CONCEPT OF MANAGEMENT THEORY AND PRACTICE

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 NATURE OF MANAGEMENT
WHAT IS MANAGEMENT?
The term ‘management’ has several meanings, depending on context purpose. Almost everyone has
opinions about what management is? As a result there is no definition of management on which
everyone agrees. There is no universally accepted standard definition of management. Moreover,
management is concerned with human beings whose behaviour is highly unpredictable.

Planning
Organizing Organizational
Management Staffing Subordinates Effectiveness
Directing
Controlling

What Management Is?

DEFINITIONS OF MANEGEMENT
Management is a process of planning, organizing, staffing, coordinating and controlling subordinate
to realize organisational goals.

(a) It is the process ‘by which managers create, direct, maintain and operate purposive
organizations through co-ordinated, co-operative human effort.’ [Mc Farland].

(b) ‘To manage is to forecast and to plan, to organize, to command, to control to co- ordinate
and to control; [Henery Fayol].

(c) ‘Management is a distinct process consisting of planning, organizing, actuating and

controlling to determine and accomplish the objectives by the use of people and
resources.’ [Terry].

(d) ‘Management is the accomplishment of results through the efforts of other people.’
[L.A. Appley]

FEATURES OF MANAGEMENT
1. Management is purposeful. It is the process of efficiently getting activities completed with
and through other people. Goal orientation and action focus provide the benchmarks for
managerial operation achieving results here implies mobilization, interaction and judicious
employment of resources (human as well as physical and financial resources) in a disciplined
manner.
2. Management is concerned with ideas, things and people. Management is “the dynamic life
giving element in every enterprise”.it provides the dynamic force necessary to convert
disorganized - sources of men, machines and materials into a useful, productive organization.

3. Management is a social process according to Newman, management is a social process because

managerial actions art chiefly concern with relation between people. Managers are needed to
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 direct co-ordinate and regulate human efforts in order to accomplish predetermined
organisational goals.

4. Management is a coordinating force. A significant part of management’s job is the

coordination of the efforts of employees each of whom has his own value and aspirations, into
a company programme.

5. Management is concerned with group efforts. An organization basically comes into

existence to achieve certain objectives which are attained more easily by a group than by an
individual working alone.

6. Management is an activity. Management is a discerningly distinct activity. It can be studied,

knowledge about it obtained, and skill in its application acquired.

7. Management is a composite process. The management process, according to Brech, is not a

‘series of separate functions (planning, organizing, directing and controlling) which can be
performed independently; it is a composite process made ‘tip of these individual ingredients.
No single function can be performed without involving the others.

8. Management acts as a creative and invigorating force in the organization. It creates a

result that is bigger whole than the sum of total of efforts put in by the group. According to
Urwick and Brech, No ideology, no ‘ism’, no political theory can win a greater output with
less effort from a given complex of human and material resources, only sound management’.

9. Management is a dynamic discipline. It is a dynamic and growth oriented function.

According to Drucker managing is not just passive, ‘but adaptive behaviour; it means taking
action to make the desired results to come to pass. Manager is a creator not a creature of the
economy. Managers do not wait for future, they make the future. In fact, the hallmark of
successful managers is the ability to visualize a problem before it becomes an emergency.

10. Finally, as pointed out by Terry, management is intangible. It is an unseen force. Its presence
is often evidenced by the results of its efforts, that is, orderliness, adequate work output,
satisfactory work climate, employee satisfaction. etc.

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 FUNCTIONS OF MANAGEMENT
AND
FUNCTIONS, ROLES, SKILLS AND LEVELS

WHAT DO MANAGERS DO?

A manager is one who is responsible for subordinates and other organizational resources. Managers
in this sense include organizational planners, organizers, leaders and controllers. One simple
definition of a manager may be: “a manager is what a manager does.” According to James A. Stoner,
managers perform the following activities:
o managers work with and through other people.
o managers bear the final responsibility for results.
o managers balance competing goals and set priorities.
o managers think analytically and conceptually.
o managers make difficult decisions and assume risks.

Obviously, managers are charged with diverse tasks and multifarious responsibilities. The nature and
importance of these activities depends on the level at which the managers are operating in an
organization. There are basically two approaches to look into the managerial performance in
organizations:

THE FUNCTIONS APPROACH

1. Planning. Planning is concerned with future. Planning anticipates and precedes action. It is
basically concerned with determining the objectives of the firm and the means for achieving them.
It is the choosing of effective course of action from among various alternatives. The planning
process starts with the selection of goals for the organization m among several alternatives. The
objectives are established for the subunits of the organization—its divisions, departments and so
on. Usually top management plans for longer periods mid decide the future course of action for
the organization as a whole. Planning at lower levels covers much shorter periods and is basically
concerned ‘with translating the plans into concrete action. Planning pervades management. It is
performed at all levels in the organization.

2. Organizing. After objectives and plans have been established, management must then organize
human and physical resources of the firm. They must design and develop an organization that
will enable members to carry out the chosen programmes successfully. Viewed broadly,
organizing includes the provision of physical facilities, capital and personnel. It is also concerned
with the determination of relationships among functions, jobs and personnel. The manager creates
a structure of relationships that connects each employee, directly or indirectly, to the organization
head. The connecting lines between superiors and subordinates provide for communication and
transmission of plans, instructions, problems and progress reports between the two.

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3. Leading. After plans have been formulated and the structure of organization has been determined,
the next step would be to direct supervise the employees toward organization goals. The leading
function, simply stated, is getting the employees to do the things you want them to do. Therefore,
it involves the leader’s qualities, styles id power as well as the leadership activities of
communication, motivation and discipline. The activity of leading is more interesting and
challenging than the functions of planning and organizing, which deals with abstract aspects of
management process. Leading is interest because it involves working with people directly.

4. Controlling. Controlling is devising the ways and means of assuring that planned performance is
actually achieved. Through controlling function, the manager keeps the organization on the right
track. Controlling can be either positive or negative. Positive control tries to ensure that the
organizational goals are effectively and efficiently achieved. Negative control tries to insure that
unwanted c undesirable activities do not occur or recur. Essentially, controlling function involves
three elements: (1) establishing standards of performance, (ii) measuring current performance
and comparing it against the established standards, and (iii) taking action to correct any
performance that does not meet those standards.

MANAGEMENT FUNCTIONS VS. MANAGEMENT LEVELS

Managers at all levels of an organization need to plan, organize, lea and control. There are, however,
differences among managers about the amount of time they devote to each of these functions.

As shown above, the amount of time that lower level managers spend on planning is much less than
top-level ones. At lower levels, management personnel spend relatively more time in directing. In
contrast, managers at higher levels spend a greater proportion of their time on planning.

Top Level Planning

Organi
sing
Middle Level Control
ling

Directing
Lower Level
Management functions at various levels

Planning at higher levels also tends to be long range planning. The amount of time spent on the
controlling function is fairly consistent at all levels of management except at the very top level such
as president. At this high level, the president is concerned with overall control of resources essential
to the very survival of firm. It should, however, be noted that the time devoted to the organizing
function is fairly consistent at all levels of management. Again, at lower levels, managers may be
specialists, but at higher levels, it is necessary that they be generalists who can see beyond the
boundaries of functional areas.

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MANAGEMENT SKILLS vs. MANAGEMENT LEVELS
In order to be effective, a manager must possess and continuously develop several essential skills.
Robert L. Katz has identified three basic types of skills—technical, human and conceptual—which
he says are needed by all managers.

Technical skill is the ability to use the procedures or techniques of a specialized field. Technical skill
is very crucial to the effectiveness of lower level managers because these persons have direct contact
with employees performing work activities within the firm.

For instance, the success drilling supervisor on an oil rig depends a great deal on his technical
knowledge of drilling. However, as one moves to higher e-J of management within the organization,
the importance of technical skill diminishes because the manager has less direct contact with day-to-
day problems and activities. Thus, the president of an oil company does not need to know much of
the technical details of drilling for oil or how to refine it,

Human skill is the ability to work with, understand and motivate other people. This skill is essential
at every level of management within the organization, but is particularly important at lower levels of
management where the supervisor has frequent contact with operating personnel.

Conceptual skill is the mental ability to coordinate and integrate the organization’s interests and
activities. It refers to the ability to see the ‘big picture’, to understand how a change in any given part
can affect the whole organization is interrelated and contributing to the primary goals of the firm.
According to Katz, all three of these skills are essential to effective management. However, their
relative importance to a manager depends on his rank in the organization. The relationship between
management levels and managerial skills is shown below:

Conceptual Conceptual Conceptual

Human Human Human

Technical Technical Technical

Relative managerial skills needed for effective performance at different levels of

management

As shown in Above technical skill is the most important at the lower levels of management and it
becomes less important as one moves up the hierarchy. Human skill is important at every level of the
organization. Finally, the importance of conceptual skill increases as we rise in the ranks of
management. For top management, which is charged with the responsibility for overall performance,
conceptual skill is probably the most important skill of all. To be effective, a manager must develop
and practice each of the managerial skills in the organization. He need not concentrate his efforts on
one or only a few of the above skills. Striking a happy balance between these skills is all that is
required.

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THE ROLES APPROACH (THE ACTIVITIES APPROACH)
In the late I960s Henri Mintzberg pointed out that there were actually ten different but highly
interrelated roles played by managers. This is a new and alternative view of the job of managing that
explains how managers spend their time and perform their work. The term ‘managerial roles’ refers
to behaviours attributable to a job or position. After examining the work of five Chief Executives,
Mintzberg concluded that managers perform ten roles that can be described under three general
categories: interpersonal, informational and decisional.

1. Interpersonal Roles
Interpersonal role help the manager keep the organization running smoothly.

Figurehead role when they perform duties that are ceremonial and symbolic in nature. These include
greeting the visitors, attending social functions involving their subordinates (like weddings, funerals),
handing out merit certificate workers showing promise etc.
The leadership role includes hiring raining, motivating and disciplining employees.
The liaison role when they serve as a connecting link between their organization and other or
between their units and organizational units.

