Communication Process PDF

1. Communication- meaning: The process of communication refers to the transmission or passage of information or message from the sender through a selected channel to the receiver overcoming barriers that affect its pace. The process of communication is a cyclic one as it begins with the sender and ends with the sender in the form of feedback. It takes place upward, downward and laterally throughout the organization. The process of communication as such must be a continuous and dynamic interaction, both affecting and being affected by many variables. Communication process consists of certain steps where each step constitutes the essential of an effective communication. 2. The Different Elements in The Process of Communication: We will now learn about the different elements in the process of communication. Sender The very foundation of communication process is laid by the person who transmits or sends the message. He is the sender of the message which may be a thought, idea, a picture, symbol, report or an order and postures and gestures, even a momentary smile. The sender is therefore the initiator of the message that need to be transmitted. After having generated the idea, information etc. the sender encodes it in such a manner that can be well-understood by the receiver. Message Message is referred to as the information conveyed by words as in speech and write-ups, signs, pictures or symbols depending upon the situation and the nature and importance of information desired to be sent. Message is the heart of communication. It is the content the sender wants to covey to the receiver. It can be verbal both written and spoken; or non-verbal i.e., pictorial or symbolic, etc. Encoding Encoding is putting the targeted message into appropriate medium which may be verbal or non-verbal depending upon the situation, time, space and nature of the message to be sent. The sender puts the message into a series of symbols, pictures or words which will be communicated to the intended receiver. Encoding is an important step in the communication process as wrong and inappropriate encoding may defeat the true intent of the communication process. Channel Channel(s) refers to the way or mode the message flows or is transmitted through. The message is transmitted over a channel that links the sender with the receiver. The message may be oral or written and it may be transmitted through a memorandum, a computer, telephone, cell phone, apps or televisions. Since each channel has its advantages and disadvantages, the choice of proper selection of the channel is paramount for effective communication. Receiver Receiver is the person or group who the message is meant for. He may be a listener, a reader or a viewer. Any negligence on the part of the receiver may make the communication ineffective. The receiver needs to comprehend the message sent in the best possible manner such that the true intent of the communication is attained. The extent to which the receiver decodes the message depends on his/her knowledge of the subject matter of the message, experience, trust and relationship with the sender. The receiver is as significant a factor in communication process as the sender is. It is the other end of the process. The receiver should be in fit condition to receive the message, that is, he/she should have channel of communication active and should not be preoccupied with other thoughts that might cause him/her to pay insufficient attention to the message. Decoding Decoding refers to interpreting or converting the sent message into intelligible language. It simply means comprehending the message. The receiver after receiving the message interprets it and tries to understand it in the best possible manner. Feedback Feedback is the ultimate aspect of communication process. It refers to the response of the receiver as to the message sent to him/her by the sender. Feedback is necessary to ensure that the message has been effectively encoded, sent, decoded and comprehended. It is the final step of the communication process and establishes that the receiver has received the message in its letter and spirit. In other words, the receiver has correctly interpreted the message as it was intended by the sender. It is instrumental to make communication effective and purposeful. Consider the following points related to the feedback involved in the process of communication −  It enhances the effectiveness of the communication as it permits the sender to know the efficacy of his message.  It enables the sender to know if his/her message has been properly comprehended.  The analysis of feedbacks helps improve future messages. Feedback, like the message, can be verbal or nonverbal and transmitted through carefully chosen channel of communication.  We can represent the above steps in a model as the model of communication process. Types of Feedback Kevin Eujeberry, the world-famous leadership exponent mentioned the four types of feedback. The types are as follows −  Negative Feedback or corrective comments about past behavior  Positive Feedback or affirming comments about future behavior  Negative feedforward or corrective comments about future behavior  Positive feedforward or affirming comments about future behavior. 3. Importance of Communication: The Basis of Co-ordination The manager explains to the employees the organizational goals, modes of their achievement and also the interpersonal relationships amongst them. This provides coordination between various employees and also departments. Thus, communications act as a basis for coordination in the organization. Fluent Working A manager coordinates the human and physical elements of an organization to run it smoothly and efficiently. This coordination is not possible without proper communication. The Basis of Decision Making Proper communication provides information to the manager that is useful for decision making. No decisions could be taken in the absence of information. Thus, communication is the basis for taking the right decisions. Increases Managerial Efficiency The manager conveys the targets and issues instructions and allocates jobs to the subordinates. All of these aspects involve communication. Thus, communication is essential for the quick and effective performance of the managers and the entire organization. Increases Cooperation and Organizational Peace The two-way communication process promotes co-operation and mutual understanding amongst the workers and also between them and the management. This leads to less friction and thus leads to industrial peace in the factory and efficient operations. Boosts Morale of the Employees Good communication helps the workers to adjust to the physical and social aspect of work. It also improves good human relations in the industry. An efficient system of communication enables the management to motivate, influence and satisfy the subordinates which in turn boosts their morale and keeps them motivated. 4. Types of Communication: i. Formal Communication Formal communications are the one which flows through the official channels designed in the organizational chart. It may take place between a superior and a subordinate, a subordinate and a superior or among the same cadre employees or managers. These communications can be oral or in writing and are generally recorded and filed in the office. Formal communication may be further classified as Vertical communication and Horizontal communication. Vertical Communication Vertical Communications as the name suggests flows vertically upwards or downwards through formal channels. Upward communication refers to the flow of communication from a subordinate to a superior whereas downward communication flows from a superior to a subordinate. Application for grant of leave, submission of a progress report, request for loans etc. are some of the examples of upward communication. Sending notice to employees to attend a meeting, delegating work to the subordinates, informing them about the company policies, etc. are some examples of downward communication. Horizontal Communication Horizontal or lateral communication takes place between one division and another. For example, a production manager may contact the finance manager to discuss the delivery of raw material or its purchase. Types of communication networks in formal communication:  Single chain: In this type of network communications flows from every superior to his subordinate through a single chain.  Wheel: In this network, all subordinates under one superior communicate through him only. They are not allowed to talk among themselves.  Circular: In this type of network, the communication moves in a circle. Each person is able to communicate with his adjoining two persons only.  Free flow: In this network, each person can communicate with any other person freely. There is no restriction.  Inverted V: In this type of network, a subordinate is allowed to communicate with his immediate superior as well as his superior’s superior also. However, in the latter case, only ordained communication takes place. ii. Informal Communication Any communication that takes place without following the formal channels of communication is said to be informal communication. The Informal communication is often referred to as the ‘grapevine’ as it spreads throughout the organization and in all directions without any regard to the levels of authority. The informal communication spreads rapidly, often get distorted and it is very difficult to detect the source of such communication. It also leads to rumours which are not true. People’s behaviour is often affected by the rumours and informal discussions which sometimes may hamper the work environment. However, sometimes these channels may be helpful as they carry information rapidly and, therefore, may be useful to the manager at times. Informal channels are also used by the managers to transmit information in order to know the reactions of his/her subordinates. Types of Grapevine network:  Single strand: In this network, each person communicates with the other in a sequence.  Gossip network: In this type of network, each person communicates with all other persons on a non- selective basis.  Probability network: In this network, the individual communicates randomly with other individuals.  Cluster Network: In this network, the individual communicates with only those people whom he trusts. Out of these four types of networks, the Cluster network is the most popular in organizations. 