PRINCIPLES OF

MANAGEMENT

HUMAN FACTORS
AND MOTIVATION

MOTIVATION
A general term applying to the entire class of drives,

desires, needs, wishes and similar forces.

Motives are based on needs.
Primary needs: water, air, food, sleep, shelter,.
Secondary needs: self-esteem, status, affiliation
with others, affection, giving, accomplishment, selfassertion,.

MCGREGORS THEORY X AND THEORY Y

Two sets of assumptions about the nature of people

by Douglas McGregor.
Theory X assumptions:

Average human beings have an inherent dislike of work and

will avoid it if they can.
Because of this human characteristic of disliking work, most
people must be coerced, controlled, directed and threatened
with punishment to get them to put forth adequate effort
toward the achievement of organizational objectives.
Average human beings prefer to be directed, wish to avoid
responsibility, have relatively little ambition and want security
above everything else.

MCGREGORS THEORY X AND THEORY Y

Theory Y assumptions:

The expenditure of physical and mental effort in work is as natural as play

or rest.
External control and the threat of punishment are not the only means for
producing effort toward organizational objectives. People will exercise selfdirection and self-control in the service of objectives to which they are
committed.
The degree of commitment to objectives is in proportion to the size of the
rewards associated with their achievement.
Average human beings learn, under proper conditions not only to accept
the responsibility but also to seek it.
The capacity to exercise a relatively high degree of imagination, ingenuity
and creativity in the solution of organizational problem is widely, not
narrowly distributed in the population.
Under the conditions of modern industrial life, the intellectual
potentialities of the average human being are only partially utilized.

MASLOWS HIERARCHY OF NEEDS THEORY

When one set of needs is satisfied, this kind of need

ceases to be motivator- Abraham Maslow.

HERZBERGS MOTIVATION-HYGIENE THEORY

Two-factor theory: dissatisfiers, also called

maintenance, hygiene or job-context factors are not

motivators, while satisfiers are motivators and are
related to job content Frederick Herzberg.
Dissatisfiers: company policy and administration,
supervision, working conditions, interpersonal
relations, salary, status, job security and personal
life.
Satisfiers: achievement, recognition, challenging
work, advancement and growth in the job.

VROOMS EXPECTANCY THEORY OF MOIVATION

People will be motivated to do things to reach a goal

if they believe in the worth of that goal and if they

can see that what they do will help them in achieving
it Victor H Vroom.
Motivation equal the value on the outcome of effort
multiplied by the confidence.
Force = valence X expectancy.
Force = Strength of persons motivation
Valence = Strength of an individuals preference for an

outcome
Expectancy = probability of desired outcome

EQUITY THEORY
Motivation is influenced by an individuals subjective

judgment about the fairness of the reward he or she

gets, relative to the inputs, compared with the rewards
of others
=
Inequitable reward == dissatisfaction, reduced output,
departure from organization.
Equitable reward == continuation at the same level of
output.
More than equitable reward == hard work, reward
discounted.

SKINNERS REINFORCEMENT THEORY

Positive reinforcement or behavior

modification: individuals can be motivated by

proper design of their work environment and by praise
for their performance, while punishment for poor
performance produces negative results B F
Skinner.
Analyze the work situation to determine what causes
workers to act the way they do, and then initiate
changes to eliminate troublesome areas and
obstructions to performance.
Performance improvements are rewarded with
recognition and praise.

SPECIAL MOTIVATIONAL TECHNIQUES

Money: money if often more than monetary value;

it can also mean status or power or other things.

Intrinsic rewards: include a feeling of
accomplishment and self-actualization.
Extrinsic rewards: include benefits, recognition,
status symbols and money.
Pay may be based on individual, group and
organizational performance.
Participation (Recognition)
Quality of working life

JOB ENRICHMENT
Job enlargement: enlarging the scope of the job

by adding similar tasks without enhancing

responsibility.
Job enrichment: building into jobs a higher sense
of challenge and achievement.
Motivation points to the importance of making jobs
challenging and meaningful.

PRINCIPLES OF
MANAGEMENT

LEADERSHIP

LEADERSHIP
The art or process of influencing people so that they

will strive willingly and enthusiastically toward the

achievement of group goals.
Principle of leadership: since people tend to
follow those who offer them a means of satisfying
their personal goals, the more managers understand
what motivates their subordinates and the more they
reflect this understanding in their actions, the more
effective they are likely to be as leaders.

LEADERSHIP STYLES
Autocratic leader: commands and expects

compliance, is dogmatic and positive and leads by

the ability to withhold or give rewards and
punishment.
Democratic or participative leader: consults
with subordinates and encourages their
participation.
Free-rein leader: uses power very little, if at all,
giving subordinates a high degree of independence.

THE MANGERIAL GRID

Developed by Robert Blake & Jane Mouton.
Grid axes : concern for people & concern for

production.

LEADERSHIP AS A CONTINUUM
Leadership continuum concept: leadership

involves a variety of styles, ranging from one that is

highly boss centered to one that is highly
subordinate centered.
The appropriate leadership style depends on the
leader, the follower and the situation.

PATH-GOAL APPROACH TO LEADERSHIP EFFECTIVENESS

Path-goal theory: the main function of leader is to

clarify and set goals with subordinates, help them

find the best path for achieving the goals and remove
obstacles.
Leader behaviors:

Supportive leadership
Participative leadership
Instrumental leadership
Achievement-oriented leadership

PRINCIPLES OF
MANAGEMENT

COMMUNICATION

COMMUNICATION
The transfer of information from a sender to a

receiver, with the information being understood by

the receiver.
Communication connects various members in an
enterprise and also it relates an enterprise to its
external environment.

