performance, using power properly, and securing effectiveness of group effort.

Effective leadership makes a positive impact on the motivation of the members of the work group. The
manager-leader may be effective or ineffective depending upon the leadership style adopted by him. The
concept of managerial grid helps managers to identify their own leadership style in terms of the degrees of
concern for people and concern for work combined in the style. More effective styles are those which reflect
the manager’s orientation : Executive, developer, Benevolent autocrat, and Bureaucrat, Less effective styles
are those which are not appropriate to the situation e.g., Compromiser, Missionary, Autocrat, and Deserter.
An effective leader must possess certain qualities like physical and mental health, empathy, self-confidence,
awareness of his strength and weaknesses, objectivity, knowledge and intelligence, decisiveness, ability to
communicate, etc.
15.15 KEY WORDS
Autocratic Leader : An individual who controls employees through domination and power of his or her
title.
Committee : A formal group that regularly meets as a body for purposes of deliberation and decision-
making. A committee may or may not have authority to carry out its recommendations.
Committee : A formal organisational team usually relatively long lived, created to carry out specific
organisational tasks.
Command Group: A group specified by a formal organisation chart as the group
of subordinates who report to one particular supervisor.
Democratic Leader: An individual who controls employees through personal talents and who is open,
flexible, and sensitive to the needs and feeling of all those under his or her jurisdiction.
Group Dynamics: Study of behaviour of groups and of interaction of behaviour of individuals as member
of a group.
Group Dynamics: A social process by which people interact face to face in small groups or refer to the
forces operating in groups.
Leadership Continuum: A sliding scale of leadership styles from autocratic to highly participative. A
leader chooses the proper style of leadership based on forces in the leader, in subordinates, and in the
situation.
Leader: A person who, at a given time and place, by his actions, modifies, directs or controls the attitudes or
behaviour of other, often referred to as followers.
Leadership: In a group or organisation, the exercise of command and direction in a skillful and responsible
fashion.
Leadership Style: The way a manager behaves in his or her role as leader. The two most widely discussed
leadership styles are task-oriented and relationship oriented behaviour.
Norms: Assumptions and expectations about how member of a group will behave.
Participative Leader: A leader who use various styles of leadership and who tries to get people actively
involved in making decisions that will affect them.
Team : Two or more people who interact with and influence each other toward common purpose.
Team Building : A conscious effort to develop effective work groups throughout an organisation.

15.16 TERMINAL QUESTIONS

1) What do you mean by team ? Discuss the stages of team development.

2) What is team building ? Explain various approaches of team building. Do you think that these
approaches are helpful in the process of team building.
3) What is team effectiveness ? Discuss various elements of team effectiveness.
4) What is leadership. Explain various theories of leadership.
5) Compare and contrast the behavioural theory and situational theory of leadership.
6) Do you think that democratic style of leadership is the best style of leadership. Give your arguments
comparing all styles of leadership.

Note : These questions will help you to understand the unit better. Try to write answers for them. Do
not submit your answers to the university for assessment. These are for your practice only.
Relationship Behaviour
Dimension

(Low) Concern for People (High)

Source of Authority

Area of Freedom
for Subordinates

Use of Authority
by the Leader

(Low ) Consideration (High)

UNIT 16 POWER AND POLITICS

Structure

16.0 Objectives
16.1 Introduction
16.2 Concept of Power
16.3 Importance of Power in the Organisation
16.4 Sources of Power
16.4.1 Formal Power
16.4.2 Informal Power
16.5 Process of Obtaining Power
16.6 Concept of Organisational Politics
16.7 Types of Political Behaviour
16.8 Factors Influencing Organisational Politics
16.9 The Basis of Organisational Politics
16.10 Let Us Sum Up
16. 11 Key Words
16.12 Terminal Questions

16.0 OBJECTIVES
After studying this unit, you should be able to :
• explain the concept of power;
• discuss the importance of power;
• identify the sources of power;
• describe the process of obtaining power;
• discuss the concept of organisational politics;
• analyse various types of political behaviour;
• explain the factors influencing the political behaviour; and
• describe the basis of organisational politics.

16.1 INTRODUCTION
Structure is required for every organisation. Structure creates positions in the organisations. Position gives
power and authority to individuals. It is the power through which individuals control the activities of the
organisation. Therefore, individuals try to gain position in order to exercise power in the organisation. For
example, there are several senior executives under one Chief Executive Officer (CEO). It is the position of
CEO which gives positional power to the person by which he/she controls all subordinates, varied activities
and the entire organisation. Therefore, every senior executive below the CEO aspire to be the CEO. Same is
also the case with politicians in political parties to become the PM/CM or occupy leadership position in the
party. Power is also necessary for the efficient functioning of the organisation. According to strategic
constituency theory, power is needed in the organisation to cope with and solve the most critical problems of
organisation which arises because of environmental uncertainties. The power structure of any organisation is
revealed through organisational chart. However, power can be acquired formally and informally as well.
When the top management of the organisations understand the source of power, it becomes easy for them
to manage power and politics in favour of the organisation while minimising their negative effects. The
success of a manager depends upon how efficiently and accurately he/she is able to analyse the
organisation’s power structure and politics accurately. In this unit, you will learn the concept and importance
of power, the sources of power and the process of obtaining the power. You will further learn the concept of
organisational politics, types of political behaviour and the factors influencing the organisational politics.
You will be further exposed to the basis of organisational politics.

16.2 CONCEPT OF POWER

Power exists in all social situations and practically pervades in all organisations. Different authorities have
tried to define power in different ways . According to R. A. Dahl , power is the ability of one person or group
to cause another person or group to do something they otherwise might not have done. It is the ability to
influence others successfully in the desired fashion.Power resides in individuals ( such as managers, and
informal leaders), in formal groups (such as department and committees) and in informal groups. It is the
principal means of directing and controlling organsisational goals and activities. The person or the group
having power influences the behaviour of others . We can say a manager or the supervisor has the power
when works are done by their subordinates as they wish to be done, way they want to be done etc. Thus, the
manager’s ability to get the work done depends upon the power possessed by him or her. In fact , almost
everyone, at every level from within and outside try to exert their power on organisation to get their work
done. Accordingly, knowledge of power in organisation is very important for every individual in general and
the people possessing power in particular in order to manage their activities and for the smooth functioning
of the organisation.

You should not get confused with the power and authority. Though power and authority are used
interchangeably, but there exists difference between the two. While power is the ability to influence others,
authority is the right to command. Normally power is exercised by the person but authority is attached with
the position and it is legitimate. Authority is one of the major sources of power. Authority is always
positional, concerned with position and legitimate. However, when one’s authority can increase one’s growth
in organisational hierarchy, but the growth may not accompany same amount of power. Moreover while
authority normally moves downward but power moves in all direction , depending upon the power being
used by the person in the organisation. It is because power is not institutional but the authority is
institutional.

There are ways in which power can be used to help the organisation .It is called positive when the managers
of the organisation debate over the appropriate course of action to improve the quality of organisational
decision making. In positive sense, individuals try to establish a balance in their personal and organisational
interest and openly solve the problem of the organisation without any hidden agenda.

In the organisational context, the terms power has also negative connotations. It becomes negative; when
individuals associated with them normally use organisational resources for their personal advantage. They try
to achieve their personal goals at the expense of the other goals. Decisions are made against the interest of
organisation and there is extreme pursuit of self-interest and individuals pursue their hidden agendas. In
negative sense, there is illegitimate use of authority, resources and information of the organisation.

The bases and sources of power are interchangeably used. However, it is the base or platform from where the
power is generated. Base refers to what a person controls, which ultimately enables him/her to influence the
behaviour of the group. While the strongest power base is legitimacy and greater power, the weakest is the
coercion.
Organisation is a place of dependence. The structure of the organisation further enhances the dependency.
One cannot do every thing all-alone. Everyone is dependent on others for getting the work done in the
organisation When someone possess something that others require but you alone control that something, you
make them dependent on you. As a result, the possessor of the resources enjoys power over them.

16.3 IMPORTANCE OF POWER IN AN ORGANISATION

For a variety of reasons, power is very important and needed in the organisation. Not only the organisation
needs power for its functioning, but people in the organisation seek power because of the following reasons:

• Power is used in the organisation to control the people and other resources so that they cooperate and
help to achieve an organisation’s current goals.
• Power can also be used to engage in politics and influence decision-making process in order to help
promote new and more appropriate organisational goals.
• It is the power, which influence complexity, formality and centralisation of activities in the organisations.
• Individuals having power even determine about the size of the organisation, allocation of rewards,
selection of technology etc.
• Power is needed for the efficient functioning of the organisation.

16.4 SOURCES OF POWER

The leading authorities on power French and Raven have divided an individual’s power into two sources.
They are formal and informal. Let us learn them in detail.

16.4.1 Formal Power

The formal power comes from the position being occupied by the person in the organisation. It is derived
from the organisation structure and positions being occupied by individuals in the organisation structure.
Higher the position in the organisation structure more is the power being enjoyed by the person occupying
that position. Infact, when an individual accepts some formal position in the organisation to performing the
day-to-day duties and responsibility, the organisation gives formal power and authority to the person to
accomplish the job related to tasks and duties. Normally persons possessing positional power are more
powerful than the persons having informal power in the organisation. There are four types of formal power
found in organisations. They are legitimate, reward, coercive and information power.

Legitimate Power : It may be defined as the power to control and use the organisational resources to
achieve organisational goals. The legitimate power provides the legal authority to the person over the
organisational resources. In true sense, legitimate power is the most powerful and ultimate source of an
individual’s power in the organisation. It is also broader than the power to coerce and reward. Specifically, it
includes acceptance of positional authority by members of an organisation. Through this power, a manager
not only controls the organisational resources but also can control the behaviour of their subordinates.

Reward Power : Reward power is just the opposite of coercive power. The reward can be tangible or
intangible or both. It is the power to give promotion, praise, raise, projects and other kinds of rewards to
one’s subordinate. It also includes friendly colleagues, important information, and preferred work shifts etc.
One who distributes rewards and that others view it as valuable will have power over them. This power is
relevant, till the subordinates value the rewards. However, persons having reward power may find it difficult
to motivate subordinates when he /she needs tangible rewards. Interestingly, the degree to which an
individual seeks such rewards, it influences the ability of managers to give or withhold them and accordingly
enjoy the power over that individual.

Coercive Power : Coercive power is dependent on fear. It is the power to give punishment or withhold it.
Out of fear of the negative results that might occur if one failed to comply, people respond with this power.
Through the use of coercive power, one can demote, terminate and suspend others. It involves frustrating
others through restriction of movement or controlling by force the basic physiological or safety needs,
withholding praise and goodwill. Infact , coercive power is possibly most often used, most often condemned,
and most difficult to control. An individual may exercise coercive power because of his physical strength,
high tones, filthy languages, or the ability to grant or withhold emotional support from others.

Information Power : Individuals having the access and control over the information exercises this power.
Because of their position or access and control over the information, whatever they wish to be performed by
the others in the organisation, they get it done. The greater the access and control over the information,
greater is the information power. For example, a manager who is in the possession of more information can
control the subordinate better because he can solve his/her problems better. As a result, the subordinate
develops more dependency. However, this is not in the spirit of an effective and empowered organisation
where information sharing is essential and very important.

16.4.2 Informal Power

Informal power is not formally given by the organisation . The existence of this power is not revealed
anywhere in the organisation structure. Thus people possessing informal power do not have positional
power. But they are as powerful as the person occupying the positions in the organisation. It is possible
because of their knowledge, skills, personality etc. Accordingly, informal power can be broadly categorized
into three types such as expert power, referent power, charismatic power. Let us learn them.

Expert Power : Expert power is informal power and does exist in every organisation. Expert power is
influenced and wielded as a result of expertise, special skill, or knowledge possessed by the individuals.
Expertise has become one of the most powerful sources of influence. The significance of expert power has
increased manifold because the world has become more technologically oriented. As a result, in every
organisation, in every branch of knowledge, individuals possessing unique knowledge and skills are able to
wield power as a result of their expertise.

Referent Power : By giving some one’s reference or getting identified with some person with position and
power, some individual in the organisation get the things done as they wish. Thus, referent power is based on
identification with a person who has desirable position, power, resources or personal traits. When some one
admires and identifies with a political leader or an influential person in the locality or the state, he /she can
exercise power over others. This type of power develops out of admiration of some powerful person. The
referent power has a lot of similarity with charismatic power.

Charismatic Power : It is a deep-rooted form of referent power. Charismatic power is based on the
emotions and feelings of the followers. It is based on the assumptions and belief that the leader has some
special or exceptional personality, ability and other characteristics, which influence and inspire the followers
to believe and follow that person. This power is normally found in religion, politics and unionism. It has
been also found that where the charismatic power exists, the importance of legitimate, coercive and reward
power diminishes. This power vanishes when the leader vanishes from the scene. The charismatic power
cannot be delegated because the other fellow may not possess the same qualities and attributes as found in a
charismatic leader. The negative side of the charismatic power is that the followers blindly follow him/her
without understanding their responsibilities.
Check Your Progress A

1) Why is power important for the organisation.

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2) Distinguish between formal and informal sources of power.

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3) Distinguish between legitimate power and coercive power

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4) Distinguish between expert power and charismatic power.

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16.5 PROCESS OF OBTAINING POWER

To obtain power, individuals and different groups in the organisations use variety of power tactics. Following
are some of the popular tactics, which are being used by individuals to gain power in the organisation.

Friendliness : In order to be powerful in the organisation, even some individuals take the help of flattery,
creation of goodwill, acting humble, and being friendly with many people with position and power to create
a power base for them. They may make request to those powerful people to give him/her the favour. By
identifying with them these individuals become powerful in the organisation.

Making oneself Irreplaceable : To gain power, individuals have to develop their specialised knowledge,
skill and relationship so deep and broader that it will be difficult for the organisation to find a substitute for
their replacement. It can also be done by deliberately accepting responsibilities which automatically brings
them into the contact of many managers, who ultimately may favour them for promotion, reward etc.

Networking with Pwerful People : It is not important that how many people do you know in the
organisation, but whom you know. To gain power some individuals try to identify with powerful individuals
in terms of their influence in the organisation, higher level of authority, status symbol, position, control over
resources, expertise etc. By identifying and establishing themselves with those persons one tries to become
powerful in the organisation.
Building Coalition : In order to get there work done individuals form alliance and coalition with each other
over the issue based matter. But in this case, as interests of individual’s changes from time to time, therefore,
coalition has to be actively managed by their members. In case of coalition, each group tries to get the
greater share of the power. Normally, more coalitions are created in the organisation where there is a great
deal of task and resource interdependence. However, when there is less interdependence among subunits,
naturally there is less coalition formation among the subunits. Especially, when they are largely self-
sufficient or there exist plenty of resources.
Being Assertive and Establishing Credibility : One should know what one is supposed to know. To be
powerful, one has to assert oneself by using direct and forceful approach such as demanding compliance with
requests, repeating reminders, citing rules that require compliance. Moreover one has to establish one’s
credibility in terms of sincerity, honesty, and punctuality in words and deals.
Building Pressure : This is a hostile method of gaining power. Normally trade unions in organisation use
this power. They might threaten a strike or show down if the management does not accept their demands.
The use of threats may provoke counter-threats rather than concession. However, pressure tactics are a part
of power struggle in organisations. Some individuals become member or leader of unions / associations to
build pressure on organisation to gain power.

16.6 CONCEPT OF ORGANISATIONAL POLITICS

Pettiberg (1973) defined organisational politics as activities in which managers engage to increase their
power and to pursue goals that favour their individual and group interests. According to Pfeffer(1981)
organisational politics involve those activities taken within organisations to acquire, develop and use power
and other resources to obtain one’s preferred outcomes in a situation in which there is uncertainty or
dissensus about choices. Employees working in the organistion can engage in political behavoiur to gain
promotion or influence organisational decision-making in their favour. In fact, politics is the unauthorized
use of power which increases or protect ones own personal interest. Accordingly, Mayes and Allen (1977)
are of the opinion that organisation politics is the management of influence to obtain ends not sanctioned by
the organisation or to obtain ends through non sanctioned means. In fact ,organisational politics is power in
action.
Power and politics are very closely related with each other. Organisational politics is associated with
resource allocation, conflict resolution, and decision making process in organisation. Politics is fact of life
for almost every organisation. When employees in organisations convert their power into action, we describe
them as being engaged in politics. Normally it is seen that individuals who have good political skills have the
ability to use their bases of power effectively in the organisation. Individuals play politics to gain more
power in organisation, to have command over resources, to have their more voice in decision-making and to
fulfill their individual goals.
Organisational politics has two sides. Positive side of organisational politics is characterised by the balanced
pursuit of individual and organisational goal, open problem solving and analyzing the situation in win-win
terms. Negative side of organisational politics is characterised by viewing the situation in win-loose
situation, having hidden agenda, pursue self interest etc. That is why some authorities have rightly said that
“ politics as a subset of power is of illegitimate in nature . Though political behaviour is outside one’s
specified job requirements but individuals play politics to use one’s power bases and to be the part of the
distribution of advantages and disadvantages within the organisation.
As politics is a fact of life in organisations , everyone has to play variety of politics but people who ignore
this fact of life do so at their own peril. The political behaviour in organisations include many activities such
as spreading rumours, leaking confidential information, exchanging favours with others in the organisation
for mutual benefit, lobbying on behalf of or against a particular individual or decision etc. However, politics
is a self-serving behaviour not sanctioned by organisations. When people play politics it causes disharmony,
conflict, stress, anxiety and uncertainty in the organisations.