5. Barriers to Communication The communication barriers may prevent communication or carry incorrect meaning due to which misunderstandings may be created. Therefore, it is essential for a manager to identify such barriers and take appropriate measures to overcome them. The barriers to communication in organizations can be broadly grouped as follows: i. Semantic Barriers These are concerned with the problems and obstructions in the process of encoding and decoding of a message into words or impressions. Normally, such barriers result due to use of wrong words, faulty translations, different interpretations, etc. For example, a manager has to communicate with workers who have no knowledge of the English language and on the other side, he is not well conversant with the Hindi language. Here, language is a barrier to communication as the manager may not be able to communicate properly with the workers. ii. Psychological Barriers Emotional or psychological factors also act as barriers to communication. The state of mind of both sender and receiver of communication reflects in effective communication. A worried person cannot communicate properly and an angry recipient cannot understand the message properly. Thus, at the time of communication, both the sender and the receiver need to be psychologically sound. Also, they should trust each other. If they do not believe each other, they cannot understand each other’s message in its original sense. iii. Organizational Barriers The factors related to organizational structure, rules and regulations authority relationships, etc. may sometimes act as barriers to effective communication. In an organization with a highly centralized pattern, people may not be encouraged to have free communication. Also, rigid rules and regulations and cumbersome procedures may also become a hurdle to communication. iv. Personal Barriers The personal factors of both sender and receiver may act as a barrier to effective communication. If a superior thinks that a particular communication may adversely affect his authority, he may suppress such communication. Also, if the superiors do not have confidence in the competency of their subordinates, they may not ask for their advice. The subordinates may not be willing to offer useful suggestions in the absence of any reward or appreciation for a good suggestion. Classical, Neo-Classical and Modern Contributors to Management thoughts: Three Organisation Theories: Classical, Neo-Classical and Modern Organisation Theory- 1. Classical Organisation Theory: The classical writers viewed organisation as a machine and human beings as components of that machine. They were of the view that efficiency of the organisation can be increased by making human beings efficient. Their emphasis was on specialisation and co-ordination of activities. Most of the writers gave emphasis on efficiency at the top level and few at lower levels of organisation. That is why this theory has given streams; scientific management and administrative management. The scientific management group was mainly concerned with the tasks to be performed at operative levels. Pillars of Organisation Theory: According to classical writers, the organisation theory is built around four key pillars division of work, scalar and functional processes, structure and span of control. (i) Division of Labour: Division of labour implies that work must be divided to obtain specialisation with a view to improve the performance of workers. The classical theory rests on the assumption that more a particular job is broken into its simplest component parts, the more specialised a worker can become in carrying out his part of the job. The specialisation in workers will make the organisation efficient. Various activities of a job are specified and subdivided into different components so that these may be assigned to different persons. The workers will go on repeating their work under division of labour. The performance of same work will help workers to improve their efficiency and the organisation as a whole is benefitted by this exercise. (ii) Scalar and Functional Process: The scalar process refers to the growth of chain of command, delegation of authority, unity of command and obligation to report. It is called scalar process because it provides a scale or grading of duties according to the degree of authority and responsibility. It generates superior- subordinate relationship in the organisation. The functional process deals with the division of organisation into specialised parts or departments and regrouping of the parts into compatible units. (ii) Structure: It is the framework of formal relationships among various tasks, activities and people in the organisation. The basic structural element in the classical theory is position. Each position is assigned a specific task and authority is delegated for its accomplishment. The efficiency with which these tasks will be accomplished will determine the effectiveness of the organisation. The classical writers emphasised line and staff organisations. (iv) Span of Control: The span of control means the number of subordinates a manager can control. Classical thinkers specified numbers at different levels which can be effectively supervised by a superior. A manager cannot exercise proper control if the number of subordinates increases beyond a certain figure, on the other hand if the number is less then his capacity and knowledge cannot be fully utilised. Appraisal of Classical Theory: The classical theory suffers from some restraints. Some of its drawbacks are given as follows: 1. Classical thinkers concentrated only on line and staff structures. They did not try to find out the reasons if a particular structure is more effective than others. 2. This theory did not lay emphasis on decision-making processes. 3. Human behaviour was ignored in this theory. Classical thinkers did not realize the complexity of human nature. They take human beings as inert instrument of organisation performing the assigned task. 4. The assumption that organisation in a closed system is unrealistic. Organisation is greatly influenced by environment and vice-versa. A modern organisation is an open system which has interaction with the environment. 2. Neo-Classical Organisation Theory: The classical theory of organisation focussed main attention on physiological and mechanical variables of organisational functioning. The testing of these variables did not show positive results. The Hawthorne Studies conducted by George Elton Mayo and associates discovered that real cause of human behaviour was somewhat more than mere physiological variables. These studies focussed attention on human beings in the organisation. New-classical approach is contained in two points: (i) Organisational situation should be viewed in social, economic and technical terms, and (ii) the social process of group behaviour can be understood in terms of clinical method analogous to the doctor’s diagnosis of human organism. This theory views formal and informal forms of organisation as important. The behavioural approach followed in this theory is the other contribution of new-classical thinkers. The pillars of classical theory viz. division of work, departmentation, co-ordination and human behaviour were taken as given but these postulates were regarded as modified by people acting independently or within the context of the informal organisation. The main propositions of neo-classical theory are given as follows: 1. The organisation in general is a social system composed of numerous interacting parts. 2. Informal organisations exist within the formal organisation. Both are affected by and affect each other. 3. Human being is independent and his behaviour can be predicted in terms of social factors at work. 4. Motivation is a complex process. Many socio- psychological factors operate to motivate human beings at work. 5. A conflict between organisational and individual goals often exists. There is a need to reconcile the goals of the individual with those of the organisation. 6. Team-work is essential for higher productivity. 7. Man’s approach is not always rational. Often, he behaves non- logically in terms of rewards which he seeks from his work. 8. Communication is necessary as it carries information for the functioning of the organisation and the feelings of the people at work. Improvements over Classical Theory: Neo-classical theory offers modifications and improvements over classical theory in some aspects such as: (i) Flat structure, (ii) Decentralisation, (iii) Informal organisations. (i) Flat Structure: The classical theory suggested tall structure whereas neo-classical theory suggested flat structure. In tall structure there is a problem of communication because of differentiation between decision makers and implementers, the levels of management are too many and motivation of people is difficult. In case of flat structure the wide span of control helps in motivation, chain of communication is shorter and it is free from hierarchical control. (ii) Decentralisation: Neo-classical theory advocates decentralised organisation which is close to flat structure because of wider span of control. It allows autonomy and initiative at the lower level. It also develops people to occupy higher positions in future. (iii) Informal Organisation: The neo-classical theorists advocated the need for both formal and informal organisations. Formal organisation represents the intentions of top management for the purpose of interactions among the people. Informal organisation is necessary to plug the loop holes of formal organisation and to satisfy the social and psychological needs of people. Managements use informal organisation for overcoming resistance to change on the part of workers and also for fast communication process. Both formal and informal organisations are interdependent upon each other. Appraisal of Neo-classical Organisation Theory: This theory tries to overcome the shortcomings of classical organisation theory. It introduced the concept of informal organisation and human behaviour approach in the study of organisational functioning. However, it is also not free from various shortcomings. Scott observes that, “like classical theory, neo-classical theory suffers from incompetency, a short-sighted perspective and lack of integration among many facts of human behaviour studied by it.” The main criticism of this theory is as follows: 1. The assumptions on which this theory is based are sometimes not true. A thinking that there is always a possibility of finding a solution acceptable to all is not true. There are conflicting interests among various groups that are structural in character and not merely psychological. This aspect has not been discussed in the theory. 2. No particular organisational structure can be suitable for all the organisations. Various organisational formats given by neo- classists are not applicable in all situations. 3. Neo-classical theory is only a modification of classical organisation theory. It suffers from nearly same drawbacks from which classical theory suffered. It lacks unified approach of organisation. This theory has also been criticised on the ground that it is nothing more than “a trifling body of empirical and descriptive information as it was mainly based on Hawthorne Studies.” 3. Modern Organisation Theory: Modern organisation theory is of recent origin, having developed in early 1960’s. This theory has tried to overcome the drawbacks of earlier theories. In the words of W.G. Scott, ‘The distinctive qualities of modern organisation theory are its conceptual analytical base, its reliance on empirical research data and, above all, its integrating nature. These qualities are framed in a philosophy which accepts the premise that the only meaningful way to study organisation is to study it as a system.” This theory may be understood in two approaches: systems approach and contingency approach. Systems Approach: This approach studies the organisation in its totality. The mutually dependent variables are properly analysed. Both internal and external variables are studied in analysing the nature of organisation. Though this theory passes a much higher conceptual level as compared to earlier theories but different writers have given varied views of the system. Organisation as a system can well be understood by identifying various sub-systems within it. Each sub-system may be identified by certain processes, roles, structures and norms of conduct. Seiler has classified four components in an organisation, human inputs, technological inputs, organisational inputs, and social structure and norms. Katz and Kahu have identified five sub-systems of organisation: (i) Technical sub-system concerned with the work that gets done; (ii) Supportive sub-system of procurement, disposal and institutional relations; (iii) Maintenance of sub-systems for tying people into their functional roles; (iv) Adaptive sub-systems concerned with organisational change; and (v) Managerial sub-systems for direction, adjudication and control of the many sub-systems and the activities of the structure. Contingency Approach: Even though systems approach presents a better understanding of organisational and managerial functioning but it does not provide solution for all types of organisational structures. Systems approach offers models which may not suit every type of organisation. A structure suitable for one