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ORGANIZATIONAL BEHAVIOUR
BLOCK 1 ORGANIZATIONAL STRUCTURE AND PROCESSES

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Organizational Behavior Organizational Structure and Processes

Block 1 Organizational Structure and Processes

Unit 1- Organisational Structure and Design: Introduction, rganisational Structure, The Organizational Process, Types of Organisational Structure, Factors Affecting Organisational Structure, Organisation Design, Key Concepts. Unit 2- Motivation: Introduction, Objectives of Directing Motivation, Meaning of Motivation, Nature of Motivation, Process of Motivation, Importance of Motivation, Maslows Needs Hierarchy, McGregers Theory X and Theory Y, Herzbergs Motivation Hygiene Theory. Unit 3- Organisational Change: Introduction, Motivation, Change Management, Levels Of Resistance, Elements for Change, Struggle for Change, Various Aspects Of Resistance, Types Of Resistance, Overcoming Resistance, Goals For Change, Affects of Change, Restructuring Organisations, Organisational Health. Unit 4- Decision Making Process: Decision-Making Process, Deterministic versus Probabilistic Models, Group Decision Making, The Rational Decision-Making Model, Types of Decisions.

Unit 1 Organisational Structure and Design 2 Unit 2 Motivation 21 Unit 3 Organisational Change 38 Unit 4 Decision Making Process 60

Unit 1 Organisational Structure and Design

Structure 1.1 Introduction 1.2 Organisational Structure 1.3 The Organizational Process 1.4 Types of Organisational Structure 1.5 Factors Affecting Organisational Structure 1.6 Organisation Design 1.7 Key Concepts 1.8 Summary 1.9 Answer To Questions _____________________________________________________________________

1.1 Introduction
Every organisation made up of more than one person will need some form of organisational structure. An organisational chart shows the way in which the chain of command works within the organisation. The right organizational structure can play an important role in an organization's evolution. This chapter introduces the elements of organizational structure. Objectives At the end of this unit, you will be able to: Define Organisation Structure Explain the Organisational Process List the types of structure Describe Organisational Design

1.2 Organisational Structure

Other organisations will have different structures. For example most organisations will have a marketing department responsible for market research and marketing planning. A customer services department will look after customer requirements. A human resources department will be responsible for recruitment and selection of new employees, employee motivation and a range of other people focused activities. In addition there will be a number of cross-functional areas such as administration and Information Technology departments that service the functional areas of the company. These departments will provide back up support and training. Organisational structure refers to the way tasks are divided up, how the work flows, how this flow is coordinated and the forces and mechanisms that allow this coordination to occur. Organisations are structured in different ways: by function as described above by regional area - a geographical structure e.g. with a marketing manager North, marketing manager South etc by product e.g. marketing manager crisps, marketing manager drinks, etc into work teams, etc.

1.3 The Organizational Process

Organizing, like planning, must be a carefully worked out and applied process. This process involves determining what work is needed to accomplish the goal, assigning those tasks to individuals, and arranging those individuals in a decision-making framework (organizational structure). The end result of the organizing process is an organization a whole consisting of unified parts acting in harmony to execute tasks to achieve goals, both effectively and efficiently. A properly implemented organizing process should result in a work environment where all team members are aware of their responsibilities. If the organizing process is not conducted well, the results may yield confusion, frustration, loss of efficiency, and limited effectiveness. In general, the organizational process consists of five steps

Review plans and objectives. Objectives are the specific activities that must be completed to achieve goals. Plans shape the activities needed to reach those goals. Managers must examine plans initially and continue to do so as plans change and new goals are developed.

Determine the work activities necessary to accomplish objectives. Although this task may seem overwhelming to some managers, it doesn't need to be. Managers simply list and analyze all the tasks that need to be accomplished in order to reach organizational goals. Classify and group the necessary work activities into manageable units. A manager can group activities based on four models of departmentalization: functional, geographical, product, and customer. Assign activities and delegate authority. Managers assign the defined work activities to specific individuals. Also, they give each individual the authority (right) to carry out the assigned tasks. Design a hierarchy of relationships. A manager should determine the vertical (decision-making) and horizontal (coordinating) relationships of the organization as a whole. Next, using the organizational chart, a manager should diagram the relationships.

Check your progress 1. Define Organisational Structure _____________________________________________________________________________________________________________________________________________________

2. Explain the Organisational Process _____________________________________________________________________________________________________________________________________________________

1.4 Types of Organisational Structure

An organisations structure is often presented as an organisational chart which will show how management is organised vertically with layers of hierarchy and horizontally by function, product or division. The chart will make clear who is responsible for what, who is responsible to who and who to go to with problems and queries.

Above: A Traditional Hierarchical Organizational Structure Managers must make choices about how to group people together to perform their work. Five common approaches functional, divisional, matrix, team, and networkinghelp managers determine departmental groupings (grouping of positions into departments). The five structures are basic organizational structures, which are then adapted to an organization's needs. All five approaches combine varying elements of mechanistic and organic structures. For example, the organizational design trend today incorporates a minimum of bureaucratic features and displays more features of the organic design with a decentralized authority structure, fewer rules and procedures, and so on. Functional structure The functional structure groups positions into work units based on similar activities, skills, expertise, and resources (see Figure 1 for a functional organizational chart). Production, marketing, finance, and human resources are common groupings within a functional structure.

As the simplest approach, a functional structure features well-defined channels of communication and authority/responsibility relationships. Not only can this structure improve productivity by minimizing duplication of personnel and equipment, but it also makes employees comfortable and simplifies training as well. But the functional structure has many downsides that may make it inappropriate for some organizations. Here are a few examples: The functional structure can result in narrowed perspectives because of the separateness of different department work groups. Managers may have a hard time relating to marketing, for example, which is often in an entirely different grouping. As a result, anticipating or reacting to changing consumer needs may be difficult. In addition, reduced cooperation and communication may occur. Decisions and communication are slow to take place because of the many layers of hierarchy. Authority is more centralized. The functional structure gives managers experience in only one fieldtheir own. Managers do not have the opportunity to see how all the firm's departments work together and understand their interrelationships and interdependence. In the long run, this specialization results in executives with narrow backgrounds and little training handling top management duties. Divisional structure

Because managers in large companies may have difficulty keeping track of all their company's products and activities, specialized departments may develop. These departments are divided according to their organizational outputs. Examples include departments created to distinguish among production, customer service, and geographical categories. This grouping of departments is called divisional structure (see Figure 2 ). These departments allow managers to better focus their resources and results. Divisional structure also makes performance easier to monitor. As a result, this structure is flexible and responsive to change.

However, divisional structure does have its drawbacks. Because managers are so specialized, they may waste time duplicating each other's activities and resources. In addition, competition among divisions may develop due to limited resources.

Matrix structure The matrix structure combines functional specialization with the focus of divisional structure (see Figure 3 ). This structure uses permanent cross-functional teams to integrate functional expertise with a divisional focus.

Employees in a matrix structure belong to at least two formal groups at the same timea functional group and a product, program, or project team. They also report to two bossesone within the functional group and the other within the team. This structure not only increases employee motivation, but it also allows technical and general management training across functional areas as well. Potential advantages include Better cooperation and problem solving. Increased flexibility. Better customer service. Better performance accountability. Improved strategic management. Predictably, the matrix structure also has potential disadvantages. Here are a few of this structure's drawbacks: The two-boss system is susceptible to power struggles, as functional supervisors and team leaders vie with one another to exercise authority. Members of the matrix may suffer task confusion when taking orders from more than one boss. Teams may develop strong team loyalties that cause a loss of focus on larger organization goals. Adding the team leaders, a crucial component, to a matrix structure can result in increased costs. Team structure Team structure organizes separate functions into a group based on one overall objective (see Figure 4 ). These cross-functional teams are composed of members from different departments who work together as needed to solve problems and explore opportunities. The intent is to break down functional barriers among departments and create a more effective relationship for solving ongoing problems.

The team structure has many potential advantages, including the following: Intradepartmental barriers break down. Decision-making and response times speed up. Employees are motivated. Levels of managers are eliminated. Administrative costs are lowered. The disadvantages include: Conflicting loyalties among team members.

Time-management issues. Increased time spent in meetings. Managers must be aware that how well team members work together often depends on the quality of interpersonal relations, group dynamics, and their team management abilities. Network structure The network structure relies on other organizations to perform critical functions on a contractual basis (See Figure 5). In other words, managers can contract out specific work to specialists.

This approach provides flexibility and reduces overhead because the size of staff and operations can be reduced. On the other hand, the network structure may result in unpredictability of supply and lack of control because managers are relying on contractual workers to perform important work.

