BMOM5203 Organisation and Business Management - Sept12 PDF

STUDY GUIDE BMOM5203 Organisation and Business Management
CENTRE FOR GRADUATE STUDIES
STUDY GUIDE
BMOM5203
Organisation and Business
Management
Writer: Dato Dr Abdul Kuddus Ahmad
Developed by: Centre for Instructional Design and Technology

Open University Malaysia
First Edition, August 2012
Copyright Open University Malaysia (OUM)

All rights reserved. No part of this work may be reproduced in any form or by any means
without the written permission of the President, Open University Malaysia.
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INTRODUCTION TO STUDY GUIDE

This Study Guide is intended for Open University Malaysia's BMOM5203
Organisation and Business Management course. It comes in TWO parts,
as described below:
Part One comprises the Course Introduction, which gives you an overview
of the course. More specifically, it provides you with the course synopsis,
objectives, learning outcomes and study load. There is a brief description of
the main textbook(s), which you must read to fulfil the course requirements.
There is also a list of additional reading references. You are encouraged to
go into myVLE to check out the assessment, assignment and final
examination formats.
Part Two comprises the Learning Guide. This starts with an overview, a
recommended weekly study schedule to guide your learning process, and a
brief description of the various elements in the Learning Guide. There is also
a list of topics to be covered. For each topic, you are given the specific
learning outcomes, a topic overview and a listing of the focus areas, together
with assigned readings and the pages where information on the focus areas
is found. To consolidate your learning and test your understanding, a
summary of the main content covered and study questions are provided at
the end of each topic.
Finally, there are two appendices, Learning Support and Study Tips, to
help you walk through the course successfully.
Please read through this Study Guide before you commence your course.
We wish you a pleasant study experience.
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Contents
Part One: Course Introduction ................................................................... 5
Synopsis ............................................................................................ 5
Objectives .......................................................................................... 5
Learning Outcomes ........................................................................... 5
Study Load ......................................................................................... 5
Main Textbook(s) .............................................................................. 6
Assigned Readings ............................................................................ 6
Additional Recommended Readings.................................................. 6
Assessment ....................................................................................... 6
Part Two : Learning Guide .......................................................................... 7

An Overview ...................................................................................... 7
Topic 1 ............................................................................................... 9
Topic 2 ............................................................................................. 13
Topic 3 ............................................................................................. 19
Topic 4 ............................................................................................. 23
Topic 5 ............................................................................................. 28
Topic 6 ............................................................................................. 33
Topic 7 ............................................................................................. 37
Topic 8 ............................................................................................. 42
Topic 9 ............................................................................................. 47
Topic 10 ........................................................................................... 51
Appendices ................................................................................................ 55
Appendix A: Learning Support ......................................................... 55
Appendix B: Study Tips ................................................................... 56
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PART ONE: COURSE INTRODUCTION
Synopsis
This course introduces you to the management of organisations. It starts off

with the current situation of management in which organisations aim to have
competitive edge over others in the industry. The course then goes to cover
the foundation of management beginning with the function of planning,
followed by organising and leading. It concludes with the management
function of control.
Objectives
The general aims of this course are to:

1. Introduce the concepts of management including its four functions;
2. Apply the concepts in analysing management situations; and
3. Develop effective strategies to solve management problems.
Learning Outcomes
By the completion of this course, you should be able to:

1. Explain the need for management for all types and sizes of
organisations;
2. Describe the functions of management in todays organisations;
3. Apply the skills you need to be a good manager;
4. Identify the sources of competitive advantage for a company; and
5. Take your organisation to greater heights.
Study Load
It is a standard OUM practice that learners accumulate 40 study hours for

every credit hour. As such, for a three-credit hour course, you are expected
to spend at least 120 hours of learning. Table 1 gives an estimation of how
the 120 hours can be accumulated.
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Table 1: Allocation of Study Hours
Activities No. of Hours

Reading course materials and completing exercises 60
Attending 5 tutorial sessions (3 hours for each session) 15
Engaging in online discussions 15
Completing assignment(s) 20
Revision 10
Total 120
Main Textbook(s)
Bateman, T. S., & Snell, S. A. (2013). Management (10th ed.). New York:
McGraw Hill.
Assigned Readings
Certo, S. C., & Certo, S. T. Modern management (12th ed.). New Jersey:
Pearson Prentice Hall.
Robbins, S. P., & Coulter, M. (2005). Management (8th ed.). New Jersey:
Pearson Prentice Hall.
Williams, C. (2009). Principles of management. (6th ed.). Ohio: South-
Western Cengage Learning.
Additional Recommended Readings
None.
Assessment
Please refer to myVLE for information on the assessment format and

requirements.
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PART TWO: LEARNING GUIDE
An Overview
This Learning Guide is arranged by topic. It covers essential content in the

main textbook and is organised to stretch over TEN study weeks, before the
examination period begins. Use this Learning Guide to plan your
engagement with the course content. You may follow the recommended
weekly study schedule in Table 2 to help you progress in a linear fashion,
starting with Week 1.
Table 2: Recommended Weekly Study Schedule
Topic Week
Topic 1: Foundations of Management 1
Topic 2: Planning 2
Topic 3: Ethics and Corporate Social Responsibility 3
Topic 4: Organising 4
Topic 5: Human Resource Management 5
Topic 6: Communication 6
Topic 7: Leadership 7
Topic 8: Motivation 8
Topic 9: Teamwork 9
Topic 10: Control 10
Each topic in the Learning Guide comprises the following sections (refer to
Figure 1):
Learning Outcomes: outline the specific tasks to be accomplished;
Topic Overview: briefly explains what the topic touches on so as to
provide a general interpretative framework for understanding the topic
content;
Focus Areas: identify the main and sub areas to be covered;
Assigned Readings: help you to navigate the set textbook and reading
materials;
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Content Summary: provides an interpretative framework for

understanding the core content; and
Study Questions: help you to focus on key subject areas.
Figure 1: Organisation of the Learning Guide
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Topic 1: Foundations of Management
Learning Outcomes
By the end of this topic, you should be able to:

1. State the importance of organisations to have effective management;
2. Describe the four functions of management; and
3. Apply the skills needed to be an effective manager.
Topic Overview
Management is the process of reaching organisational goals by working with

and through people and other organisational resources. All types of
organisations, big or small, have to be managed. The management process
is executed through activities in four management functions, namely,
planning, organising, leading and controlling. To be effective, a manager
must understand how these functions are practised. Depending on his
managerial level, he should also have the following managerial skills:
technical skill, interpersonal and communication skill and conceptual and
decision skill. He should also be aware of the current environment, where he
can apply those skills for his organisation to have competitive advantage and
move forward.
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Focus Areas and Assigned Readings
Focus Areas Assigned Readings
Bateman, T. S., & Snell, S. A. (2013).

Management (10th ed.). New York: McGraw
Hill.
1.1 Importance of management Chapter 1, pp 3-14.

and its new landscape
Extra Readings:
Certo, Chapter 1, pp.28-36
Robbins & Coulter, Chapter 1, pp. 4-20
1.2 Management functions Chapter 1, pp. 14-17.

Extra Readings:
Certo, Chapter 1, pp. 36-41
Robbins & Coulter, Chapter 1, pp. 3-15
Williams, Chapter 1, pp. 8-12
1.3 Managers roles and skills Chapter 1, pp 1827.