Formal Personal
Authority Characteristics
And Status and Skills

Interpersonnal Informational Roles Decisional Roles

Roles
 Monitor  Entrepreneur
 Figurehead  Disseminator  Disturbance
 Leader  Spokes Person Handler
 Liaison  Resource Allocator
 Negotiator

Roles played by managers

Mintzberg described these activities like acknowledgements of mail, external board work etc. are
include in category.

2. Informational Roles – These includes

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 (i) Monitor: manager serves as a receiver and collector of information
(ii) Disseminator: manager transmits special information within the organization

(iii) Spokesperson: manager disseminates the organization’s information into its environment.

3. Decisional Roles
There are four decision roles the manager adopts.

Entrepreneur Role, the manager tries to improve the unit. He initiates planned changes to adapt to
environmental challenges.

As disturbance handlers, managers respond to situations that are beyond their control such as strike,
shortages of materials, complaints, grievances etc.

Resource Allocator: This role is perhaps the most unpopular one that managers are responsible for
allocating human, physical, and monetary resources.
As negotiators, managers not only mediate in internal conflicts but also carry out negotiations with
other units to gain advantages for their own unit.

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 CONCEPT OF ORGANIZATIONS
DEFINITIONS AND CHARACTERISTICS OF ORGANIZATIONS
According to Hodge and Anthony, an organization can be thought of as a group of two or more
people working cooperatively toward a common objective or set of objectives.
Edgar Schein. According to him, "an organization is the rational co-ordination of the activities of a
number of people for the achievement of some common explicit purpose or goal, through division of
labour and function, and through a hierarchy of authority and responsibility". Gibson et al. define
organizations as devices for pooling and harnessing talent and ability together into an effective whole
that can achieve for them some desired objectives.
Organization as a group of people working together to achieve a special purpose which cannot be
achieved by an individual working alone.
The main characteristics that are common to all types of organization are as follows:-
i) Purpose or Objective: Every organization has a purpose or objective or goal which it is
attempting to accomplish, which brought it into existence and which provides a rallying point
for all the activities of its members. Apart from serving as a common bond for the unification
of the efforts and activities of an organization’s members, goals are a means for measuring
the organization’s performance or benefits to its members.
ii) Task or Activity: Every organization carries out a major task of one kind or another which
relates to and is directed towards the realization of its mission or objectives. For instance, the
primary task of a bank is to provide financial intermediation.
iii) Division of Labour: Every organization uses a system of division of labour whereby each
member is allocated a fraction of the task of the organization. The resulting specialization
increases individual output and overall organizational efficiency.
iv) Hierarchical Structure of Authority and Responsibility: Every organization has a form of
structure through which the activities and efforts of its employees are co-ordinated. This
system of structural relationships is established to attain co-operation in group activity and to
achieve desired goals.
v) Input-Output Process: All organizations obtain resources or inputs from the external
environment and turn these into outputs which are sent back to the external environment. The
inputs are referred to by economists as the factors of production and they include money,
machines, equipment, materials, labour, and information. The outputs are the goods and
services which are made available to buyers or members of the organization.

TYPES OF ORGANIZATIONS
Organizations have been classified differently by various authors each using different classification
methods and criteria. An understanding of the types of organizations that exist is essential in order
to know the particular problems of each organization type and to appreciate why organizations
behave differently.

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As noted above, several typologies of organizations have been formulated by organization theorists.
The most popular of these typologies are those developed by Parsons (4), Blau and Scott (5), Katz
and Kahn (6), and Thompson (7).
The Parsonian typology makes use of the function that is performed or the goal that is sought by an
organization as the basis of classification. According to him, all organizations can be classified
according to their function or goal. On this basis, he identifies four types of organizations namely:
i) Production Organizations: i.e. organizations that make things or products e.g. Guinness Ni-
geria Plc.
ii) Political Organizations: i.e. organizations that are concerned with ensuring that society as a
whole achieves its objectives e.g. Government establishments.
ii) Integrative Organizations: i.e. organizations that deal with the resolution or settling of
conflict and ensuring that the various parts of the society fit together well e.g. the Judiciary.
iv) Pattern Maintenance Organizations: i.e. Organizations that provide for the renewal, per-
petuation or continuation of society by performing educational, religious and cultural
activities e.g. the Schools and Universities, the Church, the family, etc.
The typology developed by Blau and Scott makes use of the primary beneficiaries of the
organization’s output (Cui Bono) as the classification criterion. According to them,
organizations can be classified into the following types:
a) Mutual Benefit Associations: i.e. organizations in which the members are expected to be the
prime beneficiaries. Examples are political parties, trade and professional associations, reli-
gious sects, voluntary clubs, etc. The crucial issue facing this type of organization is how to
maintain membership control i.e. internal democracy. This involves finding solutions to the
problems of membership apathy and oligarchical control.
b) Business Concerns: i.e. organizations in which the owners are expected to be the prime
beneficiaries e.g. industrial firms, banks, insurance companies, wholesale and retail stores,
and similar organizations privately owned and operated for a profit. The crucial problem
facing business concerns is how to maintain operating efficiency i.e. how to achieve
maximum gain at a minimum cost.
c) Service Organizations: i.e. organizations in which the prime beneficiaries are the part of
members of the public who come in direct contact with the organization, with whom and on
whom the members of the organization work. The basic function of a service organization is
to serve clients. Examples are social-work agencies, hospitals, schools, mental health clinics,
legal aid societies and human rights organizations. The crucial problems of service
organizations is how to provide professional services that meet the needs of their clients.
d) Commonweal Organizations: i.e. organizations in which the prime beneficiary is the public-
at-large. Examples are the military service, the police force, fire service departments, the
Board of Inland Revenue, the Customs and Excise, etc. The main issue that a commonweal
organization must resolve is how to maintain external democratic control i.e. how to ensure
that the public possesses the means of controlling the ends served by the organization.

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The typology developed by Katz and Kahn also makes use of the goals sought or function performed
to classify organizations. Their classification scheme provides four types of organizations namely:
i) Production or Economic Organizations: i.e. organizations which exist to provide goods and
services for society. They are concerned with the creation of wealth, the manufacture of
goods, and the provision of services for the general public or for specific segments of it.
Examples are manufacturing companies, mining and farming enterprises, banks and
insurance companies, etc.
ii) Pattern Maintenance Organizations: i.e. organizations which socialize or prepare people for
their roles in other organizations and the larger society. They prepare people to enter other
institutions smoothly and effectively, Examples are schools and religious organizations.
iii) Adaptive Organizations: i.e. organizations that are concerned with creating knowledge and
developing and testing theories. They are also concerned with applying information to
existing problems. Examples are the Federal Institute of Industrial Research, the Raw
Materials Research and Development Council and the Universities.
iv) Managerial or Political Organizations: i.e. organizations that are responsible for adjudicat-
ing, co-ordinating and controlling the use of resources, people, subsystems and authority.
Examples are government regulatory agencies.
The classification scheme developed by Thompson is based on the types of technologies that
are used by different organizations. Thompson used this factor to classify organizations as
follows:-
i) Organizations Using Long-Linked Technology: i.e. organizations that are engaged in basic
assembly-line operations and are performing functions that must be executed in a timed se-
quence. Examples are the automobile industry and the building and construction industry.
ii) Organizations Using Mediating Technology: i.e. organizations that are concerned with
bringing together groups of people such as clients or customers who wish to remain
independent. Examples are financial institutions which attempt to match the needs of
borrowers with those of lenders.
iii) Organizations Using Intensive Technology: i.e. organizations that bring together a variety of
highly technical skills or methods in order to change a person or object. Examples are computer
manufacturing and service firms, electronic manufacturing firms, aircraft manufacturing and
maintenance firms, e.tc.

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WHAT IS MANAGEMENT AND ORGANIZATION THEORY?
Before we define management and organization theory, let us see what a theory is:
Dubin defines a theory as an explanation of some phenomenon which consists of principles that
describe observable relationships
Blaylock defines a theory as an explanation of a set of component parts and their relationships in a
way that permits some prediction to be made about how the parts are likely to behave under given
conditions
A theory is a set of ideas which claims to explain how something works. In other words, a theory
contains a set of assumptions which are relevant and which derive from empirically tested definitions
or hypotheses, the assumptions being drawn from real world events with which they are actually
concerned and which they attempt to explain. A theory is any statement or group of statements
established by reasoned argument based on known facts, intended to explain a particular fact or event.
Having stated what a theory is, let us proceed to define management and organization theory and
show its usefulness in the study of organizations.
Hodge and Anthony define management theory as an explanation of management practice i.e. an
explanation of how managers behave or how they make decisions and exercise influence to perform
their responsibilities
In other words, a management theory is an explanation of how managers manage - how they set
objectives or select goals to pursue, how and why they formulate plans for the running of their
organizations, how they exercise authority and power over their staff, how they direct and control
the activities and performance of organization members, etc.
Management theory is concerned about the behaviour of individuals and groups within an
organization and the control of such behaviour.
In the case of organization theory, it is defined by Hodge and Anthony as a group of related concepts,
principles and tested hypotheses that is used to explain the components of organizations and how
they behave
Pugh defines organization theory as the body of laws and empirically tested and proven conclusions
which seek to show the relationship between the structure, functioning and performance of
organizations and the behaviour of groups and individuals within them
In other words, organization theory consists of a set of established principles and fundamental
conclusions which try to explain why organizations and their members behave the way they do.

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Existing Difficulties in Developing Useful Management Theories in Nigeria and Other
Developing Countries
There are several problems that are confronting researchers in Nigeria, other African countries and
other developing countries, in developing indigenous management theories. Let us examine some of
them here.