16.7 TYPES OF POLITICAL BEHAVIOUR

The political behaviour of the individuals in the organisations can be broadly divided into two categories
such as: legitimate, illegitimate.
Legitimate Political Behaviour : It is called legitimate politics when there is too much compliance to the
rules and the regulations of the organisation by the individuals. Legitimate politics include complaining to
one’s supervisor, bypassing the chain of command, forming coalitions, obstructing organisational policies
developing contacts outside the organisation through one’s professional activities.

Illegitimate Political Behaviour : It will be called illegitimate politics, when individuals who pursue some
extreme activities such as any type of sabotage, whistle-blowing, and symbolic protests, like wearing
unorthodox dress or groups of employees calling in sick.

Steven and Mary Ann Von have suggested seven categories of political activity in the organisation which are
discussed below :

Attacking or Blaming Others : In an organisation, members make effort to attack rival or unwanted
persons or groups. They may blame them for their own failure. This is done for projecting bad image of
unwanted or rival persons.

Selectively Distributing Information : As you must be aware that the information is considered as the
most important tool of power. Members who posses relevant and strategic information become powerful in
the organisation. This information is shared among own favourable persons. This is done to increase the
power base and gain the support of the favourable persons in the organisation.

Controlling Information Channels : Individuals who have the power, may control the informal behaviour
of the persons. They may encourage their desired behaviour and discourage undesired behaviour. In order to
please the powerful persons, people try to exhibit the desired behaviour in the organisation.

Forming Coalitions : People form coalition to influence the behaviour of other persons or group. In
coalition, two or more persons join hands to achieve some common objectives. This is done to gain the
favourable support or influence the decisions in the organisation.

Cultivating Networks : People develop networks based on variety of social relationship in the organisation.
The formation of network may help in getting information and gaining support. This may also facilitate the
members initiatives and favourable decisions by the persons who are the part of the network system.

Creating Obligations : In an organisation, if you oblige somebody, he/she may also support you. The
powerful persons try to create an obligations chain in the organisation so that they could get the support from
all the obliged persons.

Managing Impressions : It refers to creating favourable images in the organisation. In this process, the
powerful persons exhibit their behaviour in such a manner that others develop a favourable image about
them. They may project themselves as the protectors of members interest or may be visible at the time of
crisis to attract others attention and create favourable image for themselves.

16. 8 FACTORS INFLUENCING ORGANISATIONAL POLITICS

There are various factors, which influence the political behaviour of individuals in organisation. They can be
broadly categorised into; Individual factors, and organisational factors.

Individual Factors : Some individuals play politics to satisfy their individual needs, like to gain power for
control and to influence decision-making process of the organisation. They aim at increasing the area of their
influence. Nobody wants to lose power in the power struggle because power can be used for fulfilling his/her
desire. Moreover, some individuals play politics because of their high need for power.They are basically
internals and self monitored people. Individuals also play politics because of their expectation for quick
success in life at any cost.

Organisational Factors : Following are some of the organisational factors, which influence the individuals
to play politics in the organisations.
• Resources are limited in the organisation. Every department and every individual in the organisation
wants to have optimum resources. As a result, individuals are engaged in politics to get the maximum
advantages of the distribution of resources.
• Limited resources like position, power, promotion etc. are open to interpretation. As a result, any one
who is in need of those resources feel that in the process of distribution of the resources he/she will be
deprived of those resources. Therefore they take the help of politics in the organisation.
• When there is uncertainty and ambiguity in decision making because of unclear rules and policy, some
individuals play politics to get the advantage of the situation.
• When performance evaluation and its outcomes are subjective, qualitative and unclear, individuals play
politics to get the outcome in their favour.
• Some times people play politics because of high performance pressure. It is just to put pressure on the
authority to withdraw control and lower the performance target.
• Democratic and participative decision-making culture of the organisation is also prone to politics,
because everyone wants to enhance his/ her importance and give opinion.
• When people at higher level in the organisation play politics, it is natural that at the lower level too
politics will be there.

16.9 THE BASIS OF ORGANISATIONAL POLITICS

To improve political effectiveness in the organisation, different paths are available to individuals. Some of
the common bases through which one can improve one’s political behaviour are:
• Supporting one’s boss where and when the boss needs it. You have to behave in the manner that the boss
is always right. As a result, one gets identified as an individual belonging to a boss’s group.
• Some people do not express their resistance despite of their reservation over some issues. They wait for
the crisis in the organisation to express their reservation to get the favour and influence.
• Some individuals develop powerful allies with influential people to play politics in the organisation.
• One has to appear indispensable through knowledge, skill, arguments and deeds to gain political
advantage.
• To play politics one can gain control over the scarce organisational resources.
• One has to be visible in terms of one’s extraordinary performance to play politics in the organisation.

Check Your Progress B

1) Enumerate the process of obtaining power.

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2) Distinguish between legitimate and illegitimate political behaviour.

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4) Enumerate the factors influencing the organisational politics.

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16.10 LET US SUM UP

Organisation is a coalition of interest, so exists in the identification and solution of the problem. In the
process of negotiation for consensus, politicking takes place. Therefore, the existence of power and politics
is the inevitable phenomena in every organisation. In order to manage and to be managed in the organisation
efficiently every individual starting from the top to bottom needs to have knowledge of power and politics in
the organisation.

Power structure of an organisation is revealed from organisation chart. It shows only the formal sources of
power being possessed by the individuals, group and the departments in the organisation. It also reveals how
are decisions made in the organisation. As it is the power, which enables the power holders to control the
activities of the organisation and do whatever they wish to do, therefore every body wants to have power in
the organisation. To gain power there are broadly two sources. They are formal and informal sources. While
formal sources of power are legitimate but people do use informal sources of power to get advantages of the
organisation in their favour. As positions are limited in the organisation, so is the positional power. But
people play politics to acquire position.

Organisational politics is self-serving behaviour, which is not sanctioned by the organisation. Nevertheless
people play politics to be part of the distribution of advantages and disadvantages within the organisation.
Political behaviour in organisation can be legitimate or illegitimate . There are various individual and
Organisational factors, which influence individuals to play politics in organisation. And to play politics,
individuals use different mechanism. However, politics in organisation causes disharmony, anxiety, stress,
and conflict and put challenges to formal authority. Therefore, it should be managed to minimize its negative
impact on the organisation.
16. 11 KEY WORDS

Charismatic Power : Power derived from exceptional personality and abilities of the person which
influence and inspire the followers.
Coercive Power : The power to give punishment or withhold it.
Expert Power : The Power to use, distribute or withhold the information.
Information Power : The power to use, distribute or withhold the information.
Legitimate Power : The formal power to control and use the organisational resources to achieve
organisational goals.
Politics : Activities in which managers engage to increase their power and to pursue goals that favour their
individual and group interests.
Power : The ability of a person or group to influence other person or group.
Referent Power : Power as a result admiration and identification with powerful persons.
Reward Power : The power to give promotion, praise, raise, projects and other kinds of rewards.

16.12 TERMINAL QUESTIONS

1) What is Power? Why do people need power?

2) Do you think the positional power is the most powerful power in the organisation? Why so? Explain
different types of formal power in the organisation.
3) What is informal power? Explain different types of informal power in the
organisation.
4) Explain the tactics people adopt to gain power in organisations.
5) What is politics? Why people play politics in the organisation?
6) Write notes on :
a) Importance of power in the organisation.
b) Charismatic power.
c) Legitimate and Illegitimate political behaviour.
d) Factors influencing politics in the organisation.

Note : These questions will help you to understand the unit better. Try to write answers for them. Do
not submit your answers to the university for assessment. These are for your practice only.

SOME USEFUL BOOKS

Robbins P Stephen, Organization Behaviour, Prentice Hall of India, New Delhi. (Recent Edition).

Ivancevich M. John, Human Resource Management, McGraw-Hill Irwin, Boston(Recent Edition).

Luthans Fred, Organisational Behaviour, Irwin, McGraw-Hill, Boston, (Recent Edition).

John W, Newstrom and Keith Devis, Organizational Behaviour, Tata McGraw, Hill Publishing Company Ltd,
New Delhi. (Recent Edition).

Dwivedi R. S., Human Relations and Organisational Behaviour – A Global Perspective, Macmillan, Delhi.
(Recent Edition).

Steven L. Mchane and Mary An Van Glinow, Organizational Behaviour, Tata McGraw- Hill Publishing
Company Limited, New Delhi (Recent Edition).

Udai Pareek. Understanding Organizational Behaviour, Oxford University Press, New Delhi (Recent
Edition).
UNIT 17 ORGANISATIONAL CULTURE AND CLIMATE
Structure

17.0 Objectives
17.1 Introduction
17.2 Concept of Organisational Culture
17.3 Basic Elements of Culture
17.4 Functions of Organisational Culture
17.5 Factors Influencing Organisational Culture
17.6 Impact of Organisational Culture
17.7 Culture-Person Compatibility
17.8 Developing Organisational Culture
17.9 Concept of Organisational Climate
17.10 Dimensions of Organisational Climate
17.11 Creating Favourable Organisational Climate
17.12 Let Us Sum Up
17.13 Key Words
17.14 Terminal Questions

17.0 OBJECTIVES
After studying this unit, you should be able to :

• explain the meaning of organisational culture;

• describe various factors influencing organisational culture;
• explain functions of organisational culture;
• identify various impact created by organisational culture;
• describe steps leading to building effective organisational culture;
• discuss the concept of organisational climate;
• describe the dimensions of organisational climate; and
• suggest the process of creating favourable organisational climate.

1.1 INTRODUCTION

Organisational culture refers to a system of shared meaning held by its members. It is expressed in terms of
norms, values, attitudes and beliefs shared by organisational members. The organisational culture must be
created and sustained in such a way that it develops the congenial environment in the organisation. On the
other hand, organisational climate consists of a set of characteristics and factors that are perceived by the
employees about their organisation. Organisation must create favourable organisational climate for
improving the organisational effectiveness. In this unit, you will learn the concept, basic elements,
functions, factors and impact of organisational culture. You will be acquainted with the concept of culture
person compatibility and the process of development of organisational culture. You will further learn the
concept and dimensions of organisational climate and the process of creation of the favourable
organisational climate.
17.2 CONCEPT OF ORGANISATIONAL CULTURE

Culture is the pivot of any group or society. It determines the way members interact with one another and
with outsiders. Stoner, Freeman and Gilbert have described culture, as the complex mixture of assumptions,
behaviours, stories, myths, metaphors, and other ideas that fit together to define what it means to be a
member of a particular society. However scope of this chapter is limited to the study of culture within the
organisation.

When an organisation takes on a life of its own, apart from any of its members, and acquires immortality, the
organisation is said to be institutionalised. When an organisation takes on institutional permanence,
acceptable modes of behaviour become largely self-evident to its members. So an understanding of what
makes up an organisation’s culture, and how is it created, sustained, and learnt will enhance our ability to
explain and predict the behaviour of people at work. Organisational culture is described as the set of
important understandings, such as norms, values, attitudes, and beliefs, shared by organisational members.
According to the recent understanding about organisational culture, ‘system of shared meaning among
members’, is the essential core of organisational culture.

According to Eliott Jacques, an organisational culture is the customary or traditional ways of thinking and
doing things, which are shared to a greater or lesser extent by all members of the organisation, which new
members must learn and at least partially accept in order to be accepted into the service of the firm.

According to various studies, following are the primary characteristics of an organisation’s culture:
Innovation and Risk Taking: The degree to which employees are encouraged to take innovative steps and
to take calculated risk;

Attention to Detail: The degree to which employees are expected to pay attention to detail;

Outcome Orientation: The degree to which management focuses outcome rather than on process to achieve
outcome;

People Orientation: The degree to which management gives attention to effect of decisions on people
working in the organisation and on its shareholders;

Team Orientation: The degree to which works are organised around team rather than individuals;

Aggressiveness: The degree to which people are aggressive or competitive rather than easygoing;

Stability: The degree to which maintaining status quo is emphasized in contrast to growth;

Individual Autonomy: The degree of responsibility, independence, and opportunities for exercising
initiative that individuals in an organisation have;

Structure: The degree of rules and regulations and the amount of direct supervision that is used to oversee
and control behaviour;
Support: The degree of assistance and warmth managers provide for their subordinates;
Identity: The degree to which members identify with the organisation as a whole rather than with their
particular work group or field of professional expertise;

Performance-Reward: The degree to which reward in the organisation are based on employee work
performance;

Conflict Tolerance: The degree of conflict present in relationships between peers and work groups as well
as the willingness to be honest and open about differences;

Attitude Towards Change: The response given to new methods, ways, and values;

Focus: the vision of the goals and objectives of an organisation’s operations as communicated by those in
control;

Standard and Values: The levels of performance and behaviour considered to be acceptable by formal and
informal criteria;

Rituals: Expressive events that support and reinforce organisational standards and values;

Openness, Communication, and Supervision: The amount and type of interchange permitted; the
communication flow can be downward, upward, across the organisation, and in other directions as spelled
out by the culture;

Market and Customer Orientation: The extent to which the organisation is responsive to its markets and
customers;

Excitement, Pride, and esprit de corps: A tangibly good feeling about the organisation and its activities;

Commitment: The willingness of the individuals to work toward goals on a continuing basis.

Activity A

Note down the 21 factors mentioned above, on three different sheets. Discuss with three executives working
in different organisations, about how do they feel about each of the 21 factors while working for the
organisation. You might find different pictures of organisational culture in different organisations.
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17.3 BASIC ELEMENTS OF CULTURE

According to Schein there are three basic elements of organisational culture:

Artifacts: It is the first level of organisational culture. It is observable symbols and signs of the
organisations. It includes visible parts of organisation e.g., structures, processes etc. Artifacts are hard to
decipher.

Espoused Values: These are the reasons (e.g., strategies, goals, philosophies) given by an organisation for
the way things are done. It is the second level of organisational culture.
Basic Assumptions: Basic assumptions are the beliefs that are taken for granted by the members of an
organisation. These are ultimate source of values and action that include: unconscious, perceptions, taken-
for-granted beliefs, thoughts, feelings etc. It is the third level of organisational culture.

Organisational culture may be distinguished with respect to their core basic values. Core values are the
primary or dominant values that are accepted throughout the organisation. The dominant values determine
the dominant culture of an organisation. Thus, the dominant culture reflects the core values that are shared
by most of the members of the organisation. According to Martin there are four such core basic values:
• Sensitivity to needs of customers and employees;
• Freedom to initiate new ideas;
• Willingness to tolerate new risks;
• Openness to communication options.
However presence of dominant culture within the organisation does not mean that there may not be
subcultures within any given culture. Particularly in large organisations there may be subcultures within the
dominant culture. Subcultures are minicultures within an organisation, typically defined by department
designations and geographical separation.

Some organisations may have strong culture whereas others may have weak culture. In organisations having
strong cultures, core values are intensely held and widely shared. In weak cultures managerial styles may be
more person-centred. Strong cultures lead to more behavioural consistency and less employee turnover.
Strong cultures may also serve as substitute of formalisation.

Various studies suggest that national culture has a great impact on employees than does their organisation’s
culture. This factor should be taken into consideration while applying behavioural intervention in
multicultural organisation.

17.4 FUNCTIONS OF ORGANISATIONAL CULTURE

Culture is the social glue that helps hold the organisation together. There are three basic functions of
organisational culture:
• It provides a sense of identity for members;
• It enhances commitment to the organisation’s mission;
• It clarifies and reinforces standards of behaviour.

Child has explained that culture is one of strategic tools of control in organisations. According to him
cultural control helps in four areas:

• Development of strong identification with management goals;

• Development of semi-autonomous working with few formal controls;
• Having strong emphasis on selection, training and development of personnel;
• Having reward oriented climate towards security of tenure and career progression.
However there is another side of the coin. If organisational culture can be an asset, sometimes it may become
liability also. There are dysfunctional effects of culture, especially a strong one, on organisational
effectiveness. Some of the barriers created by especially a strong organisational culture are following:
Barrier to Change: Consistency of behaviour is an asset to an organisation when it faces a stable
environment. It may, however, burden the organisation and make it difficult to respond to changes in the
environment.

