DSM 501 MANAGEMENT PRACTICE
BRIEF NOTES ON MANAGEMENT FUNCTIONS
1.0 INTRODUCTION Many scholars and managers have found that the
functions of management are facilitated by the existence
of clear organization knowledge. This knowledge (or
management theory) consists of concepts, principles and
variables and their relationships. This body of knowledge
has been created, developed, used and tested for many
years. The process of creating, developing, using and
testing this theory or knowledge continues today. The
managers of today use the theory to perform his management
functions. The main functions of a manager are:
1. Planning
2. Organizing
3. Staffing or the human resources management
4. Leading
5. Controlling
The goals of managers and organizations are to achieve
organizational goals. Most organizations seek to achieve
profit or surplus. The function of managers is to
establish an environment in which people in the
organization can accomplish organizational goals. Since
organizational goals are achieved with the use or
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resources, and resources are limited, managers must help
organizations achieve their goals with the minimum of
resources or accomplish as much as possible with the
available resources. This requires a systematic process
and use of knowledge and theory. The use of management
theory helps managers accomplish organizational goals more
effectively and efficiently.
Efficiency (what is efficiency?)
Effectiveness (what is effectiveness?)
Theory alone however is not enough. The 21st century
organization is facing challenges that make management a
challenging task. Experience, tact, creativity and
innovation are essential ingredients of the 21st century
organization manager. Globalization, technology, and
other environmental challenges make the function of
management quite challenging. In managing the
organization today, theory helps a great deal. However,
you need more than theory to tackle the challenges.
Managers also face a challenging external environment.
The complexity the size and variability of this external
environment requires a systematic way of dealing with
it. Not only do managers need an understanding of this
external environment, through knowledge of existing
theory, they must also apply the theory if they are to
deal with the complexity and variability effectively.
And since we are in a competitive environment, and
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competition is using knowledge (or theory) to deal with
the challenges of the external environment, failure to
use the theory leaves one at a disadvantage.
The internal environment is also a challenge to the
management of the organization. The modern employee and
his demands must be satisfied. His or /her need for a
variety of needs, his variability and diversity, his
knowledge and goals, require a more systematic
management, using theory. The processes such as conflict
and stress that abound in a modern organization require
theory:
1.1 Importance of theory
Gives appropriate concepts , principles and variables
Helps to describe
Helps to predict
Helps to prescribe
Rationalizes management action/ decision
The classical theories were the first scientific
theories on management. Henry Fayo, in his
administrative theory proposed that management should
perform the following functions:.
i) Planning – Fayo defined planning as the function of
defining goals for future performance, and deciding
on the tasks and resources to achieve targets.
ii) Organizing is the function that is concerned with
assigning tasks, grouping the tasks together into
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sections (departments) and allocating resources to
those sub-section (or groups).
iii) Coordinating - this means bringing together the
differentiated units into a unitary whole.
iv) Commanding – this takes the form of leading and
directing organization activities. Directing means
giving orders and leading means the use of
influence to motivate employees to achieve
organizational goals.
v) Controlling is concerned with monitoring activities
keeping the organization on track towards its goals
and taking corrective action when necessary.
Since the identification of the management functions of
Fayol in the early 20th century, other researchers have
written on the same subject but the basic framework has
remained the same.
During the 1980’s, the famous Canadian researcher on
organization theory, Mintzeberg of McGill University
proposed a new approach to looking at the management
function. This approach observes what managers actually
do and from such observations arrives at the conclusion
as to what management activities are. In other words,
this approach looks at what managers actually do by
observing their activities. According to Mintzeberg, the
following are the major roles of managers:
1. Inter personal roles
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The figurehead role (performing ceremonial and social
duties as the organization’s representative).
The leader role
The liaison role
2. Informational role
i). The recipient role (receiving information about the
operations of an enterprise).
ii). The dissemination role (passing information to
subordinates).
iii). The spokesperson role (transmitting information to
those outside the organization)
3. Decision role
i). The entrepreneurial role
ii). The disturbance handler role
iii). The resource allocator role
iv). The negotiator role (dealing with the various persons
and groups of persons)
After studying the activities of various chief executives
in a variety of organizations, Mintzeberg came to the
conclusion that executives do not perform the classical
functions of planning organizing etc. instead they engage
in a variety of other activities.
Mintzeberg’s approach has been criticized in the following
ways:
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i). His sample of five CEOs was too small to support a
sweeping generalization.
ii). Secondly managers actually do other things than
planning etc Mintzeberg generally only identified
thus
iii). Thirdly many of the activities identified by
Mintzeberg are actually evidences of planning
staffing etc eg resource allocator, interpersonal
role are instances of leading.
However, looking at what managers actually do can probably
lead to a more complete presentation of management
function.
Other famous theorists that have looked at management
functions include Michael Porter. Porter presented two
theories dealing with organization structure and industry
analysis. In the organization structure framework, Porter
proposes that organization structure is determined by
strategy. He identified 5 strategy possibilities namely
product differentiations, cost differentiation, focus
product differentiation, focus cost differentiation and
stuck in the middle. Each of the five strategies has or
should have an appropriate structural design.
In the second theory on industry analysis, Porter argues
that in formulating strategy, managers must analyze the
nature of competition so as to achieve good performance.
The structure of the industry or market is taken to affect
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and determine managerial conduct which in turn has an
effect on corporate performance. Under such a model, an
organization operating within a monopoly market structure
would be expected to act to maintain higher than
competitive prices, artificially to restrict quantities
produced and sold and thus to make supernormal profits.
Porters Five forces model
The first stage is the analysis of the industry and its
incumbent and potential competitors is an analysis of the
forces causing rivalry within the industry itself. Porter
holds that there are five forces existing within the
industry at any one time, found in different combinations
and causing different levels of competitive rivalry,
depending on the type of industry under analysis, the time
of analysis and other factors.
The main consideration of the analysis is identifying the
key issues relating to:-
i). Threat of entry
ii). Threat of substitutes
iii). Power of suppliers
iv). Power of buyers
The combination or the manner of interaction of these
forces will determine the intensity of rivalry within the
market or industry.
Threat of entry
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The threat of entry exists when potential competitors to
incumbents are interested in entering or look likely to
enter, the market by placing their goods or services for
sale. Threat of entry is considered to be those actions
which are likely to evoke retaliation from the
incumbents.
Threat of substitutes
Substitutes to the products or services of the industry
under analysis are considered to be those products which
perform the same function. When analyzing the level of
the threat of substitutes for an industry’s product, it
is quite possible that the substitute offers superior
price performance compared to the incumbents’ products
due to a trade off with input development costs.
Buyer Power
There are a number of factors which can add to the power
of the buyer or consumer, of the industry’s products.
These factors include:
i). Volume purchased relative to the number of supplier
organizations within the industry. The greater the
volume bought from a supplier the greater the potential
power of the buyer.
ii). Significance of the purchase to the buyer: The greater
the significance the greater the authority the buyer
will desire over the purchases made.
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Supplier Power
If suppliers to organizations within an industry possess
high levels of power over those organizations, they are
in a better position to demand better deals with
reference to the sales of raw materials on intermediate
products they provide.
Intensity of Rivalry
The combination of the factors above and the
interdependence of the competitors in the industry itself
together produce the intensity of rivalry within the
industry. The Porter’s competitor analysis enables the
organization to adopt appropriate strategies to deal with
the issue of competition. Competitors’ analysis will
identify the various strengths and weaknesses of the
organization competitors in each of the strategic groups.
Consequently the organization is able to identify
strategies of how to respond to the challenges posed by
the power of buyers, power of suppliers, threat of entry
or even intensity of rivalry.
Consequently, beginning from the classical theories, to
the modern theories, a sufficient body of theory exists
on management function.
The following paragraphs discuss briefly the main
management function. Each of the paragraphs defines the
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function and highlights the other key aspects of the
function.
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2.0 PLANNING
2.1 What is planning?
Planning is the establishment of objectives and the
formulation, evaluation and selection of policies,
strategies, tactics and action plans to achieve the
objectives.
Planning can also be defined as the managerial
action that decides what to do, how to do it, when to
do it, and who is to do it.
Planning involves selecting missions and
objectives and the action to achieve them. It
requires decision making; that is choosing from among
alternative future courses of action.
Planning is the primary function ofmanagement. Planning is a process whereby managersselect goals, choose actions (strategies) toattain those goals, allocate responsibility for
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implementing actions to specific individuals orunits, measure the success of actions by comparingactual results against the goals, and revisingplans accordingly. Consequently planning is;
A process for making important decisions Provides direction for an organization Tells everybody what the organization is
trying to do Tells what its priorities are, where it is
going and how it is going there.
