BDPP1103 PDF

OUM Business School
BDPP1103
Introductory Management
Copyright © Open University Malaysia (OUM)

BDPP1103
INTRODUCTORY
MANAGEMENT
Dr Tee Keng Kok
Assoc Prof Dr Santhi Raghavan

Project Directors: Prof Dato’ Dr Mansor Fadzil
Prof Dr Wardah Mohamad
Open University Malaysia
Module Writers: Dr Tee Keng Kok

Universiti Putra Malaysia
Assoc Prof Dr Santhi Raghavan

Moderator: Lilian Kek Siew Yick

Developed by: Centre for Instructional Design and Technology

First Edition, November 2007

Second Edition, December 2016 (rs)
Copyright © Open University Malaysia (OUM), December 2016, BDPP1103

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 (OUM).

Table of Contents
Course Guide xiii–xvii
Topic 1 Introduction to Management 1

1.1 Organisations 2
1.1.1 Purpose 2
1.1.2 People 2
1.1.3 Systematic Structure 2
1.2 Differences between Managers and Operative Employees 3
1.3 Levels of Management 3
1.3.1 First-line Managers 4
1.3.2 Middle Managers 4
1.3.3 Top Managers 4
1.4 What is Management? 5
1.5 The Management Process 6
1.5.1 Planning 6
1.5.2 Organising 6
1.5.3 Leading 6
1.5.4 Controlling 7
1.6 Managerial Roles 8
1.7 Levels of Managerial Skills and Competencies 10
1.7.1 Conceptual Skills 10
1.7.2 Interpersonal Skills 10
1.7.3 Technical Skills 10
1.7.4 What does Katz Say? 11
1.8 Relationship between Management and Other Disciplines 12
Summary 13
Reference 13
Topic 2 The Historical Development of Management 14

2.1 Pre-Modern Era 15
2.1.1 Management has Existed for a Long Time 16
2.1.2 Contributions of Adam Smith 16
2.1.3 Influence of the Industrial Revolution on 16
Management
2.2 Classical Management Approach 17
2.2.1 Scientific Management 17
2.2.2 General Administrative Theory 19

iv  TABLE OF CONTENTS
2.3 Human Resource Management Approach 20

2.3.1 Robert Owen 20
2.3.2 Hugo Munsterberg 20
2.3.3 Mary Parker Follet 21
2.3.4 Chester Barnard 21
2.3.5 The Hawthorne Studies 22
2.4 Quantitative Management Approach 22
Summary 24
Topic 3 Planning 25
3.1 Definition of Planning 26
3.1.1 Criticism Levelled at Planning 26
3.2 Types of Planning 27
3.2.1 Strategic Planning 27
3.2.2 Tactical Planning 27
3.2.3 Time-based Planning 28
3.2.4 Specific and Directional Planning 28
3.2.5 Single-use Plan and Standing Plan 29
3.3 Management by Objectives (MBO) 29
3.3.1 What is MBO? 29
3.3.2 Is MBO Effective? 30
3.4 Strategic Framework – Strategic Management process 31
3.5 Analysis of Strengths, Weaknesses Opportunities 31
and Threats (SWOT)
3.6 Quality as a Strategy 34
3.6.1 Practice of Quality as Competitive Edge 34
3.6.2 How Does Benchmarking Help Promote Quality? 35
3.6.3 ISO 9000 Series 35
Summary 36
Topic 4 Decision Making 37

4.1 The Decision Making Process 38
4.2 Decision Making: The Rationality Model 42
4.3 Decision Making: Amendment to the Rationality Model 42
4.3.1 Bounded Rationality 43
4.3.2 Differences in Decisions Made Under the Rationality 43
and Bounded Rationality Models
4.3.3 General Mistakes Made in the Decision Making 44
Process
4.4 Decision Making: Contingency Approach 45
4.4.1 Non-programmed Decisions 45
4.4.2 Programmed Decisions 45
4.4.3 Procedures, Rules and Policies 46

TABLE OF CONTENTS  v
4.5 Group Decision Making 46

4.5.1 What are the Advantages of Group Decision Making? 47
4.5.2 What are the Disadvantages of Group Decision 47
Making?
4.5.3 Group Think 47
4.5.4 How to Improve Group Decision Making? 48
Summary 49
Topic 5 Basic Organisational Design 50

5.1 Structural Elements 51
5.1.1 Specialisation 51
5.1.2 Chain of Command 51
5.1.3 Span of Control 52
5.1.4 Authority and Responsibility 52
5.1.5 Centralisation and Decentralisation 53
5.1.6 Departmentalisation 53
5.2 Contingency Factors that Influence Structure 57
5.2.1 Mechanistic Organisations 57
5.2.2 Organic Organisations 57
5.2.3 Strategy 58
5.2.4 Size 58
5.2.5 Technology 59
5.2.6 Environment 59
5.3 Organisational Design Application 59
5.3.1 Simple Structure 60
5.3.2 Commencement of Bureaucracy 60
5.3.3 Team Structure 62
5.3.4 Borderless Structure 62
5.4 Organisational Culture 63
5.4.1 Where does Culture Originate From? 63
5.4.2 How does Culture Influence Organisational Structure? 63
Summary 64
Topic 6 Human Resource Management 65

6.1 HRM Negotiation Environment 66
6.2 Human Resource Management Process 66
6.3 Human Resource Planning 67
6.3.1 Human Resource Evaluation 68
6.3.2 Future Human Resource Needs 68
6.4 Recruitment and Selection 69
6.4.1 Selection of Candidates 69
6.4.2 Effectiveness of Tests and Interviews as Selection 70
Techniques

vi  TABLE OF CONTENTS
6.5 Orientation, Training and Development 72

6.5.1 Training of Employees 73
6.5.2 How are Employees Trained? 74
6.5.3 How do Managers Evaluate the Effectiveness of 75
Training?
6.6 Performance Management 76
6.6.1 What is Meant by Performance Management 76
Systems?
6.6.2 What will Happen when an EmployeeÊs 77
Performance Deteriorates?
6.7 Compensation and Benefits 77
6.7.1 Determination of Remuneration Level 77
6.7.2 Employee Benefits 78
6.8 Current Issues in Human Resource Management 78
6.8.1 Diversification of Employees 78
6.8.2 Sexual Harassment 78
6.8.3 Howc Organisations become Family-friendly? 79
Summary 79
Topic 7 Change Management and Innovation 80

7.1 What is Change? 81
7.1.1 Forces of Change 81
7.1.2 How does a Manager Play the Role of Change 82
Agent?
7.1.3 Calm Waters Metaphor 83
7.1.4 White Water Rapids Metaphor 84
7.2 Organisational Change and Employee Resistance 84
7.2.1 Why do People Resist Change? 85
7.2.2 Techniques to Reduce Resistance to Change 86
7.3 Making Changes in the Organisation 86
7.4 Stress 87
7.4.1 What is Stress? 87
7.4.2 Causes of Stress 88
7.4.3 Personal Factors 88
7.4.4 Symptoms of Stress 89
7.4.5 How can Stress be Reduced? 89
7.5 Stimulating Innovation 90
7.5.1 What is the Relationship between Creativity and 90
Innovation?
7.5.2 How does a Manager Stimulate Innovation? 92
Summary 93
References 93

TABLE OF CONTENTS  vii
Topic 8 Understanding Work Teams 84

8.1 Work Teams – What are They? 95
8.1.1 Stages of Establishing Teams 95
8.1.2 Are Work Groups and Work Teams the Same? 97
8.2 Types of Work Teams 98
8.2.1 Functional Teams 98
8.2.2 Problem-solving Teams 98
8.2.3 Self-managing Work Teams 99
8.2.4 Cross-functional Work Teams 99
8.2.5 Virtual Work Teams 100
8.3 Characteristics of Effective Teams 101
8.3.1 Clear Goals 101
8.3.2 Competent Individuals 101
8.3.3 Trusting Each Other 102
8.3.4 Undivided Total Commitment 102
8.3.5 Good Communication 102
8.3.6 Negotiation Skills 102
8.3.7 Capable Leadership 102
8.3.8 Conducive Environment 103
8.4 Can We Convert Individuals into Team Members? 103
8.4.1 Challenges in Team Formation 103
8.4.2 What are the Roles Played by Team Members? 104
8.4.3 How does a Manager Set the Behavioural Patterns 104
of Team Members?
8.4.4 What is the Relationship between Selection and 105
Team Formation?
8.4.5 How does a Manager Revive the Spirit of Mature 106
Teams?
Summary 107
References 107
Topic 9 Leadership 108

9.1 Trait Theories of Leadership 109
9.2 Behavioural Theories of Leadership 111
9.2.1 Kurt LewinÊs Studies in the University of Iowa 111
9.2.2 Ohio State Studies 112
9.2.3 University of Michigan Studies 112
9.2.4 What is the Managerial Grid? 113
9.3 Contingency Theories of Leadership 115
9.3.1 FiedlerÊs Model 115
9.3.2 Path-goal Theory 117
9.3.3 Leader-participation Model 118
9.3.4 Situational Leadership Model 118

viii  TABLE OF CONTENTS
9.4 Current Approaches to Leadership Theories 120

9.4.1 Charismatic Leadership Theory 120
9.4.2 What are Visionary Leaders? 121
9.4.3 Transformational Leadership 122
9.5 Trust 123
9.5.1 What is Trust? 123
9.5.2 Why is Trust Looked Upon as the Foundation of 123
Leadership?
9.5.3 Types of Trust 124
Summary 125
References 126
Topic 10 Communication 127

10.1 Understanding Communication 128
10.1.1 How does the Communication Process Function? 128
10.1.2 Is Written Communication More Effective than 130
Verbal Communication?
10.1.3 Is the Grapevine Considered an Effective Means 131
of Communication?
10.1.4 How do Non-verbal Symbols Influence 131
Communication?
10.1.5 What are the Barriers to Effective Communication? 132
10.1.6 How do Managers Overcome the Barriers to 134
Communication?
10.2 Enriching Interpersonal Skills 135
10.2.1 Why are Active Listening Skills Important? 135
10.2.2 Feedback 136
10.2.3 What is Conflict Management? 138
10.2.4 Conflict Management Styles 140
Summary 143
Topic 11 Motivation 144

11.1 Motivation and Individual Needs 145
11.2 Early Theories of Motivation 146
11.2.1 MaslowÊs Hierarchy of Needs Theory 147
11.2.2 McGregorÊs Theory X and Theory Y 148
11.2.3 HerzbergÊs Motivation-Hygiene Theory 149
11.3 New Theories on Motivation 150
11.3.1 McClellandÊs Three Needs Theory 151
11.3.2 Equity Theory 152
11.3.3 Work Features Model 153
11.3.4 Expectancy Theory 155

TABLE OF CONTENTS  ix
11.4 Important Issues in Motivation 157

11.4.1 Should Workers be Rewarded Based on Time or 157
Performance?
11.4.2 How to Motivate Low Income Workers? 157
11.4.3 What are the Differences in Motivating Workers in 158
Professional and Technical Groups?
11.4.4 How do Flexible Working Hours Motivate Workers? 159
Summary 160
Topic 12 Controlling 161

12.1 What is Controlling? 162
12.2 Importance of Controlling 163
12.2.1 Control Process 163
12.2.2 What is Measurement? 164
12.2.3 What do Managers Measure? 166
12.2.4 How do Managers Determine Differences between 166
Actual Performance and the Planned Goals?
12.2.5 What are the Steps that Management can Take? 167
12.3 Types of Control 168
12.4 Compulsory Quality Requirements for Effective Control 169
Systems
12.5 Weaknesses of Controlling 171
12.6 Ethical Issues in Controlling 172
Summary 173

xxvi X COURSE ASSIGNMENT GUIDE

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COURSE GUIDE
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x  PANDUAN KURSUS
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COURSE GUIDE  xiii
COURSE GUIDE DESCRIPTION

You must read this Course Guide carefully from the beginning to the end. It tells
you briefly what the course is about and how you can work your way through
the course material. It also suggests the amount of time you are likely to spend in
order to complete the course successfully. Please keep on referring to the Course
Guide as you go through the course material as it will help you to clarify
important study components or points that you might miss or overlook.
INTRODUCTION
BDPP1103 Introductory Management is one of the courses offered by OUM
Business School at Open University Malaysia (OUM). This course is worth 3
credit hours and should be covered over 15 weeks.
COURSE AUDIENCE
This course is offered to all learners taking the Diploma in Management and
Diploma in Human Resource Management programmes.
As an open and distance learners, you should be able to learn independently and
optimise the learning modes and environment available to you. Before you begin
this course, please ensure that you have the right course materials, understand
the course requirements, as well as know how the course is conducted.
STUDY SCHEDULE
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
120 study hours. Table 1 gives an estimation of how the 120 study hours could be
accumulated.

xiv  COURSE GUIDE
Table 1: Estimation of Time Accumulation of Study Hours
Study
Study Activities
Hours
Briefly go through the course content and participate in initial discussions 3
Study the module 60
Attend 3 to 5 tutorial sessions 10
Online participation 12
Revision 15
Assignment(s), Test(s) and Examination(s) 20
TOTAL STUDY HOURS ACCUMULATED 120
COURSE OUTCOMES
By the end of this course, you should be able to:
1. Elaborate on the aspects of management principles; and

2. Discuss the basic functions of management including planning, organising,
leading and controlling.
COURSE SYNOPSIS
This course is divided into 12 topics. The synopsis for each topic is as follows:
Topic 1 introduces the meaning of management terms and the four management
processes, namely planning, organising, leading and controlling. This topic also
explains the role of managers.
Topic 2 describes the historical development of management. This topic will

introduce three main branches of the development of management, which are the
classical thinking era, behavioural thinking era and quantitative thinking era.
Topic 3 discusses the meaning of planning, types of planning, management by

objectives, strategic framework, SWOT analysis, and quality as a strategy.
Topic 4 elaborates the decision making process, particularly the making of

decisions based on the rationality model as well as amendments to the rationality
model. This topic ends with a discussion of the contingency approach and group
decision making.

COURSE GUIDE  xv
Topic 5 identifies and defines the six elements of organisational structure, and
advantages and disadvantages of work specialisation. This topic also explains the
five departmental approaches practised by organisations and differentiates this
from mechanistic organisations.
Topic 6 explains the human resource management process, human resource

planning, hiring and selection, orientation, training and development,
performance management, compensation and benefits, and current issues in
human resource management.
Topic 7 discusses the variables that can be controlled by managers, identifies the
internal and external changes and explains how managers function as change
agents. This topic also differentiates between creativity and innovation.
Topic 8 explains the sudden growth of teams, differentiates work groups from
teams, discusses how organisations can build team spirit and managers can
encourage teams to develop the organisation.
Topic 9 defines leadership terms and explains the differences between managers
and leaders by identifying the five dimensions of integrity.
Topic 10 defines communication and elaborates on its importance to managers,

explains the communication process and interpersonal skills.
Topic 11 focuses on motivation and the motivation process. The topic also
elaborates on how managers design individual work to maximise employee
performance.
Topic 12 discusses control, the importance of controlling and the control process.
Controlling is important because it is the final link in the management chain.

xvi  COURSE GUIDE
TEXT ARRANGEMENT GUIDE

Before you go through this module, it is important that you note the text
arrangement. Understanding the text arrangement will help you to organise your
study of this course in a more objective and effective way. Generally, the text
arrangement for each topic is as follows:
Learning Outcomes: This section refers to what you should achieve after you
have completely covered a topic. As you go through each topic, you should
frequently refer to these learning outcomes. By doing this, you can continuously
gauge your understanding of the topic.
Self-Check: This component of the module is inserted at strategic locations

throughout the module. It may be inserted after one sub-section or a few sub-
sections. It usually comes in the form of a question. When you come across this
component, try to reflect on what you have already learnt thus far. By attempting
to answer the question, you should be able to gauge how well you have
understood the sub-section(s). Most of the time, the answers to the questions can
be found directly from the module itself.
Activity: Like Self-Check, the Activity component is also placed at various

locations or junctures throughout the module. This component may require you
to solve questions, explore short case studies, or conduct an observation or
research. It may even require you to evaluate a given scenario. When you come
across an Activity, you should try to reflect on what you have gathered from the
module and apply it to real situations. You should, at the same time, engage
yourself in higher order thinking where you might be required to analyse,
synthesise and evaluate instead of only having to recall and define.
Summary: You will find this component at the end of each topic. This component
helps you to recap the whole topic. By going through the summary, you should
be able to gauge your knowledge retention level. Should you find points in the
summary that you do not fully understand, it would be a good idea for you to
revisit the details in the module.
Key Terms: This component can be found at the end of each topic. You should go
through this component to remind yourself of important terms or jargon used
throughout the module. Should you find terms here that you are not able to
explain, you should look for the terms in the module.

COURSE GUIDE  xvii
References: The References section is where a list of relevant and useful

textbooks, journals, articles, electronic contents or sources can be found. The list
can appear in a few locations such as in the Course Guide (at the References
section), at the end of every topic or at the back of the module. You are
encouraged to read or refer to the suggested sources to obtain the additional
information needed and to enhance your overall understanding of the course.
PRIOR KNOWLEDGE
There is no prior knowledge required.
ASSESSMENT METHOD
Please refer to myINSPIRE.
REFERENCES
Certo, S. C. (2006). Modern management (11th ed.). Upper Saddle River, NJ:
Prentice Hall.
Chuck, W. (2007). Management (4th ed.). Canada: Thomson, South-Western.
Daft, R. L., & Margic, D. (2001). Understanding management (3rd ed.). Fort
Worth TX: Harcourt College.
Robbins, S. & Decenzo, D. (2006). Fundamentals of management: Essential

concepts and applications (4th ed.). Upper Saddle River, NJ: Prentice Hall.
TAN SRI DR ABDULLAH SANUSI (TSDAS) DIGITAL

LIBRARY
The TSDAS Digital Library has a wide range of print and online resources for the
use of its learners. This comprehensive digital library, which is accessible
through the OUM portal, provides access to more than 30 online databases
comprising e-journals, e-theses, e-books and more. Examples of databases
available are EBSCOhost, ProQuest, SpringerLink, Books24x7, InfoSci Books,
Emerald Management Plus and Ebrary Electronic Books. As an OUM learner,
you are encouraged to make full use of the resources available through this
library.

xxvi X COURSE ASSIGNMENT GUIDE

Topic  Introduction to
1 Management
LEARNING OUTCOMES
By the end of this topic, you should be able to:
1. Differentiate between managers and operative employees;
2. Explain organisation management and the four management
processes;
3. Explain the three levels of management and the responsibilities of
each level;
4. Describe the three categories of managerial roles;
5. Identify the skills that a manager should possess; and
6. State the relationship between management and other disciplines.
 INTRODUCTION
When we learn about management, we cannot omit the study of organisational
concepts. Directly or indirectly, we are all members of an organisation. We may
not be aware that we are all a part of an organisation like a college, a sports team,
the army or a musical group. In fact, our own family structure is also an
organisation and a country like Malaysia is a huge organisation. With this kind of
understanding, it is best that we first understand the concept of an organisation.

2  TOPIC 1 INTRODUCTION TO MANAGEMENT
1.1 ORGANISATIONS
Every organisation comprises a systematic collection of people to achieve a
common purpose. The Employees Provident Fund (EPF), the PilgrimsÊ Fund
Management Board (LUTH) and Hong Leong Bank (HLB) manage our funds;
Universiti Putra Malaysia (UPM) and Kasturi College provide educational
services; Matsushita (M) Bhd, supplies electrical goods; and Malaysia Airlines
System (MAS) provides flight services to all organisations. All these are
categorised as organisations as each of these have three common features, i.e.
purpose, people, and a systematic structure. We will now discuss in detail the
relationship among these three features.
1.1.1 Purpose
All organisations have a purpose or goal. This purpose will vary from one
organisation to the other. For example, the goal of MAS is to provide air
transportation services. The goal of the Selangor Football Team competing in the
Perdana League is to win the league championship. Without a purpose or aim,
there is no justification why an organisation should exist.
1.1.2 People
The purpose or aim can only be achieved if there are people handling it. Workers
and managers need to make decisions about the goals of the organisation and
endeavour to realise its aims or goals.
1.1.3 Systematic Structure

Organisations will create a systematic structure to control the behaviour of their
members. Steps used to create a systematic structure include the organisational
rules and decorum that must be adhered to by the members; as well as the
empowerment of some members with authority over others. In fact, the
determination of tasks so that organisational members understand their
respective responsibilities can be looked upon as the creation of a systematic
organisational structure.

TOPIC 1 INTRODUCTION TO MANAGEMENT  3
SELF-CHECK 1.1
What is the definition of „organisation‰?

An organisation is an entity comprising______________ collected
systematically to achieve a _____________________________________.
1.2 DIFFERENCES BETWEEN MANAGERS AND

OPERATIVE EMPLOYEES
You have just been given a clear picture about organisations. Another concept
that you should know before we learn about management, is the concept of
manager and operative employee, and the differences between the two. We want
to learn about management so that directly or indirectly, we can all aspire to be
managers. We have to learn about management because we are not born as
managers but we can be trained to be one. Therefore, it is vital that we
understand this topic and the differences between managers and operative
employees.
Operative employees are workers who are responsible for carrying out tasks
without supervising the tasks of others.
A manager is a person who directs the activities of other employees in an
organisation.
1.3 LEVELS OF MANAGEMENT

In any organisation, particularly a large organisation, there are several layers of
management, each of which has its own area of authority. As such, managers in
an organisation represent various levels in the organisational hierarchy, which in
turn differentiates their levels. These levels of managers are first-line managers,
middle managers and top managers.

1.3.1 First-line Managers

First-line managers are the lowest level of managers in an organisation. These
managers only give instructions to operative employees and do not supervise
other managers. One example of first-line managers is supervisors in an air-
conditioning plant who supervise their operative employees carrying out
installation work of air-conditioning equipment. During the British Colonial era,
these supervisors were known as „mandur‰ or „heads‰ who supervised rubber
tappers in estates. Currently, they are known as supervisors.
1.3.2 Middle Managers

The middle managers direct the activities of other managers and sometimes even
instruct operative employees. Their position is between first-line managers and
top management. Their main responsibility is to interpret in detail the goals set
by top managers for first-line managers, so that the goals can be properly
accomplished. A clear example of this mid-level position is factory managers in
electronic firms.
1.3.3 Top Managers

Top managers, comprising a small group of executives, are responsible for the
performance of an organisation as a whole. They are responsible for deciding on
the way forward or the direction of the organisation, and for planning
organisational policy which will affect every individual in the organisation.
Common job titles are „vice-president‰, „president‰, and „chief executive
officer‰.

SELF-CHECK 1.2
1. State four (4) levels of managers and operative employees in this

pyramid:
2. What are some differences among managerial groups? List a few

examples.
1.4 WHAT IS MANAGEMENT?

With an understanding of what an organisation is and of the members involved
in it, we can now try and understand what management is. Management is
defined as a process to achieve a goal in an efficient and effective manner. The
keywords in this definition are process, efficiency and effectiveness.
Efficiency means carrying out a task in the right way. Effectiveness means
carrying out the right task or the right job. Although efficiency and effectiveness
are two different concepts, in management, both these terms are closely related.
For example, Hewlett-Packard can produce the most sophisticated printing
cartridges for its printers without calculating input costs. This means this
company is effective but not at all efficient. Although it has achieved its goals, it
has done this at a very high cost.
Our inference:
„Good management emphasises goal achievement (effectiveness) and

achieves the goals in the most efficient way.‰

1.5 THE MANAGEMENT PROCESS

In the preceding subtopic, management was defined as a process. What then is
the management process?
Process is a planned way of carrying out a task. Management is defined as a

process as all managers are involved in activities that are interconnected, with
the aim of accomplishing set objectives. This process will be divided into several
separate sections or functions which form the overall process. The management
functions can be classified into the following: planning, organising, leading and
controlling. Each function is elaborated in the following subtopics.
1.5.1 Planning
Planning means managers predetermine goals and their action plans. Planning
includes defining organisational goals, by addressing several issues, such as
determining the main activity of the organisation and its purpose, and
formulating comprehensive strategies to achieve organisational objectives
through a thorough plan and not one that is based on impulse or gut-feeling.
1.5.2 Organising
Organising means managers coordinate human and material resources or
organisational resources to accomplish a goal. Organising includes activities
which determine the tasks that need to be carried out, assigning the personnel to
each task, deciding how the task must be done, reporting mechanisms and
decision making.
1.5.3 Leading
Leading means the managers direct and influence their subordinates to carry out
the tasks assigned so that goals can be achieved. By creating a conducive work
environment, managers encourage their subordinates to be fully committed.

1.5.4 Controlling
Controlling is defined as the process whereby managers ensure that the
organisation is moving towards achievement of set objectives.
Controlling is the process of monitoring-comparing results-correcting. If there is

some deviation from the set objectives, the task of a manager is to identify the
cause and take corrective action as needed.
Throughout the duration of this management course, we will discuss

management concepts based on the four management functions.
ACTIVITY 1.1
Can you attempt to draw a mind map of the functions of the

management process before looking at Figure 1.1?
Figure 1.1: Management process

Source: Robbins & Decenzo (2006)

1.6 MANAGERIAL ROLES

Managers play different roles. The closest example of a manager is yourself as
you also play several roles. Sometimes, you play the role of a son/daughter to
your parents; you are also a parent to your child; or a spouse. Henry Mintzberg,
in 1973, postulated that managers have 10 roles which can be classified into three
groups: interpersonal roles; informational roles and decisional roles, which are
summarised in Table 1.1.
Table 1.1: Managerial Roles
Role Explanation Activity

Interpersonal Managerial Role
Figurehead As a symbolic head, carrying out Ceremonial, responsible for
routine consultancy and social receiving visitors, attending
work. wedding of a subordinate,
taking clients for lunch.
Leader Responsible for encouraging Responsible for encouraging
subordinates. Carries out duties subordinates. Carries out duties
of establishment and training. of establishment and training.
Liaison Responsible for networking with Carries out all duties related to
external parties. external parties.
Informational Role
Monitor Seeks and receives the latest Reads reports and printed
information for detailed materials and maintains
understanding of the organisation personal liaison.
and the environment; serves as the
referral centre for parties within
and outside the organisation.
Disseminator Disseminates information from Holds meetings, sends written
the workers to other workers or electronic memos.
within the organisation.
Spokesperson Disseminates information about Holds annual general
plans, policies and organisational meetings, provides
action to external parties. information to the media.

Decisional Role
Entrepreneur Seeks opportunities for the Organises strategic and
organisation within the opportunistic sessions in
environment. Launches projects handling crises.
which initiate changes.
Disturbance Responsible for handling events Organises strategic sessions to
Handler beyond normal control (such as design new programmes.
strikes and bankruptcy of clients).
Resource Responsible for allocating resources Carries out all activities related
Allocator within the organisation. to budgeting and programmes
Implements organisational workersÊ tasks.
decisions.
Negotiator Responsible for large-scale Represents the organisation in
negotiations. workersÊ union negotiations
and with suppliers.
ACTIVITY 1.2
Create a diagram about the relationship among the three main

managerial roles as well as the sub-roles.
For further information about Mintzberg, you are advised to access the
following link:
http://www.henrymintzberg.com/_about.htm

1.7 LEVELS OF MANAGERIAL SKILLS AND

COMPETENCIES
It is a fact that every manager, regardless of the size or purpose of the
organisation, must carry out the four management functions at varying levels.
The question is: what are the critical skills that a competent manager must
possess? A management scholar, Robert L. Katz, has identified three essential
management skills. Many critical skills are necessary to ensure managerial
success. Try and understand yourself by finding out if you possess the skills
discussed in the following subtopics.
1.7.1 Conceptual Skills

Conceptual skills refer to the mental ability to analyse and diagnose a complex
situation. It assists managers to see how all interests and activities of the
organisation are consolidated so that the manager can visualise the complete
picture. This skill will help the manager make an informed decision.
1.7.2 Interpersonal Skills

Human skills refer to the ability to work, understand, lead and motivate
subordinates either individually or in groups. As managers work with other
people, they need to have interpersonal communication skills. This is vital for
managers to obtain the involvement and commitment of workers.
1.7.3 Technical Skills

Technical skills refer to the ability of a manager to utilise specialised knowledge
and expertise. This tends to vary by level of management responsibility. For top
managers, their skills focus on industrial aspects and a complete understanding
of the work process. For middle and lower management, detailed knowledge of
the work is vital, including finance, human resources, production, and other
areas.
Before you proceed with your reading, attempt to answer the following question:
What does Katz say about the importance of these three skills for managers?