Extra Readings:
Williams, Chapter 1, pp.13-26
Extra Readings:
Prahalad, C.K. Responsible Manager in
Harvard Business Review, Jan/Feb 2010, Vol
88, Issue , p. 36.
Content Summary
The evolution of management began about a century ago, around the time
when new mechanised technology and mass production in the Industrial
Revolution presented challenges which needed to be tackled through
scientific methods. During those hundred-odd years, there was further
evolution in management to accommodate major socio-economic changes
the world over. Today, the challenges to management are brought about by
globalisation, technological change and knowledge management. Managers
must have the foresight and skill to face this new environment in order for
their organisation to survive and compete.
The process of management has not changed much. The four basic
management functions that make up the process are planning, organising,
leading and controlling. The definitions are as follows:
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(a) Planning involves defining goals, establishing strategies for achieving

those goals and developing plans to integrate and coordinate activities.
(b) Organising is the process of determining what tasks are to be done,
who is to do them, and how the tasks are to be grouped, who reports to
whom, and where decisions are to be made.
(c) Leading includes motivating subordinates, influencing individuals and
teams as they work, selecting the most effective communication
channel, and dealing in any way with employee motivation issues.
(d) Controlling is monitoring activities to ensure that they are being
accomplished, comparing performance with previously set goals, and
correcting any significant deviations.
(Robbins & Coulter, 2005).
The management levels, as outlined below, have also not changed much:
(a) Top level managers are senior executives of the organisation who are
responsible for its overall management.
(b) The middle level managers are located in the organisations hierarchy
below the top level management and above the frontline managers.
(c) The frontline managers are lower level managers who supervise the
operations of the organisation. These managers have titles like
supervisor or chief clerk.
Managers also need a variety of skills to perform their tasks well. The three
categories of skills are as follows:
(a) Technical skill The ability to perform a specialised task involving a
particular method or process. On a sliding scale, the frontline managers
need more of this skill, with the top managers least.
(b) Interpersonal and communication skill People skill; the ability to lead,
motivate, and communicate effectively with others. All the three levels
of managers need this skill especially the top.
Conceptual and decision skill Skills pertaining to the ability to identify and
resolve problems for the benefit of the organisation and its members. All
levels of managers need this skill especially the top.
(Bateman & Snell, 2013)
Organisations that keep up with the times with sound policies and have
competitive edge in quality and cost will perform well consistently. The
authoritative Fortune 500 contains this elite group. Among them are Apple,
Occidental Petroleum, Facebook, Siemens, Toyota and Samsung. In the
case of Malaysia, elite companies include Petronas (which is on the 500 list)
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Sime Darby, Genting, Public Bank and Maybank. In these examples, all are
led by outstanding CEOs.
Study Questions
1. Compare and contrast the management of a bank and a non-

governmental organisation (say, Society for the Blind).
2. Is your university lecturer a manager? Discuss his managerial

functions, managerial roles and skills.
3. The Inland Revenue Board (IRB) of Malaysia has been awarded the
Best Public Agency for several years successively. Discuss this
agency according to Bateman& Snells drivers of performance for
competitive advantage.
4. Read Case Managing Zingermans Community of Business on pg.49-

50 of Certo, Modern Management 11e, and answer all the questions.
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Topic 2: Planning
Learning Outcomes

1. State the basic steps in the planning process;
2. Identify the elements of external and internal resources before
formulating a strategy;
3. Summarise the steps in making rational decisions.
Topic Overview
The topic begins with the need to identify the objectives of the organisation
and make plans to achieve them. There are three levels of planning, namely,
strategic, tactical, and operational which have to be aligned. Strategic
planning is more for the long term of the organisation. Environmental and
internal analyses have to first be carried out, followed by threats and
opportunities assessments, before formulating the strategies and
implementing them. All these planning and strategies require sound and
rational decisions. Decision making is at the heart of the managers job. It is
therefore his responsibility to make them. Nevertheless, there are process,
tools and techniques to assist managers in decision making.
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Hill.
2.1 Basic planning process Chapter 4, pp 128-133.
Extra Readings:
Robbins & Coulter, Chapter 7, pp 158-172.
Williams,Chapter 5, pp 160-191.
2.2 Strategic planning Chapter 2, pp 48-7; Chapter 4, pp 133-155.

Extra Readings:
Certo, Chapter 9, pp 227-240.
2.3 Decision making Chapter 3, pp 86-109.

Extra Readings:
Extra Readings:
David, F. (2009). Strategic management:
Concepts and cases (12th ed.). Pearson
Prentice Hall.
Content Summary
Planning is a process that involves defining the organisations goals,

establishing an overall strategy for achieving those goals, and developing a
set of plans to integrate and coordinate organisational work. (Robbins &
Coulter, 2005). Planning provides direction, reduces uncertainty, minimises
waste and redundancy. There are disadvantages if it is overemphasized,
takes too much managerial time or is rigidly implemented despite major
changing conditions. However, advantages tend to overweigh
disadvantages.
Planning can be divided into short, medium and long term. It ranges from
one year for the short, to five years for the long term. An example of a short
term plan would be argeting to achieve good examination performance by a
school in the coming year. To achieve this target, the school has to rely on
available resources such as facilities, financial, teaching staff and the
students themselves. A long term plan would be to achieve a consistent high
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performance over a longer period, thus more strategic planning has to be

undertaken in the form of more facilities, more trained teachers, improved
teaching methods, more support and involvement from parents, and dynamic
leadership from the headmaster.
Another example of planning is a major project undertaken just after

Malaysia achieved Merdeka (Independence) in 1957. The aim was to
increase rice production which would also alleviate the poverty of the paddy
farmers. The first target of the Merdeka promise for a better tomorrow was,
therefore, the paddy farmers. There were several problems which ailed
paddy production at that time. Paddy planting and harvesting was labour
intensive with hardly any mechanization; the paddy yield was low as the
same seed variety had been planted for generations, paddy price was low;
and the paddy lots were smallholdings mostly owned by absentee landlords.
However, the biggest problem was water as irrigation from rivers was hardly
available which meant that the farmers had to depend on rain and the
vagaries of nature. The priority was obvious. A dam has to be built which
would ensure sufficient water at the various stages of paddy production.
The planning was therefore to build a dam in Kedah, the nations rice bowl
area. This took a few years to complete but was accelerated with financial
assistance and expertise from the World Bank. While waiting for the dam,
immediate assistance was given to the farmers through the introduction of
policies of fertiliser subsidy and minimum price guarantee for paddy.
Planning for mechanization was also short term through the assistance of
Thailand and Taiwan, the leading producers of the crop. A research agency
was set up to find the best variety of paddy which was assisted through
collaboration with the Philippines Los Banyos Research Institute, famous for
discovering Miracle Rice. In retrospect, the availability of the dam was
mainly responsible for the double cropping of rice in the countrys rice bowl,
a proud achievement a few years after Merdeka. Other long standing
problems such as land ownership and the uneconomic size of smallholding
would require land reform, which would involve more comprehensive
planning and strategies.
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The latter type of planning is also referred to as strategic management. The

process is as follows:
(a) Establishment of mission, vision, and goals;
(b) Environmental analysis (General, Operating and Internal);
(c) SWOT (strengths, weaknesses, opportunities, and threats) analysis
and strategy formulation;
(d) Strategy implementation; and
(e) Strategic control.
(Certo, 2013)
One of the major projects of Malaysia in the 1980s requiring strategic

planning was the national car. Let us analyze it according to the above
process, as follows:
(a) Vision and Goals

To manufacture Malaysias own national car in its mission to be an
industrial nation.
(b) Environmental Analysis

General environment For almost two decades from the 1960s,
Malaysia enjoyed robust growth from being top producer of palm oil,
revenue from just-discovered oil & gas, and high standard of living.
Operating environment An existing auto industry with many cars,
good roads, auto-related SMEs, and sufficient human capital.
Internal environment Limited to assembling cars, limited
manufacturing base, limited auto engineering institutions, and sufficient
human skills at operating level.
(c) SWOT analysis

Strengths: Rising standard of living, second car ownership, and auto
infrastructure.
Weaknesses: High capital outlay, limited auto technology, and small
market.
Opportunities: Political stability, signs of affluence, available human
resource and auto infrastructure.
Threats: Giant auto companies and car producing countries.
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(d) Alternative strategies:

(i) Status quo Remain assembler of cars.
(ii) Build from scratch with no help from foreign car manufacturers,
like how is done by India.
(iii) Partnership with foreign car company in the early years.
(e) Alternative (iii) was selected and implemented.
As can be seen, all the planning above requires sound and rational
decisions. Decision making is at the heart of a managers job. A good
decision will help to achieve the organisations objective while a bad one will
have a negative effect.
Let us take an example of decision making, this time the new Kuala Lumpur
International Airport (KLIA) based on Batemans decision making steps:
(a) Problem
By the mid-1980s, the existing national airport at Subang had reached
its capacity, which affected business, travel and the countrys
development.
(b) Criteria for Alternatives

(i) Cost
(ii) Limited social displacement
(iii) Safety
(iv) If possible, within Kuala Lumpur and Selangor
(c) The alternatives

(i) Expand Subang, requiring land for expansion to build more
runways, costs RM 1.5 billions but major displacement of
residents
(ii) Sepang, a palm oil estate, costs RM2bil as infrastructure and
access roads needed
(iii) Langkawi, Kuantan, costing RM2.5bil each as infrastructure was
needed
(d) Decision
Alternative (ii) was chosen, costs more but less people displacement,
and within Selangor & Kuala Lumpur.
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Study Questions
1. How might planning in a not-for-profit organisation such as Malaysian