Barrier to Diversity: Especially in multicultural organisations, people from different cultural background
may bring diverse strength to the work place. Yet these diverse strengths and behaviours are likely to
diminish in strong organisational culture due to strong pressure for conformity. Again, organisational culture
may become liability if it creates institutional bias or perpetuates insensitive approach to people from
different cultural background.

Barrier to Acquisition and Merger: During acquisition and merger, high degree of cultural confluence
takes place. When two or more companies having different organisational culture are merging, all need to
evolve a unique culture for the newly emerged organisation. However if one or more partners are having
stubbornly strong culture, the culture may play negative role in the whole episode of acquisition and merger.

Check Your Progress A

1) How culture in an organisation gets established?

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2) What purpose organisational culture serves in an organisation?

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5.5 FACTORS INFLUENCING ORGANISATIONAL CULTURE

In an organisation culture begins through various forces. Once organisational culture is created, the culture is
sustained through various other forces. After this stage cultures are formed and then employees learn culture
by merely existing in a particular cultural environment. Let us now learn the beginning of culture, sustaining
the culture, formation of culture, and learning the culture by employees.
The process of culture creation occurs in three ways:
• Employers only hire and keep employees who think and feel the way they do;
• Employers indoctrinate and socialise these employees; and
• Top management own behaviour acts as a role model that encourages employees to identify with them.
Three forces play important part in sustaining a culture:
• Selection practices;
• Actions of top management; and
• Socialisation method.
An organisational culture is thus formed through interaction of various forces. Mainly these forces are:
philosophy of organisation; selection criteria; top management as role model; and, socialisation process.
Employees come to know about their organisation’s culture through various mechanisms. Some important
key mechanisms involved are discussed below:

Symbols: These are material objects that connote meanings and extend beyond their intrinsic content;
Stories: Stories illustrate key aspects of an organisation’s culture, and telling them can effectively introduce
or reaffirm those values to employees;
Jargon: It is the special language that defines a culture;
Ceremonies: These are repetitive sequences of activities that express and reinforce the key values of the
organisation, which are more important goals, which are important people, and which are expendable; such
special events commemorate Corporate values;

Statement of Principles: It is done to define culture in writing; some organisations have explicitly written
their principles for all to see.

17.6 IMPACT OF ORGANISATIONAL CULTURE

Various studies have suggested that there are some factors responsible for making the organisational cultures
more successful than others. One study by Kotter and Heskett indicate that culture has a strong impact on the
performance of organisations. The study has four main conclusions:
• Corporate culture can have a significant impact on a firm’s long-term economic performance;
• Corporate culture will probably be an even more important factor in determining the success or failure of
firms in future;
• Corporate cultures that inhibit strong long-term financial performance are not rare; they develop easily,
even in firms where there are full of reasonable and intelligent people;
• Although tough to change, corporate cultures can be made more performance enhancing.
In an organisation, combination of objective factors (innovation, risk taking, attention to detail, outcome
orientation, people orientation, team orientation, aggressiveness, stability) are perceived as organisational
culture, having either high strength or low strength or in between, which leads to performance and
satisfaction.

Impact of culture on organisation’s effectiveness is both functional as well as dysfunctional. On the positive
side, culture has impact on control, normative order, innovation, promotion, and employee’s performance
and satisfaction. On the negative side culture may lead to groupthink, collective blind spots, resistance to
change and innovation.

17.7 CULTURE-PERSON COMPATIBILITY

Culture is basically not a subject of evaluative study rather is basically a descriptive study. Every type of
culture has its functional as well as dysfunctional aspects. It would be interesting to see that different types
of culture suit to different types of person. Study of Goffee and Jones suggest that there are two factors,
which determine organisational culture. The first is sociability. It is consistent with a high people orientation,
high team orientation, and focus on processes rather than outcomes. The second is solidarity. It is a measure
of task orientation, and is consistent with high attention to detail and high aggressiveness. The two
dimensions may be either high or low in a particular culture.
These two dimensions yield four types of distinctive organisational culture which are discussed below:
• Networked culture (high on sociability; low on solidarity): Positive aspect of this culture is open
sharing of information; negative aspect includes tolerance for poor performance and creation of
political clique. You might fit into networked culture if you possess good social skills and empathy;
 you like to develop close work-related friendships; you thrive in a relaxed and convivial
atmosphere; and you are not obsessed with efficiency and task performance.
• Mercenary culture (low on sociability; high on solidarity): Positive aspect is strong focus on goal
and objectivity; negative aspect includes inhuman treatment to people who are perceived as low
performers. You are likely to fit in well in mercenary culture if you are goal oriented; thrive on
competition, like clearly structured work tasks, enjoy risk taking, and are able to deal openly with
conflict.
• Fragmented culture (low on sociability; low on solidarity): Employees are judged solely on
individual’s productivity; negative aspect include excessive critiquing of others and absence of team
spirit. Perhaps you are made for fragmented culture if you are independent; have a low need to be
part of a group; are analytical rather than intuitive; and have a strong sense of self which is not
easily perturbed.

• Communal culture (high on sociability; high on solidarity): Positive aspect is a feeling of

belonging yet a ruthless focus on goal achievement; negative aspect includes hyper intervention of
the leader who tends to create disciples rather than followers. You may fit into communal culture if
you have a strong need to identify with something bigger than yourself, enjoy working in teams, and
are willing to give first priority to the organisation.

17.8 DEVELOPING ORGANISATIONAL CULTURE

In order to develop organisational culture, a starting point, of course, is knowing what an organisation’s
culture is supposed to look like. If the ideas of Robbins and Kilmann are pooled with the idealistic writings
of Rensis Likert, a perfected culture might develop. We could propose that an ideal culture for the
accomplishment of an organisation’s goals might be one in which:

• The organisation’s goals are established and reviewed periodically through the participation of all
individuals and groups in the organisation.
• Decisions are made at the appropriate level in the organisation by the people who must live with the
decision.
• Behaviour is supportive of the organisation’s goals and purposes.
• The organisation is supportive of the needs of the individual employees.
• Individuals and groups show high levels of trust and respect for other individual and groups.
• Superiors and subordinates have a high level of trust and confidence in each other.
• Cooperation and teamwork exist at all levels in the organisation.
• Methods of reinforcement used are primarily rewards and participation.
• Individuals are cost conscious.
• Messages move upward, downward, or across the organisation as needed to get information to the
appropriate places.
• Subordinates accept downward communication with an open mind.
• Upward communication is accurate and is received with an open mind.
• Changes are initiated to improve performance and goal attainment.
• Changes are received and accepted openly.
• Individuals speak with pride about themselves and their employer.
• The time individuals spend performing tasks is related to the contributions of the tasks toward the
achievement of the organisation’s goals.
• Individuals are motivated through enjoyment from achieving the organisation’s goals.
• Conflict is seen not as a destructive force but as a potentially constructive activity.
The idealistic culture may seem unrealistic, and in many situations it probably is. Management’s role,
however, is to achieve as much of this as is possible.
The usual starting place for the planning and designing of an organisation’s culture comes after mission
statements have been created. Mission statements identify the purposes and directions an organisation plans
to pursue. Typically mission statements will include the products or services to be offered, the customers
who will be targeted, the stakeholders with whom the organisations will interact, the organisation’s
responsibilities to its stakeholders, and other goals that will give direction to an organisation’s efforts. Value
declarations may also be included to reveal how an organisation’s commitments will be actualised.

When mission statements have been completed and accepted, management’s responsibilities for providing
the appropriate structure for goal achievement begin. The formal structure (as well as informal pattern of
interaction) contribute to the culture of an organisation by laying the foundations, establishing planned
relationships, and outlining the general boundaries in which organisational activity will take place.
Many a times only stating mission statement and providing suitable structure may not help in achieving
required organisational culture. Change in organisational culture may require one or all of the following
additional steps:
• Change reward systems.
• Add new members.
• Implement culture shock.
• Change the key personnel in top management.
• Involve people.

17.9 CONCEPT OF ORGANISATIONAL CLIMATE

Though organisational culture and organisational climate are sometimes used interchangeably, some
important differences between these two concepts have been recognized. Whereas organisational culture is
concerned with the nature of beliefs and expectation about organisational life, climate is an indicator of
whether those beliefs and expectations are being fulfilled. Basically organisational climate reflects a person’s
perception of the organisation to which he/she belongs. Organisational climate is a set of characteristics and
factors that are perceived by the employees about their organisations, which serve as a major force in
influencing their behaviour. These factors include: job description, organisational structure, performance and
evaluation standards, leadership style, challenges and innovations, organisational values, decision making
processes, motivation, communication, goals, control processes and so on.
Organisational climate can be said to relate to the prevailing atmosphere surrounding the organisation, to the
level of morale, and to the strength of feelings of belonging, care and goodwill among members. According
to Tagiuri and Litwin, organisational climate is relatively enduring quality of the internal environment of an
organisation that:

• is experienced by its members;

• influences their behaviour;
• can be described in terms of the values of a particular set of characteristics of the organisation.
Hodgetts has classified organisational climate into two major categories. He has given an analogy with an
iceberg where there is a part of the iceberg that can be seen from the surface and another part that is under
water and is not visible. The visible part that can be observed or measured include the structure of hierarchy,
goals and objectives of the organisation, performance standards and evaluations, technological state of the
operations and so on. The second category contains factors that are not visible and quantifiable and include
such subjective areas as supportiveness, employees’ feelings and attitudes, values, morale, personal and
social interaction with peers, subordinates and superiors and a sense of satisfaction with the job.

17.10 DIMENSIONS OF ORGANISATIONAL CLIMATE

There have been many studies on dimensions of organisational climate. Such studies have helped us to
understand what do influence organisational climate:

Likert has proposed six dimensions of organisational climate: leadership, motivation, communication,
decisions, goals, and control.

Litwin and Stringer have proposed seven dimensions of organisational climate: conformity, responsibility,
standards, rewards, organisational clarity, warmth and support, and leadership. They have also emphasized
motivational framework of organisational climate. Motivational framework of climate include motives of:
Achievement: concern for excellence;
Expert Influence: concern for making impact on others;
Control: concern for power and orderliness;
Extension: concern for others, and for macro issues;
Dependency: concern for being in close touch with others in a significant way;
Affiliation: concern for building and maintaining close personal relationships.
On the basis of review of various studies and discussions with managers, Pareek has identified twelve
processes of organisational climate. Let us learn them briefly.

Orientation: Priority of members may range between concern to adhere to established rules, to concern for
excellence and achievement.

Interpersonal Relationships: Depending on the pattern of relationship it may lead to climate of clique
formation, or climate of control, or a climate of dependency etc.

Supervision: Depending on supervisory style, the climate may be of extension or it may be of affiliation, or
even lem Managealienation.

Problems : Problems may be taken as an opportunity or irritants; manager may solve problems alone or
jointly by the superior and the subordinates.
Management of Mistakes: Attitudes towards mistakes may be of tolerance or of annoyance; such attitudes
contribute to organisational climate.
Conflict Management: Conflict may be perceived as opportunity or as threat; such perceptions influence
organisational climate.
Communication: Direction, dispersement, mode and type of communication influence climate of an
organisation.

Decision Making: Levels at which decisions are taken, degree of participation in decision making are the
issues, which influence organisational climate.

Trust: Degree of trust or its absence influence organisational climate.

Management of Rewards: Perception about what is rewarded in the organisation influences the
organisational climate.

Risk Taking: It is an important determinant of climate.

Innovation and Change: Styles of managing change and innovations are critical in establishing climate.

Check Your Progress B

1) Do you have reasons to believe that different organisational climate may suit to different types of
persons?
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2) What are the main determinants of organisational climate?

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17.11 CREATING FAVOURABLE ORGANISATIONAL CLIMATE

Organisational climate influences the level of morale and attitudes, which members of the organisation bring
to bear on their work performance and personal relationships. Thus, it is important to build a healthy
organisational climate. A healthy organisational climate might be expected to exhibit such characteristic
features as:
• the integration of organisational goal and personal goals;
• a flexible structure with a network of authority, control and communications, and with autonomy for
individual members;
• styles of leadership appropriate to particular work situations;
• mutual trust, consideration and support among different levels of the organisation;
• recognition of individual differences and attributes, and of people’s needs and expectations at work;
• attention to job design and the quality of working life;
• challenging and responsible jobs with high performance standards;
• equitable systems of rewards based on positive reinforcement;
• opportunities for personal development, career progression and advancement;
• justice in treatment, and fair personnel and industrial relations policies and practices;
• the open discussion of conflict with emphasis on the settlement of differences without delay or
confrontation;
• democratic functioning of the organisation with full opportunities for genuine consultation and
participation;
• a sense of identity with, and loyalty to, the organisation and a feeling of being a needed and important
member of the organisation.
In order to establish a functional organisational climate, various interventions have been identified which
lead to organisational development. One of such intervention is building organisational ethos through
OCTAPACE profile, developed by Pareek. It suggests to establish: Openness, Confrontation, Trust,
Authenticity, Proaction, Autonomy, Collaboration, and Experimentation. Once these eight factors are
established in the organisation it may lead to healthy organisational climate.

A healthy climate will not by itself guarantee improved organisational effectiveness. However, an
organisation is unlikely to attain optimal operational performance unless the climate evokes a spirit of
cooperation throughout the organisation, and is conducive to motivating members to work willingly and
effectively.

Activity B

Discuss about OCTAPACE profile in your group. Discuss where your group stands on each factor, and how
can they be improved in your group.
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17.12 LET US SUM UP

Organisational culture determines the way members of an organisation interact with one another and with
outsiders. Culture provides system of shared meaning among members. The basic elements of culture are :
artifacts, espoused values and basic assumptions. The major functions of organisational culture include :
sense of identity, enhancement of commitment and reinforcement of behaviour. Moreover, strong
organisational culture may also create some barriers; like barriers to change, diversity and acquisition and
merger. Several factors influence organisational culture. These factors help in creation and sustaining of
culture in an organisation. Employees understand organisational culture through symbols, stories, Jargon,
ceremonies and statement of principles. Culture has a strong impact on the performance of the organisation.
The distinctive organisational culture may be classified into : networked culture, mercenary culture,
fragmented culture and communal culture. Organisational culture creates its impact on work place, hence,
we must develop ideal organisational culture for smooth functioning of all members of the organisation.
Organisational climate is a measure of how do members perceive the organisation. It can be explained in
terms of its dimensions. The process of organisational climate include : orientation, interpersonal
relationship, supervision, problems, management of mistakes, conflict management, communication,
decision making, trust, management of rewards and innovation and change. The favourable organisational
climate leads to perceived equality and more effectiveness.

17.13 KEY WORDS

Culture: That determines the way members interact with one another and with outsiders.

Mission Statement: Identifying the purposes and directions of an organisation and plans to pursue.
Organisational Climate: A set of characteristics and factors that are perceived by the employees about their
organisations.

Organisational Culture: System of shared meaning among members.

Subcultures: Minicultures within an organisation.

Strong Cultures: Cultures in which core values are intensely held and widely shared.

Sociability: Measure of high people orientation, high team orientation, and focus on processes rather than
outcomes.

Solidarity: Measure of task orientation, and is consistent with high attention to detail and high
aggressiveness.

17.14 TERMINAL QUESTIONS

1) What do you mean by Organisational Culture ? Discuss the main characteristics of organisational
culture?
2) What are the functions of organisational culture? Describe the basic elements and determinants of
organisational culture?
3) How does organisational culture create its impact on work place? Suggest measures for developing
organisational culture.
4) Explain dimensions of organisational climate. How favourable organisational climate can be
created?

Note : These questions will help you to understand the unit better. Try to write answers for them. Do
not submit your answers to the university for assessment. These are for your practice only.
UNIT 18 ORGANISATIONAL CHANGE
Structure

18.0 Objectives
18.1 Introduction
18.2 Forces of Change
18.3 The Process of Change
18.3.1 Lewin’s Model
18.3.2 Continuous Process Model
18.4 Resistance to Change
18.5 Overcoming Resistance to Change
18.6 Managing Change
18.7 Targets of Change
18.8 Strategies of Change
18.9 Building Effective Organisation
18.10 Let Us Sum Up
18.11 Key Words
12.12 Terminal Questions

18.0 OBJECTIVES
After reading this unit, you should be able to:

• discuss different forces which initiate change;

• analyse different models of change process;
• examine the process of resistance to change;
• describe the ways of overcoming the resistance to change;
• discuss the concept of the management of change;
• identify the targets of change;
• explain the strategies of change; and
• discuss how to build an effective organisation.