Types of planning Plans can be differentiated by;i. Levels in the organization to which plans
applyii. The time horizon of the plans (short-term or
long-term)iii. The number of times plans are used (standing
plans or single-use plans)iv. Contingent nature of plans
LEVELS OF PLANNINGCorporate level strategies Strategic plan- strategic plan outlines the majorgoals of the organization and the organizationwide strategies for attaining these goals.Strategic plans are plans that apply to the entireorganization, establish the organization’s overallgoals, and seek to position the organization interms of its environment
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For a large diversified organization with multiplebusiness units, the strategic plans are referredto as corporate levels strategies. Corporate levelstrategy is a strategy concerned with decidingwhich industries a firm should compete in and howthe firm should enter or exit industriesBusiness level strategy is concerned with deciding howthe firm should compete in the industries in whichthe firm has elected to participate in.Operating strategy is concerned with the actions thatshould be taken at the level of individualfunctions such as production, sales and R+D tosupport business level strategy. Operating plansare plans that specify goals, actions andresponsibility for individual functions, workteams or individuals.
Example: - for a large firm like 3M which isorganized into 40 differentbusiness level units, strategic planning takesplace at multiple levels. At the corporate level,the CEO and his top managers set overall goals forthe organization, choose corporate levelstrategies that span the entire organization, andallocate responsibly for implementing thesestrategies At the business level such as 3M’s office suppliesdivision, the business level strategic plandetails the specific actions that will be taken bythis division to attain the goals of the businessand establish a competitive advantage. These mightinclude, developing new products, exiting product
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lines that are not performing well and takingactions to rationalize its supply claim. Embedded within business level strategic plans areoperating plans which specify the goals forindividual functions, the actions they will taketo attain these goals, and who is responsible forthese actions. Planning might not stop at the operationallevel. Embedded within operational plans, might beunit plans which are plans for departments withinfunctions, work teams, or even individuals. Withinthe manufacturing function in 3M’s office suppliesdivision, for example a quality assurance,departments could draw up its own unit plan forimproving quality in the division’s manufacturingprocess. Similarly, within the R+D functions ofthe same division, several teams of researchersmay be focusing on the development of differenttechnologies; each team will draw its own planthat specifies goals, actions, responsibilitiesand resource requirements. Note those unit plans are embedded withinoperating plans, operating plans are embeddedwithin business level, strategic plans andbusiness level strategic plans are embedded withincorporate level strategic plans. Embedded meanthat higher level plans set the context for lowerlevel plans
PLANNING HORIZONS
The planning horizon refers to how far outa plan is meant to apply. Most strategic planswhether at the business or corporate level are
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multi-year plans. They are meant to stay in placefor several years, (a three to five year horizonis typical). Indeed shorter plans would beinappropriate as they would confuse stakeholders,who might lose confidence in top management. However, organizations sometimes adoptshort-term plans to address specific andtransitory opportunities or threats. Such shortterm plans are known as tactical plans which areplans for pursuing transitory competitive tactics.Tactical plans outline the actions managers mustadopt over the short term to medium term to copewith specific opportunity or threat that hasemergedOperating and unit plans tend to have shorter timehorizons than strategic plans. Whereas anorganization might function with the same basicstrategic plan for years, operating and unit plansmight change regularly as the tasks outlined inthem are completed and managers turn theirattention to the next task. In sum;
i). Strategic plans normally have a three to fiveyear time horizon although in theory anorganization could pursue the same strategymuch longer
ii). Tactical terms have a short- term horizon(often less than a year) and are developed todeal with emerging and transitory opportunitiesand threats
iii). Operating and unit plans tend to have short tomedium time horizons (one to three years)
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because they address specific tasks that have awell defined beginning and end
iv). An organization may be forced to change itsstrategic plans after a year, if it clearly isnot working, and an operating plan may be inplace for more than five years if specifictasks take that long.
THE NUMBER OF TIMES PLANS ARE USED Some plans that managers develop are ongoingwhile others are only used once.Single use plans- address unique events that do notrecur. They aredesigned to meet the needs of a unique situation.They are plans for attaining a onetime goal. Forexample, when Wall-Mart decided to drasticallyexpand the number of stores in China, top levelexecutives formulated a single use plan as aguide.Standing plans on the other hand are designed tohandle events that occur frequently. Standingplans are on-going plans that provide guidance foractivities performed repeatedly. The idea ofstanding plans is to save managers time by givingthem a play book to which they can refer when acertain type of event occurs. Standing plansrelieve managers from having to reinvent wheels.One reason why Starbucks has been able to growfrom 17 to almost 9000 stores by 2005 is that
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managers developed a standing plan that outlinesthe steps required to find the best storelocation, ensures that the stores have the samelook and feel as other Starbucks stores, and openstores quickly. But standing plans are too rigidand intelligent managers review their standingplans from time to time.
Plans thus provide a rational approach to achieve
prescribed objectives. Planning also implies managerial
innovation. Planning bridges the gap from where we are to
where we want to go.
Planning and control are inseparable, “the Siamese twins
of management”. Any attempt to control without plans is
meaningless since there is no way for people to tell
whether they are going the way they want to go unless they
first know they want to go.
There are two approaches to looking at the planning
function.
As a plan or the static mode . This approach considers a
plan as
A document containing objectives, programs to achieve
the goals, an evaluation mechanism. In the 1970s and
1980s managers looked at the planning function from
other perspectives.
Evolutionary mode This approach looks at a plan as a
process of continuously setting goals and objective,
identifying projects and programs to achieve the goals.
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The approach recognizes the impact of and the continuous
change of the environment and of course this mode is more
rational and modern. Looking at planning from this
approach, planning is defined as the setting of
organizational goals and the formulation, evaluation and
selection of policies, strategies, tactics and action
plans to achieve the objectives.
2.2 Importance of the Planning function
i). Planning facilitates the accomplishment of enterprise
purposes and objectives. Plans focus action on
objectives; they identify actions and programs which
tend toward the enterprise objective. Planning seeks to
achieve consistent, coordinated structure of operations
focused on desired ends. Without plans, actions become
merely random.
ii). Primacy of planning – planning precedes other managerial
functions. Planning establishes goals and objectives
necessary for all groups’ effort. All other actions are
designed to achieve enterprise goals and without
establishment of goals other functions would be
meaningless.
iii). Pervasiveness of planning – planning is a function of
all managers. Although the character and breadth of
planning will vary with their authority and with the
nature of policies and plans outlined by their
superiors.
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iv). Planning seeks to achieve consistent, coordinated
structure of operations focused on desired ends without
planning actions become merely random.
v). Planning minimizes costs because of the emphasis on
efficient operation and consistency ie it substitutes
joint coordinated effort for uncoordinated piece meal
activity which leads to efficient operations of
activities and programs
vi). Planning facilities control managers; cannot check on
their subordinates without having goals and programs
against which to measure.
vii). Planning forces managers to look ahead rather than being
obsessed with day to day problems. This is important to
the enterprise because the manager deals with what is
important in the future.
viii). Planning enables managers to identify strengths and
weaknesses of the enterprise.
Other issues that make planning important include
i). Plans provide a focus and sense of direction
ii). Planning coordinates activities
iii). Establishing priorities
iv). Motivates employees
v). Establishes criteria by which performance is judged
vi). Facilitates delegation
vii). Encourages team work
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viii). Identifies inefficiencies and unnecessary
duplication of effort.
2.3 Steps in the Planning Process
At general level, planning takes the following steps
Step 1: Being aware of opportunities in the external
environment as well as within the organization. This is
the starting point for planning. Managers should
understand the possible future opportunities and see them
clearly and completely, know where they stand in light of
their weaknesses and strengths, understand what problems
they wish to solve and why, and know what they expect to
gain.
Step 2: Establishing objectives
Setting the mission and visionSetting the missionThe mission answers the question; what is a reasonfor being?Determining the mission is the responsibility oftop management. The HR is involved in thisSetting the visionWhat do we want to become?A vision is the long term goal deserting what anorganization wants to become.
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Objectives should be established for the entire enterprise
and then for each subordinate work unit. This is to be
done for the long term as well as for the short range.
Objectives specify the expected results and indicate the
end points of what is to be done, where the primary
emphasis is to be placed, and what is to be accomplished
by the network of strategies, policies procedures, rates,
budgets and programs.
Enterprise objectives give direction to the major plans
which by reflection these objectives define the objective
of every major department. Major department objectives in
turn control the objectives of subordinates departments.