Cancer Society differ from planning in a for-profit organisation such as
Maybank?
2. How do strategic, operational, and tactical planning differ? How might

the three levels complement one another in an organisation?
3. Read Concluding Case Custom Coffee & Chocolate on p.154 of the

textbook and answer all the questions.
4. Why is decision-making often described as the essence of a managers

job?
5. When the boss takes time to decide, he is regarded as meticulous but

a subordinate will be branded as slow. Do you agree and why?
6. How would you manage group decision making?
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Topic 3: Ethics and Corporate Social Responsibility

(CSR)
Learning Outcomes
By the end of this topic, you will be able to:

1. Explain the concept of ethics in management;
2. Develop strategies to enhance ethics in organisations;
3. Describe the concept of social responsibility;
4. Assess the contrasting views on corporate social responsibility and
reconciling them; and
Topic Overview
News headlines seem to be abound with stories of irresponsible and ethically

questionable practices at large and well-known companies. Malaysia was not
spared either. Its a big issue and personal as well. Many countries
strengthened laws to prevent such abuse and promote good governance.
Corporations gave life to their code of ethics by establishing their own
ombudsman to determine complaints on ethics as well as protecting genuine
whistle blowers. Many more organisations also participated in corporate
social responsibility (CSR). Not many seem to agree with Milton Friedmans
anti-CSR view and some went beyond giving one-off donation by
establishing separate CSR department. Many governments, on their part, not
only give tax breaks for CSR but also provide awards.
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Hill.
3.1 Ethics Chapter 5, pp 166-181.

Extra Readings
Williams, Chapter 4, pp 120-123.
3.2 CSR Chapter 5, pp 181-190.

Extra Readings
Robbins & Coulter, Chapter 5, p 104.
Content Summary
Ethics is defined as our concern for good behaviour; our obligation to

consider not only our own personal well-being but also that of other human
beings. Business ethics, on the other hand, involves the capacity to reflect
on values in the corporate decision making process, to determine how these
values and decisions affect various stakeholder groups, and to establish how
managers can use these observations in day-to-day company management.
(Certo, 2013).
Many organisations have code of ethics. Johnson & Johnson (J&J) has one
of the best declaration of its oath to stakeholders, the public and society.
True enough, when one its product, the aspirin Tolinol, was found to be toxic,
the company made a public disclosure and recalled the product. J&J lost a
few million dollars in the recall but received goodwill and eventually it
overcame the losses by having more profit. Toyota has been the best auto
manufacturer almost year after year from 1980s not only due to the quality of
its cars but also because of its adherence to its declared ethics, among
them, by disclosing any defects and recall, when necessary. The same thing
could not be said about Ford in its dealing with its accident-prone jeep. Ford
passed the blame to the company contracted to make the tyres, Firestone.
The multinational Union Carbide was in similar category when its Indian
company leaked poisonous gas that killed hundreds in the 1980s.
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From ethics on products, we go to ethics by top management. The last few

years we read of fraud and ethical abuse by top management which led to
catastrophe. Andersen and a few top companies had to close causing losses
in the millions to stakeholders and jobs to hundreds. Big names like Madoff
and Ben Glison of Enron were jailed for fraud. These fraudulent acts and
ethics manipulations are not confined to industrialised countries but
developing ones too.
Governments responded to this unhealthy development by strengthening

laws and enforcing them. In the case of Malaysia, a separate Securities
Commission was established in the 1980s at the height of a business boom
rife with unethical practices. In addition to the laws, among other measures
taken were clear separation of powers between board of directors and
management, the composition of the board of directors, more disclosures in
the annual report, and more communication between management and the
stakeholders. The chamber of commerce, on its part, promoted higher
ethical standards and good governance to its members by providing training
and consultations.
In the developed countries, many major corporations established their own

internal mechanism to monitor and deal with unethical practices. It is similar
to internal audit but functions more like an ombudsman. In the cases of mass
media companies, cases involving journalism ethics or company policies and
practices are heard and decided by a panel of eminent personalities, usually
retirees from the profession, appointed by the respective companies.
The business community all over appear to counter the campaigns against
them by highlighting their corporate social responsibility (CSR) activities.
CSR is the managerial obligation to take action that protects and improves
the welfare of society as a whole and the interests of the organisation.
(Certo, 2013). In the US and Western Europe, companies started CSR in the
aftermath of the Second World War.
There are many areas in which companies can contribute in CSR such as
environmental affairs like the Green Movement, urban affairs, consumer affairs,
and employment practices. In developing countries the CSR activities normally
relate to socio-economic, health and education for disadvantaged groups. In
Malaysia, CSR also include the development and promotion of sports.
There have been contrasting views on corporate social responsibility.

Arguments for CSR begin with the premise that business as a whole is a
subset of society, one that exerts a significant impact on the way society
exists. As such, corporations must help society. The opposite view is led by
Milton Friedman, the Nobel laureate on economics, with his famous dictum
The social responsibility of business is to increase profits. He contended
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that organisations may help to improve quality of life as long as their actions
are directed at increasing profits.
(Bateman & Snell, 2013).
Many organisations reconciled the two contrasting views by doing both

profit maximisation as well as CSR activities. This is assisted to a great
extent by tax break and other incentives by governments on CSR
programmes. Smaller organisations make one-off donation but many major
ones make CSR a permanent feature by having an organisational set-up
whose tasks include planning and implementation. In Malaysia a few
corporations established a separate entity entirely to run CSR, namely, the
Lee Foundation, AlBukhari Foundation and the Kuok Foundation.
Study Questions
1. What would you do to enhance an ethical climate in your workplace?
2. Identify and discuss illegal, unethical and irresponsible business

actions that made news in your country recently.
3. Read Concluding Case Ma Earth Skin Care Tries to Stay Natural on

pg. 193-194 of textbook, and answer all questions.
4. What are your arguments for and against the concept of CSR? Where
do you stand, and why?
5. List and discuss the incentives by your Government to the private

sector to promote CSR.
6. Read Case Gap Goes Public on Social Responsibility on pg. 102-103

of Certo, Modern Management 11e, and answer all the questions.
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Topic 4: Organising
Learning Outcomes

1. Explain the fundamentals of organising;
2. Summarise ways how organisations can be structured;
3. Distinguish between span of control, authority and responsibility; and
4. Describe matrix and other contemporary form of organising.
Topic Overview
Organising is the process of establishing orderly uses for resources in the

management system. This organising function is extremely important to the
management system because it is the primary mechanism managers use to
activate plans. Tasks under the plan have to be divided to ensure there will
be no duplication. This division of labour leads to an organisational structure
which can be departmentalised according to functional, product, customer,
process or geographical forms. Chain of command and span of control must
be established. Every officer in the chain has job description which also
contains his authority and responsibility. The officer can delegate some of his
work so that the organisation would be more efficient. However, some
functions are centralised, especially those requiring decisions by higher
authority and affecting the whole organisation. The authority on
compensation and benefits, for example, belongs to the top management but
recruitment of junior personnel is delegated. In contemporary organisations
there are new forms of organising like matrix, network, outsourcing, and
merger, among others. The purpose is to be more efficient and effective as
well as to save costs.
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Management (10th ed.). New York:
McGraw Hill.
4.1 Fundamentals of Organising Chapter 8, pp 284-286

Extra Readings:
Certo, Chapter 12, pp.268-275.
Robbins & Coulter, Chapter 10, pp.282-286.
Williams, Chapter 3,pp.400-404.
4.2 Vertical Structure Chapter 8, pp 284-294

Extra Readings:
Robbins & Coulter, Chapter 10, pp. 286-292.
Williams, Chapter 3, pp. 331-335.
4.3 Horizontal Structure Chapter 8, pp. 294-305