Lack of Tradition in Basic and Applied Researchs: Basic research is research carried out for the
purpose of discovering knowledge. Applied research is concerned with converting knowledge to
practice. Academicians and scholars in developing country are living in an environment where most
business organisations and government institutions are concerned with immediate results. The
business is concerned with returns on investment

The government is concerned with immediate welfare of the people. They are thus, interested in
financing research that could help in solving the problems at hand - "action research. Since
researcher” could not function outside their environment: they are constrained by the requirements
of the private and public institutions. Therefore, researches that could lead to the development of
useful theories and their application - basic and applied researches are relegated to the background.
The result is lack of tradition for basic and applied researches.

Lack of Financing for Researches that could Result in Formulation of Sound Theories:
Researches that lead to the development of sound theories, could be beyond the financial resource of
the academicians as researchers. In developing countries funds for financing such researches are not
always forthcoming from the private and public sectors. Therefore, the needed outside support are
often lacking.

Lack of Interest in Research Leading to Theories Formulation by the Academicians:

Academicians in developing countries are themselves, often not motivated to carry out research that
would produce relevant management theories. This is due to the fact that such theories don't result in
immediate financial gains. Since most developing countries have poor academicians and researchers
are interested in researches that would lead to immediate financial benefits. Therefore, researches
leading to theories formulation are often of secondary interest.
Lack of Recognition of Positive Contribution to Knowledge: Until recently in Nigeria where merit
awards was instituted, outstanding contributions to knowledge by Nigerian were often recognized by
foreign countries and bodies. That in a way was responsible for publishing abroad by researchers and
academicians. Thus the knowledge bases of foreign countries were expanded while that of Nigeria
and other developing countries remain stagnant.

Fast Changing Force: The continent of Africa, and other developing parts of the world, are assailed
by forces of change and disunity, which make them exceedingly volatile. Since management theories
are designed for predicting or explaining behaviour in fairly stable environment; fast changes would
have rendered irrelevant a theory that was put in place to explain behaviour before the changes
occurred. Therefore, unstable political, economic, social and other factors in the environment present
their own unique problems to theory development in developing countries.
Inconsistent Legislations/Administrative Policies: Theories in management and other
social sciences are designed to help and improving the functioning of the established systems. This

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is based on the assumption that the environment will be least disturbed. In situations where
government legislations and administrative polices are changed, as soon as new men take up
mantle of authority, these will invalidate theoretical formulations based on past scenario.

Ethnicity: Africa probably has a greater degree of ethnic, cultural, and linguistic pluralism than other
continents. With regard to town life ethnicity leads to creation of ethnically homogenous
residential enclaves and voluntary association. In some cases it leads to development of "strangers'
quarters". Ethnicity can also be the cause of divisiveness, with some ethnic groups receiving
preferential treatment by those in authority. Since each ethnic group has distinct culture this can
constitute problem in formulating theories that could effectively explain different ethnic shades at a
goal.

Unnecessary Control of Institutions and Organisation: It may be necessary here to give a concrete
example with regards to trade unions. Trade unions in Africa and other developing parts of the world
are weak. They are supposed to be instrument of workers needs satisfaction. But the general weakness
of trade union in Africa can be attributed to (1) severe legal constraints placed on their operation (2)
low membership (3) free and fair elections are not the norm (4) leadership of the union are often
corrupt (5) the unions themselves are among the worst employer in the continent (6) the phrase
"strong trade union" carries fearful connotations in certain quarters in Africa. Therefore, there is
systematic erosion of trade union rights and freedoms in African countries. These constraints do not
apply uniformly to all African countries. There is great variation. Where restrictions are severe as in
Nigeria strikes still do occur. Such restrictions are stumbling block on the path of developing
management theories in Nigeria and other poor nations.

It is necessary to note, however, that despite these difficulties management scholars and academicians
are alive to their responsibilities in the adaptations of or formulation of necessary management
theories. This started as far back as 1984 when a group of management scholar produced two volumes
of work titted, "The Nigerian Managers; Challenges and Opportunities" edited by V.A. Aniagoh and
Pita N.O. Ejiofor. This works blazed the trial in the formulation of indigenous theories or adaptation
of developed theories to our unique environment. (Ogundele, 2012)

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 MANAGEMENT THOUGHT

In order to facilitate easy understanding, we can identify 4 broad approaches namely, the classical
theory, neo-classical theory and modern theories.

CLASSICAL SCHOOL OF MANAGEMENT

The term classical means something traditionally accepted or long stablished. It does not mean that
classical views are static and time bound and must be dispensed with. Surprisingly, the classical
theory developed in three streams: bureaucracy (Weber), administrative theory (Fayol), and scientific
management (Taylor) ).

FIG: Classical School and its branches

Bureaucracy

Classical School Scientific Management

Administrative Theory

CHARACTERISTICS OF CLASSICAL - MECHANISTIC ORGANIZATIONS

The classical-mechanistic school is concerned with the structure and functioning of the formal
organization. This school of thought views an organization as a collection of individuals whose
contributions are determined by a division of labour and whose efforts are co-ordinated by an
hierarchy
According to this school, an organization will function effectively if the manager makes use of a
system of division of labour, if he specifies the roles and job relationships of the organization
members and gives direction to, supplies initiative for, and monitors the individual and collective
behaviour of the workers

The principal characteristics of classical-mechanistic organizations are as follows:

i) There is a formal hierarchical structure of authority marked by vertical lines of communica-
tion, control and co-ordination between members of the firm.
ii) The organization is characterized by a system of division of labour i.e. there are specialized
functions clearly defined and differentiated from one another and performed by functional
specialists.
iii) There are internal specifications and standard procedures including a precise definition of
rights, obligations and technical methods attached to each role. In other words, roles and

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 procedures are clearly defined.
iv) There are many rules and the organization employs "rational" techniques i.e. there is objective
rationality or impartial application of laid, down rules and regulations. This means that the
organization is viewed as a collection of individuals to be governed or controlled by formal
rules and regulations thus establishing an impersonal structure of relationships between them.
v) Authority is centralized with a knowledge of actualities located at the top of the hierarchy and
the superior insisting on loyalty and prescribing the standards and rules of operations and work
behaviour for sub-ordinates.
vi) Jobs and areas of jurisdiction are clearly defined by contract and is not necessary to do any
work other than the specified job. Job contents remain the same over a long period of time.

Bureaucracy.
1. Bureaucracy. Weber defined bureaucracy as the type of administrative system which is
organized rationally, logically, impersonally and according to official rules as a means of
carrying out imperative control over human beings.
According to Max Weber, under a bureaucracy organization structure has the following
features:
 task are divided into very specialized jobs.
 a rigorous set of rules must be followed to ensure predictability uncertainty in task
performance.
 a stable and well-defined hierarchy of authority ensuring clear responsibility
relationships.
 superiors take an impersonal attitude in dealing with subordinates
 written rules, decision and keeping of extensive files.
 Specified qualifications for individuals holding office.
 Employment and promotions based on merit, technical competence.
 Life long employment and there is adequate protection of individuals against arbitrary
dismissal.

An organization can be considered bureaucratic depending on the extent to which above features are
present. Weber believed that bureaucracy provides an ideal weapon to harness and routinize the
human and mechanical energy which fuelled the industrial revolution.

He sought to describe an ideal organization—the one that would be and would provide maximum
efficiency of operation. He viewed bureaucracy as an ideal type because he felt that it had certain
advantages over other organizational forms. These advantages such as precision, speed, unambiguity,
knowledge of the files, continuity, strict subordination, reduction of friction and of material and
personnel costs—are raised to the optimum point in the strictly bureaucratic administration.

Advantages of Bureaucracy
i) It eliminates favouritism and discriminations since duties are performed according to laid
down rules.

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ii) Formal· specialization· is encouraged thus increasing productivity and efficiency.
iii) It enhances precision, clarity and order in official transactions and minimizes conflict and
friction since rules, procedures and roles are clearly defined and applied.
iv) It promotes organizational stability, uniformity and continuity of operations and a consistent
and uninterrupted performance of the various activities of the firm regardless of changes in
personnel.
v) Only the most qualified personnel are employed and/or promoted a thus enhancing fairness,
professionalism and organizational efficiency.
vi) It makes effective co-ordination of activities possible through the hierarchy of authority and
the unified system of discipline·, control and standardized procedures.
vii) It minimizes the effect of human unpredictability.
For the above reasons, bureaucracy is said to contribute to organizational efficiency.
Disadvantages or Shortcomings of Bureaucracy
The defects or dysfunctional consequences of bureaucracy are as follows:
i) It may discourage personal initiative because it emphasizes a strict conformity to standard
rules and procedures.
ii) It encourages organizational inflexibility. Bureaucracy is not adaptive to changes and new
tasks because of its rigid structure, standardized rules, procedures and role differentiation. It
sees innovation and change as pathological and a disturbance to an otherwise ordered system.
iii) It slows down the pace of work because officials tend to develop an exaggerated concern for
routines and regulations at the expense of the goals they are meant to help achieve. Thus,
rules stop being a means to an end but an end in themselves as organizational goals become
less important to the staff than the maintenance of the organization itself.
iv) Because of a rigid differentiation of work into specialized roles, each department tends to
plough its own furrow. Departmental goals may become ends in themselves rather than a
means to the overall goal of the organization.
v) The cost of administration is increased because of excessive paperwork, form filling and
documentation of affairs.
vi) Bureaucracy is a sterile and unreal machine model of organizations because it concentrates
on the role of the formal leader in the organization and fails to consider informal groups and
informal leadership roles. Relationships, both internally and externally, are depersonalized.
The view that formal leaders (the managers) must rule by implementing rules and standard
procedures portrays workers as mere order takers and neglects the informal side of enterprise
and its potential benefits.
vii) It breeds anxiety, insecurity and tension in employees and removes their personal liberty be-
cause they are eager to be seen as conforming to existing procedures and policies rather than
as doing things that are good in their own eyes.

