DSM 501 MANAGEMENT PRACTICE NOTES

PART ONE: INTRODUCTION TO AND THE EVOLUTION OF MANAGEMENT

THEORY
======================================================
1 LECTURE 1 INTRODUCTION
Overview of the course
What is management
What is Management theory
What is management practice
Is management a science an art or a profession
Importance of management theory
Importance of management
Evolutions of management theory and practice
1. The pre classical period (The Pre historic Man, The Roman Empire,
The Great Wall of China, The Pyramids of Egypt, The Roman Catholic
Church and The First and Second Word Wars)
2. The classical period (the Administrative Theory, The theory of
Bureaucracy and the Scientific Management theory)
3. The neo classical theories (The Hawthorne Experiments, Chester
Barnard, Mary Parker Follet, Abraham Maslow, McGregor)
4. The contingency theories (Joan Woodward, James Thompson,
Charles Perrow, Burns and Stalker, Emory and Trist, Lawrence and
Lorsch, Michael Porter, Snow and Miles, Larry Greiner, Mintzberg,
and others )
5. The Information Processing Theories
6. The Population Ecology Theory
7. Modern Theories (Peters and Waterman, Peter Drucker and TQM)
3 SUMMARY
Critically examine each of the above theories
Compare and contrast the theories
Which of the theories do you think best applies in to days management
situation and why
What factors do you think determined the development of the theory
===============================================================
1.0 INTRODUCTION
1.1 What is management?
The term management can be defined in the following ways:
1. As a group of people whose job is to direct the efforts of others in the
organization towards the attainment of the organizations objective

2. Management as a process refers to the process by which management directs

actions in the organization towards the achievement of organizations goals
through the functions of planning, organizing controlling staffing and so on.
3. Economists define management as a resource or as one of the factors of
production together with capital, land, labor and entrepreneurship. In this
context management is bought and developed so as to increase the firms
productivity and profitability.
4. Organization theorists view management as a system of authority. Management
in this approach is defined in terms of the rank and position it occupies in the
hierarchy of an administrative system. Management occupies a certain position
in this administrative hierarchy and plays a certain role in the system with
regard to decision making, control and other aspects of the organization.
5. Sociologists view management as a class and status in the social system. In a
social system management occupies a certain position. Entrance to this position
in the social system is based more and more on education and knowledge and
ability to analyze organizational issues and make good decision.
1.2 What is management theory?
Management theory means a theory about management. It is a body of knowledge
created through scientific (systematic) method. It consists of principles and concepts.
These concepts and principles have been determined through observation of events and
facts and has established causal relationships and associations of the events and facts.
Where these associations and relationships have been established to be true after long
periods of observation and association the principles are given and are used to predict
what can happen in similar circumstances. Principles could be descriptive prescriptive or
normative. Descriptive principle s describe relationships between variables. Prescriptive
(or normative) principles recommend or propose what should be done to achieve certain
results. Management principles are prescriptive because they propose what should be
done to achieve organizations objectives. Therefore management theory is a body of
knowledge created or developed through a method of science and consists of principles
and concepts that advise management on the things that should be done about
organizations so as to achieve desired results.
1.3 Is management a science, an art or a profession?
Management as an art
Art is the know how to accomplish desired results. This implies that there exists a body
of knowledge which management uses to accomplish the desired results in organization
Management as a profession
A profession implies that:
1. It is based on a proven systematic body of knowledge and this requires
intellectual training to acquire
2. In a profession emphasis is made on service to others and usually there is a
code of ethics to be followed

3. Entrance to the profession is usually restricted by standards established by

an association of members , membership of which is restricted to people
with common training and attitude
4. A profession maintains an experimental attitude towards information and is
constantly in search of new information and knowledge through research
and practice
1.4 Management as science
Science implies a body of knowledge created through the scientific or systematic
method or process. To qualify as scientific the process of creating this body of knowledge
must follow a specific process. Management theory has been created through a
systematic process. In addition a scientific theory must fulfill the following other
conditions
1 It is based on empirical findings
2 Its findings are objective
3 It uses specific clear and unambiguous concepts
4 It consists of principles variables and relationships between those variables
5 The methodology used can be replicated
6 Data analysis is relatively rigorous
1.5 Importance of management theory
Management theory is important to a practicing manager because it assists in:
1 Describing work tasks the organization in a clear and unambiguous terms
and concepts
2 Predicting outcomes of managerial action
3 Prescribing solutions to management action
4 Rationalizing management decisions
Management theory also helps managers deal with the following complexities
organization complexity
environmental complexity
technology
globalization
workforce diversity
size
competitive advantage
1.6 What do managers do/
The Classical Approach Managers perform the functions of planning, organizing,
staffing, controlling, motivating and leading

The neo classical Approach In the neo classical approach managers perform three
important roles interpersonal, informational and decisional roles

Inter personal roles

The figurehead role (performing ceremonial and social duties as the
organizations representative).
The leader role
The liaison role
2. Informational role
i). The recipient role (receiving information about the operations of an enterprise).
ii). The dissemination role (passing information to subordinates).
iii). The spokesperson role (transmitting information to those outside the
organization)
3. Decision role
i). The entrepreneurial role
ii). The disturbance handler role
iii). The resource allocator role
iv). The negotiator role (dealing with the various persons and groups of persons)

The Modern Approach This approach proposes that managersperform the

following functions

Communication Human resource management and

Networking

2.0 EVOLUTION OF MANAGEMENT THEORY

Management theory has evolved as follows
2.1 Pre-classical Period
During this period management theory existed basically as set of concepts and
principles used in organizations by managers to achieve efficiency and effectiveness
Management theory was not fully developed during this period. There was evidence
of more practice than documented theory in:
- The roman empire
- The Chinese empirer
- The pyramid of Egypt
- The catholic church
- Adam smith- evidence of documentation of theory managementwealth of nations- invisible hand.
The Roman Empire

The extensive bureaucracy of the Roman Empire could not have been maintained in
such a form and for such a long time without the application of a management theory
that we know today.
The Chinese Empire
The construction of the Great Wall of China could not have been accomplished
without the sophisticated administrative and bureaucratic structures we know today.
The Pyramids of Egypt
The pyramids of Egypt could not have been completed without sophisticated
organization practices and structures of the modern period.
The Catholic Church
The Catholic Church has also practiced many elements of classical theories for
almost 2 thousand years.
1.2.2 The Classical Theories
The classical theories were developed in three streams/approaches namely:
a) The Administrative theory
b) The theory of Bureaucracy
c) The scientific management Theory
The classical theories had the following general characteristics:

The classical theories concepts and applications have evolved and developed over
many centuries. However the first written theories developed through the
scientific method began appearing during the early part of the 20th century.

Therefore what we refer to technically as classical theory was presented in written

form between the 1880s and the 1950s.

The main common elements of classical theory are:

The three streams were formed on similar assumptions about organizations

organizations as a structure of relationships of human beings with goals,
objectives, roles, activities, power etc that exist when persons work together.

They were also developed at around the same period 1880 to 1950s.

Their main goal was to find out what needs to be made to organization structures
and relationships to improve efficiency in the organizations.

However the three approaches had the following dissimilarities:

(i)
-

(ii)
-

They were developed by separate groups of writers working totally independently

of each other:
Bureaucracy developed mainly by sociologists who generally took a scholarly
point of view.
Administrative theory and scientific management developed by writers who were
practicing managers they were not merely content at describing organizations,
they prescribed practical purposes for better organizational performances.
Administrative theories focused on overall relatively macro aspects of
organizations
the scientific management theory looked at the micro aspects the worker, and
the foreman.
Bureaucracy also looked at the macro aspects of the organization.

The main Elements of the three approaches are as follows:

The Theory of Bureaucracy:
(1)
Was developed by sociologists who took a relatively scholarly descriptive
point of view
(2)

The most famous of those sociologists was Max Weber (1864 1920) who
was a German Sociologist. He published most of his works towards the
end of the 19th Century. Max Weber identified the following as the main
characteristics of bureaucracy:
Labor is divided so that the authority and responsibility of each member is
clearly defined.
Offices or position are organized in a hierarchy of authority resulting in a
chain of command.
All organizations members are to be selected on the basis of technical
qualifications through formal examinations or by virtue of training or
education.
Officials are appointed not elected.
Administrative officials work for salaries and are career people.
The officials are separate from owners
The officials are subject to strict rules and controls regarding the conduct of
their official duties. Those rules are impersonal and uniformly applied to all
people and cases.
The above specifications by Max Weber were necessary because during this
period and before, most organizations were managed on a personal family
like basis. Employees were loyal to an individual rather than to the
organization or its mission. The dysfunctional consequences of the practice
were that resources were used to realize individual desires and goals rather
than organizational goals and needs. Employees in effect owned the

organization and used resources for their own rather than to serve customers
and organizations.
Max Weber envisages organizations that would be managed on an impersonal
basis. He called this form of an organization bureaucracy. Max believed that
organizations that exhibited the characteristics that he described would be
more efficient and adaptable to change.
Evaluation
(1)

Most of the characteristics described by Max Weber truly describe an ideal

organization. They described what should be rather than what is.
However, to the extent that organizations aspire to achieve the
characteristics described by Max Weber, their efficiency and effectiveness
can be maintained.

(2)

Some of the aspects envisaged by Weber, however, have sometimes taken

on a negative meaning e.g. being associated with endless rules and red
tape.

Administrative Theory:
This theory was largely developed by Henri Fayol (1841 1925) who was a
French industrialist. He described a number of management principles that go
towards capturing the entire flavor of the administrative theory of management.
Some of those principles are:
(i)

Division of work (or specialization)

One should work at activities in which he/she has comparatively higher skills.
This should lead to higher productivity.

(ii)

Authority and responsibility

Authority is right to give orders. Each person should have an appropriate
authority to go with the given responsibility. Responsibility is the task to be
accomplished.

(ii)

Discipline
There must be respect and obedience to the rules and objectives of the
organization.

(iii)

Unity of Command
To reduce confusion and conflicts each member should receive orders from and
be responsible to only one superior.

(v)

Unity of direction
An organization is effective when members work together towards the same
objective.

(vi)

Subordination of individual interest to general interest

The interests of one employee or group of employees should not prevail over that
of the organization. Rather, the general interest must be maintained as paramount.

(vii)

Remuneration of personnel should be fair not exploitative, and should reward

good performance.

(viii)

Centralization
A good balance should be found between centralization and decentralization.

(ix)

Scalar Chain
There is a scalar chain or hierarchy dictated by the unity of command linking
members of the organization from the top to the bottom.

(x)

Equity
Kindliness and justice, largely based on predetermined conventions, should
prevail in the organization.

(xi)

Stability of tenure of personnel

Job security should reward good performance.

(xii)

Initiative
A manager who has initiative, and can get others junior to him to do it, is far
superior to the one who does not have this ability.

(xiii)

Esprit de corps
Unity is Strength- superior performance comes from working together; thus,
everyone in the organization should be encouraged to work together and have a
sense of belonging.

(xiv)

Technical ability
Technical ability predominates lower down the ladder and management ability
higher up.

(xv)

Fayol emphasized the importance of planning, organizing commanding and

coordination and controlling in organizations.

(xvi)

Fayol recommend rational selection of and training of workers together with

professional training for managers.

Evaluation of Administrative theory

1.

The principles of administration as postulated by Henri Fayol fail to be universal

truths.

2.

The principles lack scientific derivation and verification.

3.

The administrative theory is power centered. It is thus in philosophical conflict

with those who desire limited individualism.

4.

Administrative theory suffers from the dysfunctions of bureaucracy such as

rigidity, impersonality, and excessive categorization.

5.

Administrative theory suffers from superficiality, oversimplification and lack of

realism. It is satisfied with theoretical rather than actual.

However, as a theory of organization, the Administrative theory is critical because:

(i)
It recognizes the need for:
Specialization
Unity of command
Discipline
Separation of individual and organization interest.
(ii)

It also introduces essential principles that even today lead to organization

efficiency.

Scientific Management Theory

First developed by Fredrick W. Taylor (1856 1915) a mechanical engineer in the United
States the Scientific Management can be defined as:
The application of scientific method of study, analysis and problem
solving to organizational problems.
Or
A set of mechanisms or techniques for improving organizational problems.
Scientific Management focuses its unit of analysis on the physical activities of
work. Scientific management deals with the relationship of a worker and his or
her work. Thus, this is emphasis on man-machine relationships with the objective
of improving performance of routine, repetitive productions tasks.
Scientific management advocates for an empirical detailed study of each job to
determine how it could be done most efficiently.
The basic assumptions of scientific management theory are:
Improved results in organizations will come from the application of the
scientific methods of analysis to organizational problems. In other words,
the scientific management approach holds that scientific solutions to
problems of management of organizations are superior to those of other
approaches.
Scientific management focuses primarily on work itself and not on the
particular person doing the work.
Each worker is assumed to be a classical economic man-interested in
maximizing his monetary income. The complications of emotional and

social actions and reactions of persons in organizations are not

emphasized.
The basis principles of scientific management as expounded by Fredrick W. Taylor are as
follows:
Develop a science for each element of mans work in order to maximize the
organizations output.
Scientifically select and then train, teach and develop the worker.
Management should heartily cooperate with the workers so as to ensure all the
work is being done in accordance with the principles of science.
There is almost equal division of the work and responsibility between
management and the workers. The management should take over all work for
which they are better fitted than the workers, and the workers should do the work
for which they are better fitted.
Application of the piece rate principle: This is the principle by which workers
are paid by piece rates on the basis of standards set by motion and time studies
rather than on other basis. Piece rates are effective in motivating workers.
Tailors piece rate system was called the differential piece rate system. Under this
system, workers were paid a low piece rate up to a standard (a standard was based
on a first class man performing under average conditions). At higher levels of
output the worker was paid a hire rate.
Tailors recommendations were designed to reduce the inefficiencies and the wastefulness
of the past through practicing scientific rather than rule of thumb methods.
Evaluation of the Scientific Management Theory
The basic problem with the scientific management theory is that it assumed man to be
purely an economic man interested only in the satisfaction of his basic needs. His
rationality and motivation were purely financial/ materialistic. These assumptions were
not realistic and man was motivated by more than his basic needs as later proved by the
neo classists
Comparison of the classical theories
(i)
The theories were mainly developed during the early part of the
20th century.
(ii)

(ii)The three streams were formed on similar assumptions about

organizations organizations as a structure of relationships of
human beings with goals, objectives, roles, activities, power etc
that exist when persons work together.

(iii)

(iv)Their main goal was to find out what needs to be made to

organization structures and relationships to improve efficiency
in the organizations.
They considered the environment to be either static or to have
an insignificant role in organizational efficiency

(iv)

10

However the three approaches had the following dissimilarities:

(i)
They were developed by separate groups of writers working
totally independently of each other:
(ii)
Bureaucracy developed mainly by sociologists who generally
took a scholarly point of view
(iii)
Administrative theory and scientific management developed by
writers who were practicing managers; they were not merely
content at describing organizations, they prescribed practical
purposes for better organizational performances.
(iv)

Administrative theories focused on overall relatively macro

aspects of organizations. The scientific management theory
looked at the micro aspects the worker, and the foreman.
Bureaucracy also looked at the macro aspects of the
organization.

THE CLASSICAL THEORIES

The need for a theory to replace the rule of thumb approach of the pre-classical era

To improve organizational performance

To enhance organizational competitiveness
To sustain and legitimize managerial authority
To come to grips with the increase in size and complexity of organization
To help deal with increases in environmental complexity

The classical approach is characterized by three common propositions

1. Organizations are rational entities they are collectivities of individuals focused
on the achievement of relatively specific goals through their organization into
highly formalized differentiated and efficient structures.
2. The design of an organization is a science through experience, observation and
experiment, it has been established that there is one best universal organizational
form. This is based on the hierarchical and horizontal discussion of labour and
functions, where by organizations are conceived of as machines which once set in
motion, inexorably and efficiently will pursue and achieve their preselected goals.
3. People are economic beings they are solely motivated by money. This means that
they will try to achieve the maximum reward for the minimum work and will use
whatever bargaining power their skills or knowledge to this end.
The main promoters of the classical approach were: Fredrick Taylor and Frank and
Lillian Gilbereith; Hein Fayo, and Max Weber.

11

LECTURE 2 The Neo Classical (Behavioral or Human relations) Theories

2.1 The Hawthorne Experiments
Carried out between 1927 and 1933 at the Chicago Hawthorne plant of the
Western Electric Company. Four studies were done namely: ELTON MAYO
1 The illumination studies
The objective of this experiment was to determine the relationship between the
level of illumination and worker productivity. It was expected that worker productivity
would increase with increasing levels of illumination. The studies failed to prove any
relationship between worker productivity and level of illumination
2 The Relay Assembly Test Room Studies
The objective of this study was to determine the relationship between worker
productivity and improved benefits and working conditions. The experiment also wanted
to find out whether there were other factors that influence productivity and worker
behavior. The studies found out that there was no cause and effect relationship
between working conditions and output. Rather, there were other factors that affected
workers output such as his/her attitudes and supervisor behavior.
3 The interviewing Program
In this Experiment the employees were interviewed to learn more about their
opinions with respect to their work, working conditions and supervision. The interviews
sought the views of the employees on the factors that could lead to increased
productivity. The interviewees suggested that the following other factors could affect
their productivity:
Psychological factors help determine whether a worker is satisfied or
dissatisfied in any particular work situation
The persons need for self-actualization determines his/her satisfaction in
the work.
A persons work group and his relationship to it, also determines his/her
productivity.
4 The Bank Wiring Room studies
This experiment sought to study the effect of group influence on workers productivity.
The researchers found out that an informal grouping and relationship was a critical factor
in the workers productivity. The informal group determined the groups productivity,
and functioned as a protective mechanism (served both for internal and external
purposes).
The Hawthorne Experiments concluded that:

12

(i)

(ii)
(iii)
(iv)

An industrial organization is a socio technical system. The socio part is the

human aspects that need to be taken care of in order to increase workers
productivity and the technical system is the physical aspects that also need to be
improved.
Employee attitudes and morale are also important as determinants of productivity.
Other factors include workers personality and supervisors behavior. These two
also affect workers altitude and morale.
A workers social group has a prevailing effect on his or her altitude and
productivity.

Criticisms of the Hawthorne studies

(1)
The philosophical basis
By emphasizing the social needs of human being rather than the economic needs
and self-interest, these studies conflict the philosophical basis of economic
theory.
(2)
Methodology
i) The study methodology lacks the basis for generalizations.
ii) Findings
The cause and effect relationship conclusions lack general support and
scientific verifiability.
Contribution
The Hawthorne Studies have however made the following contribution to
Organization theory
As a basis for organization theory Research, the Experiments were important.
They were some of the earliest scientific studies in human behavior.
Their finding on the importance of informal groups is also a key to
organization theory.
Their emphasis on employee altitude towards work as an additional to other
factors was a breakthrough in organization theory.
2.2 Mary Parker Follet
a philosopher and political scientist
Was also a social worker among the poor in Boston?
1 Emphasized the importance of subordinating individual freedom to that of the group
2. Stressed the importance of democracy in decision making by involving all in order to
find a solution. Recommended the use of power with rather than power over.
Observed that Power cannot be delegated but authority can.
Power is the capacity to
get things done. Authority is the right to give orders. Power should be exercised with
rather than over. Power over is dominance or control, based on force. Power with is a
jointly developed power. She emphasized that power is a basic to management
especially when used with.

13

Defined conflict as the difference in opinion or interests. She emphasized that

conflict cannot be avoided, and therefore must be used to manage organizations.
Noted that there are three ways of managing conflict:
Dominance one side wins over the other
Compromise each side gains something to settle the conflict; also
each side loses something. In both dominance and comprise, the basic
causes of conflict is not settled. Follet recommends a third way.
Integration of desires. In this way a solution that fully meets the goals
of each party in a dispute is found. Both parties get what they want.
Neither party gives up anything. Integration lets the parties creatively
discover alternatives that satisfy both parties in conflict. In integration,
conflict is used to creatively discover alternative that satisfy both
parties.
Follet also brought a new way of looking a leadership. She defined a leader as
one with a vision of the future and can articulate the common purposes towards
which the organization is striving. The leader focuses the energies of people
towards that purpose. A leader not only knows the technical aspects of his job,
but also understands the total situation and the relationship among its many
parties. Leaders also train and develop their followers.

2.3 Chester Barnard

Barnard was writing in the 1930s

Was the President of New Jersey Bill Telephone Company

Contributed to organization theory in three areas:

i)
The importance of individual behavior
ii)
Theory of compliance
iii)
Theory of organization structure
1The importance of individual Behavior
Bernard was the first person after the Hawthorne studies to emphasize the
importance and variability of the individual in the work setting.
He emphasized that an essential element in organizations is the
willingness of persons to contribute their individual effort to the
organization.
The individual is always the basic strategic factor in organizations.
Consequently the individual regardless of his history or his obligations,
must be induced to cooperate or there cannot be cooperation.
2.

Barnards theory of compliance

Barnards theory of compliance consisted of four basic elements.
(i)
The willingness to cooperate is a basic element of the individual in
the organization
(ii)
In complying, the individual surrenders his personal preferences
i.e. surrender in order to comply in an organization.
(iii)
An individual is only willing to comply if he is sufficiently
induced.

14

(iv)

The level/quantity of inducements determines his degree of

compliance.
Barnard noted that material incentives by themselves are not enough. Other
incentives include:
Opportunities for distinction
Prestige
Personal power
Coercion (i.e. sometimes force is necessary to obtain compliance).
3.
-

Barnards theory of organization structure

Emphasized that the organization was a structure of decision makers
Stressed the importance of communication in organizations
Stressed the role and importance of informal organizations in
communication and cohesiveness
He was also one of the first organization theorists to take a systems view
of organizations.
2.4 McGregors Theory X and Theory Y
McGregor proposed two sets of assumptions while motivating a worker; the theory X and
theory Y assumptions. A managers behavior towards his workers and his management
style will differ based on the assumptions guiding his behavior.
Theory X assumptions
i)
ii)
iii)

The average person dislikes work and will avoid it if possible.

Because of this dislike for work, the workers must be directed, tightly controlled
and pressured to get them to work towards organizational goals.
The average person wants security, avoids responsibility and has little ambition.

Theory Y assumptions
i)
ii)

The average person does not dislike work

If a person is committed towards a set of goals, he will work towards them
without an external control.
iii)
Goal commitment follows from the satisfaction of a persons desire to achieve
iv)
The average person can learn to accept responsibility. Lack of ambition is not a
basic human characteristic.
v)
Creativity, ingenuity and imagination are human characteristics that are unduly
dispersed in the populations
Modern organizations only partially tap the potential of its workers.
2.5 Maslows hierarchy of needs
Maslows proposed that within every person is a hierarchy of needs
(five). These are;
a) Physiological needs- these are the food, drink, shelter etc
b) Safety needs- security and protection from physical and emotional harm
15

c) Social needs- need for affection, belongingness, acceptance and friendship.

d) Esteem needs- self respect, autonomy and achievement.
e) Self actualization- need to achieve ones maximum potential and self fulfillment.
Maslow argued that;
1. Human beings require needs in a hierarchical order
2. Each level of need must be substantially satisfied before the next level is
activated.
3. Once a need has been satisfied it ceases to motivate and the next level becomes
more dominant.
4. Therefore if you want to motivate you must first identify the level that person is
on in the hierarchy of needs and focus on satisfying needs at or above that level.
5. Maslow separated the two needs into higher and lower level needs. Physiological
and safety needs were considered lower order needs, social esteem and self
actualization needs wee considered higher order needs. The difference was that
higher order needs are satisfied internally while lower order needs are
predominantly satisfied externally.
Management Implications of Maslows theory
1) Employees have different needs at different times
2) Employees have several interdependent needs not just one dominant need.
Managers must therefore understand that employees are motivated by a cluster
of needs not just one need
3) At some point most employees want to achieve their full potential. Therefore
managers must structure organizations to help people continue and develop
this motivation
4) Employees needs are influenced by values and norms. In other words higher
order needs are shaped to some extent by the norms and values of the team,
the organization and society in which the individual lives. Consequently
managers can adjust employee motivation and effort by reshaping these norms
and values for example by encouraging more performance oriented team
norms, managers can strengthen team members self actualization needs.
2.6 McGregors Theory x and Theory y
McGregor proposed two sets of assumptions about human nature:
1) Theory X assumes that workers
Have little or no ambition
Want to avoid responsibility
Need to be closely supervised and controlled to work effectively
Generally dislike work and only work for salary and security
2) On the other hand theory Y assumes that workers
Want and exercise self direction
Accept and actually seek out responsibility

16

Want work and consider work to be a normal activity

McGregor believed that theory Y predominates, consequently to motivate the employees

there is need to allow for participation in decision making, provide challenging jobs, and
good group relations.
2.7 Herzbergs two factor theory (also called motivation hygiene theory
Herzbergs theory proposes that there are two sets of conditions or factors that affect
workers level of satisfaction or motivation at the work place. The hygiene factors
describe the employees relationship with their job environment, and that affect the level
of dissatisfaction at work. These factors include
Company policy and administration
Salary
Interpersonal relations
Working condition
On the other hand, the motivators are factors related to the employees desire for growth
in their work and which affect the level of satisfaction or motivation at work. The
motivators include
Achievement
Recognition
The work itself
Responsibility
Advancement
Opportunity for growth
The Herzbergs two factor theory of motivation proposes a two step process of
motivating employees
1. First make the employees not dissatisfied by
Having sound non primitive company policies that are administered fully
Having good technical supervisors who permit employees to work without
undue pressure
Paying salaries and wages that are adequate and fair
Establishing an environment that promotes good interpersonal relations
between employees and supervisors
Creating good working conditions, comfortable offices, reasonable hours
etc
2. Then make employees motivated by
Permitting employees to achieve challenging goals with minimal
interference
Recognizing employees good performance and productivity and
crediting them for their efforts

17

Giving employees more responsibility as they show the desire and

ability to handle it
Providing a career path of meaningful advancements for productive
employees
Designing jobs that are interesting and challenging
Providing training and educational opportunities that help employees
grow especially in skills that relate to their careers

Managers should note that employees are motivated first if they are not dissatisfied, and
second if they are provided with motivators. Both the dissatisfiers and motivators must
be provided if employees are to be motivated in their work
2.8 Vrooms Expectancy Theory
This theory proposes that people will be motivated to do things to reach a goal if
they believe in the worth of that goal, and if they can see that what they do will help them
in achieving it.
Vrooms theory proposes that people will be motivated to do things if they place
on the outcome of their efforts a value equal to the value multiplied by the expectancy.
Expectancy theory states that an individual tends to act in a certain way based on
the expectation that the act will be followed by a given outcome and on the attractions of
that outcome to the individual. It includes three variables of relationships:
1. Expectancy or effort performance linkage- is the probability by the individual that
exerting a given amount of effort will lead to a certain level of performance.
2. Instrumentality or performance reward linkage is the degree to which the
individual believes that performing at a particular level is instrumental in attaining
the desired outcome.
3. Value or attractiveness of the reward is the importance that the individual places
on the potential outcome or reward that can be achieved on the job.
This analysis can be summarized by the question; how hard do I have to work to
achieve a certain level of performance and can I actually achieve that level. What reward
will performing at that level of performance get me? How attractive is the reward to me
and does it help me achieve my own personal goals. Whether you are motivated to put
forth effort, (i.e. work hard) at any given time depends on your goals and your perception
of whether a certain level of performance is necessary to attain these goals.
Implications for managers
The key to expectancy theory is in understanding an individuals goal and the linkage
between effort and performance, between performance and rewards and finally between
rewards the individual goal satisfaction. Consequently, managers have to align rewards
with what the employee wants. After all we want to reward the employee with those
things that they value. Also expectancy theory emphasizes expected behaviors. Do
employees know what is expected of them and how they will be evaluated?
Finally expectancy theory is concerned with perceptions. An individuals own
perception of performance reward and goal outcome, not the outcomes themselves will
determine his/her motivation (level of effort).

18

2.9 Equity Theories

Equity theory proposes that employees compare what they get from a job
(outcomes) in relation to what they put into it (inputs) and then compare their input;output ratio with the input output ratios of relevant others. If an employee perceives her
ratio to be equitable (or fair) in comparison to those of relevance others then justice
prevails and she will be motivated. However if the ratio is inequitable (unfair) the
employee will feel under rewarded or over rewarded. Equity theory proposes that the
employee might;
1.
2.
3.
4.
5.

Distort either own or others inputs or outcomes

Behave in some way to induce others to change their own inputs or outcomes
Behave in some way to change their own inputs or outcomes
Choose a different comparison person
Quit the job

The implication for equity theory is that employees will be influenced significantly by
both absolute and relative rewards. Whenever employees perceive inequity, they will act
to collect the situation
Who are these others the employee will compare with? These includes
1. Individuals with similar jobs in the same organization in the same profession e.t c.
2. The systems including the organization pay policies procedures and systems
3. The self referring to the input outcomes ratios that is unique to the individual. It
reflects the past personal experiences and ant acts as influenced by jobs, or family
connections
1.2.4 The basic elements of the Neo-Classical theories were:
(i)
Individual needs. Recognizes the existence of, and the variability of
individual needs, and characteristics e.g. feelings, emotions, and
perceptions.
(ii)
Work Groups recognizes the existence and the importance of informal
groups in organizations.
(iii)
Participatory Management emphasizes the need of involving employees
in decision making especially on things that affect them.
SUMMARY OF THE NEO-CLASSICAL THEORIES
1. Organizations are complex social systems- with both formal and informal structures.
They are not mechanical units with inert objects which need only neat rules and
structures (explained by administrative and the theory of bureaucracy) and they are
not motivated purely by economic incentives as proposed by Taylor in his scientific
management theory.
To control the people you need to take into account

19

 Social needs of human beings

Their other needs such as participating in decision making, self-actualization
Their diversity e.g. some are x and others are y.
2. Human beings have emotional as well as economic needs. Organization need to be
designed in such a way as to enable workers to meet both their material and non
material needs. Only in this way will the workers perform efficiently and effectively
on the best interests of the organization.
3 Importance of leadership and communication These theories also emphasized the
importance of communication in organizations
4 The type and quality of a leader is also a contributor to organization success (Mary
Parker Follet). Communication is also key to success- amount of information and the way
it is communicated.
Criticism of the Neo-classical theories
1. Economists rejected the argument that non material incentives have a potentially
stronger motivating influence than material incentives.
2. Other writers thought that the neo-classical view that workers needed non-material
things more than material things portrayed workers as irrational beings.
3. Others thought that need for togetherness was contrary to need for individualism.
4. Others thought that emphasis on the importance of leadership portrayed human
beings as babies.
5. The other criticism was the one- best way approach
That there is one best way to structuring organizations and that it holds good
for all organization. This ignored other factors such as environment, culture and
strategy that were important in determining the structural dimensions of
organizations.
These concerns were addressed by the contingency theories
LECTURE 3 THE CONTINGENCY THEORIES
3.1 Introduction

20

Contingency theories basically reject the one best way approach to management and
organizational structure. The structural and management styles adopted are dependent
(contingent) on the situational (contextual) variables facing the organization. The
contingency theories relate to how the organizational structure adjusts to fit with both the
internal environment such as work technology and the external environment such as
economic or political/legal. Contingency means that one thing depends upon another
thing or that one characteristic depends upon another characteristic. What works in one
setting may not work in another setting. There are no universal principles that apply to
every organization. There is no one best way. The most efficient organizational structure
may be contingent upon the size, technology or strategy and since organizations are open
systems, its environment. The main contingency variables are: Environment, Technology,
Size, Strategy, Culture and Growth. In a summary form the following are the structural
and management styles relationship with each of the above contextual variables.