Step 3: Developing premises
The third logical step in the planning process is to
establish circulate and obtain agreement to utilize
critical planning premises such as forecasts, applicable
basic policies and existing company plans. They are
assumption about the environment in which the plan is to
be carried out.
The basic principle of planning premises is that the more
thoroughly individuals charged with planning understand
and agree to utilize consistent planning premises , the
more coordinated enterprise planning will be.
Forecasting is important in premising eg what kinds of
markets, what prices etc.
Step 4: Determination of alternative courses of action
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The 4th step in planning is the search for and the
examination of alternative courses of action, especially
these not immediately apparent. .Examination involves
identifying their weak and strong points.
Establishing the organizations strategy Grand strategies explain how the organization’smission is to be accomplished. Three common grandstrategies are; growth, stability and defensive.The growth strategy involves expansion as in sales,market share, number of employees or number ofcustomers.The stability strategy involves little or no change. Thecompany maintains its stratus in market share,number of products
Step 5: Evaluating alternative courses
This involves weighting of strong and weak points of each
alternative according to the premises and goals. Several
techniques exist to evaluate the alternative courses of
action including quantitative and qualitative techniques.
Step 6; Selecting a course
This is the point at which a course is selected.
Step 7: Formulating derivative plans.
Once a course is chosen, then derivative plans to
implement the decision have to be made. For example if a
decision is made to purchase a type of a plan, then
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derivative plans include plans for hiring staff, training
of various specialists, sourcing of finance etc.
Step 8: Numbering the plans
After decisions are made and plans are set, the final step
is to give them meaning by numbering them ie giving them
meaning by converting them into budgets.
2.4 Managing by objectives
The phrase ‘Management by objectives” was first coined by
Peter Drucker in the 1950s. He saw it as a principle of
management aimed at harmonizing individual managers’ goals
with those of the organization. The most important
features of MBO are:
It focuses on results rather than on activity
It develops logically from the corporate planning
process by translating corporate and departmental
objectives into individual managers’ objectives
It seeks to improve management performance.
MBO is a comprehensive management system that integrates
many key management activities in a systematic manner and
that is consciously directed toward the effective and
efficient achievement of organizational and individual
objectives. This view of MBO as a system of managing is
not shared by all.
Benefits of MBO
i). Improvement of managing through oriented planning
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ii). Clarification of organizational roles, structures and
delegation of authority according to the results
expected of different departmental managers.
iii). Encouragement of personal commitment to their own and
organizational goals
iv). Development of effective controls, measuring results
leading to corrective action.
Failures of MBO
Failure to teach the philosophy of MBO. Managers must
explain to the subordinates what it is, how it works,
why it is being done, what part it will play etc.
Failure to give guideline to goal setters. Managers
must know what the corporate goals are, and how their
own activities fit in with them
2.5 Parts of a plan
i). Purpose of mission
This identifies the organizations basic functions or tasks
of an organization or any part of its. Every organization
has, or at least should have a purpose or mission. Society
assigns functions to enterprises. For example the purpose
of a business enterprise is the production of goods and
services and the distribution of those goods and services.
The purpose of a University is teaching and research and
so on.
ii) Objectives or goals
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The objectives or goals are the ends toward which
activity is aimed. They represent not only the end point
of planning but also the end towards which organizing,
staffing leading and controlling are aimed. Goals can be
long-term or short term, broad or specific.
Hierarchy of Objectives
Organizational goals form a hierarchy ranging from the
broad aim to the specific individual objectives, The
result of the hierarchy is the purpose (society) second
is the objective.
Multiplicity of objectives
Organizations normally have multiple objectives which
they seek to achieve. This is because they have multiple
stakeholders.
iii) Procedures
All plans must establish a required method of handling
future activities they are chronological sequences of
required actions they are guide to action, and they
detail the exact manner in which certain activities must
be accomplished.
iii) Rules
Rules spell out specific required actions or non actions,
allowing no discretion. The essence of rules is that they
reflect a managerial decision that some certain action
must-or must not be taken rules differ from policies in
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that they give no discretion unlike policies which guide
decision making.
iv) Programs
Programs are a complex of goals, policies, procedures
rules, tasks assignments, steps to be taken, resources to
be employed and other elements necessary to carry out a
given course of action. They are ordinarily supported by
budgets.
v) Strategies
Strategy is defined as the determination of the basic
long-term objectives of an enterprise and the adoption of
courses of action and allocation of resources to achieve
the goals.
vi) Policies
Are the general statements or understanding that guide or
channel thinking in decision making, sometimes statement
may not be there, but the CEO of the enterprise can show
by example the organizations policy eg by regularly
reporting at 8.00 the CEO shows by practice what the
policy of the organized is, will regard to reporting
that. Another example is when the CEO decides to promote
from within the organization, this may be interpreted as
policy and carefully followed by subordinates.
Policies define an area within which a decision is to be
made.
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They also ensure that the decision will be consistent
with and contribute to the objective with and contribute
to the objective. Policies help decide issues before they
become problems, make it unnecessary to analyze the same
situation every time it comes up, and unify other plans,
thus permitting managers to delegate authority and still
maintain control over what their subordinate do.
There are many type of policies
vii) Budgets
A budget is a statement of expected results expressed on
financial terms. A budget may be expressed in financed
terms in terms of labour hours or **** outs or any other
numerically measurable term. I may deal with operations
(operations budget) or may reflect capital outlays
(capital budget) or it may show cash flows (such as the
cash budget).A budget is the fundamental planning
instrument in many companies. A budget focuses on
advance, whether a week or for five years, a numerical
compilation of expected cash flow expenses and revenues,
capital outlays or labour – or chine –hour utilization.
A budget is the principal tool of control.
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3.0 DECISION MAKING
Decision making is at the core of planning. It is the
selection of alternative courses of action. Decision
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making is considered central to planning because planning
involves the continuous selecting of projects and
programs, evaluating them and choosing the best project
or program. Decision making involves four basic steps.
i). Premising
ii). Identifying alternatives
iii). Evaluating alternatives
iv). Choosing the best alternatives
Importance of decision making
Mangers see decision making as their central job because
they must constantly choose what is to be done, who is to
do it, and when, where and occasionally even how it will
be done. Decision making is also part of everyone’s daily
living. A course of action can seldom be judged alone
because virtually every decision must be geared to other
plans.
Effective decision making must be rational. Rationality
emphasizes that
There is an attempt to reach some goal
There must be a clear understanding of alternative
courses of action to reach the goal under existing
circumstances and limitations.
There is sufficient information and ability to analyze
and evaluate the alternatives in light of the goal
sought.
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There must be a desire to come to the best solution by
selecting the alternative that most effectively
satisfies goal achievement.
People seldom achieve complete rationality particularly in
managing. This is because
i). Decision is about the future (since no one can make
decisions about the past).
ii). It is difficult to recognize all possible
alternatives to be followed to reach a goal (this is
particularly so when decision making involves
opportunities to do something that has not been done
before)
iii). In most cases not all alternatives can be analyzed,
even with the newest available analytical techniques and
computers.
Due to above limitations, a manager must settle for
limited or bounded rationality. In addition, in view of
the very great limits managers must go towards
rationality, in practice, or what is referred to as
accepting a course of action that is ‘good enough” under
the circumstances.
Developing of alternatives
Assuming that we know what our goals are, and we are
agreed on the planning premises, then the first step in
decision making is to develop alternatives. There are
almost alternatives to any course of action. If a manager
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cannot get alternatives to a course of action then most
probably he has not forced himself or herself to consider
other ways. The ability to develop alternatives is often
as important as being able to select correctly from among
them. Developing alternatives requires ingenuity,
research and common sense.
Types of decision
Decision can range from those of a vital, once-for-all
nature to those of a routine and relatively trivial
nature. They can be immediate in their effect, or they
can be delayed Ansoff (1965, 1987) sees management as
having three principal areas:
Strategic decisions- these are the basic, long-term
decisions which settle the organization’s relationship
with its environment, notably in terms of its products
or services, and its markets. These are the decision
which set the principal goals and objectives of the
organization. Also included here would be the major
statements of the organization.
Operating decision: These are the short-term decisions
which settle issues such as output levels, pricing and
inventory levels. Fewer variables are involved in the
decision making process and the decisions themselves
are routine and repetitive in nature – operative
decision tend to receive priority over others because
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of the sheet weight of their volume plus their ability
to show results in the short term.
Administrative decisions- these decisions arise from and are
subject to the conflicting demands of strategic and
operational problems. They are essentially concerned
with setting the organization structure eg by
establishing lines of authority and communication.