Extra Readings:
Williams, Chapter 3, pp.324-331.
4.4 Responsive Organisation Chapter 9, pp. 329-336.
Content Summary
Organising is the process of creating an organisations structure. An

organisational structure is the formal arrangement of jobs within an
organisation. The jobs are arranged through a process called
departmentalisation. There are five major ways to departmentalise, as
follows:
(a) Functional departmentalisation is grouping jobs by functions performed;
(b) Product departmentalisation is grouping jobs by product line;
(c) Geographical departmentalisation is grouping jobs on the basis of
territory or geography;
(d) Process departmentalisation is grouping jobs on the basis of product or
customer flow; and
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(e) Customer departmentalisation is grouping jobs on the basis of common

customers.
(Robbins & Coulter, 2005)
Functional is the main form of departmentalisation. Types of departments are

like human resource, marketing, and finance. Meanwhile, companies with
branches overseas like Petronas have geographical departmentalisation.
This is the horizontal structure.
The other structure is the vertical which can be represented in the form of an
organisation chart which shows the chain of command with continuous line
of authority that extends from the upper organisational levels to the low
levels and clarifies who reports to whom. Three related concepts include
authority, responsibility, and unity of command.
A further concept from the chart or structure is the span of control which
refers to the number of subordinates a manager can supervise effectively
and efficiently. The ideal span of control depends on the skills and abilities of
the manager, the characteristics of the work being done, the tasks of the
employees, and proximity of subordinates. The trend in recent years has
been towards larger span of control.
The organisational vertical structure also shows the decision-making

process. Some decisions are centralised in which decision-making is
concentrated at a single point in the organisation, usually in the upper levels.
Some decisions are decentralised to the lower levels. This is also referred to
as employee empowerment. The trend is towards decentralisation in order to
make the organisation more flexible and responsive.
An organisational design can either be mechanical or organic. A mechanical

design is normally for larger organisation that is characterized by high
specialisation, rigid departmentalisation, narrow span of control, and little
participation in decision making by low-level employees. An organic one is
highly adaptive and flexible.
Many of todays organisations are finding that the traditional hierarchical

organisational designs are not appropriate for the increasingly dynamic and
complex environment they face. Contemporary designs are as follows:
(a) Team structures Made up of work groups or teams that performs the
organisations work;
(b) Matrix organisation Assigns specialists from different functional
departments to work on one or more projects being led by project
managers;
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(c) A network organisation A small core organisation that outsources

major business functions;
(d) A virtual organisation One that consists of a small core of full time
employees and that temporarily hires outside specialists to work on
opportunities that arise;
(e) A modular organisation A manufacturing organisation that uses
outside suppliers to provide product components that are then
assembled into final products;
(f) Merger One or more companies combining with another; and
(g) Outsourcing Contracting with an outside provider to produce one or
more an organisations goods or services.
(Bateman & Snell, 2013 and Robbins & Coulter, 2005)
Contemporary organisations also aim to achieve consistently high quality.

This is one of the characteristics of a responsive organisation that answers
to the demand of customers and changing times. Systematic ways of
meeting that goal include the following:
(a) Total Quality Management (TQM) An integrative approach to
management that supports the attainment of customer satisfaction
through a wide variety of tools and techniques that result in high quality
of goods and services;
(b) Six Sigma A method of systematically analysing work processes to
identify and eliminate virtually all causes of defects, standardising the
processes to reach the lowest practicable level of any cause of
customer dissatisfaction; and
(c) ISO 9001 A series of quality standards developed by a committee

working under the International Organisation for Standards to improve
total quality in all businesses for the benefit of producers and
customers.
Study Questions
1. Can an organisations structure be changed quickly? Why or why not?
2. With the availability of advanced information technology that allows an

organisations work to be done anywhere at any time, is organising still
an important managerial function? Why or why not?
26
3. When two organisations merge, what type of structural issues do you

think might need to be addressed?
4. Read Concluding Case Stanley Lynch Investment Group on pg. 313-

314 of the textbook, and answer all the three questions.
5. Read Concluding Case DIY Stores on pg.347-348 of the textbook,

and answer all the tree questions.
27
Topic 5: Human Resource Management
Learning Outcomes
By the end of the topic, you will be able to:

1. Explain how organisations use human resource management to gain
competitive advantage;
2. Choose the appropriate methods for the recruitment and selection of
new staff;
3. State the importance of training and development of staff;
4. Analyse the various methods of performance assessment; and
5. Describe the fundamental aspects of a reward system.
Topic Overview
Human resources are essential to any organisation and how these resources
are managed in a firm is a critical element in a companys pathway to
success. First the organisation must plan the human resource need of the
organisation. This is followed by the recruiting and selecting process. Many
organisations open the recruitment to internal as well as external candidates.
This is to ensure opportunities for career development is available to existing
staff at the same time that the organisation seeks fresh faces and ideas.
Selection is done by a panel normally through the interview process, a well-
tested way of getting the right candidate. These new employees have to be
trained. Training should be systematic and well-planned; it should span from
orientation to retraining for new skills or updating skills; and it should cover
all categories of staff. Training helps to improve staff performance, another
important function of HRM. Performance assessment (PA) should contain
key indices and must be done professionally and objectively by the
assessing panel. PA determines the compensation and benefits the
employee gets. The principle of a reward system is it should be attractive
enough for people to join as well as remain in the organisation. A reward
system ordinarily consists of salary and other monetary and non-monetary
elements.
28
Focus Areas and Reading Assignments
Bateman, T. S., & Snell, S. A.

(2013). Management (10th ed.). New
York: McGraw Hill.
5.1 Human Resources Planning Process Chapter 10, pp 352-357.

Extra Readings:
Robbins & Coulter, Chapter 12, pp
282-286.
5.2 Staffing Chapter 10, pp. 358-368.

Extra Readings:
Certo, Chapter 13, pp. 315-322.
Robbins & Coulter, Chapter 12, pp.
286-293.
Williams Chapter 11, pp. 410-424
5.3 Developing Workforce (Training) Chapter 10, pp. 369-371.

Extra Readings:
293-295.
Williams, Chapter 11, 425-429.
5.4 Performance Appraisal Chapter 10, pp. 372-376.

Extra Readings:
296-297.
Williams, Chapter 11, pp. 434-435
5.5 Rewards System Chapter 10, pp. 376-382.

Extra Readings:
298-299.
29
Content Summary
Human Resource Management (HRM) deals with formal systems for

managing people at work. The main formal systems are recruitment and
selection, training and development, performance assessment, and reward
system. The policies and practices in each system must help to establish a
firms sustainable competitive advantage.
Human resource process of an organisation begins with manpower planning.

The number of employees, the types of jobs and qualifications form part of
the planning for recruitment. Recruitment proper can be done by various
ways, as follows:
(a) Advertisement through print media Key attributes: average
processing cost, large coverage, many applications, takes time to
process, better chance to get suitable candidates;
(b) Companys website Least cost, the rest as above;
(c) Graduating students of colleges and universities Not much cost, fresh
candidates and qualified but little experience;
(d) Professional journals Average cost, qualified and experienced
candidates;
(e) Headhunting Normally done by agency, high processing costs,
suitable candidate but on his terms; and
(f) Internal qualified staff No processing costs, bring satisfaction to
workforce, experienced candidate, may suffer in-breeding.
During tight labour market in the 1980s, some factories in Malaysia went to
the extent of walk-in interview and going to outlying areas to search for
workforce with the promise of providing transportation to place of work.
When the labour situation for these production workers continued to be tight,
Malaysia allowed the hiring of foreign labour from neighbouring countries.
Selection is part of the recruitment process. For many positions, especially

the senior levels, the selection is done through interview. This is the best
way to test the communication ability of candidates, the knowledge about the
job, and current affairs.
In Malaysia the most stringent recruitment process has been into the
Malaysian Administrative and Diplomatic Service (PPTD) in which
candidates have to sit for two elimination tests before entering for interview.
The successful candidates will then undergo an academic year training to
get a Diploma in Administration. Only then is he/she will be officially
30
appointed as a PPTD officer. PPTD is the premier service of the country

which calls for this stringent recruitment and selection.
The most stringent selection exercise was, however, for the first Malaysian
astronaut. Malaysia was offered by Russia a place in its team on the
expedition to the International Space Station after Malaysia bought a US$2
billion jet package. The requirements were for physically-fit candidates
having a first degree between the ages of 20 to 35 years old. 14,000 applied.
After passing a series of physical tests, 20 were selected for the final. They
appeared before a Panel of 3 Eminent Malaysians before one was selected.
Training is the next element of HRM. An organisation has to plan for the
training needs of its employees in terms of types of training and categories of
staff, and the budget, among others. Besides orientation for the new staff,
there are also other types of training for existing staff such as upgrading of
skills and learning new technology. There is a tendency among organisations
to cut back on training during an economic downturn, which should not be.
Instead, there are ways to cut down costs such as modifying the types of
lecture, having in-house trainers, and changing venue. Training should be
done to fulfil the organisation's needs but the trained employees should be
amply rewarded and placed for career development.
The next HRM element is performance appraisal (PA). Employees have to

