People In Business PDF

TOPIC 2 : PEOPLE IN BUSINESS 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 1 2.1 Motivating 2.1.1 The importance of a well-motivated workforce: workers Why people work and what motivation means The benefits of...

TOPIC 2 : PEOPLE IN BUSINESS 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 1 2.1 Motivating 2.1.1 The importance of a well-motivated workforce: workers Why people work and what motivation means The benefits of a well-motivated workforce: Labour productivity, reduced absenteeism and labour turnover The concept of human needs – Maslow’s hierarchy Key motivational theories: Taylor and Herzberg 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 2  2.1 Motivating Employees 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 3  2.1 Motivating Workers “The average person puts only 25 % of his energy and ability into his work. The world takes off his hat to those who put in more than 50% of their capacity and stands on its head for those few and far between souls who devote 100%” Andrew Carnegie - industrialist 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 4  Why Do People Work? 1. Earn a living - Earn money to satisfy their basic needs and wants. 2. Earn a reward for their effort. 3. Socialisation - i.e. satisfy social needs 4. Self satisfaction e.g. keep himself busy. 5. Social status. 6. Fulfil certain ambition. e.g. Becoming a manager, be self employed 7. Social work / service – volunteers in social and religious organisations. Thus, not all people work just for money. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 5  “Motivation is the stimulation of any emotion or desire operating upon one’s will and prompting or driving it to action” Lillis Willingness to expand energy to achieve a goal or reward. A force that activates dormant energies and sets in motion of action for better performance 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 6  What is demotivation? When an employee is not satisfied and shows unwillingness to work or exert effort which results in deterioration in his individual performance. A worker is demotivated when he derives no satisfaction from his job and his needs are not met which negatively impacts on his performance. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 7  Indicators/ Evidence Of Low Motivation (Demotivation) 1. Increase in rate of absenteeism 2. Frequent industrial conflicts and Grievances 3. Increase in rate of accidents 4. Frequent Strikes and Lock outs, Industrial Sabotage 5. Increase in Labour Turnover - rate at which employees leave 6. Resistance and resentment / non cooperation 7. Decline in employee productivity 8. Continued Lateness, etc. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 8  Causes Of Low Motivation / (Demotivation) 1. Low pay/incentives 2. Unclear organisational policy 3. Inappropriate management / leadership style 4. Lack of organisational facilities 5. Tough working conditions e.g. Too long hours of work 6. Lack of health and safety facilities 7. Job insecurity- e.g. Employees on temporary contracts 8. Ineffective communication causing misunderstandings 9. Lack of trust and discrimination at work 10. Lack of career advancement opportunities 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 9  LABOUR TURNOVER 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 10 Labour Turnover Measures the rate at which workers are replaced in an organisation. Labour Turnover = No. of Workers left in a period X 100 Average No. Of Workers A labour Turnover of up to 5% is considered normal but high turnover is matter of concern. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 11  Causes of Labour Turnover 1. Low motivation 2. Better offer by rivals 3. Personal obligations/ commitments 4. Continued ill health 5. Routine Jobs - Monotony and boredom 6. Unclear policies 7. Poor working conditions 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 12  Problems Of High Labour Turnover 1. Recruitment and training costs. 2. Bad publicity that may make external recruitment difficult. 3. Demotivate existing employees. 4. Loss of output and customers. 5. Failure or organisation plans. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 13 How Can Managers Reduce Labour Turnover? 1. Employee motivation – providing incentives that are better than rivals 2. Worker participation and investigation on reasons for leaving. 3. Training, delegation and career advancement opportunities. 4. Raising greater sense of belonging towards the organisation. 5. Reviewing its recruitment process and human resources policy Strategy: 1. Invest in capital intensive techniques that reduce high dependence on workers. 2. Employ workers on full time contracts rather than many part time workers. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 14  Need For Motivation 1. For higher productivity 2. To retain staff / reduce labour turnover 3. Promote job satisfaction 4. Improve industrial relations 5. Improve communication 6. Promote business image and intellectual capital 7. Fulfill ethical goals towards employees 8. Attract potential employees 9. Reduce latenesses and absenteeism 10. Facilitate implementation of change 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 15 The benefits of a well-motivated workforce: 1. Improves employee morale and work ethos 2. Improves labour productivity 3. Reduces lateness and absenteeism 4. Retains employees and thus reduces labour turnover 5. Increase intellectual capital 6. Facilitates future external recruitment due to good reference 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 16  The concept of human needs – Maslow’s hierarchy Abraham Maslow - hierarchy of needs -1954 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 17 ABRAHAM MASLOW (1954) A famous Psychologist ; he studied people motivation. He was of the view that people work to satisfy their needs. Money is not the sole reason for which people work. He classified human needs in five categories. NEEDS PSSSS 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 18  Maslow’s Pyramid/ Hierarchy Of Needs Self Actualisation Needs Secondary level/ Self Esteem/ Recognition Needs higher order needs Social/Affiliation Needs Safety/Security Needs Primary level/ Lower order needs Physiological Needs 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 19 Level 1: Physiological Needs These needs arise from the basic physiology of life that are important for survival. Include: Food, Shelter Clothing Fresh air Good temperature and Sleep. According to Maslow an individual would first satisfy his basic needs and then look for other needs these are mostly satisfied through money. Once these needs are reasonably satisfied it no longer motivates the employee. He would seek higher level needs. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 20 Level 2: Safety or Security Needs The need for security Includes: Job security, Avoidance against harm, Economic security in terms of pensions, provident fund, medical insurance Protection against: - arbitrary action - favouritism, discrimination and - unpredictable administrative policy. An employee who has reasonably satisfied his safety and security needs would no longer be motivated with rewards which satisfy the same. He should be motivated if he is provided with the possibility of satisfying a higher order needs as per the hierarchy. i.e. social or affiliation needs. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 21  Level 3: Social Or Affiliation Needs The need to belong and be accepted by various groups in the society. Include: Getting companionship, giving and receiving love and affection, becoming a member of a group, cooperating with others. When man’s social needs are not satisfied he behaves in a peculiar way that often tend to defeat organisational objectives. He has the tendency to resist, becomes antagonistic, hostile and even uncooperative. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 22 Level 4: Esteem Or Recognition Needs Arise whereby the individuals desire a high evaluation of themselves. These needs are concerned with self-esteem and esteem from others. Feeling of competence Autonomy Achievement For Recognition Prestige, Status These are higher level needs but have low priority. An employee who has reasonably satisfied his Esteem needs would no longer be motivated. He should be motivated by providing him the possibility of satisfying his Self actualisation needs. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 23  Level 5: Self-Actualisation needs Need to realise one’s own potential for continued self-development and for being creative. “ a man generally wants to achieve self fulfilment, that is, he has a tendency to develop his potential to fulfil his desire to become everything that one is capable of becoming” 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 24  Maslow findings: Employees work to satisfy their needs Money is not the sole motivator; it only satisfies lower order / primary level needs Employees have five levels of needs, which they satisfy in a hierarchical order Employees may be motivated through satisfaction of higher order needs that are often given low importance by management. One who has reasonably satisfied a need would no longer be motivated with the same he should be motivated with next hierarchical order need. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 25  Criticisms: 1. Assumes a rigid hierarchy of satisfying needs. Some people may be deprived of their lower level needs but may still try for self actualisation needs. Example: Mahatma Gandhi. 