PURPOSE OF COMMUNICATION
To effect change- to influence action toward the welfare of

the enterprise.
To establish and disseminate goals of an enterprise.
To develop plans for their achievement.
To organize human and other resources in the most
effective and efficient way.
To select, develop and appraise members of the
organization.
To lead, direct, motivate and create a climate in which
people want to contribute.
To control performance.

COMMUNICATION IN THE ORGANIZATION

Downward communication: flows from people

at higher levels to those at lower levels in the

organizational hierarchy.
Upward communication: travels from
subordinates to superiors and continues up the
organizational hierarchy. Ombudsperson: a person
assigned to investigate employee concerns, thus
providing a valuable upward communication link.

COMMUNICATION IN THE ORGANIZATION

Crosswise communication:

Horizontal flow: flow of information among people on

the same or similar organizational levels.
Diagonal flow: flow of information among persons at
different levels who have no direct reporting
relationships with one another.

PRINCIPLES OF
MANAGEMENT

CONTROLLING

CONTROLLING
The measurement and correction of performance in

order to make sure that enterprise objectives and the

plans devised to attain them are being accomplished.
Steps:
1. Establishment of standards
2. Measurement of performance
3. Correction of deviations

CRITICAL CONTROL POINTS & STANDARDS

Principle of critical point control: effective control

requires attention to factors critical to evaluating

performance against plans.
Types of critical point standards:

Physical standards
Cost standards
Capital standards
Revenue standards
Program standards
Intangible standards
Goals as standards
Strategic plans

BENCHMARKING
An approach for setting goals and productivity

measures based on best industry practices.

Strategic bench marking
Operational bench marking
Management bench marking

CONTROL AS A FEEDBACK SYSTEM

Management control is usually perceived as a feedback

system similar to the common household regulator.

Feedback loop of management control:

FEEDFORWARD OR PREVENTIVE CONTROL

Managers need, for effective control, a system that

will inform them potential of problems while giving

them time to take corrective action before those
problems occur.
Feedforward systems monitor inputs into a process
to ascertain if the inputs are as planned; if they are
not, the inputs or the process is changed in order to
obtain the desired results.

CONTROL OF OVERALL PERFORMANCE

As overall planning must apply to enterprise or

major division goals, so must overall control.

Decentralization of authority- especially in product
or territorial divisions- creates semi-independent
units, and these must be subjected to overall control
to avoid chaos of complete independence.
Overall control permits the measurement of an
integrated area managers total effort, rather than
parts of it.
Many overall controls in business are
finance.

CONTROL OF OVERALL PERFORMANCE

Profit and loss control: the profit and loss

statement shows all revenues and expenses for a

given time, so it is a true summary of the results of
business operations.
Return-On-Investment control: measures both
the absolute and relative success of a company or
company unit by the ratio of earnings to investment
of capital.

BUREAUCRATIC AND CLAN CONTROL

Bureaucratic control: is characterized by the

wide use of rules, regulations, policies, procedures

and formal authority.
Clan control: is based on norms, shared values,

expected behavior and other cultural variables.

PRINCIPLES OF
MANAGEMENT

CONTROL
TECHNIQUES

BUDGET AS A CONTROL DEVICE

Budgeting: the formulation of plans for a given

future period in numerical terms.

Financial- revenue & expense, capital budget

Nonfinancial- labor hour, materials, sales volume.

Are statements of anticipated results.

DANGERS IN BUDGETING
So complicated and detailed, become cumbersome,

meaningless and unduly expensive.

Often control wrong things:

Measure inputs, but ignore outputs such as customer

satisfaction and product quality, which are difficult to measure.

Real savings may come from efficient machines,

new products or other creative ideas, not from

adhering to the budget.

ZERO-BASE BUDGETING
Dividing enterprise programs into packages

composed of goals, activities, and needed resources

and calculating the costs for each package from base
zero.
Avoid common tendency to look at only changes
from previous period
Forces managers to plan each program afresh

EXAMPLE - 1
ABC Company has prepared a unit sales budget for

the upcoming months as follows:

Month

Units

Month

Units

January

5,000

June

30,000

February

7,500

July

35,000

March

10,000

August

25,000

April

15,000

September

10,000

May

20,000

October

6,000

EXAMPLE - 1
ABC has a policy to maintain inventory levels equal

to 30% of the coming months sales requirements.

Inventory on January 1 is projected to be 1,200 units.

Prepare a production budget for ABC Company for

the next six months.

EXAMPLE - 1

January February March

Sales
5,000
7,500
10,000
Ending inventory
2,250
3,000 4,500
Total needs
7,250
10,500 14,500
Less:Beginning inventory1,200
2,250 3,000
Units to be produced
6,050
8,250 11,500

April
15,000
6,000
21,000
4,500
16,500

May
20,000
9,000
29,000
6,000
23,000

June
30,000
10,500
40,500
9,000
31,500

EXAMPLE - 2
Resear Company sells modems. Resear desires to

hold a finished goods inventory equal to 100% of the

next months sales requirement of modems. The
beginning finished goods inventory is 1,200 units.
Forecasted unit sales for April and the next three
months are as follows:

April

May

June

July

800

850

925

1,000

EXAMPLE - 2

TRADITIONAL NON-BUDGETARY CONTROL DEVICES

Use of statistical data
Operational audit
Management by Walking Around

TIME-EVENT NETWORK ANALYSES

Gantt Charts
Milestone Budgeting

GANTT CHART
Developed by Henry Laurence Gantt in 1910s to

illustrate project schedule.

Gantt Chart: A bar chart that shows the time
relationship between the events of a production
program.
Total program goals are regarded as a series of
interrelated supporting plans that people can
comprehend and follow.
Henry Laurence Gantt
(1861-1919)

GANTT CHART

MILESTONE BUDGETING
Breaks a project down into controllable pieces and

then carefully follow them.