unit may not be suitable for another. Contingency approach suggests an organisational design which suits a particular unit. A structure will be suitable only if it is tailor made for an enterprise. The influence of both internal and external factors should be considered while framing a suitable organisational structure. This approach suggests that needs, requirements, situations of a particular concern should be considered while designing an organisational structure. The factors which influence an organisation may be described as: (i) Environment (ii) Technology (iii) Size of operations (iv) People. These factors greatly influence a decision for the selection of an appropriate organisation for an enterprise. Scientific Management by Taylor- Fredrick Winslow Taylor ( March 20, 1856 - March 21, 1915) commonly known as ’Father of Scientific Management’ started his career as an operator and rose to the position of chief engineer. He conducted various experiments during this process which forms the basis of scientific management. It implies application of scientific principles for studying & identifying management problems. According to Taylor, “Scientific Management is an art of knowing exactly what you want your men to do and seeing that they do it in the best and cheapest way”. In Taylors view, if a work is analysed scientifically it will be possible to find one best way to do it. Hence scientific management is a thoughtful, organized, dual approach towards the job of management against hit or miss or Rule of Thumb. Principles of Scientific Management by Taylor: F.W. Taylor or Fredrick Winslow Taylor, also known as the ‘Father of scientific management’ proved with his practical theories that a scientific method can be implemented to management. Taylor gave much concentration on the supervisory level of management and performance of managers and workers at an operational level. Let’s discuss in detail the five principles of management by F.W Taylor. 1. Science, not the Rule of Thumb- This rule focuses on increasing the efficiency of an organisation through scientific analysis of work and not with the ‘Rule of Thumb’ method. Taylor believed that even a small activity like loading paper sheets into boxcars can be planned scientifically. This will save time and also human energy. This decision should be based on scientific analysis and cause and effect relationships rather than ‘Rule of Thumb’ where the decision is taken according to the manager’s personal judgement. 2. Harmony, Not Discord- Taylor indicated and believed that the relationship between the workers and management should be cordial and completely harmonious. Difference between the two will never be beneficial to either side. Management and workers should acknowledge and understand each other’s importance. Taylor also suggested the mental revolution for both management and workers to achieve total harmony. 3. Mental Revolution- This technique involves a shift of attitude of management and workers towards each other. Both should understand the value of each other and work with full participation and cooperation. The aim of both should be to improve and boost the profits of the organisation. Mental Revolution demands a complete change in the outlook of both the workers and management; both should have a sense of togetherness. 4. Cooperation, not Individualism- It is similar to ‘Harmony, not discord’ and believes in mutual collaboration between workers and the management. Managers and workers should have mutual cooperation and confidence and a sense of goodwill. The main purpose is to substitute internal competition with cooperation. 5. Development of Every Person to his Greatest Efficiency- The effectiveness of a company also relies on the abilities and skills of its employees. Thus, implementing training, learning best practices and technology, is the scientific approach to brush up the employee skill. To assure that the training is given to the right employee, the right steps should be taken at the time of selection and recruiting candidates based on a scientific selection. Fayol’s Organization Theory Henry Fayol, also known as the ‘father of modern management theory’ gave a new perception of the concept of management. He introduced a general theory that can be applied to all levels of management and every department. The Fayol theory is practised by the managers to organize and regulate the internal activities of an organization. He concentrated on accomplishing managerial efficiency. The fourteen principles of management created by Henri Fayol are explained below. 1. Division of Work- Henri believed that segregating work in the workforce amongst the worker will enhance the quality of the product. Similarly, he also concluded that the division of work improves the productivity, efficiency, accuracy and speed of the workers. This principle is appropriate for both the managerial as well as a technical work level. 2. Authority and Responsibility- These are the two key aspects of management. Authority facilitates the management to work efficiently, and responsibility makes them responsible for the work done under their guidance or leadership. 3. Discipline- Without discipline, nothing can be accomplished. It is the core value for any project or any management. Good performance and sensible interrelation make the management job easy and comprehensive. Employees good behaviour also helps them smoothly build and progress in their professional careers. 4. Unity of Command- This means an employee should have only one boss and follow his command. If an employee has to follow more than one boss, there begins a conflict of interest and can create confusion. 5. Unity of Direction- Whoever is engaged in the same activity should have a unified goal. This means all the person working in a company should have one goal and motive which will make the work easier and achieve the set goal easily. 6. Subordination of Individual Interest- This indicates a company should work unitedly towards the interest of a company rather than personal interest. Be subordinate to the purposes of an organization. This refers to the whole chain of command in a company. 7. Remuneration- This plays an important role in motivating the workers of a company. Remuneration can be monetary or non-monetary. However, it should be according to an individual’s efforts they have made. 8. Centralization- In any company, the management or any authority responsible for the decision-making process should be neutral. However, this depends on the size of an organization. Henri Fayol stressed on the point that there should be a balance between the hierarchy and division of power. 9. Scalar Chain- Fayol on this principle highlights that the hierarchy steps should be from the top to the lowest. This is necessary so that every employee knows their immediate senior also they should be able to contact any, if needed. 10. Order- A company should maintain a well-defined work order to have a favourable work culture. The positive atmosphere in the workplace will boost more positive productivity. 11. Equity- All employees should be treated equally and respectfully. It’s the responsibility of a manager that no employees face discrimination. 12. Stability- An employee delivers the best if they feel secure in their job. It is the duty of the management to offer job security to their employees. 13. Initiative- The management should support and encourage the employees to take initiatives in an organization. It will help them to increase their interest and make then worth. 14. Esprit de Corps- It is the responsibility of the management to motivate their employees and be supportive of each other regularly. Developing trust and mutual understanding will lead to a positive outcome and work environment. This 14 principles of management are used to manage an organization and are beneficial for prediction, planning, decision-making, organization and process management, control and coordination. Henry Fayol vs. F.W. Taylor Theories: - BASIS FOR HENRY FAYOL F.W. TAYLOR COMPARISON Meaning Henry Fayol, is a father of modern F.W. Taylor, is a father of scientific management who laid down management who introduced four fourteen principles of management, principles of management, for for improving overall administration. increasing overall productivity. Concept General theory of administration Scientific Management Emphasis Top level management Low level management Applicability Universally applicable Applies to specialized organizations only. Basis of Personal Experience Observation and Experimentation formation Orientation Managerial function Production and Engineering System of Wage Sharing of profit with managers. Differential Payment System Payment Approach Manager's approach Engineer's approach Elton Mayo’s Human Relations Approach to Management Subject Matter of Elton Mayo’s Human Relations Approach: According to Human Relations Approach, management is the Study of behaviour of people at work. This approach had its origin in a series of experiments conducted by Professor Elton Mayo and his associates at the Harvard School of Business at the Western Electric Company’s Hawthorne Works, near Chicago. These studies brought out for the first time the important relationships between social factors and productivity. Before it, productivity of the employees was considered to be a function only of physical conditions of work and money wages paid to them. For the first time it was realised that productivity depended largely upon the satisfaction of the employees in work situations. Following the Howthrone Experiments, a great deal of work has been carried on by behavioural scientists belonging to a variety of disciplines including Psychology, Sociology, Philosophy and Anthropology in studying the behaviour of people at work. Those who subscribe to the Human Relations School of Thought are of the view that the effectiveness of any organisation depends on the quality of relationships among the people working in the organisation. So, according to them, the managers must concern themselves with an analysis of organisational behaviour, that is, interaction of people with the organisation. The basic as- sumption of this school still remains that the goals of the organisation are achieved through and with the people. Apart from the study of formal organisation and techniques used by such organisations, this school studies the psychological processes in the organisations, informal organisations, conflict, change, motivation and relationships, and the various techniques of achieving organisational development by improving the relationships among the various groups of people constituting the organisation and its internal environment. Thus, it may be said that this school concentrates on people and their behaviour within the formal and informal organisations. Features of Elton Mayo’s Human Relations Approach: The main features of the Human Relations Approach to management are the following: (a) Since management is getting things done through and with people, a manager must have a basic understanding of human behaviour in all respects—particularly in the context of work groups and organisations. (b) The managers must study the inter-personal relations among the people at work. (c) Larger production and higher motivation can be achieved only through good human relation. (d) The study of management must draw the concepts and principles of various behavioural sciences like Psychology and Sociology. Contribution of Elton Mayo to Management Thought: George Elton Mayo (1880-1949) was a professor at the Harvard Business School. He published the books —‘Human Problems of an Industrial Civilisation’ (1933), ‘Social problems of an Industrial Civilisation’ (1945), ‘Training for Human Relations’ (1949) etc. He conducted the famous ‘Hawthorne Experiments’ at the Hawthorne plant of the Western Electric Company in the USA during 1927-32 with his associates. These experiments are described below: 1. Illumination Experiments: From these experiments, it was revealed that productivity could be increased not only by improving the working environment, but also through informal social relations among the members of the working group. 