18.1 INTRODUCTION
The term change may be defined as the replacement of existing one with a new one. Change results in new
opportunities, challenges and also some hardships. Change is inevitable in the life of an individual or
organisation. A change in an organisation is known as organisational change, which refers to the setting up
new production methods; producing new products; restructuring of organisation; adoption of information
technology; change from public to private ownership or vice-versa etc. Organisations, which learn and cope
up with change, will flourish and others, which fail to do, so, will disappear. Modern organisations are
required to compete in a global market. Further technological developments resulted in changes in the
methods of producing goods and services. All these developments make changes inevitable, pervasive, and
persistent in organisational life. In this Unit, you will learn the forces and process of change, their
resistance and how to overcome resistance to change. You will further learn managing change, targets of
change and strategies of change. You will be acquainted with how to build an effective organisation.
18.2 FORCES OF CHANGE
Organisations today operate in a very dynamic and changing environment. They have to make suitable
changes from time to time to become competitive; to serve customers better; to be on par with latest
technology; to maintain or to improve upon existing level of profits.

All the forces, which initiate changes, can be broadly divided into two categories: Internal Forces and External
Forces. Let us learn them in detail.

Internal Forces

i) Change in Leadership: A change in leadership of an organisation may result in change in perceptions,

strategies, activities and results.

ii) Change in Employees Profile: Some changes in employees profile are inevitable because of death,
retirement, transfer, promotion, discharge or resignation. Women employment is on the increase.
Further in the context of present day globalisation, employees are recruited from different national
and cultural backgrounds. Human Resource policies and practices have to be reoriented to suit the
diverse workforce.

iii) Change in Employees Morale and Motivation: The changes in leadership, their policies and practices
may affect the morale and motivation of the employees resulting in declining productivity, production
and profits.

iv) Union Influence: The influence of the union on many organisations in respect of recruitment, service
conditions, wage rates etc. is still perceptible inspite of the implementation of policies of
liberalisation by many Governments. The management will have to make suitable changes in
response to demands of the union.

v) Implementation of New Technology: Technological developments result in change of job, production

process, and employee profile. More computers, automation; and reengineering programmes result in
substantial changes in most of the organisations. The Internet has its profound impact on the markets
of number of organisations. Biotechnology is another field where large number of products are likely
to be created.

External Forces

i) Competition: Global competition has come into existence. Mergers and acquisitions have been on the
increasing trend. Organisations have to make suitable changes in response to the demands from the
competition. They should acquire the capacity of developing new products rapidly and market them
quickly. Short production runs, and short product cycles by equally flexible and responsive systems
will be required to face these competitive challenges.
ii) Economic Fluctuations: The fluctuations in security markets, interest rates, exchange rates etc. have continued
to impose changes on organisations.
iii) Social Trends: Increase in college attendance; delayed marriages by young couple; economic upliftment
of women and backward communities etc. suggest changes, which are to be considered by organisations.
All these result in fluctuations in the demand for products used by these groups.
iv) Global Politics: Collapse of Soviet Union, the reunification of Germany, the policies of W.T.O., U.S
attack on Afganistan and Iraq etc. have their impact on the business of different organisations, whose
activities are related to such developments.
Look at Table 18.1 which shows all the internal and external forces initiating changes.

Table 18.1 : Forces of Change

Forces Examples

External
New technological development Development of bio-technologyIT revolution
Changes in government policies LiberalisationPrivatisation
Competition Global competitionMergers and acquisitions
Economic fluctuations Interest rate fluctuationsFluctuations in security
marketsExchange rate fluctuations
Social trends Increase in educated classEconomic upliftment of women and
reserved communitiesDelayed marriages
Global politics World Trade OrganisationCollapse of Soviet
UnionReunification of GermanyUS attack on Afganistan and Iraq
Internal
Change in leadership Democratic leadership
Changes in employee profile Increase in women employmentRecruitment from different
national and cultural backgrounds
Changes in employee morale and motivation Effect of changes in leadership
Implementation of new technology Computerization of production processBusiness process re-
engineering
Union influences Union demands include : recruitment, service conditions, wage
rates etc.

18.3 THE PROCESS OF CHANGE

A successful change process involves three steps :

• Identifying the need for change;
• Cultivating a new behaviour or substitute; and
• Feeling comfortable with the new situation.

Let us now consider two popular models of change process. The first one is Lewin’s three-step model. Which
is discussed below.

1.1.1 Lewin’s Model

According to Kurt Lewin, the change process consists of three steps: i) Unfreezing the status co; ii) Movement
to a new stage; and iii) Refreezing the new change to make it permanent. Look at Figure 18.1 which shows
Kurt Lewin’s change process.

Figure 18.1 : Lewin’s Model of Change Process

Unfreezing is the process by which people are made to realise the need for change. Environmental pressures,
declining performance, recognition of a problem or availability of a better way of doing things, may speed up
unfreezing. While the driving forces of change are to be encouraged and the forces of resistance are to be
discouraged. Changes introduced without undergoing this process of unfreezing are sure to fail due to
unawareness and resistance on the part of the employees.

The second stage is the changing or moving stage. This involves taking action to modify a situation by changing
things such as the people, tasks, structure and technology of the organisation.

The final stage in the change process is refreezing, which consists of making the new tasks, technologies, and
relations relatively permanent. The introduced changes are thus reinforced and stabilised. When this stage of
refreezing is not done, the changes introduced are likely to be abandoned within a short time or incompletely
implemented.

Activity A

Take one latest incident of change in your organisation and explain the change process in terms of Lewin’s
Model?
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18.3.2 Continuous Process Model

The Lewin’s model is very simple and straightforward. However it does not deal with several important
issues. Hence the second model of change process continuous change process model has come into
existence. This model treats the change from the perspective of top management. In this approach, the top
management perceives that certain forces or trends call for change and the issue is referred to organisation’s
usual problem solving and decision-making process. The top management defines the goals to be attained
after the change. Alternatives for change are also considered and evaluated, and an acceptable one is
selected.

The top management may seek the assistance of a change agent – a person responsible for managing the
change effort who may be a member of the organisation or an outsider. While an internal change agent is
likely to know the organisation, people, tasks, political situations etc. very well; an outsider is likely to view
the situation more objectively. As per the direction and management of the change agent, the organisation
implements the change through Lewin’s model.

The final step in this model is measurement, evaluation and control. Through this process, the top
management determines the effectiveness of the change process by evaluating various indicators of
organisational productivity or employee’s morale. Look at Figure 18.2 which shows change process model
of organisational change.

Figure 18.2 : Change Process Model of Organisational Change

It takes time for employees to absorb even small changes. Much more time and effort may be required for
employees to adapt to complex changes. Transition management is the process of systematically planning,
organising and implementing change. Once the change starts, the organisation is neither in the old state nor
in the new state. But the businesses will have to continue. Transition management ensures that business
continues while the change is occurring. The members of the regular management team assume the role of
transitional managers to co-ordinate organisational activities with the change agent. Communication about
the change is an important step in transition management.

18.4 RESISTANCE TO CHANGE

Resistance to change is an attitude or behaviour that shows unwillingness to approve a particular change.
This resistance is to be overcome for successful change. Sometimes resistance to change serves as a
feedback to reconsider the proposed change. Thus resistance to change can also be used for the benefit of the
organisation.
The essence of constructive approach to resistance is to consider objections raised and make suitable
amendments and educate the employees about the proposed change. Resistance can be overt, implicit,
immediate and differed. When it is overt and immediate, the management can take immediate remedial steps
to deal with such resistance. Implicit resistance may result in loss of loyalty, loss of motivation, increased
mistakes, increased absenteeism etc. In course of time, similarly differed resistance creates problem to the
management particularly when substantial amounts have already been invested in carrying out the change.
Resistance to change may be introduced by the organisation, the individual or both.

We shall now examine the different sources of resistance either from organisation or from individuals.

Organisational Resistance

The following six major sources of organisational resistance have been identified.

i) Structural Inertia: Every organisation has built in mechanisms or systems to maintain stability. It
may be training and other socialised techniques or formulation procedures. The people are recruited;
they are trained and they are shaped to behave in certain ways. When change is proposed in any of these
systems and procedures, the existing employees may not accept it.
ii) Limited Focus of Change: Organisations consist of interdependent sub-systems. We can’t change
one without effecting the other. If management desires to change the technological process without
simultaneously modifying the organisational structure, the change in technology is not likely to be
accepted.
iii) Group Inertia: Some times even if individuals want to change their behaviour, group norms may act
as a constraint.
iv) Threat to Expertise: A change in the organisation may threaten specialised expertise developed by
the individuals and groups over the years. Hence they are likely to oppose the change.
v) Threat to Established Power Relations: Any redistribution of decision-making authority may
threat individuals’ power relationship with others and leads to resentment.
vi) Resource Allocation: The groups in the organisation, which control resources often consider change
as a threat.

Individual Resistance

The reasons for resistance from individuals can be traced to basic human characteristics such as perceptions,
personalities and needs. The following are the six reasons for individual resistance to change.

i) Habit : The human beings prefer to carry out their daily jobs in the same way. Introduction of any new
steps in carrying out the job makes them feel that the job has become difficult. So they resist this change.

ii) Security : People with high need of job security are likely to resist the change which is likely to affect
their feelings of safety. Introduction of new technological changes in an organisation may make the employees
feel that their jobs are in jeopardy.

iii) Economic Factors : Employees may feel that the proposed changes may reduce their monthly pay.
Hence they oppose such changes.
iv) Fear of Unknown : When the change is proposed, a known situation is sought to be replaced by an
ambiguous and uncertain situation, which may not be liked by the employees. As a result, they develop a
negative attitude towards the proposed change.
v) Lack of Awareness : People may not be aware of the benefits of the proposed changes and consequently
they resist those changes due to ignorance.
 vi) Social Factors : Individual employee may resist changes either because of the influence of the group
or the union to which they belong. They may feel that if those changes are accepted, they may be ridiculed
by their colleagues or the union officials.

Look at Figure 18.3 which shows sources of resistance to change.

Figure 18.3 Sources of Resistance to Change

Individual Organisational

RESISTANCE

Activity B

1) Interview some senior managers in the organisation and elicit the causes for organisational resistance
to change.
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2) Interview some senior employees in the organisation and elicit the causes for individual resistance to
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5.5 OVERCOMING RESISTANCE TO CHANGE

When there is a resistance to change, the management has to take appropriate steps to overcome the
resistance. The following six ways have been suggested for dealing with the resistance to the change:
i) Education and Communication: The first approach to overcome resistance is through education and
communication. Under this approach, the employees are educated about the change before it is implemented.
This helps them to understand the logic of the change and its benefits. This method is the best method when
resistance is based on inaccurate or incomplete information.

ii) Participation and Involvement: Resistance to change can be reduced significantly by inviting the
concerned employees to participate in its decision making process. They feel that it is their own proposal
and consequently they stand by its implementation.
iii) Facilitation and Support: This involves providing both emotional, training and financial assistance to
employees experiencing the hardships of change.
iv) Negotiation and Incentives: This approach Provides for negotiation with concerned employees and
offers incentives to make them agree to the change.
v) Manipulation and Co-optation: This method consists of attempts to influence the employees and
more especially, the opinion makers, through some special benefits or providing more attractive information
or by withholding undesirable information.
vi) Coercion: This is the application of direct threats or force upon the resisters. The threats may consist
of transfer, loss of promotion, retrenchment etc.
Look at Table 18.2 which shows methods of overcoming resistance to change.

Table 18.2 : Overcoming Resistance to Change

Method Use when Advantages Disadvantages

Education & communication People lack information or have inaccurate information
Creates willingness to help with the change Can be very time consuming
Participation & involvement Other people have important information and/or power to resist
Adds information to change planning; builds commitment to the change Can be very time
consuming
Facilitation & support Resistance traces to resource or adjustment problems Satisfies
directly specific resource or adjustment needs Can be time consuming; can be expensive
Negotiation & agreement A person or group will lose something because of the change
Helps avoid major resistance Can be expensive; can cause others to seek similar deals.
Manipulation & cooptation Other methods don’t work or too expensive Can be quick and
inexpensive Can create future problems if people sense manipulation
Explicit & implicit coercion Speed is important and change agent has power Quick;
overpowers resistance Risky if people become crazy
18.6 MANAGING CHANGE
Finally we consider the factors influencing successful management of organisational
change. The following six factors are to be considered in this context:

i) Environmental Influences: Environment is an important factor in bringing about organisational

change. The demands of the environment have to be considered in finalising the change. The
environmental complexities increase as the area of the organisation’s operations increase – local,
regional, national and international. Further acceptance of change varies widely from place to place and
from culture to culture. Moreover, the techniques to be adopted for managing change also differ from
country to country.

ii) Whole View of the Organisation : It is always necessary that managers should take whole view of
organisation while proposing change. A partial view can affect the change effort adversely.

iii) Support of Top Management: The success of any change effort depends to a large extent on the
support of top management. Complaints may be made against the change proposals of local/regional
managers to the top management. Therefore, unless the top management is informed in advance and
their support is ensured, problems may arise and the local/regional management may fail in
implementing the change.

iv) Employee’s Participation: Employees or their representatives may be invited to participate in

discussions relating to the proposed change. If they are given a role in designing the change, they are
likely to cooperate with the management in implementing the change.
v) Open Communication: Open communication between management and employees is an important
factor in managing the change. Employees are likely to have certain misapprehensions about the change
and unless correct information is provided through open communication system, the change efforts are
likely to fail.

v) Incentives and Rewards: Employees who are responsible for the successful implementation of the
change should be recognized and appropriately rewarded. Sometimes people who resist in the
beginning or oppose throughout are given more importance than employees who support the change
right from the beginning. Employees who support the change actively and help others adjust to
changes deserve special recognition by way of news release; special consideration in performance
appraisal; an increment in pay or a promotion etc. Look at Table 18.3 which shows the factors and
impact of managing change.

Table 18.3 : Managing Change

Key Impact

Environmental influences A major factor influencing the change

Whole view of organisation Comprehensive effect on the Organisation
Support of top management Minimises the problems while implementing the change
Employee’s participation Cooperate with the implementation of change
Open communication Minimises misapprehensions
Incentives and rewards Encourages employees to cooperate with management
Activity C

Select any Organisation where change has been successfully implemented and identify the causes for
successful implementation of that change?
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18.7 TARGETS OF CHANGE

The change is usually carried out with a view to improve the performance of one or more of the following
four elements:

i) Human Resources: Human Resources constitute the most important asset of an organisation. The
competencies and the overall success of an organisation depend on the quantity and quality of its
 employees. Hence the organisations will have to find out most effective way of motivating human
resource. The efforts in this context, include:
• Additional investment in training and development activities to enable employees to acquire new
skills and abilities,
• Integrating employees with the organisational culture,
• Changing organisational norms and values to motivate multicultural and diverse work force, and
• Institution of promotion reward systems applicable to a diverse workforce.

ii) Functional Resources: Each organisational function needs to develop procedures, which will help
the organisation to manage the environment. As environment changes, organisations often transfer
resources to the functions where maximum value can be created. An organisation can improve the value
by changing its structure, culture and technology.

iii) Technological Capabilities: Technological capabilities provide a wonderful opportunity to change

itself in order to exploit market opportunities. This will help the organisation either in developing new
products or improving the existing products or improving the production process.

iv) Organisational Abilities: The design of an organisation structure and culture helps an organisation
to harness its human and functional resources to exploit technological opportunities. The ability of
people and functions can be increased by making suitable changes in their relationships.

Thus, the proposed change should aim at improving the performance of either human resources,
functional resources or technological capabilities or organisational abilities.
Look at Figure 18.4 which shows the targets of change :

Figure 18.4 : Targets of Change

Activity D

1) Identify the organisations where the changes are initiated and find out the methods adopted for
bringing change in human resources.
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Identify the organisations where the changes are initiated and find out the methods adopted for
bringing change in functional resources.
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3) Identify the organisations where the changes are initiated and find out the methods adopted for
bringing change in technological capabilities.
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4) Identify the organisations where the changes are initiated and find out the methods adopted for
bringing change in organisational abilities?
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18.8 STRATEGIES OF CHANGE

An appropriate strategy for implementing the change is to be followed to get the best results from
proposed changes. The strategies of changes can be classified into two categories:

i) Evolutionary – which is gradual, incremental and specifically focused

ii) Revolutionary – which is sudden, drastic and organisation wide

Managers who choose an evolutionary strategy make incremental changes to organisational strategy
and structure. On the other hand, managers who choose the revolutionary strategies make drastic changes to
organisational strategy and structure. Instead of making changes one by one, they wait until change is really
necessary and then make all the changes simultaneously.

The revolutionary change, which is otherwise known as top down change calls for intervention of the
top management. This involves massive dislocation and the uncertainty. This approach is preferred because
it is the only way in which an organisation can overcome the inertia that threatens efforts to restructure the
company.