Check your progress 3. What are the various types of organizational structure _____________________________________________________________________________________________________________________________________________________ _____________________________________________________________________________________________________________________________________________________

1.5 Factors Affecting Organisational Structure

Several factors influence the choice of structure: a) Organizational size The larger an organization becomes, the more complicated its structure. When an organization is small such as a single retail store, a two-person consulting firm, or a restaurant its structure can be simple. b) Organization life cycle Organizations, like humans, tend to progress through stages known as a life cycle. Like humans, most organizations go through the following four stages: birth, youth, midlife, and maturity. Each stage has characteristics that have implications for the structure of the firm. Birth: In the birth state, a firm is just beginning. An organization in the birth stage does not yet have a formal structure. In a young organization, there is not much delegation of authority. The founder usually calls the shots. Youth: In this phase, the organization is trying to grow. The emphasis in this stage is on becoming larger. The company shifts its attention from the wishes of the founder to the wishes of the customer. The organization becomes more organic in structure during this phase. It is during this phase that the formal structure is designed, and some delegation of authority occurs. Midlife: This phase occurs when the organization has achieved a high level of success. An organization in midlife is larger, with a more complex and increasingly formal structure. More levels appear in the chain of command, and the founder may have difficulty remaining in control. As the organization becomes older, it may also become more mechanistic in structure. Maturity: Once a firm has reached the maturity phase, it tends to become less innovative, less interested in expanding, and more interested in maintaining itself in a stable, secure environment. The emphasis is on improving efficiency and profitability. However, in an attempt to improve efficiency and profitability, the firm often tends to become less innovative. Stale products result in sales declines and reduced profitability. Organizations in this stage are slowly dying. However, maturity is not an inevitable stage. Firms experiencing the decline of maturity may institute the changes necessary to revitalize. c) Strategy How an organization is going to position itself in the market in terms of its product is considered its strategy. A company may decide to be always the first on the market with the newest and best product (differentiation strategy), or it may decide that it will produce a product already on the market more efficiently and more cost effectively (cost-leadership strategy). Each of these strategies requires a structure that helps the organization reach its objectives. In other words, the structure must fit the strategy. d) Environment The environment is the world in which the organization operates, and includes conditions that influence the organization such as economic, social-cultural, legalpolitical, technological, and natural environment conditions. Environments are often described as either stable or dynamic. In a stable environment, the customers' desires are well understood and probably will remain consistent for a relatively long time. Examples of organizations that face relatively stable environments include manufacturers of staple items such as detergent, cleaning supplies, and paper products. In a dynamic environment, the customers' desires are continuously changingthe opposite of a stable environment. This condition is often thought of as turbulent. In addition, the technology that a company uses while in this environment may need to be continuously improved and updated. An example of an

industry functioning in a dynamic environment is electronics. Technology changes create competitive pressures for all electronics industries, because as technology changes, so do the desires of consumers. e) Technology Advances in technology are the most frequent cause of change in organizations since they generally result in greater efficiency and lower costs for the firm. Technology is the way tasks are accomplished using tools, equipment, techniques, and human know-how. Small-batch production is used to manufacture a variety of custom, made-to-order goods. Each item is made somewhat differently to meet a customer's specifications. A print shop is an example of a business that uses small-batch production. Mass production is used to create a large number of uniform goods in an assembly-line system. Workers are highly dependent on one another, as the product passes from stage to stage until completion. Equipment may be sophisticated, and workers often follow detailed instructions while performing simplified jobs. A company that bottles soda pop is an example of an organization that utilizes mass production. Organizations using continuous-process production create goods by continuously feeding raw materials, such as liquid, solids, and gases, through a highly automated system. Such systems are equipment intensive, but can often be operated by a relatively small labor force. Classic examples are automated chemical plants and oil refineries. f) Employee skills: Matrix structures are particularly suited to organisations where the employee skill level is high. g) Leadership style: If the owners of a business wish to keep as much control over their business as possible there will be a narrow span of control whereas those who wish to motivate their teams may delegate decision-making to others and therefore have a wider span of control. h) Business objectives: If a company decides to expand quickly, through a merger or acquisition, the span of control will become much wider. i) External factors: A recession may cause the need to cut back and make many roles redundant. This can result in layers of management being taken out of the business reducing the chain if command and making the organisation much flatter.

Check your progress 4. State the factors affecting organizational structure _____________________________________________________________________________________________________________________________________________________ _____________________________________________________________________________________________________________________________________________________

1.6 Organisation Design

An organization's structure is defined by its configuration and interrelationships of positions and departments. Organizational design is the creation or change of an organization's structure. The organizational design of a company reflects its efforts to respond to changes, integrate new elements, ensure collaboration, and allow flexibility. Organizing a business is difficult. Once an organization has a plan, the next step is to make it happen. The major characteristics of organizational structure is, in many ways, like the important parts of a jigsaw puzzleyou pick them out, one by one. In particular, the two basic forms of organizational structure are mechanistic and organic.

1.7 Key Concepts

Take note of the following key concepts as you work through the reading: a) Departmentalization The process of divinding an organiztion into different working units is called departmentalization. Departmentalization can be done on the following basis Functional - production, finance Products- consumer products, industrial products Customers- civilian, military Regions or territory- North, South Divisional - Time, process b) Span of Control Span of control is the term for the number of subordinate employees directly accountable to a manager. The larger the number of employees a manager controls the wider is his span of control. Narrow span: The manager controls six or fewer employees. There is close supervision of the employees, tight control and fast communication. However, the supervision can be too close, the narrow span means that there are many levels of management, resulting in a possibly excessive distance between the top and the bottom of an organisation. Wide span: The manager controls more than six employees. Managers are forced to delegate work, and tasks may be less closely supervised. There are possible problems with the overloading of work and with loss of control. However, there are fewer levels of management. c) Downsizing and Restructuring In a business enterprise, downsizing is reducing the number of employees on the operating payroll. Some users distinguish downsizing from a layoff , with downsizing intended to be a permanent downscaling and a layoff intended to be a temporary downscaling in which employees may later be rehired. Businesses use several techniques in downsizing, including providing incentives to take early retirement and transfer to subsidiary companies, but the most common technique is to simply terminate the employment of a certain number of people. Rightsizing is downsizing in the belief that an enterprise really should operate with fewer people. Dumb sizing is downsizing that, in retrospect, failed to achieve the desired effect. Corporate restructuring is necessary when a company needs to improve its efficiency and profitability and it requires expert corporate management. A corporate restructuring strategy involves the dismantling and rebuilding of areas within an organization that need special attention from the management and CEO.

The process of corporate restructuring often occurs after buy-outs, corporate acquisitions, takeovers or bankruptcy. It can involve a significant movement of an organizations liabilities or assets. d) Centralisation versus Decentralisation. Centralisation is the process by which the activities of an organization, particularly those regarding decision-making, become concentrated within a particular location and/or group. Decentralisation is where the decision making responsibility is given to more operational managers, lower down the organisation. Advantages of Centralised Structure Advantages of Decentralised Structure For Organisations For Organisations Senior managers enjoy greater control Senior managers have time to over the organisation. concentrate on the most important decisions (as the other decisions can be undertaken by other people down the organisation structure. The use of standardised procedures can Decision making is a form of results in cost savings. empowerment. Empowerment can increase motivation and therefore mean that staff output increases. Decisions can be made to benefit the organisations as a whole. Whereas a decision made by a department manager may benefit their department, but disadvantage other departments. People lower down the chain have a greater understanding of the environment they work in and the people (customers and colleagues) that they interact with. This knowledge skills and experience may enable them to make more effective decisions than senior managers.

The organisation can benefit from the Empowerment will enable departments decision making of experienced senior and their employees to respond faster to managers. changes and new challenges. Whereas it may take senior managers longer to appreciate that business needs have changed. In uncertain times the organisation will Empowerment makes it easier for people need strong leadership and pull in the to accept and make a success of more same direction. It is believed that strong responsibility leadership is often best given from above.

Check your progress 5. What is organizational Design? Explain its key concepts _____________________________________________________________________________________________________________________________________________________ _____________________________________________________________________________________________________________________________________________________

Self assessment Questions 1. Describe Centralisation versus Decentralisation. _____________________________________________________________________________________________________________________________________________________ 2. What is Departmentalization? _____________________________________________________________________________________________________________________________________________________ 3. Explain Traditional Hierarchical Organizational Structure. _____________________________________________________________________________________________________________________________________________________ 4. Explain Organization Life Cycle. _____________________________________________________________________________________________________________________________________________________

1.8 Summary
The working relationships vertical and horizontal associations between individuals and groups that exist within an organization affect how its activities are accomplished and coordinated. Effective organizing depends on the mastery of several important concepts: work specialization, chain of command, authority, delegation, span of control, and centralization versus decentralization.

1.9 Answer To Questions

1. 2. 3. 4. 5. See Section See Section See Section See Section See Section 1.2 1.3 1.4 1.5 1.6, 1.7

Reference: www.ebsglobal.net/programmes/organisational-behaviour www.freemba.in/substream.php?stcode=3& =Organisational_Behaviour Organisational Behaviour: Concepts, Controversies and Applications by Stephen P. Robbins - 1997 Organisational behaviour: individuals, groups and organisation by Ian Brooks - 2006 - 336 pages Previous ed.: 2003.

Unit 2 - Motivation
Structure 2.1 Introduction 2.2 Objectives of Directing - Motivation 2.3 Meaning of Motivation 2.4 Nature of Motivation 2.5 Process of Motivation 2.6 Importance of Motivation 2.7 Maslows Needs Hierarchy 2.8 McGregers Theory X and Theory Y 2.9 Herzbergs Motivation Hygiene Theory 2.10 Summary 2.11 Answer to Questions

2.1 Introduction In this unit we will understand the use of motivation in management context. Motivation is an integral part of direction. No organization can perform its optimum without self motivated employees. Since motivation influences productivity, supervisors need to understand what motivates employees to reach peak performance. It is not an easy task to increase employee motivation because employees respond in different ways to their jobs and their organization's practices. Every organization is derived through this element. This important step can profoundly affect an organisation's success.