2. Relay Assembly Test Room Experiment: In this experiment a small homogeneous working group was constituted. Several new elements were introduced in the work environment such as—shorter working hours, proper rest periods, improved physical conditions, friendly supervision, free social interaction among the group members, and so on. During the period of the experiment, productivity and morale increased. Productivity and morale were maintained even if the improvements in the working conditions were withdrawn. The researchers concluded that socio- psychological factors such as the feelings of being important, recognition, participation, informal work group, non-directive supervision etc. held the key for higher productivity. 3. Mass Interviewing Programme: A large number of workers were interviewed to know their perceptions and orientation on the working life. The results again confirmed the importance of informal relation, social and psychological needs and their impact on the behaviour of the workers. 4. Bank Wiring Observation Room Experiment: A group of 14 workers was observed with regard to their work behaviour. The observation revealed the informal production norms set by the workers and the existence of informal relations in the group. The conclusions of the Hawthorne Experiments are pointed out below: (i) A factory is not only a techno-economic unit but a psycho-social organisation also. (ii) The workers spontaneously form small informal groups. The norms and values of such groups have significant influence on the behaviour and performance of the workers. (iii) Physical conditions of work have some influence on the workers’ morale and pro- ductivity. But their inter-personal relations, attitude of the supervisors and other social and psychological factors have a far greater influence. (iv) Usually, the workers act or re-act not as individuals but as the members of a group. (v) The workers are not mere economic men motivated by money alone. They respond to the total work situation including recognition, participation etc. (vi) The informal leaders play an important role in setting and enforcing group norms. (vii) The managers must understand and recognise the inter-personal and group relations on the job. Elton Mayo is known as the ‘Father of Human Relations Movement’. The Hawthorne Experiments provided a landmark in the evolution of management thought. Many organisations initiated the measures to improve relations with the workers. The managers were supposed to assume a new role and to develop new concepts of authority, motivation and leadership. However, the Hawthorne Experiments were criticised for lack of scientific analysis and research. It was alleged that the researchers had certain pre-conceived perceptions and orientations. The experiments were too narrow and small to provide generalisation. The findings of Hawthorne Experiments are, however, accepted even today. Mayo’s work was a turning point in the development of management thought. His work challenged the basic postulates of the classical approach. His studies revealed the over-whelming signifi- cance of human and social factors in industry. He is rightly called the ‘Founder of the Human Relations Approach’ to management. Management by Objectives - Meaning, Need and its Limitations An effective management goes a long way in extracting the best out of employees and make them work as a single unit towards a common goal. The term Management by Objectives was coined by Peter Drucker in 1954. What is Management by Objective? The process of setting objectives in the organization to give a sense of direction to the employees is called as Management by Objectives. It refers to the process of setting goals for the employees so that they know what they are supposed to do at the workplace. Management by Objectives defines roles and responsibilities for the employees and help them chalk out their future course of action in the organization. Management by objectives guides the employees to deliver their level best and achieve the targets within the stipulated time frame. The 6 steps of the MBO process are; 1. Define organizational goals 2. Define employee’s objectives 3. Continuous monitoring performance and progress 4. Performance evaluation 5. Providing feedback 6. Performance appraisal Let’s briefly look at each of these; 1. Define Organizational Goals Goals are critical issues to organizational effectiveness, and they serve a number of purposes. Organizations can also have several different kinds of goals, all of which must be appropriately managed. And a number of different kinds of managers must be involved in setting goals. The goals set by the superiors are preliminary, based on an analysis and judgment as to what can and what should be accomplished by the organization within a certain period. 2. Define Employees Objectives After making sure that employees’ managers have informed of pertinent general objectives, strategies and planning premises, the manager can then proceed to work with employees in setting their objectives. The manager asks what goals the employees believe they can accomplish in what time period, and with what resources. They will then discuss some preliminary thoughts about what goals seem feasible for the company or department. 3. Continuous Monitoring Performance and Progress MBO process is not only essential for making line managers in business organizations more effective but also equally important for monitoring the performance and progress of employees. For monitoring performance and progress the followings are required; 1. Identifying ineffective programs by comparing performance with pre- established objectives, 2. Using zero-based budgeting, 3. Applying MBO concepts for measuring individual and plans, 4. Preparing long and short-range objectives and plans, 5. Installing effective controls, and 6. Designing a sound organizational structure with clear, responsibilities and decision-making authority at the appropriate level. 4. Performance Evaluation Under this MBO process performance review is made by the participation of the concerned managers. 5. Providing Feedback The filial ingredients in an MBO program are continuous feedback on performance and goals that allow individuals to monitor and correct their own actions. This continuous feedback is supplemented by periodic formal appraisal meetings in which superiors and subordinates can review progress toward goals, which lead to further feedback. 6. Performance Appraisal Performance appraisals are a regular review of employee performance within organizations. It is done at the last stage of the MBO process. Need/Importance for Management by Objectives (MBO)  The Management by Objectives process helps the employees to understand their duties at the workplace.  KRAs are designed for each employee as per their interest, specialization and educational qualification.  The employees are clear as to what is expected out of them.  Management by Objectives process leads to satisfied employees. It avoids job mismatch and unnecessary confusions later on.  Employees in their own way contribute to the achievement of the goals and objectives of the organization. Every employee has his own role at the workplace. Each one feels indispensable for the organization and eventually develops a feeling of loyalty towards the organization. They tend to stick to the organization for a longer span of time and contribute effectively. They enjoy at the workplace and do not treat work as a burden.  Management by Objectives ensures effective communication amongst the employees. It leads to a positive ambience at the workplace.  Management by Objectives leads to well defined hierarchies at the workplace. It ensures transparency at all levels. A supervisor of any organization would never directly interact with the Managing Director in case of queries. He would first meet his reporting boss who would then pass on the message to his senior and so on. Every one is clear about his position in the organization.  The MBO Process leads to highly motivated and committed employees.  The MBO Process sets a benchmark for every employee. The superiors set targets for each of the team members. Each employee is given a list of specific tasks. Limitations of Management by objectives Process  It sometimes ignores the prevailing culture and working conditions of the organization.  More emphasis is being laid on targets and objectives. It just expects the employees to achieve their targets and meet the objectives of the organization without bothering much about the existing circumstances at the workplace. Employees are just expected to perform and meet the deadlines. The MBO Process sometimes do treat individuals as mere machines.  The MBO process increases comparisons between individuals at the workplace. Employees tend to depend on nasty politics and other unproductive tasks to outshine their fellow workers. Employees do only what their superiors ask them to do. Their work lacks innovation, creativity and sometimes also becomes monotonous. What is Decision Making? Most writers on management think that management is basically a decision-making process. They argue that it is only through making decisions that an organisation can accomplish its short-term and long-term goals. A decision is an act of selection or choice of one action from several alternatives. Decision-making can be defined as the process of selecting a right and effective course of action from two or more alternatives for the purpose of achieving a desired result. Decision- making is the essence of management. According to P. F. Drucker – “Whatever a manager does he does through making decisions.” All matters relating to planning, organising, direction, co-ordination and control are settled by the managers through decisions which are executed into practice by the operators of the enterprise. Objectives, goals, strategies, policies and organisational designs are all to be decided upon in order to regulate the performance of the business. The entire managerial process is based on decisions. Decisions are needed both for tackling the problems as well as for taking maximum advantages of the opportunities available. Correct decisions reduce complexities, uncertainties and diversities of the organisational environments. George Terry defines decision-making “as the selection of one behaviour alternative from two or more possible alternatives.” In the words of D. E. Mcfarland: “A decision is an act of choice wherein an executive forms a conclusion about what must be done in a given situation. A decision represents behaviour chosen from a number of alternatives.” The definition of decision-making has three different but inter-related implications. These are as follows: 1. When the managers make decisions, they exercise choice. They decide what to do on the basis of some conscious and deliberate logic or judgement. 2. When making a decision the managers are faced with alternatives. An organisation does not take a wise manager to reach a decision when there are no other possible choices. It does require wisdom and experience to evaluate several alternatives and select the best one. 3. When taking a decision, the managers have a purpose. They propose and analyse the alternative courses of action and finally make a choice that is likely to move the organisation in the direction of its goals. Principles of Decision Making: Effective decision involves two important aspects—the purpose for which it is intended, and the environmental situation in which it is taken. Even the best and correct decision may become ineffective if these aspects are ignored; because in decision-making there are so many inside and outside chains of unavoidable reactions. If certain principles are followed for decision-making, such multidimensional reactions can mostly be overcome. These principles are stated as follows: 1. Subject-matter of Decision-making: Decisional matters or problems may be divided into groups consisting of programmed and non-programmed problems. Programmed problems, being of routine nature, repetitive and well-founded, are easily definable and, as such, require simple and easy solution. Decision arrived in such programmed problems has, thus, a continuing effect. But in non- programmed problems, there is no continuing effect because they are non-repetitive, non- routine, and novel. Every event in such problems requires individual attention and analysis and its decision is to be arrived at according to its special features and circumstances. 