2. A person tries for his higher level need when his lower level need is ‘reasonably satisfied”. The reasonable level is subjective and differ from person to person. 3. People may also satisfy higher level needs with money as money can also be a symbol of power, status, provide self-respect and self-actualisation. 4. Saturated basic needs act as disincentives. But lower level needs are hardly fully satisfied. It can assume varied and more sophisticated forms. Example:- from an ordinary flat to an air-conditioned flat. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 26  Conclusion Maslow’s hierarchy of needs does not make any significant contribution to management in motivating its workforce. Provides an excellent starting point for explaining why people behave in certain manner. Still the exact nature of the needs and how they relate to one another is only hierarchical and unclear. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 27  Key Motivation theories – Taylor and Herzberg 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 28  What Motivates ? Money/Financial rewards OR Just Money/Financial rewards OR Just Non financial rewards OR Financial and Non Financial incentives ? Motivation Theories. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 29  What motivates ? Motivation Theorists. F.W. TAYLOR Economic Man-Work study Money/Financial rewards Money + Non financial rewards Abraham Maslow Frederick Herzberg Hierarchy of Needs Two Factor Theory 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 30  Motivation Theorists 1. Frederick Winslow Taylor (Economic man, Work study and pay systems) -1911 2. Frederick Herzberg – Two factor Theory 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 31 1. F.W. TAYLOR (1911) - Economic man. Traditional/Content theories Taylor worked as a labourer at Bethlehem steel factory where he conducted his studies in labour productivity and his research were adopted and he was promoted to supervisor and even became the chief engineer of the same factory. His ideas were published in 1911. Taylor’s view: Taylor believed in ‘the economic man’. Personal monetary gain was the main motive for which people work. People may be encouraged to work effectively through money. Fuelling workers with more money would increase productivity. He framed piece rates that was linked to a worker’s individual output. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 32  Taylor was of the view that an inefficient worker had no place in an Organisation and he should be compelled to leave by paying him a low piece rate for low productivity. The principle was to penalise a slow worker by paying him a low rate for low productivity and to reward an efficient worker by higher wages for high productivity. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 33  Criticisms 1. Believes money is sole motivator when not all people work for just money 2. Theory is restricted to shop floor level- says nothing for middle and top managers. 3. Too simplistic - more money for higher output. 4. Considered to be inhuman for ignoring human relations and capability. 5. Has limited outlook and just consider material / economic man. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 34  Application of Taylor’s findings: 1. Piece rate wage payment system is commonly used by businesses even today 2. Financial rewards such as overtime, performance related pay, bonuses are still paid to workers 3. He devised through his motion study ways of minimising movements and wastages 4. Performance standards and time standards are outcomes of his study that are commonly used in most modern businesses. 5. Businesses attempt to seek the best methods to minimise movements and fatigue through reviewing their office layouts. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 35 2. HERZBERG -Two Factor Theory (Modern Theories) (1923-2000). Frederick Herzberg -“content theory of work motivation”.. In the 1950’s, he conducted a study of need satisfaction of 200 engineers and accountants employed by firms in and around Pittsburgh. - He used the critical incident method for obtaining data for analysis. -The purpose of his study was to find out what people want. - He designed a structured interview in which employees were asked to describe a few previous job experiences in which they felt “exceptionally good” or “exceptionally bad” about jobs. - They were also asked the degree to which their feelings were influenced for better or worse. - Analysing the information Herzberg concluded : - There were two categories of needs essentially independent of each other affecting behaviour in different ways. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 36 His Findings: 10 - Maintain zero level of motivation Absent Present MAINTENANCE FACTORS DISSATISFACTION NO DISSATISFACTION HYGIENE FACTORS Absent 6 - Strong Motivation Present MOTIVATORS NO SATISFACTION SATISFACTION SATISFIERS 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 37  Maintenance / hygiene Factors If absent cause dissatisfaction but their presence does not result in strong motivation 1. Work condition. 2. Company policy and administration. 3. Technical supervision 4. Interpersonal relations with supervisor. 5. Interpersonal relations with peers. 6. Interpersonal relations with subordinates. 7. Salary. 8. Job security 9. Personal life. 10. Status 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 38  Motivational Factors or ‘Satisfiers’.. Some job conditions. If present, build high levels of motivation and job satisfaction.. If not present, they do not cause dissatisfaction.. There are six motivational factors : 1. Work itself 2. Achievement 3. Recognition 4. Possibility of Growth 5. Advancement 6. Responsibility 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 39. Motivational factors are mostly related to the job contents.. An increase in these factors will satisfy the employees; however any decrease will not affect their level of satisfaction. Strong Motivation. Maintenance factors and hygiene factors are extrinsic to the job. Zero level of Motivation. They do not provide motivation but if they are adequate and present they prevent dissatisfaction..They help in maintaining zero level of motivation.. They produce no improvement but avoid unpleasantness. No Motivation. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 40  Criticisms 1. Based on limited methodology 2. Theory is inconsistent with previous research; it ignores situational variables. 3. He only looked at satisfaction and not productivity. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 41  2.1.2 - Methods Of Motivation 2.1 Motivating 2.1.2 Methods of motivation: workers Financial rewards, e.g. wage, salary, bonus, commission and profit sharing Non-financial Methods, e.g. Job enrichment, job rotation, team working, training, opportunities for promotion Recommend and justify appropriate method(s) of motivation in given circumstances 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 42  What Motivates ? Money/Financial rewards Just Money/Financial rewards Just Non financial rewards Financial and Non Financial incentives Motivation Theories. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 43 How to Motivate? - Motivators Rewards or incentives managers use to stimulate employees to derive higher productivity. Classification: 1. Financial / Monetary rewards or incentives 2. Non financial / Non monetary rewards / Incentives 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 44  Financial / Monetary Rewards Or Incentives Rewards that are extrinsic and expressed in monetary terms. These increases the total earnings of an employee. Methods: 1. Wages (piece rates) 2. Salary 3. Bonus 4. Commissions 5. Profit sharing 6. Performance related pay 7. Share options, etc. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 45 Non Financial/Non Monetary Rewards Such are incentives that are not in monetary terms and do not increase total earnings but these improve the quality of work and life of employees. Methods: 1. Fringe benefits 2. Ways of promoting job satisfaction. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 46  Ways Of Motivating Employees - MOTIVATORS 1. Financial or monetary motivators or incentives 2. Non financial Motivators or incentives - Fringe benefits - Promoting Job satisfaction 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 47  FINANCIAL MOTIVATION AND INCENTIVES Financial motivators aim at satisfying basically what Maslow calls the primary needs of people. This also coincides with F.W Taylor's ‘Economic man’. Financial motivators increase the total earnings of an employee but it might not be the sole motivating factor. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 48  Some Common Financial Motivators: Individual motivation: Wages - piece rates Salary Additional Financial Rewards: Overtime Bonus Performance related pay (PRP) or bonus Commissions Collective Motivation: Profit sharing Co - Partnerships/Share options 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 49  Wages Monetary rewards for the physical and mental effort exerted by manual workers that are usually paid on a weekly basis in cash or directly in the worker’s personal bank account. Wage earnings may depend on the hours worked or even on the number of units produced. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 50  Advantages Problems Worker does not have to wait for long to Has to be calculated every week obtain reward for his effort. Lesser risk of miscalculations Increases workload of wage clerks Firm disburses lesser amount at a time Costly to administer. Workers have negligible savings that affect their morale. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 51 Methods/Systems Of Wage Payment: Time wage/rate system - Payment on basis of time spent in the organisation irrespective of amount of work done. Time rate Total earnings = Hours worked X Wage rate per hour Piece rate system - Payment on basis of work done irrespective of time taken by a worker. Piece Rate Total earnings = No. of Output units produced X Wage Rate per unit 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 52  Time rate A system of wage payment when workers are paid depending on hours worked. It may be on an hourly, daily, weekly or monthly rate. Example:. Suppose a worker is paid @ $ 50/hr and. he has spent 48 hours in a particular week. What would be his weekly wage? Total earnings = Total hours Worked x Wage rate /hr. $ 2400/week 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 53  Y-axis Total Wage Assume Wage Rate = $10/hr $ Total Wage earnings 80 X-axis O 8 Hours Worked 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 54  Appropriateness: Where: 1. Quality is of extreme importance. e.g. artistic goods, handicrafts 2. Speed of production is beyond control of worker e.g. capital intensive techniques. 3. Output cannot be precisely measured e.g. maintenance and repair work 4. Close supervision is possible. 5. Work delays are frequent and beyond control of employees 6. Incentive schemes would be difficult or impossible to follow. E.g. indirect labour 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 55 Advantages of time rate 1. High quality products that meet customer satisfaction 2. Low wastage as workers take time to do the work well 3. Workers with different personal abilities are considered and rewarded accordingly. 4. Less stress, fatigue and morale of workers is high leading to better output. 5. Discourage absenteeism as workers are paid according to time spent at work. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 56  Limitations 1. Workers obtain payment for idle time irrespective of quantity. 2. Encourage employees to go-slow to earn overtime wages. 3. Strict supervision is necessary to get the required amount of work done. 4. Calculating labour cost per unit may become difficult due to productivity differences. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 57 Piece rate A wage payment system when workers are paid based on individual output units produced, job completed or an operation performed. Payment is made according to the quantity of work done and no consideration is given to time taken. Example: If a worker is paid $ 20 / unit and he produces 20 units during the day His total earnings would be $400..i.e. 20 units X Piece rate 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 58 Appropriateness Of Piece Rate : 1. When work is of repetitive nature 2. Output is measurable 3. It is possible to fix an equitable and acceptable piece rate. 4. Materials, tools and machines are available to cope with possible increase in production. 5. Quality of goods can be controlled. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 59  Advantages 1. Distinction is made between efficient and inefficient workers. 2. A direct incentive that prompt workers to adopt ‘best’ methods 3. Idle time is not paid. 4. Ascertaining output help in preparing quotations. 5. Workers use tools and machinery with care 6. Lesser supervision. 7. Inefficient workers are motivated to become efficient by producing more. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 60  Disadvantages 1. Does not provide inducement to average workers / trainees. 2. Priority is often quantity rather than quality resulting in high reject quality. 3. Haste makes waste. Due to ineffective use of materials. 4. High maintenance costs due to overuse. 5. Frustration and fear of losing wages if they produce less. 6. Health hazards, absenteeism and accidents due to over working. conscious workers will not earn enough and lose morale. 7. Quality 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 61  2. Salary Salary is a monetary reward paid for the physical and mental effort of an employee. It is paid at a flat rate; on a monthly basis usually directly into the employees’ personal bank account. Extra work / overtime is usually not paid for. Employees may increase their earnings through additional monetary rewards like Performance related pay, bonus, commissions, profit sharing, share options, etc. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 62  Advantages Disadvantages Calculated once a month Employees have to wait a long time Do not involve high calculation costs. Workers earn flat rates that may prompt absenteeism HR or administration department has Huge cash outflow at a time enough time to calculate such salaries May improve working capital. No overtime 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 63 DEDUCTIONS.Payments deducted out of the employee’s gross pay. Example: - Tax deductions (PAYE) - Contribution towards national pension schemes - Trade union membership subscriptions, etc. Gross pay – Deductions = Net pay 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 64  Additional Financial Rewards/payment:. Overtime. Bonuses. Performance related pay (PRP) or bonus. Commissions 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 65  3. Overtime Extra hours worked over and above normal working hours. - Refers to the extra hours worked by a worker. - Overtime rate is higher than the normal rate. Usually 1.5 times the normal wage rate. Overtime hours Worked = Total hours worked – Normal hours of work.. Overtime earnings = Total overtime hours worked X Overtime Rate..Overtime Rate The wage rate paid for overtime it is greater than the normal wage rate. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 66  Y-axis Wages Total wages rate ($) Overtime Rate 120 Overtime Earnings 80 Overtime Total Normal Earnings X-axis 8 12 Hours Worked 0 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 67  Example: Calculate: 1. Overtime rate 2. Total overtime 3. Total Normal earnings 4. Total Overtime Earnings 5. Total earnings 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 68 Answer: 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 69  Appropriateness: When 1. Urgent orders need to be met. 2. There is penalty or legal actions in case of breach of contract 3. There is sudden rise in demand for the product 4. Workers are healthy, skilled , trained and committed to work. 5. Facilities exists like adequate lighting, drinking water, materials, canteen, etc. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 70  Advantages Disadvantages. Higher earnings for workers. Increases labour cost. Urgent orders may be met.Workers waste time during normal hours. Spread over of overheads due to greater.Higher risks of accidents, machine breakdown, capacity utilisation injury, etc.. Avoids over employment.May cause high lateness and absenteeism.Allows greater capacity utilisation 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 71  4. Bonus An additional financial reward paid in addition to wages or salaries to reward employees for greater effort. Types: 1. Attendance bonus- Paid for satisfactory attendance. Aims at reducing absenteeism. The legal leaves (Sick and casual) not taken are usually paid. This increases the total earnings. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 72  2. Productivity bonus- - Additional financial reward paid to employees based on increase in productivity Amount depends on the productivity agreement between employer and employee representatives. Higher the productivity the higher the amount of bonus. It may be affected by internal and external factors 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 73 3. End of year bonus- 1/12 of annual earnings paid to all employees. Other firms may pay higher bonus depending on their business performance.. In Mauritius it is mandatory to pay minimum 1/12 bonus (employment act) 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 74  5. Commissions Paid mostly to marketing personnel in addition to their basic earnings as additional financial incentive to prompt them to mainly increase sales. Paid to sales agents, sales managers, distributors, advertising agents, etc. Paid as a percentage of revenue generated by an individual employee. However, businesses are affected by trade cycles and off periods whereby people hardly purchase goods. This could reduce their additional reward despite great efforts.. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 75 6. Performance related pay (PRP) Monetary incentive to employees that is directly linked to their individual performance at work assessed through a periodical performance appraisal exercise. Performance appraisal The ascertaining of an employee’s performance in relation to his job requirements. An interview is conducted by his immediate superior , the employee set his own goals against which his performance and increment is determined. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 76  Performance Reward Scale Performance level Reward/Increment (As % of normal pay) < 50% 10% minimum 50-69% 15% 70-89% 20% >90% 25% 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 77  EXAMPLE Assume: Actual performance = 100 units Agreed performance standard =150 units The employee produced = 130 units Total earnings $10,000 for 100 units Calculate: (i) % increase in output or performance (ii) Amount of increment (iii) Total performance related earnings 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 78  Answer: (i) % increase in output = Change in output produced/Expected change X 100 30/50 X 100 = 60% (ii) Amount of increment = Applicable Performance Rate x Original salary 15/100 X $ 10,000 = $ 1,500 (iii) Total pay = Previous pay + Performance Increment $ 10,000 + $ 1,500 = $ 11,500 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 79 Advantages of PRP: 1. Recognition for individual effort 2. Promotes individual performance and productivity 3. Better management – employee communication and understanding 4. Greater mutual trust due to agreed terms Disadvantages of PRP: 1. Does not encourage team spirit 2. Can cause conflicts amongst individual employees 3. Requires many conditions for best performance 4. Time consuming to cater for each individual employee in large organisations 5. Risks of personal bias and conflicts due to lack of uniformity in its implementation 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 80 Collective Motivation Certain motivators may have motivating effect on all employees rather than just an individual like : - Profit sharing Scheme* - Share Options / Schemes 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 81 7. Profit Sharing Monetary incentive where employees participate in business profits. Profit sharing ratio is decided in advance after consultation and involvement of employee representatives. May increase cooperation amongst all members that may push them to work harder. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 82  Advantages 1. Encourages cooperation and team spirit. 2. All members share profit. 3. Employees receive extra money. 4. May improve understanding and promote Employee – management relation. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 83  Limitations 1. Ignores individual or team efforts. 2. All workers share profits ; that may be a disincentive for highly efficient workers. 3. Profit is influenced by external factors like recession, tastes and preferences, etc. 4. In case of loss; workers do not gain any extra income. 5. Workers have to wait for long time to receive their rewards. 6. Trade unions may scrutinize accounts and give rise to internal conflicts. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 84 8. Co-Partnerships / Share options Employees participate in equity capital of a company. Employees become shareholders and may exercise control over the business. Employees participate in both, profit and management decisions through their representatives. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 85  Advantages: 1. Overall productivity may rise due to self motivated workforce 2. They receive dividend on shares held. 3. Employees participate in management decision making through representatives 4. Better control over work environment. 5. Integrates employees with the organisation, as they are also owners 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 86  Weaknesses 1. Eemployees take risk as other shareholders do. 2. Low sshareholdings may reduce employees’ say in management. 3. Employee backgrounds may not suit high level decision making..4. Employees have to wait long time to obtain dividends 5. Dividends are not guaranteed 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 87 Why Are All Employees Not Paid The Same pay? Reasons: 1. Market demand and supply 2. Level of hierarchy (post held) 3. Fringe benefits and other non-monetary rewards 4. Difference in productivity/output 5. Degree of responsibility 6. Weak trade union pressure 7. Employment legislation (wage policy) Mr. Sawdagur Devesh–52547325 88 - L HSC  NON-FINANCIAL MOTIVATORS Non-financial methods: Job enrichment Job rotation Team working Training Opportunities for promotion 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 89  NON-FINANCIAL MOTIVATORS Non monetary rewards or incentives provided to employees to improve their work and living standards and promote greater job satisfaction. Examples .Fringe benefits . Promoting Job satisfaction (job redesign) 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 90  NON-FINANCIAL MOTIVATORS 9. Fringe benefits (perks) Non monetary rewards that do not increase total earnings but improve standard of work and living of an employee.. Crèche facilities. Subsidised / free meals.Medical Insurance. Free memberships in clubs, birthday celebrations. Study leaves.Free holidays abroad. Graduate schemes. Discount on company products. Company car 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 91 10. Ensuring Job Satisfaction Job satisfaction is the mental feeling, which an individual has about his job. The pleasure and contentment associated to a job. If one likes his job intensely, one will experience high job satisfaction. If one dislike his job intensely, one experience job dissatisfaction. Job satisfaction ensures a high level of motivation. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 92  Ways Of Promoting Job Satisfaction: (a) Job Security (b) Job design and redesign: (i) Job rotation* (ii) Job enlargement or whole job concept (iii) Job Enrichment* 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 93 11. (a) Job Security Implies employee would continue in same plant elsewhere, and will enjoy economic and social security through: 1. Health and welfare programmes 2. Security against sickness – sick leaves, medical insurance 3. Security against unemployment disability – permanent contract 4. Security against old age and death – pension, lumpsum These act as a major motivator for most employees. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 94 Job Re-design Job re-design framed by Herzberg, provide encouragement to do a good job and get rid of ‘boring’ jobs for greater job satisfaction. Job redesign Methods:.Job Rotation.Job Enlargement.Job Enrichment May also include: delegation, empowerment and training. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 95  12. Job Rotation* Swapping from one job to another that are at the same level; so that monotony and boredom is reduced and the worker performs a job for short time. The basic objective of job rotation is to increase the skill and knowledge of the employee about related jobs and hence promote greater job satisfaction. Workers learn to do different activities necessary for an operation or a unit of work. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 96  Illustration Job Rotation Assume a Job consists of 4 Tasks Worker 4 performed by 4 groups of workers. Worker 1 Task 1 Rotation after 1 month Worker 2 Worker 3 Task 4 JOB Task 2 Worker 1 Worker 4 Task 3 Worker 3 Worker 2 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 97  13. Job enlargement or whole Job concept - Widening content of jobs by increasing operations in which the job holder is involved. - Increasing complexity of the job in order to appeal to higher order needs of workers. Employee performs more varied tasks that are on the same level which do not require higher level responsibilities. Attempts are made to give workers more complete or whole jobs to perform. Example: A typist also performing cognate duties like dispatching correspondence, receiving phone calls, record keeping, etc. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 98  Job Enlargement More tasks at same level J..............O.............B 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 99 14. Job Enrichment* Derived from Herzberg’s two-factor theory. It includes increasing the variety work content during the job design which provides employee with opportunity for greater recognition, advancement, growth and responsibility. The job is made more interesting and challenging through tasks requiring higher responsibilities. It is done by giving the worker more autonomy and by allowing him to do much of the planning and inspection formerly done by his supervisor. It is usually more successful at improving the quality of work rather than the quantity. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 100 Job Enrichment More tasks at higher level of responsibility J..............O.............B 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 101 15. TEAMWORKING / Cell Production* Production is organised so that groups of workers undertake complete units of work. Benefits: 1. Lower labour turnover 2. More ideas from workers 3. Higher quality when TQM is integrated 4. Worker motivation social and esteem needs are satisfied. 5. Fewer middle managers are required – which reduce management costs 6. Complete units of work can be given to teams – job enrichment Problems: 1. Not every worker is a team player – reserved/ introvert people 2. Team values and attitudes may not coincide to that of the organisation 3. Training costs 4. Disruptions in production till team stabilises Mr. Sawdagur Devesh– 102 52547325 - L HSC 16. TRAINING Imparting of work related education to employees satisfy their esteem needs and also provide them with necessary skills to perform better. This can enhance their morale, motivation and increase productivity besides self satisfaction. Mr. Sawdagur Devesh–52547325 103 - L HSC 17. OPPORTUNITIES FOR PROMOTION Promotion allows employees to satisfy their recognition needs and also what Herzberg calls the “satisfiers”. Fair promotion opportunities allows the employees to seek for career advancement and exert greater effort. Mr. Sawdagur Devesh–52547325 104 - L HSC 18. Delegation Of Authority - Delegation of a substantial amount of authority to subordinates to execute a given task - Often makes the subordinate feel important and trusted and determined to show results. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 105  FACTORS DETERMINING MOTIVATION METHODS 1. Management objectives 2. Prevailing wage rate 3. Incentives provided by other rival firms 4. Government policies and labour laws 5. Firms ability to pay 6. Availability of the required type of labour. 7. Owners’ objectives and attitude towards employees 8. Skills and qualifications 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 106  2.2 Organisation And Management 2.2 2.2.1 Draw, interpret and understand simple organisational charts: Organisation and Simple hierarchical structures: span of control, hierarchy, chain of command management Roles, responsibilities of directors, managers, supervisors, other employees in an organisation and inter-relationships between people in organisations 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 107  ORGANISATION STRUCTURE 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 108 What is an organisation? It consists of a group of individuals who come together for a common purpose. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 109 Forms of Organisation Objectives 1. Social Organisation 1. Social objective 2. Religious Organisation 2. Religious objective 3. Business Organisation 3. Business objective 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 110  INFORMAL AND FORMAL ORGANISATION 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 111  INFORMAL ORGANISATION 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 112  INFORMAL ORGANISATION FORMAL ORGANISATION Origin: Origin: Created deliberately and consciously by Created through socio-psychological forces at the framers of the organisation work place. Purpose: Purpose: Planned structure No specific structure Emphasis Emphasis Social relations that are unofficial in character Work specialisation and abilities Structure Structure Neither prescribed nor predetermined Has hierarchy of jobs, authority relationships, rules, procedure and codes of punishment in case of non Nature of Groups: observance – Represented through Quite unstable. organisation Chart. Nature of Groups: Quite stable 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 113  2.2.1 FORMAL ORGANISATIONS 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 114  FEATURES OF FORMAL ORGANISATIONS 1. Organisation Structure – represented through organisation chart 2. Hierarchy 3. Chain of command 4. Span of Control 5. Authority 6. Delegation 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 115 1. Organisation Structure Shows the layers of management and division of responsibilities within a formal organisation. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 116 2. Hierarchy Shows different layers of management and authority limits within a formal organisation. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 117  Levels of hierarchy Top Management Level Board of Directors, Chief Executive officers Middle Management Level Assistant managers, Supervisors, foremen, etc. Shop Floor Level Production line workers 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 118 3. Chain of Command Refers to the way authority, responsibility and communication passes down from higher levels towards lower management levels in a formal organisation. Demonstrates who has authority upon whom and the lines of communication that exist. Some organisations may have long chain of command while others short. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 119 4. Span of Control Shows the number of subordinates an immediate manager is responsible for. The number of subordinates who can be managed effectively by a superior. - Fewer the number of people reporting to the superior, larger the number of managers required. - A manager with a span of control of up to 7 subordinates is considered to have more effective control. Some organisation structures have wide span of control with few layers while others narrow span of control with many levels. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 120 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 121  Wide Span Of Control Example: CEO Manager A B C D Asst. Manager E F G H I J K L M Span for manager A = 5 i.e. E,F,G,H,I 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 122 Advantages Of Wide Span Of Control 1. Few layers of management – lesser supervision cost per subordinate 2. Better and easy top-bottom and bottom-up communication 3. Efficient use of supervisory human resources within the organisation 4. Only the deserved and most efficient is promoted 5. Competition amongst subordinates that may increase their individual productivity. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 123 Disadvantages Of Wide Span Of Control: 1. Shortens chain of command with few layers in its hierarchy. 2. Superiors spend much of their valuable time just supervising 3. Low motivation due to lesser scope of promotion at higher levels. 4. Superiors may not concentrate in important tasks 5. Work overload may increase labour turnover at the middle management level. 6. High risks of mismanagement and industrial relations problems. 7. Performance appraisal may not be easy. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 124 Narrow span of Control CEO Manager A B Asst. Manager C D E F Supervisors G H I J K Span for manager A =2 i.e. C,D Team L M leaders N O 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 125  Advantages Of Narrow Span Of Control 1. Better supervision and assistance to subordinates 2. Superiors have time for strategic tasks 3. Efficiency - more professionals at middle management level. 4. High confidence due to close supervision and assistance. 5. Quick response to organisation needs. 6. Employees have more scope to achieve higher positions within the hierarchy. 7. Better performance assessment of staff since superior appraise fewer subordinates 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 126 Disadvantages Of Narrow Span Of Control 1. High indirect labour (supervision) cost 2. Long channel of communication, messages may be distorted during transmission 3. Top management may not have all information concerning the shop floor level 4. May increase employee expectations in terms of promotions. 5. Requires well defined policy and formal relationship 6. Too close supervision may cause frustration and low motivation. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 127  FACTORS DETERMINING SPAN OF CONTROL 1. Size of organisation 2. Business strategy 3. Capability and level of training of subordinates 4. Work load of the superior 5. Management style Theory X or Theory Y 6. Organisational culture and trust 7. Technology 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 128 Authority The right to make decisions and the legitimate exercise of power. The power to make decisions that guide actions of another. - The scope and amount of discretion given to a person to make decisions by virtue of the position held within the organisation. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 129 Delegation Giving to a subordinate the discretion to make decisions within a certain, defined sphere of influence. - Delegation refers to giving the subordinate the authority to perform particular tasks. However, superior’s responsibility is not delegated. - It has the virtue of enlarging and enriching the experiences of the subordinates through training opportunities that enable them to advance in their careers. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 130 Example: Delegation of task by a shop manager to the shop assistant 1. Assist in recruitment of sales persons 2. Allocate daily tasks for sales persons 3. Monitor inventories and daily sales 4. Ensure proper arrangement of shop shelves 5. Such other tasks previously performed by the shop manager which he may no longer look into due to greater workload. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 131  Reasons / Need for Delegation of Authority 1. Expansion 2. Increase in workload at higher management levels 3. Restructuring 4. To increase promotion opportunities for employees 5. To ensure employee motivation 6. To assess employee performance on job. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 132  Reasons a Superior might not delegate 1. Lack of trust upon subordinates 2. Fear of being challenged or Due to high ego/ fear of job security threats 3. Change in strategy - e.g. downsizing 4. Nature of decision e.g. strategic decisions 5. Management attitude- autocratic 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 133  Factors To Be Considered While Delegating to Lower Levels. Effective delegation depends on: 1. Degree of trust on subordinates 2. Level of training of subordinate 3. Size of the organisation 4. Attitude and qualities of the subordinate 5. Type of decision or authority being delegated 6. Degree of responsibility of the subordinate. 7. Leadership quality of the subordinate 8. Competitor activities- or structure 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 134  Types Of Decisions That May Not Be Delegated. 