2.2 Objectives of Directing Motivation

Selection, training, evaluation and discipline cannot guarantee a high level of employee performance. Motivation, the inner force that directs employee behaviour, also plays an important role. Highly motivated people perform better than unmotivated people. Motivation covers up ability and skill deficiencies in employees. Such truisms about motivation leave employers wanting to be surrounded by highly motivated people but unequipped to motivate their employees. Employers and supervisors want easily applied motivation models but such models are unavailable. Motivation probably tops the list of complex activities with which labour managers deal. Their intuition suggests an easy answer, "I want everyone around here to be motivated." They often blame employees for their lack of motivation and performance problems. Employees on the other hand often blame any performance problems they may have on external factors - their supervisors, equipment, training, co-workers, weather, unrealistic demands made on them, pressures at home, lack of recognition etc., etc. Despite the conflicting perceptions held by employers and employees, employers must deal with employee motivation.

2.3 Meaning of Motivation

The term motivation has been derived from the word motive. A motive is an inner state that activates energies or moves an individual and channelises his behaviour towards goals. It reflects an impulse, drive or urge to move in a specific direction to reduce a need. Motives and needs are initiating and sustaining. Drives are what move individuals to satisfy needs, while goals are the ends towards which behaviour is governed by a myriad of needs which stem from human motives. Motivation is the art of understanding this motives and satisfying them to direct and sustain behaviour towards the accomplishment of organizational goals. Motivation is the set of processes that moves a person toward a goal. Thus, motivated behaviours are voluntary choices controlled by the individual employee. The supervisor (motivator) wants to influence the factors that motivate employees to higher levels of productivity. Factors that affect work motivation include individual differences, job characteristics, and organizational practices. Individual differences are the personal needs, values, and attitudes, interests and abilities that people bring to their jobs. Job characteristics are the aspects of the position that determine its limitations and challenges. Organizational practices are the rules, human resources policies, managerial practices, and rewards systems of an organization. Supervisors must consider how these factors interact to affect employee job performance.

2.4 Nature of Motivation

The fore going definitions highlight the following characteristics of motivation: Motivation is a psychological concept. It is concerned with the intrinsic forces operating within an individual which impels him to act or not to act in a particular way. A motive is a personal and internal feeling. Motivation is a continuous and dynamic process as it deals with human beings which are an ever changing entity modifying itself every moment. Human needs are unlimited and go on changing continuously. People must at all times be provided with the stimulus to work because the satisfaction of one need gives rise to another need. Motivation is a complex and difficult function. In order to motivate people, a manager must understand satisfying mutiliplicity of human needs. But needs are mental feelings which cannot be described and measured accurately. They are vague and have to be deduced from external behaviour of human beings. Moreover, needs are basically subjective. Every person adopts a different approach to satisfy his needs and one particular need may cause different behaviour on the part of different people. Human needs are inter-connected and inseparable and it is not possible to divide them into water-tight compartments. Motivation is a circular process. Motivation is the result of an interaction between human needs and the incentives offered to satisfy them. Motivation is different from satisfaction. Motivation is the process of stimulating an individual or a group to take desired action. In other words, motivation is the drive towards an outcome where as satisfaction refers to the outcome performed by a person. Motivation is the product of anticipated values from a given course of action and the perceived probability that the action will lead to these values. The anticipated value is known as valence and it reflects the strength of a persons preference for an outcome in relation to others. The perceived probability is called expectancy and it refers to the strength of belief that a particular action will result in the desired outcome.

Check your progress 1. What is motivation? Explain nature of motivation _____________________________________________________________________________________________________________________________________________________

2.5 Process of Motivation

Three ways of looking at motivation are: needs, rewards and effort. The needs approach stems from the notion that peoples' unsatisfied needs drive their behaviour. Figure out a person's needs, satisfy the needs and the person will be motivated. For example, a person with a high need to satisfy goals is motivated by production targets. The rewards approach is based on the expectation that rewarded behaviour is repeated. Giving a person a bonus for excellent performance during a difficult harvest period encourages the person to make a special effort during the next difficult harvest. The effort approach to motivation is based on the expectation that effort brings the worker what he or she wants.

The most effective motivation for employees comes from within each employee, i.e., self-motivation. Possible indicators of self-motivation include: past accomplishments in school, sports, organizations and work; stated career goals and other kinds of goals; expertise in one or more areas that shows evidence of craftsmanship, pride in knowledge and abilities, and self-confidence; an evident desire to continue to learn; and a general enthusiasm for life. Threats, bribery, manipulation and coercion have only limited usefulness beyond the very short-run in changing behaviour in the farm environment. More effective employer action responds to employee needs, making their work useful to satisfying their needs, helping employees understand the relationship between their contribution to success of the farm and rewards received, and creating an atmosphere of equity and fairness.

2.6 Importance of Motivation

Motivation is an important part of managing process. A team of highly qualified and motivated employee is necessary for achieving objectives of an organisation. It is only through motivation process, they contribute maximum for accomplishing objectives. Without motivation, they may not have an urge to maintain or improve their efficiency. Importance of motivation in management may be judged on the basis of the following factors: 1. Effective use of resources: In business, all physical resources should be used through human force. Effective and efficient use of these resources depends upon the ability and readiness of work force. Thus team of highly motivated employees greatly help in making optimum use of available resources for achieving objectives. 2. Higher efficiency: Motivation is directly related to the level of efficiency. Highly motivated employees make full use of their energy and other abilities to raise the existing level of efficiency. They produce more as compared to other employees. 3. Accomplishment of organizational goals: The process of motivation helps in shaping the working behaviour of the employees and making it desirable for achieving objectives. Highly motivated employees would make goal directed efforts. They are more committed and cooperative for seeking organizational goals. 4. Reduced labour turnover and absenteeism: Highly motivated employees are the most important and valuable assets to the organisation. They are more loyal and sincere therefore they remain punctual and regular in their work schedule and prefer to stay on the job for longer period of time. These factors help in reducing absenteeism and labour turnover. 5. Healthy industrial relations: Motivation is considered as a backbone of good industrial relation. Effectively motivated employers get more satisfaction and carry high morale which makes them more disciplined. In such a situation, the possibilities of under trail disputes and unrest are reduced to minimum and industrial relation gets improved. 6. Improved corporate image: Motivation also helps in improving image of organisation. If employees are motivated, they produce more, they maintain self disciplined productive internal environment in the organisation ultimately gives better impression to the outsiders dealing with the organization and its image is enhanced.

Check your progress 2. Explain process of motivation _____________________________________________________________________________________________________________________________________________________

3. What is the importance of motivation? _____________________________________________________________________________________________________________________________________________________

2.7 Maslows Needs Hierarchy

Maslow's Hierarchy of Needs identifies five levels of needs, which are best seen as a hierarchy with the most basic need emerging first and the most sophisticated need last. People move up the hierarchy one level at a time. Gratified needs lose their strength and the next level of needs is activated. As basic or lower-level needs are satisfied, higher-level needs become operative. A satisfied need is not a motivator. The most powerful employee need is the one that has not been satisfied. Abraham Maslow first presented the five-tier hierarchy. Level I - Physiological needs are the most basic human needs. They include food, water, and comfort. The organization helps to satisfy employees' physiological needs by a pay cheque. Level II - Safety needs are the desires for security and stability, to feel safe from harm. The organization helps to satisfy employees' safety needs by benefits. Level III - Social needs are the desires for affiliation. They include friendship and belonging. The organization helps to satisfy employees' social needs through sports teams, parties, and celebrations. The supervisor can help fulfil social needs by showing direct care and concern for employees. Level IV - Esteem needs are the desires for self-respect and respect or recognition from others. The organization helps to satisfy employees' esteem needs by matching the skills and abilities of the employee to the job. The supervisor can help fulfil esteem needs by showing workers that their work is appreciated. Level V - Self-actualization needs are the desires for self-fulfilment and the realization of the individual's full potential. The supervisor can help fulfil self-actualization needs by assigning tasks that challenge employees' minds while drawing on their aptitude and training.

2.8 McGregers Theory X and Theory Y

Douglas McGregor in his book, "The Human Side of Enterprise" published in 1960 has examined theories on behaviour of individuals at work, and he has formulated two models which he calls Theory X and Theory Y. Theory X Assumptions The average human being has an inherent dislike of work and will avoid it if he can. 1. Because of their dislike for work, most people must be controlled and threatened before they will work hard enough. 2. The average human prefers to be directed, dislikes responsibility, is unambiguous, and desires security above everything. 3. These assumptions lie behind most organizational principles today, and give rise both to "tough" management with punishments and tight controls, and "soft" management which aims at harmony at work. 4. Both these are "wrong" because man needs more than financial rewards at work; he also needs some deeper higher order motivation - the opportunity to fulfil himself. 5. Theory X managers do not give their staff this opportunity so that the employees behave in the expected fashion. Theory Y Assumptions 1. The expenditure of physical and mental effort in work is as natural as play or rest. 2. Control and punishment are not the only ways to make people work, man will direct himself if he is committed to the aims of the organization. 3. 4. 5. 6. If a job is satisfying, then the result will be commitment to the organization. The average man learns, under proper conditions, not only to accept but to seek responsibility. Imagination, creativity, and ingenuity can be used to solve work problems by a large number of employees. Under the conditions of modern industrial life, the intellectual potentialities of the average man are only partially utilized.