3.2 Technology
3.2.1 What is Technology?
Technology refers to the process of transforming inputs into outputs in an organization.
It includes the tools the equipment the knowledge and the processes used in the
transformation process. Every organization uses technology to transform inputs into
outputs. Technology can be classified or differentiated in many ways. Some of those
ways are technical complexity of operations, interdependence of operations and
knowledge analyzability and variety. Technical complexity refers to the
differentiation in the use human labor versus the use of machinery and equipment in
the transformation process. The more the proportion of the human input the less
complex the technology and the more the proportion of the machine input the more
complex the technology. In the case of interdependence of operations, the greater the
interdependence the higher the technical complexity. In the case knowledge
analyzability and task variety the complexity of technology takes on four dimensions
of routine, engineering, non routine and craft technologies. These dimensions of
technology typologies are explained here below.
a) Joan Woodwards Technical Complexity
Joan Woodward was a British Industrial Sociologist. Her studies covered 100
manufacturing firms in South Essex, England. Her study was conducted between
September 1954 and September 1955. The study was designed to test whether
management principles as applied on organization structure, span of control, chain of
command etc led to successful organizations.
Method of study
Woodward and her research team visited each of the firms studied, interviewed managers,
examined company records and observed its manufacturing operations. Her data included
a wide range of structural characteristics of these organizations such as span of control,
levels of management, management and clerical ratios, work skill level, dimensions of

21

management, (i.e. written versus verbal communications, use of sanctions) type of

manufacturing processes, data on commercial success of the company (such as
profitability, prices of shares in stock exchange) the history and rate of development,
reputation of the firm as an employer, level of salaries paid to senior staff, rate of staff
wastage and the relationship between the firm and outside organizations.
Data analysis
The initial study of data found that firms varied widely in such things as span of control,
number of hierarchical levels, administrative ratio and amount of verbal communications.
Thus her data did not show any proof to the one best way principle of management.
However a further look and analysis of the data and information showed a relationship
between organisation structure and technology. Woodward developed a scale and
organized the firms according to technical complexity of the manufacturing processes.
Technical complexity represented the mechanization and predictability of the
manufacturing process. Her scale had ten categories that were grouped into three
production types as summarized in Annex 1 attached and discussed below.
Group 1: Small Batch and Unit Production
These firms tended to be job shop operations that manufacture and assemble small orders
to meet specific needs of customers. Customs work is the norm. This technology relies
heavily on the human operator. It is thus not highly mechanized and predictability of
outcome is low. Examples included many types of made to order manufactured products,
such as specialized construction equipment or custom made electronic equipment.
Group 11: Large Batch and Mass Production
This manufacturing process is characterized by long production of standardized parts.
Output often goes into inventory from which orders are filled because customers do not
have special needs. Examples would include most assembly lines, such as automobiles or
trailers homes. The integrated cotton mill is also a mass production technology.
Group III: Continuous Process Production
In this technology, the entire process is mechanized. There is no starting and stopping.
This represents mechanization and standardization one step beyond an assembly line. The
organization has high control over the process and outcomes are highly predictable.
Examples would include chemical plants, oil refining, and liquor production.
Her findings were as follows
Ratio of management staff to total personnel shows an increase from unit production,
to mass production and then is low in continuous process production.
Supervisor span of control is highest in mass production and low in both unit and
process production technologies.
Direct labor to indirect labor ratio is also low in both unit and process technologies
but high in mass production technologies.
Other characteristics such as formalization and centralization are high for mass
production and low for other technologies i.e unit production and process production.

22

The number of skilled workers and the use of verbal versus written communication
also depend upon manufacturing technology. It is low in unit and process production
and high in mass production.
Overall, the management system in both unit and process technology is characterized
by organic while mass production is characterized by mechanistic system.
With respect to technology and performance, Woodward studies found that successful
firms tended to be those that had complementary structures and technologies i.e firms
that most nearly approximated the typical structure for their technology were most
effective. Firms that deviated in either direction from their ideal structure were less
successful.
Woodward was able to explain the disparity between her findings and the classical
prescriptions of management theorists these principles must have been based on
these theorists experiences with organizations that used mass production
technologies. The mass production firms had clear lines of authority, high
formalization, a low proportion of skilled workers achieved through a high division of
labor, wide span of control at the supervisory
level and centralized decision making.
To summarize, Woodwards study found a curvilinear relationship between
technology and structure as follows

b) James Thompson
James Thompson classified technology in terms of the degree of interdependence of the
operations or tasks in the production process. His main focus was on service industries.
He identified three categories ranging from least interdependence to the most
interdependent;
i) Pooled independence
When each part of an organization operates on a relatively autonomous manner but by
fulfilling their individual purpose they enable the organization as a whole to function
effectively for example the cashier in a bank.
ii) Sequential interdependence
Where the outputs from one part of an organization constitutes the inputs for other parts
of the system for example in a restaurant.
iii) Reciprocal interdependence
Where overall effectiveness requires repeated and direct interaction between an
organizations separate parts, for example in a hospital.
The basic findings of Thompson was that as interdependence increases coordination
through standardized procedures will become less effective and the need for flexibility
and more personal attention increases. Therefore as interdependence increases the
organization requires less complex structures and more organic management styles to
achieve efficiency.
c) Charles Per rows Knowledge Technology
Charles Per row tried to look at the limitations of Woodward namely the fact that
Woodward studied only manufacturing firms. Since manufacturing firms represent less
23

than half of all organizations, technology needs to be operational zed in a more general
way if the concept is to have meaning across all organizations.
Per row looked at knowledge technology rather than production knowledge. He defined
technology as the action that an individual performs upon an object, with or without the
aid of tools or mechanical devices, in order to make some change in that object. He
identified two dimensions of technology viz:

Task variability this considers the number of exceptions encountered in ones

work. These exceptions will be few in number if the job is high in routines. Jobs that
normally have few exceptions in their day-to-day practice include those on an
automobile assembly line or as a fry cook at McDonalds. At the other end of the
spectrum if a job has a great deal of variety, a large number of exceptions can be
expected. Typically this characterizes top management positions, consulting jobs or
the work of those who make a living by putting out fires on off shore oil platforms.
So, task variability appraises work by evaluating it along a variety routiness
continuum.

Task/Problem Analyzability the second dimension assesses the type of procedures

followed to find successful methods of responding adequately to task exceptions. The
search can at one extreme, be described as well defined. An individual can use logical
and analytical reasoning in search for a solution. If you are basically a high B-student
and you suddenly fail an exam given in a course, you logically analyze the problem
and find a solution. In contrast, the other extreme would be ill-defined problems. If
you are an architect assigned to design a building to conform to standards and
constraints that you never heard about or encountered before, you will not have any
formal search technique to use. You will have to rely on your prior experience,
judgment and intuition to find a solution. Through guesswork and trial and error, you
might find an acceptable choice. Perrow called this second dimension problem
analyzability ranging from well defined to ill define. Annex 3 attached represents a
ten-item questionnaire that measures these two dimensions.

These two dimensions task variability and problem analyzability can be used to
contrast a two by two matrix- shown in fig 2 below. The four cells in this matrix represent
four types of technology, routine, engineering, craft and easy to analyze problems. The
mass production processes used to make steel or auto mobiles or refine petroleum
belongs in routine category. A banks tellers job is also an example of activities
subsumed under routine technology.

Engineering technologies have a large number of exceptions, but they can be

handled in a rational and systematic manner. The construction of office buildings
would fall in this cell, as would be the activities performed by tax accountants.
Craft technologies (Cell 3): deal with relatively difficult problems with a limited set
of exceptions. This would include shoe making, furniture restoring, or the work of
performing artists.

24

Non-routine technologies: are characterized by many exceptions and difficult to

analyze problems. Examples of non-routine technologies would be strategic planning
and basic research activities.
Routine Technologies these are characterized by repetitions of similar
operations.
In summary, Perrow argued that if a problem can be studied systematically using logical
and rational analysis cells 1 or 2 would be appropriate. Problems that can be handled only
by intuition, guesswork or unanalyzed experience requires the technology of cell 3 or 4.
Similarly if new, unusual, or unfamiliar problems appear regularly, they would be in
either cell 2 or cell 4. If problem are familiar, then cell 1 or 3 are appropriate.
Perrow also proposed that task variability and problem analyzability were positively
correlated. By that he meant that it would be unusual to find instances where tasks had
very few exceptions and search was clearly unanalyzable or where tasks had a great many
exceptions and search was well defined and easily analyzable. So that the four
technologies can be combined into a single routine, non-routine dimension. This is shown
in the figure 2 as a diagonal line.
Figure 2. Perrows Technology Classifications
Task variability
Few Exceptions

Many Exceptions
C

Craft
4

Ill defined

non-routine
3
Routine 1
Well defined

2
Routine

engineering

Technology and Structure

Perrow argued that control and co-ordination methods should vary with technology
type. The more routine the technology, the more highly structured the organization
should be. Conversely, non-routine technology requires greater structural flexibility.
Perrow then identified the following as the key aspects of structure that could be
modified to the technology.

The amount of discretion that can be exercised for completing tasks

The power of groups to control the units goals and basic strategies.
The extent of inter-dependence between these groups.

25

The extent to which these groups engage in co-ordination of their work using either
feedback work or the planning of others.

The above means that

The most routine technology (cell 1) can be accomplished best through standardized
co-ordination and control. These technologies should be aligned with structures that
are high in both formalization and centralization.
Non-routine technologies (cell 4) demand flexibility. Basically they would be
decentralized, have high interaction among all members, and be characterized as
having minimum degree of formalization.
Craft technology (cell 3) requires that problem solving be done by those with the
greatest knowledge.
Engineering technology because it has many exceptions but analyzable search
process, should have decisions centralized but should maintain flexibility through low
formalization.
Table 10 Perrows: Technology Structure Predictions
Cell

Technology

Formalization

Centralization Span of control

Routine

High

High

Non Routine

Low

Low

Wide

Co-ordination and
control
Planning and rigid
rules
Less rules and less
need for control

3.3 Organizational Environment

Organizational environment refers to all the elements existing outside the boundary of
the organization that have the potential to affect all or part of the organization. In a
broad sense, the environment is infinite and includes everything outside the
organization. It consists of sectors such as:
Raw material - these are individuals and other firms which supply the
organization with raw materials
Human resources
- these are organizations which supply the
organization with human resources
Financial Resources - these are conditions, competitiveness, institutions
and instruments which supply the organization with financial resources
Customer or Market - this sector includes the customers who purchase
the organizations goods and services

26

 Economic - this includes the state of the economy, inflation, depression,

or unemployment rates, economic policies etc. of the country or region
where the organization sells its goods and service
Political/legal - this includes the stability or instability, rules and
regulations, and the justice systems of the country
Socio-cultural - consists of values, beliefs, standards of the society in
which the organization is situated
Demographic - consists of all the demographic dimensions of the society
of the organization
Natural Environment - consists of the climate, weather and other natural
conditions of the country or regions of the organization
International environment - consists of the elements, factors and other
organizations existing outside the country of the organization which have
the potential to affect the organization
Dimensions of Organizational environment
The external environment of an organization can be differentiated, measured or
categorized in many ways. The main ways in which this differentiation can be done are
the following:a) Aldrich categorizes an organizations external environments in terms of:i)
Environmental Capacity: This measures the environment in
terms of resources availability
ii)
Homogeneity/Heterogeneity: This categorizes the environment
in terms of the degree of similarity among the environments
elements
iii)
Stability/Instability: This categorizes environment in terms of the
degree of turnover of the elements
iv)
Consensus/Dissensus: This categorizes the environment in terms
of the degree to which an organizations claim to a specific domain
is disputed or recognized by other organizations
v)
Concentration/ Dispersion: This measures the degree to which
resources and other elements are evenly distributed over the range
of the organizations domain
vi)
Environmental Turbulence: This measures the extent to which
the task environment of an organization is disturbed by an
increasing rate of interconnection between elements and trends.
b) Emory and Trist
categorized external environments into the following
categories:
Placid Randomized. This is a simple environment. It is placid in the
sense that elements change slowly. The environment is random
because when a change does occur, it is not predicted, and is not
coordinated with other environmental elements.
Placid Clustered. This environment is stable. Elements are linked
together so that any slight change in one causes simultaneous change

27

in other elements. When threats or opportunities occur they occur in

clusters which is more dangerous for the organization
Disturbed reactive. In this environment changes are no longer
random. Actions by one organization can disturb the environment and
provoke a reaction.
This environment is made up of large
organizations. A decision by any one organization in this type of
environment is significant enough to cause a disturbance, and calls for
a reaction from other organizations.
In a disturbed reactive
environment, managements task is to carefully plan decisions and
strategic moves to allow for counter moves.

Turbulent Field. This is an environment characterized by both

complexity and rapid changes. Multiple sectors experience dramatic
changes and the changes are connected. The turbulent field usually
has overwhelming negative consequences for the organization. The
distinguishing feature of the turbulent field is the inter-dependence and
the inter-connectedness of the elements.
c)

Lawrence and Lorsch Studies

Lawrence and Lorsch of Harvard University examined three departments
(Manufacturing, Research & Development and Sales) in ten companies in
the United States of America. Their aim was to find out how
organizational structure relates to environmental complexity. Their
findings were that;
The plastics industry with high environmental complexity tended to
have higher departmental differentiation than either the food industry,
(facing moderate complexity), and the container industry, (facing low
environmental complexity). They defined differentiation as the
differences in cognitive and emotional orientation among managers in
different functional departments.
The plastics industry also had a higher degree of integration than either
the foods industry or the container industry. Their findings are as
summarized in table 6.1.
Table 3.1 Environmental Uncertainty and Organizational Structures

Environmental uncertainty
Departmental differentiation
Percentage in
(integration)

integrating

INDUSTRY
Plastic Food
s
High
Moder
ate
High
Moder
ate
roles 22%
17%

Contain
er
Low
Low
0%

Thus Lawrence and Lorsch found that:

28

d)

Firms differentiate themselves in accordance with the

environmental complexity: the greater the environmental
complexity, the greater the differentiation.
Firms integrate themselves more in accordance with environmental
complexity. The more the environmental complexity (measured by
heterogeneity and stability of environmental elements) the more
the level of integration.

Burns and Stalker Studies

Burns and Stalker observed 20 industrial firms in England and discovered
that when external environment was stable, the internal structure was
characterized by rules, procedures and a clear hierarchy of authority (i.e.
high formalization). They were also highly centralized.
However, the studies found out that in rapidly changing environments, the
internal organization was much looser, free flowing and adaptive. Rules
and regulations often were not written down, or if written down were
ignored. The hierarchy of authority was not clear. Decision making was
decentralized. Burns and Stalker used the term organic to describe the
decentralized, low formalized, flexible- structures, and mechanistic to
describe centralized, highly formalized and inflexible structures.

THE CASE FOR THE ENVIRONMENT=STRUCTURE=PERFORMANCE=FIT

(ENVIRONMENTAL IMPERATIVE)
1) Management /Organization theory has established that organizations face different
types of environments. Four of these theories include those by Aldrich, Emery and
Trist, Lawrence and Lorsch and Burns and Stalker Studies. All these theories
emphasize that in order to achieve efficiency and effectiveness organizations align
their structures to appropriate environments.
2) There are three key dimensions to any organizations external environment
touched on by the four theories. These are capacity, volatility, and complexity.
The capacity of an environment refers to the extent to which it can support
growth. Rich environments generate excess resources which can buffer the
organization in times of relative scarcity. Abundant capacity leaves room for an
organization to make mistakes while scarce capacity does not.
3) Volatility refers to the degree of instability in an environment. Where there is a
high degree of unpredictable change the environment is dynamic. This makes it
difficult for management to predict accurately the probabilities associated with
various decision alternatives. At the other end is a stable environment. Stability

29

makes it easy for organizations to predict accurately the probabilities associated

with different decision alternative.
4) Complexity measures the environment in terms of the degree of heterogeneity and
concentration among environments elements. Simple elements are homogeneous
and concentrated. In contrast environments characterized by heterogeneity and
dispersion are complex
5) Organizations that operate in environments characterized as scarce, dynamic and
complex face the greatest degree of uncertainty because they have little room for
error, high unpredictability and a diverse set of elements in the environments for
the organization to constantly monitor. They would therefore need structures that
are characterized by decentralization and lower formalization to allow for
flexibility.
6) Organizations that operate in abundant, stable and simple environments have less
uncertainty and would therefore do with mechanistic structures.
THE CASE AGAINST THE ENVIRONMENT IMPERATIVE
1) If there is an environment imperative, it is mostly limited to those sub units at the
boundary of the organization those that interact directly with the environment.
For instance the structure of purchasing and marketing functions may be a direct
response to their dependency on the environment. The environment may have no
impact on production, research and development, accounting and other similarly
insulated activities.
2) It may also be, since environments are perceived to reflect the structures from
which they are seen, then it is possible that differentiated structures will perceive
a heterogeneous environment or that decentralized structures will perceive more
environmental uncertainty.
3) A stronger case may also be built around the argument that the environments are
relatively impotent on their effects on structure.
4) Some opponents of the environmental imperative argue that todays organization
faces a far more stable environment than the one of the 1700s, 1800s and the
1900s. During these periods the world changed from a rural, agricultural, horse
powered society to an urban, industrialized world with railroads, telegraph,
steamships, electric lights, automobiles and airplanes. In relative terms therefore
todays managers may be facing a fairly stable external environment whose
uncertainty is fairly predictable and certain and hence having very little impact on
structure.
5) The final argument against the environmental imperative is that the impact of the
external environment is not observed in reality. Not only do organizations that
operate in similar environments have different structures they also show no
significant difference in effectiveness. Further many organizations have similar
structures and very diverse environments. The counter argument here may be that

30

the competition is not high enough to differentiate those organizations who

structure their organizations as environment complexity
Implications for management practice
Managers at all levels and in all functions should analyze the organization environment
periodically and identify the sources of uncertainty
To manage transactions with the organization environment effectively, managers should
chart the forces in the organization specific and general environments noting
The number of forces that will affect the organization
The pattern of interconnectedness or linkages between these forces
How rapidly these forces change
The extent and nature of competition which affects the organization
How rich or poor the environment is
Taking that analysis, managers should plan how to deal with the complexities. Designing
inter organizational strategies to control and secure access to scarce and valuable
resources in the environment in which they operate is the first stage in this process
3.4 The Resource Dependence Theory
Resource dependence theory was most fully developed by Jeffrey Pfeiffer and Gerald
Salancik who published their ideas in 1978. Their book was provocatively entitled The
internal control of organizations to emphasize the point that the environment is a
powerful constraint on organization actions. Although resource dependence theory is
based on the assumption that organizations are controlled by their environments, these
theorists also believe that managers can learn to navigate the harsh seas of environmental
domination.
The basic argument of resource dependence theory is that an analysis of inter
organizational relations within the network of the organization can help managers to
understand the power/dependence relationships that exist between their organization and
other network actors. Such knowledge allows managers to anticipate likely sources of
influence from the environment and suggests ways in which the organization can offset
some of this influence by creating counter-dependence.
An organizations vulnerability to its environment is the result of its need for resources,
such as raw materials, labor, capital, equipment, knowledge, and outlets for its products
and services. These resources are controlled by the environment. The dependency these
needs produce gives the environment its power. The environment uses this power to
make demands on the organization for such things as competitive prices, desirable
products and services, and efficient organizational structures and processes. However the

31

dependency the organization has on its environment is not one single, undifferentiated
dependency, it is a complex set of dependences that exist between an organization and the
specific elements of its environment found on the organizational network.
A resource dependency analysis begins by identifying an organizations needed resources
and then tracing them to their sources.

This procedure can be visualized with a

combination of the open systems and the-inter organizational network models (see Figure
below). The open systems model helps you to identify resource inputs and the outputs of
the organization. You then use the network model to define where the resources and
outputs are located. For example, firms that provide raw materials and equipment will be
found among the networks suppliers. Tracing the organizations outputs will identify
specific customers in the network. Labor, capital and knowledge are also brought into
the organization and are supplied through other elements of the network (e.g. labor from
employment agencies, capital from financial institutions, and knowledge from
universities.)
APPLYING RESOURCE DEPENDENCE THEORY
Capital
Inputs (Investors)
(Technology

Knowledge and
Equipment
Sector)

Raw materials
(Suppliers)

ORGANISATIO
N

Outputs (Customers)

Labor Inputs
(Employees)

32

After specifying resources and their sources in the network of organization, the resource
dependence perspective moves your attention to those environmental actors who can
affect these organization-environment relationships and thereby support or interfere with
the organizations resource exchanges. Competition over raw materials and customers is
one source of potential influence, and this is where you should bring the firms
competitors into your analysis. Another source is regulatory agencies, and the special
interests groups who compete with the organization for influence over the regulators.
Of course the procedure given above is too ambitious. In practice it will be impossible to
consider every source of dependence that an organization has on its environment or every
potential competitive or regulatory move. The practical solution is to sort resources
according to their criticality and scarcity. Criticality is an estimate of the importance of a
particular resource. Critical resources are the resources without which the organization
cannot function. For example beef is a critical resource for MacDonalds, whereas
drinking straws are not. Scarcity is an estimate of the availability of the resource within
the environment. Gold and platinum are scarce; air and water are not. Resources which
are both critical and scarce are given highest priority in organizational efforts to track and
manage dependence because these create the greatest power base for other network
actors. To the extent that regulatory agencies or competitors affect the organizations
dependence, these will also be drawn into focus.
Managing dependence requires the establishment of countervailing power with respect to
the particular environmental elements on which the organizations dependence rests.
This means that the first step towards applying the resource dependence perspective is to
thoroughly understand the network with respect to criticality and scarcity of resources.
The second step is to seek ways to avoid dependency or make other environmental actors
dependent on the organization.
Organizations have found many different ways to manage their resource dependencies
and Pfeffer and Salancik document quite a few. In the area of managing suppliers of raw
materials, one common technique is to establish multiple sources of supply. This reduces
the power of any one supplier. Where there are benefits of using a limited number of
suppliers, such as with IT systems where the costs of changing suppliers are high,
contracting is a common strategy for managing dependences. Dependency on suppliers

33

(or customers from the suppliers point of view) is sometimes counteracted by

acquisitions or mergers strategies (called vertical integration) or joint venturing with
suppliers; similar strategies also are useful for managing competitor relations (called
horizontal integration).

Strategies for managing all kinds of dependencies include:

developing personal relationships with members for firms on which yours is dependent,
and establishing formal ties such as taking up membership on their board of directors, or
inviting one of their officers to sit on your board. In the area of managing regulatory
dependence, a common strategy in the U.S. is to send lobbyists to Washington to
influence legislators for example to work, for competitive trade agreements or to note
government funding of research and development. All aspects of marketing sales,
advertising, and distribution can be seen as attempts to manage output dependencies via
influence on consumer purchases of company products. Counteracting negative public
opinion or the negative influence of special interest groups is sometimes achieved with
advertising for example issuing corporate image campaigns.
Labour and knowledge dependencies are sometimes managed with recruitment strategies
for attracting executives and other personnel away from competitors. A strategy that can
aid in the management of dependency with respect to competitor organizations and
regulations is the formation of trade associations.

These associations enable their

members to share the costs of monitoring conditions and trends in the environment and to
pool their influence, for instance by jointly hiring lobbyists to represent their common
interests to the government. Of course trade associations are open to criticism and even
legal action if they are not careful to monitor themselves with respect to price fixing and
other business practices society regards as unfair. In societies in which price fixing is not
outlawed, price agreements and cartels are common means of managing environmental
dependence between competitors. OPEC is a prime example. Finally if all else fails the
organization can release itself from unwanted dependencies by changing its environment.
For example an organization can enter or leave a line of business or alter its
product/services mix through diversification or retrenchment (e.g. joint ventures, spin
offs, mergers, acquisitions).

Notice, however, that these strategies merely alter the

dependence picture they do not eliminate the need to manage resource dependence.

34

Managing resource dependence requires careful definitions and monitoring of the

environment. It also calls for imagination with respect to balancing the power of your
own organization. As discussed above Pfeiffer and Salancit offer both a model for
analyzing dependency in the organizational environment and a set of strategies for
managing these dependencies.
3.5 The Population Ecology Theory
The PET (population ecology theory) was developed by American organization theorists
namely Michael Hannan, John Freeman and Howard Aldrich among others.

Like

resource dependence theory, PET starts from the assumption that organizations depend on
their environments for the resources they need to operate. In both views this dependency
gives the environment considerable power over the organization. However, whereas the
view point of RDT theory is clearly the perspective of the organization, population
ecology theory looks at organizations from the perspective of the environment. What
interests the population ecologist is not one particular organization seeking its own
survival via competition for scarce and critical resources (the resource dependence view)
but rather the patterns of success and failure among all the organizations that compete
within a given resource pool. The basic objective of the PET is to explain why certain
organizations survive and multiply whereas others languish and disappear in the same
environment
Explanation of the PET
(i) The carrying capacity of the environment is limited. An excess population of
organizations leads to congestion and subsequently to the survival of only those
organizations successful in creating a niche in the market place.
(ii) Like biological elements organizations are doomed to die unless they meet the
environmental test of fitness. Environmental forces select out the most appropriate
structural forms for survival from among populations of organizations on the basis of fit
between structural attributes and environmental characteristics.
(iii) The population- ecology theory shifts away from preoccupation with organization at
the individual level towards population level. It is not the fitness of any single
organization that is of interest. It is the group or groups of organizations and they may be
influenced by actions and events with which they have no obvious or direct links
(iv) Management has no effect in deciding whether or not the organization will survive or
die. Environmental factors solely determine the survival of any organization.

35

Criticism of the Population ecology theory

(i) The claim that the organizations existence and survival is determined by the
environments carrying capacity means that the theory cannot be used to predict about the
future. This is because the concept of environmental carrying capacity is immeasurable
and cannot be estimated. It can only be measured on ex post or retrospective basis. Thus
the theory cannot be used to make organizations adapt to their environment and therefore
ensure survival. Thus as an organization theory it is therefore inappropriate.
(ii) The concept of fitness is not clearly defined by the theory. In other words it is
insufficient to state that only those organizations that environment determines as fit
survive. To do so would be tautological. A more meaningful and causal pattern must be
presented for a theory to be acceptable.
(iii) To claim that organizations are like biological organisms also ignores the fact that
organizations are created by men- a biological organism- to meet its objective. To claim
that a biological organism, man, can create a biological organism, an organization,
endows man with supernatural powers.
(iv)The population ecology theory also ignores the role of managerial decision makers.
To assume or argue that managers should be passive, helpless elements completely
dependent on environmental forces is to denigrate the importance role managers can play
in determining the success or failure of an organization
3.6 The Institutional Theory
3. The Size Imperative
Size refers to the bigness or smallness of an organization as measured by some
variable such as number of people, the value of assets an organization has or the value of
turnover. To determine the relationship between size and structure and management styles
a group of researchers based at the university of Aston in Birmingham in a study of 87
companies found out that the larger the organization the greater the specialization and the
use of procedures and reliance on paper work
(formalization), in other words the
larger the organization the more likely it was to adopt (and need) mechanistic structures.
The study also found that the reverse was also true i.e. the smaller the organization the
more likely it was to adopt (and need) an organic (flexible) management style and less
complex structures. That is to say small organizations require decentralized and
personalized structures but as organizations grow in size, more centralized and
impersonal structures are more effective.
Size as a Contingent Factor
Peter Blaus studies of government agencies, universities and department stores, found
that size is the most important condition affecting the structure of organizations. In one of
his studies, Blau looked at 53 autonomous state employment security agencies and
found that increasing size promotes structural differentiation but at a decreasing rate. In
other words increases in organization size are accompanied by initially rapid and

36

subsequently more gradual increases in structural differentiation (both horizontal,

vertical and spatial differentiation). In other words an increase of say five hundred
employees when an organization has a labor force of 300 employees, has a significantly
larger impact on structural differentiation than a similar additional of 500 employees to
an organization that already has 2000 employees. That is, the difference between x and
y in the diagram below is smaller than the difference between and x and y.

Diagram 6.4 Increase in organization size affect structural differentiation at a

decreasing rate.
Y
X

y1

x1

x
y
x

300

800

200

2500

The Aston study in Great Britain also found size to be a major determinant of structure.
The Aston group of researchers at the University of Aston in Great Britain looked at forty
six organizations and found that size was associated with greater specialization and
formalization. They concluded that an increased scale of operations increases the
frequency of recurrent events and repetitive of decisions which makes standardization
desirable. Another researcher, John Child, found that size, was positively related to
specialization, formalization and vertical differentiation but negatively related to

37

centralization. He concluded that larger organizations are more specialized, have more
rules, more documentation, more extended hierarchies, and a greater decentralization of
decision making, further down such hierarchies. He also agreed with Blau that the impact
of size on these dimensions expanded at a decreasing rate as size increased. That is, as
size increased, specialization, formalization and vertical span also increased but at a
declining rate. On the other hand centralization decreased but at a declining rate as size
increased.

Criticism of the size imperative

1. Although several studies show some form of relationship between size and some
structural variables (e.g. structural differentiation, formalization specialization and
centralization) no conclusive evidence is available for other variables such as
standardization, professionalism and so on. There is need for more researchers in this area
to establish conclusive evidence with regard to the role of size in determining the
structure of organization with, regard to all structural variables.
2. Studies on size- structure relationships have generally been done for large and
medium sized companies. Small businesses face different problems and have different
priorities in terms of structural designs. In addition managers of small businesses have a
more limited set of structural options.
3. Many other factors e.g. environment technology, culture and strategy
simultaneously face the organization. Thus, even the structural designs associated with
size might be as a result of these other factors.
However, we may conclude that despite the above criticisms size is a major determinant
of structural designs eg structural complexity (vertical, horizontal and spatial) and
formalization and centralization. The impact of size on other structural variable has not
been conclusively established
STRATEGY AS A CONTINGENT FACTOR

38

What is Strategy?
Strategy can be defined as the determination of the basic long term goals and
objectives of an enterprise and the adoption of courses of action and the allocation of
resources necessary for carrying out these goals. Decisions to expand the volume of
activities, to set up distant plants and offices, to move into economic functions or to
become diversified along many lines of business involve the defining of new basic goals.
New courses of action must be devised and resources allocated and reallocated in order to
achieve these goals and to maintain and expand the firms activities in the new areas in
response to shifting demands, changing sources of supply, fluctuating economic condition
, new technological development and the actions of competitors. (Robbins, S.P., 2000).
These are two approaches to defining strategy: the planning view and the evolutionary
vie or /mode.
The Planning Mode
This view describes strategy as a plan or explicit set of guidelines developed in
advance. Managers identify where they want to go, then they develop a systematic and
structured plan to get there. Until, the 1990s this view point dominated literature on
strategy.
The Evolutionary Mode
This approach looks at strategy as a process which evolves over time as a pattern in a
stream of significant decisions. The identification of goals and the different ways to
achieve the goals is dependent on environmental changes. Since environment is
continuously changing then the goals and the ways to achieve the goals must
continuously change, to keep up with the changing environment. As the environment (and
their markets) change, strategies become outdated and require alteration. Historically, in
the period up to the 1970s, organizations were able to achieve success via rigid planning
and strategy- implementation programs and processes. In the period since the mid 1970s,
the process of strategy and strategic management has become more emergent.
Organizations may begin with an idea of the manner in which they intend to achieve their
goals but are much more flexible about how they will get there. Therefore an important
aspect of the process of strategy is the strategic context in which the organization is
operating.