1. Takeover/merger decisions 2. Decisions involving Very huge investments 3. Long term policy decisions. 4. Relocation decisions 5. Recruitment of higher management staff. Such other decisions that may affect the common purpose and mission of the business. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 135  ADVANTAGES OF DELEGATION TO SUPERIOR SUBORDINATES More time for strategic decisions Training to handle more important tasks Source of internal replacement Feel trusted Higher productivity due to motivation May be promoted if vacancy arises Promote better relations and understanding Closer and better guidance since superior holds full responsibility Help in better performance assessment Boost morale / satisfaction 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 136  PROBLEMS OF DELEGATION TO SUPERIOR SUBORDINATE Responsibility is not delegated Overloaded with tasks Increase subordinates’ expectation Cause frustration for being accountable of poor performance Over dependence upon subordinates May lack rewards/incentives 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 137  NEED FOR ORGANISATIONAL STRUCTURE 1. Personal identity - role of each member is defined. 2. Determination of responsibility - Fixes definite responsibility 3. Determination of authority - Defines authority and delegation of authority 4. Coordination - Sequence in which activities are to be performed are defined 5. Optimum staff use - As work to be done at each work point is known 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 138  FACTORS AFFECTING ORGANISATION STRUCTURE 1. Environment 2. Strategy 3. Technology 4. Size 5. People The above factors mainly affect : The number of levels, Number of divisions and Number of job titles that generally increase with the size of the organisation. The degree of formalisation also increases with size. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 139 ORGANISATION CHART - It is a pictorial representation of the organisation structure - Indicate formal relationship, locations and positions in the hierarchy. - Shows only the formal relationships at a given point of time - Informal relationships are not shown ; they are mostly transitory and flexible. Director Finance Human Production Marketing Resource Customer Clerk Typist Advertising & Sales services promotion dept. department 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 140  Example: Organisation Chart For A Sole Trader Owner Shop Assistant Cashier A Cashier 2 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 141 Importance of Organization Charts to employees? 1. Obtain information on the size, job positions and structure in the organisation 2. Know from whom to take orders and to whom to give 3. Identify their authority limits and span of control 4. Training Guide for promotion prospects 5. Communicate to outsiders 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 142  Uses of Organisational Charts 1. Management tool 2. Avoidance of overlapping and duplication 3. Solution of organisational conflicts 4. Training Guide 5. Reference for outsiders 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 143  Limitations 1. Rigidity 2. Partial View 3. Inappropriate description 4. Psychological problems 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 144  Forms of organisational structure Approaches to Organisational structures: 1. Tall and Flat Structure 2. Functional 3. Line and Staff 4. Centralised and Decentralised… 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 145 1. Tall Structure CEO Manager A B Assistant Manager C D E F G H I J K Span for manager A =2 i.e. C,D L M 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 146  Features 1. Long Chain of command 2. Narrow Span of Control 3. Many layers of management 4. Greater supervision Cost 5. Closer supervision 6. High delegation 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 147  Benefits 1. Better supervision and control over subordinates 2. Greater promotion prospects for subordinates 3. Superiors may easily assess performance of subordinates 4. Motivated staff 5. High delegation to subordinates. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 148  Problems 1. Communication takes time 2. Subordinates may not know top management. 3. Higher supervision Cost 4. Subordinates may be overloaded with delegated tasks 5. May raise employee expectations. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 149  2. Flat Structure CEO Manager A B C D Asst. Managers E F G H I J K L M 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 150  Features 1. Short Chain of command 2. Wide Span of Control 3. Short Channel Of communication 4. Lesser supervision Cost 5. Competition amongst subordinates 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 151 Benefits 1. Quicker communication 2. Subordinates are closer to top management due to few layers of management. 3. Lesser supervision Cost 4. Only best is promoted 5. Competition amongst subordinates may generate greater efficiency. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 152  Problems 1. Managers are overloaded with supervision tasks 2. Frustration amongst subordinates to achieve higher levels 3. Performance appraisal becomes difficult 4. High labour turnover at middle management level. 5. Ineffective supervision and control may result in high wastages. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 153 3. Functional Organisational Structure: Created by grouping organisational activities on basis of functions. Functions are classified into basic, secondary and supporting functions according to their nature and importance. Establishment of functional structure becomes necessary as a small organisation grows and business activities become complex. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 154  Example: Director Finance Human Production Marketing Resource Sales Clerk Typist Advertising & Customer department promotion dept. services 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 155 Advantages 1. High degree of specialisation, a unit or department is concerned with one aspect of overall activities. 2. Brings order and clarity by prescribing what is expected to do. 3. Greater job satisfaction and professional achievement due to being restricted to his own area of specialisation. 4. High degree of control and coordination of functions. 5. Clear chain of command for communication and authoritative decisions. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 156  Drawbacks 1. Responsibility for ultimate performance cannot be fixed as no one is responsible for product cost and profit. 2. Each department focuses on its contribution to the product and not the entire product. 3. Decision-making is slow, as it has to go through various departments. 4. Lacks responsiveness to cope with urgent situations 5. Give rise to line and staff and interdepartmental conflicts. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 157 3. LINE AND STAFF ORGANISATION An organisational pattern in which individual specialists and groups of specialists advise ‘line officers’ on the special aspects of their activities. The staff members concentrate in the research and planning aspects of business problems while the line officials are left free to devote their attention on the execution of policy. In order to complete a job and attain specific objectives; staff officers provide advice, consultancy services or give direction and supply up to date and accurate information to line officers. Management encyclopaedia 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 158  STAFF Managers LINE Managers Staffs Think Line managers Do Advise Do Say do like this Say Just to do Have ideas and Knowledge Have the authority to command Analyse and recommend Perform Nothing to do with the product Have something in connection with the product Tell lines what to do Tell the staff when to do. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 159  LINE & STAFF ORGANISATIONAL STRUCTURE CEO Advise Staff Managers IT HR Legal Economist Consultant Consultant Advisor Advise Marketing Line Finance HR Manager Production Managers manager manager manager Line Authority Accountant Auditor Assistant Assistant Clerk1 Clerk2 Sales men Sales men 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 160  Characteristics of line and staff organisation 1. Unity of command through specialisation 2. Cooperation of line- staff officers 3. Quick and expert services 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 161 Advantages 1. Specialisation in each field provides greater efficiency. 2. Proper distribution and division of work 3. Increase in Know how and skill 4. Quick Expert advise useful in time based competition. 5. Promote team working and greater confidence amongst line officers. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 162  Disadvantages 1. Line and staff conflicts 2. Possibility of misunderstanding 3. Lack of direct command or control 4. No measurement for specific or extraordinary skills. 5. Over dependence on staff officers. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 163  Reasons For Line And Staff Conflicts: 1. Differences in opinion 2. Staff officers have no direct authority 3. Poor coordination 4. Overdependence on staff officers 5. Too high goals set by staff officers 6. Unclear job description 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 164  Effective Line And Staff Organisation 1. Clear definition of authority and responsibility 2. Staff officers’ work should be defined through clear job descriptions 3. Staff officers should advise line officers voluntarily 4. The duties of line officers should be stated 5. Advice to both line and staff by top officers 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 165  CENTRALISATION V/S DECENTRALISATION Centralisation Management concentrates on unity of command and decisions are reserved for few managers at higher levels rather than delegating towards lower levels. When powers are reserved for the central authority and authority to be exercised by the lower staff is limited. Prof. Allen 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 166  Centralisation Advantages Disadvantages 1. Unity of command and action 1. Top management may be overloaded with information 2. Maintains originality of information 2. Delay in implementation of decisions 3. Quicker decisions 3. No delegation of authority to lower levels. 4. Top management knows all details on the organisation 5. Standardisation of policies and decisions 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 167 Decentralisation Decentralisation is the systematic effort to delegate to lowest levels all authority except that which can only be exercised at central points. Prof. Allen 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 168  Forms of Decentralisation. Functional Decentralisation – Function wise Federal Decentralisation - Product wise Regional Decentralisation - Region wise Project wise decentralisation - Project wise 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 169 1. Functional Decentralisation Each functional department head take all decisions concerning their specialisation except very important decisions that are reserved for higher levels. Example: Marketing department take all decisions concerning marketing activities. 2. Federal Decentralisation Appropriate for businesses producing wide range of products. They delegate authority to each product manager to take decisions concerning each product but very important decisions are still reserved for higher levels. 3. Regional Decentralisation Each branch manager is delegated power to take decisions concerning his branch except certain vital decisions that are reserved for higher levels. Appropriate for Large businesses e.g. Multinationals, large local firms 4. Project Wise Decentralisation Useful for businesses handling many projects at a time. Each project or team manager has the authority to take decisions concerning their activities except very important decisions that are reserved for higher levels. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 170  Decentralisation Strengths Weaknesses 1. Reduces responsibility towards more 1. Decisions, procedures may lack uniformity managerial units 2. Capable managers are often reluctant to 2. More Personnel development in decision- participate in decision making making process. 3. Creates problems of coordination between 3. Shortens lines of communication separate organisational units 4. Places decision making close to situations 4. Inter unit conflicts and rivalry can interfere affected by decisions with the organisational operations. 5. More people participate in decision-making. 5. Hidden costs arising through duplication of 6. Delegation towards lower levels staff work. 7. Facilitate performance assessment 6. Ineffective in making quick decisions 7. Lack of unity of command and control 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 171  Factors Affecting Extent Of Decentralisation 1. Size - as it grows control may become difficult. 2. Strategy – expansion may necessitate more delegation 3. Location – in different areas regional decentralisation would be important 4. Type of operations – Many and complex operations need greater decentralisation. 5. Environment – Changing business environment, external factors. 6. Management style - Autocratic more centralised decisions 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 172  BUSINESS FUNCTIONS 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 173 Business Functions: 1. Finance 2. Human Resource 3. Production 4. Marketing 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 174 Business Functions: Business Functions: 1. Finance 2. Human Resource/ 3. Production 4. Marketing Administration Wage & Salary Training & Industrial Sub-functions Administration Development Relations 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 175 Function 1: Finance It is concerned with the identification and selection of appropriate sources of finance, preparation of financial statements and forecasts , managing working capital, etc. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 176 Function 2: HR & Administration These activities is mainly concerned with the management of personnel (people) in an organisation. These include: Manpower planning, Recruitment, selection, Training & development, Wage & salary administration, Industrial relations, Performance appraisal, Welfare programmes, etc. In some larger organisations the administration department is kept separate from the HR department that looks after reception, switchboard, typing, photocopying, secretarial and computer services, etc.: 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 177  Function 3: Production This activity is concerned with the making of goods and services. It includes: Production planning, Product research, Selecting Production methods, Quality control and assurance Inventory management and control, etc. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 178 Function 4: Marketing Concerned with the identification of consumer needs, anticipating and satisfying the needs profitably. It includes: Conducting marketing research Product design and development Devising appropriate marketing mix strategies concerning Product, price, promotion and place, etc. Developing marketing plans, etc. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 179  EFFECTS OF GROWTH ON BUSINESS FUNCTIONS 1. Finance Function More capital has to be injected to finance expansion. Huge capital investment may necessitate further finance through financiers. Rates on credit need also be negotiated so that the strain in cash flow is minimised. The department may need to be restructured to fit growth objective. 2. Human Resource Function When businesses grow more personnel may be recruited at different level. May need to set up separate HR dept. and other sub functional departments to cater for larger number of employees. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 180 3. The Marketing Function May have to frame different marketing strategies to satisfy larger markets. Distribution channels may have to be changed to reach greater customers. May have to persuade the existing outlets to purchase more and even look out for newer markets to sell the additional outputs. The department may need to be restructured to fit growth objective. 4. Production Function More investment in equipment may be required to meet production targets. Scale and techniques of production may need to be altered. For instance, continuous flow production may be adopted instead of batch/ intermittent production techniques. More effective Inventory and quality control systems may need to be implemented. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 181  2.2.2 The Role of Management 2.2 Organisation and management 2.2.2 The role of management: Functions of management – planning, organising, co-ordinating, commanding and controlling Importance of delegation; trust versus control 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 182  Management 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 183  MANAGEMENT Definition Management is the art of getting things done through people in formally organised groups. Harold Koontz 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 184 Roles & Responsibilities. 1. Setting organisational objectives 2. Organising resources 3. Controlling resources 4. Communicating 5. Coordinating activities 6. Motivating staff 7. Appraising staff 8. Assessing the training needs of its employees 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 185  Management Functions POCCC 1. Planning 2. Organising 3. Controlling 5 main functions 4. Commanding/Directing 5. Coordinating 6. Motivating Other functions 7. Staffing 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 186  Management Functions 1. Planning Involves forecasting and preparing business plans like manpower plan, financial plans, production plans, marketing plans, etc. 2. Organising Making arrangements for resources for execution of plans like money, manpower, machines, framing organisation structure, etc. 3. Controlling Monitoring all activities by analysing performance/output/productivity from previous results to ensure that there is no deviation from set goals. 4. Commanding / Directing Such involves giving orders and instructions to ensure maintenance of activity with no deviation. 5. Coordinating Involves linking all activities, functions and resources to focus on a common organisational goal. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 187  Management Responsibilities Finance Department 1. Prepare forecasts and budgets 2. Advise and arrange for appropriate sources of finance 3. Keep records of all business transactions. 4. Prepare financial statements. 5. Control all financial aspects to avoid inefficiency. 