Comments on Theory X and Theory Y Assumptions These assumptions are based on social science research which has been carried out, and demonstrate the potential which is present in man and which organizations should recognize in order to become more effective. McGregor sees these two theories as two quite separate attitudes. Theory Y is difficult to put into practice on the shop floor in large mass production operations, but it can be used initially in the managing of managers and professionals. In "The Human Side of Enterprise" McGregor shows how Theory Y affects the management of promotions and salaries and the development of effective managers. McGregor also sees Theory Y as conducive to participative problem solving. It is part of the manager's job to exercise authority, and there are cases in which this is the only method of achieving the desired results because subordinates do not agree that the ends are desirable. The situation in which employees can be consulted is one where the individuals are emotionally mature, and positively motivated towards their work; where the work is sufficiently responsible to allow for flexibility and where the employee can see her or his own position in the management hierarchy. If these conditions are present, managers will find that the participative approach to problem solving leads to much improved results compared with the alternative approach of handing out authoritarian orders. Once management becomes persuaded that it is under estimating the potential of its human resources, and accepts the knowledge given by social science researchers and displayed in Theory Y assumptions, then it can invest time, money and effort in developing improved applications of the theory. McGregor realizes that some of the theories he has put forward are unrealizable in practice, but wants managers to put into operation the basic assumption that: Staff will contribute more to the organization if they are treated as responsible and valued employees. Check your progress 4. What is Maslows hierarchy of needs?

5. Explain McGregers Theory X and Theory Y _____________________________________________________________________________________________________________________________________________________

2.9 Herzbergs Motivation Hygiene Theory

Frederick Herzberg, contributed to human relations and motivation two theories of motivation as follows: Hygiene Theory Motivation Herzbergs' first component in his approach to motivation theory involves what are known as the hygiene factors and includes the work and organizational environment. These hygiene factors include: The organization Its policies and its administration The kind of supervision (leadership and management, including perceptions) which people receive while on the job Working conditions (including ergonomics) Interpersonal relations Salary Status Job security These factors do not lead to higher levels of motivation but without them there is dissatisfaction. The second component in Herzbergs' motivation theory involves what people actually do on the job and should be engineered into the jobs employees do in order to develop intrinsic motivation with the workforce. The motivators are Achievement Recognition Growth / advancement Interest in the job These factors result from internal instincts in employees, yielding motivation rather than movement. Both these approaches (hygiene and motivation) must be done simultaneously. Treat people as best you can so they have a minimum of dissatisfaction. Use people so they get achievement, recognition for achievement, interest, and responsibility and they can grow and advance in their work. Therefore, the hygiene and motivation factors can be listed as follows: Hygiene factors Company policies and administration Supervision Working conditions and interpersonal relations Salary, status and security Motivators Achievement Recognition for achievement Interest in the task Responsibility for enlarged task Growth and advancement to higher level tasks Effects on Individuals of Working Environment The working environment has an effect on individuals as follows: It will provide at least sufficient for his basic needs and often much more. For example, 50 years ago in the United Kingdom, food and shelter were a person's basic needs. Today, most families will consider that the basic needs also include a car, television, overseas holiday, etc. It may or may not provide adequate security. Again, most individuals seek a secure job, there are others including some men on oil rigs, who seek high pay for a limited period but with limited security.

It provides an individual with an identity. As a member of an organization, he carries out a specific function. It also gives the worker comradeship, freedom from boredom, and an interest during his working life. It also provides self-fulfilment for individual where consideration has been given to ensure that the job is creative and gives job satisfaction. It provides the individual with status. There is a status in all jobs. Providing the job content is investigated to make the work more interesting. Effects on Work Groups of Working Environment Rensis Likert has already described how the various management styles in an organization can affect the groups in an organization. Whilst the working environment will affect individuals, it will undoubtedly have a greater effect on working groups, since whilst an individual may have certain needs, he will not obtain those needs if the working environment does not provide the needs of the working group. The working group is the instrument of society through which in large measure the individual acquires his attitudes, opinions, goals and ideals; it is also one of the fundamental sources of discipline and social controls. Therefore, the working environment has an effect on groups as follows: It will affect the morale of the group. It will determine whether the group achieves the objectives set by the organization. It It It It will will will will determine whether the degree of cooperation provided by the group motivate the group to give of their best. determine whether the human relations within an organization are good or bad. also affect the relations between management and trade unions.

Check your progress 6. Explain Herzbergs Motivation Hygiene Theory ______________________________________________________________ _____________________________________________________________________________________________________________________________________________________

Self assessment Questions 1. How working environment affects the work groups in the organization? _____________________________________________________________________________________________________________________________________________________ 2. Explain objectives of motivation. _____________________________________________________________________________________________________________________________________________________

3. Explain the Hygiene factors of Hertzbergs Theory. _____________________________________________________________________________________________________________________________________________________

2.10 Summary
This unit emphasized on motivation and it different shades. The only way you can find out what truly motivates your staff is: Asking your employees what motivates them Monitoring the changes in work levels as a result of your motivational philosophy Once you know what makes your employees tick you can formulate a management style which will assist to motivate your staff. For many employers or managers this task is simple, but for many it has been continuous learning process.

2.11 Answer to Questions

See Section See Section See Section See Section See Section See Section 2.3 and 2.4 2.5 2.6 2.7 2.8 2.9

Reference: www.ebsglobal.net/programmes/organisational-behaviour www.nwlink.com/~donclark/leader/leadob.html www.freemba.in/substream.php?stcode=3& =Organisational_Behaviour Organisational Behaviour: Concepts, Controversies and Applications by Stephen P. Robbins - 1997 Organisational behaviour: individuals, groups and organisation by Ian Brooks - 2006 - 336 pages Previous ed.: 2003.

Unit 3 Organisational Change

Structure 3.1 Introduction 3.2 Motivation 3.3 Change Management 3.4 Levels Of Resistance 3.5 Elements for Change 3.6 Struggle for Change 3.7 Various Aspects Of Resistance 3.8 Types Of Resistance 3.9 Overcoming Resistance 3.10 Goals For Change 3.11 Affects of Change 3.12 Restructuring Organisations 3.13 Organisational Health 3.14 Summary 3.15 Answer To Questions ______________________________________________________________

3.1 Introduction
In a knowledge-powered environment it is an organisations ability to successfully cope with change that gives it a competitive edge. Objectives At the end of this unit, you will be able to: Define Change management List the elements of change State the types of resistance Define Restructuring organisations

3.2 Motivation
Critical to success is the ability to motivate employees with people-friendly HR policies and bring synergies in individual and organisational goals. Motivation means different things to different employees. Money is often the biggest motivator, more so at lower levels in an organisations hierarchy. For some, chances of moving ahead in a chosen career, and reaching positions of power and influence are major motivators. Motivation helps to achieve goals, gain a positive perspective and build self-esteem and capability. Demotivators Employees feel demotivated because of inadequate infrastructure, outdated equipment and entrenched attitudes amongst others. Motivators An improved rewards and recognition system More interesting work More efficient bosses Greater participation and challenges More opportunities for development They can be ascertained through performance appraisals, informal conversations, and attitude surveys. It is however crucial to cultivate a climate of honesty, openness and trust. On the job Convey concern: Convey to employees the organisations concerns and intention. Extend support: Make the staff understand the levels of support they can expect from the organisation. Earn respect: Earn respect by setting an example. Cash, low on the list: Studies reveal that cash incentives and fringe benefits motivate new employees more than existing employees. Focus on individual growth: Consider policies and incentives that positively affect work, promotion, reward and recognition, effective participation, and employee involvement.

3.3 Change Management

Feedback is one of the most valuable elements in the motivation cycle. An organisation will do well to constantly feel the pulse of employees as it transits through the trauma of change. Understanding Resistance Resistance is the reaction towards the unknown that unsettles one from a predictable and comfort zone. It is a force that slows or stops movement. In fact, the reaction to resistance hinders change often leading to arguments, opposition and threats. Little wonder that nearly two-thirds of all major changes in organisations fail.

3.4 Levels Of Resistance

Level 1 - Information stage Resistance at this stage comes from: 1. Lack of information 2. Disagreement with the idea itself 3. Lack of exposure 4. Confusion Level 2 - Reactions to change At this stage, emotional and physiological reactions to change prevail. Blood pressure rises, adrenaline flows, pulse increases and one is fearful that he will lose face, friends or job. Resistance may come from fear over a perceived: 1. Loss of power, control, status or respect 2. Feeling of incompetence or isolation 3. Sense that they can't take on anything else (too much change) Level 3 - Bigger than the current change This is the domain of cultural, religious and racial differences. In other words, people may not resist the idea itself but whom you represent or because of their relationship with you. They often wonder why the other group can't see reality as it is. Resistance at this level may come from: Personal history of mistrust Significant disagreement over values Transference. The person being resisted represents someone else such as a mother or father or some significant member. The challenge of resistance comes from the fact that all change is limited to Level 1 or the information stage. If taken a bit farther, this may help accept change easier and better.