2. Organisational Structure: The organisational structure, having an important bearing on decision-making, should be readily understood. If the organisational structure is rigid and highly centralised, decision- making authority will remain confined to the top management level. This may result in delayed and confused decision and create suspicion among the employees. On the contrary, if the organisational structure provides scope for adequate delegation and decentralisation of authority, decision-making will be flexible and the decision-making authority will be close to the operating centres. In such a situation, decision-making will be prompt and expected to be more effective and acceptable. 3. Analysis of the Objectives and Policies: Proper analysis of the objectives and policies is needed for decision-making. The clear definition of objectives and policies is the basis that guides the direction of decision-making. Without this basis, decision-making will be aimless and unproductive. 4. Analytical Study of the Alternatives: For decision-making, analytical study of all possible alternatives of a problem with their merits and demerits is essential. This is necessary to make out a correct selection of decision from among the alternatives. 5. Proper Communication System: Effective decision-making demands a machinery for proper communication of information to all responsibility centres in the organisation. Unless this structure is built up, ignorance of decision or ill-informed decision will result in misunderstanding and loose co-ordination. 6. Sufficient Time: Effective decision-making requires sufficient time. It is a matter of common experience that it is usually helpful to think over various ideas and possibilities of a problem for the purpose of identifying and evaluating it properly. But in no case a decision can be delayed for an indefinite period, rather it should be completed well in advance of the scheduled dates. 7. Study of the Impact of a Decision: Decision is intended to be carried out for the realisation of the objectives of the organisation. A decision in any particular area may react adversely in other areas of the organisation. As all business activities are inter-related and require co-ordination, it is necessary that a study and analysis of the impact of any decision should precede its application. 8. Participation of the Decision-maker: The decision-maker should not only be an observer while others will perform as per his decision. He should also participate in completing the work for which decision was taken by him. This experience will help him in decision-making in future. The principle of participation in work of the decision-maker will enable him to understand whether the decision taken is practical and also guide him in forthcoming decisional matters. 9. Flexibility of Mind: This is essential in decision-making, because decisions cannot satisfy everybody. Rigid mental set-up of the decision-maker may upset the decisions. The flexible mental disposition of the decision-maker enables him to change the decision and win over the co- operation of all the diverse groups. 10. Consideration of the Chain of Actions: There is a chain relationship in all the activities of any organisation. Different activities are tied up in a chain sequence. Any decision to change a particular work brings change in other related works also. Similarly, decision-making also proceeds following the chain of action in different activities. Therefore, before taking a decision one should consider the chain relationship among different activities. Types of Decision Making The managers or non-managers have to make decisions at some point to get their organizational goals done. These decisions are categorized further. The types of decision making in an organization are as follows: 1. Programmed And Non-Programmed Decisions: Programmed decisions are routine and repetitive in nature. These decisions deal with common and frequently occurring problems in an organization such as buying behaviour of consumers, sanctioning of different types of leave to employees, purchasing decisions, salary increment, etc. Non-programmed decisions are not routine or common in nature. These are related to exceptional situations in which guidelines or routine management is not set. For example, problems arising from a decline in market share, increasing competition in the business environment. The majority of the decisions taken by managers do fall in this non programmed category. 2. Operational and Strategic Decisions: Operational decisions are just the normal functioning of the organization. These decisions do not require much time and take a shorter time as compared to other decisions taken. Ample of responsibilities are delegated to subordinates. The main decision is to create harmony in an organization and to see whether the management is proper or not. Strategic decisions include all present issues and problems. The main idea is to achieve better working conditions, better equipment, and efficient use of existing equipment, etc. These all fall under this category. Usually, strategic decisions are taken by top-level management. 3. Organizational and Personal Decisions: If the decision is taken collectively keeping in mind the organizational goal, it is known as the organization goal, and if the manager takes any decision in the personal capacity (affecting his/her life). It is known as personal decisions. These decisions may sometimes affect the functioning of the organization as well. For example, if the employee has decided to leave the organization, it may affect the organization. The authority of taking personal decisions cannot be delegated and is dependent on the individual itself. 4. Major and Minor Decisions: These are classified as the type of decision-making in management where decision-related to purchase of new premises is a major decision. These are taken by top management whereas the purchase of stationery is a minor decision. Minor decisions can be taken by the superintendent. 5. Individual and Group Decisions: When the decision is taken by an individual, it is categorized as an individual decision. Usually, routine decisions are taken by individuals within the policy framework of the organization. Group decisions are taken by a group of individuals in the form of a standing committee. Generally, important types of decisions in management are shifted to this committee. The main aim of a group decision is to involve the maximum number of individuals in the process of decision making. 6. Tactical and Operational Decisions: Decisions that are pertaining to various policy matters in the organization are known as policy decisions. These are taken by top management and do have a long-term impact on the organization. For example, decisions regarding the location of the plant or volume of production. These are tactical decisions Operational decisions are all day-to-day decisions that need to be taken for the proper functioning and operation of the organization. These can be taken by middle or lower-level managers. For example, the Calculation of bonuses given to each individual is an operational decision and is performed by middle or lower-level managers. These were the types of managerial decisions that are performed by top, middle and lower- level management in the organization to get things done in alignment and to achieve the organizational goal effectively and efficiently. Process and Steps in Decision-Making: In decision-making process steps normally refers to processes, procedures and phases which are usually followed for better decision. According to Stanley Vance decision-making consists of the following six steps: 1. Perception: Perception is a state of awareness. In a man consciousness arises out of perception. Consciousness gives tilt to the decision-making process. The executive first perceives and then moves on to choose one of the alternatives and thus takes a decision. Perception is, therefore, an important and first step without which decisions relating to any of the problems of the organisation cannot be taken. Other steps follow “perception” is the first step in decision-making. 2. Conception: Conception means designs for action or programme for action. Conception relates to that power of mind which develops ideas out of what has been perceived. 3. Investigation: The investigation provides an equipment with the help of which the manager tries to go ahead with a debate either in his mind independently or with his co-workers. Perception is a sort of location of the problem whereas conception is the preparation of design or programme for solving the problem. But only perception and conception cannot offer the solution. For solution investigation is to be carried out. Informations relevant to a particular concept is to be sought, acquired and then analysed. Relative merits and demerits of a different analysed concepts should be measured. Alternative course of action is to be thought, analysed and compared to. This needs investigation with which the manager should be armed. 4. Deliberation: Weighing the consequences of possible course of action is called deliberation. The manager may either weigh the relative merits and demerits and the following consequences in his own mind or share his mental exercise with others to equip himself better. The deliberations remove bias and equip the manager with different ideas and alternatives and help him in arriving at a decision which may safely be ascribed as good decision. 5. Selection: Selection is an act of the choice which in management terminology is known as decision. After deliberations one of the alternatives, the best possible in the circumstances, is selected. 6. Promulgation: Perception, conception, investigation, deliberation and lastly selection will carry weight only when selected – the chosen alternative, that is, the decision – is properly and timely communicated to all those who are concerned and for whom the decision is meant. Only proper promulgation will help its execution. According to the views of Mrityunjoy Banerjee – A discrimination among the available alternatives is designated as the decision. For him also decision is an act of choice – selection from different available alternatives. 