17
viii) It causes training incapacity. The demand for predictability, reliability, conformity, etc.
produces a general rigidity of behaviour in employees. They tend to adopt measures which
are in line with their past training and experience thus leading to the adoption of wrong
procedures under new conditions. Employees are unable to develop a capacity for new
training.
ix) It causes self-perpetuation and empire-building. Officials tend to adopt a sit-tight attitude in
positions thus turning themselves into immovable tin gods. The attribute of bureaucracy that
produces this is security of office tenure.

Criticism
Warren Bennis catalogued the criticisms of bureaucracy thus:

 it does not take into account the informal relationships between

king in the organization;

 its system of control and authority are hopelessly outdated;

 it does not Possess adequate means for resolving differences and conflicts between
ranks and most Particularly between function groups;

 due to hierarchical division of authority communication process tends to be Slow and

is often distorted;

 by encouraging Conformity to rules and regugulations bureaucracies leave nothing

for original or innovation behaviour In such atmosphere it is very difficult to adapt
to changing circumstance. It finds Coping with change difficult

TAYLOR F.W. FATHER OF SCIENTIFIC MANAGEMENT (1856-1915)

Although Taylor F.W. was regarded as the father of Scientific Management, the forerunners of
scientific management were Robert Owen (1771—1858) and Charles Babbage (1792-1871).

The scientific management era was marked by the contributions of F. W. Taylor, Henry Gantt and
Frank and Lilian Gilbreths. Taylor is historically referred to as the father of scientific management
due to his original pioneering work. Taylor was initially trained as a machinist in the 1870s and
eventually became a Foreman. Taylor's ideas grew primarily out of years of experience in three
companies: Midvale, Simonds Rolling Machine and Bethlehem Steel.

Taylor discovered that production and pay were poor, inefficiency and waste were prevalent and most
companies had tremendous unused potentials. He concluded that management decisions were
unsystematic and that there was no research to determine the best means of production (Bateman and
Snell, 2006).

In summary, Taylor was concerned with what he saw as problems of the industry of his time. Among
these were:

18
  Unclear concepts of management responsibility.
 Lack of measured standards for defining the workers' tasks and
 Widespread inefficiency of labour and systematic "soldering" of workers on
the job (McFarland, 1979).

Taylor gave much concern to efficiency having been convinced that greater production was
dependent on efficiency. In curing the inefficiency inherent in work, he advocated for scientifically
designing the job, that is, the best way of completing a task. The best way, according to Taylor meant
requiring the least number of motions on the part of the man and the least amount of time. Taylor
believed that there were certain principles, laws, .theories and concepts that could be applied to
designing all jobs thereby creating for efficiency.

To actually determine what constituted the one best way, Taylor broke down each job or task into
sets of individual elements and determined how long it took a man to complete each element of the
job, making some allowances for unavoidable delays and brief rests as well as a judgment about how
much efforts the worker was expending, this marked the evolution of time study.

One of Taylor's implicit assumptions was that the worker was compensated to produce and should be
willing to follow the instructions and methods, which were specified by those in authority He
therefore advocated for strong systems of reward and punishment. To promote cooperation between
the management and the workers, he introduced the concept of a "differential piece rate payment.
Under this plan, rates were established namely standard and differential rates. If a man produced a
"standard" he would be compensated via the standard rate per unit say 25k, the higher rate would
apply to everything he produced not just piece, which exceeded the standard. Taylor believed
management could afford this scheme because of higher productivity.
Taylor also advocated a sharp distinction between planning and implementation of task. Prior to
Taylor's contributions, it was the common practice for each man to plan his work through observation
and experience or guess basis. Taylor believed that the supervisor should plan the work while
operative employee should concern himself only with physical doing of it. Taylor advocated
functional foremanship as in the case of production shop. He suggested eight functional foremen i.e.,
gang boss; speed boss; inspector; repair boss; order of and routine clerk; instruction-card clerk; time
and cost clerk and shop disciplinarian. In effect, Taylor said that each worker would have eight
specialized supervisors; though this might create confusion and conflict of authority. Meanwhile, the
idea of functional foremanship has been modified in modern organizations by the use of staff
specialists.

Taylor's work had a very mixed reception. White some hailed him as a creator of efficiency; others
viewed him as a menace to the whole labour force engaged in industry. In reaction to the hostile
group on his ideas and techniques. Taylor listed four basic principles on which his philosophy rested.
The principles were:

 Development of a science for every of o man's work, which replaces the old rule of
thumb.
 Scientific selection, training and development of workers.
 Existence of spint of heartj)y cooperation between the workers and the management.

19
  The presence of almost equal of work and responsibility between the management and
the workers, each taking over the job for which he is best fitted.
Or

Benefits / Advantages of Scientific Management

1. Application and use of scientific methods.

2. Wide scope for specialization and accurate planning.
3. Minimum wastages of materials, time and money.
4. Cordial relations between workers and management.
5. Benefits to workers (higher wages and less burden of work), management (cost reduction,
better quality productions) and consumers (superior goods at lower prices)

Contributions
According to Gilbreths the primary benefit of scientific management ‘conservation and saving,
making an adequate use of every ounce of energy of any type that is expected’. In the modern
assembly line conveyor belts bring to each employee the parts needed to perform one specific job
and they carry the completed work to the next employee on the line. Specialization and division of
labour have brought about the second industrial revolution in America and other developed nations.
In fact, American production ‘miracle’ is said to be in legacy of scientific management. The time and
motion techniques shown clearly as to how to organize the tasks in a more efficient and rational way.
The role of scientific selection and development of workers in increasing worker effectiveness is also
recognized.

The stress it placed on work design encouraged managers to pursue the ‘one best way’ philosophy
and achieve the tasks with the minimum effort and cost.

ADMINISTRATIVE SCHOOL
Henry Fayol
Acknowledged as the founder of administrative school not because he was the first to investigate
managerial behaviour but he was the first to systematize it. Trained as a mining engineer, Fayol made
his mark as an industrialist with the Commentry-Fourchmbault. He joined the firm as a junior
executive and rose quickly through the ranks until his retirement as a director of the company in 1918,
when he turned around the company from the point of collapse to profitability.

In 1916, at the age of seventy-five, Fayol published a book titled, "Administration Industrielle". This
book did not become widely known in Britain and America until its translation into English in 1949
(Kraitner, 1995). Despite its late appearance in the English speaking countries and having to compete
with scientific management and human relations movements in the United States, Fayol's ideas made
an important landmark in the twentieth century management thinking.

Fayol began his task by identifying the key business activities, which include technical (producing
and manufacturing products), commercial (buying and selling of raw materials and products)

20
financial (acquiring and using of capital), security (protecting emphasis and properties), accounting
(recording and taking of cost and compiling statistics) and managerial.

Fayol focused on managerial activities based on the fact that management activities had been the
neglected aspect of business operations. According to Fayol, to manage is to forecast and plan, to
organize is to command, to coordinate and control.

Fayol was of the opinion that the type of skill needed by a manager to perform these functions would
depend on his position in the organizational hierarchy. For instance a foreman would require specific
technical skills but very little managerial ability: However, as he moved up the hierarchy, managerial
skills would become more important than technical skill. However, the extent of managerial skill
required by a manager would depend on the size of the organization.

Fayol called for the introduction of formal managerial training in schools rather than reliance on the
"sink or swim approach". He further provided a break-down of the principles of management which
he believed could be applied to the house, religious organization, military and politics as well as
industry. Fayol carefully chose the team "principles" of management rather than "laws" to avoid any
idea of rigidity, the principles are flexible and can be adapted to meet every need depending on
circumstances.
The fourteen principles enumerated by Fayol are as follows:

i. Division of work: Fayol considered specialization as a natural human process in every

society which leads to higher productivity, specialization of technical and managerial work.
ii. Authority and responsibility: Authority, the right to give orders and the power to exact
obedience should be commensurate with responsibility. This situation enables
accountability in the delegation of authority. In general, Fayol concluded that responsibility
is feared as much as authority is sought after and fear of responsibility paralyzes much
initiative and destroys many good things.
iii. Discipline: This is defined as obedience and an outward mark of respect for the rules and
objectives of the organization in accordance with formal agreement between the firm and its
employees.
iv. Unity of command: This refers to principle of one man, one superior in order, to eliminate
conflict and confusion, workers should receive orders from and be responsible to only one
superior. Violation of this principle will' undermine authority, jeopardize discipline, and
threaten stability.
v. Unity of direction: One head, one plan for a group-of activities. Members of an organization
should work together towards the same objective.
vi. Subordination of individual interests to the general interest: The interest of individuals or
groups of employees should not prevail over that of the organization. This principle requires
firm but fair hand from the supervisor who should set good examples. It requires consistent
supervision.
vii. Remuneration: This should be fair to both the employees and the firm. The firm must
consider the cost of living and its ability to pay.
viii. Centralization: This depends on the size of the company and the quality of management.
However, a good balance must be maintained between centralization and decentralization of

21
 authority. According to Fayol, the debate between centralization and decentralization has no
precise solution.
ix. Scalar chain: The line of authority must be arranged in hierarchical manner dictated by the
principle of unity of command linking all members of the organization from the top to the
bottom. Fayol rightly condemned the idea that departments should communicate With each
other only through their heads. He advocated a "gang plank" an arrangement where other
departments deal with each other cutting out the hierarchy.
x. Order: The tight man in the tight position. According to fayol, there is a place for everything,
and everything in its place, a place for everyone and everyone in his place. This presupposes
the of most difficult management activities: good organization and good selection.
xi. Equity: Combination of kindness and justice towards employees.
xii. Stability of tenure of personnel: Employees need to be Given time to on their jobs and there
must not be fear or threat of dismissal
xiii. Initiative: Within the limits of authority, all categories of start should be encouraged to show
initiatives. It leads to motivation. Fayol cautioned managers against the personal vanity
which prevents them from this opportunity to subordinates.
xiv. Esprit de corps: the need to encourage teamwork and inter relationship. Dividing enemy
forces to them is team is a greave sin against the business.