1.7.4 What does Katz Say?

Katz says that although all three skills are essential for effective management, their
relative importance depends on the level of management in the organisation.
Technical skills are very important at the lower management level and become
less important at top management level. For example, a manager at a building
site must have technical skills as he is required to handle building problems that
may arise on a daily basis.
Conceptual skills become more important as managers go up the management

ladder. The higher the position on the management hierarchy, the greater will be
the managerÊs involvement in wider and long-term decision-making.
Interpersonal skills are essential for all levels of management, because as

managers, we need to work with other people and involve them to complete the
task at hand.
Now let us take a look at the relationship between skills and types of management
more specifically (refer to Table 1.2). For example, for first-line management, the
most used skill is technical, followed by interpersonal skills and some conceptual
skills. This is different for top management, whereby the most essential skill is
conceptual, followed by interpersonal skills and some technical skills.
Table 1.2: Relationship between Skills and Managerial Levels
First-line Middle Top Management

Management Management
Relative skills that

are needed for Conceptual Conceptual
Conceptual
effective
performance at
difference levels of Interpersonal Interpersonal
management
Interpersonal
Technical Technical
SELF-CHECK 1.3
State three types of skills that a manager must have.

1.8 RELATIONSHIP BETWEEN MANAGEMENT

AND OTHER DISCIPLINES
Normally, there is continuity between one field of knowledge and another, and
courses studied often are interconnected. As such, steps have been taken to link
the study of management with other fields like economics, psychology and
sociology. The rationale behind this move is to allow us to visualise the
relationship between management and other fields and assimilate the role played
by other fields in managerial aspects. This kind of understanding will help us to
become more effective managers. Six other fields will be compared to the field of
management in Table 1.3.
Table 1.3: Relationship between Other Disciplines

and the Discipline of Management
Discipline Relationship
Anthropology This is the study of society. It helps us learn about mankind and
their activities. Anthropologists who study the culture and
environment help us to understand the differences of culture,
attitude, and behaviour among people of various nations and
organisations.
Economics Economics emphasises the provision and allocation of
resources. It gives an idea about economic changes and
organisational roles in facing globalisation.
Philosophy Philosophy is the study of values and ethics. Ethics control
human behaviour and ensure the right behaviour is adhered to.
Nowadays, ethical issues mould our organisation.
Political Science Political Science is the study of individual and group behaviour
within the ambit of the political environment. The study
includes conflicts, empowerment, power manipulation and
individual interests.
Psychology Psychology aims to measure, explain and sometimes change the
behaviour of mankind. Psychology basically attempts to
understand individual behaviour.
Sociology Sociology is the study of humans and their relationship with
each other. It includes social changes as a result of globalisation,
culturalisation, changing roles of the genders, etc.

 Good management requires understanding of organisational and

management concepts as well as the terms commonly used at the workplace.
The capability to comprehend the concepts and recognise the different roles
of managers at various management levels will facilitate understanding of
what is expected from managers. These factors will help managers to perform
better.
 Excellent managers are those who not only could grasp the concepts but are
also able to apply them to various work conditions and situations effectively
and efficiently.
Robbins, S., & Decenzo, D. (2006). Fundamentals of management: Essential

concepts and applications (4th ed.). Upper Saddle River, NJ: Prentice Hall.

Topic  The Historical
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Development of
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" 2. Describe the historical hierarchy of management, associating each
" approach with the respective management gurus.
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 INTRODUCTION
Some people may find historical studies to be boring whilst others may find it
interesting. History can be considered a boring subject as we tend to be
influenced by certain perceptions impressed upon us when studying history in
school. Students are forced to memorise dates, terms, leaders and important
events. We become very adept at learning facts by memorisation without really
understanding what we have been taught.
Actually, that is not the reason to study history. Historical knowledge encourages
us to be holistic individuals who understand why a certain event occurred. It
does not encourage us to merely accept everything that happened in the past.
In this topic, we will study the historical foundations of management. This study
will help us understand the development of management theories. By
understanding the history of management, you can begin to understand the
origin of fundamental concepts of management, a major part of which is still
being practiced. For example, history helps us to answer the questions of where,
when and who were the management gurus who pioneered the industrial
psychological fields still being practised by organisations today.

TOPIC 2 THE HISTORICAL DEVELOPMENT OF MANAGEMENT  15
In this topic, we will focus on three approaches to management thought which

are now well-established in the field. The three approaches are the classical
management approach (divided into scientific theory and general administrative
theory); the human resource management approach; and the quantitative
management approach. Although these approaches developed over time, the
ideas which came about later did not replace the previous train of thought. In
fact, new ideas were built upon old ideas and subsequently enriched the classical
approach to management.
ACTIVITY 2.1
Before we look into managementÊs genesis, take a moment to think

about the following question. When do you think the practice of
management commenced?
2.1 PRE-MODERN ERA

The following flowchart depicts the Historical Development of Management (see
Figure 2.1). More information about the pre-modern era will be discussed in the
following subtopics.
Figure 2.1: Evolution of management thought

16  TOPIC 2 THE HISTORICAL DEVELOPMENT OF MANAGEMENT
2.1.1 Management has Existed for a Long Time

Management has existed within us for thousands of years. This is clearly
evidenced by the building of the Great Wall of China, 6,700km in length from 7
to 4 BC, one of the man-made constructions that can be seen from outer space.
Another familiar example is the Egyptian Pyramids, which were built more than
5000 years ago, with each pyramid taking a period of 10 years to complete. These
two constructions needed the management of thousands of workers and building
materials (people and structure) so that the work could be completed (purpose).
Michael Angelo, in the 16th century, was involved in a medium-scale business.

About 13 people helped him to paint the Sistine Ceiling; 20 people helped him to
sculpture the Medici Temple in Florentine and more than 200 people assisted in
the construction of the Laurentian Library. He had his own workers, trained
them, assigned them into work groups, and kept records of his workers.
Although there is evidence of management activities prior to the modern era,
only in the past few hundreds of years, particularly in the 19th century, have
management studies been undertaken in a systematic manner.
2.1.2 Contributions of Adam Smith

The contributions of Adam Smith or the Father of Economics were documented
in his 1776 book, The Wealth of Nations. This book postulated detailed
discussions on economic gains that could be achieved by organisations and
society if specialisation and division of labour were adopted in daily tasks. Smith
used the pin-making industry as an analogy. He found that if 10 workers were
involved in pin production specialisation, 48,000 pins could be produced daily.
On the other hand, if each worker made the whole pin individually, only a total
of 200 pins could be produced daily. This popular management concept ă
specialisation of labour was put forward by Smith 200 years ago.
2.1.3 Influence of the Industrial Revolution on

Management
The Industrial Revolution began during the end of the 18th century in Great
Britain and spread to the US towards the end of the Civil War (1861 ă 1865). It
began with the use of machine technology which could produce factory goods on
economies of scale (see Figure 2.2).

Figure 2.2: Industrial revolution
The rapid use of machinery, mass-production, and reduction of transportation

costs with almost no legislation gave rise to the growth of large companies.
However, a formal management theory did not materialise till the early 1900s.
2.2 CLASSICAL MANAGEMENT APPROACH

This approach signalled the commencement of a systematic study of
management. The classical management approach can be divided into two
branches: scientific management, which discussed the approaches of increasing
operative workersÊ productivity, and the general administrative theory, which
focused on overall organisational efficiency.
2.2.1 Scientific Management

The following discusses the main ideas of scientific management presented by its
key contributors:
(a) Frederick Taylor

In 1911, Frederick Taylor published the Principles of Management, which
gave rise to modern management theory. Known as the Father of Scientific
Management, he explained the use of scientific approaches to define the
„best methodology‰ to carry out a job.
Several of his findings came about as a result of his work experience in the
Midvale and Bethlehem Iron Factories in Pennsylvania in the US. As an
engineer, he was amazed at the inefficiency of the workers. He took a
period of two decades identifying the best practice for each task and came
out with a clear framework to improve the efficiency of manufacturing
activities.

He selected the right workers for each task and trained them to perform the
task in the most efficient way. To encourage the workers, he used monetary
incentives. Taylor achieved a 200 per cent productivity enhancement level.
His approach enabled many companies in the US to enjoy a competitive
advantage when compared to other foreign companies.
ACTIVITY 2.2
Many companies now select the most appropriate workers and study
the most economic method of job performance. Are these measures
implemented in your organisation?
(b) Frank and Lillian Gilbreth

The husband and wife team of Frank and Lillian Gilbreth, students of Taylor,
contributed towards scientific management as well (see Figure 2.3. Frank was
a building contractor whilst Lillian was a psychologist. After Frank resigned
in 1912, he and his wife involved themselves in scientific management. They
researched reduction of wastage as a result of motions and fatigue.
Figure 2.3: Frank and Lillian Gilbreth

Source: http://gilbrethennetwork.tripod.com
The Gilbreth pair was also involved in design experiments and use of tools.
One famous study was their observation of bricklaying. They used a
moving camera to study the work involved in bricklaying. They labelled 17
hand-and-body motions of searching, selecting and holding, called
therbigs, which allowed them to further study these motions. They
discovered that each hand-and-body motion fatigued the worker and
elimination of these motions would reduce fatigue. As such, they
endeavoured to identify the most economic motions for each task, so that
performance could be enhanced and fatigue reduced.

(c) Henry L. Gantt (1864 ă 1920)

Henry L. Gantt was a contemporary of Taylor. His contributions towards
work efficiency were also through scientific methods. He came up with an
incentive system which gave lower-ranked workers bonuses for each task
completed ahead of time. His study also involved the managers. Gantt is
well-known for his Gantt Chart that is widely used in the modern
workplace.
2.2.2 General Administrative Theory

The following are the descriptions of two key individuals who contributed to the
general administrative theory:
(a) Henri Fayol

Henri Fayol was the managing director of a coal factory in France. He
carried out a study based on his experiences as a manager. Fayol was a
contemporary of Taylor. Taylor studied the work of supervisors by using
scientific methods whilst Fayol focused on the activities of managers. He
emphasised that management is a normal function for all and not just for
specific people.
(b) Max Weber

Weber, a German sociologist, introduced the theory of the structure of
authority and interpreted organisational activities based on positions of
authority (see Figure 2.4). He threw light on a specific form of organisation.
which he described as bureaucracy. Bureaucracy is a system based on clear
division of labour, clear hierarchy of authority, formal rules and procedures
as well as impersonality. Although his ideas came about towards the end of
the 19th century, the structure suggested by Weber is still practised by
many large organisations today.
Figure 2.4: Max Weber

ACTIVITY 2.3
Does your organisation fall under the bureaucratic structure?
2.3 HUMAN RESOURCE MANAGEMENT

APPROACH
The human resource management approach will be discussed in the following
subtopics; which focuses on several management gurus.
2.3.1 Robert Owen

A businessman from Scotland, Robert Owen bought his first factory in 1789
when he was just 18 years of age. He frowned upon the mistreatment of child
workers (below the age of 10), long working hours and deteriorating conditions
throughout Scotland. These conditions propelled him to make changes.
He argued that these companies treated their machines better than workers and
were willing to invest more to purchase expensive machines at the expense of
cheap labour. He emphasised that the best investment that could be made by any
business executive would be to improve the lot of workers.
Owen suggested conducive work environments. He is not known so much for his
success as a businessman but for his commitment and sincerity to alleviate
suffering and misery at the workplace.
2.3.2 Hugo Munsterberg

Hugo Munsterberg was a champion of industrial psychology in the scientific
research field. He studied individuals and their optimum productivity in the
workplace. He proposed the scientific study of human behaviour to understand
the overall pattern and also tried to explain differences between individuals. He
also suggested the use of psychological tests to improve the worker selection
process. The value of this theory is now important in the formulation of training
methodologies and organisational behaviour studies to enable the understanding
of the most effective techniques to motivate workers.

Munsterberg could see the relationship between scientific management and

industrial psychology. These two fields could enhance efficiency through the
scientific analysis of work, improvement of skills and competencies of
individuals so as to meet work demands. Knowledge about several selection
techniques, workersÊ training, work design and motivation are now based on the
work of Munsterberg.
2.3.3 Mary Parker Follet

Follet was a philosopher who began her writings during the scientific
management era but was more human-oriented. She emphasised that
organisations should be based on group ethics compared to individual ethics.
Follet believed that the potential of a person would merely remain as potential if
that person was not allowed to grow within a group. She believed the work of a
manager was to coordinate and harmonise effort in groups. In the same vein,
workers and managers should view themselves as partners within a group. Her
humanistic views today influence the way we handle motivation, leadership,
power and authority in a team.
2.3.4 Chester Barnard

BarnardÊs views did not differ much from FolletÊs. Barnard defined an
organisation as a social system which required the cooperation of individuals.
His views were contained in his book, The Functions of the Executive, published
in 1938. The main function of the managers was to communicate and encourage
subordinates to achieve high standards. Barnard believed that the success of any
organisation largely depended on the cooperation between the workers and the
maintenance of good relationship with organisational stakeholders. He believed
that a manager should analyse the external environment and make
organisational changes so as to create a balance.
The importance of having teams, social responsibility and matching

organisational strategies with opportunities (environmental factors) forms the
basis of the work put forward by Barnard.

2.3.5 The Hawthorne Studies

This study was a major contribution to the behavioural approach. This study was
carried out by the Western Electric Company at the Hawthorne Works in Cicero,
Illinois. Initial work started in 1924 and continued till the 1930s. This study was
commissioned by a group of industrial engineers at Western Electric, who studied
the effects of the illumination intensity in the workplace on the output of workers.
A control and an experimental group were put in place for this study. The
experimental group was deliberately exposed to differing intensities of
illumination whereas the control group was exposed to a fixed intensity of
illumination.
The experiment was continued by increasing the intensity of illumination on the

experimental group. It was found that output increased at the expected rate. When
the illumination intensity was reduced, it was found that output was not affected;
in fact an increase was recorded. The results of this experimental group were
compared with the control group. It was found that the output levels for both
groups were almost similar. The engineers concluded that if the intensity of
illumination did not influence work performance, other factors must have done so.
In 1927, a professor from Harvard, Elton Mayo, was invited to participate in this
experiment. This collaboration continued till 1932. Several conclusions were
made. One of the tests carried out was to assess the effect of incentive payments
on worker output. It was discovered that group performance and productivity
were often the outcome of group social norms and standards.
2.4 QUANTITATIVE MANAGEMENT

APPROACH
This management approach (operational research and management science) was
based on mathematical and statistical techniques which were used to solve
military problems during the 2nd World War.
The British Army solved the problem of optimising the effectiveness of its limited
airplanes with the help of mathematicians who came up with the optimum
provision model. The Americans used operational research techniques to
enhance the success of their submarines crossing the Northern Atlantic Ocean.

After the war, several quantitative techniques were used in the business sector. A
group of army officers known as the „Whiz Kids‰, joined Ford Motors in the 1940s
and continued to use statistical methods to improve the decision-making process.
Among the famous names were Robert McNamara and Charles „Tex‰ Thornton.
McNamara succeeded in becoming the president of Ford and later became the
American Secretary of Defense. His last position was as head of the World Bank.
Tex Thornton succeeded in starting up a multi-billion dollar company, once again
using quantitative techniques for acquisition and resource allocations.
SELF-CHECK 2.1
The following are several statements about well-known historical
management concepts created by management gurus. Select and write
the correct name of the guru in the right-hand column.
Hugo Munsterberg, Adam Smith, Max Weber, Frederick Taylor,

Robert Owen.
Statement Teacher
He spent a period of two decades seeking „the best practice‰
for each task and designed clear guidelines to improve the
efficiency of manufacturing activities.
He introduced the theory of authoritarian structure and defined
organisational activity based on the relationship of authority.
He provided a clear picture of a unique organisational trend
known as bureaucracy.
He claimed that companies treated their machines better than
the workers. He suggested a conducive work environment.
He saw the interrelationship between scientific management
and industrial psychology. He also suggested the use of
psychological tests to improve worker selection.
He put forward detailed discussions on economic advantages
that could be accomplished by organisations and society if
specialisation was adopted in daily activities.
"

 There are three main approaches in the development of management as a

field of study, namely, the classical approach, the behavioural/human
resource approach and the quantitative approach.
 The classical approach is divided into two theories: the scientific theory and
the general administrative theory.
 You have also learnt about several management gurus and their respective
contributions.

Topic  Planning
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 INTRODUCTION
This topic will discuss the first component in the management process, which is
planning. If we make a comparison of accomplishments among companies, it is
most likely that successful companies have almost similar elements, i.e. each of
them does planning. Let us now look further into the advantages of planning.

26  TOPIC 3 PLANNING
3.1 DEFINITION OF PLANNING

Planning encompasses defining organisational objectives and goals, formulating
overall strategies to achieve objectives and outlining comprehensive levels of
planning to be integrated and coordinated. It is related to the question of what
needs to be done and what are the best approaches that must be adopted to get it
done.
Planning encourages coordination of activities. Knowing and understanding the

direction of the organisation and being aware of the things that must be done to
achieve the objectives will help the members of the organisation to coordinate all
their activities to achieve set objectives.
Planning reduces uncertainty. It is especially necessary when managing under

uncertain conditions. Besides this, planning also prevents work duplication and
wastage. Finally, planning will help to set objectives and standards, which in
turn will facilitate controlling.
3.1.1 Criticism Levelled at Planning

Although planning brings about several advantages, there is also criticism
levelled against planning. Some say planning results in inflexibility and rigidity.
Formal planning ties the organisation to set objectives and time schedules and
the assumption that the environment is static. If a managerÊs plan is based on
incorrect assumptions, then planning will also be inaccurate.
The second criticism is that planning cannot be done in a dynamic environment.

The current business scenario is very fluid and this tends to complicate
forecasting activities. In fact, managers in an ever-changing environment need to
be flexible.
It is also said that formal planning restricts intuition (gut feeling) and creativity.
Vision, which is normally in the abstract form, and functions, as an indication of
the direction of the organisation, will eventually become formalised and routine
over time.
Besides this, planning also makes managers focus their attention on current
competition and not future challenges. A lot of planning activity focuses on
taking advantage of existing business opportunities in an industry. Normally,
planning does not encourage managers to create or penetrate a new industry, in
other words, pioneer into new markets or introduce new ideas and products.

TOPIC 3 PLANNING  27
The last criticism is that formal planning gives an impetus for bogus successes,
which may lead to failure. We cannot deny that success can become failure in
conditions of uncertainty. It may become difficult or impossible to change
successful plans. A „successful‰ plan may be the basis of misleading guarantees
of success. There is a lot of evidence that excellent performance is obtained
through formal planning, as opposed to the views of the critics. However, we
cannot infer that all companies that plan are more successful when compared to
companies that do not plan. A company that plans normally records higher
profits and returns on investment. As a matter of fact, quality processes and
accurate planning are more effective for the performance of an organisation
compared to the role of planning.
Finally, blame will normally be accorded to environments of uncertainty if an

organisation that has formal planning does not succeed in accomplishing high
performance levels, for example change in government policies, entry of new
competitors etc.
3.2 TYPES OF PLANNING

After discussing the aims of planning and its pros and cons, let us now take a
closer look at the types of planning that can be used for our organisational
activities.
3.2.1 Strategic Planning

Strategic planning are plans that involve the entire organisation. A strategic plan
outlines the overall objectives of the organisation and determines the position of
the organisation in the organisational scenario. This kind of planning focuses on
the efforts of the organisation to accomplish its goals. Strategic planning is the
foundation for the creation of tactical plans.
3.2.2 Tactical Planning

Tactical planning, or also known as operational planning, outlines in detail the
steps for achieving overall objectives.

Strategic planning and tactical planning differ in three aspects. Normally,

strategic planning encompasses a long period (five years or more), whereas
tactical planning involves short-term plans. Secondly, strategic planning focuses
on general issues, whereas tactical planning focuses on the details. Finally,
strategic planning involves expressing organisational objectives whilst tactical
planning implements existing objectives and sets methods or approaches to
achieve these objectives.
Table 3.1 shows a comparison of these two types of planning.
Table 3.1: Types of Planning
Types Duration Time Frame Usage Frequency

Strategic Long-term Directional Once only
Tactical Short-term Specific As needed
3.2.3 Time-based Planning

Normally, short term refers to a period of less than one year, whereas long term
means a period of more than five years. The difference between short-term and
long-term planning depends on future commitments and the degree of change
faced by the organisation. The planning should cover the period during which
the commitments will be implemented.
In terms of the speed of change, the faster the occurrence of change, the shorter
should be the duration of the plan. This is because this kind of planning will
allow flexibility in the face of change.
3.2.4 Specific and Directional Planning

In general, specific planning is preferred over directional planning. Specific
planning has clearly defined objectives but this certainly does not mean it does
not have weaknesses. Clear and detailed information must exist to make plans,
especially if such information is difficult to obtain. When uncertainty is high, the
management must make allowances for flexibility to face unexpected changes
and it is at this point that directional planning is preferred.
Directional planning identifies general guidelines. It provides focus or attention

and not detailed objectives and achievement measures. For example, a specific
plan will aim to reduce costs by 10 per cent and increase profits by 8 per cent
within 6 months, whereas a directional plan will aim to increase profits by 6 to 12
per cent within a period of 6 months.

3.2.5 Single-use Plan and Standing Plan

A single-use plan is used for a specific or unique situation. It is a detailed action
plan which may not be repeated in the same way in the future. There are three
types of single-use planning, i.e. for programmes, projects and budgets.
Programmes are single-use plans which consist of several activities to achieve a
specific organisational goal. Projects are plans that direct an individualÊs or
groupÊs work towards a certain purpose. Budgets are plans which channel
financial resources for other plans. For example, a manager of a tea plantation in
Peninsular Malaysia is instructed to expand the plantation into Sabah and
Sarawak. He will probably not use a standing plan for acquiring the land because
the area under question may have unique needs in terms of location, cost of
opening a plantation, readiness of the workforce, obstacles, need for legislation
and other factors.
A standing plan comprises plans that are already available, which have
guidelines for repetitive steps or processes. For example, for registration in
universities, the dates may differ but the processing steps remain the same every
semester. Standing plans include policies, procedures and rules.
ACTIVITY 3.1
Produce a conceptual map about the types of planning that can be used
for the activities in your organisation.
3.3 MANAGEMENT BY OBJECTIVES (MBO)

In this subtopic, we will be exploring the definition of management by objective
(MBO) and its effectiveness.
3.3.1 What is MBO?

MBO is not something foreign in the world of management. For many people
involved in planning, the term MBO or Management By Objectives is often a
topic of conversation. The attraction is that it interprets overall objectives into
specific objectives. MBO operationalises objectives by cascading them to the
entire organisation. MBO has a two-way function, i.e. from bottom-up and from
top-down. The result is a hierarchy which links objectives at one level to the next
level. For workers, MBO represents a personal performance objective (refer to
Figure 3.1)

Figure 3.1: Cascading objectives
What are the common elements of an MBO programme?
There are four common ingredients in all MBO programmes, i.e. specific
purposes, participative decision making, explicit time frame and performance
feedback. These four elements are described further in Table 3.2.
Table 3.2: Elements in MBO
Element Description
Specific goal MBO objectives must be contained in brief statements which
outline expected outcomes.
Participative Objectives are not only made by the employer to be adhered to
decision making by the employees. In addition, the management together with
the workers identify the goals and determine the best methods
to achieve those goals.
Explicit time-frame Each objective has its own time duration for achievement.
Performance MBO always provides continuous feedback on the
feedback achievement of goals. In the perfect sense, it is implemented by
providing continuous feedback to every individual. An
evaluation meeting over a formal time period completes this
process.
3.3.2 Is MBO Effective?

Evaluating the effectiveness of MBO is a complicated process. Challenging specific
goals is found to produce higher output when compared to organisations that do
not have goals or have unclear goals or purposes. At the same time, feedback also
motivates performance. These decisions are consistent with MBO principles which
emphasise the importance of having specific objectives and feedback. MBO can be
even more effective if the goals set are extremely challenging.
3.4 STRATEGIC FRAMEWORK – STRATEGIC

MANAGEMENT PROCESS
Strategic Management Process is a 9-step process which includes planning,
implementation, and evaluation of strategies. Strategic Planning involves the first
seven steps.
Step 1: Identifying Mission, Objectives and Current Strategies
Every organisation has a mission statement that outlines the purpose and
answers the question „what is the nature of our business?‰. For example, the
mission of a college would probably be to provide training for students to
prepare them for the career world. By defining the organisational mission, the
organisation identifies the detailed scope of its products and services
3.5 ANALYSIS OF STRENGTHS, WEAKNESSES

OPPORTUNITIES AND THREATS (SWOT)
Please do not be surprised by the previous subtopic which seems to bring the
topic on strategic framework to a sudden end. SWOT Analysis is actually a part
of the strategic framework which is being discussed. SWOT Analysis
encompasses Steps 2 and 3 which study external factors of the organisation and
Steps 4 and 5 which analyse the internal factors. This is discussed separately.
SWOT is the analysis of the strengths, weaknesses, opportunities and threats of
the organisation.
(a) Step 2: Analysing the Environment

Organisations should be aware of their competitors, new legislation which
influence organisations, customer needs, and other relevant factors.
By analysing the environment, managers will be better equipped to define

existing strategies ă i.e. strategies that are compatible with the environment.
This step will be complete after the organisation carefully identifies what is
happening in the external environment and is sensitive to new directions
which will have an effect on the operations of the organisation.

(b) Step 3: Identifying Opportunities and Threats

The environment comprises positive and negative factors which will
influence the organisation. Opportunities are positive factors whilst threats
are negative factors.
Telecommunications technology is an opportunity for telecommunication

companies like Maxis. However, it is a threat to courier service companies
like Federal Express.
(c) Step 4: Analysing the Organisational Resources

Every organisation faces financial and resource constraints. An analysis of
this will provide information about the resources available. The availability
or otherwise of resources and skills in an organisation will determine the
strengths and weaknesses of that organisation.
(d) Step 5: Identifying Strengths and Weaknesses

Strengths are internal resources that exist in an organisation or activities
that the organisation carries out well. Core competencies of an organisation
means that the organisation has strengths or extraordinary skills that enable
it to have a competitive advantage.
Weaknesses are the lack of resources or poorly conducted activities carried

out by the organisation.
(e) Step 6: Re-evaluation of Mission and Objectives of the Organisation

After analysing the resources and the environment, the outcomes of
existing strategies can be forecasted. Managers must decide if strategies
which were decided earlier, or their implementation, need to be amended.
This decision must be based on the performance deficiency.
Performance deficiency is the difference between the objectives that have

been set to accomplish goals and the actual outcome achieved. This
performance deficiency could be the result of selecting objectives which are
more difficult to achieve or there are unforeseen changes to the
environment or an inaccurate inference of the strategies.