4.0 ORGANISING
Organizing is the function of
Allocating tasks and responsibilities among different
people in an organization
Grouping these tasks and responsibilities into different
departments
Differentiating the tasks and responsibilities into
hierarchies
Establishing mechanisms necessary for integrating the
differentiated departments and hierarchies.
Factors that determine organization structure
Purpose or goals
People
Tasks
Technology
Culture
Size
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Environment
Bases of organization structure
Functional –based on grouping of major business
functions eg production marketing.
Product is based on product
Geographical – based on geographical location
Hybrid structure
o Usually based on products, geography or both with
some key functions located at the headquarters.
Matrix
o Based on a combination of functional organizational
with project based
Basic variables for categorizing organization structure
Centralization – the level of decision making
Formalization –the number of documents
Span of control – the number of subordinates under one
manager
Specialization
Structural differentiation
Vertical differentiation
Spatial differentiation
Professionalism
Standardization
Advantages and disadvantages of different types of
structures
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Discuss the advantages and disadvantages of the various
basis of structuring
Functional
Product
Matrix
Effects of a poor or inappropriate organization structure
Low motivation and morale
Ineffective decision making
Lack of coordination and control
Poor communication
Derisiveness and lack of cooperation
Poor adherence to organizational objectives
Inability to respond to changes in the environment
Failure to provide opportunity for development
Duplication of activities
CENTRALISATION VS DECENTRALIZATION
Centralization
Advantages
i). Greater control
ii). Economies of staffing
iii). Economies of specialization
iv). Easier communication
Disadvantages
i). Excessive bureaucracy
ii). Rigidity
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iii). Delays in decision making
iv). Loss of initiation
v). Stifles personal development
Decentralization
Advantages
Decision are made where the action is
Recognition of local conditions
Improves morale
Personal development
More responsive to consumer needs
Disadvantages
Loss of control
Loss of some economies of scale
Development of narrow development view
Span of control
A narrow span has the following advantages
Close supervision of subordinates
Tight control
Fast communication
It has the following disadvantages
Many levels of management (costly)
Excessive distance between the top and bottom
Advantages of an organization structure
Motivated staff
Effective decision making
Good coordination and control
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Effective communication
Creates cooperation among staff, and departments.
Good adherence to organizational objectives
Ability to respond to changing environment
Clear opportunities for personal development
STRUCTURAL DESIGN OPTIONS
Minterberg presents a different view on structuring
organizations. He starts by saying that every organization
consists of five basic parts.
1. The operating core: the employees who perform the basic
work related to the production of products and services.
2. The strategic Apex: top level managers, who are charged
with the overall responsibility of the organization.
3. The middle level managers – who connect the operating core
and the strategic apex .
4. The techno structure which consists of analysts,
professionals and those who have responsibility for
effecting central responsibility in the organization.
5. The support staff – people who fill the staff units, who
provide direct support service for the organization.
Any one of those five parts can dominate an organization.
According to Mintebergs, there are five distinct design
options or configurations, depending on the part which has
greatest control. If control lies with the operating core,
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the resulting design or configuration is professional
bureaucracy which is characterized by decentralized
structures. If the dominant part is strategic apex, the
structure is referred to as simple structure. It is
characterized by centralization. If middle management is
in control, then the resultant structural design is
referred to as divisional structure. It consists of autonomous
groups. Where the techno structure is dominant, then the
resultant structural design is machine bureaucracy. Finally
if the dominant group is the support staff, the structural
design is referred to as adhocracy – an example is in a film
making organization consisting of various professionals.
This type of structure has no entrenched hierarchy; no
permanent departments not even formalized rules. It is
characterized by low formalization, decentralization and
great flexibility.
Organizational design options
1. Professional bureaucracy- if control lies with the
operating core, then professional bureaucracy is the
result. Decision are decentralized
2. Simple structure –if the dominant element is the
strategic apex
3. Divisional structure – if middle management is in
control, then the resultant design option is divisional
35
structure, this consist of groups of essential
autonomous units operating in a divisional structure.
4. Machine Bureaucracy: this results where the
technostrucure is dominant- this results in high level
of standardization.
5. Adhocracy – in those situations where staff relies
control will be via mutual adjustment and resultant
structural design is known as adhocracy
The following section describes each of the above design
configurations in greater detail.
The simple structure
A simple structure is low in complexity, has little
formalization and has authority centralized in a single
person. It is depicted as a flat organization, with an
organic operating core and almost everyone reporting to a
one person apex,where the decision making in centralized
Strengths of a simple structure lie in the following:
Its simplicity
It is fast and flexible in decision making
Requires little cost to maintain
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Owner
Store keeper
Finance Accounting Sales
Accountability is clear
No layers of cumbersome structure
There is a minimum amount of goal ambiguity because
members are able to identify readily with the
organization missions.
It is also fairly easy to see how ones actions
contribute to the organization goals.
Weaknesses
Limited applicability – only in small organizations.
When confronted with increased size, this structure
proves inadequate
The simple structure concentrates power on a single
person. Thus the structure can succumb to the abuse of
authority by the person in power.
The concentration of power in a single person can also
work against the organization’s effectiveness and
survival.
The structure hangs on the health and whims of one
individuals.
When should you use a simple structure
If the organization is small
When the organization is in its formative stage of
development
If the environment is simple and dynamic.
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If the organization faces high hostility or crisis
If the senior manager is also the owner
If or when the chief executive officer wants to hold
power or has power thrust upon him by his or her
subordinates.
Machine Bureaucracy
In a machine bureaucracy, the main characteristic is
standardization. It has highly routine operating tasks,
very formalized rules and regulations, tasks are grouped
into functional departments, there is centralized
authority, decision making follows a chain of command and
there is an elaborate administrative structure with a
sharp distinction between line and staff activities. Rules
and regulations permeate the entire structure. The key
part of structure is the techno structure.
Strengths of machine bureaucracy
The primary strength of the machine bureaucracy lies in
its ability to perform standardized activities in a
highly efficient manner.
By putting like specialists together results in
economies of scale, minimization of duplication of
personnel and equipment and comfortable and satisfied
38
employees, who have the opportunity to talk the same
language among their peers.
Machine bureaucracy can also get by nisely with less
talented and hence less costly, middle and lower level
managers.
The pervasiveness of rules and regulations substitutes
for managerial discretion
Standardization coupled with centralization allow
decision making to be centralized.
Weaknesses
Specialization and standardization creates sub unit
conflict where functional unit goals can override the
overall goals of the organization.
Obsessive concerns with following the rules- there is
no room for modification
When is machine bureaucracy appropriate
In large organization
In simple and stable environments
In a technology that contains routine work that can be
standardized
In mass production firms such as those in automobile and
steel industries
In government offices
The Professional Bureaucracy
39
This type of structure combines standardization with
decentralization
The power lies with the operating core because they have
the critical skills that the organization needs and they
have the autonomy.
Professional bureaucracies also include machine
bureaucracies with them they have for example the
support staff.
Strengths of professional bureaucracy
The basic strength of the professional bureaucracy is its
ability to perform specialized tasks with the same
relative efficiency as the machine.
Weaknesses of the professional bureaucracy
Tendency of sub units to conflict
The various professional units seem or tend to pursue
their own interests.
The specialists might be comprehensive to follow the
rule. This might interfere with the organization’s
effectiveness in a competitive and rapidly changing
environment
Adhocracy
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This type of structure is a temporary arrangement to
implement a certain project or objective
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5.0 THE STAFFING FUNCTION
Planning the HR needs Strategic HR planning consists ofdeveloping a systematic, comprehensive strategyfor,
a)Understanding current employee needsb)Predicting future employee needs.
1.Understanding current employee needs
This requires that you understand the presentstaffing needs of your organization. Thismeans that you undertake a job analysis andwrite a job description and job specification
i) Job analysis- to determine by observationand analysis the basic element of ajob. You can achieve this byintervening job occupants about whatthey do, observe the flow of work, andhow results are accomplished.
ii) Job description and job specification- once youhave understood the fundamentals of a
41
job then you can write a jobdescription which is a summary of whatthe job holder does and how and why heor she does it. Next, you can writejob specification which describes theminimum qualifications a person musthave to perform the job successfully.
This process of job analysis, jobdescription and job specification enables orhelps the manager to;a)Avoid hiring people who are overqualified (and
probably more expensive) or under qualified(and thus not as productive) for a particularjob.
b)By having a job description, an organizationcan match an applicant’s qualification to thejob specifications.