1. What is Motivation? Motivation is the word derived from the word ’motive’ which means needs, desires, wants or drives within the individuals. In Simple words, Motivation may be defined as a planned managerial process, which stimulates people to work to the best of their capabilities, by providing them with motives, which are based on their unfulfilled needs. It is the process of stimulating people to actions to accomplish the goals. In the work goal context, the psychological factors stimulating the people’s behaviour can be -  desire for money  success  recognition  job-satisfaction  team work, etc One of the most important functions of management is to create willingness amongst the employees to perform in the best of their abilities. Therefore, the role of a leader is to arouse interest in performance of employees in their jobs. The process of motivation consists of three stages: - 1. A felt need or drive 2. A stimulus in which needs have to be aroused 3. When needs are satisfied, the satisfaction or accomplishment of goals. Therefore, we can say that motivation is a psychological phenomenon which means needs and wants of the individuals have to be tackled by framing an incentive plan. 2. Following are the outstanding Features of the concept of motivation: i. Motivation is a personal and internal feeling: Motivation is a psychological phenomenon which generates within an individual. ii. Motivation is need based: If there are no needs of an individual, the process of motivation fails. It is a behavioural concept that directs human behaviour towards certain goals. iii. Motivation is a continuous process: Because human wants are unlimited, therefore motivation is an ongoing process. iv. Motivation may be positive or negative: A positive motivation promotes incentives to people while a negative motivation threatens the enforcement of disincentives. v. Motivation is a planned process: People differ in their approach, to respond to the process of motivation; as no two individuals could be motivated in an exactly similar manner. Accordingly, motivation is a psychological concept and a complex process. 3. Significance/Importance of Motivation: Motivation is an integral part of the process of direction. While directing his subordinate, a manager must create and sustain in them the desire to work for the specified objectives: i. High Efficiency: A good motivational system releases the immense untapped reservoirs of physical and mental capabilities. A number of studies have shown that motivation plays a crucial role in determining the level of performance. “Poorly motivated people can nullify the soundest organisation.” said Allen. By satisfying human needs motivation helps in increasing productivity. Better utilisation of resources lowers cost of operations. Motivation is always goal directed. Therefore, higher the level of motivation, greater is the degree of goal accomplishment. ii. Better Image: A firm that provides opportunities for financial and personal advancement has a better image in the employment market. People prefer to work for an enterprise because of opportunity for development, and sympathetic outlook. This helps in attracting qualified personnel and simplifies the staffing function. iii. Facilitates Change: Effective motivation helps to overcome resistance to change and negative attitude on the part of employees like restriction of output. Satisfied workers take interest in new organisational goals and are more receptive to changes that management wants to introduce in order to improve efficiency of operations. iv. Human Relations: Effective motivation creates job satisfaction which results in cordial relations between employer and employees. Industrial disputes, labour absenteeism/turnover are reduced with consequent benefits. Motivation helps to solve the central problem of management, i.e., effective use of human resources. Without motivation the workers may not put their best efforts and may seek satisfaction of their needs outside the organisation. The success of any organisation depends upon the optimum utilisation of resources. The utilisation of physical resources depends upon the ability to work and the willingness to work of the employees. In practice, ability is not the problem but necessary will to work is lacking. Motivation is the main tool for building such a will. It is for this reason that Rensis Likert said, “Motivation is the core of management.” It is the key to management in action. 4. Maslow’s Need Hierarchy Model Human behaviour is goal-directed. Motivation cause goal-directed behaviour. It is through motivation that needs can be handled and tackled purposely. This can be understood by understanding the hierarchy of needs by manager. The needs of individual serves as a driving force in human behaviour. Therefore, a manager must understand the “hierarchy of needs”. Maslow has proposed “The Need Hierarchy Model”. The needs have been classified into the following in order: i. Physiological needs- These are the basic needs of an individual which includes food, clothing, shelter, air, water, etc. These needs relate to the survival and maintenance of human life. ii. Safety needs- These needs are also important for human beings. Everybody wants job security, protection against danger, safety of property, etc. iii. Social needs- These needs emerge from society. Man is a social animal. These needs become important. For example- love, affection, belongingness, friendship, conversation, etc. iv. Esteem needs- These needs relate to desire for self-respect, recognition and respect from others. v. Self-actualization needs- These are the needs of the highest order and these needs are found in those persons whose previous four needs are satisfied. This will include need for social service, meditation. 5. Limitations of the concept of motivation: Four limitations of the concepts of motivations are as follows: - Theories of Motivation A number of motivational theories help explain the role of leaders in motivating workers. Two prominent theories are Maslow's Hierarchy of Needs and Frederick Herzberg's Two-Factor Theory. In general, these theories note that people are typically only motivated by things they either don't have or don't generally expect in a job. Therefore, providing basic pay, benefits and fair working conditions doesn't inherently mean that you will get a worker's best effort. Role of Compensation Compensation does play a role in motivation. However, simply paying a fair wage won't ensure optimum production, according to Maslow and Herzberg. Initially, an employee might get excited at a first job that pays $40,000. You may see strong performance during a honeymoon period. However, at some point, the worker will start to take the pay granted, and it will serve little motivational purpose. You can use pay to stimulate performance, but you will need to offer it in the form of incentives or recognition of accomplishments to motivate. Employee Preferences Motivation is simply the level and longevity of someone's intensity toward a task or project. As a leader, it is very difficult to provide a work environment that drives all employees in the same way. In social work, some employees are driven by their natural desires to help others and the sense of intrinsic value they experience. Other people may get into social work careers and feel less driven by these factors. In this case, burdens of modest income and challenging work may derail a leader's ability to get strong performance from an employee. Varying Needs Given the emphasis on needs as motivators in the theories of Maslow and Herzberg, you are naturally limited by the reality that people work with different needs perspectives. Someone just starting out may be motivated more by compensation because of a drive to make ends meet. A more established professional may need to feel a sense of belonging and esteem or pride in what he does. As a leader, offering fair compensation, a positive work culture and recognition of accomplishments may help cover the bases more effectively in motivating diverse workers. 6. Contemporary Theories of Motivation: Three important contemporary theories of motivation are as follows: i. Self Determination Theory: Self determination theory suggests that people are motivated to grow and change by three innate and universal psychological needs. This theory suggests that people are able to become self-determinated when their needs for competence, connection, and autonomy are fulfilled. The concept of intrinsic motivation, or engaging in activities for the inherent rewards of the behaviour itself, plays an important role in self-determination theory. Two key assumptions of the theory are as follows: a) The need for growth drives behaviour- The first assumption of this theory is that people are actively directed towards growth. Gaining mastery over challenges and taking in new essential for developing a cohesive sense of itself. b) Autonomous motivation is important- While people are often motivated to act by external rewards such as money, prizes and acclaim (known as extrinsic motivation), self-determination theory focuses primarily on internal sources of motivation such as need to gain of knowledge or independence (known as intrinsic motivation). ii. Self-efficacy theory: This theory focuses on segments which are: a) Experience: If you have performed similar task in the past, then you are more likely to be confident that you can complete similar tasks well in the future. b) Vicarious experience: You can develop self-efficacy vicariously by watching other people perform a task. If you watch someone similar to you perform a task and succeed at that task, then obviously your self-efficacy toward that task will increase. c) Social persuasion: You can increase your self- efficacy if others gives you encouragement that you can perform that task. Conversely, self efficacy will decrease if you receive discouragement towards that job. d) Physiological feedback: When confronted with a task you experience a sensation from your body. How you interpret these signals will impact your self-efficacy. For example- If a large presentation is assigned to you Infront of a huge crowd- you’ll not get relief psychologically until it is done. iii. Vroom’s expectancy Theory: Vroom’s Expectancy theory was proposed by Victor H. Vroom, who believed that people are motivated to perform activities to achieve some goal to the extent they expect that certain actions on their part would help them to achieve the goal. Vroom’s expectancy theory is based on the assumption that an individual’s behaviour results from the choices made by him with respect to the alternative course of action, which are related to the psychological events occurring simultaneously with the behaviour. This means an individual selects a certain behaviour over the other behaviours with an expectation of getting results, the one desired for. 7. Financial incentives of motivation: Financial incentives can be provided on an individual or group basis and satisfy the monetary and future security needs of individuals. The most commonly used financial incentives are: (a) Pay and Allowances Salary is the basic incentive for every employee to work efficiently for an organization. Salary includes basic pay, dearness allowance, house rent allowance, and similar other allowances. Under the salary system, employees are given increments in basic pay every year and also an increase in their allowances from time-to-time. Sometimes these increments are based on the performance of the employee during the year. (b) Bonus It is a sum of money offered to an employee over and above the salary or wages as a reward for his good performance. (c) Productivity linked Wage Incentives Many wage incentives are linked with the increase in productivity at individual or group level. For example, a worker is paid 50 rupees per piece if he produces 50 pieces a day but if he produces more than 50 pieces a day, he is paid 5 rupees extra per piece. Thus, on the 51st piece, he will be paid 55 rupees. (d) Profit-Sharing Sometimes the employees are given a share in the profits of the organization. This motivates them to perform efficiently and give their best to increase the profits of the organization. (e) Retirement Benefits Retirement benefits like gratuity, pension, provident fund, leave encashment, etc. provide financial security to the employees post their retirement. Thus, they work properly when they are in service. (f) Stock Options or Co-partnership Under the Employees Stock Option Plan, the employee is offered the ordinary shares of the company at a price lower than its market price for a specified period of time. These are non-standardized offers and shares are issued as a private contract between the employer and employee. These are generally offered to management as a part of their managerial compensation package. Allotment of shares induces a feeling of ownership in the employees and they give their best to the company. Infosys, GoDaddy and The Cheesecake Factory are some of the companies that have implemented the scheme of the stock option. (g) Commission Some organizations offer a commission in addition to the salary to employees for fulfilling the targets extremely well. This incentive encourages the employees to increase the client base of the organization. (h) Perquisites Several organizations offer perquisites and fringe benefits such as accommodation, car allowance, medical facilities, education facilities, recreational facilities, etc. in addition to the salary and allowances to its employees. These incentives also motivate the employees to work efficiently. 