be assessed whether they are performing efficiently and effectively or if there
is need for improvement. The 360 feedback is one of the latest PA system. A
PA system normally consists of, among others, key performance index (KPI)
and the ranking given by the panel of assessors. The assessment should
always be objective, professionally done and fair, and the employee told of
his strengths and weaknesses. For the latter, he must be retrained. PA is
highly important because it is linked to the reward system of the company.
The reward system consists of salaries and other monetary and non-
monetary benefits. An organisation has to consider its capacity to pay the
standard in the industry, the minimum wage and other government
legislations. The reward system should be competitive so that candidates are
attracted to join the organisation and continue to remain in it. For many
corporations in the private sector, the compensation and benefits are done
through collective bargaining between management and the unions. The
period of the resulting contract will be two or three years. For the public
sector in Malaysia, the Government in 2012 is reverting to the pre-1980
practice of appointing a commission headed by a judge to examine salaries
and benefits. In between those years, the reward system is a management
prerogative in consultation with the civil service unions.
31
Study Questions
1. Why is human resource management considered part of the organising

function?
2. If interviews have serious limitations in terms of validity and reliability,

why do organisations continue to use them?
3. Why has employee training become such a big deal?
4. What purpose does performance appraisal serve?
5. How would you define an effective reward system? What role does
benefits serve in a reward system?
6. Read Concluding Case Invincibility Systems on pp. 390-391 and

answer all the questions.
32
Topic 6: Communication
Learning Outcomes

1. State the importance of interpersonal communication;
2. Devise ways to avoid miscommunication ;
3. Explain how to improve downward, upward and lateral communication
in organisations; and
4. Explain the role of informal communication including grapevine .
5. Describe and apply the role of electronic media.
Topic Overview
Communication is the process of sharing information with other individuals. It

is a major part of the leading function. Communication consists of three
types, namely, interpersonal communication, formal organisational
communication, and informal communication. The importance of effective
communication cannot be overemphasised because everything a manager
does involves communicating. He must first be effective in interpersonal
communication, both verbal (including written) and non-verbal. For
successful communication, the meaning must be imparted and understood.
To avoid miscommunication, he must plan first, examine the purpose, and
consider the physical and human setting. For formal organisational
communication, there are three types, namely, downward, upward and
lateral. It is formal because it refers to communication that follows the official
chain of command or is part of the communication to do ones job. The
communication network must be flowing efficiently and effectively for the
good of the organisation. In addition to formal, there is the informal
communication--the one that does not follow the lines of the organisation
chart. Grapevine is the main informal network. It is active in almost every
organisation. Managers must know how to use it for the advantage of their
organisations.
33

Management (10th ed.). New York:
McGraw Hill.
6.1 Interpersonal Communication Chapter 15, pp 532-536 & 542-549.

Extra readings:
256- 264.
6.2 Organisational Communication Chapter 15, pp. 549-554.

Extra readings:
Certo, Chapter 15, pp. 373-374
Robbins & Coulter,Chapter 11,
pp.266-269.
Williams, Chapter 18, pp.693-695.
6.3 Informal Communication Chapter 15, pp.554-555

Extra readings:
6.4 Electronic Media (IT) Chapter 15, pp. 536-542

Extra Readings:
Robbins & Coulter, Chapter 11,
pp.269-273.
Content Summary
Communication is an essential part of the management function of leading or

influencing. It is defined as the transmission of information and meaning from
one party to another through the use of shared symbols. (Bateman & Snell,
2013). In management, everything a manager does involves communicating.
Communication between him and his employees provides the information
necessary to get work done effectively and efficiently.
34
The first type of communication is interpersonal. It consists of verbal, which

is sharing of information through words, either written or spoken. The other is
non-verbal, which is sharing information without using words. In verbal, a
manager should be competent in both written and spoken. A well-written
memorandum, say for a project, will get approval by the board of directors
and, more so, with a skilful presentation.
In the case of non-verbal communication, the best-known types are body

language and verbal intonation. Subordinates in organisations of whatever
socio-cultural background will observe first the demeanour and the voice
intonation of the boss before asking for anything. Nevertheless, a manager
should never make a decision according to his mood.
Non-verbal communication should also be extended to the place of work. A

well-laid interior, brightly coloured and sufficiently decorated workplace with
working but smiling staff leave positive impression to visitors
A manager should choose the channel of communication wisely according to

the subject matter at hand, the type and background of the receivers, and
the occasion. A reprimand, for example, should be done privately with the
offender, while compliments are given in public; speech by the boss during
office Hari Raya party or other festivals should be light-hearted in the spirit of
the occasion with some dose of reminders and motivation; and decisions on
layoffs should be both written and oral and they should include information
on severance package and a promise take in when situation improves.
From interpersonal, we move to formal organisational communication. This is

the management of communication within the organisation. There are three
types, as follows:
(a) Downward Communication that flows from any point on an

organisation chart to another point. It is used to inform, direct,
coordinate and evaluate. Decisions to be implemented flow downward.
(b) Upward Communication that flows from any point on an organisation
chart upward to another point. The planning process is in this category.
So is feedback.
(c) Lateral Communication that flows from any point on the organisation
chart horizontally to another point. An example is when a Director of a
department communicates with the Director of Legal Services, who is
on the same level as he, on a point of law.
Besides the formal, there is also the informal organisational communication.

This is communication that does not follow the lines of the organisation chart.
The grapevine is its network. It exists in almost every organisation. It exists
35
largely to serve the self-interests of the people within it. Nevertheless,

managers should not ignore grapevine but should manage it to the
organisations advantage. Rumours such as office romance or promotion
speculation should not be interfered with but potentially destructive ones like
misuse of authority, financial mismanagement, and corrupt practices should
be nipped in the bud and investigated.
A new feature in managerial communication which organisations must

address is internet gripes critical of the organisation that appear in websites
and blogs. This is a contemporary form of surat layang (anonymous flying
letters). Rather than be defensive, managers should view these internet
gripe sites as a source of information and deal with them in its own website.
This irritant is minor compared to the tremendous changes brought about by

information technology (IT) on managerial communication. E-mail, SMS,
voice-mail, electronic data interchange (EDI), teleconferencing,
videoconferencing, intranet, are just some of the tools created by IT. And the
list keeps on growing. Social networks like Facebook and Tweets are among
the new additions. Communication and the exchange of information among
organisational members are no longer constrained by geography or time.
Study Questions
1. Ineffective communication is the fault of the sender. Do you agree or

disagree with this statement? Discuss.
2. How might managers use the grapevine for their benefit?
3. Is information technology helping managers become more effective

and efficient? Explain your answer.
4. Read Concluding Case Best Trust Bankon pg. 561-562 of the

textbook, and answer all the questions.
36
Topic 7: Leadership
Learning Outcomes
By the end of this topic you will be able to:

1. Explain the distinction between management and leadership;
2. List the characteristics of trait leadership;
3. Describe the situational approach to leadership; and
4. Distinguish todays types of leadership.
Topic Overview
Leadership is the ability to influence others to achieve organisational goals.

There is a distinct difference between leaders and managers: leaders are
concerned with doing the right thing, while managers are concerned with
doing things right. Anyway, a manager can become a leader through
experience after some time. A leader has traits or personal characteristics
like intelligence, maturity, integrity and the drive to achieve. In addition,
studies show that successful leadership requires a unique combination of
leaders, followers, and leadership situations. This is the situational theory of
leadership which focuses on leader behaviour. The behaviours are on such
management matters like decision making, the use of power, job-centred or
employee-centred, and flexibility. The overview ends with a discussion on
contemporary leadership.
37

(2013). Management (10th ed.).
New York: McGraw Hill.
7.1 Leading & Managing Chapter 12, pp 435-439.

Extra Readings:
Williams, Chapter 17, pp 642-
650.
7.2 Leadership Traits Chapter 12, pp.440-441.

Extra Readings:
Certo, Chapter 16, p. 388.
7.3 Situational Approaches to Leadership Chapter 12, pp. 444-451.