2.Predict future employee needs Predicting future employee needs meansthat the manager has to have the knowledgeabout the staffing the organization might needand the likely sources for that staffing. Withregard to the staffing, the organization mightneed in the future, the manager needs to knownot only the resignations and retirements butalso the organizations vision and strategicplan. With regard to the likely sources forstaffing, the organization can either recruit
42
from internal or external sources. In lookingat the internal sources, you need to considerwhich employees are, motivated, trainable andpromotable, and what kind of training yourorganization might have to do. A humanresource inventory which is basically a reportlisting the organization’s employees by name,education training, languages and otherimportant information. In looking outside eyou need to consider the availability oftalent in tour industry and geographical areaslabor pool, the training of people graduatingfrom various colleges and such factors as whatland, kind of people are moving into yourarea.
The legal bases of the HR management There are four areas generally covered by laborlaw in various countries. These are; 1) Labor relations
These laws provide procedures for dealing withemployees and their labor unions, about disputes,compensation benefits, working conditions and jobsecurity.2) Compensation benefits
These laws provide for the minimumwages and maximum number of working hours.They also regulate against child labor. Salaried
43
executives, administrative and professionalemployees are exempt from these rules.
3) Health and safety
These laws provide for organizations to provideemployees with non-hazardous working conditions.
4) Equal employment opportunity
These laws legistrate against discrimination inemployment based on racial, ethnic and religiousbases. The principal concepts covered in equalemployment opportunities laws arediscrimination, affirmative action and sexualharassment.
Discrimination occurs when people arehired or promoted (or denied hiring orpromotion) for reasons not relevant to thejob, such as tribe, skin color, gender orreligion.
Affirmative action focuses on achievingequality of opportunity within anorganization. It tries to make up for pastdiscrimination in employment by activelyfinding hiring and developing the talentsof people from groups discriminatedagainst in the past.
Sexual harassment
Performance appraisal Performance appraisal is the assessing anemployee’s performance and providing him or her
44
with feedback. This management function has twopurposes;
i. Helps the employees understand how theyare going in relation to objectives andstandards. Here the manager makes ajudgment of the employee
ii. It helps the employees identify theirtraining needs and personal development.Here the manager councils the employee.
Appraisals may either be objective or subjective; Objective appraisals- also called results
appraisals are based on facts and are oftennumerical. Here managers use such quantifiablemeasures as quantity of products produced orsold, number of complaints received or handledetc
Subjective appraisals These are based on a manager’sperception of an employee’s traits or behaviors.Trait appraisals – are ratings of such subjectiveattributes as attitude, initiative, andleadership. Trait evaluation may be easy tocreate and use but their validity isquestionable because the evaluator’s personalbias can affect the ratings.Behavioral appraisal- measures specificobservable aspects of performance- being ontime for work for instance. Although …………. theevaluation is still somewhat subjective.
45
Who should make appraisals- generally managers areresponsible for evaluating their employees.However, others can also perform staffappraisal. These are
i. Peers and subordinatesii. Customers and clients
iii. Self- appraisaliv. 360- degree assessment
Recruitment Recruitment is the process of locating andattracting qualified applicants for jobs open inthe organization. The word qualified refers topeople with the right skills, abilities andcharacteristics for the jobs available in yourorganization. Recruiting can be done throughinternal or external recruitment. Internal recruiting means attracting peoplealready on the organization to apply for the jobopening in your organizationExternal recruiting means attracting jobapplicants from outside the organization. Jobvacancies are placed in newspapers, employmentagencies or even in the internet.Internal recruitingAdvantages
Cheaper Fewer risks- candidates are already known Motivates those already in the
organization to work hard.
Disadvantages
46
Limits the pool of fresh talents andfresh new ……..
Whenever a job is filled it creates avacancy elsewhere in the organization
Encourages employees to assume that theywill be promoted thus haunting theircompetitiveness
External recruitingAdvantages
Applicants may have special knowledge andexperience
Applicants may have fresh ideas and new………
Disadvantages The recruitment process more expensive The risks are higher that the person hired
may not perform
This is the process of recruiting, hiring training,
developing and maintaining effective workforce within the
organization. To perform this function effectively
managers must understand four fundamentals points.
47
1. The staffing function is the responsibility of all
managers in the organization
2. This function should view employees as an important or
critical resource of the organization
3. It is important to match employees and their skills and
needs to the company’s goals and objectives. The hiring,
the training and development must match employees’
skills and needs to the company’s goals and objectives
4. There exists a large body of complex, comprehensive and
increasing body of laws and rules governing
relationships between employers and employees. Managers
must be aware of these laws and regulations.
The process of the staffing function
The staffing function consists of three main stages
Stage one: activities designed to attract productive
employees to the organization. These activities include
i). Planning
ii). Recruitment
iii). Selecting
Stage two: activities designed to develop employees into a
productive workforce. These activities include:
i). Training and
ii). Development
Stage three- this stage encompasses the activities
designed to maintain the work force. They include
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i). Compensation
ii). Promotion
iii). Transferring
iv). Demoting
v). Separating employees
The above activities are discussed below;
1. Human Resource Planning
This will involve six distinct steps.
Setting the organization’s objectives
Setting the sales and production forecasts
Setting human needs forecast
Analyzing current supply of employees
Forecast human needs given current supply
Establish a plan for recruiting, selecting and
transferring employees
Human needs forecast is a process that compares the
current level of employment in the various jobs to the
numbers needed to fulfill the production and sales
forecast and to meet the company’s strategic objective,.
Before they can derive those numbers, managers need to
carry out a job analysis job description, and job
specification.
Job analysis-is the systematic gathering of information
about a job. This information includes job titles,
supervisor, training, experience and other qualifications
needed to perform the job, responsibilities and activities
49
involved in the job and the working conditions. This
information also includes organization data such as
whether the job is dependent on other jobs and which jobs
will follow the completion of the job
Job description – a job description specifies the object
for the job, the responsibilities and activities involved,
how the job relates to other jobs, working conditions and
similar facts.
Job specification – this document identifies the
qualification, skills, training education and other
personal characteristics required of the person performing
the job . The job specification lists such items as how
many years of experience are needed to qualify for the
job, required education levels, skills, special training
and in some cases, psychological characteristics.
Recruitment
Recruitment is the process of informing qualified
potential employees about job openings and encouraging
them to apply.
Selection
Selection is the process of screening applicants for the
skills and abilities listed in the job specification to
determine which ones are best suited for the job.
Training and development
These are the efforts of companies to maintain and improve
the quality of their work force.
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Compensation
Consists of all monetary payments and non-monetary goods
and services given to employees in place of money.
Promotion
An assignment to a new job at a higher level and usually
at a higher salary and benefits.
Demotions
An assignment to a new job at a lower level and often at a
lower salary.
Transfers
A horizontal or lateral movement from one job to another
of equal or similar responsibilities and salary.
Separations
Occur when an employee leaves the company due to lay off,
involuntary termination, voluntary resignation or
retirement.
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7.0 LEADERSHIP Definition
Leadership is defined as the art or process of influencing
people so that they will strive willingly towards the
achievement of group goals. The important point to note is
that not only are the people led willing to work, but to
work with zeal and confidence. Zeal reflects earnestness,
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and intensity on the execution of work. Confidence
reflects experience and technical ability. To lead is to
guide, conduct, direct and precede. Leaders act to help a
group achieve objectives with the maximum application of
its capabilities. Leaders do not stand behind a group to
push and to provide. They put themselves before the group
as they facilitate progress and inspire the group to
accomplish organization’s goals.
Functions of Leadership
i) To induce or persuade all subordinates or followers to
contribute willingly to organizational goals in
accordance with their maximum capability. In order to
perform this function, the leader must have the
following ;
The capability to comprehend that human beings have
differing motivating forces at varying times and in
different situations.
The ability to inspire
The ability to act in a way that will develop a
climate for responding to and arousing motivations.
The ability to inspire means one is able to enliven
followers to apply their full potential and capabilities
to a project. They have charismatic qualities that induce
loyalty, devotion and zeal on the part of the followers.
The best evidence of inspirational leadership comes from
hopeless and fearful situations such as a nation on the
52
eve of battle, or a leadership deserted by followers. In
such a situation, charisma plays a part in saving the
situation.
LEADERSHIP THEORIES
Because of its importance to all levels of group action
there is a considerable volume of theory and research
concerning leadership. It is not possible to summarize
such a considerable body of theory, but leadership can be
separated into trait, situational and contingency theories
of leadership.
The trait approach to leadership
The earliest studies of leadership were based largely on
an attempt to identify the traits that leadership
possessed. In fact prior to 1949, most studies on
leadership tended to concentrate on identifying traits. In
general the study of leadership traits has not been very
fruitful. Not all leaders possess all traits and many non
leaders may possess most or all of them. Also the trait
approach gives no guide as to how much of any trait a
person should have. Furthermore, out of a dozen or so of
studies, there is no uniformity of identified traits or
any significant correlations of traits with actual
instances of leadership.