As against the revolutionary change, evolutionary change depends on bottom up change strategy. The
change is carried out through incremental steps in which all the employees may be involved in decision-
making and implementation. Top management also guides the actions and make sure that they are in
conformity with overall corporate objectives. However, this strategy requires longer period of
implementation than top down change.

The evolutionary change facilitates organisational learning and allows the organisation to respond to
changing environment. The revolutionary strategy can be implemented by employing one of the following
three approaches:
i) Re-engineering: Re-engineering involves the re-thinking and re-design of business process to
increase organisational effectiveness. The attention will be on the business processes rather than the
organisational functions.
ii) Re-structuring: Restructuring is a second form of revolutionary change. There are two basic steps
to re-structuring:
 • An organisation reduces its level of differentiation and integration by eliminating divisions or
departments
• An organisation downsizes the number of its employees to reduce operating cost.
• Change in the relationships between divisions or functions are common in restructuring.

iii) Innovation: Innovation is the process by which organisations use their skills and resources to develop
new goods and services or to develop new production and operating system. The objective is to meet the
needs of customers in the best possible manner. However, innovation is also associated with high level
of risk because the results of research and development activities are often uncertain.

The other classification of change strategies is on the basis of methods usually used in making the
employees accept the changes. These methods are as follows:

i) Force Coersion Strategy: Under this strategy, rewards or punishments are applied to induce or to
force the employees to accept the change. The effects of this strategy continue as long as the
rewards or punishments are effective.
ii) Rational Persuasion Strategy: Under this strategy, an attempt is made to make the employees to
accept the change through the use of special knowledge, empirical support or rational arguments.
This strategy is also known as empirical-rational strategy. When this strategy succeeds, it results
in a longer and more internalised acceptance than the force coercion strategy.
iii) Shared Power Strategy: This involves inviting the employees to participate in decision-making
relating to the proposed change. This strategy is also known as normative re-educative approach, which
tries to develop directions and support for change through involvement and empowerment. This strategy
lasts long and internalises change. Look at Figure 18.5 which shows the strategies of change.

Figure 18.5 : Strategies of Change

(Source : Adopted from: Organisational Behaviour, Schermerhorn, Hunt & Osborn. Page: 399)
Activity E

Study the change process in an organisation and identify whether the change is evolutionary or revolutionary.
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18.9 BUILDING EFFECTIVE ORGANISATION

An effective organisation is the one, which utilises its resources in a way that maximizes the organisations
ability to create a value. In other words an organisation is effective if it can :
• Secure scarce and valued skills and resources from outside the organisation. (external resource effectiveness).
• Creatively co-ordinate resources with employees’ skills to innovate products and adopt to changing customer
needs. (internal systems effectiveness).
• Efficiently convert skills and resources into finished goods and services (technical effectiveness).

Let us now consider these three effectiveness in detail.

i) External Resource Effectiveness : The organisations control over the external environment. The
organisations ability to influence the stakeholders’ perceptions in its favour and to receive a positive
evaluation by external stakeholders are very important to the organisations survival. The effectiveness
of organisations control over the environment is measured with the help of indicators such as stock
price, profitability, return on investment etc. which the shareholders judge how well the management
is controlling its environment.

ii) Internal Systems Effectiveness : The effectiveness of an organisation also depends on how does
the organisation function effectively. It should have a structure and a culture, which permit
adoptability and quick responses to changing conditions in the environment. The organisation should
be flexible so that it can speed up decision-making and rapidly innovate production services. High
degree of employees co-ordination and motivation will have direct impact on organisations ability to
respond to its environment.

iii) Technical Effectiveness : This consists of how can an organisation convert its skills and resources
into finished goods and services effectively. Technical effectiveness is measured in terms of
productivity and efficiency. Increase in production without increase of cost or reduction per unit cost
are all examples of technical effectiveness. Productivity measures the effectiveness of the
organisations production operations. Employees attitude and motivation and their desire to co-operate
are also important in influencing productivity and efficiency.

An organisation may be effective in one area but not in others. The overall effectiveness of an organisation
is ensured with the existence of the effectiveness of all the three components – external resources, internal
systems and technical matters. Managers have to take steps in developing effectiveness in all these three
tasks. Failure in the part of the organisation in any one or more of these areas will result in ineffective
organisation.

Factors in Building Effective Organisation

The following are some of the factors to be considered for building effective organisation.

Sensitivity Training : This is a method of changing behaviour through unstructured group interaction. The
employees are brought together in free open environment. They discuss among themselves and thus they
learn through serving and participating.

Survey Feedback : This method consists of using questionnaires to identify discrepancies among member’s
perceptions; arranging discussion among the members on their perceptions and suggesting remedies.

Process Consultation: Under this method, an outside consultant is employed to assist the organisation to
perceive, understand and act upon process events. This helps the managers to take remedial steps to improve
the situation.

Team Building: Modern organisations are increasingly relying on team to accomplish work tasks. Team
building utilises high interaction in group activities to increase trust and openness among team members.
The objective is to improve efforts of members, which will result in increased teams’ performance.

Inter Group Development: This method aims at changing the attitudes and perceptions of different groups
towards each other. Each group meets independently to develop lists of its own perception and the
perception of other groups. The groups then exchange their lists, after which similarities and differences are
discussed. Thus, an attempt is made to sort out the differences and reach the stage of integration. In this
way, the relations among the groups are improved.
Innovation: Innovation is a new idea applied to initiating or improving a product, process or service. The
effectiveness of the organisation depends to a large extent on its innovativeness. Innovativeness can be
developed in all the functional areas of management.

Creating a Learning Organisation: A learning organisation is an organisation that has developed the
continuous capacity to adopt and change. Just as individuals learn organisations also learn. An organisation
can be a continuous learner by :

• Establishing a strategy for change, innovation and continuous improvement;

• Re-designing the organisation structure to facilitate the continuous learning by all the departments and
employees; by reshaping the organisations culture to suit the continuous learning.

Activity F

1) Observe the strategies adopted in any organisation in bringing change and give an example with
explanation where the Force Coersion strategy has been adopted to bring change in the organisation.

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2) Observe the strategies adopted in any organisation in bringing change and give an example with
explanation where the Rational Persuasion strategy has been adopted to bring change in the
organisation.
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3) Observe the strategies adopted in any organisation in bringing change and give an example with
explanation where the Shared power strategy has adopted to bring change in the organisation.
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18.10 LET US SUM UP

Organisational change refers to the replacement of existing system to a new system. It may result in some
opportunities, challenges as well as hardships. Both internal and external forces influence the process of
change in an organisation. A successful change process involves three steps; i.e., identification of need for
change, cultivation of new behaviour and feeling comfortable with the new situation. Lewin’s model and
Continuous process model explain the process of the change.

As the change is introduced in an organisation, it may face the resistance by the organisational members.
Both individual and organisation may resist the change. Organisation may deal with the resistance to change
through : education and communication, participation and involvement, facilitation and support, negotiation
and incentives, manipulation and cooptation and coercion.

The process of change requires to be managed in a careful and systematic way. The factors influencing
successful management of organisational change should be considered for this purpose. The major targets of
change are : human resources functional resources, technological capabilities and organisational abilities.
An appropriate strategy for implementing the change should be devised considering both evolutionary and
revolutionary changes. An effective organisation is required for using its resources for creating the optimum
value. The organisation should focus on external resource effectiveness, internal system effectiveness and
technical effectiveness for this purpose . The factors to be considered for building effective organisation are
: sensitivity training, survey feedback, process consultation, team building, inter group development,
innovation and creating a learning organisation.

18.11 KEY WORDS

Change agent: A person responsible for managing a change effort.

Change: It is the movement from the old way to a new way of doing things.
Coercion: Application of direct threats or force upon the resistors.
Coercive power: The extent to which a person has the ability to punish physically or psychologically.
Decision-making: The process of choosing a course of action.
Empowerment: The process of enabling workers to set their work goals, make decisions and solve problems
within their sphere of responsibility and authority.
Evolutionary change: Change that is gradual, incremental and specifically focused.
Group: Two or more people who interact with one another such that each person influences and is influenced
by the other person.
Innovation: The process of creating and doing new things
Moving phase: It involves taking action to modify a situation by changing things such as the people, tasks,
structure, and technology of the organisation.
Organisation: A group of people working together to attain common goals.
Organisational change: It is the process by which organisations move from their present state to some desired
future state to increase their effectiveness.
Organisational structure: The system of task, reporting and authority relationships within which the organisation
does its work.

Planned change: It is the deliberate design and implementation of structural innovation, a new policy or goal,
or a change in operating philosophy, climate or style.
Process consultation: Helps groups improve on such things as norms, cohesiveness, communication, decision-
making methods, conflict, task, and maintenance activities.
Re-engineering: The radical redesign of organisational processes to achieve major gains in cost, time and
provision of services.
Refreezing: The process of making new behaviours relatively permanent and resistant to further change.
Resistance to change: An attitude or behavior that shows unwillingness to make or support a change.
Restructuring: Change in the relationships between divisions or functions in the organisation.
Revolutionary change: Sudden, drastic, and organisations wide change.
Unfreezing: The process by which people become aware of the need for change.

18.12 TERMINAL QUESTIONS

1) What are the major forces and resistance to change? How does organisations should manage the change
process?
2) What is organisational change? Discuss the forces influencing the organisational change?
3) Explain in detail the external and internal forces of organisational change. Which one do you think is
more prominent?
4) How do evolutionary change and revolutionary change differ, under what conditions managers choose
one approach or the other?
5) What suggestions do you offer for managing organisational change successfully?
6) What are the important elements to be targeted for change in an industrial organisation?
7) How does Lewin’s three-step model explain the process of change?
8) What are the steps to be initiated for building an effective organisation? Discuss with examples.
9) What is meant by effective organisation? Explain the factors influencing the effectiveness of an
organisation?

Note : These questions will help you to understand the unit better. Try to write answers for them. Do not
submit your answers to the university for assessment. These are for your practice only.

Reinforcing and making permanent the new tasks, technologies and relations

• Individual components

• Group components

• Task components

• Structural components
• Technology components

• Identifying the need for change

• Increasing the driving forces to change

• Reducing the resisting

• forces to change

Refreezing
 Moving

Unfreezing

Change Agent

Transition Management

Implement the Change

Problem solving Process

Recognise and Define Problem

Forces for Change

Measure Evaluate Control

• Habit
• Security
• Economic Factors
• Fear of Unknown
• Lack of Awareness
• Social Factors

• Structural Inertia
• Limited Focus of Change
• Group Inertia
• Threat to Expertise
• Threat to established power relations
• Resource Allocation

Organisational

Individual

Human Resources
 Functional Resources

Change Targets
Technical Capabilities

Organisational Abilities

Change agent behaviour

Unilateral action “command”

Rational persuasion; Expert testimony;

Demonstration projects
Empowerment;

Participative decisions

Change Strategy

Force coercion

Rational Persuasion

Shared power

Predicted Outcomes

Temporary compliance

Long-term internationalization

Long-term internationalization

Power Base

Rewards
Punishments
Legitimacy

Expertise
Reference
UNIT 19 ORGANISATIONAL DEVELOPMENT
Structure

19.0 Objectives
19.1 Introduction
19.2 Concept of Organisational Development
19.2.1 Objectives of OD
19.2.2 Underlying Values of OD
19.3 OD Process
19.4 OD Approaches
19.5 OD Strategies / Interventions
19.6 Managing the OD Process
19.7 Let Us Sum Up
19.8 Key Words
19.9 Terminal Questions

19.0 OBJECTIVES
After studying the unit, you should be able to:

• discuss the concept of OD;

• describe the characteristics, objectives and underlying values of OD;

• explain the process of OD;

• describe OD techniques or interventions for bringing change in

the organisation; and
• discuss the ways and means for personal growth and organisational development.

19.1 INTRODUCTION

Organisations face many challenges in terms of increasing competition, maintenance of higher quality of
goods and services, growing role of technology and high expectation of the customers; etc. These challenges
compel the organisations to equip themselves to deal with them. Organisational development is an
important mechanism of improving the organisation and people through planned and established system for
meeting these challenges. It aims at improving the organisation and people through planned systems. The
strategies of organisational development focus on solving the organisational problems, and enhancement of
its effectiveness.
In this unit, you will learn the concept, characteristics, objectives and underlying values of organisational
development. You will be acquainted with various processes and approaches of organisational development.
You will further learn the strategies/interventions used for overall improvement of the organisation. You
will be also familiarised with the management of organisational development process.

19.2 CONCEPT OF ORGANISATIONAL DEVELOPMENT

Organisational Development is a planned, managed and systematic process to change the culture, systems
and behaviour of an organisation in order to solve its problems and achieve its objectives. While OD
frequently includes structural and technological changes, its primary focus is on changing people and the
nature and quality of their working relationships. Thus, OD is the modern approach to management of
change for human resources development. It concentrates on people dimensions like norms, values,
attitudes, relationships, organisational culture etc. Dale S. Beach defined OD as a complex educational
strategy designed to increase organisational effectiveness and wealth through planned intervention by a
consultant using theory and techniques of applied behavioural service.

According to French and Bell, O.D. refers to a long range effort to improve an organisation’s problem
solving capabilities and its ability to cope with changes in its external environment with the help of external
or internal behavioural scientists, consultants, or change agents. OD is intended to create an internal
environment of openness, trust, mutual confidence and collaboration and to help the members of the
organisation to interact more effectively in the pursuit of organisational goals.

As a body of concepts, tools and methods Organisation Development (OD) can be referred as a new
discipline. Thus, OD is a top management supported long term effort to improve an organisation’s problem
solving and renewal processes particularly through a more effective and collaborative diagnosis and
management of organisational culture. It emphasizes on formal work team, temporary team and inter-group
culture.

The analysis of the above description indicates the following characteristics of OD :

• It is an educational strategy which attempts to bring about a planned change.

• It relates to real organisational problems instead of hypothetical classroom cases.
• It uses sensitivity training methods and emphasizes the importance of experiment based training.
• Its change agents are almost external consultants outside of the organisation.
• External change agents and internal organisation executives establish a collaborative relationship
involving mutual trust, influence and jointly determined goals.
• External change agents are humanists seeking to establish a social and altruistic philosophy within an
organisation.
• The goals that the change agent seeks to accomplish through OD tend to reflect human approach and
aims for better conflict resolution, increased understanding and more considerable leadership.
• The organisational changes sought are usually the result of some immediate problems but it is a long
term approach covering three to five years.
• OD is used to describe a variety of change programmes. It intends to change the organisational
philosophies, skills and attitudes of people.
• OD is a dynamic process involving a considerable investment of time and money.
• It is based on open and adaptive system concepts and believes that organisational design and managerial
performance are mutually interdependent.
• OD is research based activity. It aims at conducting surveys, collection of data and evaluation of the
situations.
19.2.1 Objectives of OD

OD efforts broadly aim at improving the organisational effectiveness and job satisfaction of the employees.
These aims can be attained by humanising the organisations and encouraging the personal growth of
individual employees. Specifically the objectives of OD are:

• To increase openness of communication among people.

• To increase commitment, self-direction and self control.
• To encourage the people who are at the helm of affairs or close to the point of actual action to make the
decisions regarding their issues through collaborative efforts.
• To involve the members in the process of analysis and implementation.
• To encourage the confrontation regarding organisational problems with a view to arriving at effective
decisions.
• To enhance the personal enthusiasm and satisfaction levels.
• To increase the level of trust and mutual emotional support among employees.
• To develop strategic solutions to problems with higher frequency.
• To increase the level of individual and group responsibility in planning and execution.
The emphasis of OD on human dimensions of organisation is reflected in humanistic values by:
• Providing opportunities for people to work as human beings rather than as resources in the production
system.
• Providing opportunities for each member of the organisation as well as the organisation itself to develop
to the level of full potential.
• Seeking to increase the organisational effectiveness.
• Attempting to create congenial environment to feel excitement and challenge of work.
• Providing opportunities to influence the people, work, environment and organisation.
• Treating each human being as a person with a complex set of needs important for his work and life.

Thus, OD is a modern approach which is different from the traditional one and aims to bringing
organisational effectiveness through proper synchronization of human beings with task, structure and
technology in an organisation.