(f) Step 7: Strategy Formulation

After carrying out an assessment by comparing the actual outcome with the
standards, the following four grand strategies can be practised.
(i) Growth Strategy

The philosophy of the growth strategy is „the bigger the better‰.
Under this strategy, the organisation tries to enhance organisational
operations. The growth is done by increasing sales, manpower or
market share. This strategy can be achieved by direct expansion, new
product development, quality improvement and diversification.
Direct expansion could involve increasing organisational size and
returns on investment while diversification could involve mergers
and acquisitions.
(ii) Stability Strategy

This strategy is based on a stable environment (no change). This is
most appropriate when the organisation exists in an environment that
is stable and unchanging. Satisfactory organisational performance, a
clear or critical absence of strengths and weaknesses are suitable
indicators to adopt this strategy. The presence of threats and
opportunities that are not clearly manifested also encourage this
strategy.
(iii) Retrenchment Strategy

This strategy is implemented as a direct result of technological
advancement, globalisation, changing environment, mergers and
acquisitions. When growth and stability strategies are no longer
efficient, this strategy becomes appropriate. It has certain features like
size reduction and sale of less profitable products.
(iv) Combination Strategy

This strategy encompasses a combination of the previous strategies.
Some sections of an organisation can adopt the growth strategy whilst
others may embark upon retrenchment. Proton may take the step of
increasing production of the Proton Wira but reduce production of the
Proton Satria.
Besides the abovementioned strategies, organisations also need

competitive strategies which can enable them to face market
competition. According to Michael Porter, there are three strategies
for competitive edge, i.e. leadership costs, being different and being
focused. Leadership costs refer to savings in output costs, being
different refers to quality of the product and being focused refers to
the company focusing on markets in which they have the edge.
SELF-CHECK 3.1
Write about the four strategies that can be practiced by managers after
assessment has been done by comparing actual output with standards.
(g) Step 8: Implementation of Strategy

The next step in the strategic management process is implementation. As
mentioned at the commencement of this topic, it does not matter how good
a strategy is, its success cannot be measured until it is implemented well.
The main ingredient of planning is the leadership of the organisation. Not
only is top management important in successful implementation but the
presence of a motivated middle management and first-line management is
also vital.
(h) Step 9: Evaluation of Strategy

Finally, the strategic results must be evaluated. How effective is the
strategy that has been implemented? Is this strategy really necessary? This
will be discussed in greater detail in Topic 12, on the controlling process.
The concepts and techniques which will be introduced in Topics 9 to 12 can
be used to evaluate the strategic results and make the necessary corrections.
ACTIVITY 3.2
Draw a flow chart of the nine strategic management steps.
3.6 QUALITY AS A STRATEGY

In this subtopic, we will be discussing the practice of quality as competitive edge,
how benchmarking promotes quality and the ISO 9000 Series.
3.6.1 Practice of Quality as Competitive Edge

We have completed the discussion on the process of strategy formulation. The
following concepts related to the practice of quality as a strategy are
interconnected to the concept of strategic planning. As managers, we should also
consider the possibility of practising this strategy.

The concept of marketing nowadays emphasises satisfying customer needs and

at the same time, endeavours to retain customer loyalty. In this discussion of
strategy, companies can choose to adopt quality as a strategy. When we talk
about National, Nike, Gucci and BMW, they all seem to have one commonality,
which is quality (see Figure 3.2).
The ability of an organisation to satisfy customer needs based on quality allows it

to differentiate itself from its competitors. In this way, the organisation can
attract and retain customers. An organisation that consistently improves the
quality and reliability of its products and services will have a competitive edge. It
must be remembered here that product innovation cannot be sustained as it can
easily and quickly be emulated by competitors.
Figure 3.2: Nike Shoes
3.6.2 How Does Benchmarking Help Promote

Quality?
Benchmarking refers to the identification of best practices in doing something to
enable the organisation to accomplish excellent performance levels. The
management can improve the quality of its products and services by analysing
and emulating the examples of leaders in industry. For example, many
universities try to benchmark their resources, services and achievements, with
renowned universities like Oxford and Cambridge University.
3.6.3 ISO 9000 Series

In the 1980s, there was a call at the global level for organisations to improve the
quality of their products and services. As such, in 1987, the ISO 9000 series came
about which was designed by the International Organisation of Standardisation
in Geneva, Switzerland.

The ISO standards is a process, i.e. a body or accredited auditors who will certify
if a factory, laboratory or office of a company has achieved a certain quality
management level. This level of standard ensures customers that the
organisation:
(a) Uses specific measures to test its products prior to sale;

(b) Continuously trains its workers;
(c) Maintains satisfactory operational records; and
(d) Solves problems when they occur.
Another international standard is the ISO 14000. It provides certification in terms
of environmental preservation.
 Organisational success begins with effective planning. An organisational

plan that is well understood by employees will bring members of the
organisation together towards achieving the organisational goals through
coordination of work, establishment of work standards and implementation
of control mechanisms.
 Although planning provides various advantages to an organisation,

managers must at the same time be aware of its limitations. For this reason,
managers must take necessary steps to ensure organisational activities are not
totally dependent or constrained by the plan established. A good plan is
flexible in nature as it provides avenue for change and adaptation to the
organisational environment.
 A SWOT Analysis is part of a strategic plan. This type of plan is deemed

critical to the survival of an organisation.
 Management today has also incorporated quality perspectives in strategic

planning to boost the competitive advantage of an organisation.

Topic  Decision
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Making
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LEARNING OUTCOMES
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" 1. Describe the decision making process;
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2. Explain the limits to making rational decisions;
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" 3. Describe peopleÊs behaviour in bounded decision making;
" 4. Identify the two general mistakes in decision making;
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" 5. Explain the strengths and weaknesses of group decision making;
" and
" 6. Explain the three techniques for improving group decision making.
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 INTRODUCTION
After planning, a concrete decision must be made. Consider how you would
approach planning for a holiday; several decisions will have to be made. You
must decide on the destination, how many days to go for, the tour company to
select and with whom you want to go. It is not easy to make such decisions, but
as managers, you are expected to possess the skills to make an informed decision
that is precise, constructive and impartial.
Any decision cannot be made based on intuition or impulse per se, because if we
make the wrong management decision, it will not only affect us but other parties
as well. In fact, a decision made by a manager, regardless of the level, will bring
about positive or harmful effects to the unit, department and respective
divisions, in fact to the entire organisation.
A manager must learn to make constructive decisions and hence master the
techniques of effective decision making.

38  TOPIC 4 DECISION MAKING
4.1 THE DECISION MAKING PROCESS

Decision making is normally defined as choosing from alternatives but this
assumption is too simple as decision making is a process that involves eight
stages. Figure 4.1 shows the eight stages.
Figure 4.1: The decision making process
(a) Step 1: Identifying the Problem

The decision making process commences with the existence of a problem or
when there is conflict between an existing situation and a desired situation.
The identification of a problem is a subjective process. A manager who fails
to identify problems and take corrective action is akin to a doctor who
treats the patientÊs hand when the patient has a leg injury. How can a
manager be aware of the existence of a problem? A manager can become
aware by comparing the present situation against the standard.
To clarify this, let us take an example: a decision to buy a new car. You are
currently facing a car engine breakdown and have already spent about
RM7,000 on repairs over the last few years. Your mechanic makes an
estimate and finds that the cost of repairing your car is not economical. To
add to this, the current public transportation system does not facilitate your
mobility. We now have a problem.
(b) Step 2: Identifying Decision Criteria

After identifying the problem being faced, one must first determine the
various decision criteria. Every decision making process, whether implicit
or explicit, has criteria which will assist decision making. Taking the
example of the car, if your decision is to buy a new car, what are the
considerations to be looked into before making a choice? Could it be the
price of the car, safety, type of car, or other factors, which will be
considered?

TOPIC 4 DECISION MAKING  39
(c) Step 3: Assigning Weightage for the Criteria

Assigning a weightage for the criteria is important as it will help prioritise
the criteria. It represents the simplest approach whereby a weight of 10 is
given to the most important criteria and lower weight for less important
criteria. This number (1 to 10) can be repeated more than once. Examples of
weightage assigned to car buying criteria can be referred to in Table 4.1.
Using the car example, if you give price top priority, then price will be
given a weight of 10 and if you feel comfort is important but not as
important as price, than you can give comfort a weight of 8.
Table 4.1: Criteria and Weightage in Decision Making on Purchase of Car
Criteria Weightage
Price 10
Internal Comfort 8
Durability 5
Repair Records 5
Performance 3
Maintenance 1
(d) Step 4: Developing Alternatives

Managers need to find various ways to solve problems in the pursuit to
obtain best solution. This effort includes generating ideas on the possible
strategies and approaches to handle the problem.
Idea generation requires creativity and imagination. Managers may use

their personal knowledge and experience to develop ideas. They could also
solicit ideas from peers, employees, vendors and customers, or refer to
books, reference materials and other resources. Ideas can also be generated
by viewing problems from different perspectives. This is possible as it
provides a better understanding of the problem which would later lead to
identification of the root cause. Based on this, managers can focus on the
actual issue rather than wandering around with ineffective suggestions.
Useful and effective ideas can be developed through various methods

including group discussions, brainstorming sessions and meetings.
However, it is very important to keep in mind the goals and objectives that
you are trying to achieve throughout the process.

(e) Step 5: Analysis of Alternatives

You now have a list of car types that you desire and a set of identified
criteria with the respective weights. What is the next step? You have to
assess the cars by giving marks on a scale of 1 to 10 after test-driving them.
See example in Table 4.2.
Table 4.2: Assessment of Car Alternatives
Initial Internal Record of

Alternatives Durability Performance Maintenance Total
Price Comfort repairs
Perodua 2 10 8 7 5 5 37
Mercedes 9 6 5 6 8 6 40
BMW 8 5 6 6 4 6 35
Honda 9 5 6 7 6 5 38
Volvo 5 6 9 10 7 7 44
Jaguar 10 5 6 4 3 3 31
Mazda 4 8 7 6 8 9 42
Perdana 7 6 8 6 5 6 38
Nissan 9 7 4 4 4 5 33
Audi 5 8 5 4 10 10 42
Toyota 6 5 10 10 6 6 43
GTi 8 6 6 5 7 8 40
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(f) Step 6: Choosing from Alternatives
Step 6 is the critical step of selecting one car from existing alternatives.
After identifying the important criteria, assigning a weight, listing the type
of cars to be considered, and giving marks for each criterion and car, we
should make a selection based on the highest score. The score can be
obtained by multiplying the marks in Step 5 (Table 4.2) with the weight
assigned in Step 3 (Table 4.1).
Therefore, the internal comfort of a Perodua car is calculated as follows:

Weight 8 (Table 4.1) multiplied by 10 (Table 4.2) equals 80.
"

Table 4.3: Weightage of Car (Alternatives  Weightage)
Record
Starting Internal
Alternatives Durability of Performance Maintenance Total
Price Comfort
repairs
Perodua 20 80 40 35 15 5 195
Mercedes 90 48 25 30 24 6 223
BMW 80 40 30 30 12 6 198
Honda 90 40 30 35 18 5 218
Volvo 50 48 45 50 21 7 221
Jaguar 100 40 30 20 9 3 202
Mazda 40 64 35 30 24 9 202
Perdana 70 48 40 30 15 6 209
Nissan 90 56 20 20 12 5 203
Audi 50 64 25 20 30 10 199
Toyota 60 40 50 50 18 6 224
GTI 80 48 30 25 21 8 212
(g) Step 7: Implementation of Alternative

Although the selection process is complete, the decision can still fail if not
implemented well. As such, this step aims to turn decisions into action. This
step involves conveying the decision to those involved and getting their full
commitment.
(h) Step 8: Evaluation of the Effectiveness of the Decision

The final step in the decision making process is to evaluate whether the
decision has solved the problem.
ACTIVITY 4.1
Have you ever made decisions using the steps suggested in the
decision making process? You should use these suggested steps to
achieve a higher quality of decision making.

4.2 DECISION MAKING: THE RATIONALITY

MODEL
Can you make a rational decision? Of course you can. Now assume that
managers make rational decisions. A rational decision maker is one who makes
decisions that are objective and logical. He will define the problem cautiously, i.e.
based on aims that are clear and specific. In addition, a consistent decision
making process will provide direction for the selection of an alternative that
optimises the goals.
In many instances, the rationality model assumption is inaccurate. This is

because the level of certainty postulated by this model almost does not exist.
Managers who make decisions in a scenario of certainty will know that the
results from each selected alternative may not be achieved.
At the same time, a manager will try and estimate the probability of each of these
alternatives and will place each situation in a position of risk. As such, if a
manager makes a decision based on limited information, he is said to be in a
position of uncertainty.
4.3 DECISION MAKING: AMENDMENT TO

THE RATIONALITY MODEL
Many of us make decisions based on incomplete information. As in the example
of buying a car, do you know which parts of the car are made from metals, alloy,
plastic or rubber? Do you know the car lightsÊ intensity of illumination and what
is the level considered safe for road conditions?
When we are faced with complicated problems, we tend to take steps to reduce
the problems to the level with which we can cope. As such, managers are
involved in a process called satisfice which is the process of seeking solutions
which are merely satisfactory and sufficient ă or in other words a satisfactory
decision.

4.3.1 Bounded Rationality

Management theory is developed based on the assumption that managers act
rationally. The core of a managerÊs work revolves around making rational
decisions but in reality, not many managers act rationally. However, according to
Herbert Simon, an economist and management intellectual, in certain scenarios,
managers act rationally.
Due to the fact that man is incapable of analysing, interpreting and

understanding all the information that is required, he tends to develop simple
models by selecting the important characteristics of a problem. The rational
action taken by a manager, in formulating a simple or rational model is called
bounded rationality. The decision is a „satisficing‰ or „satisfactory‰ solution.
4.3.2 Differences in Decisions Made Under the

Rationality and Bounded Rationality Models
When a problem has been identified, the search for criteria and alternatives will
commence. The list of criteria normally is limited and only comprises obvious
choices. Herbett Simon suggested that decision makers focus on choices that are
easy to find or the obvious choices. This means the generation of alternatives
which do not differ much from previous decisions for the same problem.
After a set of alternatives has been identified, managers will begin to assess them.
This evaluation is not comprehensive. They will make an evaluation until they
find an alternative which can solve the problem. The alternative which has the
capacity to satisfice will bring an end to the search for alternatives.
For example, a human resource management graduate is in the process of

looking for a new job within 50km of the place of his residence with a desired
starting salary of RM2,000 monthly. He will accept a job as an industrial
psychology executive in a place which is about 40km away from his home with a
starting salary of RM2,200 a month. On the other hand, by making a wider search
in newspapers, on the Internet, etc., he might obtain a job as a human resource
management expert in a firm located 30km from his residence with a starting
salary of RM2,600 a month.
What is the implication of bounded rationality on a managerÊs work? In a

situation where the assumption of perfect rationality can be used, (this includes a
majority of very important decisions made by managers), the breakdown of the
decision making process is greatly influenced by the importance of decision
making, the organisational culture, internal politics and power considerations.

4.3.3 General Mistakes Made in the Decision Making

Process
Heuristics is the behaviour which expedites the decision making process or the
behaviour of seeking a speedy process for consideration. Heuristics can be
divided into two categories, i.e. availability heuristics and representative
heuristics. Both these kinds of heuristics bring out potential biases. The following
are the descriptions of availability and representative heuristics and another
aspect of heuristics:
(a) Availability Heuristics

This is the likelihood of man forming a judgement based on available or
existing information, emotional experiences or on something that has just
happened which leaves a strong perception. We have greater inclination to
make predictions of events not happening than events that will happen.
An example is fear of flying. People are more confident about driving than
flying even though the airplane accident rate is far lower than of road
accidents. Air accidents gain more attention. Airplane accidents receive
greater media coverage and this increases the perception that there is
greater risk of flying than the risk of road accidents.
(b) Representative Heuristics

Representative Heuristics causes individuals to interrelate the probability
of an occurrence with an event they are accustomed to.
An example of representative heuristics is the ambition of students to

become an F1 champion, whereas the probability of becoming a doctor is
greater. This happens because when they watch a race, they imagine they
can drive in the same way. Another example is in an organisation where a
manager might plan to launch a product and predict that the sales level will
not differ much by referring to previous successful sales of the same
product, even though this may now be fallible.
(c) Escalation of Commitment

This phenomenon occurs when managers decide to increase capital or
commit to pursuing a course of action even though negative data exists that
does not support that decision. This could come about because of
overwhelming stress of losing the job, performance, colleagues and ego.

ACTIVITY 4.2
Provide other examples of:

(a) Availability Heuristics
(b) Representative Heuristics
(c) Escalation of Commitment
4.4 DECISION MAKING: CONTINGENCY

APPROACH
Problems can take various forms. There are simple and straightforward
problems, i.e. the decision making aim is clear, the problem is routine and the
information about the problem can be interpreted easily and precisely. However,
often times, problems are complicated. They could be new problems or problems
which are out of the norm. The causes of such problems are less clear or
ambiguous.
4.4.1 Non-programmed Decisions

Non-programmed decisions refer to unique and non-repetitive decisions when a
manager is faced with a complicated or ambiguous problem and there is no clear
solution readily available for him. A non-programmed decision or special
decision is required.
Examples of situations which need non-programmed decisions are decisions to

acquire a new firm, to select an architect to design a new office headquarters and
to shut down any division that is not raking in profits.
4.4.2 Programmed Decisions

Programmed decisions are decisions made for simple and routine problems. The
decision is programmed according to needs, as it occurs, up to the point a
definite approach is identified to address the problem. Programmed decisions
are relatively simple and depend on previous solutions. There is almost no
seeking of alternative solutions. For example, when the Federal Highway is
jammed, an alternative solution that is almost always resorted to is the use of the
LDP- Puchong or KESAS highways.

4.4.3 Procedures, Rules and Policies

Procedures are a set of interrelated measures that can be utilised by managers
when faced with simple and straightforward problems. Complications only set in
at the problem identifying stage. Once the problem has been identified, the
solution is straightforward.
Rules are explicit or open statements that inform managers about dos and donÊts.
Rules are used to solve simple problems as it is easy to follow and ensures
consistency.
Policies provide guidelines that channel the managersÊ thoughts in a particular

direction. In contrast to rules, policies outline the parameters within which to
make decisions and do not provide information on what should and should not
be done.
ACTIVITY 4.3
Fill in the blank spaces with the correct terms about procedures, rules
and policies.
________ provides guidelines which channels the managersÊ thoughts

in a particular direction. It outlines parameters to make decisions and
does not provide information on what can be done and what is
prohibited. Whereas ________ are explicit statements that inform
managers on what should and should not be done. Meanwhile,
________ is a series of interrelated measures that can be used by
managers when confronted with routine problems.
4.5 GROUP DECISION MAKING

Many decisions which are made by an organisation, particularly important
decisions which have an overall effect on the organisation and the staff are made
in groups. In most cases, it is made by the group which has to face the outcome
of the said decision.

4.5.1 What are the Advantages of Group Decision

Making?
Individual and group decision making each has its own advantages.
(a) Group decisions provide more complete information compared to

individual decisions.
(b) In a group, various experiences and differing perspectives can be
integrated.
(c) Besides this, groups are capable of generating greater alternatives.
(d) Finally, group decisions support acceptance of the solution. This is because
the decisions have been made together, particularly by those involved
directly in the outcome of the decision.
(e) This process will enhance its implementation.
4.5.2 What are the Disadvantages of Group Decision

Making?
The Following the disadvantages of group decision making:
(a) It is time consuming as group consensus is required.

(b) It may become a victim of circumstances when there is minority group
power. The minority group in power often gets to influence the final
decision.
(c) There may be social pressure to agree. It encourages group thinking ă a
form of group consensus, i.e. differing opinions, minor and less popular
decisions are shrouded to give a picture of consensus.
(d) In group decisions, the responsibility of each member is diluted.
4.5.3 Group Think

Group think refers to situations whereby the ability of groups to evaluate
alternatives objectively to reach a quality decision is affected. Since there is
pressure to agree, members will prevent individuals from making critical
evaluations on abnormal or unpopular views. This will adversely affect the
efficiency of thinking and moral judgements.

4.5.4 How to Improve Group Decision Making?

After looking at the pros and cons of group decision making, let us now look at
how we can optimally achieve the most concrete decision. Three approaches are
suggested here.
(a) Brainstorming
Brainstorming refers to a process of generating ideas. It refers to a
simplified method of reducing stress for consensus. It is used as a
straightforward process to come up with alternatives. In a small group
comprising six to twelve members, the head of the group will present a
problem and explain it clearly to the members. Members are given the
opportunity to come up with as many suggestions as possible within a
given time. No criticism is made and every suggestion is recorded.
(b) Nominal Group Techniques

This technique prohibits any discussion among members when suggestions
are generated. Members must be present but they function individually.
Each of them writes down the problems faced and suggests possible
solutions. The main advantage is that it allows a formal meeting without
obstructing individual thinking.
(c) Electronic Meeting

This technique combines the group nominal technique and computer
technology. A total of 50 members can meet in the meeting room arranged
in a „U‰ shape with a computer terminal on each desk. Issues are put
forward and members give their comments via computer. Individual
comments and group voting are displayed on the screen in the meeting
room. The main advantage of this technique is that it provides anonymity
and honesty. Through anonymity, members can key-in their messages
freely and quickly, chatting time is reduced and members can communicate
without disturbing others.
The main set back of electronic meetings is that it is a disadvantage to

members who are not so efficient in typing. Furthermore, members with
truly constructive ideas are not given due recognition. This method also
curtails face-to-face communication.
Please visit http://www.workteams.unt.edu/reports/lahti.htm to read

more on group decision making.

 Managers make routine as well as major decisions regularly. Unlike those

made by other people, decisions made by managers can be critical as they can
affect the survival of an organisation. Consequently, managers need to make
vigilant decisions.
 Although the possibility of making poor decisions can be reduced using the
rational decision making process, managers must also be conscious of the
limitations of the process and the challenges in making rational decisions. In
order to overcome the setback, organisations lay down procedures, rules and
policies to steer administrative and management decisions.
 Organisations also practice group decision making to collectively share the

outcomes or consequences of decisions made0
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Topic  Basic
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Organisational
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Design
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1. Discuss the six structural elements of organisational design;
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" 2. Describe the five departmentalisation methods that can be practised
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3. Explain the six differences between mechanistic and organic
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organisations;
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" 4. Explain the four contingency factors that influence organisational
" structure; and
" 5. Elaborate on the six organisational design structures.
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 INTRODUCTION
Over the past several centuries, we have witnessed how managers attempted to
establish their organisational structure based on a hierarchical structural
framework which encouraged efficient mass production, promoted uniformity in
rules and was centrally controlled.
However, as the organisation expanded, multiple managerial layers had to be

included in the existing structure. The question was whether the existing
structure could cope with the increasing manpower and whether this structure
could perform at optimum level? Could the organisation continue to compete
actively in a dynamic environment?

TOPIC 5 BASIC ORGANISATIONAL DESIGN  51
When the organisations expanded in size, a re-evaluation of the existing structure

became necessary so as to enable the organisation to achieve optimum
effectiveness and efficiency levels. Reorganisation would become necessary if it
was found that the existing structure was no longer effective. This activity refers
to the organising process. The organising process is the manner in which work
could be redesigned and reallocated among the members of the organisation so
that the goals of that organisation could be achieved more effectively.
After corporate strategy decisions have been made, an effective structure must be
put in place to facilitate the achievement of organisational goals. When a
manager becomes involved in re-establishing and rearranging the organisational
structure, he is said to be involved in the organisational design process.
Organisational design is normally carried out by top management and it
encompasses all types of organisations.
5.1 STRUCTURAL ELEMENTS

When we discuss aspects of organisational design, we must focus on six
structural elements; specialisation, chain of command, span of control, authority
and responsibility, centralisation and decentralisation and departmentalisation.
5.1.1 Specialisation
In Topic 1, we have covered the aspect of specialisation, which was put forward
by an economist whose contributions remain significant to this day. In the 1700s,
Adam Smith, in his book, entitled „The Wealth of Nations‰, emphasised the
breakdown of labour into several divisions.
This meant that work had to be divided into various stages and each work step
be undertaken by a different person. Every individual specialised in a particular
area of activity. Specialisation required multiskilled and competent workers.
5.1.2 Chain of Command

The pioneers of management were of the opinion that workers should only have
one leader. A worker who has more than one leader often receives conflicting
instructions and priorities from different bosses. When the principle of the chain
of command is violated, the pioneers of management proposed a clear division of
activities and appointment of one leader for each level of activity.

52  TOPIC 5 BASIC ORGANISATIONAL DESIGN
The concept of chain of command is logical at the structural level of an

organisation. Many organisations are still guided by this principle, but rigid
adherence to this principle will give rise to a rigid environment and will
adversely affect organisational performance.
5.1.3 Span of Control

The span of control principle discusses the number of workers that can be
effectively controlled by a manager. There is no agreement on specific numbers
but the pioneers favoured a smaller span of control or a number of workers of
less than six.
In general, top managers required a smaller span of control compared to middle

managers, and middle managers needed to have a smaller span of control
compared to first-line managers.
There have been changes in thinking about effective span of control. Many
organisations are increasing their respective spans of control. This span is
becoming more and more dependent on factors beyond the control of the
organisation.
This is because it is believed that workers who have more training are more
experienced and need less direct supervision. The factors taken into
consideration are the workersÊ tasks, the complexity level of the task, distance
between workers, level of uniformity of tasks and other factors.
5.1.4 Authority and Responsibility

Authority refers to the rights enshrined in a managerÊs position to give
instructions with the hope that those instructions will be adhered to. Authority
was the guiding principle of management pioneers who believed that authority
would glue the organisation together. Authority was usually a top-down
function, i.e. from the top to a lower management level. Authority was linked to
the post without taking into consideration the personal characteristics of the
holder of the post. This meant that when a person vacated a post, the authority
remained in the post and was not taken away by that person.
When managers disburse authority, they must also allocate equivalent

responsibilities. When workers are given certain rights, they are also expected to
carry out the relevant tasks. The distribution of authority without responsibility
will only give rise to coercion. No one should be given the responsibility for
something without being given the corresponding authority.

5.1.5 Centralisation and Decentralisation

Centralisation depends on the degree of decision-making authority that is
allocated to the lower levels in an organisation. Centralisation and decentralisation
are phenomena related to decision-making authority. It must be remembered here
that no organisation practises ideal centralisation and decentralisation policies.
However, the ultimate objective is the efficient and optimum utilisation of
manpower.
Traditional organisations are normally in the form of a pyramid, that is, power
and authority is vested in the top layers. In such an organisational structure,
centralised decisions are obviously practised.
Current organisations are becoming more and more complex, and faced with
dynamic changes in the environment. On this basis, more and more managers
believe that decisions should be made by those who are in proximity to the
problem. Managers of today will select the level of centralisation or
decentralisation based on their capacity to make decisions so as to achieve
organisational objectives.
One form of empowerment is by distributing authority to workers to make

decisions on daily tasks but this does not mean senior managers are totally free
from decision-making.
5.1.6 Departmentalisation
The pioneers of management proposed that organisational activity should be
specialised and grouped together. Specialisation gave rise to experts who needed
to be coordinated. The coordination work could be done by placing the experts
together in one department under one manager. Methods of departmentalisation
are shown in Table 5.1.