Check your progress 1. What is Change Management? _____________________________________________________________________________________________________________________________________________________ 2. State various levels of resistance for change _____________________________________________________________________________________________________________________________________________________

3.5 Elements for Change

Change an Omnipresent entity in our lives! It is constant, everywhere and also accelerating. The only way to cope up with this whirlwind is to adapt to it. In fact, adaptability is inherent to human nature and with our very first breath; we learn to adapt, a continuous process for the rest of our lives, each hour bringing in a new change. Likewise, change is an also an integral part of organisational growth and essential for its survival. The question here, however, is not whether to change but when and how it can be brought in successfully. Ironically, man, whose second nature is adaptability resists changes in work environment and of course sometimes at home too. Thus to manage and implement change fruitfully, is a crucial matter. Managers need to be equipped with their most logical arguments and persuasive skills to support it. To be able to handle such situations, it is pertinent to know the nature of and responses to work changes. Nature of work change It can be defined as any alteration that occurs in the work environment. Change, immaterial of which part in the organisation is undergoing it, effects the whole organisation. It demands that employees make dramatic adjustments either directly or indirectly. Thus it is a human as well as a technical problem. A word of caution, though, to the staunch advocates of change, repeated changes might lead to pressures that cause a breakdown in the organisation. Organisations achieve a state of equilibrium, i.e., a balance between opposing forces. In such a state people coexist, perform their jobs and know what to expect next. When changes harbour in, employees are required to readjust. If they fail to do so, the organisation becomes unbalanced and attains disequilibrium. This leads to chaos in the system and the managers are faced with the daunting task of handling this unsavoury situation. The manager dons two roles in such situations- proactive and reactive. He introduces changes- anticipates events, initiates change and takes control of the organisations destiny- a proactive role. Apart from this, he has to restore and maintain the equilibrium that the change upsets. Here the manager assumes a reactive role wherein he responds to events, adapts to change and deals with the consequences of change. Change is of two types- minor and major. The daily changes are predictable and come under the minor category, where the employees need not make drastic adjustments. The equilibrium, in such situations is reached readily. Major changes like hostile takeovers, buyouts and subsequent organisational restructuring, reengineering, naturals disaster like oil spills and gas leaks, take a longer time to reach a new equilibrium. The onus is on the managers to guide the employees through the emotional shock that usually accompanies such changes. Responses to change A fact evident in any organisation that brought in changes time and again is that there can never be a direct adjustment to change. It develops through each employees attitude to respond to change and interpreted according to his or her attitudes. In other words, the way a person feels about change determines how he responds to it. These feelings are again a result of personal history and work environment. Personal history includes biological processes, background and social experiences away from home. Work environment reflects how a group reacts to codes, patterns and norms.

Another kind of response that is also observed in matters of change is the group response. People belonging to a group show their attachment by joining in a uniformed response to change. This response may sometimes result in walkouts, strikes and demands. Basically, they respond in a we are all in this together attitude. The group also tries to maintain equilibrium in an attempt to return to its normal life. This results in a counter pressure within the group, which is a self-correcting measure. Such self-correcting measures to restore balance whenever change comes in are called homeostasis. Footnote Changes come in with some costs, which are not just economic, but also are psychological and social. Economic: Costs associated with change need to be analysed. The cost-benefit should be considerable and the benefits should always be greater than the costs. Psychological: These costs are also referred to as psychic costs as change affects the inner self or psyche of the employee. Costs of this nature can be debilitating as they may also affect the physical health of the employee.

Check your progress 3. Explain elements of change management _____________________________________________________________________________________________________________________________________________________

3.6 Struggle for Change

People are often at the centre of change, an undeniable fact. Another fact to be comprehended is that they also resist change, especially in an organisation. Resistance to work by an employee may manifest as discredit, delay or prevent the implementation of a work change. Employees feel the need to resist as they feel it is a threat to their security, social interaction, status, competence or sometimes self-esteem. However, resistance is a positive attribute. It provides stability and predictability to an organisations behaviour and if it were not for resistance, OB would assume a confused uncertainty. It can also be a source of functional conflict. The negative side of the coin is that resistance hinders adaptation and progression. Resistance can either be obvious, immediate, hidden or deferred. Of all these, hidden resistance is dangerous as it leads to loss of motivation and loyalty, increased errors and absenteeism. Hidden resistance can surface after weeks, months or sometimes years later and this is precisely why it could be dangerous. All the above-cited reasons make one inquisitive as to the various aspects of resistance.

3.7 Various Aspects Of Resistance

Sources of resistance There are two sources for resistance- individual and organisational. Each has its own reasons for resistance. Individual resistance: This is within people and stem out from our perceptions, personalities and needs. There are five reasons for this kind of resistance: Habit: Man is a creature of habit and to cope up with the various complexities, he relies on habit. Thus when confronted with change, he tends to resist it. Security: People perceive change as a threat to their security. Economic factors: Common assumption is that change may lower the pay cheques. A change in ones own routine task leads to fear of not being able to perform the new task efficiently. Uncertainty: Change substitutes unknown to known. Selective perception: People hear what they want to hear and perceive what they want to. They ignore the information that challenges the world they have created. Organisational resistance: All organisations actively resist change and the evidence is all around you. There are eight major sources of organisational resistance: Structural inertia: There are in-built mechanisms of stability in every organisation. For example, the process of recruitment, wherein applicants are hired and trained to fit into the organisation is one such mechanism. When change sets in, namely outsourcing the hiring activity to a consultant it is this structural inertia that counterbalances to sustain stability. Limited focus of change: Change in one subsystem of an organisation affects other subsystems, too. Group inertia: Even if individuals are ready to accept change, group norms prevent them from accepting it. Threat to expertise: Organisations have specialised groups, which perform tasks with their expertise. Change is often perceived as threat to such expertise. Threat to power: Change in the decision-making authority is a threat to long-established supervisors and middle managers. Threat to resource allocations: There are groups in an organisation, which control resources. Change is perceived as a threat to such groups in the reallocation of budgets. Change politics: People rise to higher positions by developing skills and behavioural patterns favoured by the organisation. Change is a serious threat to their status and position and to top it all, they are expected to implement it. Indifference of senior management: Many senior managers give their verbal support to change, but lack in response when it comes to resources, time and personal involvement.

3.8 Types Of Resistance

There are three types of resistance to change which work in combination to produce an employees attitude toward change. Logical resistance It stems from disagreement with the facts, rational reasoning, logic and science. It arises from the actual time and effort required to adjust to change, which are the actual costs borne by the employees. Psychological resistance This is based on emotions, sentiments and attitudes. It is the internal logic of the employee, which is very real to the employee. Sociological resistance It is a product of a challenge to group interest, norms and values. There are political coalitions, labour union laws and communal values to be comprehended with.

3.9 Overcoming Resistance

There are six tactical moves that help in overcoming resistance. Education and communication Give the employees full details and clear any misunderstanding or misinformation disseminated. It can be achieved through one-to-one discussions, memos, group presentations or reports. Participation The employees who are going to be affected by change should be allowed to participate in the decision-making process. Individuals who participate in the decision to change are the ones unlikely to resist. Facilitation and support Make supportive efforts to reduce resistance. Employee counselling therapy, new-skills training or a short period of leave may facilitate adjustment. Negotiation This is necessary when resistance comes from a powerful source. A specific reward package always helps in coping up in such situations. Manipulation and cooperation Twist and distort facts to make them attractive, withhold undesirable information and create false rumours, so that employees get manipulated to accept the change. Co-opt the leaders of resistance group to take an active role in the process of change. Coercion Application of force or direct threats upon the resisters is the last of tactics. Threats of transfer, loss of promotions, negative performance appraisal and a poor letter of recommendation are examples of coercion. Benefits of resistance As said earlier, resistance is not bad. It may encourage management to re-examine the proposals. Employees can successfully discourage careless management decisions. It can help identify specific problem areas where a change is likely to cause difficulties. This enables the management to take corrective measures. Management is encouraged to communicate better so that the employees are more susceptible to change. Apart from these there are varied psychological advantages such as realising the intensity of employees emotions on the issue and venting employees feelings. Agents of Change Change is essential and we learn to accept it, eventually. However, why or how change is brought about is what intrigues most of us. Change is of two kinds- those that just happen and the other is, which are planned. Change should not be treated as an accidental occurrence. Visualise it as proactive and purposeful, intentional and goal-oriented activity, which happens in the case of planned change.

Check your progress 4. What are various aspects of resistance? _____________________________________________________________________________________________________________________________________________________

5. State the types of resistance _____________________________________________________________________________________________________________________________________________________

6. How would you overcome resistance? _____________________________________________________________________________________________________________________________________________________

3.10 Goals For Change

Seeks improvement in organisation's adaptability to changes in its environment. Seeks change in the employee behaviour.

Who is responsible? Change agents are primarily responsible for any change within the organisation. Can be managers or non-managers, employees or outside consultants. The most favoured are outsiders who can challenge the organisation's conventional wisdom. Doubtless to say, outsiders offer objective perspective than the insiders, but are handicapped with inadequate understanding of the organisation, its history, culture, operating procedures and personnel. Thus it is advisable also to have an internal champion for the change program to succeed. Traits of the change agent Promote change actively and enthusiastically. Build support for change within the organisation. Overcome resistance. Innovative. Self-confident. Persistent. Energetic. Willing to take a risk.