19.2.2 Underlying Values of OD

For success of the efforts of OD, there are underlying assumptions or values which
should be the basis of OD approach. There are a number of such values as given below:
• OD movement believes the assumptions of theory Y of McGregor. As such, it emphasizes supportive
and creative opportunities for growth. Self control and personal responsibility are to be provided to the
employees in an organisation rather than using controls and punishment. An individual should be more
independent and autonomous.
• When the new employee is appointed he is to be taken into confidence, invited to work place and into
association for discussion on his personal and work related issues in private meetings. Thus a new
employee needs confirmation and support of others.
• Organisation is benefited by the differences in background, personality and view points of employees.
Contrasts and conflicts of individual should be accepted as the reality.
• Full range of expression of feelings result in high motivation, commitment and creative ability.
• Honesty and directness enable people to put their energies into the real problems and improve
effectiveness.
• Executives should create and develop cooperation among employees for effectiveness and not for
wasting human and other resources.
• Giving attention to process activities not only at the time of assigning activities and bringing relations
among employees but also at the later stages will bring closeness among people.
• Suppressing the conflicts has long run effect on employee morale. Hence identifying the root causes of
the problem and working out a satisfactory solution rather than suppressing the conflict are needed.
• Participation of people throughout the progress of OD is essential to ensure their commitment.
• It is assumed that individual’s objective is personal growth. Organisational growth may be the off shoot
of individual growth.
• These underlying values form the basis of OD culture in an organisation. To be successful in OD
endeavours, efforts should be directed to implant their assumptions in an organisation.

Check Your Progress A

1) What is O.D.?
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2) Describe the characteristics of O.D.?

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3) Enumerate the underlying values of O.D.?

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19.3 OD PROCESS
The process of OD refers to the way OD efforts work for a given objective. The OD process is complicated
and it takes long time to complete the process. The process of OD is composed of: a) Data gathering and
organisational diagnosis, b) Action intervention, and c) Process maintenance.

Data collection and diagnosis are an extensive task in the OD process. It involves data collection pertaining
to a problem area. Action interventions are the techniques which are appropriately chosen for use in
implementation stage of the OD process. Process maintenance is a management component which ensures
the on going progress to avail the OD benefits in future.
There are various steps of OD process but the typical process consists of the following steps :

Initial Diagnosis : If it is recognized that there are some inadequacies within organisation which can be
corrected by OD activities, it is necessary to find out the professional and competent people within the
organisation to plan and execute OD activities. The services of the outside consultants can also be taken to
help in diagnosing the problems and developing OD activities. The consultants adopt various methods
including interviews, questionnaires, direct observation, analysis of documents and reports for diagnosing
the problem.

Data Collection : Survey method is used to collect the data for determining organisational climate and
identifying the behavioural problems creeping in the organisation.

Data Feedback : Data collected are analysed and reviewed by various work groups formed for this purpose
in order to mediate in the areas of disagreement or confrontation of ideas or opinions.

Selection of Interventions : The interventions are the planned activities that are introduced into the system
to accomplish desired changes and improvements. At this stage, the suitable interventions are to be selected
and designed.

Implementation of Interventions : The selected intervention should be implemented. Interventions are to

be implemented steadily as the process is not a one shot, quick cure for organisational malady. At the same
time, it achieves real and lasting change in the attitudes and behaviour of employees.

Action Planning and Problem Solving : Groups prepare recommendations and specific action planning to
solve the specific and identified problems by using the collected data .

Team Building : The consultants encourage the employees throughout the process to form into groups and
teams by explaining the advantages of the teams in the OD process.

Inter-group Development : The consultants encourage the intergroup meetings, interaction etc. after the
formation of groups/teams.

Evaluation and follow up : The organisation evaluates the OD programmes, find out their utility, develop
the programmes further for correcting the deviations. The consultants help the organisation in this respect.
All the steps in the OD processes should be followed by the organisation in order to derive full range of OD
benefits.
Activity A

Identify any one problem area of an organisation you know very well. Plot the OD process and prepare an
action plan to diagnose the problem and design an action plan for implementation.
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19.4 OD APPROACHES
During the course of OD process the change agent or facilitator or consultant plans some activities for the
client organisation to collect data, initiate action and provide feedback. All these activities are planned and
carried out jointly between the change agent and the organisation. Collectively these activities can be
termed as interventions. Interventions are also called OD strategies for a period of time given in the
reference. An OD intervention can therefore be defined as the set of structured activities.

Intervention is the actual manipulation of various elements and may be viewed from several different
perspectives. It is useful to distinguish between intervening in the organisational system and intervention as a
strategic and planned action. In the first case, once the OD process has begun, modifications start taking
place within the organisation. The second type is aimed explicitly at resolving difficulties, removing blocks
and building on strengths to enhance the effectiveness of the organisation. The basic approaches are Techno-
structural Approach & Human Processual Approach which are discussed below.
A) Techno-structural Approach
It relates to theories of interventions into the technology (e.g. task method and processes) and the structure
(e.g., the relationships, roles, arrangements etc.) of the organisation. Techno-structural approaches are rooted
in the fields of engineering, sociology, psychology, economics and open system theory. Interventions in these
areas are intended to effect the work content and method and to effect the sets of relationships among
employees. The broad heading of techno-structural development includes :socio-technical system
perspectives, job design, job enlargement and job enrichment.

Socio-technical systems and job design in part, owe their emergence to two earlier and still current
perspective to change. Opponents of socio-technical systems criticise the physical approach for testing
social groups and individuals mechanistically and criticise the physiological approach for ignoring the
technology of the organisation.
B) Human Processual Approaches
Human Process or behavioural intervention focuses on the human participants and the organisational
processes (e.g.; communication, problem solving, decision making etc.) through which they accomplish
their goal as well as the organisations goals. This orientation to OD is rooted in the academic fields of
psychology, social psychology and anthropology, and in the applied disciplines of group dynamics and
human relations. Human process orientation tend to value human fulfilment and expect improved
organisational performance. Some of these are vertical dimensions of a hierarchy.
It continues to grow along with the belief that the technology of the behavioural sciences can be applied to
help to cope with a society in which change, and also maximum utilisation of human resources, are desirable.

19.5 OD STRATEGIES/INTERVENTIONS

An OD intervention can be defined as the set of structured activities in which selected organisational units
(target groups or individuals ) engage with a task or sequence of tasks that are directly or indirectly related
to organisational development. The OD strategy can be defined as an overall plan for integrating different
organisational improvement activities over a period of time to accomplish objectives. The OD interventions
are interrelated and overlapping in nature. No two interventions are alike and there is no single OD method
capable of serving all the possible objectives of an organisation. Primarily the OD interventions can be
classified in the context of components of our organisation like structure related, task-technology related and
people related interventions.
According to French and Bell the interventions can be clubbed into twelve groups. They are :
• Diagnostic
• Team building
• Intergroup activities
• Survey feedback methods
• Education and training programmes
• Techno-structural activities
• Process consultation
• The management grid
• Mediation and negotiation activities
• Coaching and counselling
• Career planning, and
• Planning and goal setting activities.

OD interventions are used according to the nature of units of change (targets) in the client organisation. The
targets of change are the individual, group, intergroup and the organisation in the specific context of task,
structure and technology. The interventions include many exercises and activities which depend on
conceptual material and actual experience with the subject under study. Loot at Table 19.1 which clearly
explains the nature of target areas (problems) and the type of OD interventions suitable in the given
situation:

Table 19.1 : Problem Areas and Types of OD Interventions

____________________________________________________________________
Problems Identified Possible Interventions
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Alienation of employees Work redesign, Job-enrichment,
Role efficacy labs
Non-collaboration among Team building workshops
functionaries.
Erosion of authority Leadership, Sensitivity Training, training,
Role efficacy labs
Negative attitude of staff Survey feedback, task forces
towards customer service

Productivity loss of workers Personal growth labs, goal setting,

and management team building.

Restrictive practices Union-management interface

Under-utilisation of man power MBO, Work-redesign
Executive’s rivalry Power labs
Low opinion about subordinates Transactional analysis, Team building,
Policy of appeasement Conflict management

Failure of participation Union-management interface,

Sensitivity training

Distrust between union and Union management interface

management
Planning operations Interface labs
Linkage problems Role negotiations
Outdated systems and procedures Brainstorming, Creative Problem
solving, Task force

Team related problems Team building exercises, Role

analysis, Role negotiation technique
organisational mirroring,

Structural problems Job design, MBO, Socio-technical

systems.

Education & Training Coaching and Counselling activities

Based on the above description, important interventions focussing upon different aspects can be discussed in
the following paragraphs:

1) Survey Feedback : It consists of an attitude survey through well designed questionnaires or

interviews or observations and giving feedback to the client organisation. It has much appeal and
application in real life situation. The attitude survey may have an objective of measuring the process; for
instance, communication, decision making and leadership at different levels. The data generated are
perceptual and attitudinal in nature. A summary of results is prepared in group discussion. Generally
feedback of results is given to the group which generated the data. Subsequently devices are designed to
resolution of organisational problems. Thus, the process of survey feed back includes : collection of
 data, feedback, development of action plan and follow-up. For authentic results, it should be ensured that
the questionnaire is valid and reliable, employees support investigators and people have mutual trust and
so on.

2) Management Grid : The most publicised technique developed by Robert Blake and Jane S. Mouton
is a step by step approach. The Grid connotes an intellectual framework of how do people manage. This
approach uses a six-phase Grid OD programme which identifies the five basic managerial styles in
numerical combinations which are 1-9, 9-1; 5-5; 9-9; and 1-1. It is depicted in Figure 19.1
Figure 19.1 : Management Grid

High 1-9 (Country Club) 9-9(Team)

5-5(Middle road)

1-1 (Impoverished) 9-1(Task)

Low

Concern for Production

1-1 (Improverished Style) = Minimal concern for people and

production.
1-9 (Country club Style) = Maximum concern for people but
minimal for production
9-1 (Task Style) = Maximum concern for production but minimal for
people.
9-9 (Team Style) = Maximum concern for people and
production.
5-5 (Middle Road Style) = Middle of the road status for
production people.

Development of leadership skills through grid programme involves wide variety of integrated and
instrumented activities which are conducted in experimental and structured conditions. The participants are
assisted to understand the approaches for integrating people and production. The six phase programme
covers three to five years. The first two phases cover management development so that the remaining phases
can help managers towards excellence in organisational performance (9-9 style). The six phase programme
consists of the following:

Laboratory, team development, inter-group development, organisational goal setting, goal achievement and
stabilisation.

3) Team Building : Team building is an attempt to assist the work group to identify, diagnose and solve
its own problems. In fact, groups develop their own norms of behaviour which influence individual and
group behaviour. Organisation is perceived as a system of interlocking groups. OD considers work
groups as teams which are turning points of introducing change. Team building attempts to effect
improvements in various teams operating in an organisation like permanent work teams, task forces,
committees etc. Team building activities focus on diagnosis, task achievement, team relationships and
 organisational process. The constituent parties in team building activity are: the external consultant, the
group leader and the members of the group.

In team building activity, members gather and discuss problems relating to their task performance. It
takes frank and fearless discussion. In the team building exercises, the members contribute information
concerning their individual perception of issues, problems and task relationship. Subsequently there is
agreement for overcoming these problems. Normally the goal of the meeting is to transform the team into
a better and effective team.
4) Sensitivity Training : It is also called laboratory training as it is conducted by creating an
experimental laboratory situation in which employees are brought together to interact in an unstructured
environment. Sensitivity training helps to understand people better, to develop an understanding of
others, to develop specific behavioural skills and to gain insights into the group processes. It also aims
on reducing interpersonal friction.

The primary objective of sensitivity training is to break through the barrier of silence and facilitate
verbalisation of participant to emphasize on the process of dialogue rather than the contents of the
training. It is not a hidden and manipulation process but aims at brain washing of individuals.

This training is carried out by unstructured groups without an agenda, leader and predetermined goals.
The group is given complete autonomy in developing their own devices, interactions and on going
process for interaction. Sometimes some planned activities may also be introduced in the Training Group
(T.Group) Laboratory training may involve role playing, intergroup competitive exercises, self-insight
questionnaires, lectures and audio visual aids. Sensitivity training provides a mechanism for personal
learning and development.

5) Four System Management : Rensis Likert’s four System Management is a four level model of
organisation effectiveness incorporating the basic categories of task orientation and people orientation.
According to Likert management philosophy can be classified into four convenient systems such as:
i) Exploitative-Autocratic System
ii) Benevolent Autocratic System
iii) Consultative Democratic System and
iv) Participative Democratic System.

This theory propounds that three basic concepts of system four management will make the organisation
effective. These are:
a) Use of the principle of supportive relationship in the organisation
b) Use of group decision making and group methods of supervision in the organisation, and
c) High performance goals.

Likert’s conclusion is that most effective organisation have system four characteristics i.e., Participative
Democratic System and the least effective Exploitative Autocratic System’s features. Under system four
management, the causal variables like supportive relationships, groups decision making and high
performance influence the end result variables (such as high productivity and low absenteeism ) through
the intervening variables (such as favourable attitudes towards superiors, high confidence and excellent
communication). It is realised that system four is the ideal management where goals are set by the group
members and not by the superiors. This system motivates subordinates.
6) Management by Objectives (MBO) : MBO is yet another popular tool of O.D. MBO process
involves the process of educating the concerned people about MBO, agreement upon clear cut
quantifiable objectives, evaluation of objectives and feed back for deviation and corrective action. It is a
comprehensive overall managerial philosophy which focuses upon joint goal setting. It synthesises the
individual’s goal to organisational goals. Since all levels of an organisation are involved in goal setting,
the entire organisation will have feeling of unity. MBO programmes can be effective if properly
implemented. It needs support of top management.
7) Process Consultation : Process consultation is the set of activities on the part of consultant which
help the client to perceive, understand and act upon the process events which occur in the client’s
environment. It concentrates on the analysis of process of some activities like communication, leadership
etc. It attempts to develop initial contacts, define relationships, select the method of work, collection of
data and diagnosis. Process consultation is designed to change attitudes, values, interpersonal skills,
group norms, and cohesiveness and other process variables. Basically it is a method of intervening in an
on going system.

8) Contingency Approach : Propounded by P. Lawsence and J. Lorseh this approach is based on the
premise that an organisation is a complex social system. Its activities must be integrated into a unified
effort to enable it to cope with the environment. Conceptually people in different departments have
different orientations related to the tasks they perform. In actual practice, the organisational units in their
routine operations are differentiated along their orientation. It appears that with the task differentiation
coordination is not possible. According to contingency approach both differentiation and integration are
possible for total organisation’s effectiveness with the help of integrative devices. To summarise, high
organisational performance is compatible with the existence of both differentiation as well as integration
which are required as per the demands of their immediate environment. The contingency approach can
be applied as an OD intervention in industrial organisations in the form of inter group confrontation
meetings of concerned departmental individuals.

9) Role Analysis : In the performance of their respective roles individuals manifest certain behaviour
which may thwart team effectiveness. Many a times it is found that the individuals are not clear about
their own expected behaviour from the view point of other members of the team. In such situation the
role analysis technique is used for clarifying the role expectations and obligations of the members of a
team. The resultant role requirements and the expected behavioural components of each other help the
member enjoy a mutually satisfactory behaviour in the work team. In the role analysis technique, the
respective role players analyse the focal role of the individuals. These are discussed openly in a
classroom situation by the entire team. Finally a role profile is prepared as a written summary on the
basis of role clarifications and expected behaviour. This paves the way for collaborative efforts without
any confusion about the respective roles.

10) Inter-group Activity : Poor interpersonal relationships are not uncommon features in organisational
functioning . In these situations inter-group activity focuses on improving the relationships between
groups. It facilitates interaction and communication between the work groups which ultimately avoids
dysfunctional inimical competitiveness among them. Inter-group team building involves the process of
differentiation and integration.

11) Organisation Mirroring :It involves activities where one group of members gets feedback from the
members of several other groups about how is it being perceived. Organisational mirroring is used when
there is difficulty with other department in the organisation. A meeting is called and feedback is sought
from other department. During the meeting the exact picture emerges which will resolve many
misunderstandings between two groups of people.
12) Third Party Peace Making Intervention :This intervention is based on the thoughts on
understanding conflicts and their resolutions at the interpersonal level. It facilitates confrontation as a
method of resolving the conflicts arising between two parties who are aware of the existence of the
conflicts and want to confront the issues. The consultant as a third party must be skilled in the art of
diagnosing the conflicts and use confrontation as technique. This process focusses on four basic elements
of conflicts namely : (i) the conflict issues, (ii) the contributory circumstances, (iii) the conflict related
behaviour, and (iv) the results of the conflict. The actual form that the peace making process takes
depends upon the nature and source of the conflict.