Table 5.1: Methods of Departmentalisation
Departmentalisation
Explanation
Method
Functional This method divides manpower according to the main
Departmentalisation functions in the organisation. It can be used by all types of
(see Figure 5.1) organisations.
Product Every product is placed under a senior manager who is an
Departmentalisation expert and responsible for all matters related to that product.
(see Figure 5.2)
Customer This method is used on the assumption that the customers in
Departmentalisation each department have common problems and needs which
(see Figure 5.3) can be managed by ONE expert.
Geographical This method is very valuable if the companyÊs customers
Departmentalisation span a wide area.
(see Figure 5.4)
Process This method groups all activities based on work-flow or
Departmentalisation customers.
(see Figure 5.5)
Figures 5.1 to 5.5 show the departmentalisation methods.
Figure 5.1: Functional departmentalisation

Figure 5.2: Product departmentalisation
Figure 5.3: Customer departmentalisation
Figure 5.4: Geographical departmentalisation

Figure 5.5: Process departmentalisation
SELF-CHECK 5.1
We have discussed six important elements in organisational design.

Please select and match the six elements which have been discussed
with the explanation in the left column.
Departmentalisation, Span of Control, Chain of Command, Specialisation,

Authority, Centralisation and Decentralisation"
Description Element
1. A worker who has more than one boss often receives
conflicting instructions and priorities. As such, a worker
should have only one boss.
2. The rights enshrined in an organisational position to
give instructions with the hope the instructions are
adhered to.
3. Coordination work can be done by placing the experts
together in one department under the direction of a
single manager.
4. Tasks are divided into several stages and each step is
carried out by a different person.
5. The functions of several decision-making authorities are
distributed to lower levels in the organisation.
6. Discusses how many workers can be controlled by a
manager effectively.

5.2 CONTINGENCY FACTORS THAT INFLUENCE

STRUCTURE
The most appropriate structure for an organisation depends on contingency
factors. Among the popular contingency factors are strategy and size of
organisation, technology used and the environment surrounding the
organisation.
5.2.1 Mechanistic Organisations

A mechanistic organisation is an organisation that is characterised by specialised
jobs and responsibilities, precisely defined, unchanging roles, and a rigid chain of
command based on centralised authority and vertical communication. This type
of organisation works best in stable, unchanging business environment.
Mechanistic organisations are the result of the integration of the six structural
elements.
The chain of command ensures that there is a formal hierarchy of authority. A

narrow span of control creates a tall and impersonal structure, i.e. the top
management ensures control through the imposition of rules. Besides this, a high
degree of specialisation also allows tasks to be carried out easily, routinely and
uniformly. Departmentalisation causes the situation to be very impersonal,
which in turn necessitates multiple managerial layers.
5.2.2 Organic Organisations

Organic organisations are organisations which can adapt to various situations.
They are characterised by broadly defined jobs and responsibility, loosely
defined, frequently changing roles, and decentralised authority and horizontal
communication based on task knowledge. This type of organisation works best in
a dynamic, changing business environment.
This type of organisation contrasts significantly with mechanistic organisations.

Its unique structure enables it to be flexible according to its needs. Under this
structure, there are competent and trained technicians who can handle problems.
They need minimum supervision and control. In addition, organic organisations
are more decentralised.

Now, let us look at Figure 5.6 which shows the differences between mechanistic
and organic organisations.
Figure 5.6: Mechanistic organisation versus organic organisation
SELF-CHECK 9.2"
List the differences between Mechanistic and Organic Organisations.
Now, let us look at the contingency factors that influence organisational

structure.
5.2.3 Strategy
Organisational structure is one method that can assist management to achieve its
objectives. As such, structure follows strategy. In fact, organisational structure is
based on strategy. If management makes a decision to change strategies, changes
must also be made to the organisational structure. Research also supports the
relationship between strategy and structure.
5.2.4 Size
There is historical evidence that an organisationÊs size has an impact on the
creation of its structure. Big organisations which employ more than 2,000
workers will be more inclined towards work specialisation, differentiation, and
the use of rules compared to smaller organisations. However, this relationship is
not linear as the impact of size will become less important as the organisation
keeps expanding.

5.2.5 Technology
Every organisation utilises some form of technology to transform resource input
to organisational output. To achieve this objective, the organisation uses tools,
materials, human expertise and experience, arranged according to specific
activities. Researchers have concluded that to achieve high levels of effectiveness,
technology must complement the organisational structure. A lot of research
focuses more on the methods of transforming input to output and the differences
in the routine levels of carrying out the tasks. The more routine a task, the greater
is the need for a uniformed structure. Organic organisations need less routine
technology.
5.2.6 Environment
Mechanistic organisations are most effective in stable environments. On the other
hand, organic organisations function better in an uncertain and fluid
environment. The relationship between structure and environment is the main
reason why managers restructure their organisations to ensure responsiveness
and flexibility.
Aspects of competition at the global level, for example, frequent product

innovation and increased customer demand, are examples of dynamic
environmental forces. Mechanistic organisations will face a dead-end if hit by the
waves of change.
SELF-CHECK 5.3
What are the four contingencies that influence the structure of an
organisation? Please write your answers in the spaces provided.
5.3 ORGANISATIONAL DESIGN APPLICATION

In this subtopic, we will look into the different organisational structures, such as
the simple structure, bureaucracy, team and borderless structure.

5.3.1 Simple Structure

Most organisations start off as simple-structured entrepreneurships. The owner
of the company is the president and all workers report directly to him. The level
of work specialisation is low with minimum operational control procedures.
Centralised authority is vested in one person, i.e. the owner. This kind of simple
structure is a horizontal organisation that practises centralised decision making.
It is mostly used by smaller organisations.
Among the strengths of this simple structure are that decisions can be made
quickly as they only involve one person; and it is more flexible as coordination
work can be carried out easily. Operational costs are also low due to the small
number of workers and the question of accountability is also clear.
The weakness of this structure is it only works well for small organisations. Its
effectiveness becomes weaker when the organisation grows. The lack of policies
and rules to guide its operations and a high degree of centralisation result in
information overload at the top level. When the size of the organisation increases,
decision making is delayed and comes to a standstill. Finally, all decisions
depend on one person only.
5.3.2 Commencement of Bureaucracy

Many organisations cannot survive for long with a simple organisational
structure. When the number of workers increases, less formal work procedures
are replaced by more formal procedures. Rules are implemented,
departmentalisation is established and managerial layers are increased to
coordinate tasks in the respective departments. At this stage, bureaucracy comes
into existence. Two bureaucratic designs that are most popular are the functional
structure and the divisional structure.
(a) Functional Structure

The advantage of the functional structure is work specialisation. It
facilitates economies of scale and reduces duplication of personnel and
equipment. The weakness is that it focuses more on the achievement of
functional objectives over organisational objectives.
(b) Divisional Structure

The divisional structure consists of fully-equipped units or divisions. In
principle, each division is autonomous with a divisional manager who is
responsible for overseeing the performance and who has full authority to
make operational decisions and formulate strategies.

The headquarters provides support services to the divisions. The

headquarters functions as an external observer which coordinates and
controls all divisions.
The main advantage of a divisional structure is its emphasis on decisions.

The divisional managers are fully responsible for the services and products
that are offered. This kind of structure also frees the headquarters from
dealings and problems on a daily basis. Duplication of functions which
involve high costs makes this kind of structure less efficient and is the main
disadvantage of this structure.
ACTIVITY 5.1
The simple structure cannot continue to exist without bureaucracy.
However, we always hear complaints from the people that
bureaucracy delays work procedures. Does this mean we have to
eliminate bureaucracy? Elaborate.
(c) Matrix Structure

The matrix structure integrates the advantages of both the functional and
divisional structures, i.e. the specialisation practised by functional
structures and clear focus and accountability of the divisional structure.
Refer to Figure 5.7 on the example of matrix structure.
Figure 5.7: Example of matrix structure

The unique feature of this structure is that workers have at least two
managers above them: a functional manager and a product or project
manager. The project manager has authority over the functional members
who are a part of his team. However, authority is jointly shared between
the functional and project managers. Normally, the project manager has
authority over the project workers for issues related to the project; whereas
decisions on promotions, remuneration adjustments and yearly evaluation
are the responsibility of the functional manager.
To function effectively, the divisional and project managers must always

communicate and coordinate with one another. The advantage of this
matrix structure is that it can coordinate interconnected complex tasks and
projects and at the same time maintain the functional expertise that has
been put together. The weakness is that confusion occurs as a result of
power struggles among the managers.
5.3.3 Team Structure

The whole organisation comprises work groups or teams. The team members
have the authority to make decisions which impact them, in the absence of a
chain of command. Bureaucracy delays decision making and hampers
innovation. One step to overcome this problem is by making the organisational
structure more horizontal and creating work teams among disciplines.
5.3.4 Borderless Structure

The final structure is the borderless structure. This structure is not obstructed by
boundaries or categorisation as practised by traditional organisations. It obscures
the boundaries of the organisation by increasing its dependency on the
environment. It is also known as network organisation, unobstructed learning
organisation, modular or virtual organisation.
A borderless structure encompasses all the aspects within the organisation. It

aims to eliminate obstructions which exist within and outside the organisation.
This kind of organisation needs work groups from various disciplines who have
the authority to make decisions, undertake the tasks and are accountable for
decisions made.
Among factors which encourage the increase of borderless organisations are

markets and competition at the global level and the need for the organisation to
act and adapt in a complex and fluid environment. Technological changes also
contribute to the growth of the borderless structure.

The borderless structure provides flexibility, which enables an organisation to

take action quickly as well as take advantage of available opportunities.
ACTIVITY 5.2
Draw a mind map of all the organisational structures that you have
just studied. Then, state what is the structure practised by your
organisation.
5.4 ORGANISATIONAL CULTURE

Organisational culture is a system of shared values. Every organisation has a
culture which reflects workersÊ behaviour. It is a system of values, symbols,
practices and beliefs. The shared values shape what the workers perceive and
how they will respond to their „world‰.
5.4.1 Where does Culture Originate From?

Organisational culture normally is the product of the vision and mission of the
organisational founders who were not restricted by any specific practice or
ideology. Most organisations which started off small allowed their founders to
implement their vision.
5.4.2 How does Culture Influence Organisational

Structure?
Organisational culture influences the structure of an organisation but the
organisation also depends on the influences of that culture. An organisation that
has strong core values will ensure that the dominant values guide the behaviour of
the organisation members. Sometimes, culture can replace rules, as has been said
before; culture is a reflection of the behaviour of the individual. A strong culture
will create the ability to forecast, and set behavioural standards and consistency
without the need for written documentation. As such, it can be said that the more
influential the organisational culture, the less the need for formal procedures.

 The dynamics of the business environment forces organisations to regularly

review their structure in order to sustain effective and efficient operations.
 The reorganisation process involves redesigning the organisational structure

and reallocating resources to fit into the new organisational structure as a
result of changes that have taken place in the environment.
 Organisational redesigning involves modification of relevant organisational

structural elements. However, appropriateness of the structure is very much
influenced by the organisationÊs contingency factors such as the
organisational strategy, size, technology and environment.

Topic  Human
"
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"
6
"
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Resource
"
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"
Management
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" LEARNING OUTCOMES
"
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1. Describe the human resource management process;
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" 2. Differentiate between job description and job specification;
"
3. Describe the most effective selection method for certain types of
"
work and the validity for each method;
"
" 4. Describe two forms of training programmes and provide relevant
" examples;
" 5. State at least two advantages of giving compensation and benefits
" to workers;
"
" 6. Explain the three current issues at the workplace; and
" 7. Explain seven techniques to evaluate staff performance.
"
"
 INTRODUCTION
Do you agree that the quality of an organisation depends on the quality of the
workers it employs? Well, there is a lot of evidence to support this view. As
discussed in Topic 5, organisations consist of a group of people brought together
and grouped in a specific way to achieve a particular goal. Without employees,
there is no organisation. You can argue that technological advancements, the
existence of computers and robots have replaced a substantive part of human
activities, but the question is who is behind the invention of this sophisticated
machinery? Therefore, it must be emphasised here that the quality of the workers
is very important to foster and sustain organisational harmony.
66  TOPIC 6 HUMAN RESOURCE MANAGEMENT
The decisions and methods of staffing and human resource management (HRM)
are critical to ensure that an organisation employs and retains the right
personnel. In many organisations, HRM tasks are undertaken by HRM experts
within the organisation. Sometimes the HRM tasks are channelled to consultancy
firms which specialise in HRM activities. However, for small-sized organisations,
the managers themselves have to conduct recruitment (in other words, HRM
activities) without the assistance of HRM experts.
When you attend an interview, the team of interviewers is not just made up of
HRM managers. Have you ever wondered who they are? They are managers
from other divisions. Managers from big organisations are also involved in HRM
activities such as selection of candidates, assessment of application forms,
interview of candidates and other tasks. It does not matter if HRM experts
provide HRM support as every manager will be involved in making HRM
decisions.
6.1 HRM NEGOTIATION ENVIRONMENT

Employers today must ensure that there are equal employment opportunities for
every candidate and employee of an organisation. Exemptions can be made
based on the situation. For example, a person who is dependent on a wheelchair
for mobility can be rejected by the Fire Department if he applies to be a fire-
fighter but this candidate cannot be rejected if he applies for the position of clerk
in the same department.
Whether some HRM decisions can be made or not, under this kind of legislation,
is subject to affirmative action control. Many organisations have affirmative
action programmes which ensure that HRM decisions and practices can employ
and retain workers from minority groups, including female workers.
Organisations must not only refrain from discriminative policies. In fact, they
should proactively improve the status of those classified as belonging to
protected groups. In other words, managers do not have absolute freedom to
determine who can be hired, promoted or dismissed.
6.2 HUMAN RESOURCE MANAGEMENT

PROCESS
Figure 6.1 shows the main components of the HRM process. It represents eight
steps which, if implemented well, will provide the organisation with credible
workers. The first three steps represent job plans and if implemented in detail,
will help to identify and select competent workers. These steps are vital in
assisting organisations to achieve their strategic goals.
TOPIC 6 HUMAN RESOURCE MANAGEMENT  67
Orientation and training and development help new employees to adapt to the
organisation and obtain skills and knowledge. Finally, the HRM process will help
organisations to achieve organisational performance, correct performance
problems and help workers to maintain their respective performance levels. The
external environment influences the overall process, as shown in Figure 6.1.
Figure 6.1: Strategic human resource management process
ACTIVITY 6.1
Try to explain Figure 6.1 in your own words, i.e. how do the
components of the human resource management process function?
6.3 HUMAN RESOURCE PLANNING

Human resource planning is a process whereby managers will ensure the
organisation has sufficient workers and qualified workers that are placed in the
relevant sections and within an appropriate time, are capable of undertaking
their respective tasks effectively and efficiently, as well as able to help the
organisation achieve its overall objectives. The human resource plan translates
organisational mission and objectives into personnel planning.

The HRM process involves the assessment of future human resource needs and
the development of a programme that can help fulfil these needs.
6.3.1 Human Resource Evaluation

How do organisations assess their human resources? The management begins by
evaluating the current human resource status through the human resource
inventory. Input is obtained from the forms completed by the employees. This
inventory enables the management to know the kinds of talents and skills that
their employees have.
One of the current assessment techniques is job analysis. The job analysis steps
are more basic than the compilation of the human resource inventory. It involves
analysing workflow and identifying the required worker behaviour for every
division in the workflow. In short, job analysis aims to identify the skills,
knowledge and attitudes that are required to perform each task successfully.
The information that is accumulated is then used to produce job descriptions and
job specifications. A job description is a written statement that describes the
scope of work of the employee, how the job is to be done and the purpose of
carrying out the task. It contains job duties, environment and work atmosphere.
A job specification, on the other hand, lists the minimum qualifications that an
employee must have to carry out a task successfully, i.e. by identifying the
knowledge, skills and attitudes that are necessary to carry out a task efficiently
and effectively.
Both these documents are very important in the recruitment and selection
process. Job descriptions can be used to describe the expectations of the job to
candidates, whereas job specifications can be used to draw the attention of
managers to the list of qualifications necessary for an employee to carry out a
task and candidates who are qualified for the task.
6.3.2 Future Human Resource Needs

Future human resource needs are determined by the strategic direction of the
organisation. The demand for human resources depends on the demand for the
products and services supplied by the organisation. The overall goals of the
organisation and the forecasted output provide the basis for determining the
need for human resources. After the current capacity assessment and future
needs analysis are done, only then can a programme be developed to match
estimates with labour supply forecasts.

ACTIVITY 6.2
What are the mission and objectives of your organisation? How does
management translate them into organisational plans?
6.4 RECRUITMENT AND SELECTION

Where do managers recruit candidates from? The choices available to a manager
are listed in Table 6.1.
Table 6.1: Selection Decision Outcomes
Rejection of Error Accurate Decision

Work Performance Successful Rejection of Error Accurate Decision
Then Unsuccessful Accurate Decision Acceptance of Error

Selection Decision
Is one resource better than the other? Some resources provide quality candidates.
Many researchers find that workersÊ references provide the best candidates.
Candidates referred by the employees themselves are already screened by them
before being referred. Workers always make references when they are sure the
referred candidates are not a threat to their reputation. However, this kind of
reference does not encourage diversity.
6.4.1 Selection of Candidates

The selection process is a training exercise in predicting candidates who will be
successfully recruited. „Successful‰ in this context refers to the criteria used by
the organisation to assess the candidates. Any selection decision can bring about
four outcomes (refer to Table 6.1). A decision is correct if: the candidate, who is
predicted to be successful, proves to be successful; candidates predicted to be
unsuccessful, are proven to be incapable of undertaking the tasks.

Problems will arise if we make erroneous rejections and acceptance. Erroneous

rejection occurs when we reject a candidate who is predicted to be incapable of
performing the job and subsequently proves otherwise. This mistake puts the
organisation at the risk of being accused of job discrimination. The second
mistake is acceptance error, which occurs when we accept a candidate who is
predicted to be able to handle the job and subsequently proves otherwise. This
error will be costly for the organisation in terms of training, opportunities lost
because of the incapability of the worker and the termination salary that has to be
paid.
6.4.2 Effectiveness of Tests and Interviews as

Selection Techniques
Managers can use various techniques to reduce the rejection and acceptance
errors. Among the popular methods are written tests and simulation-
performance tests as well as interviews.
ACTIVITY 6.3
Have you encountered selection based on tests or interviews? What is

your view of these methods?
(a) Written Tests

In general, written tests include intelligence, ability, competency and
aptitude tests. For example, intelligence tests are appropriate for the post of
supervisor. However, it must be remembered that a high intelligence test
score is not necessarily a determinant of performance.
(b) Simulation-Performance Test

This determines whether a candidate can perform a job and allows him to
do the actual task. The assessment is based more on the analysis of actual
work that has been done compared to the written test. The simulation-
performance test includes assessment of real work behaviour. Among the
well-known simulation-performance tests are the following:
(i) Work Sample

A part of the actual work, suitable for routine work
(ii) Assessment Centre

Simulation of problems that might be faced in a particular job

The advantage of simulation-performance is its similarity to the actual

work content, which is a better indicator to predict short-term job
performance.
(c) Interview
Interviews conducted through application forms are a universal selection
technique. Although widely encouraged, the effectiveness of this technique
is still questionable. Interviews can be a reliable and valid technique if they
are structured and conducted properly.
On the other hand, normal interviews do not avail useful information to the
company for the following reasons:
(i) Knowing the candidate beforehand will affect the assessment of the
candidate. Information about the candidate is available in the
application form or other sources. This information will create
unrealistic expectations;
(ii) The interviewers will have stereotypical perceptions of a ÂgoodÊ
candidate. For example, female candidates cannot give their full
commitment to their jobs because of motherhood and marriage.
(iii) The interviewers will be more inclined towards candidates with
similar interests. Interviewers who like to play golf will prefer
workers who have the same interests;
(iv) The schedule of candidates to be interviewed will influence the
assessment. Interviewers will begin to feel tired and bored in the
evening or after several rounds of interviews;
(v) The flow of information obtained from the interview will influence
the way assessment is done. This happens when candidates give
unsatisfactory answers in the early stages of the interview;
(vi) Negative information will give a poor perception;
(vii) Candidates will be assessed in the first few minutes of the interview.
This is normally based on first impressions; and
(viii) Forgetting the content of the interview once it is over. Interviewers
cannot then provide an unbiased and accurate assessment of the
candidate.
It is also said that it is difficult to find good workers, and even if workers are
good, they will not stay for long. One of the reasons for this could be that
candidates are not given the right information during the interview.

Giving candidates only positive information during the interview will give rise to
dissatisfaction and encourage turnover. Every employee has a set of expectations
of the organisation and the job to be undertaken.
Inaccurate information will impact the organisation negatively. Firstly, selecting

the wrong candidate will lead to this candidate seeking another job more in line
with his expectations. Secondly, providing only positive information about the
job will lead to the candidate having unreasonable expectations which will
eventually lead to dissatisfaction. When the employees eventually learn about
the actual job expectations which are not consistent with their initial aspirations,
they will be disillusioned in terms of their commitment to the organisation. This
kind of employee will pose problems for the organisation.
In view of this, to increase job satisfaction and reduce turnover, organisations

must consider using realistic job previews (RJP). RJP contains both favourable
and less favourable information about the job and the organisation. Candidates
are given realistic information which allows them to have lower and more
realistic expectations about the job. The end result is that the rate of resignation is
lower among new employees.
ACTIVITY 6.4
Did you have any initial aspirations or expectations in your workplace

which have now changed? What actually happened?
Before we explore the concept of orientation, training and development, consider

your expectations of the word „orientation‰. Is it something positive or negative?
6.5 ORIENTATION, TRAINING AND

DEVELOPMENT
How do we introduce new workers to the organisation? After being selected to join
an organisation, a new recruit must be initiated to the job and the organisation.
Among the main reasons for conducting orientation activities are to:
(a) Reduce feelings of anxiety;

(b) Fit new workers to the job, work unit and the organisation; and
(c) Help in the adjustment process among new workers and co-workers.

Three types of orientation normally conducted by an organisation are work

orientation, work unit orientation and organisational orientation.
(a) Work orientation provides more information to the employee than received
during recruitment. This is the time for the employee to correct any
unrealistic expectations and aspirations. Here, new employees are given
clarification about the job scope and responsibilities and how their
performance will be evaluated.
(b) Work unit orientation aims to familiarise the employees with the goals and
objectives of the unit. At this stage, employees also receive information
about how their work process can contribute to the goals of the unit. For
example, you, as a manager, explain to the new sales executive that the
outcome of his sales achievement will contribute to the targeted total sales
output. Other than this, new employees will be introduced to their co-
workers.
(c) Organisational orientation is conducted to introduce the employee to the

organisation as a whole. It informs the employee about the objectives,
history, philosophy, procedures and rules of the organisation.
Organisational authorities have an obligation to ensure that new employees
are integrated into the organisation as smoothly as possible.
6.5.1 Training of Employees

Employee training is a learning exercise which aims to achieve a certain level of
change which, relatively, can be sustained so that the employeesÊ ability to carry
out their jobs improves. It involves change in skills, knowledge, attitudes or
behaviour. The training needs can be identified by addressing several questions
in the process shown in Figure 6.2.
There are several easily identifiable symptoms, which can indicate that training is
needed. Among signs which indicate the need for training are a drop in
production rates, decline in quality of goods and services, increase in accident
rates and increase in rejection rates of products and services of the company.

Figure 6.2: Identifying the need for training
6.5.2 How are Employees Trained?

Most training programmes take the form of On-The-Job-Training (OJT). OJT may
disrupt a job if more mistakes occur during training. There are also times when a
task is too difficult to learn whilst working.
Generally, training can be divided into two forms: On-the-job-training, and Off-
the-job-training.
Table 6.2: Forms of On-The-Job-Training and Off-The-Job-Training
On-The-Job-Training
1. Job Rotation Rotation of job among employees at the same level. It
provides comprehensive exposure to the workers.
2. Understudy Assignment Working with a veteran, mentor or coach who provides
support and encouragement
Off-The-Job-Training
1. Lectures in Class Lectures which provide specific technical skills.
2. Videos and Films Using media to deliver technical skills which are
difficult to demonstrate using other methods.
3. Simulation Exercises Learning a task by doing that task on a simulation basis.
It involves case analysis, role-playing and group
interaction.
4. Vestibule Exercises Learning a task using the equipment which will actually
be used in the real work situation, on a simulation basis.

6.5.3 How do Managers Evaluate the Effectiveness of

Training?
Managers can assess the outcome of training based on how much knowledge is
imparted to the employees successfully, whether there is behavioural change or if
the training programme has achieved the objectives set.
SELF-CHECK 6.1
Match the forms of employee training provided below to the

descriptions explanations in the right-hand column.
Films and Videos, Vestibule Training, Job Training, Simulation

Exercises, Lectures in Class, Understudy Assignment
Forms Description
of
Training
Rotation of work among workers at the same level. It gives
comprehensive exposure to the employee.
Working with a veteran, mentor or coach who provides
support and encouragement.
Lectures which provide specific technical skills.
Using media to deliver technical skills which are difficult
to demonstrate using other methods.
Learning a task by doing that task on a simulation basis. It
involves case analysis, role-playing and group interaction.
Learning a task using the equipment which will be actually
used in the real work situation, on a simulation basis.

6.6 PERFORMANCE MANAGEMENT

In this subtopic, we will explore more about performance management systems
and employee performance.
6.6.1 What is Meant by Performance Management

Systems?
Performance management system is a process of setting performance levels and
appraisal of the performance levels so as to achieve the required human resource
objectives. It also provides documentation to support worker performance.
ACTIVITY 6.5
How is performance setting and appraisal carried out in your

organisation? Are you satisfied with the techniques used?
The following are techniques popularly used (refer to Table 6.3):
Table 6.3: Performance Level Management and Appraisal Techniques
Technique Description
Written Comment The Appraiser writes down comments about the
employeeÊs performance.
Critical Incident The appraiser focuses on critical incidents which is
a test whether the employee can carry out a task
assigned to him effectively.
Graphic Rating Scale The appraiser evaluates the employee by giving a
score to each performance trait that has been
identified, on an escalating scale.
Behaviourally Anchored This combines the techniques used in the critical
Rating Scale incident technique and graphic rating scale.
Multiperson Comparisons This involves comparisons with other employees.
Management Guidance This technique focuses on the final outcome.
Appraisal
360o Feedback Appraisal is done by employee, supervisor, team
members, co-workers, customers, etc.

6.6.2 What will Happen when an Employee’s

Performance Deteriorates?
A manager must understand the reasons for a drop in employee performance. If
this happens due to wrong job-fit, then the solution is very clear. However, if it is
related to the reluctance of the employee to carry out the task, then it poses a
disciplinary problem. A manager can overcome these problems through
counselling or disciplinary action.
Counselling can help solve problems related to job performance. It addresses the
question of the employeeÊs lack of interest to carry out a task productively. If this
method is not effective, then the organisation can probably consider disciplinary
action.
6.7 COMPENSATION AND BENEFITS

We will now look into the determination of remuneration and employee benefits
in general.
6.7.1 Determination of Remuneration Level

The administrative aim of compensation is to design a remuneration structure
which is cost-effective and which can attract and retain competent employees. It
also functions as an incentive to employees so that they can give their best in
their jobs. Finally, it aims to ensure that employees receive salary levels that are
equitable and fair.
The main determinant of salary received depends on the kind of work done by
an employee. Different levels of work require different skill levels, knowledge
and ability commensurate with the respective responsibilities and authority.
The salary level is also influenced by the kind of business venture, work
environment, location, employee performance levels and employee seniority.
Finally, it depends on the organisationÊs philosophy on compensation. Some
organisations believe that they should not pay more than the actual amount
whereas other organisations believe the actual amount should be paid.