39

Incremental Versus Fundamental Strategy

Fundamental changes occur when the organization decides to completely reorganize
its activities and internal operations. All its employees are involved and affected. A
fundamental change requires a shift in focus, direction and other major aspects for the
organization. The effects of a fundamental change are wide ranging and have a great
impact.
On the other hand, incremental change represents a softer approach to the process
and effects of change. Incremental change may be executed over time, or between
different departments. It still has an overall aim and goal and will therefore move the
organization forwards. The effects may be no less drastic than where fundamental change
occurs, only more measured.
Levels of strategy
There are two levels of strategy: Business level and corporate level
In Corporate Level Strategy the organization seeks to answer the question in what
business are we in? It determines the rules that each business unit in the organization will
follow. Corporate level strategy is determined by top level managers. It can also be
developed by a specific planning group or department. It will then be communicated to
the rest of the organization for implementation. In highly hierarchical organizations the
method of implementation will also be communicated. The leaders of the organization
will dictate to all extents, the corporate strategy, the implementation and measurement.
In other organization (less hierarchical) a more interactive approach to strategy
formulation and implementation may be employed. In these cases a broad strategic
direction will be communicated to the departments who may then be asked for their input
as to the manner in which it will be implemented, and success measured.
Business Level Strategy is more concerned with how the business unit will compete. It
seeks to answer the questions. How should we compete in each of our businesses? For the
small organization in only one line of business or a large organization that has avoided
diversification, business level strategy is typically the same as corporate strategy but for
organizations in multiple businesses, each business unit will have its own strategy that
defines the products or services it will offer, the customer it wants to serve and so on.

40

Most contemporary structure strategy theories focus on business level strategy. To the
extent that strategy actually determines structure, strategy level is an important point to
keep in mind. Why? For small organizations, in only one line of businesses, or nondiversified large organizations, business and corporate strategy will be the same, and the
organization should have a relatively uniform organization structure. But organizations
with diverse business strategies should be expected to have a variety of structural
configurations; that is management should design structures to fit the different strategies.
Dimensions of Strategies (or classifying strategic dimensions)
There are many ways of classifying strategy.
1) Chandlers strategy- structure thesis
One of the earliest studies on strategy-structure relationship was by a Harvard
University historian, who in the 1960s studied close to 100 of Americas largest firms.
Tracing the development of these organizations from 1909 to 1959, Chandler concluded
that changes in corporate strategy preceded and led to changes in an organizations
structure. As Chandler put it a new strategy required a new or at least a refashioned
structure, if the enlarged enterprise was to be operated efficiently or put it differently
unless structure follows strategy, inefficiency results.
Chandler found that the companies he studied began as centralized structures. This
reflected the fact that they offered unified product lines. As demand for their products
grew, the companies expanded. They increased their product lines, and had to develop
different structures to cope with their changing strategies.
Chandler essentially argued that organizations typically begin with a single product
line. The simplicity of this strategy is compatible with a mechanistic structure. Decisions
can be centralized. Because organizations strategy is narrowly focused, the structure to
execute it can be low in both complexity and formalization. So, Chandler concluded, the
efficient structure for an organization with a simple product strategy is one with high
centralization, and low formalization. As organizations seek to grow, their strategies
become more ambitious and elaborate. From the single product line, companies typically
expand activities within the same industry. This vertical integration strategy makes for
increased interdependence among the units and creates the need for a more complex
coordination device. This calls for increased formalization and complexity.

41

If growth proceeds further into product diversification, the structure must further be
adjusted if efficiency is to be achieved. A product diversification strategy demands a
structural form that allows for efficient allocation of resources, accountability for
performance and coordination of units. This can best be achieved through the creation of
a multiple set of independent divisions each responsible for a specified product line.
Thus, according to Chandler, successful organizations that diversify should have a
different structure from that of successful firms that follow a single product strategy.

Evaluation of Chandlers Strategy Structure Theory

Chandlers claim that strategy influences structure has been supported by several other
studies (Robbins 2000). However his study suffers from a few shortcomings, for
example:
i). He looked only at large profit making organizations
ii). He focused on growth as a measure of effectiveness rather than profitability
iii).His definition of strategy as product diversification is incomplete, as strategy can also
include other variables e.g. market segmentations, actions of competitors, and others
However, despite the few shortcomings of methodology and definition, there is over
whelming evidence that strategy influences structure.
2) Miles and Snows Strategic Types
Raymond Miles and Charles Snow classify organizations strategies into four
categories: defenders, prospectors, analyzers and reactors.
1) Defenders
In this type, organizations seek stability by producing only a limited set of products
directed at a narrow segment of the total potential market. Within this limited niche,
defenders strive to aggressively prevent competitors from entering their turf.
Organizations do this through standard economic actions such as competitive pricing, or
production of high-quality products. There is little or no scanning of the environment to
find new areas of opportunity, but there is intensive planning oriented towards cost
reduction and other efficiency issues. The result is a structure made up of high horizontal

42

differentiation, centralized control and an elaborate formal hierarchy for communications.

Over time defenders are able to curve out and maintain small niches within their
industries that re more difficult for competitors to penetrate.
2) Prospectors
These types of strategies are almost the opposite of defenders. Their strength lie in
finding and exploiting new product and market opportunities. Their success depends on
developing and maintaining the capacity to survey a wide range of environmental
conditions, trends and events. They invest heavily in personnel who scan the environment
for potential opportunities and threats. This type of strategy requires flexibility and hence
structure will also be flexible. It will rely on multiple technologies that have a low degree
of routinization and mechanization. There will be many decentralized units. The structure
will be low in formalization; have decentralized control, with lateral as well as vertical
communication.
3) Analyzers
These types of organizations try to capitalize on the best of both prospectors and
defenders. They seek to minimize risk and maximize opportunity for profit by moving
into new products or new markets after viability has been established by the prospectors.
They take the successful ideas of prospectors and copy them. Analyzers live by imitation.
Analyzers must have the ability to respond to the lead of key prospectors yet at the same
time maintain operating efficiency in their stable product and market areas. Analyzers
accept smaller profit margins in the products and services that they sell than will
prospectors, but they are more efficient. Prospectors have to have higher profit margins to
justify the risks that they take.
Analyzers seek both flexibility and stability. They respond to these goals by
developing a structure made up of dual components. Parts of these organizations have
high levels of standardization, routinisation and, mechanization and efficiency. Other
parts are adaptive to enhance flexibility. In this way they seek structures that can
accommodate both stable and dynamic areas of operations. But in this compromise, there
can be costs. If situations change rapidly, demanding that organizations move fully in
either direction, their ability to take such action is severely limited.

43

4) Reactors
These organizations represent a residual strategy. In general reactors respond
inappropriately, perform poorly, and as a result they are reluctant to commit themselves
aggressively to a specific strategy. What can cause this? Top management may have
failed to make the organization strategy clear. Management may not have fully shaped the
organization structure to fit the chosen strategy. Whatever the reason the outcome is the
same. The organization lacks a set of response mechanisms with which to face a changing
environment.
Strategy- Structure Relationship according to Miles and Snows Theory.
Fig 5.4 describes Miles and Snows four strategic types as falling along a continuum
that range from low to high in terms of environmental change and uncertainty. Following
the logic of this theory, the more uncertainty and change the management forecasts, it
would move to the right along the continuum in fig 5-4. Similarly as strategies move to
the right along the continuum the organizations structure should be modified or
redesigned to be increasingly flexible and adaptive.
Explanation: management perceives little or no change and uncertainty in the
environment under defender strategy. The successful structure, under such conditions
should be designed for optimum efficiency. This efficiency can best be achieved through
high division of labor, high standardization, high formalization and centralized decision
making. Organizations following a reactor strategy respond to change reluctantly.
Management perceives some change and uncertainty, but they are not likely to make any
substantial adjustments until forced to, by environmental pressures. So this structure is
likely to be very much like the one discounted for defenders.
Managers pursuing analyzer strategy perceive a considerable degree of change and
uncertainty but wait until competitors develop a viable response, and then they quickly
develop it. Analyzers combine the best of both words by tightly structuring their current
and more stable activities, while developing flexible structures for new activities that face
general uncertainties.

44

Finally, prospectors strategies require the greatest degree of structural flexibility.

There is a lot of change and uncertainty so structure should be highly adaptive. This
would translate into low complexity, low formalization and low centralization.
Fig 5-4 Snow and Miles Environment- strategy continuum

Rapid Change and

Uncertainty

Little Change and

Uncertainty

Prospectors

Analyzers

Reactors

Defenders

3 Porters Competitive Strategies

Michel Porter, of Harvard Graduate School of Business, proposed that management
can follow any of the following strategies. Product differentiations, cost differentiation,
focus product differentiation and focus cost differentiation.
i) Product differentiation strategy
In this type of strategy firms try to achieve leadership in their market domain by
emphasizing high quality, extraordinary service innovative design, technological
capability or unusual positive brand, image. The key is that the attribute chosen is
different from those offered by rivals and significant enough to justify a price premium
that exceeds the cost of differentiation.
ii) Cost differentiation Strategy
In this type of strategy firms try to differentiate themselves by being low cost
producers. Success with this strategy requires that the firm sell at low prices but also offer
a product or service perceived as comparable to that offered by rivals in terms of quality,
or at least be perceived as such. Typical means of achieving such a cost advantage

45

include efficiency of operations, economies of scale, technological innovation, low cost

labor, or preferential access to raw materials. Examples of firms that have used this
include Hyundai Motors.
iii) Focus Product differentiation
In this type of strategy the firm identifies a smaller portion of the market which it seeks to
dominate and proposes to achieve this by emphasizing on quality of goods and services.
That is to say, the firm will select a segment or group of segments in an industry (such as
product variety, type of end buyer , distribution channel or geographical location of
buyers) and achieve competitive advantage over other sellers through extra high quality.
The goal is to exploit a narrow segment of the market.
iv) Focus cost differentiation
This is similar to focus differentiation strategy but the firm seeks to achieve
competitive advantage by selling the product or services at low price.
v) Stuck in the middle
Porter used the term stuck in the middle to describe organizations that are unable to
gain a competitive advantage by any one of the four strategic types discussed above.
Such organizations will find it very difficult to achieve long term success. When they do,
according to Porter, it is usually as a result of competing in a highly favorable industry, or
having all their rivals similarly stuck in the middle. Porter notes that successful
organizations frequently get themselves into trouble by reaching beyond their competitive
advantage and ending up stuck in the middle. Laker Airways provided such a case. It
began in 1977, by offering flights between London and New York at rock-bottom prices.
This cost leadership strategy resulted in a resounding success. In 1979, however, the firm
began to add new routes and offer up scale services. This blurred the publics image, and
lead to Laker Airways collapse in 1982.
Porters Strategic Type Structure Implications
The structural implications for Porters strategic types are as follows.
i). No structural predictions are made for the stuck in the middle strategy.
ii). Predictions have also excluded the focus strategies for the simple reason that they are
derivatives of the product and cost differentiation strategies.

46

iii).The goal of cost leadership strategy is to achieve efficiency through tight controls,
minimization of overhead expenses, and use of economies of scale. The best structure
of achieving these would be high formalization and high centralization.
iv). The product differentiation strategy demands a high degree of flexibility that can best
be achieved through low complexity, low formalization and decentralization.
4 Danny Millers Strategic Types
Danny Miller of the University of Montreal and McGill University developed four
strategy dimensions of innovation, marketing differentiation, breadth and cost control.
i) Innovation
In this type of strategy the firm introduces major new products or services. It does
this through scanning of markets to discern customer requirements. This strategy implies
major and meaningful innovations. Structural dimensions necessary to achieve these
objectives are decentralization and extensive use of coordination committees and task
forces.
ii) Marketing differentiation strategy.
In this type of strategy the firm strives to create customer loyalty by uniquely
meeting a particular need. The firm seeks to create a favorable image for its product
through advertising, market segmentation and prestige pricing. This would describe a
strategy used by premium beer products and designer label apparel manufacturers. This
requires moderate to high structure complexity, moderate to high formulation and
moderate decentralization.
iii) Breadth Strategy
This type of strategy refers to the scope of the market which the business caters: the
variety of customers, their geographic range, and the number of products. Some grocery
chains for instance have chosen to operate only in a given community. Others however
extend their operations to the regional, national or even international level. This requires
high complexity and low formalization.
iv) Control Strategy

47

This type strategy considers the extent to which the organization tightly controls costs,
refrains from incurring unnecessary innovation or marketing expenses, and cuts prices in
selling basic products. This strategy needs high formalization and centralization

LIMITATION TO THE STRATEGY STRUCTURE RELATIONSHIPS

Attacks on the strategy imperative lies basically in questioning the degree of
discretionary latitude managers actually have. For instance it seems logical that the
impact of strategy would be greater in the early development of the organization. When
personnel are hired, equipment purchased, and procedures and policies established it
becomes a whole lot tougher to change.
Another challenge to the strategy imperative deals with the lag factor. When
management implements a new strategy, there is often no immediate change in structure.
The major factor affecting response is the degree of competitive pressure. The less
competition an organization faces, the less rapid its structural response. Without
competition the concern for efficiency is reduced. The conclusion is that where an
organization faces minimal competition, there is likely to be a significant lag between
changes in strategy and modification in structure.
DOES STRUCTURE DETERMINE STRATEGY
Structure can influence strategy. Structure can motivate or impede strategic activity as
well as simply constrain strategic choices. For example strategic decisions made in a
centralized structure are typically going to have less diversity of ideas and are more likely
to be consistent over time, than in a decentralized organization where input is likely to be
diverse, and hence likely to change as people change. In a study of 110 large
manufacturing firms, Keats and Hitt found that strategy follows structure. Another study
of 54 firms listed among the top half of fortune 500, Pitts also found out that structure
influences and constrains strategy rather than the other way round.
Propositions Regarding the Effects of Structure on the strategic Decision Process.

48

Complexity As the level of complexity increases so does the probability that

i)

Members initially exposed to the decision stimulus will not recognize it as being
strategic or will ignore it because of parochial preferences

ii)

A decision must satisfy a large constraint set, which decreases the likelihood that
decisions will be made to achieve organizational goals

iii)

Strategic action will be the result of an internal process of political bargaining and
moves will be incremental.

iv)

Biases induced by members parochial perceptions will be the primary constraint

on the comprehensiveness of the strategic decision process. In general, the
integration of decisions will be low.

Formalization: As the level of formalization increases, so does the probability that:

i). The strategic decision process will be initiated only in response to problems or crises
that appear in variables monitored by the formal system.
ii). Decision will be made to achieve precise, yet remedial, goals and means will displace
ends.
iii).Strategic action will be the result of standardized organizational processes and moves
will be incremental
iv). The level of detail achieved in the standardized organizational processes will be the
primary constraint on the comprehensiveness of the strategic decision processes. The
integration of the decisions will be intermediate.
Centralization: As the level of centralization increases, so does the probability that:
i) The strategic decision process will be initiated only by the dominant few and will
be the result of proactive, opportunity seeking behavior.
ii) The decision process will be oriented toward achieving positive goals (i.e.
intended future domains) that will persist in spite of significant changes in means.
iii) Strategic action will be the result of intended rational choices, and moves will be
major departures from the existing strategy.

49

iv) Top managements cognitive limitations will be the primary constraint on the
comprehensiveness of the strategic process. The integration of decisions will be
relatively high
Source: Robbins S.P (2000) Organization Theory P 141 adapted from W. Fredrickson
(1986) The Strategic Decision Process and Organizational Structure Academy of
Management Review April 1986 P 28
Industry Structure Relationship
Closely related to the issue of strategys impact on structure is the role of industry as a
determinant of structure. There are distinguishing characteristics of industries that affect
the strategies in terms of growth possibilities, regulating constraints, barriers to entry,
degree of competitiveness and other factors. Simply knowing the industry in which an
organization operates allows one to know something about product life cycles, required
capital investments, long term prospects, and types of production technologies, regulatory
requirements and so force. Public utilities for example face little competition, and can
have more tightly controlled structures.
To illustrate how industry can affect structure, let us take two variables that tend to
differ by industry category- capital requirements for entry and product innovation rates.
Figure 5-6 shows four industry categories with examples form each. Type A industries
rate high on both variables, while type C industries are high on capital requirements and
low on product innovation. The high capital requirements tend to result in large
organizations and a limited number of competitors. Firms in type A and C industries will
be highly structured and standardized, with type Cs being more decentralized to facilitate
rapid responses to innovations introduced by competitors.
Type B and D industries because of low capital requirements tend to be made up of a
large number of small firms. Type D, however will likely have more division of labor and
formalization than type Bs because low product innovation allows for greater
standardization. In the same way that capital requirements influence organizational size
and number of competitors, we should expect high product innovation rates to result in
less formalization and more decentralization of decision making.

50

Consequently, strategy may merely be an intermediate step between unique

characteristics of the industry in which the organization operates and the structure it
implements to achieve alignment (see fig 5.5)

Figure 5-5 Industry Structure Relationship

Industry

Strategy

Structure

Source: Robbins Pg 143

Figure 5-6
High

Two Variable Analysis of Industries

Low

Product Innovation Ratio

Capital Requirements

High
Examples

Low
Example

-Aerospace

- Computer Software

Example

X Retail building materials sales.

X metals and mining

Source: Robbins pg 144

==========================================================

51

Review Question on Strategy, Structure Relationship

1. Contrast planning and evolutionary modes. Which dominates the management theory
literature?
2. What is Chandlers thesis on strategy structure framework? What evidence does he
present to support this thesis?
3. What criticisms can you direct at Chandlers thesis?
4. Does Chandlers framework have any application to small business management?
5. If structures are relatively stable over time, does this imply that strategies dont
change?
6. Using Miles and Snows typology, describe the structure that would align with each
strategic type.
7. Using Millers integrative framework, attempt to reconcile Chandler , Miles and Snow
and Porters Strategy-structure theories
8. Strategy follows structure rather than vice versa Build an argument to support this
statement. Then build an argument to refute this statement.
9. Do you think there is any relationship between an organizational life cycle stage and
organizational strategies? Explain.
10. How are strategy and industry categories related?

52

DIAGRAMMATIC REPRESENTATION OF THE RELATIONSHIP BETWEEN STRUCTURE

AND CONTINGENT VARIABLES

a) The strategy imperative

The strategy structure relationship
Structural
complexity
(mechanistic)

(organic)
Cost
leadership

Product
differentiation

b) The technology imperative

i)
Technical complexity and structural complexity
Structural
complexity
(high)

Low
Unit batch

Mass

Continuous

Technical high
complexity

53

ii)

Interdependence
Thompson

of

departmental

operations:

James

Structural
complexity

Mediating
Low

iii)

Sequential
Medium

Reciprocal
High

Task analyzability and task variety: Charles Perron

Ill
defined

Craft

Well
defined

Routine

Few exceptions

Non-routine

Engineering

Many exceptions

54

iv)

Task analyzability/task variety structure technology

framework

Structural
complexity
(High)

Low
Routine

Engineering

Craft

Non Routine

NB: The structure/technology, environment, strategy and size give a general framework for trying to align
structure to the contingent variables.

The Size Imperative

High

Low
structural
complexity

Small
size

Size

===============================================================

55

3.5 Culture
Culture refers to the particular set of values, beliefs, customs and systems that are unique
to an organization. Culture is reflected by language, symbols, standards, values, customs,
artifacts and beliefs held by the members of the group and accepted by the members as
peculiar to to the group. One way of differentiating/or measuring culture is in terms of
(a) Entrepreneurial culture this is characterized by creativity and innovation.
Members of the group practice and are encouraged to practice and are
rewarded when they are creative and innovative.
(b) Clan culture: this is characterized by participatory management styles and
a concern for people. The rationale for this type of culture is that it is
people who make an organization efficient and therefore taking care of
them through recognition and support will lead to organizational
efficiency.
(c) Bureaucratic culture In this culture rules and regulations are strictly
followed. There is a high degree of control.
(d) Mission culture In this culture emphasis is on the achievement of the
organizations goals
1.4.6 Weaknesses of the contingency theories

The relationship between structure and contextual variables refer to

formal structure; yet the informal structure is not only required it
might have a significant influence.
Structures and management styles may strongly be influenced by
other factor such as regulations e.g. the utility firms, banks etc.
The contingency theory is too mechanistic and ignores the
complexity of organizational life. Organizations are social entities
with all the varieties and complexities of the human elements. As
such no scientific relationship can hold or explain highly complex
social relations and power struggles that influence the choice of
structure, technology and each environment.

Critical Evaluation of the Contingency Theories

Positive
1. The theories were in tune with the times in which they emerged- the 1960s and 1970s
period of rapid economic and technological changes

56

 Larger organizations
Intense competition
2. The contingency theories offered plausible explanations of not only why these events
were causing problems for organizations, but also how to resolve them.
3. The theories were simpler to understand and apply than the neo-classical theories.
4. The theories were rational in that they explained known structural options and
identifiable contingencies.
Negative/shortcoming
1

Difficult to relate contingent factors to performance- many other factors come into
play in an organization setting

No agreed definitions of the factors

Use of the formal organization structure. The contingency theories only dealt with the
formal structures and ignored the informal structures which are also important in an
organization.

===========================================================
Therefore there is need for other theories to explain the complex natures of organizations
e.g. the information processing theory, the population ecology theory and the principles
propagated by Peters and Waterman.

LECTURE 4 THE MODERN VIEW POINTS

4.1 The Information Processing Theory
i) The Information processing theory views organizations as open systems which face
two basic situations
a) Environmental threats and uncertainties
b) Task uncertainty- this is the difference between the amount of information already
possessed by the organization and the amount of information required to perform
the task
i.e Task uncertainty = Information required to perform the task MINUS the
information already possessed by the organization.
ii) The organization must have the mechanism and be structured in such a way that it
can diagnose the information it has, and the information required. In particular the
organization must be able to gather, interpret, and use the appropriate information in
order to reduce this task uncertainty

57

iii) The second assumption of the information processing theory is that given the
various sources of uncertainty a basic function of organization structure is to create the
most appropriate configuration of work units (as well as the linkages between them) to
facilitate the effective collection, processing and distribution of information.
iv) The third assumption of the theory deals with the sub systems or the various
departments of an organization. Because the sub systems have different degrees of
differentiation (that is to say they have different time perspectives, goals, technology
etc) the important question is not what the over all organization should be but rather
what are the optimal structures for the different sub units within the organization.
v) The information processing theory views the organization as having
the tasks of the organization vary in their degrees of their uncertainty
as work related uncertainty increases, so does the need for increased amount
of information and thus the need for increased information processing
capacity
an organization will be more effective when there is a match between the
information processing requirements facing the organization and the
information processing capacity of the organization
if an organization ( or sub units) face different conditions over time more
effective units will adapt their structures to meet the changed information
requirements
THE CULTURE EXECELLENCE APPROACH
This approach is led by three theorists namely Peters and Waterman, Kanter and Handy.
4.3 Peters and Watermans Management Principles
In their book, In Search of Excellence, the two authors made innovative proposals on
how to achieve efficiency and effectiveness in organizations. The book was based on a
study of 100 of the most successful U.S. companies during the 1970s. The authors
proposed the following principles to guide managers.
1)
2)
3)

4)

5)
6)

Bias for action A preference for doing something, anything, rather than sending
an idea through endless circles of analysis and committee reports.
Staying close to the customer Learning the customers preferences and catering
to them.
Autonomy and Entrepreneurship Breaking the corporation into small units and
encouraging them to act independently and competitively. Encouraging and
rewarding creativity and innovation at all times.
Productivity through people Creating in all employees the awareness that their
best efforts are essential and that they will share in the rewards of the companys
success.
Hands on, value driven Insisting that managers keep in touch with the
companys essential business and promote a strong culture.
Stick to the knitting remaining with the business the company knows best.

58

Simple form, lean staff- Few administrative layers, few people at the upper levels.
Simultaneous loose tight properties Fostering a climate of dedication to the
central values of the company, combined with tolerance for all employees who
accept those values
4.4 Total Quality Management Principles (TQM)
7)
8)

These principles were first developed in the 1940s by Edward Denning. Denning
emphasized the importance of employees in achieving high quality. He described TQM
as empowering, energizing, and enabling employees to work with one another. He
transplanted those ideas to Japan after the end of World War II. By the 1970s Japanese
products were flooding markets around the world.
By the 1980S, the TQM philosophy was consolidated into the following principles.
(1)

TQM (Meaning of) a company wide effort that includes all employees,
suppliers and customers, and seeks to continuously improve the quality of
products and services to meet customer expectations.

(2)

Under TQM, employees are encouraged to participate in the improvement of

quality and to find and solve problems that affect productivity.

(3)

Customer focus: The entire company is directed towards customer satisfaction

(4)

Strategic Planning and Management :

Managers must make long-term
commitment to improving the quality of their product

(5)

Continuous Improvement: Managers should not expect their companies to reach

high quality productivity levels over-night. A step by step approach is much more
realistic.

(6)

Empowerment and Teamwork: Since quality is attained through all employees,

and not just managers, a great deal of teamwork among all workers and across all
levels of the company must occur. Such teamwork is required not only vertically
(i.e. among top, middle, and lower, level managers and employees) but also
horizontally (i.e. within and across departments).
In additional inter
organizational team work between the company and its suppliers is needed to
fully integrate suppliers capabilities with those of the company.

4.4 Peter Drucker (1995)

Druckers main contribution to management theory is in three areas namely:
1)
Ways of evaluating management
According to Drucker management should be evaluated in four other dimensions
in addition to the traditional one of goal achievement namely
i) Purpose and Mission

59

Management exists to enable a business achieve its objective. The objective of a

business is to supply goods and services using its resources to consumers at a
price the consumers are willing to pay.
ii) Productive work and worker achievement
A business accomplishes its performance through work. Work is performed by
workers. Making the worker work is a very important task for management; it
implies consideration of the human resource as human beings and not as things.
It means recognizing the worker as having a personality, and thus requiring
responsibility, motivation, participation, satisfaction, leadership, status and
function.
iii) Social Impacts and Social Responsibilities
Every organization is part of society, and it exists for the sake of society. To
produce economic goods and services, the business has to have impacts on
people, on community, on society and on the environment. It has to have impact
on the community as a source of jobs, tax revenues, waste products and
pollutions. It has an impact on the environment in terms of physical, geo-physical
and biological negative and positive effects. The business has therefore got to be
evaluated on the basis of its impact on people, community, society and the
environment, thus being concerned with the quality of life of community.
iv) The Time Dimension
Management has to consider both the present and the future: both the short run
and the long run. Where the future and the present are not both satisfied, where
their requirements are not harmonized, or at least balanced, the interest of the
business is endangered, damaged or destroyed. Thus management has the
responsibility of ensuring that the present is not only efficiently managed but that
efficiency is harmonized with the future.
v) Administration and Entrepreneurship
Administration means getting the most out of what already exists.
Entrepreneurship means creating, innovating and bringing new things for a better
tomorrow. But to create a better tomorrow begins by making todays business
successful. Thus the job of a manager is making todays business successful in
terms of administrative and economic efficiency thus ensuring the success of the
same business tomorrow. Thus he is concerned with the efficiency of todays and
tomorrows and therefore he/she creativity and innovation to create better ways to
enable survival for tomorrow.
2)

Druckers other contribution is the philosophy of management by objectives. This

philosophy emphasizes that senior managers should establish long range goals.
Lower level managers should actively participate in setting those goals. In
addition each manager should set his/her own goals. Each managers goals
become the source of self control of his performance

60

3)

Druckers other contribution is his proposals about what is likely to happen in the
future (until about 2010). For him the future (i.e. 21 st Century first decade) there
will be:
i)
A rise in alliances globally linked by technology
ii)
A compelling need for decentralized organizations in an increasingly
uncertain environment.
iii)
An increase in the use of teams in organizations
iv)
An increase in the number of knowledge workers and continued decline
in blue collar workers.
v)
The evolution of society into three sectors: business; government; and
non-profit the later will be interested only in social development. The
Non-profit sector will be characterized by volunteer services.
vi)
A world economy in which world markets will become more important
than domestic markets.

THE CULTURE EXCELLENCE APPROACH

Introduction
Culture provides the greatest source of competitive advantage. There are three major writers on the
approach Tom Peters and Robert Waterman, Rosabeth Mos Kanter and Charles Handy.

1) Tom Peter and Robert Waterman

In search for excellence

A bias for action

Close to the customer
Autonomy and entrepreneurship
Productivity through people
Hands-on value driven
Stick to the knitting
Simple form team staff
Simultaneous loose fight properties

2) Rosabeth Moss Kanter

Corporate giants must learn how to dance
According to Kanter to be competitive in a modern environment, companies must

i)
ii)
iii)

Restructure to find synergies

Opening boundaries to form strategic alliances.
Creating new ventures from within, encouraging innovation and entrepreneurship.

61

A.
-

Restructuring to find Synergies

Identify and concentrate on the core business areas
Eliminate all non-core activities.
Devolve authority to appropriate levels those in the front line,
The non-core areas can be done by computers or outsourced.

B. Opening Boundaries to Forms Strategic Alliances

- The need for alliances with other organization to exploit opportunities and share ideas

and information.
These alliances may take three forms
Opportunistic alliances
Service alliances
Stakeholders alliances
Opportunistic alliances comprises a joint venture whose aim is to take advantage of a

particular opportunity that has arisen

Stake holder alliances is a continuing almost a permanent partnership between an

organization and its key stakeholders eg employees, customers and suppliers

Service alliance organizations form a cross- company consortium to undertake a

special project with a limited lifespan

C creating New Ventures from within
- Encouraging innovation and creativity
- Need to create new cultures that encourage and aid creativity and innovation. As a result
the innovative potential of employees is tapped, resulting in a proliferation of new ideas,
products, and ways of working, leading to improvements in organizational performance
Charles Handys Emergence Future Organization
His thinking and writing were inspired by rising unemployment in Europe and the rise of Japan
as an economic power. Handy argued that if organizations were to survive the competitiveness of
the 1980s, and meaningful jobs were to be created for all those who wished to work, then both
organizations and individuals would have to change the way they perceived jobs and careers. In
his book, The Age of Unreason, Handy identifies three generic types of organizations that should
dominate the future. These are: the Shamrock organization, the Federal organization and the
Triple I organization.
a) The Shamrock Organization
- Like the plant of the same name, a Shamrock organization has three interlocking leaves
or three distinct groups of workers the core, the contractual and the flexible labour
-

force.
Core workers form the specialists, the professionals, who form the brain, the hub or the
nerve centre of the organization. These are people who are seen as being essential to the
organization

62

The contractual fringe These may or may not work exclusively for the organization in question.
They are contracted to carry out certain tasks for which they are paid a fee. This group is cheaper
(they are only paid for what they do), their management is easier, and they are hired only when
there is work.