8. Non-financial incentives of motivation: Non-Financial Incentives Apart from the monetary and future security needs, an individual also has psychological, social and emotional needs. Satisfying these needs also plays an important role in their motivation. Non-financial incentives focus mainly on the fulfilment of these needs and thus cannot be measured in terms of money. However, there are chances that a particular non-financial incentive may also involve the financial incentive as well. For example, when a person is promoted his psychological needs are fulfilled as he gets more authority, his status increases but at the same time, he has benefitted monetarily also as he gets a rise in salary. The most common non- financial incentives are: (a) Status With reference to an organization, status refers to the position in the hierarchy of the organizational chart. The level of authority, responsibility, recognition, salary, perks, etc. determine the status of an employee in the organization. A person at the top-level management has more authority, responsibility, recognition and salary and vice-versa. Status satisfies the self-esteem and psychological needs of an individual and in turn, motivates him to work hard. (b) Organizational Climate Organizational climate refers to the environmental characteristics of an organization that are perceived by its employees about the organization and have a major influence on their behavior. Each organization has a different organizational climate that distinguishes it from other organizations. Some of the factors that influence the organizational climate of an enterprise are organizational structure, individual responsibility, rewards, risk and risk-taking, warmth and support and tolerance and conflict. When the organizational climate is positive employees tend to be more motivated. (c) Career Advancement Opportunity It is very important for an organization to have an appropriate skill development program and a sound promotion policy for its employees which works as a booster for them to perform well and get promoted. Every employee desires growth in an organization and when he gets promotion as an appreciation of his work he is motivated to work better. (d) Job Enrichment It refers to the designing of jobs in such a way that it involves a higher level of knowledge and skill, a variety of work content, more autonomy and responsibility of employees, meaningful work experience and more opportunities of growth. When the job is interesting, it itself serves as a source of motivation. (e) Job Security Job security provides future stability and a sense of security among the employees. The employees are not worried about the future and thus work with more enthusiasm. Owing to the unemployment problem in our country, job security works as a great incentive for the employees. However, there is also a negative aspect of this incentive that employees tend to take their job for granted and not work efficiently. (f) Employee Recognition Programmes Recognition means acknowledgment and appreciation of work done by employees. Recognition in the organization boosts their self-esteem and they feel motivated. For example, declaring the best performer of the week or month, displaying their names on the notice board and giving them rewards, fall under the Employee recognition program. (g) Employee Participation Involving the employees in decision making regarding the issues related to them such as canteen committees, work committees, etc. also helps in motivating them and inducing a sense of belongingness in them. (h) Employee Empowerment Giving more autonomy and powers to subordinates also make them feel that they are important to the organization and in turn they serve the organization better. 9. What is Leadership? Leadership is a process by which an executive can direct, guide and influence the behavior and work of others towards accomplishment of specific goals in a given situation. Leadership is the ability of a manager to induce the subordinates to work with confidence and zeal. Leadership is the potential to influence behaviour of others. It is also defined as the capacity to influence a group towards the realization of a goal. Leaders are required to develop future visions, and to motivate the organizational members to want to achieve the visions. According to Keith Davis, “Leadership is the ability to persuade others to seek defined objectives enthusiastically. It is the human factor which binds a group together and motivates it towards goals.” Characteristics of Leadership 1. It is an inter-personal process in which a manager is into influencing and guiding workers towards attainment of goals. 2. It denotes a few qualities to be present in a person which includes intelligence, maturity and personality. 3. It is a group process. It involves two or more people interacting with each other. 4. A leader is involved in shaping and moulding the behaviour of the group towards accomplishment of organizational goals. 5. Leadership is situation bound. There is no best style of leadership. It all depends upon tackling with the situations. Importance/Significance of Leadership Leadership is an important function of management which helps to maximize efficiency and to achieve organizational goals. The following points justify the importance of leadership in a concern. 1. Initiates action- Leader is a person who starts the work by communicating the policies and plans to the subordinates from where the work actually starts. 2. Motivation- A leader proves to be playing an incentive role in the concern’s working. He motivates the employees with economic and non-economic rewards and thereby gets the work from the subordinates. 3. Providing guidance- A leader has to not only supervise but also play a guiding role for the subordinates. Guidance here means instructing the subordinates the way they have to perform their work effectively and efficiently. 4. Creating confidence- Confidence is an important factor which can be achieved through expressing the work efforts to the subordinates, explaining them clearly their role and giving them guidelines to achieve the goals effectively. It is also important to hear the employees with regards to their complaints and problems. 5. Building morale- Morale denotes willing co-operation of the employees towards their work and getting them into confidence and winning their trust. A leader can be a morale booster by achieving full co-operation so that they perform with best of their abilities as they work to achieve goals. 6. Builds work environment- Management is getting things done from people. An efficient work environment helps in sound and stable growth. Therefore, human relations should be kept into mind by a leader. He should have personal contacts with employees and should listen to their problems and solve them. He should treat employees on humanitarian terms. 7. Co-ordination- Co-ordination can be achieved through reconciling personal interests with organizational goals. This synchronization can be achieved through proper and effective co-ordination which should be primary motive of a leader 10. Leadership Styles: Definition: The Leadership Styles are the behavioural patterns that a leader adopt to influence the behaviour of his followers, i.e. the way he gives directions to his subordinates and motivates them to accomplish the given objectives. Leadership styles are on a continuum, ranging from autocratic at one end, to laissez-faire at the other, with a variety of styles in between. There are seven primary leadership styles. 1. Autocratic The phrase most illustrative of an autocratic leadership style is "Do as I say." Generally, an autocratic leader believes that he or she is the smartest person at the table and knows more than others. They make all the decisions with little input from team members. This command-and-control approach is typical of leadership styles of the past, but it doesn't hold much water with today's talent. That's not to say that the style may not be appropriate in certain situations. For example, you can dip into an autocratic leadership style when crucial decisions need to be made on the spot, and you have the most knowledge about the situation, or when you're dealing with inexperienced and new team members and there's no time to wait for team members to gain familiarity with their role. 2. Authoritative The phrase most indicative of this style of leadership (also known as "visionary") is "Follow me." The authoritative leadership style is the mark of confident leaders who map the way and set expectations, while engaging and energizing followers along the way. In a climate of uncertainty, these leaders lift the fog for people. They help them see where the company is going and what's going to happen when they get there. Unlike autocratic leaders, authoritative leaders take the time to explain their thinking: They don't just issue orders. Most of all, they allow people choice and latitude on how to achieve common goals. 3. Pacesetting "Keep up!" is the phrase most indicative of leaders who utilize the pacesetting style. This style describes a very driven leader who sets the pace as in racing. Pacesetters set the bar high and push their team members to run hard and fast to the finish line. While the pacesetter style of leadership is effective in getting things done and driving for results, it's an approach that can turn off team members. Even the most driven employees may become stressed working under this kind of pressure in the long run, suggesting that a more agile approach may be the ultimate leadership style required for leading today's talent. Should you avoid the pacesetting style altogether? Not so fast. If you're an energetic entrepreneur working with a like-minded team on developing and announcing a new product or service, this style may serve you well. However, this is not a style that can be kept up for the long term. A pacesetting leader needs to let the air out of the tires once in a while to avoid causing team burnout. 4. Democratic Democratic leaders are more likely to ask "How do you see it?" And, wherever possible, they share information with employees that affects their work responsibilities. They also seek employees' opinions before making a final decision. There are numerous benefits to this participative leadership style. It can engender trust and promote team spirit and cooperation from employees. It allows for creativity and helps employees grow and develop. A democratic leadership style gets people to do what you want to be done but in a way that they want to do it. 5. Coaching When you have a coaching leadership style, you tend to have a "Consider this" approach. A leader who coaches views people as a reservoir of talent to be developed. The leader who uses a coach approach seeks to unlock people's potential. Leaders who use a coaching style open their hearts to and doors for people. They believe that everyone has power within themselves. A coaching leader gives people a little direction to help them tap into their ability to achieve their full potential. 