Nevertheless some studies have indicated a significant
correlation between certain traits and leadership
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effectiveness. Literature has found that that there was a
definite correlation between the traits of intelligence,
scholarship, dependability, responsibility, social
participation, and socio-economic status of leadership
compared with non-leaders, Ghiselli found significant
correlation between leadership effectiveness and the
traits of intelligence, supervisory ability, initiative ,
self-assurance and the individuality in the way the work
was done.
Keith Davis likewise found that leaders do have high
intelligence, broad social interests and maturity, strong
motivation to accomplish, and great respect for, and
interest in people. But even those correlations between
traits and leadership are not persuasive. Most of these so
called traits are really patterns of behaviour that one
would expect from a leader and particularly a leader in a
managerial position.
The situational approach to leadership
This approach to leadership assumes that leadership is
strongly affected by the situations from which the leader
emerges and in which he or she operates. That this is a
persuasive approach is motivated by the situation that
gave rise to a Hitler in Germany in the 1930s. The earlier
rise of Mussoline in Italy, the emergence of F.D.
Roosevelt during the great depression of the 1930s in the
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United States, and the rise of Mao Tse-tung in China in
the period after World War II were good examples of
situational leadership. This approach to leadership
recognizes that there exists an interaction between the
group and the leader. It supports the followers theory
that people tend to follow those in whom they perceive
(accurately or inaccurately) a means of accomplishing
their own personal desires. The leader, then is the person
who recognizes these desires and does those things or
undertakes those programs, designed to meet them.
This multi dimensional approach to leadership was detected
early in the studies of Stogdill and his associates when
it was discovered that in an analysis of 470 navy officers
occupying forty five different position, their leadership
ability was heavily affected by such situational factors
as their jobs, the organizational environment in which
they operated, and the characteristics of people they were
assigned to lead. Other studies have shown that effective
leadership depends upon response to such environmental
factors as the history of the enterprise, the community in
which the organization operates the psychological climate
of the group being led, group member personalities and
cultural influences, and the time required for making
decisions.
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This approach has much meaning to managerial history and
practice. It also ties into the system of motivation. It
has meaning for practicing mangers who must take into
account the situation in its entirety when they design an
environment for performance.
Fidlers Contigency Approach to leadership
Fidlers theory implies that leadership is any process in
which the ability of a leader to exercise influence
depends upon the group task situation and the degree to
which the leaders style, personality and approach fit the
group. In other words, people become leaders not only
because of the attributes of their personality, but also
because of various situations factors and the interaction
between the leaders and the situation.
Fidler;s findings and theory are based on a considerable
volume of research. The groups he studied and tested his
hypotheses on included B-28 bomber crews, army tank craws,
antiaircraft artillery crews, infantry squads, open hearth
steel supervisors and crews, upper level company managers,
managers of gas stations, students groups and church
leaders. On the bases of his studies, Fidler found three
critical dimensions of the situation that affect a leaders
most effective style. These are;
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i). Position power: this is the degree to which the power of
a position as distinguished from other sources of power
such as charismatic or expert power, enables a leader to
get group members to comply with direction: as can be
seen in the case of managers this is the power arising
from organizational authority. A leader with clear and
considerable position power can more easily obtain
better follower ship than one without such power.
ii). Task structure; with this dimension, Fidler had in mind
the extent to which task can be clearly spelled out and
people held responsible for them in contrast to
situations where tasks are vague and unstructured. Where
tasks are clear, the quality of performance can be more
easily controlled, and group members can be more
definitely held responsible for performance than where
tasks are ambiguous.
iii). Leader –member relations This dimension, which Fidler
regards as most important from a leaders point of view
since position power and task structure may be largely
under the control of an enterprise has to do with the
extent to which group members like and trust a leader
and are willing to follow him or her.
Theories of leadership
Leadership theories can be categorized in the following
groups
57
1. Trait theories
These theories try to explain leadership in terms of the
traits that leaders have. Starting as early as the ancient
Greece, and Roman periods researchers have tried to
identify the physical, mental and personality traits of
various leaders.
The main traits identified by these theorists include
Physical (energy, appearance, perseverance, height etc).
Intelligence
Ability
Personality (adaptability, enthusiasm)
Social characteristic (cooperativeness
Tasks related (eg drive, initiative),
The main problem with trait theories is that
i). Not all leaders possess all the traits
ii). Many non leaders have some of the traits
iii). The traits approach fails to give guidance as to how
much of any trait a person should have.
Style theories
These theories try to explain leadership as an aspect of
behavior at work, rather than characteristics. They look
at leadership in terms of
Authoritarian vs. democratic styles
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People orientation versus tasks orientation
Some of these theories are:
1. McGregor’s theory x and theory y
Theory x autocratic, tough (authoritarian)
Theory y benevolent, participative and allowing self
control.
2. Likerts from management systems
This theory identified leadership as consisting of four
types
System I the exploitative- authoritative system.
System II benevolent- authoritative system
System III- consultative system which tends towards
democracy and learn work.
System IV- Participative group participation leading to
cooperation.
3. Tannerbaeem and Schmudt
This theory presents leadership as a continuous of
leadership styles ranging from authoritarian to
democratic.
Authoritarian Democratic
Style theories fail to recognize the contingent factors
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4. Contingency theories
Several variants of the contingency theories exist. For
example
i) Functional or Action centered
leadership this model incorporates the concern for task
and concern for people. The key features of the model
are the following .
Task, group and individuals needs are fulfilled
Task function directed towards task needs
Group maintenance function directed towards group
needs including team building discipline
Individual maintenance functions directed towards
the needs of individuals eg counseling, motivation
development
Task people
ii) Contingency leadership
This model uses the moral contingency to explain
leadership in the light of the relative favorableness of
the situation. The most important variables in determining
the relative favorableness of the situation are:
Leader member relations
Degree of structure in tasks
Power and authority of the position
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The above variables can lead to several situations most
favorable to a leader e.g.
i) he has good leader – member relations
ii) the task is highly structures
iii) he has a power position
The most unfavorable situation on the other hand are:
i) He is disliked
ii) The task is relatively unstructured
iii) He has little or no position power.
Principle-centered leadership
This model looks at leadership in terms of how a person
helps to certain principles of behavior. Its this model
assumes that the extent to which leaders recognize, and
keep to principles such as fairness, justice, integrity
and trust, determine their progress towards survival and
stability, or to disintegration and destruction. These
principles are universal, objectives and self-evident,
leaders should align their values with correct principles.
These principles and four: trustworthiness, trust,
empowerment and alignment.
Trustworthiness is essentially to do with the leaders
himself as a result of competence, integrity etc
Trust refers to the decade trust on others
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Empowerment refers to enabling teams and individuals to
assume responsibility for achieving results they have
agreed.
Alignment is the process of constantly reviewing the
situation in the light of external conditions and the
implementation of the other three principles.
Covye who is mostly associated to principle centered
leadership identifies eight characteristics of people who
can be considered as principle centered.
i). They continuously learn- they listen
ii). They are service oriented- they think of others
iii). They radiate positive energy they are cheerful, pleasant
iv). They believe in other people- other people have
potential
v). They lead balanced lives- they have wide interests
vi). They see life as an adventure
vii). They are synergistic- they improve on every situation
they get into they exercise for self , renewal- they
engage in activities that exercise emotional, spiritual
as well as physical and mental aspects
Leadership styles: This approach to leadership looks at
leaders in terms of their characteristics. These are:
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i). The charismatic leader
The leader who gains influence mainly from strength
of personality.
Uses personality to transform all around him into
willing followers
Possesses exceptional qualities eg Napoleon,
Hitler, Churchill.
ii). The traditional leader – his position of leadership
is acquired by birth eg kings, queens and tribal chiefs.
iii). The situational leader – the influence of such a
person results form being at the right place at the
right time. This type of leadership is of too temporary
in nature to be of value to in a business.
iv). An appointed leader is one whose influence arises
directly out of his position eg most managers and
supervisors. This is the bureaucratic type of leadership
whose legitimate power springs from the nature and scope
of the position within the hierarchy.
v). The functional leader who secure their leadership
position by what he or she does rather than by what they
are. In other words functional leaders adapt their
behaviour to meet the competing needs of the situation.
vi). The principle centered leader is the leader whose
approach to leadership is influenced by moral and
ethical principles involving consideration of equity,
justice, integrity, honesty, fairness and trust.