13) Job Design/Redesign : It is task -technology related approach aiming at making changes in the
work process of the groups of employees. Job design involves a well planned reorganisation of a job.
Basically it focusses to improve employee motivation, commitment, performance, job satisfaction etc..
There are different approaches to job design which are discussed below:

i) Job Enrichment: It is termed as vertical enrichment or addition of tasks to make the job richer. It
includes giving additional responsibilities and expecting more accountability from the employees.

ii) Job Engineering: It relates to the tasks, methods, performance standards, inter dependence of man
and machine, work flows etc. It may also include replacement of human workers for computers.

iii) Job Rotation: It involves shifting of a person from one job to another for variety of tasks to be done.
It reduces boredom and monotony.

iv) Job Enlargement: It includes expansion of tasks to be carried out. It focuses on horizontal
expansion of related tasks without additional responsibility and accountability.

v) Socio-technical System : It aims to strike a balance between the technical and social aspects of an
organisation with the aim to optimise the relationships and augment organisational effectiveness.
The socio-technical system normally involves a major redesign of the whole gamut of the way the
jobs are being carried out involving technological and social issues.
14) Quality Circles : Quality Circles are semi-autonomous work groups having about six persons who
volunteer to discuss and solve quality related problems in duty hours. It has impact on working
conditions, employees commitment and self development of employees.

15) Counselling : Counselling is the process of help extended by a Manager to his subordinate to
enhance his potential. It aims at sympathesizing and empathizing with the employees. It helps to bring
about self awareness in the employee about his own competence. The manager as counsellor assists the
employees in setting new goals and evaluate his own performance in a non threatening manner. It helps
towards self realization of one’s own strengths and weaknesses.

The above description is not exhaustive enumeration of OD interventions but as per need of the situations a
single or group of interventions may be used to resolve the issues. The focus may be a task or structure or
people. The intention of OD intervention is to enhance the performance.

Activity B

Identify the problems pertaining to task, structure, technology and people in any organisation familiar to you
and choose the most appropriate OD intervention to resolve them.
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19.6 MANAGING THE OD PROCESS
Basically there are three factors that influence the choice of an OD intervention. Applicability, Feasibility
and Acceptability. Applicability means the potential of an intervention to yield the desired results. Feasibility
means the practicality of an intervention in a given situation. Acceptability means the chances of acceptance
of an intervention in the client organisation. It must be clear that the actual choice of an intervention is based
upon the intuitive decision of the OD consultant.

A pragmatic approach is inevitable to ensure successful implementation of OD efforts in an organisation. If

it is not planned systematically, it may also create turmoil in an organisation. Therefore, the following tips
are elaborated to manage the OD process effectively.

i) Choosing receptive points : The areas or departments of the organisation should be undertaken for
OD experiment, where the people want change for improvement. The OD efforts should be
concentrated on them. Subsequently it can be moved to other units of the organisation.

ii) Focussing on the linkpins : The departments having interlinks should be identified to select the
people. The confidence of these linkpins will help to form a team for OD experimentation.

iii) Working with autonomous parts : Normally independent units/departments having least linkage
with other departments should be chosen so that cost of disturbances can be minimum.

iv) Using and developing internal resources : This will help to sustain and continue the OD efforts.

v) Starting at the top : Since there is need of support from top management, it is desired to start the OD
efforts at the top. This would ensure commitment and support.

vi) Working with supportive force : The consultant must identify the roles of individuals in the
organisation who are enthusiastic about effecting a change.

vii) Achieving minimum critical concentration : It should not hamper the culture of the unit to a great
extent and with the minimum efforts OD activity should be continued.

viii) Working on perception of problems: The client should be encouraged and helped to identify the real
problems.

ix) Having multiple points of entry : After initiating at the receptive point, OD efforts should be
gradually extended to interrelated points where related problems can be solved altogether.

x) Using proactive attitude: The proactive attitude of the consultant will bring openness to resolve the
issues.
These tips on effectiveness of OD process will help the OD endeavours to get success. For success of an OD
effort, the prerequisite conditions should be understood and established for organisational improvement.
They are :
• The key persons should have clear perception about organisational problems.
• The external behavioural science OD consultant should be hired to initiate OD efforts.
• The top level management should always own whole heartedly any effort meant for OD efforts.
• For successful intervention the complete work team alongwith the group leader and the manager must
participate in the OD exercises.
• There should be full support for entire diagnostic activities to collect data about organisational activities.
• OD efforts should be made known to all the concerned in the organisation for sustaining the changes.
• There must be link to all the sub-systems of an organisation like potential appraisal, career planning,
reward system etc.
• OD efforts should focus on the organisation in totality.
• In addition, there must be long range perspectives of the organisation for its improvement.

Check Your Progress B

1) How is sensitivity training useful for organisational development interventions.
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4) Enumerate the approaches of job design.

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19.7 LET US SUM UP

Organisational development refers to the systematic process to change the culture, systems and behaviour of
an Organisation for solving its problems and achieving the organisational objectives. The basic objectives of
organisational development are : to improve the organisational effectiveness and job satisfaction of the
employees. The basic underlying values of organisational development involves; emphasis on supportive
and creative opportunities for growth, developing the commitment, cooperation and enhancing the
participation of employees.

The steps involved in the process of organisational development include : initial diagnosis, data collection,
data feedback, selection of interventions, implementation of interventions, action planning and problem
solving, team building, intergroup development and evaluation and follow up.
Organisational Development approaches consist of techno-structure approach and human processual
approach. The organisational development strategies or interventions refer to an overall plan for integrating
different organisational improvement activities over a period of time to accomplish organisational objectives.
It can be classified into structure related, task-technology related and people related interventions. The
major organisational development interventions are : diagnostic, team building, inter group activities, survey
feedback methods, education and training programmes, techno-structural activities, process consultation, the
management grid, mediation and negotiating activities, coaching and counselling, career planning and
planning and goal setting activities.
OD process must be planned and managed systematically to get the successful result. The effective
managing process involves : choosing receptive points, focusing on link pins, working with autonomous
parts, using and developing internal resources.

19.8 KEY WORDS

Counselling : Process of help extended by a manager to his subordinate to enhance his potential.

Job Design/Redesign : Task technology related approach aiming at making changes in the work process of
the group of employees.

Organisational Development : A planned, managed and systematic process to change the culture, systems
and behaviour of an organisation to solve its problems and achieve its objectives.

Organisation Mirroring : Involves activities where one group of members gets feedback from the members
of several other groups about how is it perceived.

OD Process : The way OD efforts work for a given objective.

OD Strategy : Overall plan for integrating different organisational improvement activities over a period of
time to accomplish objectives.

Process Consultation : Set of activities on the part of consultant which help the client to perceive,
understand and act upon the process events which occurs in the client’s environment.

Quality Circles : Semi- autonomous work groups to discuss and solve quality related problems in duty
hours.

Sensitivity Training : Creation of an experimental laboratory situation in which employees are brought
together to interact in an unstructured environment.

Team Building : An attempt to assist the work group to identify, diagnose and solve its own problems.

19.9 TERMINAL QUESTIONS

1) What do you understand by O.D.? Explain the objectives and underlying values of OD.
2) Discuss the process of OD?
3) Elaborate the desired OD interventions focussing upon people?
4) Identify task-structure related OD interventions?
5) Identify the organisational problems and suggest suitable OD intervention to resolve them.
6) Discuss the prerequisite conditions for effective OD programme.
7) Give the tips for managing OD process effectively.
8) Describe the process of OD.

Note : These questions will help you to understand the unit better. Try to write answers for them. Do
not submit your answers to the university for assessment. These are for your practice only.
Concern for People
UNIT 20 EMERGING TRENDS IN OB
Structure

0.0 Objectives
0.1 Introduction
0.2 Emerging Trends
20.3 Culture and Organisational Behaviour
20.4 Cross-Cultural Management
20.5 Managing Multinational Organisation
20.6 Let Us Sum Up
20.7 Key Words
8.8 Terminal Questions

20.0 OBJECTIVES
After studying this unit, you should be able to:

• describe emerging issues in the field of organisational behaviour;

• explain the changing nature of human management in organisations;
• discuss issues relating to cross-cultural aspect of modern organisation; and
• design behavioural intervention for managing multinational organisations.

20.1 INTRODUCTION

Organisations are witnessing several changes in its structure, operations and people. The emergence of
cross-cultural environment, the influence of multinational corporations, the growing technological oriented
operations, and the increasing concern for total quality management provides different environment to the
organisations. These developments influence the whole range of social, political and cultural environment
of the organisation. People from different cultural backgrounds have been working together for the
achievement of the organisational goal. The different cultural norms and values have led to the emergence of
multiculturalism in the organisation. The study of cross-cultural management may provide good insight for
understanding the behaviour of the people. Moreover, proper understanding of multicultural behaviour may
help the managers to channelise the employee’s energy for the attainment of the organisational goal. The
employees may also coexist and prosper together. In this unit, you will learn the emerging trends in
organisational behaviour and the influence of culture on the organisational behaviour. You will further learn
the cross cultural management and the management of the multinational corporations.

20.2 EMERGING TRENDS

In this century organisations are undergoing rapid changes and many other changes are expected. Such
changes are keeping top management as well as functional managers, constantly busy in making strategies
for having compatibility with internal and external environment.
From the angle of Organisational Behaviour and Human Resource Management, Organisations are
witnessing many changes. Some of them are:

• Emergence of Multinational Corporations;

• Cross-cultural environment at work place;
• More technically skilled workforce;
• Managing through higher degree of participation;
• Smaller size of workforce;
• Subdued role of seniority, dominant role of specialised skills;
• Flexitime and flexiplace;
• Difficult to maintain jobs for long without constant high-level training;
• Instability in job, making prospect of job security dim;
• Executives may be less committed to job but highly committed to profession;
• More commitment to quality; just “OK” quality won’t do;
• OB scientists are more busy in updating themselves;
• Training on Self-efficacy more in demand; it helps people to get employment and redeployment through
imparting interview skills and exposing participants to models of people who searched for and found a
good job;
• Some hottest career of this century; Information Technology, Education and Training (e.g. cross-cultural
trainers, employee trainers, school administrators), Environmental Consultants, Health Care, Diversity
Managers, Human Resource Managers, Employee Leasing Agents, etc.;
• Computerized Performance Evaluation may open another issue related to employees performance; it was
proved by Aiello & Svec (1993), that performance on a complex task is highest, when it is not monitored,
moderate when it is monitored in person, and still low when performance is monitored by computer;
• Communication in this century through electronic publishing, CD-ROM, wireless;
• Changing faces of managerial power and empowerment schemes; bosses are using more of expert power
than coercive power, bosses are sharing information instead of holding it, bosses are working as internal
consultant in stead of simply telling what to do;
• Workflow automation has saved lot of time wasted on gathering and transferring paper;
• Flat hierarchy and horizontal structure:
• Organisations are being structured around processes instead of tasks;
• Executive positions are being defined in terms of processes, instead of in terms of collection of
people;
• Organisational charts are changing from a collection of boxes, in stead, looking more like a process
map;
• In many cases cost-cut to the extent of one-third reported due to implementation of horizontal design;
• Contingency workforce (Permanent Temporary Employees)
Though permanent employees would remain in demand in future, organisations would be more like
apartments than a home for life; at present about half of the work force in U.S.A. is working on part-time/
freelance basis.
Due to multiple changes taking place simultaneously, Organisations are in search of getting reinvented. The
most widely accepted approach in the last decade, to reinventing organisations is the practice of
reengineering the corporation, designed by Michael Hammer and James Champy. Reengineering means
radically rethinking and redesigning those processes by which we create value (for customers) and do work.
Reengineering involves redefining processes as patterns of relationships connecting organisational members
with people outside the organisation. Hammer and Champy list speed, quality of service, and overhead costs
as important competitive issues that reengineering can address. They argue that the hallmark of a really
successful company is its willingness to abandon what has been successful in the past. There is no such thing
as permanent winning formula.
Increasing Concern for Quality
In the era of competition, survival and excellence are possible only through maintaining high quality of
products and services. Quality in the work place has gone beyond creating a better-than average product at a
good price, and now refers to achieving increasingly better products and services at progressively more
competitive prices. This includes doing the things right at the first time, rather than making and correcting
mistakes.
Concern for quality has brought following changes in the managerial scenario:
• More emphasis on training;
• Autonomy emerging as strong factor of motivation;
• Organisations emphasizing on sound system of indoctrination;
• New recruits are seeking more information about technical issues, performance feedback, referent issues
(what one is expected to do), normative issues, social feedback; such information seeking is a good sign,
as it helps, to build ability to perform jobs, to know expectations about what to do, and to feel fit into
various social groups;
• Effective teams are being built through designing strategies to interact with external environment; in a
study Ancona & Caldwell (1992) identified four such strategies in ascending order of effectiveness; i)
Isolationist, ii) Technical Scouting (searching for ideas about market, competition, technology, and
coordinating this information with team members), iii) Ambassadorial (protecting team from outside
pressure, persuading others to support team and lobbying for resources), iv) Comprehensive
(ambassadorial plus coordinating technical information with non-team members);
• Survey Feedback to improve upward communication;
• Electronic brainstorming as a device for generating ideas; research suggests that electronic brainstorming
produces more number of quality ideas than face-to-face brainstorming;
• Team leaders are shifting their focus according to following comparative chart:
From to
Directing people Inspiring teamwork and building trust
Training individuals Expanding team capabilities
Managing one-on-one Creating team identity
Preventing conflict Making most of team differences
 Reacting to change Foresee and influence change
• Criteria of quality becoming more comprehensive; e.g. Malcom Baldridge Quality Award in U.S.A. is
given early to three types of organisations: manufacturing, small business, and, service; - the award is
given on the basis of following seven criteria (total points: - 1000):
Senior executive leadership : 90 points
Information and analysis : 80 points
Strategic quality planning : 60 points
Human resource development & management : 150 points
Management of process quality : 140 points
Quality and operational results : 180 points
Customer focus and satisfaction : 300 points

The issue of quality is being addressed through an approach known as Total Quality Management (TQM).
TQM is an organisational cultural commitment to satisfying customers through the use of an integral system
of tools, techniques, and training. TQM involves the continuous improvement of organisational processes,
resulting in high- quality products and services. This meaning attempts to capture the essence of W. E.
Deming’s philosophy of quality. It would be appropriate here to introduce the approach of Deming (one of
pioneers of quality movement) towards quality management.

Deming’s fourteen steps of quality management are:

• Create constancy of purpose for improvement of product and service;

• Adopt the new philosophy;
• Cease dependence on mass inspection;
• End the practice of awarding business on price tag alone;
• Constantly and forever improve the system of production and service;
• Institute modern methods of training on the job;
• Institute leadership;
• Drive out fear;
• Break down barriers between staff areas;
• Eliminate slogans, exhortations, and targets for the workforce;
• Eliminate numerical quotas;
• Remove barriers to pride of workmanship;
• Institute a vigorous programme of education and training;
• Take action to accomplish the transformation.
Another approach called “Six Sigma” became very popular and effective in the area of quality management.
Six Sigma defines the concept of achieving approximately zero defects (more precisely, 3.4 defects per
million or 99.999% defect-free manufacturing).
Six steps to Six Sigma are:
• Determine the product you make;
• Determine who are your customers ;
• Determine the suppliers you need to make the product;
• Workers map out the process to fulfill mission;
• Evaluating the process and eliminating the non-value-added steps or the sources of error;
• Establishment of measurement criteria and the drive for continuous improvement.

Quality movement is here to stay. However Tom Peters talks in terms of going even beyond quality. He
argues that the only way to survive today is through creativity and imagination, and managers need to go
beyond current thinking. He claims that crazy times call for crazy organisations. Peters asks to go beyond
change through abandonment of everything. His following prescriptions are interesting:
• Beyond Decentralisation: Disorganising to unleash imagination;
• Beyond Empowerment: Turning every job into a business;
• Beyond Loyalty: Learning to think like an independent contractor;
• Beyond Reengineering: Creating a corporate talk show;
• Beyond Learning: Creating the curious corporation;
• Beyond TQM: Toward WOW
• Beyond Change: Toward Perpetual Revolution.

Activity A

Till now you have noted various changes, which are taking place in modern organisations. The issues
discussed above in this unit are not exhaustive. Through searching current business-magazines list five other
important changes (according to your view) those are taking place in modern organisations. What are the
reasons behind selecting these five issues? How these issues are influencing human side of management?
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20.3 CULTURE AND ORGANISATIONAL BEHAVIOUR

Various studies suggest that values differ across culture. In this field Geert Hofstede has done one of the
prominent studies. Though the study is more than thirty years old, it is still treated as an authentic study to
find influence of culture on values. After doing survey in fifty countries - India is one of them - he found that
managers and employees vary on five value dimensions of national culture. These five dimensions are
following:
• Power Distance: It is a national culture attribute describing the extent to which a society accepts that
power in institutions and organisations are distributed unequally. This variable may range between
 relatively equal (low power distance) to extremely unequal (high power distance). Countries found to be
having low power distance are: Austria, U.S.A., Germany, Netherlands, Denmark, Israel, and New
Zealand etc. Countries having high power distance are : Malaysia, France, Indonesia, Pakistan, Columbia
Venezuela, China, Russia, Hong Kong, Philippines etc. Japan was found to be having moderate power
distance. When fifty countries were ranked along with continuum, from low to high power distance,
India ranked 42nd, meaning India is high on power distance.