The flexible labour force comprises of a pool of part-time workers available for use by the
organization. These are people with relevant skills, who are not in need of, or who cannot obtain
full time employment but who are prepared to work on part time basis.

b) The Federal Organization

Handy defines this type of organization as a collection or network of individual organizations allied
together under a common flag with some shared identity. Federation combines the advantages of small size
and those of a large organization. The smallness allows for flexibility in decision making while largeness
brings benefits of economies of scale. The federal organization has the role of generating and collecting
ideas from the member organizations and making them into concrete, achievable strategies objectives. The
federal organization is concerned with the future, with looking forward, generating new ideas and creating
sceneries and options of what the future will look like. All this is done with the ultimate aim of moving the
organization forward and keeping it ahead not only of competition but also of its time.
The Triple 1 Organization

==============================================================
4.6 Factors affecting the development of the Management Theory
The Pre Classical Period:
i)
Despite the extensive practice of management prior to the beginning of the 20 th
Century, very little was done to develop management theory as a science, or as an
important field of study. Economics, sociology, psychology, and other disciplines
were developed and written, but not management. The main reasons for this lack
of interest in developing management as a science were:
a)
For centuries, business was held in low esteem.
Aristotles
characterization of business of buying and selling as unnatural moneymaking, Adam Smiths disparaging remarks concerning businessmen and
Napoleons castigation of England as a nation of shopkeepers are all
evidences of this fact. Smith referred to certain businessmen as an order
of men whose interest is never the same with that of the public, who have
generally an interest to deceive, and even to oppress the public, and who
accordingly have upon many occasions, both deceived and oppressed it
(in the Wealth of Nations published in 1776).
b)

Another reason for the delay has been the preoccupation of economists
with political economy and non-managerial aspects of business. Adam
63

Smith was for example concerned with the wealth of a nation Ricardo was
mainly interested in wealth creation and the contribution of the factors of
production. Only in the 1930s did economists start working on the
individual firm.
c)

Another reason for the delay was the tendency to compartmentalize the
discipline within the broad field of social science.

d)

In addition to the above reasons, there was for many years a belief among
managers in business, that management is not susceptible to theory i.e.
management is totally an art, not to any extent, a science. Until Fredrick
Taylor nobody could associate management with science

e)

The other reason is that business owners and managers themselves have
discouraged the development of a theory of management, because of their
preoccupation with technology, price, accounting, marketing, and totally
ignored the theory of management.
Factors affecting the Development of the Classical, Neo Classical and Modern
Theories
i)

The Industrial Revolution, and the consequent increase in production and

the growth of the organization increased the complexity of business
organization, and brought about the need for search for better ways to deal
and manage organizations.

ii)

The Great Depression of the 1930s brought forth symptoms of human

unrest and trade unionism, which served to alert businesspeople that
among the deficiencies of the American industrial development were the
administration and manipulation of resources of business organizations.

iii)

The Second World War and the subsequent defense and space programs
put emphasis on production at least cost in materials and labor, and this
focused greater attention to the job of a manager, as the strategic factor in
accomplishing the objective.

iv)

The increased productivity set off by the war, accelerated the movement
towards large and more complex business organizations. The challenge to
effective management increases as business size increases. As business
methods and products become more complex and as relationships with
other businesses, consumers, workers, and government become more
intricate, the need for skilled management increases.

v)

In the more recent years, the need to develop management theory, so as to

improve practice has come from the world wide rivalry for markets, power
and progress. This competition has been accelerated by such other factors
as:

64

Technological change
The freeing of world trade
The change from sellers to buyers markets

vi) The pressure for wages and fringe benefits increases has raised costs to such
levels, that businesses which fail to use modern techniques of management
are at the mercy of those which do.
The challenges facing Management Today (Early 21st Century)
1)
2)
3)
4)
5)
6)

LUTHANS
The technological and human components of work are inextricably
blended.
Jobs are less tightly defined and programmed.
Contingent workers comprise a significant proportion of the work force.
Customers influence what is performed within the organization and the
standards applied to evaluating that work.
Teams rather than individuals produce the basic unit of work.
Organizational charts fail to capture the network of influence and
relationships that characterize the workplace.

The challenges that will face management in the near future

LUTHANS:
Knowledge workers will not have a traditional contractual relationship with
employers. Instead they will rent their professional skills and knowledge on a
freelance basis to different companies at different times.
The corporate headquarters will evolve into heart centers, where emotional
intelligence fuels creativity, innovation, and entrepreneurial spirit.
Downsizing, upsizing, rightsizing, growth, and stabilization all will be welcome
forms of sizing the companies. People will have coping mechanisms that will
prepare them for any shift.
In the future, productivity will be driven by speed and efficiency rather than the
staff hours dedicated to a project
Internet speed workplaces will radically transform the world of work, making
work across multiple time zones and irregular schedules more and more common.
People wont work for organizations where they dont get a share of the profits and
where work/life balance is not a given.
Companies will no longer decide which benefits an employee needs. Instead
employees will log on to their companys website to customize their benefits
programs.
People will feel an increasing ownership of their destinies, lives and careers;
living skills will be just as important as professional skills.

65

The boundaries between work and school will blur. Learning will be centered
around professions and trades, and there will be more mentor/apprentice
relationships with internet based coaching provided by people one has never met.
A digital divide will emerge separating employees who are tech-savvy and those
who arent. Smart companies will invest more in human capital and become
virtual universities to narrow the gap.
The fortune list of companies will become less of an economic force. There will
be new forms of stock trading, where businesses will be valued according to their
contributions to the local and global communities.

This new environment is a disruptive, discontinuous change.

paradigm, a new way of thinking about the workplace.

It represents a new

1.11 What is a Paradigm shift?

The term paradigm comes from the Greek word, paradeigma, which translates to a
model, pattern or example. The term paradigm is now used to mean
a broad model
a framework
a way of thinking
a scheme of understanding reality
A paradigm establishes the rules, (written or unwritten), defines the boundaries, and tells
one how to behave within the boundaries, to be successful. The impact of
internationalization, information technology, diversity and ethics, etc. has led to a
paradigm shift. In other words, for todays, and tomorrows organization and
management, there are new rules with different boundaries, requiring new and different
behavior inside the boundaries for organizations and management to be successful
1.12 The Paradigm Effect
This is a situation in which those in the existing paradigm may not even see the changes
that are occurring let alone reason and draw logical inferences and perceptions about
changes. This effect helps explain why there is considerable resistance to change and
why it is very difficult to move from the old economy and management paradigm to new.
There is a discontinuous change in the shift to the new paradigm.
1.13 Importance of Managers/Management in an organization
Management is the;
Most strategic resource:- enables the organization to formulate, implement, and
achieve its goals

Most expensive in terms of societys capital and the employers direct investment
Managers determine the efficiency of other organizations resources, workers,
physical resources, reputation, financial and organizational resources.
Where a business reaches a certain size, in terms of horizontal, vertical, or spatial
complexity, when a variety of tasks have all to be performed in cooperation,
synchronization and communication, then a business needs managers and
management.
66

Therefore management is an indispensable resource in any organization.

==========

END

OF PART ONE ===============

67

PART TWO
LECTURE 6 THE MEANING,
MANAGEMENT OF CHANGE

SOURCES,

PROCESSES

AND

THE

What is organisational change

According to Daft (983), organizational change is the adoption of a new idea or behavior
by an organization. Similarly, Hodge and Anthony (1988) define organizational
change as an alteration in the status quo. Change occurs mainly because
organizations as open systems, must frequently cope with shifts in key environmental
domains. If they do not change to cope with shifts in important environmental
domains, they may face serious problems and they may even die. By adapting to new
conditions, they can continue to grow and prosper. Thus organizations must change
to cope with changes generated by changes in their external environment, which are
continuously changing. Changes may also be generated by the internal environment
(from within the organization). Change generated from within the organization is
endogenous, while that generated from without is known as exogenous.
Organizations face a dilemma with respect to change. On the one hand, organizations
desire change in order to remain competitive, adopt more effective and efficient
technology and methods; on the other hand, organizations resist change because they
desire stability and predictability. Organizations desire stable output, predicable
costs, and financial stability. The key question for the organization thus becomes
how can we achieve desired change without disrupting current stability?
A question that arises is whether organizations bring about change deliberately or change
is brought about by the environment. In other words, do organizations actually
determine their own fate with regard to change? Can organizations actually adapt to
environmental change or does environmental change occur in such a manner that
many organizations cannot adopt, and therefore they die. The central issue here is
between environmental determinism and freedom of organizational choice and
adaptation. This idea builds on Darwins theory of natural selections, which holds
that only those species that can adjust to environmental change survive; they are
selected for survival by the environment. Those that are not selected die. This theory
argues that there is little, if any, adaptation (i.e. planned change by the organization).
The environment weeds out those organizations that do not fit.
According to Hodge and Anthony (1988) although organizational ecologys main
contribution is its dynamic environmental conceptualization, this does not displace
all other explanatory variables. In much of research, ecological variables are
combined with institutional and structural variables to explain organizational
adaptation. This paper takes the position that organizational change can be planned
and managed to a certain extent by the management. To the extent that change can be
planned then the uncertainty and instability associated with change can be reduced.
Organizational change is therefore;
- alteration of the status quo
- varying or modifying the current state of the organization aspect

68

reactive change- change in response to external circumstances

Proactive change: change primarily caused by desire by management to change.
Organizational change can influence and be influenced by several features of the
organizational life.
Change in one part of an organization affects people and processes in another
Change can be triggered by a number of external and internal factors.

SOURCES OF ORGANIZATIONAL CHANGE

EXTERNAL TRIGGERS
- Change in demand for an organizations products or services (as a result of
changing consumer preferences, action by competitors, government etc).
- threatening tactics of competitors
- arrival of a new comer in the market
- Take over of the business.
INTERNAL TRIGGERS
- Need to change strategy as a result of external forces
- Need to introduce a new culture in the organization
- Need to improve productive efficiency
- Need to improve the quality of product or services
- Need to improve standards Change can either originate from the environment or
from within the organizations. An example of an exogenous change (from the
environment) is one generated by a change in some aspect of law. An example of
an exogenous change is where for example a university introduces a new
program.
Change can impact various aspects of an organisation. It can impact on task, technology,
structure or people. Organizational growth or retrenchment as well as new
government action often changes structure. Changes in technology can also affect
peoples attitudes, emotions, skills, abilities, expectations and interest.
Seldom is the impact of change neatly compartmentalized as affecting just one or two
parts of an organization. The arrows in the diagram below indicate that change
usually has an interactive, dynamic effect on the other parts of the organisation.
Fig.1 The impact of change on Aspects of the Organization.
Structure

Task

Change

Technology

People

69

Technology changes pertain to the organizations production processes. These changes

are designed to make the transformation process more efficient or to produce greater
volume. Changes in technology involve new techniques for making products or
services.
Product (task) changes pertain to the product or service outputs of the organisation.
New products include small adaptations of existing products or entirely new product
lines.
Structure changes pertain to the changes in the organization structure, goals, policies,
reward systems, labour relations, linkage devices etc. they also pertain to the changes
in the supervision and management of the organization.
People changes refer to the changes in the attitudes, skills, expectations and behavior of
employees.
It is important to note that each type of change often influences the others. A new product
may require changes in the production technology. A change in the structure may
influence the attitude and skills of employees.
Although changes affect each other, most changes can be classified as technology,
structure, people or task depending upon the primary target.
Need for organizational change
i)
organizations face a continuously changing environment e.g.
- competitors introduce new products
- new production technologies are developed
- political environments change
- Economic environment changes e.g. economic growth, economic depression,
increase/decrease in interest rates etc.
ii)
the organizations internal environment also changes e.g.
- employees retire or resign
- inter group conflicts arise
These changes and others give managers daily challenges. The managers must constantly
respond to those challenges. They meet these challenges by implementing one or more of
the organizational change and development techniques namely:

70

The change processes

According to Bedeian (1980) there have been many attempts to develop a model of the
organizational change process. The most general in its application is the one
developed by Greiner which sought to identify conditions that distinguish successful
from the less successful change efforts. Greiners analysis led to the finding that
successful change process hinges on two key factors.
i)

A redistribution of power within an organization such that traditional decision

making practices move towards greater use of shared power.
Such power redistribution within the structure of an organization occurs through a
developmental process of change. This implies that successful organizational
changes do not take place in on one full swoop. Rather, they involve a pattern
consisting of a number of specific and interrelated phases.

ii)

KURT LEWINS THREE PHASE PROCESS

Lewis proposes that;
- every human grouping has some forces within it which help keep it in balance
and provide it with stability and others which provide it with a reason to change
(the force field theory)
Forces resisting change maintaining stability
Equilibrium
Forces for change.
Field force theory
all behavior is the result of an equilibrium between the two sets of opposing
forces (driving forces and restraining forces )
Driving forces: push one way to attempt to bring about change
Restraining forces: push the other way in order to maintain the status quo
-

Lewis suggests that the best way to implement change is to use a three step
approach to change the behavior of those opposing the change as follows.

Step 1: unfreezing existing behavior by persuading and convincing those with

restraining force
Step 2: - changing behavior by adopting new attitudes
- implementing the changes
- use of a change agent
Step 3: Refreezing - reinforcing continuously convincing the organizational members
that change is not only necessary and desirable, but inevitable. This can be consolidated
by various support mechanisms such as encouragement, participative management styles
etc.

71

MINTZBERGS FOUR PHASE CHANGE PROCESS

Mint berg identifies a four phase process of change as follows;
Stage 1 Identification of the need for change
During the first phase of the change process management identifies the need for
change
Stage 2 Identification of the alternatives
In the second phase management identifies the various alternatives of
implementing the change
Stage 3 Evaluation of the various alternatives
In this phase the various alternatives are evaluated using a given criteria and the
most efficient alternative is selected for implementation
Stage 4 Implementation
During this phase change is implemented
GREINERS CHANGE PROCESS
Greiner identified six phases common to successful change efforts each involving a
stimulus to the power structure and a reaction from the power structure of an
organization. A general overview of this process is discussed here below.
Phase 1: pressure and arousal: The process begins as a result of pressure on top
management. These pressures may arise from either externally or internally. In successful
changes, the result is the time arousal to take action.
Phase 2: Intervention and reorientation: Arousal in itself does not automatically
ensure proper response. It is quite likely that top managers will be tempted to see
problems as temporarily or to blame them on the things. As a consequence, successful
change typically involves intervention by an outsider. It is important that this individual
be known for his improvements and that he or she enters an organization at the top or as a
consultant who reports directly to the highest level of management.
Phase 3: diagnosis and recognition: this phase is characterized by a shared approach to
power as the newcomer, with top management support and active personal involvement,
engages members at several lower levels in collaborative, fact finding, problem solving
discussion in order to recognize and diagnosis current and potential organizational
problems, as well as to reduce any anticipated opposition.

72

Phase 4: Invention and Commitment: During this phase, attention switches to the
invention of new solutions capable of generating sustained commitment to new
courses of action. As in previous phase, the newcomer plays an active role, involving
all management levels in developing new ideas and methods for solving problems
and taking action. Solutions are based on shared power, emphasizing participation in
the invention of group solutions to the problems identified in phase 3. Such
collaboration has been shown to be particularly effective in developing quality
solutions and sustained commitment to action.
Phase 5: Experimentation and Search: In this phase solutions identified in phase 4 are
tested for credibility on a small scale before they are introduced on a companywide basis.
In addition, the method previously used to generate solutions (interaction and shared
power) is carefully evaluated. Further, rather than implementing major changes at the top,
numerous small changes are introduced at all organizational levels on an experimental
basis.
Phase 6: Reinforcement and Acceptance: This last phase is an outgrowth of the
acceptance and internalization of change as previously experienced. As a change is found
to be successful, and as participants support grows, it is introduced on a much larger
scale, ultimately being absorbed into all parts of an organization. Accordingly, this phase
involves reinforcement from positive results, leading in due course to an acceptance of
new practices. Greiner suggests that aside from the change itself, the most significant
outcome of this phase is greater acceptance at all organizational levels of the use of
shared power as an approach for introducing change.
Additional Aspects of Successful Change
Another way of looking at the change process and the elements necessary for change to
occur is by referring to the views of Daft (1983), Daft concedes that in order for a new
idea or behaviour to be adopted, a series of activities has to be completed. If any one of
these elements is missing the change process will fail. These elements are:
i)
Need: A need for change occurs when managers are dissatisfied with current
performance.
ii)
Idea: An idea is a new way of doing things. The idea may be a model, concept or
plan that can be implemented by the organization. The idea may be a new
product, a new machine, or a new technique for managing employees.
iii)
Proposal: A proposal occurs when someone within the organization requests the
adoption of a new behavior, idea, or technique. The proposal gives the
organization the opportunity to decide if it wants to try the change.
iv)
Decision to adopt: A decision occurs when the organization makes a choice to
adopt the proposed change.
v)
Resources: Human force and activity are required to bring about change. Change
requires resources. Change does not happen on its own. In order for a change to
be successfully proposed and implemented, resources must be allocated to it.
Principles of successful organizational change

73

Margulies and Wallace drawing on an in-depth analysis of techniques and applications of

organizational change offer several guiding propositions on successful organizational
change.
Proposition 1: planned change efforts are much more likely to be successful if initiated
and supported by the top management of an organization.
Proposition 2: Changes will flow most smoothly when those who will be affected are all
brought into the process at the earliest possible stage.
Proposition 3: Successful changes require time and repeated effort. That is before
becoming successfully incorporated as an ongoing part of organizational life, a change
effort will typically require reinforcement over some period of time.
Proposition 4: A successful change requires careful monitoring to secure accurate
feedback concerning intended outcomes. No matter how good a job one does of initially
selecting a change strategy and facts, something-unexpected will eventually occur during
implementation. Only by carefully monitoring the process can one identify the
unexpected in a timely fashion and react to it intelligently.
Resistance to change
Although change is a universal and an inevitable phenomenon, it rarely occurs in a
smooth, balanced fashion. Resistance to change is a frequent and natural occurrence. The
paragraphs that follow discuss four of the most common reasons for resisting change.
(a)

(b)
(c)
(d)

Parochial self-interest: Virtually all organisational members can be expected

to behave in ways that will maximize those goals that they personally consider
most important. Consequently, to the extent that all proposals for change
represent a threat to the status quo, individuals and groups are likely to resist if
they believe they stand to lose something of value as a result. In such
circumstances, the parties involved will for the most part focus on their own
self interest, and only incidentally on the overall good of the organization. The
following are some of the personal goals, that when threatened, will almost
inevitably provoke resistance; power, money, prestige, convenience, security
etc.
Lack of understanding and trust: People also tend to resist change when they
do not understand the intended purpose, mechanics, or consequences of a
planned change.
Different assessments: Resistance to change frequently occurs when
organisational participants differ in their evaluation of associated costs and
benefits resulting from a proposed change.
Low tolerance for change: opposition may stem from a low tolerance for
change. Different people have varying abilities to absorb change. Unknown
consequences of change may present a psychological threat to many individuals
challenging their sense of adequacy as well as threatening their self-esteem.

74

Dealing with Resistance to Change

There are six methods suggested by Bedeian (1983) to influence participants to accept
change. These methods are briefly discussed below.
i)

Education and Communication Education is the sharing of knowledge or

perception that a change initiator has acquired through means not typically
available to other members of his or her general organization. This approach
involves securing relevant facts, eliminating misunderstanding due to incorrect or
incomplete information and resolving difficult viewpoints through discussion.

ii)

Participation and Involvement This involves the involvement of potential

resisters in the planning and implementation of a proposed change. This method is
based on the notion that the most effective way to reduce opposition and to
engender commitment to a proposed change is to work collaboratively with the
members of the targeted system.

iii)

Facilitation and Support: This involves the use of facilitative and supportive
skills. Particularly appropriate when resistance develops as a result of fear and
anxiety, this method may be traced to the interest stirrings of human relations
movement.

iv)

Negotiation and Agreement: This involves the use of covert attempts to side step
potential resistance to change. Manipulation is not simply a matter of persuasion
but more a devious tactic for persuading different minded groups that a proposed
change should be adopted. As such, manipulation involves supporting a position
through slanted appeals to the particular interests of a target system. Selective
distortion of information by both omission and commission may be involved. In
addition facts and emotional appeals most likely to be convincing to the principal
parties may be consciously misrepresent. Co-operation may be classified as a
form of manipulation. Absorption of various key resisters into an organizations
selection making structure has long been a popular method to avert opposition.

v)

Explicit and implicit Coercion: This method assumes that there is a basic
disagreement and that the principal parties involved are operating from relatively
fixed positions. Typified by at least temporary abandonment of efforts at
consensus, coercion involves the use of force or threats or both to compel
acceptance of an enacted change. Tactics involved may include violent
disagreements as well as threatened firings, transfers and loss of promotion
possibilities. Coercion is generally used sparingly in practice.

Creating a Climate of Total Organisational Change

In order for a meaningful and total organisational change to occur it is important not only
to adhere to above methods of managing change, it is also important to ensure that a new
climate and culture of people in the organization is created. Climate refers to the way
people behave and think and culture refers to the values of people in the organization. For
an effective change to occur, both the ways people behave and think, and their values,

75

must change. The more these values and beliefs of people can be changed, the more
organisational change can be achieved.

ORGANIZATION CHANGE APPROACHES

1. Organizational Development (OD)
- changing the peoples culture, knowledge, behavior, values and attitudes
- changing people to adopt new values that exposure (enhance) trust and openness
open and democratic leadership styles.
- Changing management styles from dictatorial to democratic
- Changing management techniques from dictatorial leadership styles.
- According to Bennis, organisational development is a response to change a
complex educational strategy intended to change the beliefs, attitudes, values and
structures of organizations so that they can better adapt to new technologies,
markets, and challenges and the dizzying rate of change itself.
Organizational development techniques
This mainly refers to changing the people. There are many techniques in use depending
on the organization and the consultant. The four most widely used include.
i)
Survey feedback
ii)
Confrontation meetings
iii)
Sensitivity training
iv)
The management grid
i)
-

The Survey feedback techniques

a questionnaire is used to measure altitudes of employees
the questionnaire is administered by outside consultants
the results are sent to top management.
The surveys main aim is to find out the views of employees on certain issues
They can be used to identify the existence of some problem e.g low morale and
seek employees proposals of the solutions to the problems.
They can also be used to follow up on the success or not of the proposed solutions
Some examples of attitude survey questions include
- the hours of work here are okay
Very low
Low
Average
Very high
High
I am paid fairy compared with other similar companies
Very low
Low
76

formalization is a problem in my department

- Yes
- No
ii) The confrontation meetings
This is a type of focused exercise in which the management group meets with
employees to discuss and come to grips with problems that have arisen.
A consultant is also included in the meeting to slash the issues that face the
organization at any particular moment
A confrontation meeting usually begins with the consultant introducing the
subject matter in general terms, emphasizing the need for communication, mutual
trust and understanding and the need for members and management to share
responsibility for accomplishing organization goals.
In such meetings, discussions on organizations operating problems are held, and
solutions proposed.

(iii) Sensitivity training (or T-Group training)

This method or technique is a group experience designed to provide
maximum possible opportunity for the individuals to expose their behavior give and
receive feedback, experiment with new behavior, and develop awareness and
acceptance of self and others.
-

Provides managers with sensitivity for themselves and others and with
skills necessary to more effectively guide and direct changes in social arrangements
and relationships.

Develops in managers the sensitivity, understanding and skills to

participate effectively both as group leaders and members

Enables managers discover and develop tested principles and improved methods of
human relations training

Sensitivity training is arranged usually away from the job, no activities or discussion
topics are planned. The focus is on the here and now issues.

The participants are encouraged to portray themselves in the group rather than in
terms of past experiences or future problems.

The consultant or trainer sees to it that an environment of mutual trust, understanding and
frankness is created
(iv)
The managerial grid
- this method is used to bring about change in employees attitudes and values
- the technique was developed by two gentlemen Blake and Moulton
- the basic objective of the program is to develop managers with a high concern for
people and high concern for production. The program is carried out in six phases

77

Phase1: consists of seminal training in a one-week conference where managers

study the theory of managerial effectiveness.
Phase II: The manager implements a climate of openness developed in phase I
Phase III: the experiences of phase II are extended to include the
interrelationship of related organisational units
Phase IV: top management works with other groups to develop an ideal model of
employee/ management relationship.
Phase V: during this phase tactics are developed of moving the company to the
ideal organizational model development in phase IV.
Phase VI: the achievement of phases I-V are evaluated with the objective of
identifying weaknesses and telling corrective actions as necessary.
Therefore O.D is
-

a strategy of improving organizational effectiveness by means of behavioral

science approaches involving the application of diagnostic and problem solving
skills by an external consultant in collaboration with the organizations
management.
It is an organization wide process
It utilizes the techniques and approaches of the behavioral sciences i.e
psychology, social psychology and sociology in so far as they relate to the study
of work in organizations.
Involves the intervention of an external third party in the shape of a change agent
trained and experienced in behavioral science applications in the work situation.
Is aimed at organisational effectiveness, not just changing people or structures for
the sake of change
The change agent and the organization must adopt a collaborative relationship
which means being open with one another, having a high degree of trust, and
being prepared to work through conflict in a constructive way.

Role of the change agent

- The success of any O.D program depends largely on the part played by the third
party. The role ranges from the highly directive leader type of role to nondirective counseling role. In the first mentioned role, the third party will tend to
prescribe what is best for his client, at the other extreme, he will tend to reflect on
issues and problems back to his clients without offering any judgment himself. He
will let the client make / suggest proposals. In between these extremes are several
other possible roles, as indicated below:
Role of third party

78

Plans prescribes

recommends/ proposes

clarifies reflects listens

Qualities of a good third party in an O.D process

- intellect and personality, in particular the ability to listen diagnostically, and to
apply rational approaches to problems and situations.
- Mature outlook in terms of awareness, and acceptance of personal strengths and
weaknesses.
- A preference for interpersonal relations based on mutual trust and liking for
teamwork rather than competitiveness and for conflict to be handled openly and
constructively.
- Must have basic understanding of behavioral science knowledge and more
generally, intervening skills, presentation skills and ability to establish and
maintain comfortable relationships with a wide cross-section of people.
Benefits of an O.D program
- It enables an organization to adopt to change in a way that obtains the full
commitment of the employees concerned.
- It can lead to organisational structures that facilitate employee co-operation and
the achievements of task.
- It releases latent energy and credibility in the organization.
- It can improve understanding of organisational objectives by employees
- It can improve decision making processes and skills.
- It provides opportunities for management development in the context of real
organizational problems
- It may stimulate more creative approaches to problem solving throughout the
organization.
- It usually increases the ability to management groups to work as teams.
Principles of implementing an O.D program successfully.
- create and sustain a sense of urgency about the future
- create and empower a leadership team ( a guiding coalition)
- develop a vision and a strategy for achieving it
- Constantly communicate the new vision.
- Empower employees to help the change happen by removing obstacles such as
restrictive structures, lack of necessary skills, inflexible managers, and
unimaginative reward systems.
- Generating some benefits in the short term so that people can see some tangible
improvements on the way to achieving the end goal
- Consolidating short gains
- Embedding the new approaches in the organizations culture.
BUSINESS PROCESS RE-ENGINEERING (BPR)

79

this is a strategic approach to organizational change where the entire business

architecture of the enterprise is restructured
it is a fundamental rethinking and radical design of business processes to achieve
dramatic improvements in critical contemporary measures of performance, such
as quality, cost, service and speed
BPR is vital, under modern conditions of customer expectations, intense
competition and the pervasive nature of change.
Processes include all the collection of activities that take one or more kinds of
inputs and creates an output that is of value to the customer. Typical processes
include ordering, buying, manufacturing, product development, delivery,
invoicing,
The reengineering process tends to lead to the following changes in the way work
is undertaken
Several jobs or tasks becoming combined with related tasks.
Workers become more involved in decision making (empowerment increase)
The various steps in a process being performed in accordance with the needs of
the next process rather than in some pre-determined linear form.
Processes having several versions to deal with differing customer requirements
Work is performed where it makes most sense.
A reduction in the number of checks and controls insisted on during the process.
The minimization of reconciliations (e.g. of orders) between customers and
suppliers.
A single point of contract with the customer
Hybrid centralized / decentralized operations prevail.

The structural changes likely in a BRP are

- work structures move away from functional departments towards process teams.
- Employees are empowered to act in ways that were previously controlled by rules
- Empowerment implies a willingness and an ability to accept greater responsibility
for work outcomes
- Preparation for work implies a greater emphasis on education (i.e to understand
the why) rather than on training (understanding the how)
- The focus for performance and payment shifts from activities to results (expressed
in terms of value created for the customers).
- Advancement within the organization is more likely to be based on the ability to
undertake the work rather than on performance in the current job.
- A culture change will occur in which the typical employee will see the customer
as more important than the boss.
- Organisational structures are likely to become flatter and less formalized.
- Senior executives assume the role of culture leaders than financial score cards
- The role of IT (Information Technology) will be vital in facilitating the reengineering process. The personal computer, the photocopies, the fax machine, e
mail, and the mobile phones, all show the importance of IT in facilitating the
BPE processes.

80

The shortcomings of the BPR

BPR has been challenged on the following grounds
i)
Much of what passes as BPR is not so much of process engineering, but process
simplification, is process led, rather than vision led, is not revolutionary it is just
an improvement of existing systems, and works with existing systems rather than
challenging them.
ii)
BPR as practiced makes people work harder, than smarter
iii)
It is used as a tool of downsizing
iv)
Hence people become victims rather than beneficiaries
v)
The drive to please the customer rather than the boss can lead to dysfunctional
consequences to the organization.
3. AMBIDEXTROUS APPROACH TO ORGANIZATIONAL CHANGE
Meaning
In an ambidextrous approach to change, the change agent incorporates structures and
management processes that are appropriate to both the creation and the use of the idea of
change
For example the organization can behave in an organic way (or create organic structures)
during the innovation and creation of new ideas, and then adopt mechanistic structures
when the change is being implemented.
Justification
Organic structures such as decentralization and low formalization encourage creativity
and innovation. On the other hand, mechanistic structures such as high centralization and
high formalization stifle creativity, with emphasis on rules, procedures and regulation but
results in efficiency and effectiveness.
Techniques for encouraging ambidextrous change in technology change
i)
Switching structures: means an organization creates an organic structure when
such structure is intended for the innovation of new ideas, and reverts to
mechanistic structures during the implementation of the changes.
ii)
Creative departments: in some organizations, the creation of new ideas is
assigned to separate departments for adoption by other departments. Departments
that initiate change are organically structured to facilitate generation of new ideas
and techniques. Departments that are supposed to implement those changes tend
to have mechanistic structures so as to achieve efficiency in the implementation.
General Manager

Creative department
Organic structure

iii)

Using
department
mechanistic

Venture teams: These teams encourage creativity. The teams are often given a
separate location and facilities so that they are not constrained by organizational

81

procedures. The teams may be given total license to establish new venture
projects for any department.
iv)
New venture fund: a fund is created to provide financial resources for employees
who can develop new ideas, products or business. Employees are given leave and
resources to go out of the organization and create new business opportunities for
the organization. Employees can also use company labs and equipment to develop
a business idea. If the idea is successful, the company can provide the necessary
financial resources to start up the business.
v)
Corporate entrepreneurship: here the company attempts to develop internal
entrepreneurial spirit, philosophy, and structures that will produce a higher than
average number of innovations.
====================================================
LECTURE 8 STRESS, CONFLICT AND THEIR MANAGEMENT
5.1 What is Stress?