6. Affiliative A phrase often used to describe this type of leadership is "People come first." Of all the leadership styles, the affiliative leadership approach is the most up close and personal. A leader practicing this style pays attention to and supports the emotional needs of team members. The leader strives to open up a pipeline that connects him or her to the team. Ultimately, this style is all about encouraging harmony and forming collaborative relationships within teams. It's particularly useful, for example, in smoothing conflicts among team members or reassuring people during times of stress. 7. Laissez-Faire The laissez-faire leadership style is at the opposite end of the spectrum from autocratic. Of all the approaches, this one involves the least amount of oversight. You could say that the autocratic style leader stands as firm as a rock on issues, while the laissez-faire leader lets people swim with the current. On the surface, a laissez-faire leader may appear to trust people to know what to do. When taken to the extreme, however, such a hands-off leader may end up appearing aloof. So, although it's beneficial to give people room to run, managers must find a balance to make sure they remain moored the critical goals of the organization. CONTROLLING & CHANGE: 1. CONTROLLING- Intro: Controlling is the process of comparing the actual performance with the standards set by the company to make sure that activities are performed accordingly, if not, then take appropriate measures to correct them. Controlling is one of the important functions of management. Definition Robert N.Anthony states that “Management control is the process by which managers assure that resources are obtained and used effectively and efficiently to accomplish the organizational goals”. Concept The process of Controlling verifies that the tasks allotted to the employees are performed on time. It also ensures that the activities are carried out as per the plans and strategies. Controlling leads back to the first function in the management cycle which is planning, revising and taking proper measures if activities are happening incorrectly. It is executed at all levels in the organization. 2. Features and Characteristics of Control 1. Control is a Management Function- In management, there are various functions like planning, directing, staffing, organizing and controlling. Controlling is one of the essential functions without which all other functions are rendered meaningless. 2. Control is Embedded at each level of the Hierarchy- All managers follow the practices of control management to accomplish their tasks and keep a check on their reporters to ensure the attainment of goals. Although control exists at every level, it differs, for example, the top management involves strategic control, middle management in tactical control and lower management in operational control. 3. Control is a Continuous Activity- Controlling is not a single time activity but instead a continuous process that involves a timely review of performances and results in corrective action. 4. Control is both Backward and Forward-Looking- We compare the performance with the standards which are set during the planning and processing. The past data or activities are used for the analysis of deviations; hence control is backward looking. Control is also related to the future as the past activities cannot be controlled. The data analysed is used to take corrective measures in the future. 5. Control is Closely Linked with Planning- Planning and Controlling are closely linked and run hand in hand. Planning sets the action course while controlling keeps track of it. If there is any deviation in the course, controlling helps to find errors and design new strategies to get it back on track. The findings from the process of controlling act as an input to the planning process. 6. Control is Related to Results- The assessment of progress is based on the results. Any deviation from the required results control has to be incorporated to take corrective actions. 3. Importance of Control in Management Accomplishing Organizational Goals: Control measures the progress of organizational goals and accentuate deviations, if any, and lays out the basis for corrective measures. It ensures that the organizational goals are on track. Efficient Use of Resources: Wastage and spoilage of resources are reduced. For example, in damage control, the defective products are examined and the production will be modified to reduce errors and produce error-free products and thereby reducing further wastage of materials. Thus, it ensures that resources are used in the most effective and efficient manner. Judges Accuracy of Standards: The management will be able to verify whether the standards set by the organization are accurate. According to the changes in the environment, the standards can be reviewed and revised by exercising control. Employee Motivation: When standards are set by the organization, employees will know beforehand as to what is expected from them and perform accordingly, based on their performance, they will be appraised. When control is practised to check the tasks, the performances will be better and so will be the appraisals which in turn will motivate the employees. Ensuring Order and Discipline: Controlling keeps a close check on the employee’s activities and ensures the activities are performed honestly. It fosters a sense of discipline and order in the organization. Facilitating Coordination in Action: At every level in the management, the activities of the subordinates will be checked and coordinated by the managers which lead towards the accomplishment of organizational goals. 4. Limitations of Control Management No Control over External Factors: The organizations do not have control over the changes in the external environment for example changes in technology, competition and changes in consumer requirements. Employee Resistance: Employees tend to oppose certain control procedures because it may limit their freedom. For example, time tracker machines or CCTVs may not be accepted by all employees. Difficulty in Setting Standards: It gets difficult to measure performance because standards cannot be defined quantitatively which arise due to different problem areas such as human behaviours, employee morale and job satisfaction. Costly: Controlling incurs a lot of expense, time, and effort hence gets costlier. It must be ensured by the management that the cost involved in running a control system should not exceed the benefits gained from it. 5. Steps in Designing a Control System: Setting a goal and establishing desired objectives.– “I want to create 1,000 pairs of shoes in a month.” Measuring the achievements of goals and objectives.– “I’ve made 999 pairs of shoes in a month.” Comparing the achieved goals and objectives with the original goals and objectives. – “I wanted 1,000 and I got 999. I wanted to do it in a month and I’ve spent a month.” Analyzing variances and reporting on them. Determining the underlying causes for the variations.– “I’m one pair of shoes short, but I’ve met the deadline. I did not have enough materials on day two and I got behind in my goals.” Taking corrective action to eliminate the variations.– “I’ve recalculated the requirements for fabrics and I’ve ordered enough for next month.” Following up and repeating the process.– “I’ve now created the right amount of shoes every month.” 6. What are Financial Controls? Financial controls are the procedures, policies, and means by which an organization monitors and controls the direction, allocation, and usage of its financial resources. Financial controls are at the very core of resource management and operational efficiency in any organization. Required Processes The implementation of effective financial control policies should be done after a thorough analysis of the existing policies and future outlook of a company. In addition, it is important to ensure the following four processes are completed before implementing financial control in a business: 1. Detecting overlaps and anomalies Financial budgets, financial reports, profit & loss statements, balance sheets, etc. present the overall performance and/or operational picture of a business. Hence, while formulating financial control policies, it is very important to detect any overlaps and/or anomalies arising out of the data available. It helps in detecting any existing loopholes in the current management framework and eliminating them. 2. Timely updating Financial control is the essence of resource management and, hence, the overall operational efficiency and profitability of a business. Timely updates of all available data are very important. In addition, updating all management practices and policies concerning the existing financial control methods is also equally important. 3. Analysing all possible operational scenarios Before implementing a fixed financial control strategy in an organization, it is important to thoroughly evaluate all possible operational scenarios. Viewing the policies from the perspectives of different operational scenarios – such as profitability, expenditures, safety, and scale of production or volume – can provide the necessary information. Also, it helps establish an effective financial control policy that covers all operational aspects of the organization. 4. Forecasting and making projections While implementing a financial control policy, forecasting and making projections are very important steps. They provide an insight into the future goals and objectives of the business. In addition, they can help establish a financial control policy in accordance with the business objectives and act as a catalyst in achieving such goals. Importance of Financial Controls 1. Cash flow maintenance Efficient financial control measures contribute significantly to the cash flow maintenance of an organization. When an effective control mechanism is in place, the overall cash inflows and outflows are monitored and planned, which results in efficient operations. 2. Resource management The financial resources of an organization are at the very core of any organization’s operational efficiency. Financial resources make available all other resources needed for operating a business. Hence, financial resource management crucial in order to manage all other resources. Effective financial control measures hence are crucial to ensure resource management in an organization. 3. Operational efficiency An effective financial control mechanism ensures overall operational efficiency in an organization. 4. Profitability Ensuring an organization’s overall operational efficiency leads to the smooth functioning of every organizational department. It, in turn, increases productivity. which comes with a direct, positive relationship with profitability. Hence, establishing effective financial control measures ensures improved profitability of any business. 5. Fraud prevention Financial control serves as a preventative measure against fraudulent activities in an organization. It can help prevent any undesirable activities such as employee fraud, online theft, and many others by monitoring the inflow and outflow of financial resources. Examples of Financial Controls 1. Overall financial management and implementation Placing certain qualification restrictions and employing only certified, qualified financial managers and staff working with the formulation and implementation of financial management policies Establishing an efficient, direct chain of communication among the accounting staff, financial managers, and senior-level managers, including the CFO Periodic training sessions and information sessions among accounting staff, etc. to ensure being updated with the changing laws and evolving business environment concerning business finance Periodic, thorough financial analysis and evaluation of financial ratios and statements wherever fluctuations are significant Delegation of financial duties in a segregated and hierarchical fashion in order to establish a chain of operation

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