6.7.2 Employee Benefits

When an organisation designs its overall compensation package, it also considers
one other element, i.e. fringe benefits. Fringe benefits are non-monetary
compensation designed to enrich the life of the employee. Benefits differ greatly
from one organisation to another. Some of the employee benefits practised by
organisations in Malaysia are contributions to the EmployeesÊ Provident Fund
(EPF) or Pension Scheme; Medical Benefits; Financial Loans at minimum interest
rates, etc.
6.8 CURRENT ISSUES IN HUMAN RESOURCE

MANAGEMENT
The current issues related to human resource management that will be discussed
in the following subtopics are diversification of employees, sexual harassment
and family-friendly organisations.
6.8.1 Diversification of Employees

Employee diversification refers to the hiring of foreign workers, women, disabled
persons, etc. Organisations must ensure the recruitment process is free from
discrimination. Applicants must feel comfortable with the organisational culture
and demonstrate willingness to compromise.
6.8.2 Sexual Harassment

Sexual harassment is a serious global problem. It represents unsolicited sexual
advances which can affect an employeeÊs job.
It can happen to a person of the opposite or same sex. Sexual harassment can take
the form of verbal or physical harassment which will lead to an uncomfortable
work environment.
The management can be made responsible for any sexual harassment charge. The
legal body will be interested in finding out whether the organisation was aware
of the case. Should the organisation be aware of such a case? What must the
organisation do to overcome this problem?

6.8.3 How can Organisations become Family-friendly?

Family-friendly benefits are external assistance given by an organisation to the
family of an employee. It includes flexible working hours, leave for parents and
aid for the elderly. It also takes into account employees who have children and
other dependents who cannot be neglected when the employee is at work.
 In this topic, you were exposed to the human resource management process,
human resource planning, recruitment and selection, orientation, training
and development, performance management, compensation and benefits,
and current issues in human resource management.
 You should be able to describe all this with examples from your own work
environment.
"
"

Topic  Change
"
"
"
"
7
"
"
"
Management
"
"
"
"
and Innovation
"
"
" LEARNING OUTCOMES
"
" 1. Describe the two change factors which influence the management
" of an organisation;
"
" 2. Explain the importance of the role played by a manager, as an
" agent of change in an organisation;
" 3. Discuss the two metaphoric differences of change, namely „calm
" waters‰ and „white water rapids‰;
"
4. Explain the three reasons why people resists change and five
"
techniques to reduce resistance of change;
"
" 5. Explain the five causes and three symptoms of stress; and
" 6. Explain the three sets of factors that stimulate innovation.
"
"
 INTRODUCTION
Before we begin this topic, try to recall your village, the place where you grew up
not so long ago, be it in Seremban, Dengkil or Pasir Gudang. Is the village or
town the same as before? Is the field where you used to play football unchanged?
Is the market you used to frequent with your parents still the same? In some
instances, the answer may be yes, while other places may have undergone some
changes. The point of this whole exercise is that everything goes through a
process, i.e. change.

TOPIC 7 CHANGE MANAGEMENT AND INNOVATION  81
From a management perspective, change is adapting to the environment,

structure, technology, or even individuals within an organisation. As you have
learnt in the process of decision making in Topic 4, the work of a manager is very
simple if no changes are needed. If there are no changes, planning can be done
easily if managers know what should be done next. The question of restructuring
the organisation does not arise as the existing structure can cope with an
unchanging or static environment.
Changes in an organisation are the norm. According to one view, „even things
which remain the same change‰. Morning will not remain morning, and the
young will grow old. All these are natural phenomena. Therefore, managing
change is part of a managerÊs task. You, as a manager, can change three things:
organisational structure, technology and individuals.
7.1 WHAT IS CHANGE?

Change is an element that all individuals, groups and organisations must
continuously cope in order to survive (Singh, 2005). Organisation change is
defined as the adoption of a new idea or behaviour by an organisation (Daft &
Margic, 2001).
7.1.1 Forces of Change

There are two factors in organisational activity which can influence you, i.e.
internal and external factors. These factors can also bring about the need for
change.
(a) External Factors

External factors encompass the following:
(i) New Competition

New competitors can penetrate the existing market. For example,
Golden Screen Cinemas became a competitor to Tanjung Golden
Village in the movie business.
(ii) Legislation and Rules Imposed by the Government

For example, due to laws prohibiting mobile phone use while driving,
entrepreneurs need to think about how mobile phone users can use
the phone whilst driving. Among measures adopted by several
telecommunication companies is the invention of the „hands-free‰
device whilst the Alcatel Telecommunications Company introduced
the „direct-talk hands-free‰ telephone.

82  TOPIC 7 CHANGE MANAGEMENT AND INNOVATION
(iii) Technology
The most drastic technological changes have occurred in the field of
computerisation and robotics. In the past, the use of manpower in the
business sector was very intensive. Now, if a company still uses
manpower, it is considered as lagging behind technologically.
(iv) Economy
Economic unrest, which is currently a hot topic of conversation,
cannot be overlooked. The demand and purchasing power and
change in currency values force organisations to find ways to deal
with uncertain demands.
(b) Internal Factors

Internal factors can be the result of internal operations within the
organisation or from the impact of external changes. When the
management reorganises or rearranges organisational strategies, this will
normally bring about many changes.
Employees may face changes in their scope of work, which will require
them to undergo training, for example, to learn how to use a new machine.
Changes can also occur when the communication network and pattern of
interaction among employees change. Another form of change which has
been less common prior to this is changes to the compensation and benefits
scheme. However, as we have seen in the Topic 6 on human resource
management, changes to this scheme must be made, so that the
organisation can attract and retain competent workers.
7.1.2 How does a Manager Play the Role of Change

Agent?
Now, we proceed to an issue that is very important for a manager who is
confronted with scopes of work within a constantly changing environment.
Every change that occurs needs a catalyst to initiate, encourage or speed up the
change process. The person entrusted with the responsibility of managing the
change process is called a change agent. If you are involved in any activity that
encourages change, you are a change agent. This title is not exclusively for a
person at the managerial level; in fact, it can include employees who are not
managers.

Normally, if change is needed throughout the organisation, an external

consultant will be appointed to provide guidance and advice (go to
www.consultant-center.com for more information). The advantage of appointing
consultants is that they can offer an unbiased perspective in terms of giving
advice or suggestions as they have no vested interest in the organisation.
Appointing external consultants is not without its weaknesses. Consultants may

not have in-depth information or an understanding regarding the history,
culture, procedures and personnel of the organisation. Here, internal managers
have an advantage over external consultants in that they tend to be more
sensitive and cautious when putting forward suggestions for change.
ACTIVITY 7.1
Have you ever made suggestions in your organisation, whether

directly or indirectly, about something which can change a method
and perspective of how a task should be done?
When we talk about the waves of change, there are two metaphors or general
views, as will be discussed in the following subtopics.
7.1.3 Calm Waters Metaphor

This metaphor looks upon the organisation as a big ship which is crossing a calm
ocean. The change which occurs is like the occasional waves, which are only a
temporary disruption in an otherwise calm situation and the organisation is at a
high stage of certainty.
Managers who feel their organisations fall under this metaphor can overcome
changes according to the LewinÊs Three Step Model. Please refer to Figure 7.1.
Figure 7.1: Change process

Lewin was of the opinion that to handle the change process successfully, the
following steps must be followed.
(a) Unfreezing Process

This process involves the unfreezing of the status quo. Status quo refers to
the state of equilibrium. Unfreezing the status quo refers to a shift from the
equilibrium or current stage. Unfreezing is necessary to increase the power
to change behaviour under the status quo and reduce resistance which
prevents the shift away from the equilibrium state.
(b) Changing
This process involves changing to the new situation. After the unfreezing
process is completed, the changing process can commence.
(c) Refreezing Process

This process assists in stabilising change. The new situation has to be frozen
so that there is long-term continuity. If not completed, the status quo might
return.
LewinÊs Three Step Model regards change as a breakaway from the equilibrium
state of the organisation.
7.1.4 White Water Rapids Metaphor

According to this metaphor, organisations are likened to a raft sailing on rough
seas. Change is a natural phenomenon and managing change is a continuous
process. This metaphor takes into consideration an uncertain and fluid
environment. Managing a country like Malaysia is a perfect example. Managing
a multi-racial and multi-cultural society amidst uncertain economic conditions
which include interference at the international level requires the organisation to
be managed using the White Water Rapids Metaphor analogy.
7.2 ORGANISATIONAL CHANGE AND

EMPLOYEE RESISTANCE
After understanding change and admitting that change is a phenomenon that
cannot be ignored, we will now study the implications of change, particularly on
both managers and employees. As an agent of change, a manager implements
changes because he is concerned with the effectiveness of the organisation
competing in the environment. Change can be looked upon as a challenge to
some managers and employees.

ACTIVITY 7.2
Have you or other members of your organisation resisted any change

suggested by the management of your organisation? Why?
7.2.1 Why do People Resist Change?

An individual will resist change because of three main reasons, as follows:
(a) Uncertainty
Change replaces certainty with vagueness and uncertainty. Workers in an
organisation normally dislike uncertainty. For example, have you ever been
in a situation when your organisation is considering whether to give a
bonus at the end of the year and you are planning to get a new car as soon
as you receive the bonus? This situation is known as uncertainty. You are
uncertain whether the bonus will be given and at the same time, there are
rumours that car prices will go up.
(b) Worries about Individual Losses

The second cause of resistance is fear of losing something already in hand.
Employees will worry about losing out on promotions, money, authority,
friendship, personal facilities and other valuable benefits. For example,
among the reasons for the resistance to moving the international airport
from Subang to Sepang, were the increase in transportation costs (toll and
petrol) and separation from family members who were reluctant to move.
(c) Belief that the Change is Not for the Good of the Organisation
The last cause of resistance is the belief that the change is not in line with
the goals and interests of the organisation and will only bring losses to the
organisation. If we look at this from a positive aspect, this kind of resistance
will benefit the organisation later when steps to review the plans are taken.

7.2.2 Techniques to Reduce Resistance to Change

Table 7.1 outlines the techniques that can be used to reduce resistance to change.
Table 7.1: Techniques to Reduce Resistance to Change
Techniques Description
Learning and The assumption is that resistance comes about because of inaccurate
Communication information and weak communication.
Involvement Involving those who are directly related to the effects of change in the
decision making process will increase the acceptance level of the change.
Support Help employees overcome fear, worry and anxiety as a result of the
change. This includes counselling sessions, training to enhance skills
to face the changes, and other activities.
Negotiation Change something that is precious so that it reduces the resistance to
the change process.
Manipulation Reduce or change the information or situation to influence people to
change.
Pressure Directly use intimidation, coercion or threats.
ACTIVITY 7.3
Which method is practised by your organisation to reduce resistance to
change?
7.3 MAKING CHANGES IN THE

ORGANISATION
What can be changed by an organisation? After you have understood the
importance of change in the organisation and its implication on members of the
organisation, let us look at methods that can be used to carry out change. As
discussed in the earlier part of this topic, organisations can change the following
three things:
(a) Structure
Structural change of the organisation is a change to the relationship
authority, coordination mechanism, degree of power centralisation, work
design, etc. Structural change will give authority to the employees to
implement the change process.
(b) Technology
Technological change comprises adapting to work methods, work processes
and tools used. The main focus of technological change is continuous
initiatives which aim to develop a process that is more flexible to better
support operational quality. Therefore, organisations must be committed
and provide training and learning opportunities to the employees.
(c) People
Changing people means changing attitudes, aspirations, perceptions and
behaviour. Workers are expected to give their commitment towards
achieving organisational objectives. Again, organisations must provide full
support towards employee learning and training. Other than this,
organisations must re-evaluate their compensation system so that it
supports organisational objectives.
7.4 STRESS
In this subtopic, we will discuss the meaning of stress and various other issues
related to it.
7.4.1 What is Stress?

Every sensible individual experiences stress, be it in the workplace or within the
family. Whether you are a worker or housewife, young or old, or an employer or
employee, you are bound to face stress. Stress is a dynamic state of tension, i.e.
the individual is faced with opportunities, constraints or extraordinary demands.
Stress is important but cannot be predicted. It is a very complex issue.
Usually, stress is viewed as a negative concept but sometimes, it can bring about
positive effects when it offers opportunities to be in possession of something.
Conversely, it brings about negative effects when there are constraints and
demands at the same time. Constraints prevent us from doing what we want.
Demands will make you give up one thing for another because it takes time and
forces you to focus your attention on other matters.
When compounded with uncertainties about the outcome and importance of an

outcome, the constraints and demands will increase the potential for stress.

7.4.2 Causes of Stress

The factors which contribute to stress can be divided into two, i.e., organisational
factors and individual factors (refer to Figure 7.2).
ACTIVITY 7.4
Draw a mind map about the causes of stress faced by an employee.
Table 7.2: Factors which Contribute to Stress in an Organisation
Sources of Description
Stress
Task Demands This is a factor related to the job. It comprises the employeeÊs
work design, work environment and work flow. The work
quantum can also increase stress. In addition, a higher level
of interdependence among workers contributes towards the
potential for stress.
Role Demands This relates to the stress on a worker who has a role to play in
the organisation.
Interpersonal This refers to stress imposed by colleagues.
Demands
Organisational Unreasonable rules and limited opportunities to make
Structure decisions further increase stress.
Organisational Leadership styles which emphasise fear-based motivation
Leadership and strict supervision will permeate the whole organisation
and cause stress.
7.4.3 Personal Factors

Personal factors include family issues, financial problems and oneÊs inherent
personality. There are workers who bring personal problems to work. However,
the personality of the employee determines his resilience in handling stress.
There are two types of personalities that have differing strengths in handling
stress.
(a) Type A behaviour

If you are categorised as a Type A personality, you are classified as a person
who is punctual or responds quickly. You are governed by a competitive
spirit and have limited time to relax.

(b) Type B behaviour

If you fall under Type B, you will be classified as a person who does not
experience time-related stress.
ACTIVITY 7.5
Do you fall under Type A or B?
7.4.4 Symptoms of Stress

After understanding the seriousness of stress and factors which cause stress, we
need to learn how to identify stress. In general, there are three signs of stress, as
follows.
(a) Physiological Signs

A high stress level will change metabolism levels; cause increased heartbeat
and breathing and headaches; and increase risk of heart disease. This kind
of stress requires the attention of trained medical personnel.
(b) Psychological Signs

Among clear indications of stress are increased tension and worry,
boredom, and work delay, all of which affect productivity.
(c) Behavioural Signs

Signs of change in an individualÊs behaviour include a change in eating
habits, frequent smoking, rapid speech patterns and sleep disturbances, all
of which also affect productivity.
7.4.5 How can Stress be Reduced?

Not all forms of stress impact an organisation adversely. It is admitted that the
presence of low levels of stress is sometimes necessary to provide encouragement
to the workers.

Some of the stress reduction steps that can be practiced are shown in Table 7.3.
Table 7.3: Steps to Reduce Stress
Steps Description
Communication Telling employees what exactly needs to be done and what
is expected helps to reduce vagueness and role conflict.
Redesigning tasks This will help to reduce stress caused by work overload.
Employee This is a programme implemented to help employees who
Assistance at one time demonstrated high performance levels before
Programme falling prey to drugs, or other problems.
Wellness This programme is designed to sustain the well-being of
Programme employees. It includes anti-smoking campaigns, weight-
loss programmes, stress management and others. It is
hoped that this programme can reduce medical costs,
reduce absenteeism and prevent health-related problems.
SELF-CHECK 7.1"
Write down three symptoms of stress. Provide an example for each

symptom and state the steps that can be taken to overcome each
symptom.
7.5 STIMULATING INNOVATION

In the following subtopics, we will discuss the relationship between creativity
and innovation and how management stimulate innovation.
7.5.1 What is the Relationship between Creativity and

Innovation?
We often hear about advertisements that state, „To bring up your child so that he
is healthy and creative, send him to school‰. What is meant by creativity?
Creativity is the ability to integrate ideas into a more unique pattern or
interconnect the ideas. An organisation that stimulates creativity is an
organisation that develops new approaches and unique solutions to issues and
problems. The invention of the microchip is said to be a creative discovery.

You may be wondering how creativity differs from innovation. Innovation is the
process of taking a creative idea and converting it into a useful product, service
or operational method. The use of microchips in operating mobile telephones is
an example of innovation.
Some people say that creativity is inherited. Others believe that creativity can be
developed through training. Creativity can be considered as a four-fold process
which consists of perception, incubation, inspiration and innovation. Look at
Table 7.4 for more details.
Table 7.4: Four Processes of Creativity
Creative Explanation
Process
Perception The way we perceive things. Creativity means looking at
something from a unique angle.
Incubation An idea will go through a process known as incubation. In this
process, workers collect information which is then stored,
reaccessed, studied and reformed so as to create something new
in the end.
Inspiration The time when all efforts are successfully integrated.
Innovation Involves converting inspiration into a useful product, service or
method.
Thomas Edison, who invented the light bulb, stated that „creativity is 1 per cent
inspiration and 99 per cent perspiration‰. To Edison, the 99 per cent means the
process of testing, evaluating, and restudying what is discovered under the
inspiration process.
ACTIVITY 7.6
Do you agree with the statement „Creativity cannot be taught. It is an

inborn talent in a person‰? Explain why you agree or disagree.

7.5.2 How does a Manager Stimulate Innovation?

If your organisation looks like it is not creative or innovative, you can consider
proposing several steps mentioned here. There are three sets of factors that
stimulate innovation. These are the organisational structure, culture and human
resource practices in an organisation.
(a) Structural Factor

An organic structure stimulates innovation positively. This structure has a
low level of job specialisation, has minimum rules and practices greater
empowerment compared to the mechanistic structure. This structure
encourages flexibility, adaptation, and other elements, which expedites the
acceptance of innovation.
An abundant availability of resources provides the right platform for

innovation. Abundant resources enable management to purchase the
innovation, bear the expenses of creating innovation and absorb costs of
failure.
Finally, communication between units will bring down the wall which
impedes innovation. Open communication among the departments will
accelerate the innovation process.
(b) Organisational Culture

Culture which frequently encourages innovation has common features. It
encourages experiments, and rewards success and failure. In fact, this type
of culture celebrates failure. Such an atmosphere reduces shyness and
encourages the generation of ideas. There are eight characteristics common
in a culture of innovation as follows:
(i) Acceptance of uncertainty;

(ii) Tolerance for the impractical;
(iii) Low external control;
(iv) Risk tolerance;
(v) Mistakes looked upon as learning experiences;
(vi) Conflict tolerance;
(vii) Focus on the outcome and not the means; and
(viii) Focus on open systems.

(c) Human Resource Factor

Innovative organisations encourage active training and development of the
workers so that workersÊ knowledge is always up-to-date. Such
organisations also provide work security to reduce the risk of dismissal if
mistakes occur. It encourages its employees to be champions of change.
As soon as new ideas are developed, these champions of change will

actively promote the ideas, obtain support, reduce resistance and ensure the
innovation is implemented.
Research has shown that these champions of change have several common
characteristics. Each of them has a high confidence level, is energetic, and is
inclined to take risks. They can influence others and they have the ability to
obtain the commitment to support their vision.
ACTIVITY 7.7
Suggest a number of changes that you wish to see happening in your

organisation.
 In this topic, you have studied the meaning of change, employee resistance to
change, approaches to implementing change in organisations, stress and
stimulation of innovation.
 You should be able to state the factors of change that can be undertaken by
managers and reasons why people resist change.
 You have learnt the steps to reduce resistance to change and how to foster a
creative and innovative spirit.
Daft, R. L., & Margic, D. (2001). Understanding management (3rd ed.). Fort
Worth, TX: Harcourt College.
Sight, K. (2005). Organisation change and development. New Delhi, India: Excel
Books.

Topic  Understanding
8 Work Teams
LEARNING OUTCOMES
1. Describe the five stages of establishing work teams in an
organisation;
2. State at least four differences between work groups and work teams;
3. Describe the five types of normal work teams;
4. Explain the eight characteristics of effective work teams;
5. State the three ways to transform individuals into effective team
members; and
6. State the four ways to revive the spirit of mature teams.
 INTRODUCTION
No matter where you work, most of the tasks are undertaken by teams. Lately,
you will find, directly or indirectly, you have been absorbed into a work group or
committee, and all of a sudden, you have become a member of that group and
are expected to work with other people. What happens to an individualÊs work
output? Why is it that work that was handled by an individual, is now being
taken over by work teams?
Actually, working in teams is not a new phenomenon. Do you remember the last
time you were involved in preparing for a feast? What was your task? Try and
recollect if you worked alone. The answer is definitely not. You worked with
your other relatives and siblings. Some cooked, washed and set up camps, while
others served, decorated and handled other tasks.

TOPIC 8 UNDERSTANDING WORK TEAMS  95
In the past, if an organisation practiced teamwork, it was unusual news, but now,
if an organisation does not practice teamwork, it is considered odd. Teamwork
has currently become very popular because it has proven to be more effective
than working alone when a task needs a variety of skills, views and experiences.
Organisations which have restructured themselves to be more effective and
efficient have set up work teams as they can bring out the latent talents of the
employees.
8.1 WORK TEAMS – WHAT ARE THEY?

According to Sandstorm, Meuse and Fultrell (1990), work teams are defined as
interdependent collections of individuals who share responsibility for specific
outcomes for their organisations. In the following subtopic, we will explore more
about work teams.
8.1.1 Stages of Establishing Teams

Many teams undergo continuous change. Generally, there is a pattern to describe
the establishment of teams. As shown in Figure 8.1, this occurs over four stages,
which are the forming stage, storming stage, norming stage and performing
stage. For ad-hoc teams, there is one more, the adjourning stage.
(a) Stage I – Forming

In this stage, the employees involved in the team are brought together. At
this point, each of them does not know why they have been brought
together and what needs to be achieved. They are also not aware of the
structure of the team such as with whom they will be working and what
their working relationship will be like. Leaders are also not known, for
example, who is responsible for whom, or to whom they should report their
performance. This stage is over as soon as each member of the team
considers himself to be a part of that team.
(b) Stage II – Storming

In this stage, there will be conflict within the group. Members will resist the
control imposed on each individual in the team. They are still
unaccustomed to working in a team where the members have differing
expectations. This stage ends when an obvious leader emerges from the
team.

96  TOPIC 8 UNDERSTANDING WORK TEAMS
(c) Stage III – Norming

In this stage, a closer relationship is formed and members of the group
begin to manifest cohesiveness. At this stage, the identity of the group can
be seen clearly and camaraderie is nurtured. This stage ends when there is a
solid structure and team members respectively understand and accept
common expectations.
(d) Stage IV – Performing

The team structure is accepted by all members and they are ready to
function fully as a team. For permanent teams, this is the final stage in the
team formation process.
(e) Stage V – Adjourning

This stage is only for ad-hoc teams, i.e. the team has completed a task
assigned to it and needs to be dissolved. This stage may adversely affect
some teams which have a high degree of cohesiveness.
Figure 8.1: Stages of team establishment
For many organisations, the setting up of teams does not occur in the stages
described in this subtopic. One stage may overlap another. Still, it must be
remembered that this is basically a general framework.

SELF-CHECK 8.1
After learning about the stages of establishment of teams, explain each

of the stages.
ACTIVITY 8.1
Before we proceed to the next topic, think about the following

statement. Work groups and work teams sound almost similar. In
your opinion, are they the same?
8.1.2 Are Work Groups and Work Teams the Same?

Teams are composed of people grouped together, are they not? Are they not
brought together through a process of gathering individuals? If this question
exists in your mind, you are making a logical link. But it must be reiterated that
groups and teams are different.
(a) Work Groups

Groups are made up of two or more people who are brought together to
achieve a goal. Work groups are gathered with the objective of sharing
information and making decisions which will help the group members to
carry out the tasks under their responsibility. Work groups are not involved
in collective work and cooperation, i.e. the outcome does not influence the
members. There is no positive synergy, whereby the joint effort will
produce a greater output than if carried out individually.
(b) Work Teams

The most salient difference between groups and work teams is the synergy
that is produced as a result of the collaboration of the individuals. The
management hopes that the positive synergy of each team member will
produce a greater output without the need to increase input (or better still
with reduced input). The differences between teams and groups are further
clarified in Figure 8.2.

Figure 8.2: Comparison between work teams and work groups
8.2 TYPES OF WORK TEAMS

Work teams can be divided into five categories. These five categories will be
discussed further in the following subtopics.
8.2.1 Functional Teams

Have you participated in a work team comprising colleagues from the same
division or department? Members of functional teams comprise a manager and
workers from the same unit. Issues like authority, decision-making, leadership,
and interaction are relatively simple and clear. Functional teams are usually
involved in efforts to improve work activities or to solve any problem within one
functional unit. For example, at Yamaha Motors, workers from sales, installation
or services form teams separately and solve customer problems.
8.2.2 Problem-solving Teams

Workers grouped together from the same department who meet for several
hours in a week to improve quality, efficiency and the work environment are
known as problem-solving teams. Members meet to share ideas and put forward
suggestions on how work processes and methodologies can be improved. One
such team frequently used is quality circles. Team members meet often to discuss
quality problems, examine root causes of the problems, suggest solutions, and

take corrective action. They are responsible for improving quality problems as
well as generating and evaluating feedback. However, this team is rarely given
the full authority to implement the suggestions and solutions.
8.2.3 Self-managing Work Teams

A self-managing work team is a formal work group that functions without a
manager. It is responsible for completing a part of or the whole work process to
deliver a product or service to internal or external customers. This kind of team
has control over the rate of work progress, determination of tasks and so on. An
ideal self-managing work team (or one which is actually self-managed) carries
out selection activities, in fact, even evaluation is self-conducted. In short, the
importance of work at the supervisory level is less or it may be dropped
completely.
8.2.4 Cross-functional Work Teams

Members of this team comprise members from the same hierarchical level but
from different work areas within the organisation. They are brought together to
complete a task. The formation of cross-functional teams is an effective method to
allow workers from different departments, units and divisions within the
organisation to communicate so that they can share and generate new ideas,
solve problems, and coordinate complex tasks.
However, this cross-functional team is sometimes difficult to manage. In the

initial stages, workers will face difficulties in working in differing work
environments – in terms of experience, work methods, norms, attitudes,
personalities and other aspects. Thus, it will take quite some time for the workers
to adapt to the situation.
Lack of common perspectives or opinions from workers with different

backgrounds means that these workers invariably a take longer period to discuss
related issues. This is done to reduce the probability of arriving at a less than
optimal solution for the problem.