Stress is an adaptive response mediated by individual differences and/or

psychological processes that is a consequence of any external (environmental)
action, situation, or event that place excessive psychological and/or physical
demands on a person.
Stress is the tension people feel when they are facing or enduring extra ordinary demands
constraints or opportunities and are uncertain about their ability to handle them
effectively. Stress is the feeling of tension and pressure. Stress has both physical and
emotional consequences for the individual
Stress has both positive and negative impacts on the individual. Distress can result in
anxiety and illness while eustress can stimulate an individual to better cope and adapt to
environmental changes
The sources of job related stress are:
Demands created by individual differences
Stress created by job itself
Stress created by others expectations of you
Stress created by co workers and managers
Stress created by the environment and culture
Stress created by forces outside the organization
Symptoms of stress
Physiological signs which can range from sweaty palms, restlessness, headaches
to hypertension and heart attacks
Psychological signs such as boredom, irritability, anxiety, hostility and
depression
Behavioral signs such as sleeplessness, increased smoking alcohol abuse

i)

Thus stress consists of

A reaction to a situation or event (not the situation or event itself)

82

ii)
iii)

Excessive psychological and/or physical demands

An impact by individual differences

Stress is not
anxiety
nor nervous tension or
something necessarily harmful,
Stress is excessive psychological or physical situation of the individual caused by
an event or a situation or action.
Stress is an adaptive response to an external situation that results in physical,
psychological and or behavioral deviation for organizational participants.

Job Stress is a condition arising from the interaction of people and their jobs, and
characterized by changes within people that force them to deviate from their normal
functioning.

Burn out
- Chronic state of emotional exhaustion

It is a special case of distress

It is work related and is often used to describe extreme cases of stress in the work
environment

It is often experienced by people in jobs with high levels of inter personal

interaction or jobs that require helping other people.

Individuals who experience burnout usually have a high emotional investment in

their work, derive a major part of their self-esteem from their work, and have a
few interests away from work. They also have high performance standards for
themselves, especially for what they can do to help someone.

Repeated exposures to work stressors results in burn out.

Reducing burnout
- Depersonalization of relationships i.e. viewing the people served as objects
instead of humans.
-

Results of burnouts
Headaches, mood swings, cynicism, increased use of drugs, alcohol, questioning
of self and family conflicts

Organizational results include inflexibility in dealing with organizational clients,

negatives work attitudes, increased absenteeism and decreased work efficiency

83

occupations that experience high levels of burnout include nurses, customer

services, and social workers.
-

Research physicists forest rangers, and laboratory technicians experience low

turnover.

Distress: feelings of anxiety, fear and threat

Eustress: feelings of excitement, challenge and opportunity
Usually, people associate the results of distress with stress.
Behavioral results
e.g. high levels of smoking, drug abuse, appetite disorders and violence.
Psychological results - include severe anxiety, alienation, depression and speech
difficulties.
Medical results - include hearth disease, stroke, backaches, ulcers and headaches some
of these medical results can also be a results of behavioral results
5.2 Importance of Stress
In todays work environment, stress has become a major and legitimate concern for
organizations. New environmental demands in the work place are increasing work-related
stress. Causes of stress include: globalization, advanced technology, loss of privacy,
continually having to learn new skills, information inundation, etc.
This increasing stress is having a deteriorating impact on those affected and their
families, and is also costly to organizations through absenteeism, employee turnover,
direct medical costs, workers compensation, diminished productivity, and accidents.
5.3 Model of stress
- Describes how stress is formed and the conditions under which the sources of
stress evoke a stress response
-

This model acts just as an explanatory model as it has not been empirically tested

It is mainly useful as a tool of analyzing and managing stress.

Sources

Perceived stress

Extra organizational

Stress
response

Behavioral
response

Organizational

84

Group

Individual
Psychological
Physiological
Physical

85

Distress

Eustress

Results in
distress

Behavioral
Psychological
Medical

Results in
Eurostress

Exhilaration
Excitement
Surprise

5.4 The Effects of Stress

Physical Problems due to Stress and Conflict
1)
Immune system problems lessened ability to fight off illness and infection
2)

Cardiovascular system problems high blood pressure and heart diseases

3)

Musculoskeletal system problems such as tension; headaches and back pain

4)

Gastrointestinal system problems such as diarrhea, and constipation.

Of course not all the above physical problems can be linked to stress. Environmental
conditions and the persons general state of health, heredity, and medical history also
contribute.
5.5 The Causes of Stress
5.5.1 Extra organizational Stressors
These include: societal/technological changes, globalization; relocation; the family;
economic and financial conditions; race, class, and residential or community condition.
Societal/technological change
The phenomenal rate of change has had a great effect on peoples lifestyles and has
increased stress.
A Persons family a family situation, either a squabble or illness can cause stress to
the employee. Also the challenges of balancing the responsibilities of their jobs and the
needs of their families are putting up pressure on employees.
Relocation, transfer, or promotion can also lead to stress. Expatriate managers (those
with responsibilities outside their home country) may undergo cultural shock which is a
stressor.
Sociological variables such as race, sex and class, which cause differences in values,
beliefs, also cause stress.
Financial situation of the employee and the economic conditions in the country can
also cause stress.

86

5.5.2 Organizational Stressors

These organizational stressors include
Administrative policies and strategies

Downsizing

Competitive pressures

Merit pay plans

Bureaucratic rules

Advanced technology
Organizational structure and design
Centralization and formalization
Specialization
Role ambiguity and conflict
No opportunity for advancement
Organizational processes
Tight controls
Only downward communication
Little performance feedback
Centralized decision making
Lack of participation in decision making
Punitive appraisal system
Working conditions
Crowded work areas
Noise, heat or cold
Polluted air
Strong odor
Unsafe, dangerous conditions
Poor lighting
Physical or mental strain
Toxic chemicals or radiation
5.5.3 Group Stressors
Group stressors can be categorized in two areas:
Lack of group cohesiveness (or togetherness) - This can be caused by
task design
the supervisor prohibits or limits togetherness or
other members of the group shut the person out
Lack of social support
When social support is lacking (e.g. when an employee does not share his joys,
successes, problems, etc with his co-workers) this can be quite stressful.
5.6 Individual Stressors
Individual dispositions such as type A characteristics, personal control, learned
helplessness, and psychological hardiness may also affect the level of stress in an

87

individual. In addition, the intra-individual level of conflict stemming from

frustration, goals, and roles, has implications as individual stressors.
Type A characteristics
Type A personality is an action-emotion complex, that can be observed in any
person who is aggressively involved in a chronic, incessant struggle to achieve
more and more, in less and less time, and if required to do so, against the
opposing efforts of other things or other persons. Type A employees are the ones
who:
work long hours, under constant deadline pressure and conditions
often take work home at night or weekends and are unable to

relax

constantly compete with themselves, setting high standards of

productivity that they seem driven to maintain

tend to become frustrated by the work situation, to be irritated

with the work efforts of others, and to be misunderstood by supervisors.

These types of persons usually experience considerable stress. By contrast, type

B personalities are:

not concerned about time

patient

relaxes without guilt

take a low key approach to time

Type B persons are less likely to be stressed than their Type A persons.
Personal Control: If employees feel that they have very little control over their work
environment, and over their own job, they will experience stress. However, where
employees are given a sense of control over their work environment, such as being given
a chance to be involved in the decision making process that affects them, this will reduce
their work stress
Learned helplessness
Helplessness is a feeling that one has no control over their fate, and that they are helpless
pawns being tossed aimlessly about by forces beyond their control. One factor that causes
this feeling is lack of participation by employees in decisions affecting their jobs. This
feeling may cause stress.
Psychological Hardiness
This is a characteristic that enables individuals to resist the adverse effects of stressful life
events. It involves a sense of purpose in ones life, the belief that one can control ones
own outcomes, and a tendency to new change as an opportunity for growth rather than a
threat. Those people with such characteristics will be able to survive and even thrive, but
those who do not possess hardiness may suffer the harmful outcomes of stress and
conflict.

88

5.7 Stress management

Stress management has the objective of maintaining stress at an optimal level. This is
because some stresses are unavoidable, and some amount of stress is not bad for some
people.
Both organizations and individuals have a role to play in managing stress.
5.7.1 Individual stress managing strategies
(i) Stress reduction strategies: These mainly aim at decreasing the number of
stressors affecting a person. The most obvious is to avoid events and circumstances
that cause distress. For example if crowds cause you stress, avoid them, if you do not
enjoy driving in heavy traffic, then avoid traffic jams.
-

Planning is also a key element in stress avoidance. If stressors are unavoidable

planning helps the person prepare for them.

Entering a new organization and new job is a stressful experience. Learning

about the organization and job before accepting a position prepares a person for
new stressors.

Some food also cause stress, caffeine, nicotine, alcohol can be stressors,
especially when taken in excessive quantities.

A person can also use perceptional processes to reduce stress. People develop the
ability to block perceptually the stressors. They can also selectively ignore some
stressors by looking for positive elements in the stressors.

Time management skills also help many people manage the multiple demands
placed on them by work and non-work settings. Such skills include setting
priorities and developing a schedule for doing important tasks

Learning a situation which is stressful can also be a stress reduction strategy.

(ii) Stress resilience strategies

These types of strategies help a person develop physical and psychological stamina
against potentially harmful stressors. The major resilience strategies are exercise, diet and
weight control.
(iii) Stress recuperating strategies
These help people rejuvenate physically and psychologically, especially after sphere
distress. The major methods include vigorous exercise, relaxation training, meditation
(focused awareness), diversion, and balanced work-non-work lifestyles.

89

5.7.2 Organizational stress management strategies

The goal of organizational stress management is to achieve the optimal level of stress
required to achieve most effectively the goals of the organization
(i) Stress reduction strategies
These include, training programs, personnel policies, job design and organizational
design.
Training programs these should focus on job-related training that improve a persons
ability to do a job. Other training programs can teach people time and stress management.
Organizations can also design their selection, placement, and career development policies
and procedures to help people reduce distress selection, placement, and career
development policies. Policies can also help people reduce stress. Physical layout of the
work place can reduce stressors. Noise controls, proper temperatures, removal of
obnoxious odors also help reduce stress. Flexible work schedules day care centers, and
day care benefits also help reduce stress.
(ii) Stress resilience strategies
Physical exercises, diet, and weight control help employees resist the effects of stress.
The organization can provided on-site space for exercises, to encourage employees to do
exercises.
Company cafeteria can offer stress resilient diets. Organizations can offer complete
programs of diet and exercise, giving their employees guidance on the right balance of
each.
(iii) Stress recuperative strategies
Strong or vigorous exercises help employees recuperate from distressful situations,
working off the effects of stress before leaving the workplace helps prevent work stress,
from spilling over to an employees non-work life.
Some training programs can also offer stress-oriented therapy to employees with distress.
Employees assistance programs offering counseling that focus on behavioral changes
such as altering type A behavior, drug and alcohol abuse, and aggravate smoking
counseling programs within the work selecting one particularly helpful to those people
who cannot manage stress effectively by themselves.
============================================

90

LECTURE 8 CONFLICT AND ITS MANAGEMENT

6.1 What is Conflict

Conflict consists of interactive, opposing behaviors between two or more

people, groups or larger social systems having incompatible goals

conflict is usually experienced as troublesome if not disruptive

conflict ranges form disagreements, debates, to physical confrontation,

murder, and or annihilations (elimination) (i.e can be presented in the form of a
continuum ranging from low to high conflict)

conflict may be
- overt or covert
- perceived or non-verbal
- active or passive
- manifest or latent
6.2 Levels of Conflict
There are five levels of conflict:
Level I
Level II
Level III
Level IV
Level V

Intra-individual conflict
Inter personal conflict
Inter group conflict
Organizational conflict
Conflict between larger social systems

The main causes of inter group, organizational, and larger social systems conflicts are
i)
Intra-Individual conflict
ii)
Inter personal conflict
The main cause of interpersonal and intrapersonal conflict is stress. Thus in order to
understand conflict one must understand stress.
6.2.1 What is intra-individual conflict
Opposing behavior between different sub-systems of an individual
Can be caused by stress
Can also be caused by the following

Conflict due to frustration. Frustration occurs when

a motivated drive is blocked before a person reaches a desired goal. The
barrier may be either overt (outward, or physical) or covert (inward or
mental)
Example
Need

drive

Goal
Barrier

91

Goal Conflict: Three separate types of goal conflicts can be identified.

Approach approach conflict - where the individual is motivated to
approach two or more positive but mutually exclusive goals.
Approach avoidance conflict where the individual is motivated to
approach a goal and at the same time is motivated to avoid two or more negative
but mutually exclusive goals
Avoidance avoidance conflict where the individual is not clear about
what role he is supposed to play in his different capacities in an organization.
6.2.2 Interpersonal Conflict: There are four major sources of interpersonal conflict.
i)

Personal differences: This refers to differences in upbringing, cultural and

family traditions, and socialization processes, education, values etc. These
differences cause conflict among organizational participants.

ii)

Information deficiency: This may be a result of misinformation or

communication breakdown.

iii)

Role incompatibility: This may arise when the organizational participants

are expected to perform incompatible roles in an organization. For example, a
sales manager may be required to increase sales which means increasing
output and stock levels. The production manager may be required to reduce
stock levels to reduce costs. This may be a cause of interpersonal conflict.

iv)

Environmental stress: In an environment characterized by scarce or

shrinking resources, downsizing, competitive pressures, high degrees of
uncertainty, etc, interpersonal conflict could be amplified.

6.2.3 Inter group Conflict

Inter group conflict arises when individuals belonging to one group interact, collectively
or individually, with another group or its members in terms of their reference group
identification.
Causes of Inter group Conflict
i)
Competition for resources
ii)
Task interdependence
iii)
Jurisdictional ambiguity
iv)
Status struggles this conflict occurs when one group attempts to improve its
status, and another group views this as a threat to its place in its status hierarchy.
In an inter group conflict the following conditions prevail:

There is a clear distinction between we and they

A group that feels that it is in conflict with another group becomes more
cohesive and pulls together to present a solid front to defeat the other group

92

The positive feelings and cohesion within the in-group do not transfer to
the members of the out-group. The members of the out-group are viewed as the
enemy rather than as neutrals
Threatened group members feel superior they over-estimate their own
strengths, and underestimate that of members of other groups
The amount of communication between conflicting groups decrease.
When there is communication, it is characterized by negative comments and
hostility.
If a group is loosing in a conflict, the members cohesion decreases and
they experience increased tension in themselves. They look for a scapegoat to
blame their failure on.

93

6.2.4 What happens during competition / conflict?

In general the following development can be expected in groups competing for goals that
only one group can attain, such as writing a contest or attaining a particularly attractive
reward of some trend.

(1) A WE VERSUS THEY constellation of attitudes and feelings forms

Both groups take pride in the groups accomplishments and make favorable evaluation
of our group in contrast to unfavorable or less positive evaluations of characteristics
of the other group.
(2) Each group has distorted perceptions and judgments about the other group
favorable information about the other group is either ignored or interpreted in favor of
ones own group
the performance of ones own group is over estimated,
the performance of the other group is underestimated
(3) Each group sees the other as the enemy
in addition to making disparaging remarks within ones own group about the enemy
group, contact with the other group is frowned upon and generally avoided. A great
deal of energy is used to outwit the enemy

(4) Group solidarity, cooperation and morale increases

If the odds are not over whelming i.e. groups in conflict or competition become more
cohesive and mutual help increases
(5) Negative perceptions and feelings carry over into noncompetitive
situations
(6) Information is used to erode the position of the other group
- when negotiations or intermediaries are used to negotiate between two groups in
conflict information supplied by group members to their representations is aimed at
improving the relative position of ones group rather than at clarifying matters or
enhancing communication
-

(7) representatives may become either heroes or traitors

a representative who is negotiating with the other group and who acquires too readily
to the position of the other group is branded a traitor
a representative
6.2.5 What happens after the competition / conflict?
The following things happen to the winning group after the contest is over
1. The winning group tends to be joyful, self congratulatory, and reveal in the glow
of victory.
2. The role of the leader(s) is enhanced. Leaders are congratulated, their status is
enhanced, and group members are even more willing to follow their leaders in the

94

future.
3. The wining group becomes complacent. Characteristically the winners bask in
their success and do not critique their performance. They do not examine in what
respects their performance might improve for future situations. They become fat
and happy.
4. The winning group has little empathy for the losers. The winners typically cannot
understand why the defeated group is so defensive and sudden. Further they
cannot understand why the other group takes the matter so seriously.
6.2.6 The following things happen to the losing group
1. Gloom settles over the loosing group the members of the losing group tend
to be gloomy more so and sub dated.
2. The judges are seen as unfair. The judges who hard done the decision are
frequently perceived by the losing groups as biased, unfair, and incompetent,
and having no grasp of the problem. They are wrong, not group.
3. The leader(s) lose in status and influence and status of the leader(s) decline
dramatically. Feelings may sometimes run so high that the leader or negotiator
is deposed or resigns.
4. Some critique of what happened ready occur. There is some attempt to assess
the reason for deflect, but considerable planning of the circumstances of the
judges or of each other can occur.
5. Recriminations may occur within the losing group. In the losing group, mutual
blaming for the deflate frequently occurs, the person blames another, and
other group members support the criticism or defend the person attacked.
Recriminations may proliferate for a while, with some disorganizing and
splintering occurring. Sometimes the splintering leads to group dissolution.
6. The losing group has little empathy for the winning group. They see the
celebration of the other group as excessive and they resent their self
congratulatory behavior.
6.3 Functions of conflict

1. conflicts and competition are the vehicles for surfacing and resolving
disagreements and different points of view
2. conflict can help redefine a groups or organizations mission, can help review
group norms
3. some levels of conflict can also provide an energizing and vitalizing dimensions
to organizational life
4. conflicts can also
Lead to production of better ideas
Lead to search for new products
Lead to better clarification of news.
5. conflict can also lead to group solidarity and cooperation against the other group
6. conflict can lead to morale and increased productivity

95

6.4 Dysfunctions of conflict

1.
2.
3.
4.
5.
6.
7.
8.

can lead to physical harm or even killings

can lead to destruction of property
in a work environment conflict can make people too upset to work
can lead to break down or distortion of communication
conflict can also lead to stress (both emotional or physical)
can produce excessive levels of tension anxiety and stress
can drive out people who cannot tolerate high levels of conflict
Can reduce trust, leading to antagonistic interactions. This can lead to withholding
/ distorting of information by one party.
9. Low conflict falls if encourage new ideas or tolerate difficult points of new. This
decisions mad with poor information
6.5 Competition
-

refers to rivalry between two or more organizations which is mediated by a thrilled

party
In business, the third party may be a customer, a supplier of raw materials, or
distribution, or potential employee.
In free market system, competing organization attempt to influence third party
discussion through various appeals and offerings
A third party choice may viewed as a vote of success for one of the competing
organizations.
6.5.1 Functional consequences of competition

encourages creativity
encourages lowering of prices
encourages quality
within groups, it encourages effectiveness and efficiency
within longer systems, it encourages creativity, innovation and effectiveness.
6.5.2 Comparison between conflict and competition

1. incompatibility of goals
in conflict, there is incompatibility of goals between parties
in competition compatibility of goals between parties

2. opposing behavior
in conflict, behavior is entirely (or mostly), opposing
in competition, some opposing behaviors some cooperative behavior

3. rules
in conflict few or no rules of behavior

96

in competition rules exist

4. willingness to enter
in conflict one or both parties may be drawn or forced into the conflict
in competition usually both parties enter willingly

6.5.3 Consequences of competition

Functional consequences
- creativity and innovation
- clarification of difference
- motivation
- group solidarity increases
- after the will, may result in group friendship and cooperation
Dysfunctional consequences
-

development of a we versus they attitudes

distorted perceptions and judgment about the other groups
each group sees the other as an enemy
misinformation about the other group
the wining group might become complement
the loosing group might become gloomy leading to loss of morale and drive

6.6 Cooperation
6.6.1 Define cooperation consists of mutually reinforcing or supportive behaviors
between tow or more people, groups or larger systems. The behaviors may steal from a
perception that collaboration will help obtain mutual goals, or just from predisposition to
believe this way.
- cooperative behavior may be verbal, or non-verbal or both
- it is usually active, although there may be degrees of cooperation
- The groups, individuals or larger systems work together in order to enhance, the
outcome received by each. Assistance is two way or reciprocal in nature.
Example
i. workers work together to lift a heavy load
ii. managers achieve their expertise to reach an important decision
-

The persons, groups or units involved coordinate their actions in order to reach goals
and levels of performance they could not attain alone. Once the mutually desired goals
are reached the benefits are shared among the parties in some agreed manner.
Cooperation often pays, for all concerned
Cooperation results in systematic benefits
6.6.2 If cooperation is so beneficial, why dont people, groups or units cooperate?
i.

The main reasons is that the goals sought by the groups or

individuals cannot be shared e.g. if two people are selling the
same promotion, they cannot cooperate to attain it. In many

97

ii.

iii.

(i)
(ii)
(iii)

cases therefore, competition or conflict is the result

The other reason is that many valued goals in organizations
(e.g status, power promotions etc,) are in short supply and ar
sought by many more persons or units than can hope to attain
them, cooperation is scarce, whereas competition and conflict
are the norm
The other reason is that in many instances the individuals or
groups may find that they have an alternative to cooperation.
They can either choose To cooperate to achieve mutually
desired goals, or they can work on their own to achieve the
desired goals.

Reciprocity people treat others the way they are treated rather than treating
others the way they would have others do not them.
Communication: in many situation where cooperation could develop, but it does
not, its absence is blamed on failure to communicate.
Group size: as the number of individuals rises, the level of cooperation drops
several factors contribute to this outcome.

The greater the members of persons, the greater the xxxx that one will be totally
selfish, exploitative or simply uncooperative.
As groups increase in size communication among their members, becomes more
difficult.
As the number of individuals increases, diffusion of responsibility develops such
as pass the back
6.6.3 Consequences of cooperation
Functional consequences
Shared benefits
Increased outcomes (synergistic)
Peace and stability within or between group
Dysfunctional consequences
Complacency
Lack of creativity and innovation
Failure to adopt change
6.6.4 Differences between conflict and cooperation
1. In conflict, there are likely to be more dysfunctions than in cooperation.
2. Conflict as defined as interactive opposing behavior between two or more people
groups or larger systems having in compatible goals cooperation is defined as mutually
reinforcing or supporting behaviors between two or more people, groups or larger
systems.
- In cooperation, behavior is supportive while in conflict behavior is opposing.
- In cooperation, goals are similar write in conflict goals are usually incompatible.
98

3. In conflict, the opposing behavior stems firm a perception of loss or potential loss of
something one or more of the parties wants, in cooperation, the supportive behavior
stems from a perception that collaboration will help obtain mutual gains, or just from a
predisposition to behave this way.
4. In conflict, behaviors may be overt and direct, or they may be sub rosa undisclosed to
the party or parties. In cooperation behaviors is usually overt and direct as there is no
reason to make it sub rosa.
6.6.5

Comparisons between cooperation and conflict

1) Similarities
Cooperative behavior, like conflict behavior may be verbal or nonverbal or both.
Both conflict and cooperation can be functional or dysfunctional
In both conflict and cooperation, there are at least three parties to the situation.
In both conflict and cooperation, behaviors are interactive in the sense that it is
between at least two people and there is usually more than one cycle of behavior and
counter behavior.
Both conflict and cooperation can be considered as parts of a continuum

Low
Conflict

high
conflict

Low cooperation

high cooperation

High conflict

low conflict

low cooperation

high cooperate

6.6.5 Cooperation and conflict

a) Cooperation has largely positive consequences at least for the parties involved
while conflict has both positive and negative consequences
b) Cooperation consists of mutually reinforcing or supportive behaviors between two
or more people, groups or larger systems while conflict consists of opposing
behavior.
c) Cooperative behavior stems from a perception that collaboration will help obtain
mutual goals, while conflict stems from a perception of conflicting goals.
Cooperation may also stem from a predisposition to behave this way

99

d) In cooperative behavior, since each of the parties involved is obtaining something

desirable, or expects to, there is little reason for the behaviors or be sub Rosa.
Therefore cooperative behavior is open and disclosed to all parties who may wish
to hear or know about the cooperation. Conflict is usually sub-rosa.

6.7 Conflict and its management

Conflict management focuses on maintaining conflict at functional levels for a
department, work unit, or an entire organization. Conflict management does not mean the
complete elimination of conflict, nor does it refer only to conflict reduction. It means
maintaining conflict at the right level to help the department, work unit, or organization
reach its goals effectively and efficiently.
Basic to the process of conflict management is the selection of a desired level of conflict.
The desired level of conflict varies according to the perceived conflict requirements of
the unit. Several factors affect the choice of the desired level of conflict e.g.
(i)

(ii)
(iii)
(iv)

Organizational culture different cultures place differing values on debate,

disagreements, and conflict. Managers in organizational cultures that support
debate, doubt, and questioning may perceive a higher desired level of conflict
than those who do not.
The nature of the organizations products or services: creative and innovative
products or services require a higher level of conflict, than more routine and
predictable products and services.
Organizational environment organizations facing fast changing external
environments require higher levels of conflict for successful adaptation than
organizations facing stable external environments.
The managers tolerance for conflict also affects his perception of a units conflict
requirements. A manager who avoids conflict is likely to have a lower tolerance
for conflict than a manager who actively engages in conflict behavior.

Conflict management model

The management of conflict requires that when conflict is dysfunctionally high, the
manager tries to reduce it. If the conflict is dysfunctionally low, he tries to increase it. In
the same way a thermostat maintains a desired room temperature, conflict management
maintains a desired conflict level.
Signs of a dysfunctionally high conflict
Low trust in a work unit
Deliberate distortion of information
High levels of tension during interpersonal interactions
Antagonism between parties
Sabotage
Violence between the parties
100

Symptoms of dysfunctionally low conflict

Suppression includes denial of differences, a desire to perceive similarities between
parties that do not exist, repressing controversial information, and prohibiting
disagreements about legitimate issues.
Withdrawal reduced communication avoidance of interactions, the belief in peace
at any price and walking away from a disagreeable interaction.
Reducing conflict
When conflict increases to dysfunctionally high levels, managers must develop
techniques for reducing it to acceptable levels. There are three approaches to reducing
conflict in organization. These are: win-lose, lose-lose, and win-win
Lose-lose methods
- none of the parties to the conflict episode get what they want.
- Typical lose lose methods are
(i)
(ii)
(iii)

Avoidance parties to the conflict avoid confrontation. However although

manifest conflict may be reduced through avoidance, latent conflict can arise.
Compromise in compromise, parties in conflict use bargaining and negotiation
to reduce conflict. Each party to the conflict gives up values. In compromise
however, manifest conflict may reduce, but latent conflict persists.
Smoothing: in smoothing parties to the conflict emphasis similarities not
differences. Thus, because differences are not discussed, latent conflict exists.

Win lose methods

In win-lose method, one party to the conflict becomes a clear winner, and the other party
a clear loser. Consequently win-lose methods clearly leave latent conflict. Nevertheless,
they reduce conflict. Main methods of win- lose are: dominance; authoritative command;
and majority rule.
(i)
Dominance: dominance happens when one party to a conflict overwhelms the
other either because the overwhelming party has a higher authority status, or is
physically over powering. It can also happen when one party to the conflict has a
low tolerance for conflict. Although dominance reduces conflict, if leaves latent
conflict.
(ii)
Authoritative command: this occurs when the parties in conflict refer their
conflict to a common superior who decides the solution to the conflict manifest
conflict stops, but conflict episode ends with a conflict after ***
(iii)
Majority rule: in this method, the issue in conflict is put to a vote. Some members
(majority) win, and the minority loses. If this is acceptable to all concerned, this
method can reduce conflict.
The win - win methods of conflict reduction
In these methods, each party to the conflict episode gets what he/she wants. These
methods include: problem solving, integration, and establishing super ordinate goals.

101

(i)

(ii)

(iii)

Problem solving: this method tries to find the basis of conflict and ensures that all
differences among the parties are fully exposed. The parties regard differences as
important sources of information which lead to creative solutions to the conflict.
Properly done, problem solving is an effective way of reducing conflict.
Integration: this method seeks solutions that are in the best interests of all parties.
It assumes that people deeply held interests and desires are the bases of conflict.
Thus, the method tries to find a solution that meets the goals of every party in the
conflict.
Super ordinate goal: a super ordinate goal is a goal desired by all parties in the
conflict but is unattainable by any party alone super ordinate goals compel
cooperation even if he parties otherwise do not wish to cooperate.

Increasing Conflict
Conflict management includes increasing conflict when the conflict becomes
dysfunctionally low. The goal of increasing conflict is to get the functional level of
conflict so as to increase efficiency and effectiveness, help increase information, and
proposing creative solutions to problems. Managers must ensure that conflict is increased
to levels that are not dysfunctionally high. The following are the major methods of
increasing conflict;
(a) Deliberately forming heterogeneous groups to find solutions to problems
(b) By developing an organizational culture that supports openness about debate
and opinions. Ie a culture that rewards debate discussions and questioning
========================================================
LECTURE 9 CORPORATE SOCIAL RESPONSIBILITY (CSR)
3.1 What is Corporate Social Responsibility
- Social Responsibility of a business is the expectations that business will do
more than what is required by law and profit maximization.
- It is a firms obligation to constituent groups in society other than stockholders,
and beyond that prescribed by Law.
- The stakeholders of a business include shareholders, employees, society,
community, Government, competitors, customers, suppliers and creditors.
- Social responsibility refers to the managers duty or obligations to make decisions that
nurture, protect, enhance, and promote the welfare and well-being of stakeholders and
society as a whole. Managers are being socially responsible when they: provide severance payment to help laid off workers make ends meet until they
can find another job.
provide workers with opportunities to enhance their skills and acquire additional
education so they can remain productive and do not become obsolete because of
changes in technology
allow employees to take time off when they need to, and provide health care and
pension benefits to employees

102

 contribute to churches or support various civic minded activities in the cities or

towns in which they are located
decide to keep open a factory whose closure would devastate the local
community
decide to keep a companys operations in the country to protect the jobs of the
countrys people rather than move operations to another country.
decide to spend money to improve a new factory so that it will not pollute the
environment
decide not to invest in countries that have poor human rights records
choose to help poor countries develop an economic base to improve living
conditions

(1)

SOCIAL RESPONSIBILITY OF
STAKEHOLDERS
Responsibility within the company

BUSINESS

TO

THE

VARIOUS

o Working conditions
- Right to safe workplace
o Equal employment opportunity in a workplace regardless of race, sex, religion,
age and ethnic affiliation
o Affirmative action Programs that attempt to remedy historical problems of
discrimination by increasing the number of chances fro employment, promotion,
etc for the discriminated groups.
o Reverse discrimination: Discrimination that makes it more difficult for the
non-discriminated to get hired, or promoted.
o Diversity training programs
Programs that attempt to get workers to understand and value individual cultural
differences within the organizations workforce.
o Economic security
The company should ensure
(a) Employees have a steady, uninterrupted employment earning a living
wage.
(b) That those who are no longer working are provided for either by providing
pension or gratuity
o Employee dignity and freedom from sexual harassment
Organizations must ensure no form of harassment at work for any employee.
o Excessive executive compensation
No excessive compensation for executives

103

o Conflict of interest
Managers should not influence a company decision which is clouded by the
chance for a personal gain;
(2)

Responsibility to customers
Right to safety the right of customers to use products that do not unnecessarily put
them in danger.
Right to be informed the right to be protected against fraudulent, deceitful, or
grossly misreading information, advertising, labeling, or other practices, and to be
given the facts one needs to make an informed choice.