3.11 Affects of Change

It affects structure, technology, physical setting and people. Structure Changing conditions demand organisational structural changes and the change agent needs to comply with it. Structural changes involve making alterations in authority relations, coordination mechanisms, job design or similar structural variables. Organisational structure defined in terms of its degree of complexity, formalisation and centralisation is a prime target for change. For instance a horizontal organisation may undergo a drastic change in order to become a flat organisation. Actual structural design can also be modified. Redesigning of jobs or schedules, job descriptions redefined, jobs enriched or introduction of flexible work hours are all part of change options that an agent may consider. Technology Civilisation is in a constant flux as far as technology is concerned. Automation, computerisation and introduction of new equipment, tools or methods are the major technological changes that mankind has experienced in the 20th century. Automation is a technological change that replaces men with machines. Industries that are affected by automation in India are the automobile and textile areas. Maruti Udyog and Hindustan Motors are examples in automobile industry where automation changed the face of the organisation. Likewise, Mafatlal and Arvind Mills, giants in textile industries brought in sweeping changes through automation. Computerisation, the most important technological change of this century, changed the face of every organisation. Supermarkets with computerised checkout counters, Internet, the information provider with the click of a button, and the magic wand of computerisation touched many other fields. Physical setting Whatever changes happen to the physical setting, they do not have any impact on organisational or individual performance. Change in physical setting typifies changes to the workspace layout, taking into consideration work demands, formal interaction requirements and social needs. People Change has the greatest impact on people. Change agents have the crucial responsibility of helping individuals and groups to work more effectively on the eve of change. This involves changing the attitudes and behaviours of organisational members through processes of communication, decision-making and problem solving. The critical question now is how does one go about implementing change in organisations and why at times change fails miserably.

3.12 Restructuring Organisations

Organisations today in the competitive world have no option but change. However, change should not be restricted to a unit or a functional group but must trickle down from the CEO to the shop floor employee. New wave restructuring exemplifies a commitment to change. Restructuring must be implemented after careful thought and consideration, since it affects communication, organisational structure as well as recruitment and retention. Basic concepts underlying restructuring Focus on tangible and significant change Change is not merely day-to-day adjustments. It has a trickle down effect. At every level, employees must learn to adapt. Restructuring efforts must encompass changes designed to help the organisation refocus, evolve and adapt. The senior management must be proactive and focus on tangible, significant change to surmount both internal and external business challenges. Establish a unifying theme Every change initiated, must be integrated with the organisations goal. Employees must be able to visualise the end through the progressive series of integrated changes. Internal and external efforts need to be harnessed effectively, to translate into smaller goals, wherein employees consider "what is in it for me ". The message will be passed on effectively only if the communications channels are unclogged and grapevine used effectively Actions to be taken Communications must be detailed enough to give employees a clear understanding of their part in the larger framework of restructuring. Performances targets, tasks, and expectations of employees and employers should be clearly defined. The success of any restructuring programme rests on involvement.

Effective Execution Implementation requires time and concerted effort across the organisation. Deadlines must be met while restructuring, and managers must be made accountable. Effective execution communicates a sense of decisiveness and commitment. The restructuring is sustainable only if it enables changes in compensation, new skill requirements, career path and expectations. Organisations can effectively implement change by using New wave restructuring to retain their competitive edge.

Check your progress 7. What are the affects of change? _____________________________________________________________________________________________________________________________________________________

3.13 Organisational Health

Organisational health is the latest buzzword in business circles. This involves corporate culture, commitment, ethics, employee morale and organisational stress. In healthy organisations, managers find committed and loyal employees with high morale. In other words, healthy organisations are those, where people like to come to work and are proud to be a part of. Diagnosing ill health A checklist of symptoms: Declining profits and productivity Increasing absenteeism Decision-making by the top management Disregard for organisational reputation and ethical behaviour Low employee morale and motivation Barriers to communication Lack of commitment and trust among employees, goal setting, mentoring and development programmes Assessing health This assesses employee perceptions and includes critical examination of eleven organisational dimensions: Communication: Adequate communication typifies a healthy organisation. Facilitating communication among co-workers and between managers and subordinates is essential. The communication process needs to be friendly, two-way and across all levels of the organisation. Apart from written documents, personal interactions need to be encouraged. Participation and involvement: Employees at all levels should be involved in decision-making process. Employee ownership in decisions aids efficient implementation of measures. Commitment: Trust cultivates organisational health. A sense of pride among employees about the place of work results in commitment. This, in turn, leads to a willingness to attend work-related meetings. Morale: Employee morale is reflected in the friendly atmosphere where employees interact with each other, both professionally and personally. This gives them enough motivation to perform their jobs enthusiastically. Organisational reputation: Positive reputation of the organisation is a reflection of organisational health. Employee involvement in improving relationships with the community is critical for such reputation. Ethics: A positive ethical behaviour can be facilitated by an employee-developed code of ethics. This would create value to "character" and remove unwanted "politics" from the organisation. Performance recognition: When employees are encouraged and supported to attain their potential, they feel valued and appreciated. Goal alignment: Departmental goals are usually achieved in a healthy organisation. Employees can identify the focus of their departments and set the goals accordingly. Leadership: Leaders have well perceived working relationships with people at the top, peers and subordinates. They are generally friendly and approachable and contribute significantly to organisational health. Development: Employee development is an essential component of organisational health. Formal development and training programmes are mandatory. Accordingly, planning, execution and participation need to be facilitated. Resource utilisation: Appropriate use of resources is a measure for organisational health. Employee perception about shared resources results in goal achievement. Managers well trained to assess employee perception should be able to identify the specific areas that require improvement for optimal organisational health. This exercise enables employees to enjoy a healthy organisational environment and help the company to prosper. Corporate Sickness Anyone associated with a sick unit at some point of his career knows how it leads to frustration and a sense of helplessness. The problem is compounded by the fact that the malady could not be diagnosed in time. To do this effectively, one must begin with the symptoms. Next, the causes need to be identified and then a prescription recommended for putting the organisation back on its feet. Doctoring a corporate sickness The recovery process comprises a few steps: 1) Getting started 2) Assessing the extent of sickness 3) Choosing the right treatment and using it and 4) Periodic check-ups.

Getting started: As doctors do, an organisation first recognises the problem or symptoms that led to the decline in productivity, quality or market share, drop or disappearance of projects and increased absenteeism or turnover. Once such serious problems are observed, one has to decide the course of action and resources required to fix the problem. Often, for a quick fix, an organisation sends its members to attend seminars and host training programmes to address the problem. Nevertheless, since this doesn't address the root of the problem, the problem continues to persist. This leads to indifference. After a while, employees start expecting nothing from the management and cynicism sets in. For the best results, however, employees must implement recommendations made by the management or by outside resources. The external resource must necessarily be neutral, knowledgeable in team assessment and capable of giving guidance. Assess breadth of the problem and identify causes: Use surveys to determine the breadth and depth of your organisation's symptoms. The former can be divided into: Symptoms within just a few groups: These causes concern the goals, roles and relationships within a team. Intra and intra-group symptoms: Issues that cause negative effects between teams such as a disagreement over responsibilities, allocation of scarce resources and power conflicts are the focus of attention here. Pan-organisation symptoms: Such illnesses could be the result of organisational structure, compensation, management style, performance appraisal, and employee selection process, authority or communication patterns, among others. In fact, the more widespread the organisational sickness, the greater is the possibility of these being the causes. Choose treatments and use them Treating intra-group problems: If problems within a group exist, they can be treated by clarifying roles, setting goals, solving problems and training in small group skills. Treatments for inter-group problems: Peace can be restored within such groups by inter-group teambuilding, where members discuss their problems and arrive at a solution; establishing cross-functional teams to deal with "bridge" issues that cut across organisational lines. Treatments for changing organisation-wide, systems issues: These include changing the organisational structure to be more customer-based, changing market focus and the organisation's strategic plan, among others. Periodic evaluation Organisational health must be aligned with established measures of success, and checkups ought be conducted periodically. Change is an also an integral part of organisational growth and essential for its survival. The question here, however, is not whether to change but when and how it can be brought in successfully. Ironically, man, whose second nature is adaptability resists changes in work environment and of course sometimes at home too. Thus to manage and implement change fruitfully, is a crucial matter. Managers need to be equipped with their most logical arguments and persuasive skills to support it. To be able to handle such situations, it is pertinent to know the nature of and responses to work changes. Check your progress 8. Write a short note on Organisational Health

Self Assessment Questions 1. Define Goals for Change. _____________________________________________________________________________________________________________________________________________________ 2. Explain Corporate Sickness. _____________________________________________________________________________________________________________________________________________________

3. Describe Restructuring Organisations _____________________________________________________________________________________________________________________________________________________

4. How resistance is good for change? _____________________________________________________________________________________________________________________________________________________

3.14 Summary
Change is of two types- minor and major. The daily changes are predictable and come under the minor category, where the employees need not make drastic adjustments. The equilibrium, in such situations is reached readily. Major changes like hostile takeovers, buyouts and subsequent organisational restructuring, reengineering, naturals disaster like oil spills and gas leaks, take a longer time to reach a new equilibrium. The onus is on the managers to guide the employees through the emotional shock that usually accompanies such changes.

3.15 Answer To Questions

1. 2. 3. 4. 5. 6. See Section See Section See Section See Section See Section See Section 3.3 3.4 3.5 3.7 3.7 3.8

7. See Section 3.9 8. See Section 3.12 Reference: www.ebsglobal.net/programmes/organisational-behaviour www.freemba.in/substream.php?stcode=3& =Organisational_Behaviour Organisational Behaviour: Concepts, Controversies and Applications by Stephen P. Robbins - 1997 Organisational behaviour: individuals, groups and organisation by Ian Brooks - 2006 - 336 pages Previous ed.: 2003.