Extra Readings:
Certo, Chapter 16, 388-401.
Robbins & Coulter,Chapter 17,
pp. 423-432.
Williams, Chapter 17, pp. 653-
669.
7.4 Contemporary Leadership Chapter 12, pp. 451-457

Extra Readings:
pp. 433-436.
Williams, Chapter 17, pp.668-
674.
Extra Reading:
MarChapterionne, Sergio Fiat
Extreme Makeover in Harvard
Business Review, Dec 2008, Vol
86, Issue 12, pp. 45-48.
38
Content Summary
Leadership is important in organisations because leaders are the ones who

make things happen. Leaders use their influence on the staff to motivate
them to work harder to achieve organisational goals. They show the way,
monitor their work, correct it when they deviate, provide adequate
information and resources, compliment them, reward them, as well as scores
of other activities to work together for the organisation. They apparently have
to do more than simple managing.
There is a distinct difference between leaders and managers: leaders are

concerned with doing the right thing, while managers are concerned with
doing things right. However, effective managers may not necessarily true
leaders. Many administrators, supervisors and even top executives perform
their responsibilities successfully without being great leaders. But these
positions afford an opportunity for leadership. With training, experience and
reasonable time they can become good leaders.
Early studies on leadership focused first on the leader (trait theories)and how
the leader interacted with his or her group members (behavioural theories).
Stature, appearance and other physical traits were not determinants of
leadership. However, later studies show that successful leaders tend to
possess characteristics such as intelligence, academic achievements,
emotional maturity, integrity, job-relevant knowledge, persistence and a drive
for continuing achievement. These characteristics too were not sufficient to
be a leader.
The studies then focused on leader behaviour under different situations. This
situational approach to leadership is of the view that successful leadership
requires a unique combination of leaders, followers, and leadership
situations. The following are the main models:
(a) Tannenbaum and Schmidt Leadership Continuum

In determining how to make decisions as a leader, managers should
consider three forces: forces in the manager (like his personal values
and confidence in his subordinates), forces in the subordinates (their
knowledge and experience, interest in the problem, readiness to
assume responsibility on the decision),and forces in the situation (the
organisations values, type of problem, and time available).
From these forces, the leader makes decisions autocratically (in which
he makes the decision alone and announces it), or democratically (from
participative style, asking suggestions from subordinates, then he
decides, to permitting groups to make decisions within prescribed
limits).
39
(b) The Vroom-Yetton-Jago Model

This model of decision making styles has two important premises,
namely, organisational decisions should be of high quality, and
subordinates should accept and be committed to the decisions made.
(c) Fiedlers Contingency Model

The model emphasizes leader flexibility the ability to change
leadership style. This concept hypothesizes that, in any given
leadership situation, the leader-member relations, task structure, and
the position power of the leader, are the three primary factors that
should be considered when moving leaders into situations appropriate
to their styles.
(d) The Hersey-Blanchard Situational Theory

The theory hypothesizes that leadership style should reflect the
maturity level of the followers. The more mature the followers, the less
the leader need to engage in task performance b ehaviours. The theory
is a reminder to leaders to treat different people differently from time to
time as each of them changes jobs or gain more maturity over a
particular job.
(e) Path-Goal Theory

The theory suggests that the primary activities of a leader are to make
desirable and achievable rewards available to organisation members
who attain organisational goals and to clarify the kinds of behaviour
that must be performed to earn those rewards.
In general, the theory suggests that the functions of the leader are to:
(i) Make the path to work goals easier to travel by providing
coaching and direction
(ii) Reduce frustrating barriers to goal attainment, and
(iii) Increase opportunities for personal satisfaction by increasing
payoffs to people for achieving performance goals.
The above are major classic approaches to understanding leadership, all of

which remain useful today. As for todays leadership, management gurus like
Bateman & Snell, Certo, Robbins & Coulter, and Williams highlight charisma
and vision which are more distinguishable in contemporary leaders. Each
author may give different titles to the leadership list but in general, the
attributes are as follows (with examples by me):
(a) Charismatic leader A person who is dominant, self-confident,
convinced of the moral righteousness of his beliefs, and able to arouse
a sense of excitement and adventure in followers. Such leaders are like
40
Martin Luther King, Tunku Abdul Rahman, Lee Kuan Yew and Dr
Mahathir Mohamad.
(b) Transformational leadership Leaders who motivate people to
transcend their personal interests for the good of the organisation. Eg.,
Steve Jobs of Apple, Tony Fernandes of AirAsia, and Arshad Ayub, ex-
ITM Director .
(c) Transactional leaders leaders who manage through transactions,
using their legitimate, reward and coercive powers to give commands
and exchange rewards for services rendered. E.g., Idris Jala of MAS,
and Lim Kok Weng of LKW University College of Creative Technology.
Study Questions
1. If you ask people why a given individual is a leader, they tend to

describe the persons in terms such as competent, self-assured,
inspiring a shared vision, and enthusiastic. How do these descriptions
fit in with the leadership concepts in Chapter 12 of the textbook?
2. Identify someone you think is an effective leader. What traits and skills
does this person possess that make her or him effective?
3. There has been a trend by certain major organisations to appoint
celebrities as ambassadors or some form of leadership. What do you
think of this practice? To what extent will the organisations objectives
be achieved?
4. Read Concluding Case The Law Offices of Jeter, Jackson,Guidry, and
Boyer on pg. 465-466 of the textbook, and answer all the questions.
5. Read Case Toyotas Drive for Global Leadership on pp.411-412 in
Certo (ibid.), and answer all the questions.
41
Topic 8: Motivation
Learning Outcomes

1. Identify the process factors of equity and expectancy of employee
motivation;
2. List the need theories of motivation; and
3. Explain rewards and incentives to enhance high performance.
Topic Overview
Motivation refers to forces that energise, direct, and sustain a persons

efforts. The efforts are to achieve the goals set by the manager. The
manager himself has to show certain behaviour and skills to motivate the
employees like his interpersonal communication. He also has to show the
need for fairness under the equity theory as well as the reward expected by
the employee for work well done under the expectancy theory. He has also
to identify the individual need of the employee according to Maslows and
other need theories and motivate the employees to achieve them. There is
also motivation derived from the job itself such as the job design, the tasks
that are challengeable but doable, and empowerment. And then there are
the motivation forces from the rewards and incentives, both monetary and
non-monetary, which lead to job satisfaction and higher performance.
42

8.1 Motivating for Performance Chapter 13, pp 470-480.

Extra Readings:
400-403.
8.2 Peoples Needs for Motivation Chapter 13, pp. 480-483

Extra Readings:
393-400.
8.3 Designing Motivating Jobs Chapter 13, pp. 484-494

Extra Readings:
Certo, Chapter 17,pp. 423-432.
pp.400-407.
Extra Readings:
Hughes, Liz Motivating Your
Employees in Women in Business,
Mar/Apr 2003,Vol 56, Issue 2, p.7.
Content Summary
Being able to effectively motivate employees is a challenge that faces

managers in all types and sizes of organisations. Motivation is the set of
forces that initiates, directs, and makes people persist in their efforts to
accomplish a goal. The goal is set up by the manager in line with the overall
objectives of the organisation. It is also meant to be a motivating factor to
enhance the employees performance. Under this goal-setting theory, it is
better for the manager to give a task that is challengeable but attainable. It is
also good to discuss first with the employee and express confidence that
43
based on his past and current performance he can do it. The manager has to
inspire his subordinates through his interpersonal communication and
authority.
In doing the challengeable assignment, the employee will be further

motivated when his expectation is realized. This comes under the
expectation theory in which a persons work effort lead to some level of
performance. He therefore expects to be complimented or rewarded.
There is also the question of fairness in case the expectation is not realised.
This is in line with equity theory which states that people assess how fairly
they have been treated according to two key factors: outcomes and inputs.
Outcomes are various things one receives on the job such as pay and
benefits while inputs are ones contributions to the organisation like effort
and time. Unfairness will be felt by an employee when he perceives that the
two do not commensurate and worse when he compares his case with other
individuals. This is a major issue of dissatisfaction among employees in
many organisations. A manager has to detect this early and nip it in the bud
before it affects staff morale and motivation.
Expectation and equity come under the process theories of motivation which
emphasize how individuals are motivated. The second type is the content
theories which deal with peoples internal characteristics in motivation. These
are the needs theories which indicate the kinds of needs that people want to
satisfy. People have different needs motivating them towards different goals.
The extent to which and the ways in which a persons needs are met or not
met at work affects his behaviour on the job.
The most important theories describing the contents of peoples needs are
Maslows need hierarchy, Alderfers ERG Theory, and McClellands needs.
(a) Maslows Hierarchy of Needs

Maslow organized five major types of human needs into a hierarchy
which people need to satisfy, in a specific order, from bottom to top.
The needs, in ascending order are:
(i) Physiological (food, water, sex, and shelter)
(ii) Safety or security (protection against threat and deprivation)
(iii) Social (friendship, affection, belonging, and love)
(iv) Ego (independence, achievement, status, recognition, and self-
esteem)
(v) Self-actualisation (realising ones full potential, becoming
everything one is capable of being).
44
(b) Aldefers ERG Theory

The theory postulates three sets of needs: existence, relatedness, and
growth. Existence needs are all material and physiological desires.
Relatedness needs involve relationships with other people and are
satisfied through the process of mutually-sharing thoughts and feelings.
Growth needs motivate people to productivity or creatively themselves
or their environment.
(c) McClellands Needs

McClelland also identified a number of basic needs that guide people.
The most important needs, according to him, are the needs for
achievement, affiliation, and power.
The next set of motivation forces which a manager can apply to his
organisational members are related to the job. Among them are as follows:-
(a) Job Design