6.Liaise with other departments for better coordination. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 188  Management Responsibilities Human Resources Department 1. Prepare manpower plans 2. Recruitment and selection 3. Assessing staff training needs 4. Wage and salary administration 5. Ensure Discipline and adherence to HR policies 6. Negotiation with employee representatives 7. Conduct HR audits 8. Ensure employee motivation 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 189  Management Responsibilities Production / operations department 1. Plan production / operations 2. Prepare production Budgets and forecasts 3. Look for appropriate supplies of Inventories 4. Manage and control Inventories 5. Select.appropriate production methods. 6. Conduct research and development 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 190  Management Responsibilities Marketing department 1. Develop marketing plans and strategies. 2. Conduct market research (surveys) 3. Design and develop new products prototypes 4. Decide on appropriate and coordinated marketing mix 5. Forecast and analyse sales data. 6. Identify. market gaps and explore profitable market segments 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 191  Importance Of Delegation 1. Increase job satisfaction 2. To provide the feeling of Subordinates being trusted 3. For Staff development that satisfy recognition needs 4. So as not concentrate authority on just few managers 5. Allow managers time to concentrate towards more important tasks 6. Increase sense of responsibility of superiors 7. Facilitate future internal recruitment / replacement 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 192 Trust versus Control 1. Managers are reluctant to delegate due to lack of trust. 2. Managers fear of losing control when tasks are completed by subordinates 3. Insecurity of managers - Fear that subordinates can do a better job. 4. Trust is vital element for managers to delegate 5. Trust is vital for reducing control over workers 6. Trust is important for greater sense of belonging 7. Trust improves employee morale and job satisfaction 8. Trust satisfies esteem of workers. 9. Trust can allow a laissez faire management style 10. Trust could reduce supervision costs 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 193 2.2 Organisation and management 2.2.3 Leadership styles: Features of the main leadership styles – autocratic, democratic and laissez-faire 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 194  2.2.3 Leadership Styles “Management is doing things right, leadership is doing the right things” Peter Drucker 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 195 Who is a leader? A leader is one who has followers. Classification Example.Political Leaders Bill Clinton, M.K.Gandhi.Religious Leaders Moses, Pope Benoit 16 Social Leaders Mother Theresa, Business Leaders Managers,CEO’s, etc.e.g Bill Gates 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 196  LEADERSHIP THEORIES: “Leadership is the process of influencing the activities of an individual or a group towards the achievements of a goal in a given situation.” Paul harsely 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 197  What is leadership? “It is influencing people to follow you and to work willingly the things that you want them to do” “It is the ability to shape the attitudes and behaviour of others, whether in formal or informal situation.” “It is the process of inducing a subordinate to behave in a desired manner”. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 198 “ All people are potential leaders and given the desire and opportunity, people can develop into effective ones..” Robert Dubin 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 199  Leadership and Management Importance of leadership in management 1. Serves as a motive power to group efforts. 2. Helps the manager to exercise authority towards the objectives. 3. Required at all levels in the organisational structure (MBO). 4. Eliminates maladjustment. 5. Promotes team spirit and cooperation in management. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 200 Qualities Of A Leader / Manager: 1. Willpower 2. Judgement 3. Flexibility 4. Integrity 5. Courage 6. Self Confidence 7. Moral qualities 8. Self Sacrifice 9. Paternalism 10. Fairness 11. Initiative 12. Decisiveness 13. Dignity 14. Knowledge of people / emotional intelligence. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 201 Leadership Styles & Effectiveness The style is the way in which the leader influences its followers. Managers may influence their followers in various ways. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 202  Leadership Styles 1. Autocratic / authoritarian / leader centered leadership 2. Democratic / Consultative / participative or group centered leadership 3. Laissez faire / free rein/individual centered leadership 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 203  Autocratic / Authoritarian / leader Centered Leadership Leader makes decisions without consultation with others. He believes in secrecy, gives strict orders and allows no deviation. Example An orchestra maestro Ship /Army Captain 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 204  Features 1. An autocratic leader is work centered or leader centered 2. Concentrates all authority and decision-making powers on himself. 3. He believes in secrecy rather than sharing ideas and information. 4. He structures the complete work situation for his employees. 5. He tolerates no deviation from his strict orders. 6. Followers are often unaware of organisation goals due to secrecy. 7. Decision making is under his full responsibility 8. The leader is the sole to direct, motivate and control his subordinates 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 205  Appropriateness/Effectiveness 1. When urgent decisions need to be taken. 2. When workers are unskilled; untrained and avoid work (Theory X managers) 3. In Centralised structures, when decisions are reserved for few managers 4. Where employees have to strictly abide to instructions e.g. scientists, army. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 206 Criticism 1. Ineffective communication leads to misunderstandings and subsequent mistakes 2. No consultation with workers may result in poor decision making 3. It is usually termed as negative leadership 4. High degree of dependency on the leader cause delays 5. Can cause de-motivation and alienation of staff due to fear, insecurity and reprisal 6. Objectives may not be clear to employees due to secrecy. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 207 2. Democratic or Group Centered Leadership This style centralises managerial authority. Leader consults followers but he reserves authority to take final decision. They do not delegate to juniors their rights and responsibilities but give specific directives to their subordinates. Participative leaders call for subordinates’ high degree of responsibility. Self-esteem is recognised which promote job competence. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 208 Appropriateness : 1. Employees are knowledgeable and experienced in work assigned to them. 2. An established and successful work group has already been formed and is successfully working to realise its objectives. 3. Job calls for teamwork and cooperation among employees 4. Manager aims at improving morale and group attitudes towards management. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 209  3. Laissez Faire / Individual Centred Leadership Described as “no leadership at all” that believes “one who leads least, leads best”. The leader delegates the authority for decision making rather completely. Group establish own goals within the framework of organisational policy. The leader expects subordinates to be self-motivated - There is very little ground rules and - The leader provides very minute guidance and support to its followers. Leader acts as a liaison officer between outside sources and ensure that necessary resources are available to the group. A permissive style whereby the leader has a rather passive role to play in the social participation 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 210 Appropriateness 1. Goals and objectives are clear to subordinates. 2. Business practices, use rewards and involvement for motivation and control. 3. Leader is truly interested in consulting subordinates before decision making 4. Subordinates desire involvement in matters that affect them. 5. Group has a proven record of cooperation and performance. 6. Workers work independently with little or no direct contact with supervisor. 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 211 Factors Determining Leadership / Management Style : 1. Type of staff and level of training 2. History of the business- Previous style 3. Accepted norms within the institution 4. Nature of the changes needed 5. Quality of the relationships 6. Culture of the business- may be long embedded and difficult to change 7. Nature of the task – needing cooperation? Direction? Structure? 8. Type of business – creative business or supply driven? 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 212  2.2.4 Trade Unions 2.2 Organisation and management 2.2.4 Trade unions: What a trade union is and the benefits of workers being union members 09/01/2022 Mr. SAWDAGUR Devesh - 52547325 - F4+5 213 Trade Union An association or group of workers who come