Unit 4 Decision Making Process

Structure 4.1 Introduction: Decision-Making Process 4.2 Factors Affecting Decision Making 4.3 Group Decision Making 4.4 Decision-Making Models 4.5 Types of Decisions 4.6 Summary 4.7 Answer To Questions ______________________________________________________________

4.1 Introduction: Decision-Making Process

Organisations, many a times have to make rational decisions unwillingly. The timing and aptness of these decisions determine the existence of the organisation. As people differ from one another so do their decision-making skills and styles. The decision-maker's style and characteristics can be classified as: The thinker, the cowboy (snap and uncompromising), Machiavellian (ends justifying the means), The historian (how others did it) The cautious. On a daily basis a manager makes many a decision. Some of these decisions are routine and inconsequential, while others have drastic impacts on the operations of the organisation. Some of these decisions impact the financial condition of the organisation. In our increasingly complex world, the task of decision-makers is becoming more challenging with each passing day. Objectives At the end of this unit, you will be able to: Define decision- making process Explain group decision making Describe rational decision making process A decision-maker must respond quickly to events in this fast-paced economy. In addition, he must sometimes incorporate, a bewildering array of choices and consequences into his decision. Routine decisions are often made quickly, perhaps unconsciously without a need for a detailed process of consideration. However, for more complex and important managerial decisions, it is necessary to take time to decide systematically. An effective model needs to be evolved by organisations to help managers make the right decision. The decision-making process involves the following steps: 1. 2. 3. 4. 5. 6. 7. Define the problem. Identify limiting factors. Develop potential alternatives. Analyze the alternatives. Select the best alternative. Implement the decision. Establish a control and evaluation system.

1. Define the problem The decision-making process begins when a manager identifies the real problem. The accurate definition of the problem affects all the steps that follow; if the problem is inaccurately defined, every step in the decision-making process will be based on an incorrect starting point. One way that a manager can help determine the true problem in a situation is by identifying the problem separately from its symptoms. The most obviously troubling situations found in an organization can usually be identified as symptoms of underlying problems. (See Table 1 for some examples of symptoms.) These symptoms all indicate that something is wrong with an organization, but they don't identify root causes. A successful manager doesn't just attack symptoms; he works to uncover the factors that cause these symptoms.

2. Identify limiting factors All managers want to make the best decisions. To do so, managers need to have the ideal resources information, time, personnel, equipment, and supplies and identify any limiting factors. Realistically, managers operate in an environment that normally doesn't provide ideal resources. For example, they may lack the proper budget or may not have the most accurate information or any extra time. So, they must choose to satisfice to make the best decision possible with the information, resources, and time available. 3. Develop potential alternatives Successful problem solving requires thorough examination of the challenge, and a quick answer may not result in a permanent solution. Thus, a manager should think through and investigate several alternative solutions to a single problem before making a quick decision. One of the best known methods for developing alternatives is through brainstorming, where a group works together to generate ideas and alternative solutions. The assumption behind brainstorming is that the group dynamic stimulates thinking one person's ideas, no matter how outrageous, can generate ideas from the others in the group. Ideally, this spawning of ideas is contagious, and before long, lots of suggestions and ideas flow. Brainstorming usually requires 30 minutes to an hour. 4. Analyze the alternatives The purpose of this step is to decide the relative merits of each idea. Managers must identify the advantages and disadvantages of each alternative solution before making a final decision. Evaluating the alternatives can be done in numerous ways. Here are a few possibilities: Determine the pros and cons of each alternative. Perform a cost-benefit analysis for each alternative. Weight each factor important in the decision, ranking each alternative relative to its ability to meet each factor, and then multiply by a probability factor to provide a final value for each alternative. Regardless of the method used, a manager needs to evaluate each alternative in terms of its Feasibility Can it be done? Effectiveness How well does it resolve the problem situation? Consequences What will be its costs (financial and nonfinancial) to the organization? 5. Select the best alternative After a manager has analyzed all the alternatives, she must decide on the best one. The best alternative is the one that produces the most advantages and the fewest serious disadvantages. Sometimes, the selection process can be fairly straightforward, such as the alternative with the most pros and fewest cons. Other times, the optimal solution is a combination of several alternatives. 6. Implement the decision Managers are paid to make decisions, but they are also paid to get results from these decisions. Positive results must follow decisions. Everyone involved with the decision must know his or her role in ensuring a successful outcome. To make certain that employees understand their roles, managers must thoughtfully devise programs, procedures, rules, or policies to help aid them in the problem-solving process. 7. Establish a control and evaluation system Ongoing actions need to be monitored. An evaluation system should provide feedback on how well the decision is being implemented, what the results are, and what adjustments are necessary to get the results that were intended when the solution was chosen. In order for a manager to evaluate his decision, he needs to gather information to determine its effectiveness. Was the original problem resolved? If not, is he closer to the desired situation than he was at the beginning of the decision-making process?

4.2 Factors Effecting Decision Making Process

Managers make problem-solving decisions under three different conditions: certainty, risk, and uncertainty. All managers make decisions under each condition, but risk and uncertainty are common to the more complex and unstructured problems faced by top managers. a) Certainty Decisions are made under the condition of certainty when the manager has perfect knowledge of all the information needed to make a decision. This condition is ideal for problem solving. The challenge is simply to study the alternatives and choose the best solution. When problems tend to arise on a regular basis, a manager may address them through standard or prepared responses called programmed decisions. These solutions are already available from past experiences and are appropriate for the problem at hand. A good example is the decision to reorder inventory automatically when stock falls below a determined level. Today, an increasing number of programmed decisions are being assisted or handled by computers using decision-support software. Structured problems are familiar, straightforward, and clear with respect to the information needed to resolve them. A manager can often anticipate these problems and plan to prevent or solve them. For example, personnel problems are common in regard to pay raises, promotions, vacation requests, and committee assignments, as examples. Proactive managers can plan processes for handling these complaints effectively before they even occur. b) Risk In a risk environment, the manager lacks complete information. This condition is more difficult. A manager may understand the problem and the alternatives, but has no guarantee how each solution will work. Risk is a fairly common decision condition for managers. When new and unfamiliar problems arise, nonprogrammed decisions are specifically tailored to the situations at hand. The information requirements for defining and resolving nonroutine problems are typically high. Although computer support may assist in information processing, the decision will most likely involve human judgment. Most problems faced by higher-level managers demand nonprogrammed decisions. This fact explains why the demands on a manager's conceptual skills

increase as he or she moves into higher levels of managerial responsibility. A crisis problem is an unexpected problem that can lead to disaster if it's not resolved quickly and appropriately. No organization can avoid crises, and the public is well aware of the immensity of corporate crises in the modern world. The Chernobyl nuclear plant explosion in the former Soviet Union and the Exxon Valdez spill of years past are a couple of sensational examples. Managers in more progressive organizations now anticipate that crises, unfortunately, will occur. These managers are installing early-warning crisis information systems and developing crisis management plans to deal with these situations in the best possible ways. c) Uncertainty When information is so poor that managers can't even assign probabilities to the likely outcomes of alternatives, the manager is making a decision in an uncertain environment. This condition is the most difficult for a manager. Decision making under conditions of uncertainty is like being a pioneer entering unexplored territory. Uncertainty forces managers to rely heavily on creativity in solving problems: It requires unique and often totally innovative alternatives to existing processes. Groups are frequently used for problem solving in such situations. In all cases, the responses to uncertainty depend greatly on intuition, educated guesses, and hunches all of which leave considerable room for error. These unstructured problems involve ambiguities and information deficiencies and often occur as new or unexpected situations. These problems are most often unanticipated and are addressed reactively as they occur. Unstructured problems require novel solutions. Proactive managers are sometimes able to get a jump on unstructured problems by realizing that a situation is susceptible to problems and then making contingency plans. For example, at the Vanguard Group, executives are tireless in their preparations for a variety of events that could disrupt their mutual fund business. Their biggest fear is an investor panic that overloads their customer service system during a major plunge in the bond or stock markets. In anticipation of this occurrence, the firm has trained accountants, lawyers, and fund managers to staff the telephones if needed.

Check your progress 1. List the steps involved in decision making process _____________________________________________________________________________________________________________________________________________________

4.3 Group Decision Making

The decision making process can be stressful for both the employee and the organisation. Group decision-making is even more complicated. Some employees see it as a form of power struggle, others cannot bear the idea of losing and yet others simply do not like to make decisions. There are several types of group decisions: 1. Unilateral - Decisions made by one person, often the nominal leader, without consultation with other group members. At times, it can be appropriate. For example, a minor decision that needs to be made right away. If it is repeated and inappropriate, this type of decision can result in very low group commitment. 2. Handclasp - Decisions made by two members. One suggests, the other endorses and carries it through without adequate discussion or group consideration. This type has high commitment for the two who made it, but generally not for the others. 3. Clique - Similar to the Handclasp but with more people involved. This type usually occurs when a close sub-group decides what is good for the rest of the group. Repeated clique decisions cause splintering of the group and low commitment. 4. Baiting A technique that reduces discussions around decisions. A person will say, "Now we have all agreed, right?!" and only the very brave will speak up. This usually suppresses obvious dissention and lowers group commitment. 5. Majority Rule - A popular way of making decisions. However, if the outcome of a secret ballot vote produces surprises, it is not always a good time to make majority rule decisions. This results in a sizeable segment of the group feeling devalued and decreases their commitment to the decisions in which they "lose" to the majority vote 6. Consensus - Similar to Majority Rule, yet nothing is a surpise. Each members is accquainted with the facts of the case..There is mutual agreement that, under circumstances, which may not be ideal, the decision made is a fair and workable. This elicits maximum support. Any type may prove effective under a given set of circumstances. However, it is obvious that the first five approaches are likely to reinforce the powerful in the group and create tension. Morale and membership commitment can be lowered. Since members possess the essential ingredients for the solutions to all problems, group decisions should be based on input from all the members.. Certainly, if the decisions are made by only a few people, it may not be necessary to involve an entire group. Though consensus is one of the best decision-making models, certain assets and liabilities of consensus decisions must be considered. Assets Of Group Consensus Approach: Greater sum total of knowledge and information Greater number of approaches to a problem Participation in problem solving increases acceptance Better comprehension of the decision Greater commitment of the members to the decision Liabilities Of Group Consensus Approach: Social Pressure - Minority opinions in groups can have little influence on the solution, even when these opinions are correct. Reaching an agreement in a group often is confused with finding the "right answer" Individual Domination - Skilled manipulators or dominant individuals can emerge and capture more than their share of influence on the outcome Conflicting Secondary Goal - People may aim at winning the argument at the cost of finding the best answer Risk Taking - The risk of not getting it their way, can prevent people from fully participating in the discussion Time - Listening and considering all points of view in order to arrive at the best solution takes time Liabilities Or Assets Depend Upon The Skills of The Discussion Leader A. Disagreement - Can serve either to create hard feelings among members or lead to a resolution of conflict and hence to innovative solutions