The classical theory represents the traditional thoughts about organisations. It is based on the
prototype industrial and military organisation. The theory concentrates on organisation structure and
their management. The classical writers include Taylor, Fayol, Weber, Gullick, Urwick, Mooney
and Reiley and others. They placed emphasis on work planning, the technical requirements,
principles of management, formal structure, and the assumption of rational and logical behaviour.

BEHAVIOURAL SCHOOL OF THOUGHT

CHARACTERISTICS AND ELEMENTS BEHAVIOURAL THEORY

The original exponents of the behavioural-humanistic theories of organization and management were
Mayo, Roethlisberger and Dickson.
The behavioural school concentrated on how people work with one another in organizations. It
emphasizes the interactions of people in an organization in order to understand the practice of
management.
The main characteristics, elements and assumptions of the behavioural-humanistic school are as
follows:
a) A belief that the organization is a group of interacting persons who have some common social
needs.
b) A focus on the emotional and social characteristics and needs of the individual and how
people actually behave as members of formal organizations rather than on their rational and
economic nature.
c) Emphasis on work group interaction (informal organizations) and their social consequences

22
 for workers’ motivation and productivity. It assumes that people work better if they are part
of a cohesive work group. It assumes that people's social needs especially in relation to the
informal work group are a main determinant of their behaviour and that the rational, economic
man stereotype does not exist.
d) A belief that people are important in organizations and that good human relations coupled
with a liberal leadership style increases productivity.
e) Emphasis on consultation and employee participation in management especially in respect of
matters affecting them as a means of increasing their output and commitment to
organizational goals. This is a direct opposite of Taylorism which holds that only experts in
job analysis and management have the responsibility and sufficient knowledge about a job to
be able to improve it.
f) A belief that workers are not insensitive factors of production; that workers have a desire to
be treated as human beings rather than as machines or mere implements to do a job.
g) A view that happy workers would create an efficient organization.
h) A belief that human problems at work can be successfully handled by a sympathetic
understanding of employees' motives and a deep knowledge of their attitudes through clinical
studies.
i) A belief that the way jobs are carried out in practice is more important than the way jobs are
described or laid down on paper hence management should be less formal and less
specialized.
There are two streams of the behavioural-humanistic theory of organization and management.
They are:
- The human relations approach, and
- The human resources or neo - human relations approach.

The human relations approach

In the 1920s and 1930s, observers of business management began to feel the incompleteness and
shortsightedness in the scientific as well administrative management movements. The scientific
management movement analysed the activities of workers whereas the administrative
management writers focused on the activities of managers. The importance of the man behind the
machines, the importance of individual as well as group relationships in the work place were
never recognized. Elton Mayo and his associates clearly pointed out that the methods advanced
by scientific management are totally inadequate and they do not produce desired results in the
face of total mechanization brought about by industrial revolution. Workers should not be treated
as mere factors of production but should be treated as human beings. Workers’ feelings and needs
are extremely important on the job. The famous Hawthrone studies undertaken by Elton Mayo
and his colleagues laid the foundation for the human dimension in organisations. Development
of neo-classical theory (behavioural /humanistic /human relations approach) was crystallized in

23
the Hawthorne Experiment conducted from 1924 to 1932 at the Hawthorne plant of Western
Electric, located near Cicero, Illinois. The results these experiments are summarized here

Phase 1: Illumination Experiments

This experiment involved the prolonged observation of two groups of the employees making
telephone relays. The purpose was to determine the effects of different levels of illumination on
worker’s productivity. The intensity of light under which one group worked systematically varied
(test group) while the light was held constant (control group) for the second group. The
productivity of the test group increased each time the intensity of the light increased. However,
productivity also increased in the control group which received no added light. Surprisingly even
when the level of illumination in the work area was reduced to ‘that on an ordinary moonlight
night productivity increased. The researchers concluded that some other variables were
contaminating the effects of the light changes. To unravel the mystery the researchers decided to
experiment further.

Phase II: Relay Assembly Test Group

In this experiment two groups of six female telephone relay assemblers were put under close
observation in separate rooms. In one room the conditions were altered and in the other they were
not. They were told about the experiments and asked to work only at comfortable pace. One
observer was also placed in the test room to record the work and create a friendly atmosphere.
Over a two-year period many changes were made in the working condition especially with respect
to rest periods. Two five-minute, then two ten-minute then six five minute rest pauses were tested.
Hot lunches were served with the rest Pluses. The work day and the work week were shortened.
Each of this changes lasted several weeks. Apart from these changes, the task was simplified
Workers in the test room were offered financial incentives for increased production The observers
Were told to allow the groups to choose their own rest periods and have a say in other suggested
changes. Over the two year period output went up in both the test and control rooms (surprisingly
since the control group was kept to the same payment schedule) steadily regardless of changes in
working conditions. Mayo and his associates came to the conclusion that ‘special attention’ and
‘treatment’ caused people to increase their efforts (known Hawthorne effect). The members were
selected as Participants in a novel experiment backed by top management. They were consulted
about work changes and were not subject to the usual restrictions imposed from above. The result
of this special attention and recognition caused them to carry a stimulating feeling of group pride
and belongingness. Also, the sympathetic supervision received by the members might have
brought about improved attitudes toward their jobs and job performance. The comments of the
employees themselves provided a clue to the improved job performance. They stated that it was
easier to work faster, because work in the test room was fun and there was little supervisory
control. At this stage the researchers were interested in finding out clear answers to the question:
Why the attitude the employees had become better after participation in the test room?

24
III: Interviewing Programme

Mayo initiated a three year long interviewing programme in 1928 covering more than 21,000
employees to find out the reasons for increase productivity. The focus of this interviewing phase was
on human relations rather than on physical working conditions. The direct interviewing programme,
selected initially, proved to be useless as employees often gave guarded, stereotyped responses. This
led the interviewers toward indirect questioning of all plant employees. Now employees began to air
their feelings freely. The point demonstrated lime interviewing programme is central to the human
relations .movement If people are permitted to talk about things that are important to them, they may
come up with issues that are at first I unconnected with their work. Such things like how they voted
for a party how the family is going to meet the ration expenses, what their friends think of their jobs
and so on. Talking about such matters to a sympathetic and understanding person who does not
criticize or advise is therapeutic. When researchers began to examine complaints made by the
employees they found most of the tumm1s to be baseless. Many times nothing was done about the
complaint, yet, after an interview the complaint was not made once again talking just made the
difference. And for the first time, the import the importance of informal work groups is recognized.
To find out more about how the informal groups operated, the bank wiring room experiment was set-
up.

Phase IV: The Bank Wiring Observation Room Experiment

In this experiment, 14 male workers were formed into a small work and intensively observed for
seven months in the bank wiring room. The men were engaged in the assembly of terminal banks for
the use in telephone exchanges. The employees in the group were paid in the regular way depending
on the efficiency rating plus a bonus based on average group effort. Thus, under this system, an
individual pay was affected by the output of the entire group and by his own individual output. It was
expected that highly efficient workers would bring pressure to bear on less efficient workers in order
to increase output and thus take advantage of group incentive plan.

However, these expected results did not come about. The researchers found that the group had
established its own standard of output and this was enforced rigorously by various methods of social
pressure.

The group men had developed specific mechanism to protect themselves both from within and
without based on certain sentiments:

Work group norms, beliefs, sentiments had a greater impact in influencing individual behaviour than
did the economic incentives offered by the management. In summary, the Hawthorne experiments
indicated that employees were not only economic beings, but social and psychological beings as well.

Human Relations
The significant effect of the Hawthorne Experiments was to turn sportlight on the social nature of
business organizations. They clearly showed that the business organization is more than a logical
arrangement of work functions. ‘They demonstrated that man at work motivated by more than the
satisfaction of economic needs.’ In fact Human relations developed as a necessary correction to the
excesses of Classical theories emphasized order, rationality, structure, specialization and generally
viewed employees as economic tools. The neoclassical model challenged this homogeneo8 economic

25
Philosophy. By treating organization as social Systems, it argues forcefully for democratic
participation creativity and commitment.

This school is characterized by a genuine interest in informal or humanistic organization rather than
in mechanistic organization, by an empirical orientation as Opposed to a conceptual one.

Emphasis is on creating a work force with high morale. There is a serious attempt to break down
formal or arbitrary boundaries that are part of the fabric of a stratified and bureaucratic organizational
structure. There is an attempt to democratize the organization, to keep people content as a part of
‘one big happy family.’

THE HUMAN RESOURCES APPROACH

The human resources or neo-human relations approach was developed by Abraham Maslow,
Douglas McGregor, Rensis Likert, Frederick Herzberg and Chris Argyris. This approach centres on
the notion that people's needs from organization and work are more than economic reward, job
security, human treatment and physical and social needs. According to this approach, employees
have a creative ability, a capacity for imagination and other natural potentialities or resources which
they want to use in order to achieve self-fulfillment, recognition, and happiness. The works of the
human resources writers are presented below to show the contributions of each one of them.
The Hawthorne experiments revealed the work organisation to be a social system and pointed to the
need for a rigorous examination of psychological and social aspects of organizational behaviour.
Later researchers tried several sophisticated research methods to understand the nature of work and
the people in the work environment. These later researchers came to be regarded as ‘behavioural
scientists’ rather than human relationists. Behavioural scientists like McGregor, Maslow, Herzberg,
Argyris, Likert etc. firmly believed that in place of the concept of social man the concept of
selfactualizinig man would be more appropriate to explain human motivations. They have
emphasized the value of more democratic, less authoritarian, less hierarchically structured
organizations than suggested by the classical writers. New buzzwords and packages have been
pressed into service to explain these contributions. One such word is the Human Resource Approach,
as described by Tosi and Carroll. relationships in the real world. It “embraces a major, ongoing
attempt to identify how certain general laws and concepts unify a number of different fields”. GST
is a way of looking at wholes wherever they are found. It provides a new paradigm for the social
organizations and management. It helps in integrating knowledge from different fields and helps
managers to look beyond single-cause thinking.