8.2.5 Virtual Work Teams

Virtual teams are a follow-up from the electronic meetings discussed in Topic 4.
Virtual teams allow members to meet irrespective of space or deadlines and it
allows the organisation to bring together members who could not previously
work together. Team members use technological tools to solve problems
irrespective of deadlines and the place they are in. They can communicate by
teleconferencing, email, intranet, internet, and Âchat-roomsÊ.
SELF-CHECK 8.2
Match the type of work team to the description of its characteristics.
Characteristics Type of Team

Members of functional teams comprise a manager and
workers from the same unit.
This type of team has control over the rate of progress,
determination of tasks, etc.
Teams allow workers to meet without worrying about
space or deadlines and it allows the organisation to bring
together workers which could not previously work
together.
Workers from the same department meet for several
hours in a week to improve quality, efficiency and the
work environment.
Members of this team are from the same hierarchical level
but from different work areas within the organisation.
Cross- Self- Virtual Functional Problem

Functional Managing Work Teams Teams Solving
Work Work Teams
Teams Teams

8.3 CHARACTERISTICS OF EFFECTIVE TEAMS

When an organisation establishes work teams, this does not guarantee automatic
success. There have been cases of work teams that have failed. Researchers have
identified several characteristics which will ensure the success of teams. The
main characteristics of successful work teams are shown in Figure 8.3.
Figure 8.3: Characteristics of high performing teams
8.3.1 Clear Goals

Effective work teams have a clear understanding of their goals and believe that
the achievement of the goals will bring about an important outcome. Clear goals
will direct each individual to focus his/her full attention and effort to the target
that has been pre-determined. Goals also help to clarify to the members what is
expected of them and ensure that everyone understands the importance of
cooperating to achieve that goal.
8.3.2 Competent Individuals

Work teams that comprise members with relevant technical skills and abilities
will drive the team forward.
They are capable of adapting their work skills to meet the needs of the team.
Effective work teams have both technical and interpersonal skills.

8.3.3 Trusting Each Other

Effective work teams comprise members who trust each other. When they begin
to get suspicious about the actions of a team member, this will adversely affect
the sharing of ideas. Members of the work team believe that their members have
integrity, positive personality and capability.
In addition, members of effective teams demonstrate high levels of loyalty and

dedication to their team. They look upon team membership as a very important
facet of their lives.
8.3.4 Undivided Total Commitment

Members of effective teams are highly dedicated to their goals and are also
willing to expend a great deal of effort to achieve that goal. They are willing to
allocate a part of their leisure time to complete a task that has been assigned to
them. Have you ever given up the opportunity to go on holiday or to rest just to
finish your tasks?
8.3.5 Good Communication

Team members must be capable of channelling their ideas to others in a form that
is easy to understand and accept, be it pleasant or unpleasant news. Good
communication also refers to feedback received from team members and the
management.
8.3.6 Negotiation Skills

Effective teams demonstrate willingness to make changes when necessary. Team
members must have the ability to confront and solve differences in opinions
amongst members. As such, they must have negotiation skills.
8.3.7 Capable Leadership

Effective leaders have the ability to influence and guide the team members in
facing a difficult situation. Leaders help to clarify goals and convince members
that change is not impossible. They increase the confidence level of each member
and help them to realise their innate potential. Leaders of effective teams play the
roles of coach and facilitator.

8.3.8 Conducive Environment

The last characteristic of effective teams is the support of the environment. To
become effective, work teams should be provided with the right infrastructure,
sufficient training, simple performance measurement techniques, incentive
programmes and a supportive human resource system. The infrastructure that is
provided should be able to strengthen the behaviour of members towards
exemplary performance levels.
ACTIVITY 8.2
A work team should have several characteristics to make it more

effective. Draw a mind map of the characteristics of effective teams.
8.4 CAN WE CONVERT INDIVIDUALS INTO

TEAM MEMBERS?
When we have realised the importance of establishing work teams, we will want
to know the methods that can be used to form teams. We will begin our
discussion with several challenges faced by organisations which aspire to use
teams as the main organisational driving force.
Some people like to be recognised for their work accomplishments individually

and there are others who feel that only the fittest can survive. You will face such
resistance when you try to form teams in a Âsurvival of the fittestÊ atmosphere.
Work teams will succeed in an environment which gives importance to collective
work.
8.4.1 Challenges in Team Formation

In a team, the success of a team member is dependent on the success achieved by
the team as a whole. To function well as a team member, every member must be
able to communicate openly and honestly with each other. They should be able
to face differences and resolve conflict. They should also prioritise the goals of
the team over individual interests.

The challenges to set up teams are great when:
(a) The national culture appreciates individual work. For example, the United
States is a country which gives more priority to individual accomplishments
as compared to collective accomplishments.
(b) The organisation values individual contributions. Some organisations

recognise individual contributions by having a monthly best worker award,
etc. compared to other organisations which recognise work teams.
8.4.2 What are the Roles Played by Team Members?

An ideal work team should comprise members who are multi-skilled. The
explanation below is from a holistic and not individualistic aspect.
Good and imaginative team members will generate ideas and concepts. They are
independent and prefer to work at their own level, speed, method and time.
There are some members who take on new ideas and try to implement them.
They will try and find sources to support these ideas.
ACTIVITY 8.3
How do managers in your organisation form a team for a particular

project?
8.4.3 How does a Manager Set the Behavioural

Patterns of Team Members?
By now you may be convinced of the advantages of forming teams. As a
manager, you will be aware of the advantages of using teams to carry out tasks.
But not all employees like to work in teams.
Thus, it is not surprising that, you, as a manager, must know how to transform
individuals into effective team members. Several approaches can be used. Three
of the most popular methods are explained below.

8.4.4 What is the Relationship between Selection and

Team Formation?
Team formation begins when managers decide to recruit a new worker. You
hope that this candidate has team skills, i.e. the skills of working with others. It is
not a surprise if there are candidates who do not have such skills or who do like
to work in teams.
If you can discern these signs, it is better not to hire such candidates as they
might hinder your aspirations to set up teams. If a candidate demonstrates some
skills which need to be adapted, you can hire him on a trial basis and mandate
him to undergo training.
(a) How to Train Individuals to Become Team Members?

The ability to perform a task well in a team requires a certain kind of
behaviour which can be learnt. Even a person who has been exposed to an
environment of individual accomplishment can be trained to become an
effective team member. Experts normally conduct training that will help
employees experience the satisfaction of working in teams.
Workshops conducted normally cover topics like problem solving skills,

communication, negotiation, conflict resolution and counselling.
(b) What is the Role of Rewards in Nurturing Team Members?

The rewards system of an organisation should encourage collectivism
rather than individualism.
For example, rewards should be given to each team member based on the
achievement of team goals. Promotions, salary increments and other kinds
of rewards should be given to workers on the basis of how effectively they
function as team members. In this way, individual contributions are
balanced with contributions to the team.
Managers, like you and me, are normally advised to save organisational
costs. However, we are given limited control over finances. So, what can we
do? Besides monetary rewards, team members can also be given non-
monetary rewards. Working in a team gives a feeling of cohesiveness to all
members. Effective team members constantly help each other and
encourage the development of character, spiritualism and the mind. As
discussed in Topic 2, employees are driven to perform a task not because of
being directed by top management per se but also because of team
influence.

Another form of reward which cannot be measured is the satisfaction and

pride of being a member of a successful team. As such, it is logical for us to
spend our time in teams, to the best of our ability.
SELF-CHECK 8.3
State three ways in which a manager can encourage team members to

work more effectively.
8.4.5 How does a Manager Revive the Spirit of

Mature Teams?
The effectiveness of a team may not flourish if it has been in existence for too
long. The passion felt initially may not last. A team, by itself, does not remain in
the implementation stage forever.
Sometimes, team success and familiarity with each other will encourage
complacency. When this happens, mature team members will become more
easily affected by groupthink symptoms, i.e. members of the team simply accept
any idea proposed by the majority.
At this stage, you might ask, what should I do? Here, we will suggest four ways
to revive lifeless teams.
(a) Preparing Team Members to Deal with the Problem of Team Maturity
Team members must be reminded that this is not a case peculiar to them as
every successful team will go through this phase. Team members must not
feel disappointed or sad if conflict starts to exist.
(b) Refresher Training Courses

Managers must consider the provision of refresher training courses, for
example, in communications, conflict resolution, revitalising teams or other
similar areas. Such programmes will restore self-confidence and rebuild
trust among members.
(c) Advanced Training

Mature teams can be exposed to advanced training which aims to increase
and enrich skills of members in solving problems. Such programmes will
assist members to solve more complex problems, which they did not have
the opportunity to do previously.

(d) Consider Self-Development as a Continuous Process

Team members should be reminded to consider self-development as a
continuous learning experience. As with organisations involved in
management by objectives (MBO), all organisations should also be involved
in re-evaluation and improvement.
SELF-CHECK 8.4
Name four ways in which managers can revive the spirit of a team
which has reached its peak.
 Work teams are vital in implementing organisational objectives which require

multi-skills and experience.
 Work teams have proven their effectiveness when compared against

individual output.
 However, managers must know the ways of forming teams with effective
characteristics.
 There are several ways to transform an individual into a team member and to
reinvigorate the work ethic of teams which have reached maturity.
Sundstrom, E., Meuse, K. P., & Futrell, D. (1990). Work teams: Applications and
effectiveness. American Psychologist, 45(2), 120-133.

Topic  Leadership
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9
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" LEARNING OUTCOMES
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1. Explain the six traits of a leader;
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" 2. Discuss the three most popular studies on behavioural theories of
" leadership;
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3. Elaborate on the four contingency models of leadership;
"
" 4. Explain the three current approaches to leaderships theory;
" 5. Explain the seven characteristics of charismatic leaders;
"
" 6. Identify the five dimensions of trust; and
" 7. Explain the three types of trust.
"
"
 INTRODUCTION
Our superior officers function, work, manage and lead us by using a variety of
ways and methods so as to ensure that we can complete our tasks towards
achieving organisational goals. Our managers are of various personalities, there
are those who are fierce, some are friendly, some are considerate and there are
those who show no compassion. Which personality do you prefer? Have you
ever asked yourself what approach you would use to lead others?

TOPIC 9 LEADERSHIP  109
Many among us use the terms „manager‰ and „leader‰ interchangeably. The
question is whether a manager is also a leader. Is it compulsory for a leader to
also be a manager? Before we delve deeper into this topic, it is best we
differentiate between managers and leaders.
Even though the majority of you may be of the opinion that managers and
leaders are the same, it is pertinent to make a distinction between leaders and
managers. Managers are appointed by the organisation. They are given powers
under the law to compensate and punish. Their ability to influence workers is
based on a formal authority that comes with the position they hold.
Leaders, on the other hand, can be appointed by the organisation, or they can
naturally emerge from within a group. They are capable of influencing others to
do something without the use of formal authority. Therefore, should all
managers also lead or should all leaders also manage? There is no research that
supports the notion that the absence of leadership skills will adversely affect the
ability of managers to manage. However, what is being emphasised here is that
ideally, a manager should also have leadership skills.
9.1 TRAIT THEORIES OF LEADERSHIP

These theories are theories defined by the common man. When asked, „What are
the traits that a leader should have?‰, chances are the answer is, a leader should
be intelligent, charismatic, able to make decisions, strong, brave, honest and self-
confident. This feedback represents the core of the leadership traits. If these
concepts are verified, then all leaders should have specific characteristics.
There seems to be a dead-end to the research which tried to study the differences
between leaders and managers. However, efforts to identify traits which have
been consistently linked to leadership have been more successful. Six clear
distinctions between leaders and non-leaders are listed in Table 9.1.

110  TOPIC 9 LEADERSHIP
Table 9.1: Traits of a Leader
Traits Explanation
Power Leaders have the will to influence and lead others. They show
willingness to accept responsibility.
Drive to Lead Leaders build trust with their followers by always being honest.
They display high levels of consistency in both their words and
actions.
Integrity and Followers will look upon their leaders as being firm when making
Credibility decisions. Leaders must convince their followers that they are
confident about the accuracy and precision of their decisions.
Self-confidence Leaders display high levels of endeavour. They have the desire to
achieve great heights, are ambitious and energetic. They do not
give up easily and always show initiative.
Intelligence Leaders must be intelligent to gather, analyse and interpret a large
amount of information, as well as have the ability to formulate
visions, solve problems and make decisions.
Business Effective leaders have high levels of knowledge about the
Knowledge company, industry and technical matters. A deep knowledge
enables them to make decisions and understand the impact of those
decisions.
An explanation based on traits per se does not take into account situations
whereby managers also make decisions. This is because managers do not make
environment-free decisions. Possessing the above mentioned traits merely
increases the probability of an individual becoming an effective leader. He still
needs to make decisions that are based on specific situations.
SELF-CHECK 9.1
State the six traits that a leader should possess.

9.2 BEHAVIOURAL THEORIES OF LEADERSHIP

There are two concepts of advantages in international trade, namely absolute
advantage and comparative advantage, which will be explained in this subtopic.
Now, let us briefly study three of the most popular studies on leadership. These
are Kurt LewinÊs Studies in the University of Iowa, the Ohio State Studies and the
University of Michigan Studies.
9.2.1 Kurt Lewin’s Studies in the University of Iowa

Kurt Lewin and his colleagues (1939) in the University of Iowa identified three
leadership styles or behaviour, i.e. autocratic, democratic and free-style, as
described in Table 9.2. The description of the two types of democratic leadership
is also included in Table 9.2.
Table 9.2: Leadership Behaviour or Styles of Kurt Lewin and Colleagues in the
University of Iowa
Traits Explanation
Autocratic Leader practices centralisation of authority, directs work methods,
etc.
Democratic Leader involves workers in decision-making, distributes authority,
encourages participation, and uses feedback to train workers.
Consultative Leader obtains input from workers but makes the final decision on
Democracy his/her own.
Participative Leader allows workers to participate in decision making. The decision
Democracy making process is handled in groups.
Free-style Leader gives full freedom to workers to make decisions and decide on
the best way to carry out a job.
Source: Lewin, Lippitt & White (1939)
After being exposed to these three leadership styles, the question now is which of
these styles is the most effective? Based on each performance criteria, free-style
leadership is found to be ineffective. The autocratic and democratic styles
provide an almost similar outcome in terms of quantity, but in terms of work
quality and satisfaction, the democratic style is found to be the best. This study
found that the democratic style is appropriate for encouraging both quantity and
quality of work.

Does this mean that a manager should only adopt the democratic style? Two
researchers, Tannenbaum and Schmidt tried to address this question. They
suggested that in deciding which style to adopt, managers consider several
factors: the managers themselves, e.g. comfort with the style used; the workers,
e.g. their willingness to accept responsibility, and the situation, e.g. current
pressure. However, managers must move towards worker-centred styles in the
long run.
9.2.2 Ohio State Studies

This study aimed to identify the free-style dimension in leadership. Starting off
with more than 1,000 dimensions, this study succeeded in reducing them to two
main dimensions: initiating structure (job-centredness) and consideration
structure (employee-centredness). The first structure refers to the inclination of
leaders to organise and structure their roles with the roles of workers in their
efforts to accomplish goals. The second dimension shows how serious leaders are
in creating a relationship with workers based on trust and respect for their ideas
and feelings (clear distinction).
The studies show that consideration structure leaders are more inclined to
achieve high levels of performance and in general are more satisfied than
initiating structure leaders, who face greater risks of dissatisfaction, absenteeism
and turnover.
9.2.3 University of Michigan Studies

This study outlined two dimensions of leadership styles, i.e. employee-oriented
style and job-oriented style. Employee-centred leaders emphasise good
interpersonal relations. They are concerned about the needs of workers and
accept differences among individuals. Job-oriented leaders emphasise technical
aspects of work and focus on accomplishing group tasks. They regard employees
as a means to achieve an outcome. This study clearly supports employee-centred
leadership.
ACTIVITY 9.1
According to the three studies that you have just read, what kind of
leadership style should a leader adopt?

9.2.4 What is the Managerial Grid?

In general, the two foremost leadership dimensions are employee-centred
leadership and production-oriented leadership. The managerial grid is a two-
dimensional view of leadership style (a vertical and horizontal graph) developed
by Blake and Mouton (1964). As mentioned, this grid categorises leadership
styles into two dimensions, i.e. „concerned with people‰ and „concerned with
production‰.
Based on Figure 9.1, each axis has nine probable positions giving a total of 81
different leadership style positions. From this grid, Blake and Mouton focused on
five main situations which are found in the four corners and one in the centre.
Blake and Mouton inferred that managers functioned best on position 9,9.
"
Figure 9.1: Managerial grid

Table 9.3: Explanation of Managerial Grid
Grid Position Explanation

1,1 Impoverished Contributes minimum effort to complete task and
Manager sustain organisation.
1,9 Country Club Overall focus on needs to maintain interpersonal
Manager relationships resulting in comfortable work time and
environment.
5,5 Middle-of-the-Road Adequate organisational performance by balancing the
Manager required resources to complete a task by maintaining
satisfactory motivation levels.
9,1 Task Manager Achievement of operational efficiency as a result of
organising workers where the element of interaction of
workers is at minimum levels.
9,9 Team Manager Work is accomplished by committed workers through
interdependent relationship and goals that are
congruent with organisational goals, giving rise to
trust and respect among workers.
Although the pioneers of leadership behaviour gave invaluable information

about leadership thoughts, they were not too successful in clarifying the
relationship between leadership behaviour and successful organisational
performance. What is found to be lacking is the consideration of situational
factors.

SELF-CHECK 9.2"
Behavioural Theories of Leadership can be categorised into several

studies. Match these studies with the most appropriate statements.
Theory Study
The initiating structure refers to the Kurt LewinÊs Studies in
inclination of leaders to outline and the University of Iowa
structure their roles with the roles of
workers in their efforts to accomplish
goals (clear distinction). The consideration
structure shows how serious leaders are
in creating a relationship with workers
based on trust and respect for their ideas
and feelings.
This study outlined two main Ohio State Studies
dimensions of leadership styles, i.e.
employee-oriented style and job-oriented
style.
This theory identified three kinds of Management Grid
behaviour or leadership styles, i.e.
autocratic, democratic and free-style.
Blake and Mouton focused on five main University of Michigan
positions which are found in the four Studies
corners and one in the centre.
9.3 CONTINGENCY THEORIES OF LEADERSHIP

Predicting leadership success is a more complex task compared to identifying
traits or behaviour. This is because leaders not only lead people but also interact
with the environment. Another view that you will be introduced to is the
effectiveness of leadership which is interdependent on situational attributes.
9.3.1 Fiedler’s Model

FiedlerÊs Model is the first contingency model for leadership.

According to this model, the effectiveness of group performance depends on the

careful matching between leadership interaction style and the degree of
situational demands that can be controlled and influenced by the leaders. Fiedler
designed a methodology to obtain information known as „least-preferred co-
worker questionnaire‰. The function of this questionnaire was to measure
leadership orientation, whether it was task-oriented or relationship-oriented.
This questionnaire comprises 16 totally different adjectives and respondents are

asked to evaluate all their co-workers, on a scale of 1 to 8, on each set of opposing
criteria.
The lesson here is that what you say about other people is more a reflection of
yourself than of the other person being evaluated. If the questionnaire is
evaluated positively, then respondents will basically be interested in good
interpersonal co-worker relationship. If evaluated negatively, then workers
basically will be interested in productivity i.e. to be task-oriented. Fiedler was of
the view that leadership style was inborn and hence could not be changed.
Fiedler also postulated that it was vital to match leadership styles with
situational demands based on three criteria listed in Table 9.4.
Table 9.4: Three Criteria in FiedlerÊs Model
Criteria Description
Leader-Worker Degree of confidence, trust and respect shown by
Relationship subordinates for their leaders.
Task Structure Degree of how structured or unstructured the task of the
worker is.
Power Position Degree to which the leadersÊ influence lies in power factors
like selection, firing, discipline, promotion and salary
increment.
Source: Forsyth (2010)
The next step is to analyse the situation based on these three criteria. If all three
criteria are evaluated highly, i.e. if the leader-worker relations are good, the task
is well structured and power position is strong, the stronger is the control or
influence of that leader.
One good situational example, is a production manager, who is well respected

and the workers are highly supportive and confident (good leader-worker
relations) of his work which is clearly defined like time-management,
requisitioning adequate supplies (clear task structure) and his position comes
with the power to compensate or punish subordinates (high position of power).

9.3.2 Path-goal Theory

This theory advanced by House (1996) is of the essence that leaders assist their
followers to achieve their respective goals and ensure that their goals are
congruent with the overall objectives of the group or organisation.
House identified four leadership styles as shown in Table 9.5.
Table 9.5: Leadership Styles
Leadership Style Explanation

Directive Leadership Allows workers to know what is expected of them,
schedules work, and shows how the job is to be done.
Supportive Leadership Friendly and shows concern for well-being of workers.
Participative Leadership Discusses with workers and takes their suggestions into
consideration when making decisions.
Achievement-oriented Sets challenging goals and expects highest levels of
Leadership performance from workers.
Source: House (1996)
In contrast to Fiedler, House was of the opinion that leaders are flexible. This
theory was of the view that equally capable leaders displayed one or all leadership
styles. The path-goal theory suggests two kinds of contingency factors:
(a) Environment
This included the following elements:
(i) The factor beyond the control of workers; and

(ii) Environment influences leadership style.
(b) Personal characteristics

This refers to the personal characteristics of workers.

9.3.3 Leader-participation Model

Are you frequently invited to attend meetings to determine a decision? If yes,
how often are you invited? Is this method of inviting workers to jointly make
decisions practiced by many leaders? This model was introduced in 1973 by two
personalities, Vroom and Yetton (1973). This model touches on leadership style
and involvement in decision-making. Taking cognizance of the fact that workersÊ
tasks may be routine or non-routine, these two researchers were of the opinion
that leadership style should take into consideration the degree of task structure.
This model provided a series of steps that must be followed to determine the
degree of involvement in decision making. This series is in the form of a decision
tree. This study was researched further by Vroom and another researcher, Jago in
1988. They succeeded in increasing the series of steps to come to a two-fold
decision making stage, i.e. from the leaderÊs side only up to the point of sharing
the problems with the workers and getting a unanimous decision.
The leader-participation model proves that leadership research should focus on

the situation rather than the person. It assumes that leaders can adapt their
leadership styles to situational demands.
9.3.4 Situational Leadership Model

This model focuses on the workers and the level of their readiness. Focusing on
workers is logical because no matter what is undertaken by a leader, his
effectiveness depends on the level of acceptance and behaviour of his followers.
The readiness term refers to the level of workersÊ capacity and will to accomplish
a certain task. The relationship between leader-followers is likened to the
relationship between parents and children. Just like parents who give freedom to
the children as they grow, leaders should also follow suit for their followers. The
model pioneered by Hersey and Blanchard (1977) is illustrated in Figure 9.2.
Hersey and Blanchard identified four leadership styles and four levels of worker
readiness. Based on this figure, if workers are reluctant and incapable of carrying
out a task (R1), leaders should show S1 leadership style, i.e. task-oriented. On the
other hand, if workers are ready and capable of undertaking a task (R4), leaders
then have no problems (S4).

Figure 9.2: Hersey and BlanchardÊs situational leadership model

ACTIVITY 9.2
After reading about the four different theories/models of leadership,

can you make an inference about each of the theories/models?
Provide examples for your inferences.
(a) FiedlerÊs Model

(b) Path-goal Model
(c) Leader-participation Model
(d) Situational Leadership Model
9.4 CURRENT APPROACHES TO LEADERSHIP

THEORIES
We will end our discussion on leadership by looking at three current theories:
(a) Charismatic Leadership;

(b) Visionary Leadership; and
(c) Transformational Leadership.
9.4.1 Charismatic Leadership Theory

Many of us have heard about Adolf Hitler. He was considered an exceptional
leader in Germany who led the German forces during the Second World War.
His leadership resulted in thousands of deaths. What were the traits possessed
by Hitler that could influence his followers to carry out genocide? The whole
world was petrified on hearing HitlerÊs name. Why?
He can be categorised as a charismatic leader. What are the common

characteristics of charismatic leaders? Table 9.6 lists some of the salient traits of
this type of leader.

Table 9.6: Characteristics of a Charismatic Leader
Characteristic Explanation
Self-confidence Charismatic leaders are fully confident of their value and ability.
Visionary They have ideal goals that exceed current situations.
Ability to They are able to communicate their vision clearly to others. This
communicate ability is a reflection of the level of understanding of their
vision followers.
Confident of Leaders who are committed to their vision are willing to take
vision personal risks, in fact, make sacrifices to accomplish their vision.
Extraordinary They display extraordinary behaviour, which opposes traditional
behaviour norms. When they succeed, this behaviour is lauded by the
people.
Act as change Charismatic leaders are often known as radical agents of change
agent as compared to those who accept the status quo.
Sensitive to the They are able to make realistic evaluations about the environment
environment and resource constraints to implement changes.
Many researchers have demonstrated keenness to show the relationship between

charismatic leaders with performance levels and high worker satisfaction.
ACTIVITY 9.3
Do the managers of your organisation display the characteristics of a

charismatic leader?
9.4.2 What are Visionary Leaders?

Visionary leaders have far reaching expectations, more so than charismatic
leaders. Visionary leaders have the ability to set a vision that is realistic and
useful, and pave the way forward for the organisation or unit that is attempting
to improve the current situation. Vision is different from setting directions as
vision can bind together the emotions and energy of the people. The core of
vision comprises the following:
(a) Ability to inspire the values of people;

(b) Probability of achieving the vision ă everyone must believe that the vision
is achievable;

(c) Ability to conceive the vision; and

(d) Full attention.
Visionary leaders have the following characteristics:
(a) Ability to clarify their vision to others through schools and other mediums
like the radio and television;
(b) Ability to show that their vision is not merely lip-service but action-
oriented ă change begins with self;
(c) Ability to channel the vision within context; and
(d) Accepted by departments, units and other divisions.
The closest example of a visionary leader is MalaysiaÊs former Prime Minister,

Tun DatoÊ Seri Dr. Mahathir Mohamad. His Vision 2020 is well known and aims
to make Malaysia a developed nation.
9.4.3 Transformational Leadership

Transformational leaders influence their followers to sacrifice personal interests
for the good of the organisation. They focus on the developmental needs of their
followers and encourage followers to look at problems with new perspectives.
They are also able to arouse and inspire their followers to strive to achieve group
goals. Transformational leaders are appreciated more than charismatic leaders.
Transformational leaders not only try to instil the qualities of courage to question
long-standing views but also the views proposed by the leaders themselves.
A lot of research supports transformational leadership. In short, there is evidence

that transformational leaders can bring about low turn-over, high productivity
and worker satisfaction.
SELF-CHECK 9.3
There are three current approaches to leadership theory. What are

they?

9.5 TRUST
After you have understood leadership aspects, let us now look at another aspect
which is just as important in the management infrastructure, i.e. trust. Trust is
the belief in someone. The level of trust is a hotly debated topic in organisations.
Trust becomes even more important when we talk about working in groups. In
this subtopic, we will define trust and the importance of trust as a component of
leadership.
9.5.1 What is Trust?

Trust is the positive expectation that a person will not take advantage of his
position. Two important elements in our definition are complacency and risk.
Trust is a process based on relevant experience that is often limited. Trust takes
time to be nurtured in an ever-increasing manner. When we discuss trust, the
question of beliefs is debated as well. Trust includes making a person weak as it
avails opportunity for frustration and disappointment. Trust is not merely
accepting risks but also the willingness to take risks.
What are the main dimensions which engulf the concept of trust? These are
described in Table 9.7.
Table 9.7: Dimensions of Trust
Dimensions Explanation
Integrity Honest and truthful.
Ability Technical skill, knowledge and interpersonal skills.
Consistency Trustworthy, predictable and good evaluation.
Loyalty Desire to defend and protect a personÊs reputation.
Transparency Willingness to share ideas and information with others.
9.5.2 Why is Trust Looked Upon as the Foundation of

Leadership?
Trust is the main characteristic linked to leaders. As a manager, a part of your
work is to work with others and solve problems. At the same time, you can get
information and creative ideas needed to solve the problems depending on the
level that the workers trust you.