B. Conflicting individual interests vs. mutual interests C. More time may be needed to reach consensus D. One who has the greatest influence and can willingly change their opinions can reinforce the existing power structure and stifle uture member input and cooperation Group Consensus Guidelines DO: 1. Listen, not only to the words but also to the rationale being offered 2. Pursue, your point and be persistent if you have good information 3. Manage, your time effectively, relative to the number of decisions that are being made 4. Involve all team members to ensure the use of their knowledge and experience 5. Strive for the best answer. Thinking in cause-and-effect terms and avoid dealing only with symptoms DON'T: 1. Argue for the sake of arguing or winning your point. 2. Give up on your convictions simply to avoid conflict. Let objective reasoning or sound information prevail. 3. Allow the group to get stuck on a specific item-move on and come back later 4. Compete by assuming that some win and some lose. Look for the best alternative

Check your progress 2. What is group decision making model? _____________________________________________________________________________________________________________________________________________________

3. State the guidelines for group decision making _____________________________________________________________________________________________________________________________________________________

4.4 Decision-Making Models

Managerial decision making depends on many factors, including the ability to set priorities and time decisions correctly. However, the most important influence on managerial decision making is a manager's personal attributes or his or her own decision-making approach. The three most common decision models are as follows: a) Rational/Logical decision model This approach uses a step-by-step process, similar to the seven-step decision-making process. The rational/logical decision model focuses on facts and reasoning. Reliance is on the steps and decision tools, such as payback analysis, decision tree, and research. Through the use of quantitative techniques, rationality, and logic, the manager evaluates the alternatives and selects the best solution to the problem. b) Intuitive decision model The managers who use this approach avoid statistical analysis and logical processes. These managers are gut decision makers who rely on their feelings about a situation. This definition could easily lead one to believe that intuitive decision making is irrational or arbitrary. Although intuition refers to decision making without formal analysis or conscious reasoning, it is based on years of managerial practice and experience. These experienced managers identify alternatives quickly without conducting systematic analyses of alternatives and their consequences. When making a decision using intuition, the manager recognizes cues in the situation that are the same as or similar to those in previous situations that he or she has experienced; the cues help the manager to rapidly conduct subconscious analysis. Then a decision is made. c) Predisposed decision model A manager who decides on a solution and then gathers material to support the decision uses the predisposed decision model approach. Decision makers using this approach do not search out all possible alternatives. Rather, they identify and evaluate alternatives only until an acceptable decision is found. Having found a satisfactory alternative, the decision maker stops searching for additional solutions. Other, and potentially better, alternatives may exist, but will not be identified or considered because the first workable solution has been accepted. Therefore, only a fraction of the available alternatives may be considered due to the decision maker's information-processing limitations. A manager with this tendency is likely to ignore critical information and may face the same decision again later.

Check your progress 4. Explain types of decision making models _____________________________________________________________________________________________________________________________________________________ 5. State the types of decisions

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4.5 Types of Decisions

There are two major categories of decisions- programmed and non-programmed. Programmed decisions are stapled and tested formula for problems that recur repeatedly. Non-programmed decisions are responses to situations, which are unique and have not been encountered previously. Whether it works in teams, groups, councils or committees, an organisation employs five methods of decision-making. Employee acceptance of major business decisions is influenced by the method used. Some of them are: Autocratic decision-making: Here, one individual decides on behalf of an organisation or group. This method should be utilised only when a decision must be made quickly. If overused, employees will see their senior executive as being dictatorial and resent his decisions. Aristocratic decision-making: The senior executive, in consultation with those who report to him directly, takes decisions. Such decisions usually are supported only by the senior executive's inner circle. Democratic decision-making: An issue is put to vote and the one with the highest number of votes is implemented. This is a poor choice for companies, unless it is for a matter that does not significantly impact the business. Many employees may disagree with the decision, though not openly. Unanimous decision-making: This is possible if everyone agrees on the decision, though in real terms it is difficult to achieve and is seldom practiced. Consensus decision-making: This decision-making method allows the group to discuss the situation and all the possible outcomes of the problem before arriving at a decision. Here, everyone supports the decision that even if not their first choice, is in the best interests of the organisation. Implementation being faster and easier, this is one of the best forms of decision-making and makes participants feel that they were part of the decision process. As a result they actively support the decision. However, a group must define the situation and list all possible outcome decisions. Then, team members must gather information to present to the group while they debate its pros and cons in a nonjudgmental manner and arrive at the final decision. Though good business decisions are difficult to come by, the task is made less difficult when you choose the right mode of decision-making. Speed of Decisions The speed of corporate decision-making has undergone radical change with the advent of the Internet. Today it is possible to instantaneously access limitless data. This new decision-aiding capability however comes with a price - the need to make decisions rapidly. Kepner-Tregoe Inc. a managing consulting firm in US undertook a national survey on "Speed and Quality in Decision-Making". A total of 818 employees - 339 workers and 479 managers - participated in this survey. The survey explored the dynamic tension between speed and quality in decision-making. 1. During the past three years, the number of decisions made during a typical workday increased. However, the time taken to make each decision either decreased or remained the same. 2. Most of the respondents say they missed opportunities because they did not make decisions quickly enough. As to the frequency with which organisations promptly capitalise on opportunities, very few answered in the affirmative. 3. Only a quarter of the workers and less than a third of the managers admitted that their decision-making matches the competitive environment. Quality suffers when speed takes precedence in decision-making and this is usually in the areas of budgeting/financing, organisational restructuring, HR, customer service and quality/productivity. The reason is poor information sharing and failure to involve the right people. 4. The reasons for delays in decision-making are: 1. Multiple approvals 2. Organisational politics 3. Changing priorities 4. Consensus on the outcome of the decision 5. The areas where decision-making is driven by Information technology (IT) are: Budgeting/finance Purchasing Customer service Daily production management Quality/productivity HR Process improvement 6. Today's decision makers get information from virtual sources like, e-mail, the Internet, the World Wide Web and databases either developed in-house or customised by their organisations. The amount of information available for decision-makers has been on the rise and both the quantity and quality of information are commendable. This has led to increased confidence among decision makers. 7. The shift from real to virtual sources has a significant impact on the speed and quality of decision-making. However, approximately th of respondents also believed that there is no effect. Only one-third of respondents use artificial intelligence in decision-making and 12% to 13% believe it has increased the speed

and quality of their decisions. 8. Organisations do not have good decision-making memory. Most of them do not maintain a database of information about past decision-making either. 9. Organisations underwent significant technological changes to facilitate decision-making, especially across geographical borders. Workers and managers make decisions with people from different locations or shifts on a regular basis. The management provided them with e-mail, teleconferencing and videoconferencing to enable teams from various geographical locations to work together effectively. In today's digital world, conducting business "at the speed of thought" is not just a catchphrase but also an unconditional imperative. However, there are limits to speed, even with the aid of technology. This is more evident in business organisations, where decisions have affected the bottom line.

Check your progress 6. What are various types of decisions? _____________________________________________________________________________________________________________________________________________________ 7. How would you explain the speed of decision making?

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Self Assessment Questions 1. Define Decision-Making Process. _____________________________________________________________________________________________________________________________________________________ 2. Explain the factors Effecting Decision Making Process. _____________________________________________________________________________________________________________________________________________________

3. Write the Dos and dont of Group-decision making process. _____________________________________________________________________________________________________________________________________________________ 4. What is Aristocratic decision-making?

4.6 Summary
Decision making is the study of identifying and choosing alternatives based on the values and preferences of the decision maker. Making a decision implies that there are alternative choices to be considered, and in such a case we want not only to identify as many of these alternatives as possible but to choose the one that (1) has the highest probability of success or effectiveness and (2) best fits with our goals, desires, lifestyle, values, and so on.

4.7 Answer To Questions

1. See Section 4.2 2. 3. 4. 5. See Section See Section See Section See Section 4.3 4.3 4.4 4.4

6. See Section 4.5 7. See Section 4.5 Reference: www.ebsglobal.net/programmes/organisational-behaviour www.nwlink.com/~donclark/leader/leadob.html www.freemba.in/substream.php?stcode=3& =Organisational_Behaviour Organisational Behaviour: Concepts, Controversies and Applications by Stephen P. Robbins - 1997 Organisational behaviour: individuals, groups and organisation by Ian Brooks - 2006 - 336 pages Previous ed.: 2003.