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Leadership then is something more than just an aspect of
personality, tradition, opportunism, or appointment. It is
ultimately connected with actual behaviour and attitudes
towards oneself and others.
Although leadership may involve empowering others, and
sharing the leadership, burden in many respects, it
nevertheless cannot advocate its final responsibility for
a groups result. Any leader must ultimately accept
personal responsibility for success or failure.
Consequently leadership can be defined as “a dynamic
process whereby one individual in a group is not only
responsible for the groups results, but actively seeks the
collaboration and commitment of all the group members in
achieving group goals in a particular context and against
the back ground of a particular national culture.
The suggestion that leadership is a dynamic process
implies that there is no one best way of leading –
leadership is essentially about striking the right balance
between the needs of the people, tasks and goals in a
given situation. If a football team is behind at half-
time, the club manager’s talk to the team is likely to be
much tougher than the upbeat speech he gave it just before
kick-off. Before the start his object would have been to
encourage and show confidence; at half time he would be
64
pointing out weaknesses, insisting in tactical changes and
urging the team to do better.
The table below illustrate the main variables in the
leadership process:
Variables of leadership
Leader Task/goals
Skills groups goals
Principles individual goals/targets
Knowledge relative complexity
Personality
Group members Situation/environment
Skills internal dynamics of group
Needs cultural issue
Motivation external pressure
Resources available
Thus leadership is involved in the motivation and
inspiring the workforce. Leaders may be appointed or
emerge. The source of their ability to influence others
comes from their expertise or from their personality.
Ideally, those appointed to the position of leadership eg
managers, should have leadership qualities. Consequently
65
some mangers are just mangers, while some managers are
also leaders. The following characteristics differentiate
managers who are not leaders and managers who are also
leaders
Managers Leaders 1. Functionaries 1. Innovators 2. Protect their operations 2. Advance their operations 3. Accept responsibility 3. Seek responsibility 4. Control employees 4. Trust employees 5. Competent 5. Creative 6. Minimize risks 6. Take calculated risks 7. Accept speaking
opportunities
7. Generates speaking
opportunities 8. Set reasonable goals 8. Sets challenging goals 9. Pacify 9. Challenges10. Strive for comfortable
working conditions
10. Seeks challenges
11. Use power cautiously 12. Uses power forcefully 13. Delegate cautiously 14. Delegate
enthusiastically 15. View workers as
employees
16. View workers as
potential followers
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8.0 MOTIVATION
Motivation is a term used to describe those processes,
both instinctive and rational by which people seek to
satisfy the basic drives, perceived needs and personal
goals, which trigger human behavior.
Motivation refers to the drives, desires, needs,wishes. Motivation refers to the forces within aperson that affect his or her direction, intensityand persistence of voluntary behavior. Motivationrefers to the process by which a person’s effortsare energized, directed and sustained towardsattaining a goal.
Three key elements are important to thatdefinition namely energy, direction andpersistence.
1)Energy- is a measure of means or derives. Amotivated person puts forth effort and workshard. However, the quality of effort must beconsidered as well as intensity. High levelsof effort don’t necessarily lead to favorablejob performance unless the effort is channeledin a direction that benefits the organization.
2)Motivation includes a persistence direction.We want employees to persist in putting fortheffort to achieve those goals. Motivating highlevels of employee is an importantorganizational concern.
Motivation represents the forces within a personthat affect his or her direction, intensity and
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persistence. Direction refers to the path alongwhich people engage their effort. This sense ofdirection of effort reflects the fact that peoplehave choices about where they put their effort.They can either arrive to work on time, finishtheir tasks early or on time, or aim for manyother targets. They could on the other hand choosenot to arrive to work on time, finish their taskslate, or do anything else; consequently thedirection is a key element of motivation.Intensity- this is the amount of effort allocatedto the goal. For example two employees may bemotivated to finish their project a few hoursearly (direction) but only one of them puts forthenough effort (intensity) to achieve this goal. Inother words intensity is how much you pushyourself to complete the task.
Models of human motivation
1) Rational –economic model
This view of human motivation has its roots in the
economic theories of Adam Smith in the 1770s. It suggests
that the pursuit of self-interest and the maximization of
gain are the prime motivators.
2) The social model
The social model draws its conclusions from the Hawthorne
Experiments of the 1920s and 1930s. This model views
people as predominantly motivated by social needs- the
need for personal relationships. The implications for
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managers is that an emphasis on attending to peoples
social needs over the needs of the task will lead to
greater productivity as well as higher morale
3) Self-actualizing model
This concept is based on Maslows Hierarchy of needs theory
which while allowing for the influence of other needs
stresses the individuals need for self –fulfillment, as
the prime motivation. The implication for managers is that
people need challenge, responsibility and authority in
their work if they are to work effectively.
4) The complex model
This model by Schein proposes that peoples motivation is a
complex issue in which general interrelated factors are at
work. Managers in this situation need to be sensitive to
the range of possible responses to employee motivation
against differing work and team environments. This model
enables us to see motivation as a human behavior which is
directed towards desired ends and that behavior is
selected consciously or instinctively towards the
achievement of those ends.
Some of the most well known motivation theories are
briefly discussed below
1) The Hawthorne studies
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These studies are closely associated with professor Elton
Mayo, a professor of industrial research at the Harvard
graduate school of business. He carried out the Hawthorne
experiments at the Hawthorne plant of the Western Electric
Company in Chicago USA, between 1927 and 1932. In these
studies emphasis was on the worker rather than work. In
other words, these studies were primarily concerned with
studying people, especially in terms of their social
relationships at work. Their conclusions were that people
are social animals –at work or outside it – and that
membership of a group is important to individuals. Group
membership leads to the establishment of informal groups
within the official, formal organization. The main
conclusions of the Hawthorne studies are as follows.
i) Individual workers cannot be treated in isolation,
but must be seen as members of a group.
ii) The need to belong to a group and have status
within it is more important than monetary
incentives or good physical working conditions
iii) Informal (or unofficial) groups at work exercise a
strong influence over the behaviour of workers.
iv) Supervisors and managers need to be aware of these
social needs and cater for them if workers are to
collaborate with the official organization rather
than work against it.
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2) Maslow’s Hierarchy of Needs theory
Maslow, proposed that
i) People are motivated to satisfy specific groups of
needs. These needs are
Physiological needs: need for food, sleep, sex
etc
Safety needs: need for a stable environment
relatively free from threats
Social needs- need to be recognized and
appreciated by other people.
Esteem needs – need for self-respect, self-
esteem and the esteem of others.
Self-actualization needs- the need for self-
fulfillment
ii) The other point by Maslow was that people tend to
satisfy those needs systematically – in a
hierarchical manner, starting form the
physiological needs and then moving up the
hierarchy. Until a particular group of needs have
been satisfied, a persons behavior will be
dominated by them.
iii) Maslow’s other point was that once a group of needs
has been satisfied, it ceases to motivate.
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Management Implications of Maslow’s theory1)Employees have different needs at different
times2)Employees have several interdependent needs
not just one dominant need. Managers musttherefore understand that employees aremotivated by a cluster of needs not justone need
3)At some point most employees want toachieve their full potential. Thereforemangers must structure organizations tohelp people continue and develop thismotivation
4)Employees’ needs are influenced by valuesand norms. In other words higher orderneeds are shaped to some extent by thenorms and values of the team, theorganization and society in which theindividual lives. Consequently managers canadjust employee motivation and effort byreshaping these norms and values forexample by encouraging more performanceoriented team norms, managers canstrengthen team members self actualizationneeds.
3 McGregor’s Theory x and Theory y
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McGregor proposed two sets of assumptions abouthuman nature:
1)Theory X assumes that workers Have little or no ambition Want to avoid responsibility Need to be closely supervised and
controlled to work effectively Generally dislike work and only work for
salary and security2)On the other hand theory Y assumes that
workers Want and exercise self direction Accept and actually seek out
responsibility Want work and consider work to be a
normal activity
McGregor believed that theory Y predominates,consequently to motivate the employees there isneed to allow for participation in decisionmaking, provide challenging jobs, and good grouprelations.