(3)

Responsibility to competitors
o Society expects the company to engage in behavior that do not interfere with
free enterprise such as monopoly, price fixing, price discrimination, and
behavior that tends to lessen competition.

(4)

Responsibilities to suppliers and creditors

o As a commercial customer, a company has the responsibility to deal with its
suppliers in a fair and honest manner.
o It is also obliged to pay its bills on time.
o It is also obliged to avoid deception in negotiations
o Creditors should be shown authentic financial statements
o The companys financial statements should be accurate.

(5)

Responsibilities to investors and shareholders

o Companies should seek to maximize profits for their investors
o Managers should not use information they have about the company to
personally benefit.
Responsibility to community
o Organizations should give support to the communities they live in by donating
to charities and other social courses.

(6)

(7)

Responsibility to government
o Companies should fully comply with the law enacted by Federal, Central or
Local authorities.
(9) The Society includes
The Public The society is adversely affected by
- Air pollution
- Water pollution
- Land pollution

104

Pollution Threats to the physical environment caused by human activities in an

industrial society.
Air pollution

Is threatened by gaseous discharges and dust particles.

Water pollution Water is polluted by industrial by-products, oil spills, run off from
farm lands, mining and urban centers.
Land pollution

Disposal of industrial waste directly into the ground is probably the

single greatest threat facing the environment today.

3.2 Philosophical bases for Social Responsibility

1) Religious Teaching
Thou shall not steal
Thou shall not kill
Do unto others as you would have them do unto you.
2) Utilitarianism
A philosophy used in making ethical decisions that aims at achieving the greatest
good for the greatest number.
A manager using this philosophical basis will figure out the impact of his decision on
everyone concerned, and choose the alternative that creates the most satisfaction for
the most people. You would reject activities that cater for narrow interests or those
that failed to satisfy the needs of the majority.
3) Individual Rights
The other philosophical basis is the belief in the importance of individual rights.
Because a belief in another persons rights implies that you have a duty to protect
those rights, you would reject any decision that violates those rights. You would for
example not deceive or trick other people in acting against their interests.
4) Justice
In making decisions one might also be guided by principles of justice. These
principles include a belief that people should be treated equally, that rules should be
applied consistently and that people who have harmed others should be held
responsible and make restitution. A just decision then is one that is fair, impartial, and
reasonable in light of the rules that apply to the situation.
The four philosophical bases are not mutually exclusive alternatives. On the contrary,
most people combine some or all of them to reach a decision that will satisfy as many
people as possible, without violating any persons rights or treating anyone unfairly.
3.3 Arguments For Social Responsibility
People expect businesses and other institutions to be socially responsible.
It is in the best interest of the business to pursue socially responsible programs.
It improves the image of the firm.
Business should be involved in social projects because it has the resources.

105

Corporations must be concerned about societys interests and needs because society
in effect sanctions business operations.
If the business is not responsive to societys needs the public will press for more
government regulation requiring more socially responsible behavior.
Socially responsible actions may increase profits for the business in the long run.

Why Be Socially Responsible

When managers behave in a socially responsible manner, the following benefits result:
i) workers and society benefit directly because organizations (rather than
Government) bear some of the costs of helping workers and society
j) The quality of life for all is increased. In fact if all companies adopted a caring
attitude, a climate of caring would pervade the wider society. Crime would fall.
k) Companies that are responsible towards their stakeholders benefit from increasing
business and support. It is therefore in the best interests of the business to be
socially responsible
Evidence suggests that in the long-run, managers who behave socially responsibly will
most benefit all organizational stakeholders (including stockholders). Socially
responsible companies in comparison with less socially responsible businesses are less
risky investments, tend to be somewhat more profitable, have a more loyal and
committed workforce and have better reputation, which encourages stakeholders
(including customers and suppliers) to establish long-term business relationship with
them.
Socially responsible companies are also sought out by communities, which encourage
them to locate in their cities and offer incentives such as tax reductions, and construction
of roads and free utilities for their plants.
3. 4 Arguments against Social Responsibility
Violates sound economic business decision making that should rightfully
concentrate on earning profits.
Might be illegal executives do not have the legal right to use corporate resources
to pursue social responsibility.
Costs are excessive compared to the benefits to society and would tend to raise
prices to excessive levels.
Managers are not trained, nor do they possess the skills or resources to determine
which socially desirable projects to support.
Concentrates too much power in the hands of business executives
Leads to the deterioration of the free enterprise system
It is the responsibility of managers to meet the interest of their shareholders as
long as they stay within the law
Social responsibility is the responsibility of government not of business

106

 Business is not equipped to deal with social responsibility activities

3.5 Factors that determine CSR
(1)

Laws & Rules Regulations

(2)

Cultural Values

(3)

Industry and/or Company Ethical Codes of Behavior

(4)

The dominant philosophical thoughts and ideals of the decision maker

(5)

The Societys level of awareness regarding business ethics

3.6 Dimensions of Social Responsibility

The strength of an organizations commitment to social responsibility ranges from low to
high. At the low end of the range is an OBSTRUCTIONIST DIMENSION OR
APPROACH. In this approach managers choose not to behave in a socially responsible
way. Instead they behave unethically and illegally and do all they can to prevent
knowledge of their behavior from reaching other organizational stakeholders and society
at large. This type of approach obviously leads to loss of reputation of the company and
also devastation for all stakeholders involved. Eventually the organizations are unable to
sustain themselves when they lose the support of their stakeholders.
DEFENSIVE APPROACH In this approach managers indicate at least a commitment
to ethical behavior. Here managers stay within the law and abide strictly with legal
requirements but they make no attempt to exercise social responsibility beyond what the
law dictates. All they ensure is that their employees behave legally and they do not harm
others. But when making ethical choices, they put claims and interests of their
stakeholders first, at the expense of other stakeholders.
The Defensive approach reflects the philosophy of the capitalist system. In a capitalist
economic system, managers are there to maximize shareholder interests as long as they
are within the law. It is not a managers job to make socially responsible choices; their
job is to abide by the rules that have been legally established.
ACCOMODATIVE APPROACH In this approach managers acknowledge the need
to support social responsibility. They agree that organizational members ought to behave
legally and ethically and they try to balance the interests of different stakeholders against
one another so that the claims if stakeholders are seen in relation to the claims of other
stakeholders. Managers adopting this approach want to make choices that are reasonable
in the wyes of society and want to do the right thing when called on to do so.
PROACTIVE APPROACH In this approach managers actively embrace the need to
behave in socially responsible ways. They go out of their way to learn about the needs of

107

different stakeholders and are willing to utilize organizational resources to promote the
interests not only of stakeholders, but of the other stakeholders.
DIMENSIONS OF CORPORATE SOCIAL RESPONSIBILITY
Obstructionist

Defensive

Accommodative

low social responsibility

Proactive

Self interest

high social responsibility

3.7 How should managers decide which social issues they will respond to
i)
ii)
iii)

iv)

All illegal behavior should not be tolerated

Whistle-blower is a term used to refer to a person who reports illegal or
unethical behavior and takes a stand against unscrupulous managers or other
stakeholders who are pursuing their own ends
Social audit - is a tool that allows managers to analyze the profitability and
social return of socially responsible actions. The managers use the tool to
rank various alternative courses of action according to both their profitability
and their social benefits. When this framework is used decisions showing
both high profitability and high social benefits are the most likely to be
implemented. Decisions with high profitability but negative social effects
would worry a socially responsible organization and would not be
implemented
Application of Ethical Standards and Values
- Managers own ethics and values influence their behavior and strongly
influence whether they will take a pro-active approach to social responsibility
or not
- An organizations code of ethics, usually printed in its annual reports and
mission statements, also influences how conscientiously managers seek to
support the interests of their stakeholders.

3.8 Evolution of CSR

i) Prior to 1900
- Business had only one responsibility: to make profit. The Social Responsibility of
business was to make profit within the Law.
- Phrases such as survival of the fittest, buyer beware Let sleeping dogs lie, etc
were popular capitalist slogans and reflected the view of the day regarding
corporate (social) responsibility.
ii) 1900 1960
During this period, journalists and human rights crusaders saw the poor quality of
products, exploitation of workers, destruction of the environment, and decided to come

108

to the defense of the stakeholders of the business organization. They used the power of
the press to stir up public indignation and agitated for reform. Largely through their
efforts, a number of laws were passed to limit the power of monopolies, and to establish
safety standards for food and drugs.
(iii) After 1960
After the 1960s management theorists have tended to consider businesses as having
many more stakeholders than shareholders. These other stakeholders include employees,
the Public the suppliers and many others. In addition many other large corporate
organizations associated their success with social satisfaction and therefore decided to
provide to society what the society needed - social goods and services. The business
realized that its long-term interests were intrinsically intertwined with that of the society
in which it operated. This approach has prevailed and even been strengthened as we
approach the 21st century.
=============================================================

LECTURE 10 MANAGEMENT FUNCTIONS

1.0 INTRODUCTION
Many scholars and managers have found that the functions of management are
facilitated by the existence of clear organization knowledge. This knowledge (or
management theory) consists of concepts, principles and variables and their relationships.
This body of knowledge has been created, developed, used and tested for many years.
The process of creating, developing, using and testing this theory or knowledge continues
today. The managers of today use the theory to perform his management functions. The
main functions of a manager are:
1. Planning
2. Organizing
3. Staffing or the human resources management
4. Leading
5. Controlling
The goals of managers and organizations are to achieve organizational goals. Most
organizations seek to achieve profit or surplus. The function of managers is to establish

109

an environment in which people in the organization can accomplish organizational goals.

Since organizational goals are achieved with the use or resources, and resources are
limited, managers must help organizations achieve their goals with the minimum of
resources or accomplish as much as possible with the available resources. This requires a
systematic process and use of knowledge and theory. The use of management theory
helps managers accomplish organizational goals more effectively and efficiently.

Efficiency (what is efficiency?)

Effectiveness (what is effectiveness?)

Theory alone however is not enough. The 21st century organization is facing
challenges that make management a challenging task. Experience, tact, creativity and
innovation are essential ingredients of the 21st century organization manager.
Globalization, technology, and other environmental challenges make the function of
management quite challenging. In managing the organization today, theory helps a
great deal. However, you need more than theory to tackle the challenges.
Managers also face a challenging external environment. The complexity the size and
variability of this external environment requires a systematic way of dealing with it.
Not only do managers need an understanding of this external environment, through
knowledge of existing theory, they must also apply the theory if they are to deal with
the complexity and variability effectively. And since we are in a competitive
environment, and competition is using knowledge (or theory) to deal with the
challenges of the external environment, failure to use the theory leaves one at a
disadvantage.
The internal environment is also a challenge to the management of the organization.
The modern employee and his demands must be satisfied. His or /her need for a
variety of needs, his variability and diversity, his knowledge and goals, require a more
systematic management, using theory. The processes such as conflict and stress that
abound in a modern organization require theory:
1.1 Importance of theory

Gives appropriate concepts , principles and variables

Helps to describe

Helps to predict
110

Helps to prescribe

Rationalizes management action/ decision

The classical theories were the first scientific theories on management. Henry Fayo,
in his administrative theory proposed that management should perform the following
functions:.
i)

Planning Fayo defined planning as the function of defining goals for future
performance, and deciding on the tasks and resources to achieve targets.

ii)

Organizing is the function that is concerned with assigning tasks, grouping the
tasks together into sections (departments) and allocating resources to those
sub-section (or groups).

iii)

Coordinating - this means bringing together the differentiated units into a

unitary whole.

iv)

Commanding this takes the form of leading and directing organization

activities. Directing means giving orders and leading means the use of
influence to motivate employees to achieve organizational goals.

v)

Controlling is concerned with monitoring activities keeping the organization

on track towards its goals and taking corrective action when necessary.

Since the identification of the management functions of Fayol in the early 20 th

century, other researchers have written on the same subject but the basic framework
has remained the same.
During the 1980s, the famous Canadian researcher on organization theory,
Mintzeberg of McGill University proposed a new approach to looking at the
management function. This approach observes what managers actually do and from
such observations arrives at the conclusion as to what management activities are. In
other words, this approach looks at what managers actually do by observing their
activities. According to Mintzeberg, the following are the major roles of managers:
2. Inter personal roles
The figurehead role (performing ceremonial and social duties as the
organizations representative).
The leader role
The liaison role
111

4. Informational role
i). The recipient role (receiving information about the operations of an enterprise).
ii). The dissemination role (passing information to subordinates).
iii). The spokesperson role (transmitting information to those outside the
organization)
5. Decision role
i). The entrepreneurial role
ii). The disturbance handler role
iii). The resource allocator role
iv). The negotiator role (dealing with the various persons and groups of persons)
After studying the activities of various chief executives in a variety of organizations,
Mintzeberg came to the conclusion that executives do not perform the classical functions
of planning organizing etc. instead they engage in a variety of other activities.
Mintzebergs approach has been criticized in the following ways:
i).

His sample of five CEOs was too small to support a sweeping generalization.

ii).

Secondly managers actually do other things than planning etc Mintzeberg

generally only identified thus

iii).

Thirdly many of the activities identified by Mintzeberg are actually evidences of

planning staffing etc eg resource allocator, interpersonal role are instances of
leading.

However, looking at what managers actually do can probably lead to a more complete
presentation of management function.
Other famous theorists that have looked at management functions include Michael Porter.
Porter presented two theories dealing with organization structure and industry analysis. In
the organization structure framework, Porter proposes that organization structure is
determined by strategy. He identified 5 strategy possibilities namely product
differentiations,

cost

differentiation,

focus

product

differentiation,

focus

cost

differentiation and stuck in the middle. Each of the five strategies has or should have an
appropriate structural design.

112

In the second theory on industry analysis, Porter argues that in formulating strategy,
managers must analyze the nature of competition so as to achieve good performance. The
structure of the industry or market is taken to affect and determine managerial conduct
which in turn has an effect on corporate performance. Under such a model, an
organization operating within a monopoly market structure would be expected to act to
maintain higher than competitive prices, artificially to restrict quantities produced and
sold and thus to make supernormal profits.
Porters Five forces model
The first stage is the analysis of the industry and its incumbent and potential competitors
is an analysis of the forces causing rivalry within the industry itself. Porter holds that
there are five forces existing within the industry at any one time, found in different
combinations and causing different levels of competitive rivalry, depending on the type of
industry under analysis, the time of analysis and other factors.
The main consideration of the analysis is identifying the key issues relating to:i).

Threat of entry

ii).

Threat of substitutes

iii).

Power of suppliers

iv).

Power of buyers
The combination or the manner of interaction of these forces will determine the
intensity of rivalry within the market or industry.
Threat of entry
The threat of entry exists when potential competitors to incumbents are interested in
entering or look likely to enter, the market by placing their goods or services for sale.
Threat of entry is considered to be those actions which are likely to evoke retaliation
from the incumbents.
Threat of substitutes
Substitutes to the products or services of the industry under analysis are considered to
be those products which perform the same function. When analyzing the level of the
threat of substitutes for an industrys product, it is quite possible that the substitute
offers superior price performance compared to the incumbents products due to a trade
off with input development costs.

113

Buyer Power
There are a number of factors which can add to the power of the buyer or consumer, of
the industrys products. These factors include:
i).

Volume purchased relative to the number of supplier organizations within the

industry. The greater the volume bought from a supplier the greater the potential
power of the buyer.

ii).

Significance of the purchase to the buyer: The greater the significance the greater
the authority the buyer will desire over the purchases made.

Supplier Power
If suppliers to organizations within an industry possess high levels of power over those
organizations, they are in a better position to demand better deals with reference to the
sales of raw materials on intermediate products they provide.
Intensity of Rivalry
The combination of the factors above and the interdependence of the competitors in the
industry itself together produce the intensity of rivalry within the industry. The Porters
competitor analysis enables the organization to adopt appropriate strategies to deal with
the issue of competition. Competitors analysis will identify the various strengths and
weaknesses of the organization competitors in each of the strategic groups.
Consequently the organization is able to identify strategies of how to respond to the
challenges posed by the power of buyers, power of suppliers, threat of entry or even
intensity of rivalry.
Consequently, beginning from the classical theories, to the modern theories, a sufficient
body of theory exists on management function.
The following paragraphs discuss briefly the main management function. Each of the
paragraphs defines the function and highlights the other key aspects of the function.
==============================================================
2.0 THE PLANNING FUNCTION
2.1 What is planning?
Planning is the establishment of objectives and the formulation, evaluation and
selection of policies, strategies, tactics and action plans to achieve the objectives.

114

Planning can also be defined as the managerial action that decides

what to do, how to do it, when to do it, and who is to do it.

Planning involves selecting missions and objectives and the action to

achieve them. It requires decision making; that is choosing from among
alternative future courses of action.

Planning is the primary function of management. Planning is a process whereby

managers select goals, choose actions (strategies) to attain those goals, allocate
responsibility for implementing actions to specific individuals or units, measure the
success of actions by comparing actual results against the goals, and revising plans
accordingly. Consequently planning is;
A process for making important decisions
Provides direction for an organization
Tells everybody what the organization is trying to do
Tells what its priorities are, where it is going and how it is going there.
Types of planning
Plans can be differentiated by;
i.
Levels in the organization to which plans apply
ii.
The time horizon of the plans (short-term or long-term)
iii.
The number of times plans are used (standing plans or single-use plans)
iv. Contingent nature of plans
LEVELS OF PLANNING
Corporate level strategies
Strategic plan- strategic plan outlines the major goals of the organization and the
organization wide strategies for attaining these goals.
Strategic plans are plans that apply to the entire organization, establish the organizations
overall goals, and seek to position the organization in terms of its environment
For a large diversified organization with multiple business units, the strategic plans are
referred to as corporate levels strategies. Corporate level strategy is a strategy concerned
with deciding which industries a firm should compete in and how the firm should enter or
exit industries
Business level strategy is concerned with deciding how the firm should compete in the
industries in which the firm has elected to participate in.
Operating strategy is concerned with the actions that should be taken at the level of
individual functions such as production, sales and R+D to support business level strategy.
Operating plans are plans that specify goals, actions and responsibility for individual
functions, work teams or individuals.
Example: - for a large firm like 3M which is organized into 40 different
business level units, strategic planning takes place at multiple levels. At the corporate
level, the CEO and his top managers set overall goals for the organization, choose

115

corporate level strategies that span the entire organization, and allocate responsibly for
implementing these strategies
At the business level such as 3Ms office supplies division, the business level strategic
plan details the specific actions that will be taken by this division to attain the goals of the
business and establish a competitive advantage. These might include, developing new
products, exiting product lines that are not performing well and taking actions to
rationalize its supply claim.
Embedded within business level strategic plans are operating plans which specify the
goals for individual functions, the actions they will take to attain these goals, and who is
responsible for these actions.
Planning might not stop at the operational level. Embedded within operational plans,
might be unit plans which are plans for departments within functions, work teams, or
even individuals. Within the manufacturing function in 3Ms office supplies division, for
example a quality assurance, departments could draw up its own unit plan for improving
quality in the divisions manufacturing process. Similarly, within the R+D functions of
the same division, several teams of researchers may be focusing on the development of
different technologies; each team will draw its own plan that specifies goals, actions,
responsibilities and resource requirements.
Note those unit plans are embedded within operating plans, operating plans are
embedded within business level, strategic plans and business level strategic plans are
embedded within corporate level strategic plans. Embedded means that higher level plans
set the context for lower level plans
PLANNING HORIZONS
The planning horizon refers to how far out a plan is meant to apply. Most strategic
plans whether at the business or corporate level are multi-year plans. They are meant to
stay in place for several years, (a three to five year horizon is typical). Indeed shorter plans
would be inappropriate as they would confuse stakeholders, who might lose confidence in
top management.
However, organizations sometimes adopt short-term plans to address specific and
transitory opportunities or threats. Such short term plans are known as tactical plans which
are plans for pursuing transitory competitive tactics. Tactical plans outline the actions
managers must adopt over the short term to medium term to cope with specific
opportunity or threat that has emerged
Operating and unit plans tend to have shorter time horizons than strategic plans. Whereas
an organization might function with the same basic strategic plan for years, operating and
unit plans might change regularly as the tasks outlined in them are completed and
managers turn their attention to the next task. In sum;
i).
Strategic plans normally have a three to five year time horizon although in theory
an organization could pursue the same strategy much longer
ii).
Tactical terms have a short- term horizon (often less than a year) and are developed
to deal with emerging and transitory opportunities and threats
iii).
Operating and unit plans tend to have short to medium time horizons (one to three
years) because they address specific tasks that have a well defined beginning and
end

116

iv).

An organization may be forced to change its strategic plans after a year, if it clearly
is not working, and an operating plan may be in place for more than five years if
specific tasks take that long.
THE NUMBER OF TIMES PLANS ARE USED
Some plans that managers develop are ongoing while others are only used once.
Single use plans- address unique events that do not recur. They are
designed to meet the needs of a unique situation. They are plans for attaining a onetime
goal. For example, when Wall-Mart decided to drastically expand the number of stores in
China, top level executives formulated a single use plan as a guide.
Standing plans on the other hand are designed to handle events that occur frequently.
Standing plans are on-going plans that provide guidance for activities performed
repeatedly. The idea of standing plans is to save managers time by giving them a play
book to which they can refer when a certain type of event occurs. Standing plans relieve
managers from having to reinvent wheels. One reason why Starbucks has been able to
grow from 17 to almost 9000 stores by 2005 is that managers developed a standing plan
that outlines the steps required to find the best store location, ensures that the stores have
the same look and feel as other Starbucks stores, and open stores quickly. But standing
plans are too rigid and intelligent managers review their standing plans from time to time.
Plans thus provide a rational approach to achieve prescribed objectives. Planning also
implies managerial innovation. Planning bridges the gap from where we are to where we
want to go.
Planning and control are inseparable, the Siamese twins of management. Any attempt
to control without plans is meaningless since there is no way for people to tell whether
they are going the way they want to go unless they first know they want to go.
There are two approaches to looking at the planning function.
As a plan or the static mode . This approach considers a plan as

A document containing objectives, programs to achieve the goals, an evaluation

mechanism. In the 1970s and 1980s managers looked at the planning function from
other perspectives.

Evolutionary mode This approach looks at a plan as a process of continuously setting

goals and objective, identifying projects and programs to achieve the goals. The approach
recognizes the impact of and the continuous change of the environment and of course this
mode is more rational and modern. Looking at planning from this approach, planning is
defined as the setting of organizational goals and the formulation, evaluation and
selection of policies, strategies, tactics and action plans to achieve the objectives.

117

2.2 Importance of the Planning function

i).

Planning facilitates the accomplishment of enterprise purposes and objectives. Plans

focus action on objectives; they identify actions and programs which tend toward the
enterprise objective. Planning seeks to achieve consistent, coordinated structure of
operations focused on desired ends. Without plans, actions become merely random.

ii).

Primacy of planning planning precedes other managerial functions. Planning

establishes goals and objectives necessary for all groups effort. All other actions are
designed to achieve enterprise goals and without establishment of goals other
functions would be meaningless.

iii).

Pervasiveness of planning planning is a function of all managers. Although the

character and breadth of planning will vary with their authority and with the nature of
policies and plans outlined by their superiors.

iv).

Planning seeks to achieve consistent, coordinated structure of operations focused on

desired ends without planning actions become merely random.

v).

Planning minimizes costs because of the emphasis on efficient operation and

consistency ie it substitutes joint coordinated effort for uncoordinated piece meal
activity which leads to efficient operations of activities and programs

vi).

Planning facilities control managers; cannot check on their subordinates without

having goals and programs against which to measure.

vii).

Planning forces managers to look ahead rather than being obsessed with day to day
problems. This is important to the enterprise because the manager deals with what is
important in the future.

viii).

Planning enables managers to identify strengths and weaknesses of the enterprise.

Other issues that make planning important include
i).

Plans provide a focus and sense of direction

ii).

Planning coordinates activities

iii).

Establishing priorities

iv).

Motivates employees

v).

Establishes criteria by which performance is judged

vi).

Facilitates delegation

vii).

Encourages team work

118

viii).

Identifies inefficiencies and unnecessary duplication of effort.

2.3 Steps in the Planning Process

At general level, planning takes the following steps
Step 1: Being aware of opportunities in the external environment as well as within the
organization. This is the starting point for planning. Managers should understand the
possible future opportunities and see them clearly and completely, know where they stand
in light of their weaknesses and strengths, understand what problems they wish to solve
and why, and know what they expect to gain.
Step 2: Establishing objectives
Setting the mission and vision
Setting the mission
The mission answers the question; what is a reason for being?
Determining the mission is the responsibility of top management. The HR is involved in
this
Setting the vision
What do we want to become?
A vision is the long term goal deserting what an organization wants to become.

Objectives should be established for the entire enterprise and then for each subordinate
work unit. This is to be done for the long term as well as for the short range. Objectives
specify the expected results and indicate the end points of what is to be done, where the
primary emphasis is to be placed, and what is to be accomplished by the network of
strategies, policies procedures, rates, budgets and programs.
Enterprise objectives give direction to the major plans which by reflection these
objectives define the objective of every major department. Major department objectives
in turn control the objectives of subordinates departments.
Step 3: Developing premises
The third logical step in the planning process is to establish circulate and obtain
agreement to utilize critical planning premises such as forecasts, applicable basic policies
and existing company plans. They are assumption about the environment in which the
plan is to be carried out.

119

The basic principle of planning premises is that the more thoroughly individuals charged
with planning understand and agree to utilize consistent planning premises , the more
coordinated enterprise planning will be.
Forecasting is important in premising eg what kinds of markets, what prices etc.
Step 4: Determination of alternative courses of action
The 4th step in planning is the search for and the examination of alternative courses of
action, especially these not immediately apparent. .Examination involves identifying their
weak and strong points.
Establishing the organizations strategy
Grand strategies explain how the organizations mission is to be accomplished. Three
common grand strategies are; growth, stability and defensive.
The growth strategy involves expansion as in sales, market share, number of employees
or number of customers.
The stability strategy involves little or no change. The company maintains its stratus in
market share, number of products

Step 5: Evaluating alternative courses

This involves weighting of strong and weak points of each alternative according to the
premises and goals. Several techniques exist to evaluate the alternative courses of action
including quantitative and qualitative techniques.
Step 6; Selecting a course
This is the point at which a course is selected.
Step 7: Formulating derivative plans.
Once a course is chosen, then derivative plans to implement the decision have to be
made. For example if a decision is made to purchase a type of a plan, then derivative
plans include plans for hiring staff, training of various specialists, sourcing of finance etc.
Step 8: Numbering the plans
After decisions are made and plans are set, the final step is to give them meaning by
numbering them ie giving them meaning by converting them into budgets.

2.4 Managing by objectives

120

The phrase Management by objectives was first coined by Peter Drucker in the 1950s.
He saw it as a principle of management aimed at harmonizing individual managers goals
with those of the organization. The most important features of MBO are:

It focuses on results rather than on activity

It develops logically from the corporate planning process by translating corporate and
departmental objectives into individual managers objectives

It seeks to improve management performance.

MBO is a comprehensive management system that integrates many key management

activities in a systematic manner and that is consciously directed toward the effective and
efficient achievement of organizational and individual objectives. This view of MBO as a
system of managing is not shared by all.
Benefits of MBO
i).

Improvement of managing through oriented planning

ii).

Clarification of organizational roles, structures and delegation of authority

according to the results expected of different departmental managers.

iii).

Encouragement of personal commitment to their own and organizational goals

iv).

Development of effective controls, measuring results leading to corrective action.

Failures of MBO

Failure to teach the philosophy of MBO. Managers must explain to the subordinates
what it is, how it works, why it is being done, what part it will play etc.

Failure to give guideline to goal setters. Managers must know what the corporate
goals are, and how their own activities fit in with them

2.5 Parts of a plan

i).

Purpose of mission

This identifies the organizations basic functions or tasks of an organization or any part of
its. Every organization has, or at least should have a purpose or mission. Society assigns
functions to enterprises. For example the purpose of a business enterprise is the
production of goods and services and the distribution of those goods and services. The
purpose of a University is teaching and research and so on.
ii) Objectives or goals
121

The objectives or goals are the ends toward which activity is aimed. They represent not
only the end point of planning but also the end towards which organizing, staffing
leading and controlling are aimed. Goals can be long-term or short term, broad or
specific.
Hierarchy of Objectives
Organizational goals form a hierarchy ranging from the broad aim to the specific
individual objectives, The result of the hierarchy is the purpose (society) second is the
objective.
Multiplicity of objectives
Organizations normally have multiple objectives which they seek to achieve. This is
because they have multiple stakeholders.
iii) Procedures
All plans must establish a required method of handling future activities they are
chronological sequences of required actions they are guide to action, and they detail the
exact manner in which certain activities must be accomplished.
iii) Rules
Rules spell out specific required actions or non actions, allowing no discretion. The
essence of rules is that they reflect a managerial decision that some certain action mustor must not be taken rules differ from policies in that they give no discretion unlike
policies which guide decision making.
iv) Programs
Programs are a complex of goals, policies, procedures rules, tasks assignments, steps to
be taken, resources to be employed and other elements necessary to carry out a given
course of action. They are ordinarily supported by budgets.
v) Strategies
Strategy is defined as the determination of the basic long-term objectives of an
enterprise and the adoption of courses of action and allocation of resources to achieve
the goals.
vi) Policies

122

Are the general statements or understanding that guide or channel thinking in decision
making, sometimes statement may not be there, but the CEO of the enterprise can show
by example the organizations policy eg by regularly reporting at 8.00 the CEO shows
by practice what the policy of the organized is, will regard to reporting that. Another
example is when the CEO decides to promote from within the organization, this may be
interpreted as policy and carefully followed by subordinates.
Policies define an area within which a decision is to be made.
They also ensure that the decision will be consistent with and contribute to the
objective with and contribute to the objective. Policies help decide issues before they
become problems, make it unnecessary to analyze the same situation every time it
comes up, and unify other plans, thus permitting managers to delegate authority and
still maintain control over what their subordinate do.
There are many type of policies
vii) Budgets
A budget is a statement of expected results expressed on financial terms. A budget may
be expressed in financed terms in terms of labour hours or **** outs or any other
numerically measurable term. I may deal with operations (operations budget) or may
reflect capital outlays (capital budget) or it may show cash flows (such as the cash
budget).A budget is the fundamental planning instrument in many companies. A budget
focuses on advance, whether a week or for five years, a numerical compilation of
expected cash flow expenses and revenues, capital outlays or labour or chine hour
utilization.
A budget is the principal tool of control.