When your followers trust you, they will be willing to place themselves in your
hands.
Have you thought about what leadership characteristics are most desired by the
followers? The answer is honesty. Honesty is consistently regarded as the most
respected leadership trait by followers. Nowadays, the effectiveness of
management and leadership depends on the ability of leaders to win the trust of
their followers.
In times of change and uncertainty, people depend on interpersonal relations for

guidance and the quality of this relationship depends on the level of trust. In
addition, the practice of empowerment and use of work teams require high levels
of trust in order to be effective.
9.5.3 Types of Trust

The following are the three types of trust:
(a) Deterrence-based Trust

This is the weakest kind of trust. This trust is based on fear of opposition if
the trust is violated. Individuals under this kind of relationship act on fear
of punishment as a result of not keeping to a promise. It is effective if the
punishment can be implemented, its impact is clear and the punishment is
actually carried out. To increase its effectiveness, the loss of interacting
parties must be greater than the gains of going against the expectations.
Many relationships are based on deterrence. In the current manager-

employee relationship, the creation of trust is based on the authority held
by the manager and the punishment that he can impose.
(b) Knowledge-based Trust

Most relationships in organisations are of knowledge-based trust. Trust is
based on the ability to predict behaviour based on previous interactions.
Knowledge about others and behaviour predictions replace contracts,
summons, and legal action, which forms the basis of knowledge-based
trust.
This knowledge is nurtured over time and most of it through shared

experiences which create confidence, trust and prediction.
(c) Identification-based Trust

The highest level of trust can be achieved when there is an emotional
relationship among the related parties. It enables one party to act as the

agent and representative of that person. Understanding nurtured is at a

stage whereby one person can act effectively on anotherÊs behalf. At this
stage, there is minimum control.
For example, this kind of relationship can be seen among happily married
couples. It can also be seen among workers who have worked together for a
long time and have experiences which allow them to understand each other
deeply. This kind of trust is much desired by managers in teams.
Figure 9.3: Levels of trust
SELF-CHECK 9.4
Provide examples for the three kinds of trust.
 In this topic, you were introduced to the theories of leadership traits,

leadership behaviour, contingency theories, current trends in leadership
theories and the concept of trust.
 You should now be able to differentiate between managers and leaders.
 You should also be able to differentiate charismatic and visionary leaders.
 You also know that trust is the foundation of leadership because when
workers trust you, they are willing to place themselves in your hands.

Blake, R. R., & Mouton, J. S. (1964). The managerial grid: Key orientations for
achieving production through people. Houston, TX: Gulf.
House, R. (1996). Path-goal theory of leadership: Lessons, legacy and a

reformulated theory. Leadership Quarterly, 7(3), 323ă352.
Lewin, K., Lippitt, R., & White, R. K. (1939). Patterns of aggressive behaviour in
experimentally created „social climates‰. The Journal of Social Psychology,
10(2), 271-299.
Vroom, V. H., & Jago, A. G. (1988). The new leadership: Managing participation
in organisations. Englewood Cliffs, NJ: Prentice Hall.
Vroom, V. H., & Yetton, P. W. (1973). Leadership and decision making.

Pittsburgh, PA: University of Pittsburgh.

Topic
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 Communication
10
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" LEARNING OUTCOMES
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" 1. Explain the communication process;
" 2. Explain the five techniques to overcome barriers to
" communication;
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3. State the four basic needs for active listening;
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" 4. Describe the six methods of conveying feedback effectively;
" 5. State the two forms of conflict; and
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" 6. Explain the three cause of conflict.
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 INTRODUCTION
What is your view on the importance of communication in your daily life and
in your organisation?
The role of communication which at one time was looked upon as not important
has now been given due recognition in daily management aspects. In fact, it is a
compulsory part of the business administration course. The switching of the term
information technology (IT) to information communication technology (ICT),
which has been hailed by the information technology community at the global
level, is evidence of its acceptance.

128  TOPIC 10 COMMUNICATION
Every action of a manager involves communication. When you give an

instruction, deliver a speech, put forth an idea, attend a meeting or even if you
keep quiet, communication is involved. You may not be able to make a decision
without information which must be communicated. After a decision has been
made, it must also be transmitted. If it is not communicated to those involved,
how can the ideas, suggestions, and instructions be accepted and followed so as
to produce a desired outcome? The best ideas, the most creative suggestions, or
the most detailed planning, cannot be implemented if they are not
communicated.
Many managers make the mistake of hoping that their ideas, suggestions, and
instructions can be somehow conveyed and at the same time expect them to be
understood. Communication skills per se are inadequate to make a manager
successful. However, ineffective communication skills will pose various
problems to managers. As a manager, you are required to understand and
practise effective information communication methods like communicating good
and bad news, giving instructions and receiving as well as giving feedback.
10.1 UNDERSTANDING COMMUNICATION

Communication can be defined as „the imparting or exchanging of information
by speaking, writing or using some other medium‰ (Oxford Dictionary, 2016). In
the following subtopics, we will discuss further about the functions of
communication, the different types of communication such as the written, verbal
and non-verbal communication and lastly, the barriers to communication.
ACTIVITY 10.1
Before you study communication in greater detail, explain

communication in one word:
Communication is __________________________________________.
10.1.1 How Does the Communication Process

Function?
When you talk, write, or listen, you are involved in the communication process.
Communication can be interpreted as a process or flow. Problems arise when
there are interferences or barriers to the flow.

TOPIC 10 COMMUNICATION  129
Communication needs a purpose which is displayed in the form of a message

delivered by a sender to a receiver. It is explained as the encoding of a message
that is sent through a specific channel to a receiver who interprets the message
sent by the sender. The outcome is the transfer of the meaning of the message
from one person to another. Please refer to Figure 10.1 for a clearer picture.
Figure 10.1: Communication process
(a) Source
A source (normally a person), begins a message by encoding a certain
thought. Four situations influence the encoding of a message:
(i) Skills
The overall success of communication depends on speaking, reading,
and listening skills as well as consideration.
(ii) Attitude
Our attitude influences our behaviour. We hold on to a set of
assumptions about issues and our communication is influenced by
this attitude.
(iii) Knowledge
We limit our communication activity to the knowledge we have on a
particular topic.
(iv) Sociocultural System

As with attitude, the sociocultural system we are in influences our
behaviour. Our beliefs and values influence us as a source of
communication.

(b) Message
A message is a physical product (that can be seen or heard) from the
encoding source. When we speak, the speech is a message; when we write,
the writing is a message; when we draw, the drawing is a message and
when we move, our hand movements or facial expressions are our
message. Messages sent by us are influenced by: symbols (language,
writing, etc.) which are used to deliver thoughts; the contents of the
message itself and the decision made in selecting and arranging the codes
and contents that are to be sent.
(c) Channel
Channel is the medium through which the message is sent. It is selected by
the source. Channels can be formal or informal. Formal channels are
determined by organisations that send work-related messages.
Traditionally, messages follow organisational authority. Informal messages
go through informal organisational channels.
(d) Receiver
Receiver is the object to which the message is directed. The message must
be interpreted into a form that can be understood by the receiver. This is the
process of decoding. As with the source, the receiver is also limited by
skills, attitude, knowledge and sociocultural systems.
(e) Feedback
The final element in the communication process is feedback. Feedback is a
measurement of how successful we have been in sending a message as
intended originally. It shows whether the message has been understood.
10.1.2 Is Written Communication More Effective than

Verbal Communication?
Communication can be in written or verbal form. The selection depends on the
purpose of your communication. Both these forms of communication have their
advantages and disadvantages. Written communication is clearer, verifiable, and
more permanent than oral communication.
Generally, when written communication is used, both parties receive a record of

that communication. The message can be kept for specific periods of time. If there
are any problems regarding the content of the message, one can easily refer to the
written message. Finally, written communication relies on the process. More
attention is given to the written word compared to the spoken word.

However, a written message has its weaknesses. Writing consumes time, reduces
feedback, reaction in the form of facial expression, and the voice and intonation
cannot be identified.
10.1.3 Is the Grapevine Considered an Effective

Means of Communication?
Let us say your name has been nominated from among 20 managers as the best
manager for 2016. You will definitely feel nervous and impatient to find out who
will be receiving the award, particularly if you have been waiting long for a
promotional opportunity. The work environment becomes tense and the
expectations of several people run high. As soon as the meeting to decide the
winner is over, you receive a phone call from your parents congratulating you,
and your colleagues have begun to send congratulatory messages a day ahead as
if they already knew the result. The next day, there is an official announcement
made by email. Although the news of the award is accurate, you probably feel
surprised as to why some people knew the results beforehand.
Informal communication that occurs in an organisation is known as the

grapevine. Traditionally, this information is channelled verbally but in this age of
technology, the message is channelled electronically. What is surprising is the
speed with which information is communicated, particularly unpleasant news.
The main question here is the accuracy of the grapevine. Research on this is
mixed. Although the information that is communicated is not so accurate, it still
contains elements of truth.
10.1.4 How Do Non-verbal Symbols Influence

Communication?
In some instances, the most meaningful communication is delivered in a non-
verbal or written form. As an example, when you leave your family behind to go
abroad on official duty for three years, silent tears from your parents are
sufficient to indicate their unwillingness to let you go. This kind of
communication is labelled as non-verbal communication.
Body language refers to movements, and facial expressions. Verbal intonation

refers to the emphasis a person places on a particular word or sentence.
According to one study, it is found that 55 per cent of verbal messages are
influenced by hand movements, facial expressions and body posture, 38 per cent
from verbal intonation and only 7 per cent from spoken words.

ACTIVITY 10.2
Give an example for each of the following:
(a) Written communication that is more effective than verbal
communication
(b) Verbal communication that is more effective than written
communication
(c) Effective non-verbal communication
10.1.5 What are the Barriers to Effective

Communication?
There are many interpersonal and intrapersonal barriers that influence the
encoding of a message. Let us discuss some of these barriers.
(a) Filtering
There is action to deliberately manipulate information so that it is more
receptive to the receiver. When you make a report to the headquarters that
your business is doing fairly well when in actual fact it is deteriorating, you
are said to be filtering information. This is more serious in big
organisations. The information that is communicated is filtered from one
level to another till the message being conveyed becomes totally different
from the actual information.
(b) Selective Perception

The receiver sees and listens based on need, motivation, experience,
background, and other personality characteristics. A worker who is always
late to the office because he does not get up on time will give a similar
perception to his manager when he arrives late for an appointment with a
client even though this time his lateness is due to a flat tyre.
(c) Information Overload

Information overload occurs when an individual receives more information
than he can analyse and use. Executives often complain that they are forced
to receive a lot of information, be it from emails, telephone calls, faxes,
meetings etc. What is done by these managers? They will select the
information, ignore some information, remove some information, or forget
about some of the information.

(d) Emotion
It is normal for all life forms to react when intimidated. When people feel
threatened, they will react in a way that reduces their ability to achieve
understanding. They will take action to defend themselves, for example, by
quarrelling, insinuating, and questioning the actions of others. When
people find themselves being intimidated by messages received, they will
try and react in a way which will prevent effective communication from
occurring.
(e) Language
The meaning of words may differ from one person to another. Age,
education and background are factors which influence language used and
understood. For instance, the word „you‰ may be a normal way to address
someone but to some people, it may be offensive. In addition, workers
come from different backgrounds and are forced to work in the same
division. This process encourages the use of specific technical words,
especially computer-related language like „mouse‰, „TCPIP‰, „CPU‰,
which may convey different meanings to different people.
(f) Fear of Communicating

How many of you like public speaking? The answer is very clear. Many
among us feel shy and afraid of communicating. Those who have this
problem will feel stressed and nervous when communicating, be it verbally
or in writing. They are willing to remain silent to reduce the need to
communicate even though their job requires them to do so.
ACTIVITY 10.3
There are many factors which impede the effectiveness of the

communication process. Draw a mind map of these barriers.

10.1.6 How Do Managers Overcome the Barriers to

Communication?
The following are some ways that managers can follow to overcome
communication barriers:
(a) Simplifying Language

Since language is a kind of barrier, managers must select their words and
structure their messages in a way which will enhance the level of
understanding of the receiver. Effective communication occurs when the
message is received and understood. Technical language can be used to
encourage understanding in groups but this will pose several problems to
people who are outside the group. As such, managers must be cautious
when using technical language.
(b) Active Listening

Active listening is the process of actively seeking meaning as opposed to
passive listening. In active listening, both the sender and receiver are
thinking and exchanging opinions. Most of us are weak listeners as
listening is tiring and less satisfying than talking. As such, a listener
normally stops listening sooner than a person who is talking. Active
listening is enriched by listening with empathy or with consideration
(imagine yourself as the sender).
(c) Controlling Emotions

We must control our emotions because emotions can distort and disfigure
our message. We all know that when a person is angry, the messages
communicated are adversely affected. What can you do if you are caught in
such a situation? The simplest answer is to stop communicating for a while
until the situation returns to normal.
(d) Observing Non-verbal Symbols

We know that non-verbal messages play an important role in
communication. You must ensure that non-verbal symbols are consistent
with the message that you want to send. For example, when you want to
warn your workers, you must be serious and not show a smiling face.
SELF-CHECK 10.1
State the methods that can be used by managers to overcome the
barriers to communication.

10.2 ENRICHING INTERPERSONAL SKILLS

Many studies opine that top managementÊs main failure is their weakness in
interpersonal skills. Nowadays, more graduates who are selected to hold
management posts are found to be lacking in interpersonal and leadership skills.
10.2.1 Why are Active Listening Skills Important?

Listening involves paying attention, interpreting and remembering. Effective
listening is an active process compared to passive listening.
Active listening requires you to delve into the thoughts of the sender so that you
can understand what is being communicated from his point of view. You have to
pay full attention and you should desire to understand fully what is being said.
There are four basic needs for active listening (refer to Table 10.1).
Table 10.1: Basic Needs for Active Listening
Basic Needs Explanation

Degree of observation Active listeners pay full attention to what is being conveyed
and make inferences and connections about what has been
spoken. They try to piece together bits of information
received within the context of what was received previously.
Empathy Empathy requires you to place yourself in the shoes of the
sender. It needs knowledge about him and flexibility on your
part. You have to set aside your own thoughts and feelings
and step into his world.
Acceptance You need to listen without being judgemental of the contents.
The main challenge is to receive what is being conveyed and
withhold evaluation of the contents till the sender stops
communicating.
Willingness to accept The listener tries to grasp fully what the sender is trying to
responsibility of convey. The listener tries to listen to the feelings and also the
completion. content, and frequently asks questions to increase
understanding.

10.2.2 Feedback
If you ask about positive and negative feedback, you are bound to get an answer
that is unexpected. If the feedback is positive, it will be conveyed quickly and
enthusiastically but it is a totally different scenario if negative feedback is being
conveyed. Everybody likes to convey and receive good news and tries to avoid
conveying and especially receiving bad news. As such, negative feedback is often
avoided, postponed or amended.
The aim of this subtopic is to show the importance of conveying positive and
negative feedback and identifying the techniques that can be used to convey
feedback effectively.
(a) What are the Differences between Positive and Negative Feedback?
Everybody, whether a manager or non-manager, a sender or a receiver, treats
positive and negative feedback differently. Positive feedback is more readily
acceptable and more accurate than negative feedback. Negative feedback
often faces resistance. People prefer to listen to good news and set aside other
kinds of news. Researchers have concluded that negative feedback is better
received if it is conveyed by a credible source (a person holding some
position, close friends, close relatives, etc.). Feedback is also more readily
received if it is supported by facts and data and actual related examples.
(b) How Do You Convey Feedback Effectively?

We can convey feedback effectively by doing the following:
(i) Focus on Specific Behaviour

Feedback should be specific and not general, for example, „You
should change your bad attitude‰ or „your performance is truly
exemplary‰. Even though it is conveying a message, it is not very
clear. It does not supply adequate information on how to change
„behaviour‰ or to maintain „good performance‰.
(ii) Feedback Should Not be Personal

Feedback, especially negative feedback, should be conveyed in a
descriptive manner rather than in an evaluative manner. It does not
matter how angry you are, you should ensure feedback focuses on the
work behaviour and that you do not convey personal criticism.
Comments like lazy, incapable, and other comments about personal
weaknesses normally do not improve worker performance.
Remember, when you give information, focus on the workerÊs work
behaviour, and not his personal behaviour. You can control his work
behaviour but not his character.

(iii) Feedback Should Be Information-oriented

The feedback that is conveyed should be information-oriented. If a
mistake has occurred, what is the implication for the organisation?
Your task at this stage is not to release your tension because by doing
so, you will adversely affect your credibility as a leader.
(iv) Time Bound

Feedback is most effective to the receiver if the time frame between
the event and the feedback is short.
As an example, a worker will be more receptive to a managerÊs

suggestions to correct his mistakes as soon as the mistake has
occurred compared to when evaluation is being done after six months.
(v) Ensure Understanding

Is your feedback adequately brief and concise so that it facilitates
understanding? You are aware that communication should allow the
receiver to understand what has been conveyed. You can use the
technique of asking the receiver to paraphrase what has been
conveyed to ensure understanding.
(vi) Focus on Behaviour that Can be Controlled

It is pointless to propose something that a worker has no control over.
You can admonish a worker who is late for an appointment because
he woke up late but reprimanding a worker who is late because of a
road accident which caused a traffic jam of two hours is very
unreasonable.
ACTIVITY 10.4
Draw a mind map of the methods of conveying feedback effectively.

10.2.3 What is Conflict Management?

The ability to manage conflicts is one of the important skills that a manager
should have. Once again, this is a very important topic as managers work with
and through other people. Conflict grows from small misunderstandings,
quarrels and non-interference into strikes, clashes and even war. Conflict begins
with a clash of opinions between two or more parties or groups, which comes
about from these parties or groups having to share limited resources or work
activities. Conflict occurs when the situation is compounded by different status,
interests, goals, values and assumptions. Conflict management is the
management of all of the above so that it can be reduced, avoided, encouraged or
managed positively.
What is your view of conflict? Should it be completely avoided or encouraged?

You probably are surprised why this question is being posed.
There are some of you who may feel that conflict is not an issue but something
that should be avoided. Table 10.2 shows three differing views about conflict.
Table 10.2: Views on Conflict
Views Explanation
Traditional Initial approaches stated that conflict is not good and always
brought about negative impacts to the organisation. On this
basis, conflict should be avoided. Management was
responsible for eliminating any conflict.
Human Relations Pioneers of human relations stated that conflict was normal
and could not be avoided in an organisation. On this basis,
organisations accepted conflicts and believed that sometimes
it brought about advantages.
Interaction There are some current theories on conflict. These theories
not only accept conflict, but in fact, encourage it. They believe
that peace, harmony, and cooperation will make the
organisation static, lifeless, lazy, and insensitive to change.
These theories encourage conflict at levels that are just
adequate to maintain organisational agility.

SELF-CHECK 10.2
There are three different approaches or views about conflict. Fill in the
blanks with the appropriate approaches.
The __________ approach states that conflict is not good and always
brings about a negative impact to the organisation. On this basis,
conflict should be avoided. Management is responsible for avoiding
any conflict. Pioneers of __________ stated that conflict was normal and
could not be avoided in an organisation. On this basis, organisations
accepted conflict and believed that sometimes it brought about
advantages. The __________ theory not only accepts conflict, but in fact
encourages it.
Conflict can take two forms: functional conflict and dysfunctional conflict. How
can a manager identify whether a conflict is of a functional or dysfunctional
kind? Please refer to Figure 10.2 and Table 10.3 for further clarification.
Figure 10.2: Forms of conflict
Table 10.3: Clarification of Functional and Dysfunctional Conflict
Conflict Type of Organisational Organisational

Situation
Level Conflict Characteristics Performance Level
A Low or Dysfunctional  Weak Low
none  Static
 Dead end
B Optimum Functional  Innovative High
 Energetic
 Critical
C High Dysfunctional  Chaotic Low
 Destructive
 Non-cooperative

10.2.4 Conflict Management Styles

What can managers do when dysfunctional conflicts occur? You should know
about the basic conflict management styles, know which parties are involved,
understand the situation which caused the conflict and be aware of your choices.
Kenneth W. Thomas outlined several techniques to resolve conflicts. In ThomasÊs
opinion, we must first of all know the reason why a person caused a conflict to
occur. He concluded that a personÊs response depended on cooperative or
assertive behaviours.
Cooperative behaviour is the level to which a person tries to alleviate conflict by

satisfying the interest of the other party. Assertive behaviour is the level to which
a person tries to alleviate a conflict by satisfying self-interest. Thomas put
forward four techniques to resolve conflicts as explained in Table 10.4.
A skilled manager will know which style is appropriate and when it should be
used. As a manager, it is impossible to resolve every conflict. As such, select the
conflict that must be resolved so that you can devote your time and energy to
functional conflicts only. Examples of unmanageable conflicts are when
opposition is too deep-rooted, when both parties wish to prolong the conflict,
when emotions run high, and when it is not worthwhile to resolve the conflict.
There are conflicts which are beyond our control; therefore, it is wise to ignore
such conflicts.
Table 10.4: Strategies to Resolve Conflict
Strategies Appropriateness of Use

Avoidance Appropriate when emotions are high and time is needed to
alleviate the situation or when assertion will bring about more
harmful effects compared to the benefits of resolving conflict by
collaboration.
Accommodation Suitable when the issue is less important to you than it is to the
other party, and harmony and stability is of greater importance
for you.
Assertion Appropriate when you need a quick solution for important
issues which require unfavourable action to be taken and when
the level of the workersÊ commitment for resolution is not high.
Compromise Appropriate when the parties involved are at a similar level of
power and when a temporary resolution is necessary to solve
complex problems or when time constraints are faced.
Cooperation Suitable when time constraints are at a minimum and all parties
want a win-win situation.

ACTIVITY 10.5
What is your view on encouraging conflict in a way that will benefit

the organisation?
As a manager, you should first of all identify the appropriate time to encourage
conflict. The following are some issues that you can consider:
(a) Are you surrounded by yes-man followers?

(b) Are workers shy or afraid to admit difficulties and uncertainties to you?
(c) Is the level of compromise so important that workers lose sight of values,
long-term objectives, and organisational welfare?
(d) Are managers of the belief that it is in their main interest to maintain peace
and cooperation within their unit, regardless of costs?
(e) Is there concern for a personÊs extreme feelings when making decisions?
(f) Do managers believe that popularity is more important that competencies
and excellent performance to achieve organisational benefits?
(g) Do managers insist on getting total agreement when making decisions?
(h) Do workers show unusual resistances to change?
(i) Is there a lack of new ideas?
(j) Is worker turnover too high?
There are many techniques that can be used to encourage conflict. Managers
should inform and channel the message about change to workers followed by
actions which prove that conflict is recognised. This step involves changing
organisational culture. Communication can be used to encourage conflict. Vague
and fearful messages also encourage conflict.
The most popular method used to shake up the whole organisation is by hiring
outsiders or people from other departments whose values, background,
behaviour and management styles are different from the current workers.
Please visit http://www.amanet.org/selfstudy/00677.htm to access information

on ways to overcome organisational conflict.

ACTIVITY 10.6
Have you been involved in any conflict, be it in your organisation or at

home? Think of a number of the conflicts and ways/strategies you used
to resolve the problems.
(a) Causes of Conflict

The approach you use to solve a conflict depends on the cause of the
conflict. It is therefore important that you identify the cause. Research has
classified conflicts into three categories, i.e., communication differentiation,
structural differentiation and personality differentiation.
Table 10.5: Causes of Conflict
Causes of Conflict Explanation

Communication Disagreement arises from difficulty to understand language
Differentiation used, misunderstanding and interferences in communication
channels.
Structural Individuals do not agree with goals, alternative decisions,
Differentiation performance criteria and allocation of resources. This kind of
conflict is rooted in organisational structure.
Personality Conflict occurs as a result of behaviour and personal value
Differentiation systems. Factors like background, education, experience and
training, nurtures the personality and specific values of an
individual.
(b) How do Managers Encourage Conflict?

It is normally difficult to accept conflict encouragement. As was postulated
by the interaction view, the presence of conflict can benefit organisations
depending on the situation, time and many other factors.
Structural work is also one cause of conflict. Centralisation of power,

readjusting workgroups, increased cooperation and task interdependency
among units are structural aspects which affect the status quo and increase
conflict levels.
Finally, the appointment of a devilÊs advocate can also spark conflict. A

devilÊs advocate deliberately raises issues that challenge anything that is
suggested by the majority or challenge what is being currently practiced.
He plays the role of a critic and puts forward challenges on issues that have
been agreed to, even by him.

 In this topic, you were given an understanding of the concepts of

communication and interpersonal skills.
 You should be able to define communication and explain why it is important

in management. Communication is a two-way process and all kinds of
barriers and disturbances will reduce communication levels.
 You were also exposed to the techniques of overcoming barriers to

communication.
 As a manager, you should be able to provide feedback and identify the two
forms of conflict and which of the two is functional and which is
dysfunctional.
 You should also be aware of the causes of conflict and the ways to resolve it.
 Managers can use conflict to benefit the organisation.
Communication. (2016). Oxford Dictionary. Retrieved from http://

www.oxforddictionaries.com/definition/english/communication

Topic  Motivation
11
LEARNING OUTCOMES
1. Explain the process of motivation;
2. Explain MaslowÊs hierarchy of needs theory;
3. Differentiate between Theory X and Theory Y;
4. Explain the implications of the motivation theories; and
5. Describe how managers can design an individualÊs work to
maximise employee performance.
 INTRODUCTION
Have you ever wondered why some people are willing to work day and night
without feeling bored or tired? Do you know of a colleague who is willing to
accept the responsibility for carrying out a task and is inspired to carry it out
with complete dedication, energy and interest? He is willing to sacrifice his meal
time, rest and sleep to complete the work. The statement, „truly industrious‰
seems apt to describe people like this.
On the other hand, you may have also come across people who always turn
down responsibilities, arrive late to work, sulk, and when given a task, you are
almost always ready to hear thousands of excuses why he has to postpone the
task. The statement, „lame‰ comes to mind.

TOPIC 11 MOTIVATION  145
The Malay proverb, „there are a thousand ways if you want something and a
thousand excuses if you do not‰, seems appropriate in the light of this topic on
Motivation. As a manager, you should be sensitive to the factors which motivate
your workers to do something and the factors that do not. This is important
because as mentioned in Topic 1, managers, willingly or unwillingly, need to
work with and through people.
This topic begins with defining motivation followed by theories that explain
clearly the concepts of motivation and methods that can be used to increase the
energy of the workers. Knowledge about the concepts of motivation will train
you to be a better and more effective manager. Please take note that the word
„motivate‰ is interchangeable with the word „encourage‰.
11.1 MOTIVATION AND INDIVIDUAL NEEDS

There is a false assumption which is frequently made by managers in relation to
motivation. Managers are normally of the view that motivation is an individual
characteristic. With this kind of understanding, it implies that some people are
motivated whilst others are not. This assumption can give rise to the view that
„he is not motivated‰, when in actual fact, motivation is the result of an
individualÊs reaction to the situation.
The level of an individualÊs motivation changes from time to time. A person may
be motivated when you invite him to cook and he immediately goes to buy the
necessary ingredients. On the other hand, if you invite the same person to go
bowling, he may give all sorts of excuses like his hand hurts, his leg hurts, and
that he needs to submit an assignment first thing the next morning. However,
this same person has the time to stand for hours by the fire cooking.
Motivation is:
The desire to expand high levels of effort to achieve organisational goals and
that effort must be achieved.
From the above definition, motivation consists of three elements:
(a) Effort
When the person is motivated, he will work harder.
(b) Organisational Goal

That effort must be directed towards the achievement of organisational
goals.