ABRAHAM MASLOW (The Self-Actualizing Man)

Maslow was an organizational psychologist. In 1943, he propounded a model which he called 'the
hierarchy of needs'. According to this model, the needs of everyone, which are at least five, can be
arranged in order of importance or relative prepotency with each unsatisfied level of need assuming
importance and motivating the individual once the need below has been satisfied. The needs can be
arranged on an ascending scale as follows:
i) Physiological needs which include food, sex, clothing, shelter, and a fair temperature.

26
ii) Safety and security needs i.e. protection against harm, danger, threats, fear and deprivation.
iii) Social needs i.e. the need for affection, to love and be loved, to associate with others, to belong
and be accepted by fellow human beings.
iv) Esteem or ego needs i.e. the desire for status, prestige, recognition, appreciation and respect
from fellow human beings and personal satisfaction from one's achievements.
v) Self-actualization needs i.e. the need to fulfill one's potential, to use one's creative talents to the
highest limit, to achieve one's ambition.
According to Maslow's model, once the physiological needs are satisfied, they cease to be important.
The safety and security needs then become important and begin to motivate the individual. When the
safety needs are satisfied, they cease to be important. The social needs then become the motivator.
This process continues until the highest level of need (self-actualization) emerges.
Maslow's contribution is that he offered a universal formula which explains and describes the
motivating factors that influence human behaviour. Most importantly, he showed that once a need is
satisfied, it ceases to be a motivator. The next ranking need then becomes the most urgent.
The significance of Maslow's concept for management is that a reasonable pay is not usually adequate
to motivate an employee. Since physiological needs (such as protection from physical aggression or
sudden loss of job or unsafe machinery) are usually reasonably satisfied especially in highly
developed countries, a worker's other needs tend to be paramount. Thus, only if a worker has an
opportunity in his or her job to realize is his or her full potential is he or she likely to be satisfied.
And only if management can provide this opportunity will individual productivity be very high.

DOUGLAS McGREGOR (Theory X and Theory Y)

Douglas McGregor (1960) contrasted two styles of leadership or management called Theory X and
Theory Y. Theory X consists of assumptions of the traditional (classical) management view which
emphasizes the need for strict managerial direction and control of employees. It assumes that people
are naturally lazy and that they do not want to work. According to this view, people want only
security, are naturally not ambitious and will avoid responsibility if they can. For these reasons,
workers must be coerced, controlled, directed and constantly supervised and threatened with
punishment otherwise they will not carry out their tasks. The theory X view is that people are not
reliable and therefore they must be driven to do their work by a judicious application of the stick
rather than carrot. As a result, management based on this assumption is coercive and manipulative.
A strict obedience to the theory X view of the nature of the average worker has led in the past to
extremely close supervision and strict discipline backed up by the threat of harsh punishment, such
as immediate dismissal, for failure to obey orders or work sufficiently hard.
The theory X view was challenged by McGregor. According to him, theory X assumptions appear
inadequate and ineffective for the full utilization of human potentialities. The alternative which he
offered is called Theory Y and is an optimistic view of human nature.
Theory Y consists of assumptions which could lead to higher motivation of workers and the total
integration and realization of individual and organizational goals.

27
The assumptions of theory Y are that people have a capacity to be highly imaginative and creative;
physical and mental work is as natural as play or rest; people will exercise self-direction and self-
control in meeting any objective to which they are committed; people are not by nature passive or
resistant to organizational goals; workers are willing to accept and will even seek responsibility. The
traditional classical management systems did not create the opportunity for these potentialities to be
exercised hence there was a preoccupation with money motivation which led to frustration of
employees. In other words, McGregor argues that people are not basically lazy or unwilling to work
but are made to behave that way by the firm's organization and management. Given appropriate
organization and treatment, particularly motivation, the employees in a firm can work hard. Because
people like to work and are reliable (theory Y), they should be allowed to work without being
subjected to excessive and debilitating controls.
To implement theory Y, McGregor stated that management should arrange organizational conditions
and methods of operation in a way which would enable people to achieve their own objectives best
by directing their efforts toward organizational objectives. According to McGregor, the increase in
productivity will be greatest if, in achieving the firm's goals, workers are also achieving their own.
Thus, the use of theory Y calls for:
i) The discovery and development of the potential in all employees;
ii) The use of minimum supervision and controls by the manager;
iii) The implementation of job enlargement, participatory leadership styles and management by
objectives schemes to ensure that the needs of the individual and the organization are properly
integrated.

FREDERICK HERZBERG (The ‘Two Factor’ Theory)

Herzberg formulated the 'two factor' theory of motivation which states that job dissatisfaction and
job satisfaction are produced by separate sets of factors. Herzberg identified the first set of factors as
physical working conditions, company policy and administration, interpersonal relations, supervision
and salary. These factors he called 'hygiene or maintenance factors'. If these factors are absent in a
job, there will be job dissatisfaction. However, their presence does not mean that there will be job
satisfaction. This is because job satisfaction is caused by a separate set of factors which relate to the
content or nature of the job itself. This second set of factors he called 'motivators' or 'satisfiers'. They
include achievement, recognition, the work itself, responsibility, and opportunity for advancement
and growth on the job.
On the basis of his interviews with 200 engineers and accountants in Pittsburg (USA), Herzberg
concluded that job satisfaction and job dissatisfaction were separate dimensions of human condition
and that each state is caused by an entirely separate set of factors. The absence of 'motivators' would
not cause job dissatisfaction. On the other hand, improvements in 'maintenance or hygiene factors
would not bring about job satisfaction. This is because, each condition is produced by a separate set
of factors.
Finally, Herzberg suggested that management should improve the 'hygiene factors' which affect the
environment or context of the job in order to remedy and prevent job dissatisfaction. In addition,
28
management should include 'motivators' in the content of every job in order to increase job
satisfaction. To make the motivators to be effective, there must be a reasonable amount of the
'hygiene or content factors' in an organization.

CHRIS ARGYRIS (Impact of Formal Organization Upon the Individual)

Argyris' contribution to organization theory was his analysis of the impact of the formal organization
upon the individual. According to him, there is an inherent conflict between the demands of a formal
organization and the nature and needs of psychologically healthy or mature persons working within
them. As people grow older or more mature, they tend to become more active, more independent and
seek to grow and find expression for their creative and psychological energy. However, in its drive
to maximize efficiency and achieve its objectives, a typical formal organization develops a structure
based on the principles of task specialization, chain of command, unity of direction, and rigid rules
and regulations. These principles demand that the worker shall be dependent, passive and subordinate
towards his superior.
The formal organization frustrates the individual by reducing the chances of realizing his needs for
independence, growth, creativity, and self-expression especially at the lowest levels of organizational
hierarchies where individual autonomy and responsibility are least. When people become frustrated
in this way, they may seek to adjust themselves by working hard to get to a high position where
conditions are less frustrating.
If the prospects of advancement are slim, the frustrated individual may resign his appointment with
the company, or absent himself from workplace frequert1y, or become apathetic and aggressive, or
loose interest in his work or attempt to 'get even' with management by restricting output or slowing
down work. According to Argyris, these methods of adjustment or adaptation are sanctioned and
perpetuated by informal work groups. In fact, the informal organization for restriction of output
develops as a mechanism for resolving this inherent conflict between the demands of the formal
organization and the needs of a psychologically healthy or mature person.
To correct this situation, Argyris recommends the following measures:
i) A horizontal and vertical loading of jobs in order to increase individual motivation. Job
enlargement or horizontal loading of jobs means increasing the variety of tasks at the same
level of complexity i.e. allowing each employee to perform more varied tasks in the hope of
making the jobs less monotonous. This can lead to increased productivity and it shows that
division of labour doesn't necessarily produce greater efficiency. Job enrichment or vertical
loading of jobs means adding jobs of a more complex, interesting, and challenging nature. In
other words, job enrichment seeks to increase the employee's responsibility and recognition
while it offers increased opportunities for challenging work and for advancement and growth
on the job.
ii) Increased employee participation in management in order to accommodate the personal val-
ues of organization members in the decisions that are made.
iii) A flexible organizational structure that permits a two-way open relationship between
managers and their subordinates.
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THE SYSTEMS APPROACH
The systems approach was developed from the writings of Chester Bernard (1938), Norbert Weiner
(1948), Ludwig Von Bertalanffy (1955), the Structural-Functionalists particularly Talcott Parsons
(1961) and Organizational Social Psychologists particularly Katz and Kahn (1966).
A system, in simple terms, is a set of interrelated parts. It is a group of interrelated but separate
elements working toward a common se.
The systems approach sees organizations as systems. A system is a set of interrelated parts such as
the various departments of a firm which together form a complete unit that performs a particular
function. Each department is a subsystem of the whole organization while each organization is a
subsystem of the whole society. Departments and individuals in an organization are seen as
interacting elements that are working together interdependently. Each department or element of the
whole system may in turn comprise a sub-system with its own network of interrelated elements i.e.
the various sections and positions.
The overriding assumption of the systems approach is that any system (the whole) is greater than the
sum of its parts i.e. a Gestalt evolves. In other words, the output which that of the whole organization
is more than the output which that of the constituent parts would be if they were to function
independently and individually. System theories are based on the view that it is not appropriate to
examine individual parts of the organization without relating them to other parts and how they
function. Instead, one should examine all the parts together including the formal and informal
relationships between and among subsystems within the organization in order to explain the system
as a totality. Thus, while the classical-mechanistic school focused on the formal structure of the
organization and the behavioural-humanistic school emphasized social relationships, systems theory
suggests that it is significant to look at the interaction between the parts of the organization and the
relationship between the organization and its environment.
Every system or subsystem is made up of people who interact and work together. This is the
organization’s human or social sub-system. The employees perform tasks and produce goods using
various techniques, procedures, plant, equipment, layout, and work methods (all collectively called
technology) within the organization’s formal structure. This is the organization’s technical sub-
system. When the objectives of the organization are added to the structure, it becomes a socio-
economic and technical system. The way in which the firm's material and human resources are used
by management is the firm's organizational sub-system.
Thus, the operation and behaviour of each system or subsystem are subject to social, economic,
technical and organizational variables. Changes can occur at any time in one or more of the firm’s
sub-systems (for example, the introduction of new machinery or the creation of a new position) that
will affect the other subsystems as well as the firm (or system) as a whole.
An organization is a closed system when only its internal environment is considered. An organization
is an open system when account is taken of the internal environment and the influence of the external
factors over which the organization has no direct control .
A closed system does not receive inputs from its outside environment. In addition, it does not
distribute any outputs to the outside environment. In short, it does not interact with its external

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environment. Closed systems rarely exist in real life.
In an open system, inputs are received from the external environment and are processed by the sys-
tem, the result of this resource energy conversion activity being an output to the external environment.
In short, an open system maintains a continuous information with its external environment.