4 HERZBERG’S MOTIVATION – HYGIENE THEORY
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Herzberg’s theory proposes that there are twosets of conditions or factors that affect workerslevel of satisfaction or motivation at the workplace. The hygiene factors describe the employees’relationship with their job environment, and thataffect the level of dissatisfaction at work. Thesefactors include
Company policy and administration Salary Interpersonal relations Working condition
On the other hand, the motivators are factorsrelated to the employees’ desire for growth intheir work and which affect the level ofsatisfaction or motivation at work. The motivatorsinclude
Achievement Recognition The work itself Responsibility Advancement Opportunity for growth
The Herzberg’s two factor theory ofmotivation proposes a two step process ofmotivating employees
1.First make the employees not dissatisfied by Having sound non primitive company
policies that are administered fully
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Having good technical supervisors whopermit employees to work without unduepressure
Paying salaries and wages that areadequate and fair
Establishing an environment that promotesgood interpersonal relations betweenemployees and supervisors
Creating good working conditions,comfortable offices, reasonable hours etc
2.Then make employees motivated by Permitting employees to achieve
challenging goals with minimalinterference
Recognizing employees’ good performanceand productivity and crediting them fortheir efforts
Giving employees more responsibility asthey show the desire and ability tohandle it
Providing a career path of meaningfuladvancements for productive employees
Designing jobs that are interesting andchallenging
Providing training and educationalopportunities that help employees grow
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especially in skills that relate totheir careers
Managers should note that employees are motivatedfirst if they are not dissatisfied, and second ifthey are provided with motivators. Both thedissatisfies and motivators must be provided ifemployees are to be motivated in their work
5 Vroom’s Expectancy Theory This theory proposes that people will bemotivated to do things to reach a goal if theybelieve in the worth of that goal, and if they cansee that what they do will help them in achievingit. Vroom’s theory proposes that peoplewill be motivated to do things if they place onthe outcome of their efforts a value equal to thevalue multiplied by the expectancy. Expectancy theory states that anindividual tends to act in a certain way based onthe expectation that the act will be followed by agiven outcome and on the attractions of thatoutcome to the individual. It includes threevariables of relationships:
1.Expectancy or effort performance linkage- isthe probability by the individual thatexerting a given amount of effort will lead toa certain level of performance.
2.Instrumentality or performance reward linkageis the degree to which the individual believes
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that performing at a particular level isinstrumental in attaining the desired outcome.
3.Value or attractiveness of the reward is theimportance that the individual places on thepotential outcome or reward that can beachieved on the job.
This analysis can be summarized by thequestion; how hard do I have to work to achieve acertain level of performance and can I actuallyachieve that level. What reward will performing atthat level of performance get me? How attractiveis the reward to me and does it help me achieve myown personal goals. Whether you are motivated toput forth effort, (i.e. work hard) at any giventime depends on your goals and your perception ofwhether a certain level of performance isnecessary to attain these goals.
Implications for managers The key to expectancy theory is inunderstanding an individual’s goal and the linkagebetween effort and performance, betweenperformance and rewards and finally betweenrewards the individual goal satisfaction.Consequently, managers have to align rewards withwhat the employee wants. After all we want toreward the employee with those things that theyvalue. Also expectancy theory emphasizes expectedbehaviors. Do employees know what is expected ofthem and how they will be evaluated? Finally expectancy theory is concerned withperceptions. An individual’s own perception of
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performance reward and goal outcome, not theoutcomes themselves will determine his/hermotivation (level of effort).
6 Equity Theory Equity theory proposes that employeescompare what they get from a job (outcomes) inrelation to what they put into it (inputs) andthen compare their input;- output ratio with theinput output ratios of relevant others. If anemployee perceives her ratio to be equitable (orfair) in comparison to those of relevance othersthen justice prevails and she will be motivated.However if the ratio is inequitable (unfair) theemployee will feel under rewarded or overrewarded. Equity theory proposes that the employeemight;
1.Distort either own or others inputs oroutcomes
2.Behave in some way to induce others to changetheir own inputs or outcomes
3.Behave in some way to change their own inputsor outcomes
4.Choose a different comparison person5.Quit the job
The implication for equity theory is thatemployees will be influenced significantly by bothabsolute and relative rewards. Whenever employeesperceive inequity, they will act to collect thesituation
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Who are these others the employee will comparewith? These includes
1.Individuals with similar jobs in the sameorganization in the same profession e.t c.
2.The systems including the organization paypolicies procedures and systems
3.The self referring to the input outcomesratios that is unique to the individual. Itreflects the past personal experiences and antacts as influenced by jobs, or familyconnections
9.0 CONTROLLING
What is control
Control is the process of evaluating the organizations
performance in relation to the objectives set, and where
necessary taking corrective action to keep the
organization on tract so it will achieve objectives.
The control process includes the following steps
i) establish performance measures
ii) Measure performance
iii) Compare performance with standards and identify
causes of variance
iv) Take corrective action.
For a control system to be successful it must be
i) he accepted by those subject to its control
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ii) must be appropriate and meaningful
iii) must be timely
iv) be cost effective
v) be sufficiently flexible
vi) be objective
Control methods
i). Budges
ii). Quality control
This method is a system of setting quality standards,
measuring performance against those standards, and taking
appropriate action to deal with denations outside
permitted tolerance level.
The control process is linked to form a continuous process
that ends either in the achievement of goals or the
modification of plans as a result of feedback. Several
observations can be made on this process.
First where standards of performance are qualitative
rather than quantitative it is preferable for them to be
expressed in terms of end results rather than of methods.
Budgets are a particularly useful vehicle for the
expression of verifiable results.
Secondly, the measurement of performance depends heavily
on the relevance, adequacy and timeliness of information.
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The supply of such information comes form a variety of
sources within the organization. The single most important
source is the management accounting department, which is
responsible for the regular production of operating
statements, expenditure analysis, profit forecasts, cash
flow statements and other relevant control information’s..
Thirdly, when comparing the actual against target
performance, most organizations only require action to be
taken when the deviation against standard is significant.
Otherwise no action is taken and no reference upwards is
asked for. This is sometimes called “the management by
exception principle”.
Fourthly, control is not just a matter of identifying
deviation, it is also a matter of putting right what may
have gone wrong, hence the importance of directions part
of the control process to the implementation of
appropriate corrective measures
The control process
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Standards of performance
Plans Actual Performance
Comparison with standard set
Take corrective action/modify plans
Deviations identified corrective action required
On target – no corrective action
Feedback in the control system
The information generated by control systems is known as
feedback. Feedback is usually produced in results.
Actual performance is recorded and the information
feedback to the managers responsible for achieving
targets. Early feedback is essential for accurate
control, especially where unexpected deviations have
occureed where deviations occure, feedback may indicate
the need for a change in the process or its inputs, or
possibly, a change in the basic plans or original
standards.
Management information system (MIS)
Lucy, in her book management Information system define
MIS as follows
“a system to convert data form internal and external
sources into information in an appropriate form, to
managers at all levels in all functions to enable them
to make timely and effective decision for planning,
directing and controlling the activities for which they
are responsible.”
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Standards of performanc
Deviations identified corrective action required
On target – no corrective action
The raw data are the basic facts and figures of
operational life, such as output figures, hours worked,
etc. These data may be stored on manual or computer
systems. In themselves they may not have great meaning,
taken together, and assembled together into relevant
groupings, the become information, which is basically
data that have been analyzed, summarized and interpreted
for the benefit of potential users, in this case
managers. The MIS processes are the various procedures
and methods used to convert the data into useful
information .
It is possible to identify four types of formal MIS
which are useful to management concerned with control at
the tactical level. These are;
i) Control systems- These monitor the organizations
activities and report on them eg production output,
sales revenues etc
ii) Data base system – these process and store
information, which can be drawn upon as a kind of
organizational memory bank.
iii) Enquiry system – these are either external or
internal data bases for carrying out investigations
into the performance of departments, product lines,
competition etc.
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iv) Decision support systems these are systems for
providing computer based facilities for conducting
analyses, simulations etc
Control methods
There are two major methods that are used in control
a) Those that focus on financial values such as budgets
b) Those that focus on physical values such as quality
control
Financial control methods
Budgets – a budgets is a statement, usually expressed in
financial terms, of the desired performance of an
organization in pursuit of its objectives in the short
term (one year) budgetary control takes the targets of
desired performance as its standard then systematically
collates information relating to actual performance and
identifies the variances between target and actual
performance.
Break-even analysis
Break-even point is the point of production and sales at
which profit is equal to zero (or TR= TC). A break even
chart is a diagrammatic representation of breakeven point
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Break-even charts are useful because they indicate the
effects of marginal changes in sales volume or costs on
profit figures.
Ratios
Ratios are relationships of accounting figures. There are
many types of ratios including
Profitability, liquidity, solvency, and efficiency ratios
Ratios provide useful summaries of relative efficiency,
liquidity, profitability and solvency measures.
Physical value control systems
There are several control systems used to control values.
One of them is the quality control. The control of quality
rests on the assumption that is mass production no two
units are exactly identical, it but it is possible to mass
produce almost identical units.
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