(i) Job Rotation Changing from one task to another to avoid
boredom
(ii) Job Enlargement Giving employees additional tasks at the
same time to avoid boredom
(iii) Job Enrichment Changing a task to make it inherently more
rewarding, motivating, and satisfying
(iv) Herzbergs motivators in his Two-Factor Theory
(v) Hackman & Oldham Model of Job Design
(vi) Flextime A programme that allows workers to complete their
jobs within a workday or a workweek of a normal number of hours
that they schedule themselves with prior approval of management
(vii) Empowerment The process of sharing power with employees,
thereby enhancing their confidence in their ability to perform their
jobs and their belief that they are influential contributors to the
organisation
(b) Rewards
(i) Extrinsic reward Given directly by the company or boss like
cash bonus.
(ii) Intrinsic Reward a worker derives directly from performing the
job itself like compliments, recognition and self-satisfaction.
45
Other motivating factors are policies and programmes of the organisation,

such as:-
(a) Human Resource Management (HRM)
Recruitment, training, career development, performance assessment,
and reward system.
(b) Work-Life Balance
A policy of the organisation to balance work with family life of the
employee so as to achieve win-win situation for family and career.
(c) Quality of Work Life
Programmes designed to create a workplace that enhance employee
well-being.
To conclude, a motivated single employee will satisfy himself alone but an

organisation full of people with high job satisfaction will likely perform well in
countless ways.
Study Questions
1. Most of us have to work for a living, and a job is a central part of our
lives. So why do managers have to worry so much about employee
motivation issues?
2. Just exactly how is Maslows hierarchy of needs a motivation theory?
3. How can managers motivate high achievers?
4. Many job design experts who have studied the changing nature of work
say that people do their best work when they are motivated by a sense
of purpose rather than by the pursuit of money. Do you agree? Explain
your answer.
5. Read Concluding Case Big Bison Resorts: Finding the Key to What
Employees Value on pg. 499-500 of the textbook, and answer all the
questions.
6. Read Case The Container Stores Motivating Experience on pg. 436-

437 of Certo, and answer all the questions.
46
Topic 9: Teamwork
Learning Outcomes

1. Explain the importance of teams and teamwork;
2. Describe how to build an effective team.
Topic Overview
Over ninety percent of organisations now use teams to produce goods and
services, to manage projects, and to make decisions and run the company.
Teams can increase productivity, improve quality, and reduce costs. There
are also disadvantages like social loafing, and problems associated with
group decision making. However, the advantages far outweigh the
disadvantages. There are several types of teams. Among the primary ones
are work teams, project and development teams, management teams, self-
managed teams, and transnational teams. Teams are developed from
groups which become true teams via basic group processes, the passage of
time, and team development activities. Team effectiveness can be enhanced
through setting up goals and priorities, how team members are selected,
trained, and compensated.
47

(2013). Management (10th ed.). New
York: McGraw Hill.
9.1 Team Environment Chapter 14, pp 504-511.

Extra Readings:
Certo, Chapter 18, pp 450451.
Williams,Chapter 10, pp 362-375.
9.2 Building an Effective Team Chapter 14, pp. 512-525

Extra Readings:
383-386.
Content Summary
A team is a small number of people with complimentary skills who are

committed to a common purpose, set of performance goals, and approach
for which they hold themselves mutually accountable. Teams are
transforming the way organisations function. Almost all companies now use
team to produce goods and services, to manage projects, and to make
decisions and run the company. Teams can increase productivity, improve
quality, and reduce costs.
Nevertheless, there are a few disadvantages, such as:

(a) Initially high turnover Not everyone likes to be in a team, some balk at
the responsibility, effort, and learning required in team settings.
(b) Social loafing when workers withhold their efforts and fail to do their
share of the work, and
(c) The problems associated with group decision making like groupthink
and minority domination.
48
However, the advantages far outweigh the disadvantages. Hence, it is

imperative that management knows when to use teams. Firstly, teams
should be used when there is a clear, engaging reason or purpose for using
them. Secondly, teams should be used when the job cannot be done unless
people work together. Finally, teams should be used when rewards can be
provided for teamwork and team performance.
There are several types of groups and teams in organisations but the
primary types are as follows:
(a) Work teams make or do things such as manufacture, assemble, sell, or
provide service.
(b) Project and development teams work on long-term projects, often over
a period of years.
(c) Management teams coordinate and provide directions to the sub-units
under their jurisdiction and integrate works among sub-units.
(d) Transnational teams are work teams composed of multinational
members whose activities span multiple countries. They tend to be
virtual teams, communicating electronically more often than face-to-
face.
The characteristics of work teams have to be understood as they are

essential for making teams effective as parts of an organisation. The most
important characteristics of work teams are norms, cohesiveness, size,
conflict, and development. Norms let members know what is expected of
them and can influence team behaviour in positive or negative ways. Team
cohesiveness helps team retain members, promotes cooperative behaviour,
increases motivation, and facilitates team performance. Team size should be
moderate between six to nine members as this would be cohesive and small
enough for members to know each other and contribute in a meaningful way
but large enough to take advantage of each members diverse skills and
knowledge. Conflict and disagreement are inevitable in most teams. The key
to dealing with team conflict is to maximise cognitive conflict, which focuses
on issue-related differences, and minimize affective conflict, the emotional
reactions that occur when disagreements become personal rather than
professional. As teams develop and grow, they pass through four stages of
development: forming, storming, normalising, and performing. Organisations
must make sure teams continue to perform by managing them well,
otherwise their performance may decline as the team regresses.
(Williams, 2013)
49
Companies can make teams more effective by setting team goals and
managing how team members are selected, trained and compensated.
Team goals provide a clear focus and purpose, and lead to higher team
performance. Challenging tasks can be used to motivate teams as long as
teams have more autonomy and control over resources. Not everyone is
suited for teamwork. When selecting team members, companies should
select people who have preference for teamwork and team diversity. Proper
training should be provided to make sure that teams work. The most
common types of training are for interpersonal skills, decision-making and
problem-solving skills, conflict resolution, technical training to help team
members learn multiple jobs, and training for team leaders. Employees
should be compensated for team participation and accomplishment by
monetary and non-monetary rewards.
In conclusion, managers should always remind his staff to be a team player,

and not be like "Rambo".
Study Questions
1. Do you think that everyone should be expected to be a team player,

given the trend that some individuals do not work (perform) best in
team setting. Discuss.
2. Do you think team tend to limit individual performance?
3. Do you assemble a team of stars or ordinary players?
4. Read Concluding Case Rocky Gagnon, General Contractor on pg 529

of the textbook, and answer all the questions.
5. Read Case Googles Motto of Dont be Evil on pg.462-463, and

answer all the questions.
50
Topic 10: Control
Learning Outcomes

1. Explain the link between planning and controlling functions;
2. Describe the bureaucratic controlling process; and
3. State the purpose of using budgets as a control device.
Topic Overview
Control is the process of monitoring activities to ensure that they are being
accomplished as planned and of correcting any significant deviations.
Control is therefore linked to planning, which some refer to as Siamese
twins. If plans are not carried out properly, management must takes steps to
correct the problem. This process is the primary control of management.
There are a number of control tools. Among them are management audits
consisting of external and internal audits, budget, and financial controls.
Organisations should have an effective control system which includes valid
performance standards, acceptable to employees, and use multiple
approaches.
51

10.1 Control Process Chapter 16, pp 565-573.

Extra Readings:
pp. 458-464.
Williams,Chapter 3, pp. 492-498.
10.2 Bureaucratic Control Tools Chapter 16, pp. 575-584.

Extra Readings:
pp. 468-473.
10.3 Designing Effective Control Systems Chapter 16, pp.584-590.