LECTURE 11 DECISION MAKING

Decision making is at the core of planning. It is the selection of alternative courses of
action. Decision making is considered central to planning because planning involves
the continuous selecting of projects and programs, evaluating them and choosing the
best project or program. Decision making involves four basic steps.
i).

Premising

ii).

Identifying alternatives

123

iii).

Evaluating alternatives

iv).

Choosing the best alternatives

Importance of decision making

Mangers see decision making as their central job because they must constantly choose
what is to be done, who is to do it, and when, where and occasionally even how it will be
done. Decision making is also part of everyones daily living. A course of action can
seldom be judged alone because virtually every decision must be geared to other plans.
Effective decision making must be rational. Rationality emphasizes that

There is an attempt to reach some goal

There must be a clear understanding of alternative courses of action to reach the goal
under existing circumstances and limitations.

There is sufficient information and ability to analyze and evaluate the alternatives in
light of the goal sought.

There must be a desire to come to the best solution by selecting the alternative that
most effectively satisfies goal achievement.

People seldom achieve complete rationality particularly in managing. This is because

i).

Decision is about the future (since no one can make decisions about the past).

ii).

It is difficult to recognize all possible alternatives to be followed to reach a goal

(this is particularly so when decision making involves opportunities to do something
that has not been done before)

iii).

In most cases not all alternatives can be analyzed, even with the newest available
analytical techniques and computers.
Due to above limitations, a manager must settle for limited or bounded rationality. In
addition, in view of the very great limits managers must go towards rationality, in
practice, or what is referred to as accepting a course of action that is good enough
under the circumstances.
Developing of alternatives
Assuming that we know what our goals are, and we are agreed on the planning
premises, then the first step in decision making is to develop alternatives. There are
almost alternatives to any course of action. If a manager cannot get alternatives to a
course of action then most probably he has not forced himself or herself to consider
124

other ways. The ability to develop alternatives is often as important as being able to
select correctly from among them. Developing alternatives requires ingenuity, research
and common sense.
Types of decision
Decision can range from those of a vital, once-for-all nature to those of a routine and
relatively trivial nature. They can be immediate in their effect, or they can be delayed
Ansoff (1965, 1987) sees management as having three principal areas:

Strategic decisions- these are the basic, long-term decisions which settle the
organizations relationship with its environment, notably in terms of its products or
services, and its markets. These are the decision which set the principal goals and
objectives of the organization. Also included here would be the major statements of
the organization.

Operating decision: These are the short-term decisions which settle issues such as
output levels, pricing and inventory levels. Fewer variables are involved in the
decision making process and the decisions themselves are routine and repetitive in
nature operative decision tend to receive priority over others because of the sheet
weight of their volume plus their ability to show results in the short term.

Administrative decisions- these decisions arise from and are subject to the
conflicting demands of strategic and operational problems. They are essentially
concerned with setting the organization structure eg by establishing lines of
authority and communication.

4.0 ORGANISING
Organizing is the function of

Allocating tasks and responsibilities among different people in an organization

Grouping these tasks and responsibilities into different departments

Differentiating the tasks and responsibilities into hierarchies

Establishing mechanisms necessary for integrating the differentiated departments and

hierarchies.

125

Factors that determine organization structure

Purpose or goals

People

Tasks

Technology

Culture

Size

Environment

Bases of organization structure

Functional based on grouping of major business functions eg production marketing.

Product is based on product

Geographical based on geographical location

Hybrid structure
o Usually based on products, geography or both with some key functions
located at the headquarters.

Matrix
o Based on a combination of functional organizational with project based
Basic variables for categorizing organization structure

Centralization the level of decision making

Formalization the number of documents

Span of control the number of subordinates under one manager

Specialization

Structural differentiation

Vertical differentiation

Spatial differentiation

Professionalism

Standardization

Advantages and disadvantages of different types of structures

126

Discuss the advantages and disadvantages of the various basis of structuring

Functional

Product

Matrix

Effects of a poor or inappropriate organization structure

Low motivation and morale

Ineffective decision making

Lack of coordination and control

Poor communication

Derisiveness and lack of cooperation

Poor adherence to organizational objectives

Inability to respond to changes in the environment

Failure to provide opportunity for development

Duplication of activities

CENTRALISATION VS DECENTRALIZATION
Centralization
Advantages
i).

Greater control

ii).

Economies of staffing

iii).

Economies of specialization

iv).

Easier communication
Disadvantages

i).

Excessive bureaucracy

ii).

Rigidity

iii).

Delays in decision making

iv).

Loss of initiation

v).

Stifles personal development

Decentralization
Advantages

Decision are made where the action is

127

Recognition of local conditions

Improves morale

Personal development

More responsive to consumer needs

Disadvantages
Loss of control
Loss of some economies of scale
Development of narrow development view
Span of control
A narrow span has the following advantages

Close supervision of subordinates

Tight control

Fast communication

It has the following disadvantages

Many levels of management (costly)

Excessive distance between the top and bottom

Advantages of an organization structure

Motivated staff

Effective decision making

Good coordination and control

Effective communication

Creates cooperation among staff, and departments.

Good adherence to organizational objectives

Ability to respond to changing environment

Clear opportunities for personal development

STRUCTURAL DESIGN OPTIONS

Mintzberg presents a different view on structuring organizations. He starts by saying that
every organization consists of five basic parts.

128

1. The operating core: the employees who perform the basic work related to the
production of products and services.
2. The strategic Apex: top level managers, who are charged with the overall
responsibility of the organization.
3. The middle level managers who connect the operating core and the strategic apex .
4. The techno structure which consists of analysts, professionals and those who have
responsibility for effecting central responsibility in the organization.
5. The support staff people who fill the staff units, who provide direct support service
for the organization.
Any one of those five parts can dominate an organization. According to Mintebergs, there
are five distinct design options or configurations, depending on the part which has
greatest control. If control lies with the operating core, the resulting design or
configuration is professional bureaucracy which is characterized by decentralized
structures. If the dominant part is strategic apex, the structure is referred to as simple
structure. It is characterized by centralization. If middle management is in control, then
the resultant structural design is referred to as divisional structure. It consists of
autonomous groups. Where the techno structure is dominant, then the resultant structural
design is machine bureaucracy. Finally if the dominant group is the support staff, the
structural design is referred to as adhocracy an example is in a film making
organization consisting of various professionals. This type of structure has no entrenched
hierarchy; no permanent departments not even formalized rules. It is characterized by low
formalization, decentralization and great flexibility.
Organizational design options
1. Professional bureaucracy- if control lies with the operating core, then professional
bureaucracy is the result. Decision are decentralized
2. Simple structure if the dominant element is the strategic apex
3. Divisional structure if middle management is in control, then the resultant design
option is divisional structure, this consist of groups of essential autonomous units
operating in a divisional structure.
4. Machine Bureaucracy: this results where the technostrucure is dominant- this results
in high level of standardization.

129

5. Adhocracy in those situations where staff relies control will be via mutual
adjustment and resultant structural design is known as adhocracy
The following section describes each of the above design configurations in greater detail.
The simple structure
A simple structure is low in complexity, has little formalization and has authority
centralized in a single person. It is depicted as a flat organization, with an organic
operating core and almost everyone reporting to a one person apex,where the decision
making in centralized
Owner

Store keeper

Finance

Accounting

Sales

Strengths of a simple structure lie in the following:

Its simplicity

It is fast and flexible in decision making

Requires little cost to maintain

Accountability is clear

No layers of cumbersome structure

There is a minimum amount of goal ambiguity because members are able to identify
readily with the organization missions.

It is also fairly easy to see how ones actions contribute to the organization goals.

Weaknesses

Limited applicability only in small organizations. When confronted with increased

size, this structure proves inadequate

The simple structure concentrates power on a single person. Thus the structure can
succumb to the abuse of authority by the person in power.

130

The concentration of power in a single person can also work against the
organizations effectiveness and survival.

The structure hangs on the health and whims of one individuals.

When should you use a simple structure

If the organization is small

When the organization is in its formative stage of development

If the environment is simple and dynamic.

If the organization faces high hostility or crisis

If the senior manager is also the owner

If or when the chief executive officer wants to hold power or has power thrust upon
him by his or her subordinates.

Machine Bureaucracy
In a machine bureaucracy, the main characteristic is standardization. It has highly routine
operating tasks, very formalized rules and regulations, tasks are grouped into functional
departments, there is centralized authority, decision making follows a chain of command
and there is an elaborate administrative structure with a sharp distinction between line
and staff activities. Rules and regulations permeate the entire structure. The key part of
structure is the techno structure.
Strengths of machine bureaucracy

The primary strength of the machine bureaucracy lies in its ability to perform
standardized activities in a highly efficient manner.

By putting like specialists together results in economies of scale, minimization of

duplication of personnel and equipment and comfortable and satisfied employees,
who have the opportunity to talk the same language among their peers.

Machine bureaucracy can also get by nisely with less talented and hence less costly,
middle and lower level managers.

The pervasiveness of rules and regulations substitutes for managerial discretion

Standardization coupled with centralization allow decision making to be centralized.

Weaknesses
131

Specialization and standardization creates sub unit conflict where functional unit
goals can override the overall goals of the organization.

Obsessive concerns with following the rules- there is no room for modification

When is machine bureaucracy appropriate

In large organization

In simple and stable environments

In a technology that contains routine work that can be standardized

In mass production firms such as those in automobile and steel industries

In government offices

The Professional Bureaucracy

This type of structure combines standardization with decentralization

The power lies with the operating core because they have the critical skills that the
organization needs and they have the autonomy.

Professional bureaucracies also include machine bureaucracies with them they have
for example the support staff.

Strengths of professional bureaucracy

The basic strength of the professional bureaucracy is its ability to perform specialized
tasks with the same relative efficiency as the machine.
Weaknesses of the professional bureaucracy

Tendency of sub units to conflict

The various professional units seem or tend to pursue their own interests.

The specialists might be comprehensive to follow the rule. This might interfere with
the organizations effectiveness in a competitive and rapidly changing environment

Adhocracy
This type of structure is a temporary arrangement to implement a certain project or
objective

132

5.0 THE STAFFING FUNCTION

Planning the HR needs
Strategic HR planning consists of developing a systematic, comprehensive strategy
for,
a) Understanding current employee needs
b) Predicting future employee needs.
1. Understanding current employee needs
This requires that you understand the present staffing needs of your organization.
This means that you undertake a job analysis and write a job description and job
specification
i)
Job analysis- to determine by observation and analysis the basic
element of a job. You can achieve this by intervening job occupants
about what they do, observe the flow of work, and how results are
accomplished.
ii)
Job description and job specification- once you have understood the
fundamentals of a job then you can write a job description which is a
summary of what the job holder does and how and why he or she
does it. Next, you can write job specification which describes the
minimum qualifications a person must have to perform the job
successfully.
This process of job analysis, job description and job specification enables or
helps the manager to;
a) Avoid hiring people who are overqualified (and probably more expensive) or
under qualified (and thus not as productive) for a particular job.
b) By having a job description, an organization can match an applicants
qualification to the job specifications.
2. Predict future employee needs
Predicting future employee needs means that the manager has to have the
knowledge about the staffing the organization might need and the likely sources
for that staffing. With regard to the staffing, the organization might need in the
future, the manager needs to know not only the resignations and retirements but
also the organizations vision and strategic plan.
With regard to the likely sources for staffing, the organization can either
recruit from internal or external sources. In looking at the internal sources, you
need to consider which employees are, motivated, trainable and promotable, and
what kind of training your organization might have to do. A human resource
inventory which is basically a report listing the organizations employees by
name, education training, languages and other important information. In looking
outside e you need to consider the availability of talent in tour industry and
geographical areas labor pool, the training of people graduating from various
colleges and such factors as what land, kind of people are moving into your area.

133

The legal bases of the HR management

There are four areas generally covered by labor law in various countries. These are;
1) Labor relations
These laws provide procedures for dealing with employees and their labor unions, about
disputes, compensation benefits, working conditions and job security.
2) Compensation benefits
These laws provide for the minimum wages and maximum number of working hours.
They also regulate against child labor. Salaried executives, administrative and
professional employees are exempt from these rules.
3) Health and safety
These laws provide for organizations to provide employees with non-hazardous working
conditions.
4) Equal employment opportunity
These laws legistrate against discrimination in employment based on racial, ethnic and
religious bases. The principal concepts covered in equal employment opportunities laws
are discrimination, affirmative action and sexual harassment.
Discrimination occurs when people are hired or promoted (or denied hiring
or promotion) for reasons not relevant to the job, such as tribe, skin color,
gender or religion.
Affirmative action focuses on achieving equality of opportunity within an
organization. It tries to make up for past discrimination in employment by
actively finding hiring and developing the talents of people from groups
discriminated against in the past.
Sexual harassment
Performance appraisal
Performance appraisal is the assessing an employees performance and providing him or
her with feedback. This management function has two purposes;
i. Helps the employees understand how they are going in relation to
objectives and standards. Here the manager makes a judgment of the
employee
ii. It helps the employees identify their training needs and personal
development. Here the manager councils the employee.
Appraisals may either be objective or subjective;
Objective appraisals- also called results appraisals are based on facts and are
often numerical. Here managers use such quantifiable measures as quantity of
products produced or sold, number of complaints received or handled etc
Subjective appraisals
These are based on a managers perception of an employees traits or behaviors.

134

Trait appraisals are ratings of such subjective attributes as attitude, initiative, and
leadership. Trait evaluation may be easy to create and use but their validity is
questionable because the evaluators personal bias can affect the ratings.
Behavioral appraisal- measures specific observable aspects of performance- being on
time for work for instance. Although . the evaluation is still somewhat
subjective.
Who should make appraisals- generally managers are responsible for evaluating their
employees. However, others can also perform staff appraisal. These are
i.
Peers and subordinates
ii. Customers and clients
iii.
Self- appraisal
iv. 360- degree assessment
Recruitment
Recruitment is the process of locating and attracting qualified applicants for jobs open in
the organization. The word qualified refers to people with the right skills, abilities and
characteristics for the jobs available in your organization. Recruiting can be done through
internal or external recruitment.
Internal recruiting means attracting people already on the organization to apply for the
job opening in your organization
External recruiting means attracting job applicants from outside the organization. Job
vacancies are placed in newspapers, employment agencies or even in the internet.
Internal recruiting
Advantages
Cheaper
Fewer risks- candidates are already known
Motivates those already in the organization to work hard.
Disadvantages
Limits the pool of fresh talents and fresh new ..
Whenever a job is filled it creates a vacancy elsewhere in the organization
Encourages employees to assume that they will be promoted thus haunting
their competitiveness
External recruiting
Advantages
Applicants may have special knowledge and experience
Applicants may have fresh ideas and new
Disadvantages
The recruitment process more expensive
The risks are higher that the person hired may not perform

135

This is the process of recruiting, hiring training, developing and maintaining effective
workforce within the organization. To perform this function effectively managers must
understand four fundamentals points.
1. The staffing function is the responsibility of all managers in the organization
2. This function should view employees as an important or critical resource of the
organization
3. It is important to match employees and their skills and needs to the companys goals
and objectives. The hiring, the training and development must match employees
skills and needs to the companys goals and objectives
4. There exists a large body of complex, comprehensive and increasing body of laws
and rules governing relationships between employers and employees. Managers must
be aware of these laws and regulations.
The process of the staffing function
The staffing function consists of three main stages
Stage one: activities designed to attract productive employees to the organization. These
activities include
i).

Planning

ii).

Recruitment

iii).

Selecting

Stage two: activities designed to develop employees into a productive workforce. These
activities include:
i).

Training and

ii).

Development
Stage three- this stage encompasses the activities designed to maintain the work
force. They include

i).

Compensation

ii).

Promotion

iii).

Transferring

iv).

Demoting

v).

Separating employees
The above activities are discussed below;

136

1. Human Resource Planning

This will involve six distinct steps.

Setting the organizations objectives

Setting the sales and production forecasts

Setting human needs forecast

Analyzing current supply of employees

Forecast human needs given current supply

Establish a plan for recruiting, selecting and transferring employees

Human needs forecast is a process that compares the current level of employment in the
various jobs to the numbers needed to fulfill the production and sales forecast and to meet
the companys strategic objective,. Before they can derive those numbers, managers need
to carry out a job analysis job description, and job specification.
Job analysis-is the systematic gathering of information about a job. This information
includes job titles, supervisor, training, experience and other qualifications needed to
perform the job, responsibilities and activities involved in the job and the working
conditions. This information also includes organization data such as whether the job is
dependent on other jobs and which jobs will follow the completion of the job
Job description a job description specifies the object for the job, the responsibilities
and activities involved, how the job relates to other jobs, working conditions and similar
facts.
Job specification this document identifies the qualification, skills, training education
and other personal characteristics required of the person performing the job . The job
specification lists such items as how many years of experience are needed to qualify for
the job, required education levels, skills, special training and in some cases,
psychological characteristics.
Recruitment
Recruitment is the process of informing qualified potential employees about job openings
and encouraging them to apply.
Selection

137

Selection is the process of screening applicants for the skills and abilities listed in the job
specification to determine which ones are best suited for the job.
Training and development
These are the efforts of companies to maintain and improve the quality of their work
force.
Compensation
Consists of all monetary payments and non-monetary goods and services given to
employees in place of money.
Promotion
An assignment to a new job at a higher level and usually at a higher salary and benefits.
Demotions
An assignment to a new job at a lower level and often at a lower salary.
Transfers
A horizontal or lateral movement from one job to another of equal or similar
responsibilities and salary.
Separations
Occur when an employee leaves the company due to lay off, involuntary termination,
voluntary resignation or retirement.
===============================================================
LECTURE 12 LEADERSHIP
Definition
Leadership is defined as the art or process of influencing people so that they will strive
willingly towards the achievement of group goals. The important point to note is that not
only are the people led willing to work, but to work with zeal and confidence. Zeal
reflects earnestness, and intensity on the execution of work. Confidence reflects
experience and technical ability. To lead is to guide, conduct, direct and precede. Leaders
act to help a group achieve objectives with the maximum application of its capabilities.
Leaders do not stand behind a group to push and to provide. They put themselves before
the group as they facilitate progress and inspire the group to accomplish organizations
goals.
Functions of Leadership

138

i) To induce or persuade all subordinates or followers to contribute willingly to

organizational goals in accordance with their maximum capability. In order to
perform this function, the leader must have the following ;

The capability to comprehend that human beings have differing motivating forces
at varying times and in different situations.

The ability to inspire

The ability to act in a way that will develop a climate for responding to and
arousing motivations.

The ability to inspire means one is able to enliven followers to apply their full potential
and capabilities to a project. They have charismatic qualities that induce loyalty, devotion
and zeal on the part of the followers.
The best evidence of inspirational leadership comes from hopeless and fearful situations
such as a nation on the eve of battle, or a leadership deserted by followers. In such a
situation, charisma plays a part in saving the situation.
LEADERSHIP THEORIES
Because of its importance to all levels of group action there is a considerable volume of
theory and research concerning leadership. It is not possible to summarize such a
considerable body of theory, but leadership can be separated into trait, situational and
contingency theories of leadership.
The trait approach to leadership
The earliest studies of leadership were based largely on an attempt to identify the traits
that leadership possessed. In fact prior to 1949, most studies on leadership tended to
concentrate on identifying traits. In general the study of leadership traits has not been
very fruitful. Not all leaders possess all traits and many non leaders may possess most or
all of them. Also the trait approach gives no guide as to how much of any trait a person
should have. Furthermore, out of a dozen or so of studies, there is no uniformity of
identified traits or any significant correlations of traits with actual instances of leadership.
Nevertheless some studies have indicated a significant correlation between certain traits
and leadership effectiveness. Literature has found that that there was a definite correlation
between the traits of intelligence, scholarship, dependability, responsibility, social
participation, and socio-economic status of leadership compared with non-leaders,

139

Ghiselli found significant correlation between leadership effectiveness and the traits of
intelligence, supervisory ability, initiative , self-assurance and the individuality in the way
the work was done.
Keith Davis likewise found that leaders do have high intelligence, broad social interests
and maturity, strong motivation to accomplish, and great respect for, and interest in
people. But even those correlations between traits and leadership are not persuasive. Most
of these so called traits are really patterns of behaviour that one would expect from a
leader and particularly a leader in a managerial position.
The situational approach to leadership
This approach to leadership assumes that leadership is strongly affected by the situations
from which the leader emerges and in which he or she operates. That this is a persuasive
approach is motivated by the situation that gave rise to a Hitler in Germany in the 1930s.
The earlier rise of Mussoline in Italy, the emergence of F.D. Roosevelt during the great
depression of the 1930s in the United States, and the rise of Mao Tse-tung in China in the
period after World War II were good examples of situational leadership. This approach to
leadership recognizes that there exists an interaction between the group and the leader. It
supports the followers theory that people tend to follow those in whom they perceive
(accurately or inaccurately) a means of accomplishing their own personal desires. The
leader, then is the person who recognizes these desires and does those things or
undertakes those programs, designed to meet them.
This multi dimensional approach to leadership was detected early in the studies of
Stogdill and his associates when it was discovered that in an analysis of 470 navy officers
occupying forty five different position, their leadership ability was heavily affected by
such situational factors as their jobs, the organizational environment in which they
operated, and the characteristics of people they were assigned to lead. Other studies have
shown that effective leadership depends upon response to such environmental factors as
the history of the enterprise, the community in which the organization operates the
psychological climate of the group being led, group member personalities and cultural
influences, and the time required for making decisions.

140

This approach has much meaning to managerial history and practice. It also ties into the
system of motivation. It has meaning for practicing mangers who must take into account
the situation in its entirety when they design an environment for performance.
Fiddlers Contingency Approach to leadership
Fiddlers theory implies that leadership is any process in which the ability of a leader to
exercise influence depends upon the group task situation and the degree to which the
leaders style, personality and approach fit the group. In other words, people become
leaders not only because of the attributes of their personality, but also because of various
situations factors and the interaction between the leaders and the situation.
Fidler;s findings and theory are based on a considerable volume of research. The groups
he studied and tested his hypotheses on included B-28 bomber crews, army tank craws,
antiaircraft artillery crews, infantry squads, open hearth steel supervisors and crews,
upper level company managers, managers of gas stations, students groups and church
leaders. On the bases of his studies, Fidler found three critical dimensions of the situation
that affect a leaders most effective style. These are;
i). Position power: this is the degree to which the power of a position as distinguished
from other sources of power such as charismatic or expert power, enables a leader to
get group members to comply with direction: as can be seen in the case of managers
this is the power arising from organizational authority. A leader with clear and
considerable position power can more easily obtain better follower ship than one
without such power.
ii). Task structure; with this dimension, Fidler had in mind the extent to which task can be
clearly spelled out and people held responsible for them in contrast to situations
where tasks are vague and unstructured. Where tasks are clear, the quality of
performance can be more easily controlled, and group members can be more
definitely held responsible for performance than where tasks are ambiguous.
iii). Leader member relations This dimension, which Fidler regards as most important
from a leaders point of view since position power and task structure may be largely
under the control of an enterprise has to do with the extent to which group members
like and trust a leader and are willing to follow him or her.

141

Theories of leadership
Leadership theories can be categorized in the following groups
1. Trait theories
These theories try to explain leadership in terms of the traits that leaders have. Starting as
early as the ancient Greece, and Roman periods researchers have tried to identify the
physical, mental and personality traits of various leaders.
The main traits identified by these theorists include

Physical (energy, appearance, perseverance, height etc).

Intelligence

Ability

Personality (adaptability, enthusiasm)

Social characteristic (cooperativeness

Tasks related (eg drive, initiative),

The main problem with trait theories is that

i).

Not all leaders possess all the traits

ii).

Many non leaders have some of the traits

iii).

The traits approach fails to give guidance as to how much of any trait a person should
have.
Style theories
These theories try to explain leadership as an aspect of behavior at work, rather than
characteristics. They look at leadership in terms of

Authoritarian vs. democratic styles

People orientation versus tasks orientation

Some of these theories are:

1. McGregors theory x and theory y
Theory x autocratic, tough (authoritarian)
Theory y benevolent, participative and allowing self control.
2. Likerts from management systems
This theory identified leadership as consisting of four types

142

System I the exploitative- authoritative system.

System II benevolent- authoritative system
System III- consultative system which tends towards democracy and learn work.
System IV- Participative group participation leading to cooperation.
3. Tannerbaeem and Schmudt
This theory presents leadership as a continuous of leadership styles ranging from
authoritarian to democratic.
Authoritarian

Democratic

Style theories fail to recognize the contingent factors

4.

Contingency theories of leadership

Several variants of the contingency theories exist. For example
i) Functional or Action centered leadership this model incorporates the concern for
task and concern for people. The key features of the model are the following:

Task, group and individuals needs are fulfilled

Task function directed towards task needs

Group maintenance function directed towards group needs including team

building discipline

Individual maintenance functions directed towards the needs of individuals eg

counseling, motivation development

Task

people

143

ii) Contingency leadership

This model uses the moral contingency to explain leadership in the light of the relative
favorableness of the situation. The most important variables in determining the relative
favorableness of the situation are:

Leader member relations

Degree of structure in tasks

Power and authority of the position

The above variables can lead to several situations most favorable to a leader e.g.
i)

he has good leader member relations

ii)

the task is highly structures

iii)

he has a power position

The most unfavorable situation on the other hand are:

i)

He is disliked

ii)

The task is relatively unstructured

iii)

He has little or no position power.

Principle-centered leadership
This model looks at leadership in terms of how a person helps to certain principles of
behavior. Its this model assumes that the extent to which leaders recognize, and keep to
principles such as fairness, justice, integrity and trust, determine their progress towards
survival and stability, or to disintegration and destruction. These principles are universal,
objectives and self-evident, leaders should align their values with correct principles.
These principles and four: trustworthiness, trust, empowerment and alignment.
Trustworthiness is essentially to do with the leaders himself as a result of competence,
integrity etc
Trust refers to the decade trust on others
Empowerment refers to enabling teams and individuals to assume responsibility for
achieving results they have agreed.
Alignment is the process of constantly reviewing the situation in the light of external
conditions and the implementation of the other three principles.

144

Covye who is mostly associated to principle centered leadership identifies eight

characteristics of people who can be considered as principle centered.
i).

They continuously learn- they listen

ii).

They are service oriented- they think of others

iii).

They radiate positive energy they are cheerful, pleasant

iv).

They believe in other people- other people have potential

v).

They lead balanced lives- they have wide interests

vi).

They see life as an adventure

vii).

They are synergistic- they improve on every situation they get into they exercise for
self , renewal- they engage in activities that exercise emotional, spiritual as well as
physical and mental aspects
Leadership styles: This approach to leadership looks at leaders in terms of their
characteristics. These are:

i).

ii).

The charismatic leader

The leader who gains influence mainly from strength of personality.

Uses personality to transform all around him into willing followers

Possesses exceptional qualities eg Napoleon, Hitler, Churchill.

The traditional leader his position of leadership is acquired by birth eg kings,

queens and tribal chiefs.

iii).

The situational leader the influence of such a person results form being at the
right place at the right time. This type of leadership is of too temporary in nature to be
of value to in a business.

iv).

An appointed leader is one whose influence arises directly out of his position eg
most managers and supervisors. This is the bureaucratic type of leadership whose
legitimate power springs from the nature and scope of the position within the
hierarchy.

v).

The functional leader who secure their leadership position by what he or she
does rather than by what they are. In other words functional leaders adapt their
behaviour to meet the competing needs of the situation.

145

vi).