• Individualism versus Collectivism: Individualism is a national culture attribute describing the degree to
which people prefer to act as individuals rather than a member of groups. Collectivism is a national
culture attribute that describes a tight social framework in which people expect others in groups of which
they are a part to look after them and protect them. Countries found to be high on individualism are:
U.S.A., U.K., France, Germany, Netherlands, and New Zealand etc. It has been found that Mexico is also
moving towards more degree of individualism. Countries found to be high on collectivism are :
Guatemala, Columbia, Pakistan, China, Hong Kong, Indonesia etc. Japan and Russia have been found to
be mid-way between individualism and collectivism. When fifty countries were ranked along with
continuum, from individualism to collectivism, India ranked 30th, meaning India is slightly tilted towards
collectivism, in comparison to other countries studied by Hofstede.

• Masculinity versus Femininity: Masculinity is concerned with quantity of life, and femininity is
concerned with quality of life. Masculinity is a national culture attribute describing the extent to which
societal values are characterised by assertiveness and materialism. Femininity is a national culture
attribute that emphasizes relationships and concern for others. Countries high on masculinity are Japan,
Germany, Hong Kong, U.S.A., Austria, Ireland, New Zealand, and South Africa etc. However, in recent
years U.S.A. has reported to be moving a bit towards femininity. Countries high on femininity are :
Sweden, Norway, Denmark, Finland, Netherlands, Chile, Portugal, and Russia etc. Countries mid-way
between masculinity and femininity are China, France, and Indonesia etc. When fifty countries were
ranked along with continuum, from masculinity to femininity, India ranked 30th, meaning India is slightly
tilted towards femininity.

• Uncertainty Avoidance: It is a national culture attribute describing the extent to which a society feels
threatened by uncertain and ambiguous situations and tries to avoid them. Where uncertainty avoidance
is high, society prefers structured to unstructured situations, and people have an increased level of
anxiety, stress, and aggressiveness. Countries high on uncertainty avoidance are : Greece, Portugal,
Japan, Chile, France, and Russia etc. Countries low on uncertainty avoidance : are Singapore, Denmark,
Switzerland, Ireland, New Zealand, South Africa, Hong Kong, Indonesia, and U.S.A. etc. Countries
moderate on uncertainty avoidance are : China, Germany, Japan, Netherlands etc. When fifty countries
were ranked along with continuum, from low to high on uncertainty avoidance, India ranked 9th, meaning
India is low on uncertainty avoidance.

• Long-term versus Short-term Orientation: Long-term orientation is a national culture attribute that
emphasizes the future, thrift, and persistence. Short-term orientation is a national culture attribute that
emphasizes the past and present, respect for tradition, and fulfilling social obligation. Countries high on
long-term orientation are : China, Hong Kong etc. Countries high on short-term orientation are: France,
Indonesia, Russia, and U.S.A. etc. The countries on mid-way between the two orientations are Germany,
Netherlands etc.

Kluckhohn and Strodtbeck have given their own framework to categorize the culture of various societies.
They have considered six dimensions, and have analysed the tendencies of various societies on the six
dimensions, which are :
• Relationship to Environment
• Subjugation (e.g., Middle-East)
• Harmony (e.g., Far-East)
• Domination (e.g., Canada, U.S.A.)
• Time Orientation
• Past (e.g. , Italy, Greece)
• Present (e.g., U.S.A.)
• Future (e.g., Japan)

• Nature of People
• Basically good (e.g., Developing Countries)
• Basically evil (e.g., N. Korea)
• Mixed (e.g., U.S.A.)

• Activity Orientation
• Doing (e.g., U.S.A.)
• Being (e.g., Mexico)
• Controlling (e.g., France)

• Focus of Responsibility
• Individualistic (e.g., U.S.A.)
• Group (e.g. , Malaysia, Israel)
• Hierarchical (e.g., U.K., France)

• Conception of Space
• Public (e.g., Japan)
• Private (e.g., U.S.A.)
• Mixed (Most of the societies).

Check Your Progress A

1) Whether emerging trends have made a work place more interesting or more tense?
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2) How far do you agree with the findings of Hofstede about work place related culture of India?
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20.4 CROSS-CULTURAL MANAGEMENT

The last decade has witnessed emergence of multiculturalism at organisations. Multiculturalism, as applied
to the workplace, is the view that there are many different cultural backgrounds and factors that are
important in organisations, and that people from different backgrounds can coexist and flourish within an
organisation. As far as findings of cross-cultural studies are concerned, they are more indicative than
deterministic, at a particular point of time.
Following issues are worth considering for comprehensive understanding of managing in a cross-cultural
environment:

Cross-Cultural Differences in Sex Role Stereotyping

• Schein & Muller (1992) did a study to find sex role stereotyping in three countries, Germany, U.K., and,
U.S.A. Correlation was computed between successful managers and men, and between successful
managers and women. In all three countries, both men and women perceived higher correlation between
successful managers and men than that between successful managers and women. However in U.S.A.,
women perceived women as more similar to successful managers than in U.K., and in U.K. women
perceived women as more similar to successful managers than in Germany (please note that number of
women managers are more in U.S.A. than in U.K., and number of women managers are more in U.K.
than in Germany). It indicates that opportunity of men coming in contact with women managers is not
significantly reducing the stereotyping against women managers, but opportunity for women managers
coming in contact with more number of women managers is improving the perception of women
managers about women managers.

Cross-Cultural Differences in Achievement Motivation

• McClelland (1925 & 1950) found that there is high degree of correlation between need for achievement
and degree of industrialisation (based on criteria of per capita income and per capita electricity
generation);

• Kizen (ongoing improvement for everyone in the organisation; - originated in Japan by an American
W.E.Deming who was responsible for development of Japan after World War II) which is a substitute of
need for achievement as resulted in total quality improvement in Japan;
• Following tips have been identified for achievement orientation/Kaizen:

Set moderately difficult goal;

Give lots of feedback;
Let people take responsibility for their work;
Encourage an action orientation.

Cross-Cultural Differences in Work Values / Motivating factors

• In a study, Elizur, Borg, Hunt & Beck (1991) surveyed people in eight countries (U.S.A., Netherlands,
Hungary, Israel, Germany, Taiwan, China, and S. Korea). They were asked to rank 24 work values e.g.,
Achievement, Interesting Job, Advancement, Meaningful Work, Use of Ability, Esteem, Security,
Supervisor, Co-workers, Pay, etc. According to the study, Achievement and Interesting Job are two most
highly rated work values across various cultures. In all the countries Pay is not highly rated. The study
indicates that basic work values are not very different across culture.

• However various motivation theories (mostly developed in U.S.A.) may be interpreted differently in
different cultures. Maslow suggests that people start with physiological need, and then move to security
need, social need, esteem need, and self-actualized need. However in countries where uncertainty
avoidance is high (e.g. Japan, Greece, Mexico), security need may be more dominant than other needs. In
other culture where femininity is high (e.g. Scandinavian Countries), social needs may be on top priority.
In countries having tendency to take moderate risk (e.g. U.S.A., U.K., Canada), achievement motivation
 may be high, whereas in countries having high degree of uncertainty avoidance (e.g., Chile, Portugal),
achievement motivation may be low.

Cross-Cultural Differences in Social Loafing

• A study by Early (1993) suggests that there is less degree of social loafing in collectivistic culture
(e.g. in China, Israel) and more in individualistic culture (e.g. in U.S.A.). It implies that in collectivistic
culture performance improves in group, whereas it goes down in group activities in individualistic culture.

Cross-Cultural Differences in Decision Making

• In individualistic culture (e.g. U.S.A.) quick decision by individual is emphasized, and a situation is
perceived as problem earlier. In Thailand, Malaysia, Indonesia, a situation is not quickly perceived as
a problem, hence decision is relatively delayed. In Japan decision is taken through gaining
acceptance of immediate colleagues. In Sweden, decision is taken involving all that may be affected,
whereas in India, consulting subordinate is a sign of weakness. In Egypt, more time is expected to be
taken on deciding over important issues. Throughout Middle East, quick decision is perceived as an
action in haste.

Cross-Cultural Differences in Conflict Handling

• A study by Ting Toomey suggests that in individualistic culture (e.g. U.S.A), there is more use of
dominating style and less of avoiding style. In such culture desire to be obliging is low. In China there is
preference for obliging (accommodating) style. In Taiwan, preference is for avoiding style.

Cross-Cultural Differences in Leadership Behaviour

• In all the cultures the two basic ingredients of leadership behaviour are: concern for people and
concern for work;

• People in different cultures show concern for people differently

U.K.: showing employees how to use new equipment and helping to accept change;

U.S.A.: not sending written memos, not talking about work-related problems;

Hong Kong: spending social time together;

Japan: speaking about subordinates’ problems with others in their absence, and by teaching new job
skills;

• People in different cultures show concern for work differently

U.K.: voicing dissatisfaction;

U.S.A.: addressing superiors using formal language;

Hong Kong: meeting with subordinates and encouraging communication;

Japan: checking work quality and helping people complete their work.
Cross-Cultural Differences in Managing Change

• In cultures where people believe that they can dominate their environment, individuals will take a
proactive view of change e.g. in U.S.A., Canada etc.; where people see themselves as subjugated to their
environment, there would be passive approach towards change e.g. in Iran, Saudi Arabia etc.;
• In culture having long-term orientation of time, people would wait patiently for change to occur e.g. in
Japan; in culture having short-term orientation, people would expect fast result e.g. in U.S.A. and
Canada;
• Culture emphasizing more on past, and on tradition, would put more resistance to change e.g. Italy;
culture emphasizing on present would put less resistance to change e.g. U.S.A.;
• In high-power-distance cultures, such as the Philippines or Venezuela, change efforts will tend to be
autocratically implemented. In contras in low-power-distance cultures such as Denmark and Israel,
change efforts will be implemented through greater use of participation.

Cross-Cultural Differences in Personality

• The prevalence of Type A personalities (high intensity for goal orientation) may be more in capitalistic
countries (e.g. North America), where achievement and material success are highly valued. Such
countries have high emphasis on time management and efficiency. On the other hand, in cultures such as
Sweden and France, where materialism is less revered, we would predict a smaller proportion of Type A
personalities.

While communicating with people from different cultures, you can take certain measures to minimize
misperceptions, misinterpretations, and misevaluation. These measures are:

• Try to assess the cultural context;

• Assume differences until similarity is proven;
• Emphasize description rather than interpretation or evaluation;
• Practice empathy;
• Treat your interpretations as a working hypothesis.

Managing Cultural Diversity

The whole world is shrinking into a single global village and hence multi-national business and social
interactions require the integration of various diverse cultures into organisational philosophy and operations.
Managing cultural diversity can improve organisational performance.

Taylor Cox and Stacy Blake have suggested six arguments for managing cultural diversity. These are:

• Cost Argument: Managing cost would lead to more advantages in diverse environment;
• Resource-Acquisition Argument: Those with the best reputations of managing diversity will win the
competition for the best personnel;
• Marketing Argument: The insight and cultural sensitivity that members with roots in other countries
bring to the marketing effort should improve these efforts in important ways;
• Creativity Argument: Diversity of perspectives and less emphasis on conformity to norms of the past
should improve the level of creativity;
• Problem-solving Argument: Wider range of perspectives lead to potentially better decisions and critical
analysis of issues;
• System Flexibility Argument: Multicultural model suggest that system will become less determinant, less
standardized, and therefore more fluid; the increased fluidity should create greater flexibility to react to
environmental changes.
Cox and Blake have suggested following spheres of activities for managing cultural diversity:

• Organisation Culture: Valuing differences and cultural inclusion;

• Mind-set about Diversity: Creating supportive environment;
• Cultural Differences: Promoting acceptance and reaping benefits of diversity;
• Education Problems: Educate management on valuing differences;
• Human Resource Management Systems: Have bias free approach in the areas of recruitment, training
and development, performance appraisal, compensation and benefits, promotion etc.;
• Impartiality: Promote impartiality on the issues of gender, race, ethnicity, and nationality.
Thomas suggests that there are several guidelines for managing diversity, but he proposes one test
emphatically that he calls Special Consideration Test. The test consists of one question: Does this
programme, policy, or principle gives special consideration to one group? Will it contribute to everyone’s
success, or will it only produce an advantage for selected group? Is it designed for them as opposed to us?
Whenever the answer is yes, the management is not yet on the road to manage diversity.

Check Your Progress B

1) What are those work values, which have shown consistency across cultures?

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2) How can cultural diversity be managed more effectively?

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20.5 MANAGING MULTINATIONAL ORGANISATION

Multinational organisation or multinational corporation (MNC) is a large corporation with operations and
divisions spread over several countries but controlled by a central headquarters.
Following are the features of MNCs from perspective of human resource management:
• They have to work in a different legal, political, and economic system;
• They have to face more tough competitions from other MNCs and local industries;
• They need to be flexible people should be able to stretch their potential;
• Their organisational structure need to be less tall and more flat;
• People selected should have global view;
• Recruitment and selection need to be hauled up to meet international challenges;
• People need training in multi-skilling;
• People selected need special training in cross-cultural values, socialization, languages etc.;
• There is need to strike balance between autonomy and control;
• There is need to strike balance within and between countries, for working as a single system.

Rhinesmith has suggested six guidelines that assist in creating a global culture within organisations. These
are:

• Create a clear and simple mission statement. A shared mission could unite individuals from diverse
cultural backgrounds.
• Create systems that ensure an effective flow of information. Information flow should be consistent
throughout the geographically dispersed organisation.
• Broaden managers’ minds to allow them to think globally.
• Develop global career paths.
• Use cultural differences as a major asset.
• Implement worldwide education and team development programmes. Unified training efforts that
emphasize corporate values can help establish a shared identity among employees.

Activity B

Meet a manager working in a multinational with headquarters outside India and having an unit in India.
Discuss the challenges in managing diversified work force coming from various cultures and working at one
place.
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20.6 LET US SUM UP
Organisations are witnessing constant changes in modern era. The emergence of cross-cultural environment,
technological oriented work place, increasing participation of employees, continuous upgradation and
increasing role of multinational corporation requires new ways of managing them. Moreover, in an era of the
competitive environment, survival and excellence are possible through maintaining high quality of products
and services. The total quality management which involves the continuous improvement of organisational
process and operations has become very important for the organisation . The six sigma approach of quality
management has been also gaining importance which focuses on zero defects. These changes influence the
behaviour of the organisation. The behaviour requires to be dealt in a cross-cultural environment as well.

The multiculturalism has been emerging in the organisation. The issues related to comprehensive
understanding of managing in a cross cultural environment include : cross-cultural differences in sex role
stereotyping, achievement motivation, work values or motivating factors, social loafing, decision-making,
conflict handling, leadership behavior, managing change and personality. Managing cultural diversity may
improve the organisational performance. Therefore, the operations of multinational corporations must be
managed to suit the requirements of cultural diversity.

20.7 KEY WORDS

Collectivism: A national culture attribute that describes a tight social framework in which people expect
others in groups of which they are a part to look after them and protect them.

Femininity: A national culture attribute that emphasizes relationships and concern for others.

Individualism: A national culture attribute describing the degree to which people prefer to act as individuals
rather than a member of groups.

Kizen: Ongoing improvement for everyone in the organisation.

Masculinity: A national culture attribute describing the extent to which societal values are characterised by
assertiveness and materialism.

Multinational Corporation (MNC): A large corporation with operations and divisions spread over several
countries but controlled by a central headquarters.

Power Distance: A national culture attribute describing the extent to which a society accepts that power in
institutions and organisations which are distributed unequally.

Reengineering: Radically rethinking and redesigning those processes by which we create value (for
customers) and do work.

Six Sigma: Defines the concept of achieving approximately zero defects.

Total Quality Management (TQM): An organisational cultural commitment to satisfying customers

through the use of an integral system of tools, techniques, and training.

Uncertainty Avoidance: It is a national culture attribute describing the extent to which a society feels
threatened by uncertain and ambiguous situations and tries to avoid them.
20.8 TERMINAL QUESTIONS
1) Explain some of the emerging trends in the fields of organisations and Organisational Behaviour.
How these changes influence the organisation ?
2) Describe Total Quality Management and Business Process Reengineering. How are they important
for the organisation ?
3) What are dimensions of cross-cultural study done by Hofstede? How national culture influence work
culture in organisations?
4) Suggest measures for managing cultural diversity. How multinational organisations can be managed
more effectively.

Note : These questions will help you to understand the unit better. Try to write answers for them. Do
not submit your answers to the university for assessment. These are for your practice only.