Extra Readings:
Certo, Chapter 21, p.526.
Content Summary
Control is any process that directs the activities of individuals towards the
achievement of organisational goals. It is how effective managers make sure
that activities are going as planned. Every individual employee in the
organisation has a role in controlling work activities. This is particularly in
organisations where employees have been empowered. But even in
organisations where employees have not been empowered, these
employees play a role in measuring, comparing, and correcting performance.
However, managers will be responsible for establishing the standards,
approaches, and guidelines for measuring, comparing, and correcting.
Besides the individual and the whole staff, managers must also control
inventories, quality, and costs, to mention just a few of their responsibilities.
52
Managers can apply three broad strategies for achieving organisational

control via:
(i) Bureaucratic control The use of rules, regulations, and authority to
guide performance
(ii) Market control Control based on pricing mechanisms and economic
information to regulate activities within organisations
(iii) Clan control Control based on the norms, values, shared goals, and
trust among members.
Bureaucratic (or formal) control systems are designed to measure progress

towards set performance goals and, if necessary, to apply corrective
measures to ensure that performance achieves the managers objectives.
A typical control system has four major steps:

(a) Setting performance standards;
(b) Measuring performance;
(c) Comparing performance against the standards and determining
deviations; and
(d) Taking action to correct problems and reinforce successes.
A simple example is the national examination performance of a school. A

school with an average performance in the secondary school certificate
examination (SPM) will set a high standard to achieve in the next few years.
The school will examine its performance in the previous years and compare
it to the standard to be achieved. The school will then take action to raise the
standard by having more trained teachers, better facilities, more resources,
more rapport and involvement between the school and the Parents Teachers
Association (PTA), more incentives for the students, tighter discipline, and
strong leadership by the headmaster. Through proper approaches in the
control system, the school will achieve success.
The three approaches to bureaucratic control are feedforward, concurrent,

and feedback. In the case of the school, the examples of the three controls
are as follows:
(a) Feedforward Policies, rules and regulations on education system,
examination, teacher qualification, financial grants, resources and
facilities. Planned activities must be within the limits of these available
resources.
53
(b) Concurrent The control process while plans are being carried out,
such as the hours of teaching of subjects, the tests, academic
improvement, additional short training for teachers, regular PTA
meetings, and etc.
(c) Feedback Control on the use of information from previous results
such as previous exams, trial examinations, informed parents and
subject experts. These information will be used to correct the deviation
to improve the school performance.
There are a number of tools used for the control system. Among them are
the following:
(a) Management Audit An evaluation of the effectiveness and efficiency
of the various systems within an organisation. Management audit may
be external, such as CPA firm; or internal, which is an entity of the
organisation. Managers use both.
(b) Budgetary control One of the most widely recognised and commonly
used methods of managerial control. Budgetary control is the process
of finding out whats being done and comparing the results with the
corresponding budget data to verify accomplishment or remedy
differences.
(c) Financial controls The two commonly used financial statements are
Balance Sheet which shows the financial picture of the company at a
given time. The other is Profit and Loss Statement, an itemised
financial statement of the income and expenses of a companys
operations.
(d) Financial Ratios An effective approach used for checking on the
overall performance of an enterprise. The three categories of financial
ratios are liquidity, leverage, and profitability.
Study Questions
1. Why is control important?
2. Why would managers want to control organisational performances?
3. What are the pros and cons of bureaucratic controls such as rules,
procedures, and supervision?
4. Read Concluding Case The Grizzly Bear Lodge on pg. 598-599 of the
textbook, and answer all the questions.
5. Read Case Technology Helps Nike Race Towards Higher

Performance on pg. 540-541 of Certo, and answer all the questions.
54
Appendices
Appendix A: Learning Support
Seminars
There are 15 hours of face-to-face facilitation, in the form of FIVE seminars

of three hours each. You will be notified of the date, time and location of
these seminars, together with the name and e-mail address of your
facilitator, as soon as you are allocated a group.
Discussion and Participation
Besides the face-to-face seminars, you have the support of online

discussions in myVLE with your facilitator and coursemates. Your
contributions to online discussions will greatly enhance your understanding
of the course content, and help you do the assignment(s) and prepare for the
examination.
Feedback and Input from Facilitator
As you work on the activities and the assigned text(s), your facilitator will
provide assistance to you throughout the duration of the course. Should you
need assistance at any time, do not hesitate to contact your facilitator and
discuss your problems with him/her.
Bear in mind that communication is important for you to be able to get the
most out of this course. Therefore, you should, at all times, be in touch with
your facilitator, e-facilitator and coursemates, and be aware of all the
requirements for successful completion of the course.
Tan Sri Dr Abdullah Sanusi (TSDAS) Digital Library
For the purpose of referencing materials and doing library-based research,

OUM has a comprehensive digital library. For this course, you may use the
following databases: InfoTrac, ProQuest and EBSCO. From time to time,
materials from these databases will be assigned for additional reading and
activities.
55
Appendix B: Study Tips
Time Commitments for Study
You should plan to spend about 12 hours of study time on each topic, which
includes doing all assigned readings and activities. You must also set aside
time to discuss work online. It is often more effective to distribute the study
hours over a number of days rather than spend a whole day studying one
topic.
Study Strategy
The following is a proposed strategy for working through the course. If you
have difficulty following this strategy, discuss your problems with your
facilitator either through the online forum or during the seminars.
(i) The most important step is to read the contents of this Study Guide
thoroughly.
(ii) Organise a study schedule (as recommended in Table 2). Take note of
the amount of time you spend on each topic as well as the dates for
submission of assignment(s), seminars and examination.
(iii) Once you have created a study schedule, make every effort to stick to
it. One reason learners are unable to cope with postgraduate courses
is that they procrastinate and delay completing their course work.
(iv) You are encouraged to do the following:

Read the Study Guide carefully and look through the list of topics
covered. Try to examine each topic in relation to other topics.
Complete all assigned readings and go through as many
supplementary texts as possible to get a broader understanding of
the course content.
Go through all the activities and study questions to better
understand the various concepts and facts presented in a topic.
Draw ideas from a large number of readings as you work on the
assignments. Work regularly on the assignments as the semester
progresses so that you are able to systematically produce a
commendable paper.
56
(v) When you have completed a topic, review the Learning Outcomes for
the topic to confirm that you have achieved them and are able to do
what is required.
(vi) After completing all topics, review the Learning Outcomes of the course
to see if you have achieved them.
57

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STUDY GUIDE BMOM5203 Organisation and Business Management

CENTRE FOR GRADUATE STUDIES

Writer: Dato Dr Abdul Kuddus Ahmad

Developed by: Centre for Instructional Design and Technology

First Edition, August 2012

Copyright Open University Malaysia (OUM)

INTRODUCTION TO STUDY GUIDE

Part Two : Learning Guide .......................................................................... 7

PART ONE: COURSE INTRODUCTION

This course introduces you to the management of organisations. It starts off

The general aims of this course are to:

By the completion of this course, you should be able to:

It is a standard OUM practice that learners accumulate 40 study hours for

Table 1: Allocation of Study Hours

Activities No. of Hours

Additional Recommended Readings

Please refer to myVLE for information on the assessment format and

PART TWO: LEARNING GUIDE

This Learning Guide is arranged by topic. It covers essential content in the

Table 2: Recommended Weekly Study Schedule

Content Summary: provides an interpretative framework for

Figure 1: Organisation of the Learning Guide

Topic 1: Foundations of Management

By the end of this topic, you should be able to:

Management is the process of reaching organisational goals by working with

Focus Areas and Assigned Readings

Focus Areas Assigned Readings

Bateman, T. S., & Snell, S. A. (2013).

1.1 Importance of management Chapter 1, pp 3-14.

1.2 Management functions Chapter 1, pp. 14-17.

1.3 Managers roles and skills Chapter 1, pp 1827.

(a) Planning involves defining goals, establishing strategies for achieving

1. Compare and contrast the management of a bank and a non-

2. Is your university lecturer a manager? Discuss his managerial

4. Read Case Managing Zingermans Community of Business on pg.49-

By the end of this topic, you should be able to:

Focus Areas and Assigned Readings

Focus Areas Assigned Readings

Bateman, T. S., & Snell, S. A. (2013).

2.2 Strategic planning Chapter 2, pp 48-7; Chapter 4, pp 133-155.

2.3 Decision making Chapter 3, pp 86-109.

Planning is a process that involves defining the organisations goals,

performance over a longer period, thus more strategic planning has to be

Another example of planning is a major project undertaken just after

The latter type of planning is also referred to as strategic management. The

One of the major projects of Malaysia in the 1980s requiring strategic

(a) Vision and Goals

(b) Environmental Analysis

(c) SWOT analysis

(d) Alternative strategies:

(e) Alternative (iii) was selected and implemented.

(b) Criteria for Alternatives

(c) The alternatives

1. How might planning in a not-for-profit organisation such as Malaysian

2. How do strategic, operational, and tactical planning differ? How might

3. Read Concluding Case Custom Coffee & Chocolate on p.154 of the

4. Why is decision-making often described as the essence of a managers

5. When the boss takes time to decide, he is regarded as meticulous but

6. How would you manage group decision making?

Topic 3: Ethics and Corporate Social Responsibility

By the end of this topic, you will be able to:

News headlines seem to be abound with stories of irresponsible and ethically

Focus Areas and Assigned Readings