The arrangement of elements must be orderly, there must per communication facilitating interaction
between the elements and fly the interaction should lead to achieve a common goal. A .university,
for example, is made up of students, teachers, administration non-teaching staff who relate to one
another in an orderly manner What one group does has serious implications for the others, so must
be communicating with each other in order to achieve the overall goal of imparting education. Thus,
the enterprise operations are view in terms of basic elements. The enterprises are viewed as procuring
and transforming inputs into outputs. Employees, physical money and the managers themselves are
parts of the system.

Inputs are the materials, information and energy flowing into the organization. The outputs are
products, services, and satisfactions by the organization.

The organization transforms inputs into a variety of outputs and offers the same to the external
environment in the form of products, goods and services. Sale of the outputs provides the necessary
energy to repeat the systems cycle as shown below

Input Transformation Output

Process

Feedback

System’s view of the management

Features of Systems theory of Management
According to Herbert B. Hicks and C. Ray Gullett, the systems theory, of management is
characterized by the following:

1. Dynamic. Within the organization, the process of interaction between subsystems is

dynamic. This contrasts with the classical view which emphasized mostly the static
structure

2. Multilevel and multidimensional. Modern theory of management both micro approach.

‘it is micro within the nation’s industrial network, and it is macro with respect to its internal
units. The modern manager is forced to recognize the importance of parts all well as the
whole. An organization can interact with other organization macro level in multifarious ways.

3. Multimotivated. Motivation is an extremely complex process and drawing simplistic

equations is a futile exercise. Organizational or its component parts, objectives cannot be
reduced to a single objective like profit. An act may be motivated by several motives.

4. Probabilistic. Operating under highly turbulent and dynamic environment management can
never be deterministic as suggested by classical theorists. Modern theory tends to be
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 probabilistic. “Statement modern theory tend to be qualified with phrases such as ‘may be’,
‘in general’ and ‘usually’ because modern theory recognizes that few predictive statements
can be made with certainty.

5. Multidisciplinary. Modern theory of management is enriched by contributions from various

disciplines like sociology, psychology, economics, anthropology, ecology, mathematics,
operations research and so on.

6. Descriptive. Instead of providing certain prescriptions, modern management theory describes

the features of organizations and management. Individuals are free to select the objectives
and the methods to improve organizational effectiveness.

7. Multivariable. There is no simple cause effect phenomenon in organizational activities. An

event may be the product of many factor that are, in turn, interrelated and interdependent.

8. Adaptive. Organizations are inextricably intertwined with the environment. In the face of
change, an organization and its environment are expected to rearrange their parts.
Organisations try to cope with environmental changes through the ‘feedback’ mechanism. To
be viable, an organization must produce outputs acceptable to components in environment.

CONTINGENCY MANAGEMENT SCHOOL / CONTINGENCY APPROACH TO

MANAGEMENT / SITUATIONAL APPROACH

In recent years, especially after 1970s, the word ‘contingency’ has. invaded the field of management.
One important contribution of the contingency perspective may best be summed up in the statement
that ‘there is no one best way to manage.’ There are many effective ways to perform various
management functions. According to this approach the best way to lead, plan, organize, and conduct
managerial activities varies with the situation. A particular method may yield fruitful results in one
situation but may lead to disastrous results in other situations. In some situations managers’ best
approach to a subordinate may be directive and dictatorial; in others, a sympathetic and democratic
approach may be appropriate. Thus, according to the contingency approach, there are no plans,
organization structures, leadership styles, or controls that will fit all situations. there are few, if any,
universal truths, concepts, and principles that can be applied under all conditions. Instead, every
management 1hm must be approached with the ‘it all depends’ attitude.

A common deficiency of the classical, behavioral and quantitative schools is that they have stress one
aspect of the organisation at the cost of others. The classical approach emphasizes on 'task' while
behavioral approach emphasizes on 'people’. The stress of quantitative approach is on 'mathematical
decision-making’. However, it is difficult to understand precisely which aspect is most useful and
appropriate in a given practical situation.This brings the need to develop me broad conceptual
framework that can help a manager diagnose a problem and decide which tool or tools will best do
the job. The systems approach as well as contingency approach provide one integrated approach to
management problems. The contingency/situational approach is the second approach (the first being
the systems approach) which attempts to integrate the various schools of management thought in an
orderly manner. The contingency management approach is similar to known leadership theory called
situational leadership theory. The contingency approach is applicable to leadership as well as to

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business management. This situational management approach is relatively a new approach to
management and is an extension of systems approach. The basic theme of contingency approach is
that organisations have to deal with different situations in different ways. There is no single best way
of managing applicable to all situations. In order to be effective, the internal functioning of the
organisation must be consistent with the needs and demands of the external environment. In other
words internal organisation should have the capacity to face any type of external situation with
confidence.

Manager must find different ways that fit different situations. They must continually address
themselves with the question: Which will work best here? For example, in order to improve
productivity, classical theorist may prescribe work simplification and tonal incentives; the
behavioural scientist may recommend job, enrichment and democratic participation of employees in
the decision making process. Instead, a manager trained in the contingency approach, may offer a
solution that is responsive to the characteristic of total situation being faced. Organizations
characterized by limited resources, unskilled labour force, limited training opportunity limited
products offered to local markets—work simplification would be the ideal. Job enrichment
programme would work better organization employs skilled labour force. Managerial action depends
upon circumstances within a given situation. No one best will work in all situations. Applying a
contingency (situational) approach requires that managers diagnose a given situation and adapt to
meet the conditions present. According to Robert Albanese the strength of contingency theory rests
on two points: first, focuses attention on specific situational factors that influence appropriateness of
one managerial strategy over another. Second, it highlights the importance to managers of developing
in situational analysis. Such skills will help managers find out important contingency factors that
influence their approach to managing.

Features of the Contingency / Situational Approach

1. Management is entirely situational. The management has to use the measures/techniques as

per the situation from time to time.
2. Management should match its approach as per the requirements of the situation. The policies
and practices used should be suitable to environmental changes.
3. The success of management depends on its ability to cope up with its environment. Naturally,
it has to make special efforts to anticipate and comprehend the possible environmental
changes. Managers should realize that there is no one best way to manage. They have to use
management techniques as per the situation which they face.

According to contingency approach, management principles and concepts of different schools have
no universal/general applicability under all situations. This means these schools have not suggested
one best method of doing things under all situations and at all times. The contingency approach has
provided a solution to this situation.

As per the contingency approach, the task of managers is to try to identify which technique or method
will be most suitable for achieving the management objectives under the available situation.

33
Managers have to develop a sort of situational sensitivity and practical selectivity in order to deal
with their managerial problems as they develop from time to time.

Contingency approach views are applicable in designing organizational structure and in deciding the
degree of decentralization in establishing communication and control systems and also in deciding
motivational and leadership approaches. In brief, the contingency approach is applicable to different
areas of organisation and management it is an attempt to integrate various viewpoints and to
synthesize various fragmented approaches to management.

The contingency approach is the outcome of the research studies conducted by Tom Burns and G.
W. Stalker, James Thompson and others.

Merits of Contingency Approach

1. Contingency approach is pragmatic and open minded It discounts preconceived notions, and
universal validity of principles.
2. Theory relieves managers from dogmas and set principles. It provides freedom/choice to
manage to judge the external environment and use the most suitable management techniques.
Here, importance is given to the judgment of the situation and not the use of specific
principles.
3. The contingency approach has a wide-ranging applicability and practical utility in,
organisation and management. It advocates comparative analysis of organisations to bring
suitable adjustment between organisation structure and situational peculiarities.
4. The contingency approach focuses attention on situational factors that affect the management
strategy. The theory combines the mechanistic and humanistic approaches to fit
particular/specific situation. It is superior to systems theory as it not only examines the
relationships between sub-systems of an organisation but also the relationship between the
organisation and its external environment.

Limitations of Contingency Approach

1. It is argued that the contingency approach lacks a theoretical base.

2. Under contingency approach, a manager is supposed to think through all possible alternatives
as he has no dried principles to act upon. This brings the need of more qualities and skills on
the part of managers. The responsibility of a manager increases as he has to analyze the
situation, examine the validity of different principles and techniques to the situation at hand,
make right choice by matching the technique to the situation and finally execute his choice.
The areas of operation of a manager are quite extensive under this theory.

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 PARTICIPATIVE MANAGEMENT
Participatory management is the practice of empowering members of a group, such as employees of
a company or citizens of a community, to participate in organizational decision making.

Participative management is a collaborative leadership style that involves employees at all levels
in decision-making. It fosters commitment and creativity within teams by delegating power and
encouraging shared problem-solving.
Participative management also called management by participation where managers value the input
and ideas of their employees, recognizing their importance in serving customers and staying
competitive in the market.

This management style encourages employees from various levels to actively participate in decision-
making processes, such as setting goals and suggesting solutions. By involving employees, this
leadership structure can lead to innovative ideas, increased job satisfaction, and improved employee
retention.

Overall, participative management empowers employees to contribute their insights and take
ownership of their work, resulting in a motivated and engaged workforce. It creates a trusting and
collaborative environment, where everyone’s contributions are valued and respected.