The principle centered leader is the leader whose approach to leadership is

influenced by moral and ethical principles involving consideration of equity, justice,
integrity, honesty, fairness and trust.
Leadership then is something more than just an aspect of personality, tradition,
opportunism, or appointment. It is ultimately connected with actual behaviour and
attitudes towards oneself and others.
Although leadership may involve empowering others, and sharing the leadership, burden
in many respects, it nevertheless cannot advocate its final responsibility for a groups
result. Any leader must ultimately accept personal responsibility for success or failure.
Consequently leadership can be defined as a dynamic process whereby one individual in
a group is not only responsible for the groups results, but actively seeks the collaboration
and commitment of all the group members in achieving group goals in a particular
context and against the back ground of a particular national culture.
The suggestion that leadership is a dynamic process implies that there is no one best way
of leading leadership is essentially about striking the right balance between the needs of
the people, tasks and goals in a given situation. If a football team is behind at half-time,
the club managers talk to the team is likely to be much tougher than the upbeat speech he
gave it just before kick-off. Before the start his object would have been to encourage and
show confidence; at half time he would be pointing out weaknesses, insisting in tactical
changes and urging the team to do better.
The table below illustrate the main variables in the leadership process:
Variables of leadership
Leader

Task/goals

Skills

groups goals

Principles

individual goals/targets

Knowledge

relative complexity

Personality
Group members

Situation/environment

Skills

internal dynamics of group

Needs

cultural issue

Motivation

external pressure

146

Resources available
Thus leadership is involved in the motivation and inspiring the workforce. Leaders may
be appointed or emerge. The source of their ability to influence others comes from their
expertise or from their personality. Ideally, those appointed to the position of leadership
eg managers, should have leadership qualities. Consequently some mangers are just
mangers, while some managers are also leaders. The following characteristics
differentiate managers who are not leaders and managers who are also leaders
Managers
1. Functionaries
2. Protect their operations
3. Accept responsibility
4. Control employees
5. Competent
6. Minimize risks
7. Accept speaking opportunities
8. Set reasonable goals
9. Pacify
10. Strive for comfortable working

Leaders
1. Innovators
2. Advance their operations
3. Seek responsibility
4. Trust employees
5. Creative
6. Take calculated risks
7. Generates speaking opportunities
8. Sets challenging goals
9. Challenges
10. Seeks challenges

conditions
11. Use power cautiously
13. Delegate cautiously
15. View workers as employees

12. Uses power forcefully

14. Delegate enthusiastically
16. View workers as potential followers

Contemporary views on Leadership

Transformational= Transactional Leadership Transformational leaders stimulate and
transform followers to achieve extraordinary outcomes. They pay attention to the
concerns and the developmental needs of the individual followers They change the
followers awareness of issues by helping those followers look at old problems in new
ways They are able to excite, arouse and inspire followers to put extra effort to achieve
group goals
On the other hand transactional leaders are leaders who lead primarily by using social
exchange (or transactions) Transactional leaders guide or motivate followers to work
towards established goals by exchanging rewards for their productivity
=========================================================
8.0 MOTIVATION

147

Motivation is a term used to describe those processes, both instinctive and rational by
which people seek to satisfy the basic drives, perceived needs and personal goals, which
trigger human behavior.
Motivation refers to the drives, desires, needs, wishes. Motivation refers to the forces
within a person that affect his or her direction, intensity and persistence of voluntary
behavior. Motivation refers to the process by which a persons efforts are energized,
directed and sustained towards attaining a goal.
Three key elements are important to that definition namely energy, direction and
persistence.
1) Energy- is a measure of means or derives. A motivated person puts forth effort
and works hard. However, the quality of effort must be considered as well as
intensity. High levels of effort dont necessarily lead to favorable job performance
unless the effort is channeled in a direction that benefits the organization.
2) Motivation includes a persistence direction. We want employees to persist in
putting forth effort to achieve those goals. Motivating high levels of employee is
an important organizational concern.
Motivation represents the forces within a person that affect his or her direction, intensity
and persistence. Direction refers to the path along which people engage their effort. This
sense of direction of effort reflects the fact that people have choices about where they put
their effort. They can either arrive to work on time, finish their tasks early or on time, or
aim for many other targets. They could on the other hand choose not to arrive to work on
time, finish their tasks late, or do anything else; consequently the direction is a key
element of motivation.
Intensity- this is the amount of effort allocated to the goal. For example two employees
may be motivated to finish their project a few hours early (direction) but only one of
them puts forth enough effort (intensity) to achieve this goal. In other words intensity is
how much you push yourself to complete the task.
Models of human motivation
1) Rational economic model
This view of human motivation has its roots in the economic theories of Adam Smith in
the 1770s. It suggests that the pursuit of self-interest and the maximization of gain are the
prime motivators.
2) The social model
The social model draws its conclusions from the Hawthorne Experiments of the 1920s
and 1930s. This model views people as predominantly motivated by social needs- the
need for personal relationships. The implications for managers is that an emphasis on

148

attending to peoples social needs over the needs of the task will lead to greater
productivity as well as higher morale
3) Self-actualizing model
This concept is based on Maslows Hierarchy of needs theory which while allowing for
the influence of other needs stresses the individuals need for self fulfillment, as the
prime motivation. The implication for managers is that people need challenge,
responsibility and authority in their work if they are to work effectively.
4) The complex model
This model by Schein proposes that peoples motivation is a complex issue in which
general interrelated factors are at work. Managers in this situation need to be sensitive to
the range of possible responses to employee motivation against differing work and team
environments. This model enables us to see motivation as a human behavior which is
directed towards desired ends and that behavior is selected consciously or instinctively
towards the achievement of those ends.
Some of the most well known motivation theories are briefly discussed below
1) The Hawthorne studies
These studies are closely associated with professor Elton Mayo, a professor of industrial
research at the Harvard graduate school of business. He carried out the Hawthorne
experiments at the Hawthorne plant of the Western Electric Company in Chicago USA,
between 1927 and 1932. In these studies emphasis was on the worker rather than work. In
other words, these studies were primarily concerned with studying people, especially in
terms of their social relationships at work. Their conclusions were that people are social
animals at work or outside it and that membership of a group is important to
individuals. Group membership leads to the establishment of informal groups within the
official, formal organization. The main conclusions of the Hawthorne studies are as
follows.
i)

Individual workers cannot be treated in isolation, but must be seen as

members of a group.

ii)

The need to belong to a group and have status within it is more important than
monetary incentives or good physical working conditions

149

iii)

Informal (or unofficial) groups at work exercise a strong influence over the
behaviour of workers.

iv)

Supervisors and managers need to be aware of these social needs and cater for
them if workers are to collaborate with the official organization rather than
work against it.

2) Maslows Hierarchy of Needs theory

Maslow, proposed that
i)

ii)

People are motivated to satisfy specific groups of needs. These needs are

Physiological needs: need for food, sleep, sex etc

Safety needs: need for a stable environment relatively free from threats

Social needs- need to be recognized and appreciated by other people.

Esteem needs need for self-respect, self-esteem and the esteem of others.

Self-actualization needs- the need for self-fulfillment

The other point by Maslow was that people tend to satisfy those needs
systematically in a hierarchical manner, starting form the physiological
needs and then moving up the hierarchy. Until a particular group of needs
have been satisfied, a persons behavior will be dominated by them.

iii)

Maslows other point was that once a group of needs has been satisfied, it
ceases to motivate.
Management Implications of Maslows theory
5) Employees have different needs at different times
6) Employees have several interdependent needs not just one dominant need.
Managers must therefore understand that employees are motivated by a cluster
of needs not just one need
7) At some point most employees want to achieve their full potential. Therefore
mangers must structure organizations to help people continue and develop this
motivation
8) Employees needs are influenced by values and norms. In other words higher
order needs are shaped to some extent by the norms and values of the team,
the organization and society in which the individual lives. Consequently
managers can adjust employee motivation and effort by reshaping these norms
and values for example by encouraging more performance oriented team
norms, managers can strengthen team members self actualization needs.

3 McGregors Theory x and Theory y

150

McGregor proposed two sets of assumptions about human nature:

3) Theory X assumes that workers
Have little or no ambition
Want to avoid responsibility
Need to be closely supervised and controlled to work effectively
Generally dislike work and only work for salary and security
4) On the other hand theory Y assumes that workers
Want and exercise self direction
Accept and actually seek out responsibility
Want work and consider work to be a normal activity
McGregor believed that theory Y predominates, consequently to motivate the employees
there is need to allow for participation in decision making, provide challenging jobs, and
good group relations.
4 HERZBERGS MOTIVATION HYGIENE THEORY
Herzbergs theory proposes that there are two sets of conditions or factors that affect
workers level of satisfaction or motivation at the work place. The hygiene factors
describe the employees relationship with their job environment, and that affect the level
of dissatisfaction at work. These factors include
Company policy and administration
Salary
Interpersonal relations
Working condition
On the other hand, the motivators are factors related to the employees desire for growth
in their work and which affect the level of satisfaction or motivation at work. The
motivators include
Achievement
Recognition
The work itself
Responsibility
Advancement
Opportunity for growth
The Herzbergs two factor theory of motivation proposes a two step process of
motivating employees
3. First make the employees not dissatisfied by
Having sound non primitive company policies that are administered fully
Having good technical supervisors who permit employees to work without
undue pressure
Paying salaries and wages that are adequate and fair

151

Establishing an environment that promotes good interpersonal relations

between employees and supervisors
Creating good working conditions, comfortable offices, reasonable hours
etc
4. Then make employees motivated by
Permitting employees to achieve challenging goals with minimal
interference
Recognizing employees good performance and productivity and
crediting them for their efforts
Giving employees more responsibility as they show the desire and
ability to handle it
Providing a career path of meaningful advancements for productive
employees
Designing jobs that are interesting and challenging
Providing training and educational opportunities that help employees
grow especially in skills that relate to their careers
Managers should note that employees are motivated first if they are not dissatisfied, and
second if they are provided with motivators. Both the dissatisfies and motivators must be
provided if employees are to be motivated in their work
5 Vrooms Expectancy Theory
This theory proposes that people will be motivated to do things to reach a goal if
they believe in the worth of that goal, and if they can see that what they do will help them
in achieving it.
Vrooms theory proposes that people will be motivated to do things if they place
on the outcome of their efforts a value equal to the value multiplied by the expectancy.
Expectancy theory states that an individual tends to act in a certain way based on
the expectation that the act will be followed by a given outcome and on the attractions of
that outcome to the individual. It includes three variables of relationships:
4. Expectancy or effort performance linkage- is the probability by the individual that
exerting a given amount of effort will lead to a certain level of performance.
5. Instrumentality or performance reward linkage is the degree to which the
individual believes that performing at a particular level is instrumental in attaining
the desired outcome.
6. Value or attractiveness of the reward is the importance that the individual places
on the potential outcome or reward that can be achieved on the job.
This analysis can be summarized by the question; how hard do I have to work to
achieve a certain level of performance and can I actually achieve that level. What reward
will performing at that level of performance get me? How attractive is the reward to me
and does it help me achieve my own personal goals. Whether you are motivated to put
forth effort, (i.e. work hard) at any given time depends on your goals and your perception
of whether a certain level of performance is necessary to attain these goals.

152

Implications for managers

The key to expectancy theory is in understanding an individuals goal and the linkage
between effort and performance, between performance and rewards and finally between
rewards the individual goal satisfaction. Consequently, managers have to align rewards
with what the employee wants. After all we want to reward the employee with those
things that they value. Also expectancy theory emphasizes expected behaviors. Do
employees know what is expected of them and how they will be evaluated?
Finally expectancy theory is concerned with perceptions. An individuals own
perception of performance reward and goal outcome, not the outcomes themselves will
determine his/her motivation (level of effort).
6 Equity Theory
Equity theory proposes that employees compare what they get from a job (outcomes) in
relation to what they put into it (inputs) and then compare their input;- output ratio with
the input output ratios of relevant others. If an employee perceives her ratio to be
equitable (or fair) in comparison to those of relevance others then justice prevails and she
will be motivated. However if the ratio is inequitable (unfair) the employee will feel
under rewarded or over rewarded. Equity theory proposes that the employee might;
6. Distort either own or others inputs or outcomes
7. Behave in some way to induce others to change their own inputs or outcomes
8. Behave in some way to change their own inputs or outcomes
9. Choose a different comparison person
10. Quit the job
The implication for equity theory is that employees will be influenced significantly by
both absolute and relative rewards. Whenever employees perceive inequity, they will act
to collect the situation
Who are these others the employee will compare with? These includes
4. Individuals with similar jobs in the same organization in the same profession e.t c.
5. The systems including the organization pay policies procedures and systems
6. The self referring to the input outcomes ratios that is unique to the individual. It
reflects the past personal experiences and ant acts as influenced by jobs, or family
connections

9.0 CONTROLLING
What is control
Control is the process of evaluating the organizations performance in relation to the
objectives set, and where necessary taking corrective action to keep the organization on
tract so it will achieve objectives.

153

The control process includes the following steps

i)

establish performance measures

ii)

Measure performance

iii)

Compare performance with standards and identify causes of variance

iv)

Take corrective action.

For a control system to be successful it must be

i)

he accepted by those subject to its control

ii)

must be appropriate and meaningful

iii)

must be timely

iv)

be cost effective

v)

be sufficiently flexible

vi)

be objective

Control methods
i). Budges
ii). Quality control
This method is a system of setting quality standards, measuring performance against
those standards, and taking appropriate action to deal with denations outside permitted
tolerance level.
The control process is linked to form a continuous process that ends either in the
achievement of goals or the modification of plans as a result of feedback. Several
observations can be made on this process.
First where standards of performance are qualitative rather than quantitative it is
preferable for them to be expressed in terms of end results rather than of methods.
Budgets are a particularly useful vehicle for the expression of verifiable results.
Secondly, the measurement of performance depends heavily on the relevance, adequacy
and timeliness of information. The supply of such information comes form a variety of
sources within the organization. The single most important source is the management
accounting department, which is responsible for the regular production of operating
statements, expenditure analysis, profit forecasts, cash flow statements and other relevant
control informations..

154

Thirdly, when comparing the actual against target performance, most organizations only
require action to be taken when the deviation against standard is significant. Otherwise no
action is taken and no reference upwards is asked for. This is sometimes called the
management by exception principle.
Fourthly, control is not just a matter of identifying deviation, it is also a matter of putting
right what may have gone wrong, hence the importance of directions part of the control
process to the implementation of appropriate corrective measures
The control process
Standards of
performance

Plans

Take corrective
action/modify
plans

Feedback in
Standards of
performance

Actual
Performance

Comparison with
standard set

Deviations
identified
corrective action
required
the control system

On target no
corrective action

The information generated by control systems is known as feedback. Feedback is

usually produced in results.
Actual performance is recorded and the information feedback to the managers
responsible for achieving targets. Early feedback is essential for accurate control,
especially where unexpected deviations have occureed where deviations occure,
feedback may indicate the need for a change in the process or its inputs, or possibly, a
change in the basic plans or original standards.
Management information system (MIS)
Lucy, in her book management Information system define MIS as follows
a system to convert data form internal and external sources into information in an
appropriate form, to managers at all levels in all functions to enable them to make

155

timely and effective decision for planning, directing and controlling the activities for
which they are responsible.
The raw data are the basic facts and figures of operational life, such as output figures,
hours worked, etc. These data may be stored on manual or computer systems. In
themselves they may not have great meaning, taken together, and assembled together
into relevant groupings, the become information, which is basically data that have
been analyzed, summarized and interpreted for the benefit of potential users, in this
case managers. The MIS processes are the various procedures and methods used to
convert the data into useful information .
It is possible to identify four types of formal MIS which are useful to management
concerned with control at the tactical level. These are;
i)

Control systems- These monitor the organizations activities and report on

them eg production output, sales revenues etc

ii) Data base system these process and store information, which can be drawn
upon as a kind of organizational memory bank.
iii) Enquiry system these are either external or internal data bases for carrying
out investigations into the performance of departments, product lines,
competition etc.
iv) Decision support systems these are systems for providing computer based
facilities for conducting analyses, simulations etc
Control methods
There are two major methods that are used in control
a) Those that focus on financial values such as budgets
b) Those that focus on physical values such as quality control
Financial control methods
Budgets a budgets is a statement, usually expressed in financial terms, of the desired
performance of an organization in pursuit of its objectives in the short term (one year)
budgetary control takes the targets of desired performance as its standard then
systematically collates information relating to actual performance and identifies the
variances between target and actual performance.

156

Break-even analysis
Break-even point is the point of production and sales at which profit is equal to zero (or
TR= TC). A break even chart is a diagrammatic representation of breakeven point
Break-even charts are useful because they indicate the effects of marginal changes in
sales volume or costs on profit figures.
Ratios
Ratios are relationships of accounting figures. There are many types of ratios including
Profitability, liquidity, solvency, and efficiency ratios
Ratios provide useful summaries of relative efficiency, liquidity, profitability and
solvency measures.
Physical value control systems
There are several control systems used to control values. One of them is the quality
control. The control of quality rests on the assumption that is mass production no two
units are exactly identical, it but it is possible to mass produce almost identical units.

LECTURE 11
GLOBALIZATION
TOPICS
1.0 The meaning of Globalization
2.0 The benefits of globalization
3.0 The consequences of globalization
========================================
1.0 THE MEANING OF GOBALIZATION
Globalization is the trend of the world economy toward becoming a
more interdependent system. Time and distance collapses
1.1 Consequences of globalization
1) The rise of the global village and E Commerce

157

The rise of the global village has developed through

development of roads, railways, and sea and air
transport The development of communications,
telephone, television, and afterwards the internet and
the web
The above has led to the development of the Global
village and E commerce, Global village refers to
the shrinking of time and space as air travel and the
electronic media have made it easier for the people of
the globe to communicate with one another
E commerce or electronic commerce refers to the
buying and selling of products and services through the
computer networks
2) The rise of the global economy
The rise of the global economy started in the 1980s when the Berlin Wall
collapsed signaling the beginning of the end of communism in Eastern
Europe. It was also when countries of the Pacific Rim began to open up their
economies to foreign investors. Finally world governments started
deregulating their economies allowing goods, people and money to move
freely throughout the world. The Global Economy refers to the increasing
tendency of the economies of the world to interact with each other as one
market instead of many markets. The world today is characterized by
instantaneous information arriving via everything from currency trading data
bases to web sites to CNN broadcasts
3) The rise of both megamergers and mini firms
worldwide
The global economy driven by electronic information forces things to get
bigger and bigger. These megamerger companies lead to the production of
new technology that leads to lower production costs leading to mega
benefits for consumers
The internet and the World Wide Web allow almost anyone to be global. This
has two important results:
a) Small companies can get started more easily because
any one can put goods or services on a web site. This
wipes out the former competitive advantage of
158

distribution and scope that large companies used to

have
b) Small companies can maneuver faster.
Small
companies can change direction faster which gives
them an advantage over large companies
The consequences for this is increased competition in both local and
international markets that requires new techniques of managing
organizations
1.3 Why learn about international management
International management is the management that oversees the conduct
of operations in or with organizations in foreign countries whether it is
through a multinational corporation or a multinational organization
A multinational corporation is business firm with operations in several
countries
A multinational organization is a nonprofit organization with operations in
several countries eg the World Health Organization (WHO), the
International Committee of the Red Cross (ICR) etc
As a manager in any of those organization or firms you may need to deal
with any of the following situations
a) You may deal with foreign customers or partners
b) You may deal with foreign suppliers
c) You may work for a foreign firm in Kenya
d) You may work for a Kenyan company in another country
or you may also work for a foreign company in another
company
As a manager in those four situations you can have any of the following
three attitudes: ethnocentric, polycentric or geocentric. Ethnocentric
managers believe that their native country culture, language, and
behavior are superior to all others. Ethnocentricism might also be
referred to as parochialism that is a narrow view in which people see
things solely from their own perspective
Polycentric managers take the view that native managers in the foreign
country best understand native personnel, and practices and so the home
office should leave them lone
Geocentric managers accept that there are differences and similarities
between home and foreign personnel and practices and that they should
use whatever techniques that are most effective

159

The lesson is clear if you are a manger managing a foreign or a local

firm in a foreign country it is imperative that you try to learn
everything you can about the local culture so that you can deal with it
and avoid being beaten by your customers.
1.4 Why companies expand internationally
Companies expand internationally for the following reasons
i)
Availability of supplies Companies need to go
where supplies of their raw materials are eg mining,
bananas, sellers of hardwood
ii)
New markets Makers of some products may find
that domestic markets for their products have
declined while demand of their products in foreign
markets are their eg cigarette manufacturers
iii)
Lower costs When labour costs are lower in other
countries manufacturing firms may opt to set up
manufacturing subsidiaries in those countries
iv)
Access to finance capital Sometimes companies
may be enticed into going abroad by the prospects of
capital being cheaper in those countries, or
sometimes a foreign government will offer a subsidy
in hopes of attracting a company that will create jobs
v)
Avoidance of tariffs and import quotas To avoid
tariffs a company might create a subsidiary firm to
produce the product in a foreign country
1.5 How companies expand internationally
Most companies do not start as multinationals. Generally they edge their
way into international business through the following ways:
i)
Global out sourcing
Out sourcing is defined as using suppliers outside
the company to provide goods and services. Global
outsourcing (or simply global sourcing or off
shoring) is defined as using suppliers outside Kenya
to provide labour, goods or services. The reasons for
this are:
The foreign supplier may have resources not
available in Kenya
160

 The supplier may have special expertise

The suppliers labour costs are lower than the
Kenyan company
ii) Importing The company buys goods outside the
country and resells them in Kenya
iii) Exporting
The company produces goods
domestically and sells them outside the country
iv) Counter trading Exchanging goods for goods
v) Licensing In licensing , a company allows a foreign
company to pay it a fee to make or distribute the first
companys products or service
vi) Franchising. Franchising is a form of licensing in
which a company allows a foreign company to pay it
a fee and a share of the profit in return for using the
first companys brand name and a package of
materials and services
vii) Joint Ventures A joint venture is a strategic alliance
with a foreign company to share the risks and
rewards of starting a new enterprise in a foreign
country. In other words the two form a strategic
alliance. A strategic alliance is when two
organizations join forces to realize a strategic
advantage that neither would realize if operating
alone
viii) Wholly owned subsidiaries. A wholly owned
subsidiary is a foreign subsidiary that is totally
owned and controlled by an organization. The foreign
subsidiary may be an existing company that is
purchased outright. A Greenfield venture is a
foreign subsidiary that the owning organization has
built from scratch
1.6

Economic and Political Legal differences

As an international manager you may have to operate in many types of

economic and political legal complexities
161

Principal Economic Systems

i)
Free market Economic systems In free market
economies the production of goods and services is
owned and controlled by the private enterprise and
the interaction of the forces of supply and demand
rather than by the government
ii) Command Economy This is the kind of economy
found in China and North Korea. In these types of
economies governments own and control most
businesses and regulates the amounts, types, and
prices of goods and services
iii) Mixed Economy. In a mixed economy most of the
important industries are owned by the government
but others are controlled by the private enterprise
iv) Developed versus Less Developed Countries
Developed countries are those with a high level of
economic development and generally with high
average level of income among their citizens. Less
developed countries also known as developing
countries consist of nations with low economic
development and low average incomes
As a manager deciding to invest in those deferent types of economies or
managing therein, you need to be cognizant of the various factors
including infrastructure and exchange rates. A countrys infrastructure
consists of the physical facilities that form the basis of that countrys level
of economic development. Examples are schools, hospitals, roads,
airports, railroads, harbors, utilities, and telecommunication system.
The exchange rate is the rate at which one countrys currency can be
exchanged for anther countrys currency. International managers need to
keep a close eye on currency exchange rates because a change of just a few
percentage points can have major implications
1.7 Political Legal Differences
Democratic versus Totalitarian
1. Democratic governments rely on free elections and
representative
assemblies.
The
government
is

162

supposed to represent the society as a whole or at least

the majority of citizens
2. Totalitarian governments are ruled by a dictator, a
single political party or a special membership group
such as a handful of ruling families or family or a
military junta (such as Cuba or Syria. The risk for you as
an international manager is that the political tides may
change very quickly and any programs you have might
be fail
Political risk is the risk that political changes wil cause a loss of a
companys assets or impair its operations. The following two political risks
face a business organization trying to do business abroad
a) Instability These are changes that are likely to occur in
policies, rules and regulations
b) Expropriation is defined a governments seizure of a
foreign companys assets
1.8 Cultural Dimensions
A nations culture is the shared set of beliefs values, knowledge and patterns
of behavior common to a group of people say a nation. And because a
culture is made up of so many things visitors to another country experience a
culture shock- the feelings of discomfort and disorientation associated with
being in an unfamiliar culture. According to anthropologists, culture
involves anxiety, and doubt caused by an overload of unfamiliar
expectations and social cues
Misunderstandings and miscommunications often arise in international
business relationships because people dont understand the expectations of
the other side
1.8.1 Holstedes model of Four cultural Dimensions
In the 1970s Greet Halsted collected data from 116,000 IBM employees in
53 countries and proposed four dimensions along which national cultures
can be placed 1) individualism/ collectivism 2) Power distance 3)
uncertainty avoidance and 4) masculinity/ femininity
1) Individualism/ collectivism how loosely or tightly are
people socially bonded Individualism indicates a
preference for loosely knit social network in which

163

people are expected to take care of themselves.

Collectivism indicates a preference for a tightly knit
social framework in which people and organizations are
expected to look after each other. Individualism is said
to be in China and Mexico and collectivism is said to be
in Sweden and Norway
2) Power Distance How much do people accept
inequality in power? Power distance refers to the
degree to which people accept inequality in social
situations High power distance occurs in Mexico, India
while low power distance occurs in Sweden and Norway
3) Uncertainty avoidance How strongly do people desire
certainty? High certainty avoidance means people feel
uncomfortable with uncertainty and support believes
that promise certainty and conformity. Low uncertainty
avoidance means that people have high tolerance for
the uncertain and ambiguous. Japan, Greece, and
France are very high in uncertainty avoidance while
USA and Jamaica are very low in uncertainty avoidance
4) Masculinity/ femininity how much do people
embrace stereotypical male or female traits?
Masculinity expresses how much people value
performance oriented masculine traits such as
achievements, assertiveness, and material success.
Femininity expresses how much people embrace
relationship
oriented
feminine
traits
such
as
cooperation, and group decision making. Sweden,
Norway and Denmark are said to be high on femininity
while Japan, Mexico, and Germany are said to be high
on masculinity.
1.8.2 The implications for cultural differences for international
management is that knowing and responding to cultural tendencies can
give one a competitive advantage
=====================================================

164

DSM 501 MANAGEMENT PRACTICE

CASE ANALYSIS
1. What is a case
A case is a written description of an enterprise (such as a business, an industry, a
hospital etc). A case usually contains information about numerous facts of an
enterprise, its history, external environment, and internal operations. Cases are usually
based on material gathered about real organizations.
2. Do cases have enough information
No. there is no such a thing as a complete case study. The amount of information
required would make the case too long. In reality the manager never has enough
information because some information is not available, some is not at this time, or
acquiring some kind of information is too costly. So with cases one must work with
the information given, and make some reasonable assumptions. Then the analyst can
determine what the crucial factors are that confront management at the time. Acting
on incomplete knowledge is the essence of the general managers task.
3. Is all the case information important
At work, managers are bombarded with information, which is a mixture of the
relevant, the partially relevant, and the useless; so it is with cases. Indeed, cases may
have too much information. It is the work of the analyst who is training to be a
manager to do the managers job to separate the wheat from the chaff. Sometimes
the chaff is even more than wheat.
4. Why are cases used in management training
Case studies train a manager to learn by doing. Cases are intended to stimulate the
reality of a managers job. The material in a case provides the data for analysis and
decision-making. The cases are the material you use in applying what you have
learned about how to be an effective manager. Each case is a framework for a
learning experience that goes far beyond the case facts. The discussion of the case
particularly stimulates the emotional atmosphere in which managers must operate.
Cases require one to analyze situations. Make decisions about the situations
presented, and defend those decisions to your peers/ lecturer. In real decision making,
you will need to persuade your peers and superiors that your analysis and solutions
are the best, and so communication and human relations skills are vital to success in
management. Cases provide one with an opportunity to improve these skills too.
However, cases are simplified reality. In real situations, the manager collects the
information, selects the relevant information for analysis and the solution, therefore,

165

managers face situations which are much more complicated while doing their job. In
addition poor case analysis means loss of marks. In real life one loses of a job.

5. The case preparation process

Step I:
Read the case and identify the relevant facts/problems and
situations. Jot them down. Put the case aside for a while.
Step II
Read the case again. This time clearly understand the facts,
problems and propose solutions.
Step II
Make a draft report of summary, proposed solutions, evaluation
and recommendations.
Step IV
Look again at the suggested solutions. Evaluate each one of them
on some criteria
Step V
Clarify how your organization can implement your suggested
solutions.
Step VI
Revaluate your report with a view to preparing a final report.
Step VII
Prepare notes for oral presentation.
6. Principles of case presentation and analysis
i)
Introduce your topic
ii)
Avoid repetition
iii)
Present material clearly and confidently
iv)
Propose alternatives
v)
Evaluate alternatives
vi)
Select best alternative.
7. Does a case have one best solution
No. The right answer is the one presented and logically defended by the analyst.
Therefore, the quality of a case analysis depends on the way the analyst has presented
the material in a logical, rational, complete manner. The logic, rationality and
completeness, however depends on the facts of the case.
8. Purpose of the case analysis
The purpose of case analysis is to diagnose and size up the situation described in the
case and then recommend appropriate action plan. The case analysis enables the
would be managers / or actual managers to face real life situations in which to
practice with actual problems of actual managers in actual companies. It is an
exercise in learning by doing. Case analysis exposes students to different problems of
different companies and situations and boosts students analytical skills and exposes
students to the ways companies and managers actually do things. Cases help
substitute for on job experience by

166

Giving the student exposure to a variety of industries, organizations and

problems.
Forcing the student to assume a managerial role (as opposed to that of just an
onlooker).
Provides a test of how to apply the tools and techniques learned in
management theory.
Asks the student to come up with pragmatic management action plans to deal
with issues at hand.

9. Specific objectives of case analysis

Using case to learn helps the student accomplish the following:
i)
Increase his / or her understanding of what managers should and
should not do in guiding a business to success.
ii)
Build your skills in sizing up company resources, strengths and
weaknesses and conducting analysis of a variety of industries and
competitive situations.
iii)
Get a valuable practice in identifying issues that need to be addressed,
evaluating alternatives, and formulating workable plans of action.
iv)
Enhance your sense of business judgment, as opposed to uncritically
accepting the alternative presentation of others in class, and in
management.
v)
Gaining an in depth exposure of difficult industries and companies.
Thereby acquiring something close to actual business experience.
The purpose of a case therefore is to enhance a students skills in sizing up a situation and
developing his / her managerial judgment about what needs to be done and how to do it.
It enables the student to think actively, offer an analysis of a situation, propose action
plans and explain and defend his / her assessment.
Another thing about case analysis is that there is no one correct way to solve a problem.
There are nearly always several feasible courses of action and approaches.
10.
Preparing a case for class presentation
Step I
read through quickly for familiarization.
Step II
read the case a second time. In this step, try to get full command of the
facts
Step II
study all the exhibits carefully. In most cases, exhibits contain crucial
information that will affect the diagnosis of the situation.
Step IV
decide what the major issues of the case are
Step V
start your analysis of the issues by analyzing some numbers. This could be
a growth rate, ratios,
Step VI
use the management tools or techniques relevant to the problems in the
case.
Step VII
support your diagnosis and opinions with reasons and evidence. Reasons
come from the case, or from your knowledge of the industry.
Step VIII
develop an appropriate action plan and set of recommendations.

167

As long as your analysis and recommendations have ample reasons, evidence and
arguments to support your views, you should not worry about your
rightness or wrongness
. In case analysis there is rarely just one approach or set of recommendations.
Managing companies and devising and implementing policies are not an exact science.
Of course there are some analyses and action plans that are better than others; but there is
nearly always more than one good way to analyze a situation; and more than one good
plan of action.
11 The ten commandments of case analysis
The following principles or guidelines are to be observed in written reports and oral
presentations.
i)
ii)
iii)
iv)
v)
vi)
vii)
viii)
ix)
x)

Read the case twice, once for an overview, and once to gain full
command of the facts, then take care to expose every one of the exhibits.
Make a list of the problems and issues that have to be confronted.
Do enough number crunching to discover the story told by the data
presented in the case.
Look for opportunities to apply the concepts and analytical tools you
have learned in the B.com or MBA program. Use only relevant concepts.
Be thorough in your diagnosis of the situation i.e. ensure that your
report coves all the relevant areas needed to be covered.
Support any and all opinions with well reasoned arguments and
numerical evidence. Avoid using the words I think, I feel, and instead use my
analysis shows.
Develop charts, tables and graphs to expose more clearly the main
points of your analysis.
Prioritize your recommendations and make sure they can be carried
out in an acceptable time frame with the available skills and financial resources.
Review your recommended action plan to see if it addresses all the
problems and issues you identified.
Avoid recommending any course of action that could have disastrous
consequences if it doesnt work out as planned; therefore be as alert to the
downside risks of your recommendations, as you are to their upside potential and
appeals

12 CONTENTS OF A CASE ANALYSIS

A case analysis should contain the following paragraphs in a logical and full manner:
Summary This is the summary of the case and should contain the key information
contained in the case.
Key issues This chapter should contain the major problems or issues that need to be
addressed by management. Only the issues reported in the case or those which can
directly or logically be discerned from the case should be identified.
Evaluation of the key issues This chapter or paragraphs discusses the key issues
identified above showing how important they are and explaining how they should be
tackled

168

Prioritization of the key issues In this part of the report the manager prioritizes the
issues discussed in the previous paragraph in terms of such factors as cost, urgency
etc. The criteria for prioritization should be indicated
Propose and evaluate alternative ways of dealing with the key issues. In this
paragraph propose and evaluate alternative ways of dealing with the key issues before
you make a recommendation for the optimum alternative.
Select the optimum solution Here the manager or student should identify with
reasons the option that would be best for the company to take given the circumstances
given in the case,
Describe and propose an implementation program of the solutions proposed in
the previous paragraph
=============== END==========================

169