Key attributes of participative management are

1. open communication,
2. trust, and
3. cooperation among team members.

Objectives of Participative Management

The six major objectives of participative management.

 Encouraging employee involvement in decision-making.

 Fostering a collaborative and inclusive work environment.
 Harnessing diverse perspectives and ideas for better problem-solving.
 Increasing employee motivation and job satisfaction.
 Enhancing employee commitment to organizational goals.
 Improving organizational performance and productivity.

Four Types of Participative Management

Let’s explore the four common types of participative management.

Consultation Style

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In this participative management approach, managers seek input from employees before making
important decisions or implementing changes. Employees act as valued contributors, sharing their
creative ideas and perspectives.

The manager considers these inputs while making the final decision, promoting a sense of inclusion
and collaboration in the workplace.

Joint Decision-Making Style

Managers and leaders encourage active employee participation in the decision-making process.
Employees have the opportunity to share their thoughts and ideas, and their input is taken seriously.

This style empowers employees to take responsibility for decisions made collectively by the team,
fostering a sense of ownership and commitment to the outcomes.

Employee-Owned Company

This type of participative management goes beyond involvement; it entails employees having a
significant ownership stake in the company.

Employees become stakeholders with a vested interest in the organization’s success. Their role shifts
from mere contributors to decision-makers, as they actively participate in shaping the company’s
direction.

Self-Managed Teams

In self-managed teams, employees are given considerable autonomy to make decisions related to
their work processes and goals. They collaborate to manage their tasks without constant supervision.

This participative management style empowers employees to take charge of their responsibilities,
promoting a sense of accountability and trust within the team.

Advantages of Participative Management

1. Enhanced Creativity and Innovation

When employees are actively involved in decision-making, their diverse perspectives and ideas lead
to innovative solutions. Participative management encourages open discussions and brainstorming,
unlocking the creativity of the entire team.

2. Increased Employee Engagement

Involving employees in the decision-making process makes them feel valued and heard. This sense
of ownership and empowerment boosts their motivation and dedication to their work, resulting in
higher levels of engagement.

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 3. Improved Problem-Solving

With participative management, multiple viewpoints are considered, leading to more comprehensive
problem-solving. Employees feel comfortable sharing their insights, which fosters a culture of open
communication and trust.

4. Higher Job Satisfaction

When employees have a say in decisions that affect their work, they become more satisfied with their
jobs. Participative management acknowledges their contributions, leading to a greater sense of
fulfillment and job contentment.

5. Increased Organizational Performance

The collaborative nature of participative management aligns employees with organizational goals,
promoting a shared commitment to success. As a result, productivity and efficiency improve,
contributing to overall organizational performance.

Disadvantages of Participative Management

While participative management offers numerous benefits, it also comes with certain drawbacks that
organizations should be aware of:

1. Time-Consuming Decision-Making

Involving multiple stakeholders in decision-making can be time-consuming. The process may

become lengthy, especially in large organizations with numerous opinions to consider, potentially
delaying timely actions.

2. Conflict and Disagreements

Different viewpoints within a participative management approach may lead to conflicts and
disagreements among team members. Resolving these disputes requires effective communication and
conflict-resolution skills.

3. Decision Paralysis

In some cases, too much involvement in decision-making can result in decision paralysis. When
everyone has an equal say, it might be challenging to reach a consensus, leading to indecision.

4. Resistance to Change

Employees may resist changes introduced through participative management, especially if they feel
their ideas are not implemented. This resistance can hinder the adoption of new strategies
or initiatives.

5. Lack of Expertise
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In certain situations, employees may not possess the necessary expertise to make critical decisions.
Relying solely on participative management might limit access to specialized knowledge and
expertise.

How To Implement Participative Management in the Workplace?

The followings are some strategies you can follow to effectively implement a participative
management approach in the organization.

1. Establish Clear Communication Channels

Effective communication is the foundation of participative management. Create open channels for
employees to share ideas, feedback, and suggestions easily. Regular team meetings, suggestion
boxes, and digital platforms can facilitate transparent and seamless communication, ensuring that
everyone’s voice is heard.

2. Foster a Culture of Trust and Respect

Build a workplace culture where trust and respect are central. Encourage leaders to actively listen to
employees’ opinions and treat their ideas with consideration. When employees feel valued and
respected, they are more likely to contribute their best and take ownership of their work.

3. Provide Training and Development

Equip employees with the necessary skills and knowledge to actively participate in decision-making.
Offer training programs that enhance problem-solving, communication, and collaboration skills.
When employees feel confident in their abilities, they will feel more empowered to contribute to the
organization’s success.

4. Recognize and Reward Participation

Acknowledge and reward employees’ active involvement in the decision-making process.

Recognizing their contributions, whether through praise, incentives, or promotions, reinforces the
importance of participative management and motivates others to engage.

5. Lead by Example

Effective implementation starts with leaders embracing participative management themselves.

Demonstrate a willingness to listen and seek input from all team members. When employees see their
leaders valuing their opinions and actively involving them in decisions, they will be more inspired to
participate and contribute wholeheartedly.

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Management by Objectives (MBO)?

MBO was first developed and used by corporate management expert Peter Drucker in 1954. In his
analytical literature entitled The Practice of Management, Drucker aims to explain MBO and outlines
the concept of his managerial approach. Drucker is often considered the father of modern
management for his belief that the interactions between managers and employees play a vital role in
the success of an organization, rather than prioritizing solely the output of products or services. The
MBO meaning further relates to Drucker's theory that once goals have been established for managers
and employees, they will be able to view their accomplishments and realize their role in the progress
toward their organization's larger objectives.

What is Management by Objectives (MBO)?

Management by Objectives (MBO) is a strategic approach to enhance the performance of an

organization. It is a process where the goals of the organization are defined and conveyed by the
management to the members of the organization with the intention to achieve each objective.

Management by Objectives (MBO) definition refers to a personnel management technique used

for planning and setting well-defined goals and objectives within the workplace.

Management by objectives is a structured approach to managing the personal objectives of

employees. In order to be successful, a specific five-step process must be followed and repeated
continuously until goals are achieved.

An important step in the MBO approach is the monitoring and evaluation of the performance and
progress of each employee against the established objectives. Ideally, if the employees themselves
are involved in setting goals and deciding their course of action, they are more likely to fulfill their
obligations.

Steps in Management by Objectives Process

1. Define organization goals

Setting objectives is not only critical to the success of any company, but it also serves a variety of
purposes. It needs to include several different types of managers in setting goals. The objectives set
by the supervisors are provisional, based on an interpretation and evaluation of what the company
can and should achieve within a specified time.

2. Define employee objectives

Once the employees are briefed about the general objectives, plan, and the strategies to follow, the
managers can start working with their subordinates on establishing their personal objectives. This
will be a one-on-one discussion where the subordinates will let the managers know about their
targets and which goals they can accomplish within a specific time and with what resources. They
can then share some tentative thoughts about which goals the organization or department can find
feasible.

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3. Continuous monitoring performance and progress

Though the management by objectives approach is necessary for increasing the effectiveness of
managers, it is equally essential for monitoring the performance and progress of each employee in
the organization.

4. Performance evaluation

Within the MBO framework, the performance review is achieved by the participation of the
managers concerned.

5. Providing feedback

In the management by objectives approach, the most essential step is the continuous feedback on
the results and objectives, as it enables the employees to track and make corrections to their actions.
The ongoing feedback is complemented by frequent formal evaluation meetings in which superiors
and subordinates may discuss progress towards objectives, leading to more feedback.

6. Performance appraisal

Performance reviews are a routine review of the success of employees within MBO organizations.

Benefits of Management by Objectives

 Management by objectives helps employees appreciate their on-the-job roles and

responsibilities.
 The Key Result Areas (KRAs) planned are specific to each employee, depending on their
interest, educational qualification, and specialization.
 The MBO approach usually results in better teamwork and communication.
 It provides the employees with a clear understanding of what is expected of them. The
supervisors set goals for every member of the team, and every employee is provided with a
list of unique tasks.
 Every employee is assigned unique goals. Hence, each employee feels indispensable to the
organization and eventually develops a sense of loyalty to the organization.
 Managers help ensure that subordinates’ goals are related to the objectives of the
organization.

Limitations of Management by Objectives

 Management by objectives often ignores the organization’s existing ethos and working
conditions.
 More emphasis is given on goals and targets. The managers put constant pressure on the
employees to accomplish their goals and forget about the use of MBO for involvement,
willingness to contribute, and growth of management.
 The managers sometimes over-emphasize the target setting, as compared to operational
issues, as a generator of success.
 The MBO approach does not emphasize the significance of the context wherein the goals
are set. The context encompasses everything from resource availability and efficiency to
relative buy-in from the leadership and stakeholders.

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  Finally, there is a tendency for many managers to see management by objectives as a total
system that can handle all management issues once installed. The overdependence may
impose problems on the MBO system that it is not prepared to tackle, and that frustrates any
potentially positive effects on the issues it is supposed to deal with.

Key Takeaways

 Management by Objectives (MBO) is an approach adopted by managers to control their

employees by implementing a series of concrete goals that both the employee and the
organization aim to accomplish in the immediate future and work accordingly to achieve.
 The MBO approach is implemented to ensure that the employees get a clear understanding
of their roles and responsibilities, along with expectations, so that they can understand the
relation of their activities to the overall success of the organization.
 If the management by objectives strategy is not adequately set, decided upon, and controlled
by organizations, self-centered workers can be likely to misinterpret results, wrongly
portraying the achievement of short-term, narrow-minded goals.

Through this practice, managers and employees set, record, and monitor personal goals for a
specific time in accordance with top-down organizational goals. Management by objectives has
been a useful tool for many organizations since the 1960s because the theory allows
organizational and personal goals to be aligned while participation and commitment from both
management and workers are strongly encouraged. It is a logical and strategic approach to
increasing an organization's performance, and it is utilized by both managers and employees
across many fields and practices.

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