146  TOPIC 11 MOTIVATION
(c) Needs
Motivation is a process of fulfilling needs.
Let us take a closer look at what is meant by needs. The level of needs that is not
satisfied will give rise to tension and an increasing tension level will create
pressure within oneself. This pressure will generate a specific behaviour to
satisfy this need, i.e. to reduce tension. For example, when you feel hungry in the
middle of the night, you cannot sleep well. In your mind, you consider whether
you should get up to get something to eat or not.
After tossing about, finally, you make the decision to cook noodles. After eating
the noodles, you can sleep well. This phenomenon is shown in Figure 11.1.
Figure 11.1: Process of motivation
11.2 EARLY THEORIES OF MOTIVATION

Theories of motivation have been proposed since as early as the 1950s. The study
of these early theories serves as a platform for new theories of motivation. In
addition, many managers are still using these theories widely. Three of the most
popular early theories which are still being used widely are the Hierarchy of
Needs Theory, Theory X and Theory Y and the Motivation-Hygiene Theory. Let
us look at each theory in detail.

11.2.1 Maslow’s Hierarchy of Needs Theory

This is the most well-known theory. This theory states that in every person, there
are five types of needs (refer to Table 11.1).
Table 11.1: MaslowÊs Hierarchy of Needs
Type of Needs Examples

Physiological Needs Food, water, and shelter
Safety Needs Safety from physical or emotional threats
Social Needs Sense of belonging in relationships, acceptance,
and friendship
Esteem Needs Self-esteem, autonomy, achievement, status,
appreciation, and recognition
Self-actualisation Needs Growth, achievement of self-potential, self-
fulfilment, and achievement of ambitions
SELF-CHECK 11.1
Label the following pyramid below with MaslowÊs Hierarchy of
Needs Theory.
MaslowÊs Hierarchy of Needs moves from a lower order to a higher order need.
After most of the needs in one level are satisfied, needs at the next level must
then be satisfied. It must be remembered that no level can be satisfied fully. A
level of needs that has almost been fully satisfied no longer has a motivational
force. To motivate workers, you need to know at what level they are on the
hierarchy and focus your attention on fulfilling the needs at that level or at a
higher level.

For example, you wish to motivate an operational employee to work overtime at

a construction site by treating him to eat the famous Penang Nasi Kandar (first
level needs). Will he be motivated to do the job? On the other hand, if you
motivate him by giving him a safety helmet, boots, bright lights in the
environment, and mobile telephone (second level needs), will he perform the job?
The worker will be more interested in the second level of motivation because he
is more concerned with his safety. This theory is widely accepted as it is based on
simple logic. For further clarification on this theory, visit the following sites:
http://web.utk.edu/~gwynne/maslow.HTM or http://chiron.valdosta.edu/
whuitt /col/regsys/maslow.html.
11.2.2 McGregor’s Theory X and Theory Y

Douglas McGregor outlined two very opposing views about man: the negative
and positive view.
(a) The Negative View of Man – Labelled as Theory X

This theory assumes that workers basically dislike work and, if possible, try
to avoid it. On this basis, they must be forced, controlled, or threatened
with punishment in order to achieve the objectives. This theory also claims
that workers will reject responsibility and await formal instructions
whenever they can. Most workers prioritise safety more than any other
factor related to work and finally they are not ambitious.
(b) The Positive View of Man – Labelled as Theory Y

This theory assumes that workers look upon work as something natural
just like resting or playing. They will exercise self-direction and control if
they are involved in achievement of objectives. They learn to accept, in fact
they seek, responsibility. The ability to make decisions rests with everyone
and not just with managers.
ACTIVITY 11.1
Do you belong to the Theory X or Theory Y category?

11.2.3 Herzberg’s Motivation-Hygiene Theory

Herzberg studied an important issue: What do workers expect from their jobs?
He concluded that several characteristics were categorised under job satisfaction
and the others under job dissatisfaction.
Figure 11.2 provides a clearer picture. When workers are dissatisfied, workers
will talk about hygiene factors like insensitive supervisors, low pay,
uncomfortable working conditions and other such factors as the main reasons for
their dissatisfaction.
Figure 11.2: HerzbergÊs motivation-hygiene theory
It is the norm that the antonym of satisfaction is dissatisfaction and the antonym
of happy is sad, but it is not necessary that a person who is unhappy is sad. A
similar concept can be applied under this theory.
Figure 11.3: Differences between the traditional view and HerzbergÊs view

If the hygiene factors are eliminated, it is not necessary that the workers will
enjoy job satisfaction. As such, the antonym of „dissatisfaction‰ is „no
dissatisfaction‰ whilst the antonym of „satisfaction‰ is „no satisfaction‰. What is
important here is to understand that if you get rid of the hygiene factors, you will
create a calm situation and not a satisfactory situation. The factors which will
eliminate job dissatisfaction are hygiene factors.
To motivate workers in a job, you should use motivator factors as shown above.
SELF-CHECK 11.2
Among the early theories on motivation are the following three
established theories. Match these early theories to the corresponding
explanation.
Theories Explanation
HerzbergÊs To motivate workers, you need to know at what level
Motivation- they are on the hierarchy and focus your attention to
Hygiene Theory fulfilling the needs at that level or at a higher level.
MaslowÊs There are two very opposing views about man: the
Hierarchy of Negative View of Man and the Positive View of Man.
Needs
McGregorÊs If you get rid of the hygiene factors, you will create a
Theory X and calm situation and not a satisfactory situation. The
Theory Y factors which will eliminate job dissatisfaction are
hygiene factors.
11.3 NEW THEORIES ON MOTIVATION

Although the old theories which have been discussed are very established, they
have not been tested in detail. However, this does not mean that those theories
cannot be applied. The difference now is that new theories have been
documented with strong evidence. The theories which will be discussed in this
the following subtopic are the three needs theory, equity theory and work model
features, and expectancy theory.

11.3.1 McClelland’s Three Needs Theory

David McClelland introduced this theory which comprised the need for
achievement, the need for power, and the need for affiliation which will be
discussed.
(a) Need for Achievement

Have you met friends who like challenges, particularly self-imposed
challenges? They like to earn their achievements and get satisfaction by
doing so. People who have a high need for achievement are often pressured
to achieve success. They achieve success on their own efforts and not
because of incentives that are being offered.
What will Mount Kinabalu climbers get when they reach the peak? Will
they get gold nuggets or the satisfaction of having overcome a challenge?
Sometimes, we do not understand why some people practice running for
miles daily for a marathon and subsequently donate the prize after winning
that marathon. This is because they obtain satisfaction and a sense of
personal achievement.
Besides this, such people always improve work methods so that the
outcome is better than before. They also accept the responsibility of finding
solutions for problems and welcome criticism and feedback so that they are
always on the right track. They do not like to gamble when winning
depends on luck. They prefer challenging work and are willing to accept
responsibility for both the success and failure of a task. This group of
people avoid work which is too simple or overly difficult to implement.
(b) Need for Power

I am sure you have come across people who like to direct and control our
work. People categorised under this need always influence the behaviour of
others in line with their own needs. They also like to compete and prefer to
impose power over others.
(c) Need for Affiliation

This need is the desire to have friendly interpersonal relationships. People
with this need prefer a harmonious, peaceful, and collaborative
environment and do not like to compete with one another.

ACTIVITY 11.2
When you work, what is your need? Do you desire achievement,

power, or affiliation with your co-workers?
11.3.2 Equity Theory

Workers do not work alone. They work with other co-workers and often make
comparisons. Let us say you have just graduated and have been offered a job
with a pay of RM4,000 monthly. Your immediate action is to accept the offer and
report for work as soon as possible. You will work hard and be satisfied with the
salary that was offered. But what will happen when you start making
comparisons and find that your colleague in the same department, who is your
peer and who reported for duty a week later with almost similar qualifications,
has been offered a salary of RM4,500 monthly?
The fact that you were offered a lucrative salary even though you are a fresh
graduate is now no longer an issue. The issue now is whether you have been
fairly compensated. There is strong evidence that workers make comparisons
between input (effort) they contribute and output (compensation) that they
receive compared to those of other co-workers, and the level of inequity or
inequality influences the level of effort that they contribute.
Table 11.2 below summarises this theory. If workers find that their input-output
ratio (output divided by input) is the same as their other co-workers who are
doing similar jobs, then there is equity level. If the ratio is not the same, then
inequity exists. They will find that they are being underpaid or overpaid.
Table 11.2: Equity Theory Relationship
Perceived Ratio Worker Evaluation*

Abdul’s Output Babu’s Output Inequity (Less reward)

Abdul’s Input Babu’s Input
Abdul’s Output Babu’s Output Equity

=
Abdul’s Output Babu’s Output Inequity (Greater reward)

>
*AbdulÊs Evaluation

11.3.3 Work Features Model

This model, which was created by Richard Hackman and Greg R. Oldham, helps
workers to interpret any task under the following five core dimensions:
(a) Skills variety;

(b) Task identity;
(c) Task significance;
(d) Autonomy; and
(e) Feedback.
These dimensions are explained in Table 11.3.
Table 11.3: Five Core Dimensions of Work
Dimension Description
Skills Variety The degree of need for skills variety and talent for workers to
complete a task
Task Identity The degree to which a part of the task completes the whole
task
Task Significance The degree to which the task influences the life and work of
others
Autonomy The degree to which the work provides the freedom to plan
and determine the procedures of carrying out a task
Feedback The degree to which individuals receive feedback about the
effectiveness of their work performance
These five core dimensions can be integrated into an index known as motivation
potential score, as shown in the following equation.
(Skills Variety + Task Identity + Task Significance)

 Autonomy  Feedback
3

At this stage, you do not have to worry about the method of calculating this
index. You only need to understand the core dimensions in this model. The
relationship between work dimension and work outcome is converted into how
great the need for personal growth is. Workers who are highly determined to
develop will find that their psychological work levels will be enriched compared
to those with low determination levels.
Research has found that the first three dimensions, i.e. skills variety, task identity
and task significance are integrated to produce a useful outcome. If all these three
features or dimensions exist in a task, we can predict that the worker will feel
that his work is important, valuable and worthwhile.
A worker will feel personally responsible for work that has autonomy and if he
receives feedback, he will be able to know how effective his work his. This model
concludes that intrinsic rewards are obtained when a person knows (feedback)
that he himself (personally responsible) carried out a task which is important,
(task significance) well. Figure 11.4 illustrates the effects of the dimensions of
work.
Figure 11.4: Effects of the five dimensions of work
Workers who are given tasks that have high work dimensions, in general, are
more motivated, satisfied and productive compared to workers who are not.
Work dimensions operate via psychological levels, which have more influence on
workers and outcome compared to motivating workers directly.

11.3.4 Expectancy Theory

This motivation theory was introduced by Victor Vroom. He explained that
every individual will perform depending on the expectation that their actions
will be followed by an outcome and the attraction power of that outcome. This
theory comprises the following three factors or relationships with their related
questions.
(a) Effort-Performance Expectancy

How hard should I work to achieve a certain level of performance and can I
achieve that level?
(b) Performance-Outcome Expectancy

What is the reward if I perform at that level?
(c) Power of Attraction

This relates to the importance of the individualÊs perceptions towards the
expected outcome to be received. „How attractive is that reward to me, and
will it help me to achieve my objectives?‰
How strongly a person is motivated to work (effort) depends on how strong is

his belief that he can achieve what is desired from that effort. If objectives are
achieved (performance), will he be given commensurate rewards? If yes, will that
reward be able to satisfy his objectives? The reward is determined by four
questions which must be addressed, by you, as a manager.
(a) The first question is as follows: what is the perceived outcome that can be
obtained from the work? Perceived outcome can be positive: salary, safety,
beliefs, benefits, or opportunities to use skills or talents. Outcome can also
be perceived negatively: fatigue, boredom, or anger. Reality is not
important at this stage. What is important is, the perception of the workers,
regardless if the perception is accurate or not.
(b) Secondly, how valuable are the outcomes to the workers? Are they valued
positively or negatively, or are they neutral? This is an internal issue which
takes into consideration attitudes, personality and individual needs. If an
individual values the outcome in a positive way, he will try and achieve it.
(c) Thirdly, what is the behaviour that should be demonstrated by the worker
to achieve the outcome? The outcome will not be effective if the worker is
not shown the way to achieve it. What are the criteria used to evaluate
workersÊ performance?

(d) The final question is how workers perceive their abilities to achieve the
desired results? After evaluating their abilities and competencies to control
the factors which lead to success, what will be done to achieve that success?
For example, you join the Principles of Management class and you like this class
very much. You believe that if you study really hard, you will eventually secure a
good job. As such, if you need to study for four hours every night to get a Grade
A, can you or are you willing to do so? If the answer is yes, you will study hard
(effort). If you study hard, you will get a good grade (performance). Is the
outcome valuable? The reward is a good grade and maybe securing a good job.
Therefore, you will be motivated.
What is the inference you can make of this Expectancy Theory? Firstly, this
theory places importance on rewards. Secondly, this theory emphasises that
managers understand the positive or negative views of workers on outcomes.
Thirdly, this theory focuses on expectancy behaviour as well as on perceptions.
SELF-CHECK 11.3
The new theories on motivation are a continuation of the early
theories, include the following three theories. From your reading,
match the theories to the corresponding explanation.
Theories Explanation
Equity Theory Every individual will perform depending on
the expectation that their actions will be
followed by an outcome and the value of that
outcome to them.
Expectancy Theory This model infers that intrinsic rewards are
obtained when a person knows (feedback) that
he himself (personally responsible) carried out a
task that is considered important (task
significance) well.
Work-Features Model This theory comprises need for achievement,
need for power and need for affiliation.
McClellandÊs Three Workers collaborate with other co-workers and
Needs Theory make comparisons among each other.

11.4 IMPORTANT ISSUES IN MOTIVATION

There are various important issues related to motivation among workers. The
following subtopics will discuss some of the main issues in motivation.
11.4.1 Should Workers be Rewarded Based on Time

or Performance?
Every person works with the hope of fulfilling a need. This need can take the
form of compensation or reward. In this aspect, compensation is of the monetary
kind.
Monetary compensation is the most effective form of motivation and managers

should study how monetary compensation can be used to motivate workers.
The performance-based compensation programme is a compensation plan which

pays compensation to workers based on specific performance measures. It is
most appropriately used with the expectancy theory, which highlights the
motivating influence of compensation and rewards. The performance-based
compensation programme is well accepted as it can be used to motivate as well
as reduce costs.
Making the pay of a worker conditional will result in the worker putting greater
effort and consequently, work continuity is maintained. In terms of cost, it helps
to reduce the costs of remuneration as well as pay increments, which otherwise
should be paid even if the worker fails to perform well.
A follow-up of this concept is skill-based compensation. It pays and rewards

workers based on their skills, knowledge or behaviour. Salary increment is based
on self-growth and the skills contributed to the organisation.
11.4.2 How to Motivate Low Income Workers?

Motivating low-income workers is a very challenging responsibility. Managers
often fall into the trap that the only way to motivate workers is through
monetary means. To motivate low income workers, you should use other forms
of compensation.
Among the methods that can be used are worker effectiveness programmes like
best worker of the month award, performance award speeches or other events to
celebrate their achievements. These programmes can place workers who show
the desired achievement levels in the forefront.

Praise is another kind of motivation but praise must be genuine, otherwise,

workers will look upon it as a manipulative measure to induce them to perform.
In the service industries, workers who deal with customers can be given the
autonomy to make decisions at their level.
11.4.3 What are the Differences in Motivating

Workers in Professional and Technical Groups?
Professional and technical workers, like engineers, lawyers and accountants, are
different from non-professional workers. They have high and far-reaching levels
of commitment in their respective fields. Normally, they are loyal to the
occupation and not to their employers. Being committed to the job means that
they rarely define work as a 9-to-5 job over a 5-day week.
For these groups, money and promotions to managerial level are not in their list
of priorities. The challenge of the job is their main priority. They like to seek
solutions to problems and the most lucrative reward is the job itself. They value
support and work recognition is the most important motivational element.
You should give challenging tasks and projects to workers in this group. They
should be given autonomy and freedom to be involved in the fields they are
interested in and allow them to structure their jobs in ways they think is most
productive. They also like to be given learning opportunities and work
recognition.
There is an increase in the number of organisations which are creating career

paths for their employees. They are given opportunities to increase their means
of livelihood and status achievement without being given any management
position. For example, lecturers are given the opportunity to be promoted to the
post of associate professor or professor without holding any management post.

11.4.4 How do Flexible Working Hours Motivate

Workers?
There are certain jobs which encourage workers to schedule their working time.
There are certain jobs that allow workers to come and go as they please. There
are currently many organisations that give more freedom to their workers.
Among methods that can be used is condensing the work-week. Workers are
required to work 10 hours a day for 4 days a week (4  10 hours = 40 hours a
week [4 – 40 programme] or 9 hours a day for 4 days and 8 hours a day in the
first week and 9 hours a day for 4 days only ([4  9 hours + 1  8 hours] + [4  9
hours] = 80 hours in two weeks).
This method has been found to reduce dissatisfaction and absenteeism. In fact,
there is an increase in productivity. However, condensing the work-week also
has its disadvantages, like a drop in productivity at the end of the week,
reluctance of workers to work extra days and low levels of machine usage.
Another method is flexible time. Workers have to work for the time period fixed
but they have the freedom to decide their working hours. This is the most
popular choice. The advantages are similar to those stated above but a further
plus point is that this programme can recruit people with various types of
experience and skills. The weakness is that it cannot be implemented for all kinds
of jobs. Some jobs need fixed working hours especially those involving
customers.
SELF-CHECK 11.4
State a few examples of motivating workers from each of the following

aspects and explain the pros and cons of each way:
(a) Compensation;
(b) Motivating low-income workers;
(c) Motivating workers in professional and technical groups; and
(d) Flexible working hours.

 This topic has provided the definition of motivation and explained the needs
of man.
 We looked at various early theories on motivation like MaslowÊs Hierarchy of

Needs Theory, McGregorÊs Theory X and Theory Y and HerzbergÊs
Motivation-Hygiene Theory.
 Then, you were exposed to McClellandÊs Three Needs Theory, Equity Theory,
Work-Features Model and Expectancy Theory.
 Important issues related to motivation and the significance of each issue was
also discussed.

Topic
"
"
"
"
 Controlling
12
"
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"
"
"
"
"
" LEARNING OUTCOMES
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" 1. Describe the three methods of controlling;
"
" 2. Describe the control process;
" 3. Differentiate between the three types of control;
"
4. Explain the 10 requirements for effective control; and
"
" 5. State at least two weaknesses and two issues of control.
"
"
 INTRODUCTION
The word „controlling‰ is often mentioned, both in the home and workplace.
You must have heard one of these well-known statements: „we must control the
quality of our products and services‰, „we must control our production costs‰, or
„we should control our departmental expenses‰. At home, among the popular
statements related to control are „you should control your childÊs behaviour‰ or
„you should control your husband/wife‰.
On a more serious level, have you ever been ordered to complete a report to be
submitted to your superior officers, head of unit or to the headquarters? What is
the rationale in spending thousands of ringgit to hire accredited auditors to audit
our accounts and is it necessary for us to hire accountants and account clerks into
the organisation to prepare quarterly, half-yearly or yearly financial statements?

162  TOPIC 12 CONTROLLING
Reports and quarterly financial statements allow managers to analyse, compare

and measure organisational performance to determine if the objectives set in the
initial stages of planning have been achieved. This managerial activity is known
as controlling. The controlling factors are often the keys to achieving
organisational effectiveness. After making comparisons and discovering that the
performance gap between what was planned and what has actually been
achieved is too wide (regardless of whether this is positive or negative),
managers will be interested to know what caused this gap.
As a manager, you should be sensitive to the performance of your workers and

know the control techniques so that gaps in the planning can be coordinated to
ensure that organisational objectives are achieved.
12.1 WHAT IS CONTROLLING?

Controlling is the process of monitoring organisational activities to ensure that
goals are achieved as planned and taking corrective action on any significant
deviations. An effective control system ensures that activities are carried out in a
way which will ensure achievement of organisational objectives. The criterion
which determines the effectiveness of this system is the ability of the system to
help in achievement of goals. In general, there are three methods in establishing a
control system: market control, bureaucratic control and normative control (refer
to Table 12.1).
Table 12.1: Methods of Control
Methods Explanation
Market Control This method emphasises the use of the external market
mechanism. Control is established based on criteria like price
competition or market share. Organisations which use this method
normally have clear products and services and stiff competition.
Bureaucratic This method emphasises authority that depends on administrative
Control rules, procedures and policies. This type of control is premised on
strict hierarchical mechanisms. It depends on uniformity of
activity, and clear job description to direct workersÊ behaviour.
Normative This method refers to the development of a control system where
Control the behaviour of the workers is controlled by shared values, norms,
traditions, beliefs and other aspects of organisational culture. It
depends on individuals and groups to identify appropriate work
behaviour and performance measurement. It is used in
organisations where team work is widely practiced. The
organisation is guided and controlled by group culture rather than
by administrative control.

TOPIC 12 CONTROLLING  163
Normally, organisations will choose bureaucratic or normative control with a bit

of market measurement control.
SELF-CHECK 12.1
List the three methods of controlling.
12.2 IMPORTANCE OF CONTROLLING

Has it ever occurred to you what will happen if there is no control? All parents
want their children to receive a good education so that they can grow up into
disciplined, well respected and useful citizens. Imagine if our daughters go out
and come back at midnight and the next day is a school day. No control means
allowing one to do as he pleases. What will happen to him?
There is no certainty that organisational activities will be carried out as planned

and the desired goals accomplished. Control is the final link in the management
chain. The quality of the control depends on the planning and allocation of
activities. If managers do not plan and allocate activities well from time to time,
controlling becomes null and void.
12.2.1 Control Process

There are only three steps in the control process: measurement of actual
performance, comparison between actual measurement and standards, and
taking management action to correct deviations or achievements that are below
standards (see Figure 12.1).
The control process makes the assumption that performance standards have
already been set. Standards must be set beforehand to allow managers to use
them as a yardstick for comparison. Standards are set at the planning stage. The
objectives that have been determined are the standards that will be used to
measure and compare performance.

12.2.2 What is Measurement?

When the term measurement is mentioned, we think of someone using a tape
measure to measure something.
Measuring is the first step in the control process. You should be interested to find
out how a manager measures. It certainly is not with a tape although there are
undeniably some managers who use tapes in their line of work.
Figure 12.1: Control process
ACTIVITY 12.1
With the help of Figure 12.1, explain the control process.
There are four sources of information that are often used by managers to measure
actual performance:
(a) Personal observation;

(b) Statistical reports;
(c) Verbal reports; and
(d) Written reports.

Table 12.2 explains the four sources of information to measure performance.
Table 12.2: Sources of Information to Measure Performance
Sources of Information Explanation

Personal Observation Personal information provides in-depth information and
knowledge about the actual activities. It allows an intensive
coverage and avails opportunities to managers to know about
the actual processes being carried out rather than only from
what is reported to them. Personal information is considered
as an inferior source of information as it is subject to
perception bias. What is observed by one manager may not
be seen by another manager. In addition, it is time consuming
and makes the control measures very obvious. Workers
regard observation activities of managers as being due to a
lack of confidence in workersÊ abilities.
Statistical Reports Real-time statistical reports that measure organisational
performance can be obtained from sophisticated computer
applications like SPSS and SAS. Statistical reports can be in
the form of graphs, bar charts, spreadsheets, etc. that can be
used by managers to evaluate performance. It can be
demonstrated easily and is effective to show relationships.
However, it only provides limited information about a
particular activity.
Verbal Reports Information can also be obtained from verbal reports, i.e., via
conferences, meetings, and personal or telephone
conversations. The pros and cons are almost similar to
personal observation. It can be obtained quickly and allows
for feedback, language expression and voice intonation.
However, verbal reports have no written record for future
reference. In addition, the information received is filtered.
Written Reports Although this is slower than verbal reports, written reports
are formal, more comprehensive and have greater depth.
Written reports are easily kept for reference.
After we have considered the available sources of information, the question is

which source should be used. The overall control measures of a manager should
utilise all the mentioned sources of information.

ACTIVITY 12.2
Draw a mind map of the sources of information for the control process.
12.2.3 What do Managers Measure?

In the control process, what is to be measured is more important than how it is to
be measured. Serious problems can occur if the wrong criteria are selected.
Workers will try their level best to achieve high levels in what is being measured
because what is being measured will determine the desired criteria or behaviour.
There are some control criteria that can be applied in any management situation.
Criteria like worker satisfaction or worker turnover and absenteeism can be
measured. You should be aware that there are certain performance activities that
are difficult to measure in a quantitative way but most activities can be divided
into specific information segments.
Besides this, managers need to determine the types of values that workers, units
or departments can contribute to the organisation and convert those
contributions into standards.
12.2.4 How do Managers Determine Differences

between Actual Performance and the Planned
Goals?
By making comparisons, one can determine the degree of differences between
actual performance and standards. Thus, it is important for managers to
determine the variation or deviation range. What is interesting to managers is the
gap and direction of the deviation and how wide the deviation gap is. If there is
directional deviation, where is the deviation heading towards? Is it more or less?

12.2.5 What are the Steps that Management Can

Take?
The third and final step in the control process is taking management action.
Managers can perform one of the three following actions:
(a) Leave it as it is (status quo);

(b) Improve actual performance; or
(c) Change the standards.
Table 12.3 explains the three actions further.
Table 12.3: Worker Performance Management Actions
Actions Explanations
Leave it alone Leave the present situation as it is. Although this action seems
(status quo) irrational, you will be surprised to know how widely this method is
used.
Improve If deviation shows a negative figure, managers need to take
improvement measures. The next question is what immediate or
basic actions must be performed. Quick action will solve the problem
quickly and return performance to the right path. Basic corrective
action finds out how and why the deviation happened and corrects
the source of the deviation. Effective managers analyse the deviation
and take time to permanently solve problems related to differences
in standards and actual performance.
Change It cannot be denied that differences happen because of unreasonable
standards standards, i.e. the goals that were set were either too high or too low.
Therefore, it is the standards that need to be re-examined and not the
performance. It could be dangerous to change standards because if
workers do not accomplish the standards, they will most likely
blame them. If you feel that the standards are realistic, maintain
them.

12.3 TYPES OF CONTROL

When we know that there is deviation, what is the type of control that we can
impose? There are three types of control as follows:
(a) Feedforward Controls,

(b) Concurrent Controls ; and
(c) Feedback Controls
Table 12.4 explains the types of control methods to prevent deviation.
Table 12.4: Types of Control to Prevent Deviation
Type of Control Explanation

Feedforward This is the most desired form of control. This type of control
prevents potential problems from occurring. Preventive steps are
taken before the actual activity is carried out. This is a forward type
of control. The key to this kind of control is taking management
action before the problem occurs. Feed-forward control allows
managers to avoid making comparisons by overcoming problems
before occurrence. However, this kind of control needs accurate and
timely information which is sometimes difficult to obtain.
Concurrent This control is implemented concurrently with the activity.
Managers can take corrective action before huge costs are incurred.
One of the most popular ways of concurrent control is direct
supervision.
Feedback You may not have experienced both types of control stated above
but you have surely experienced this final type of control, i.e.
feedback control. This is the most popular type of control. Control is
implemented after the occurrence. The main disadvantage of this
control is by the time managers get the information, the damage has
been done. But there are also advantages. It provides managers
useful information on how effective the planning is. Besides this,
positive feedback further enhances the workersÊ motivation levels.

Figure 12.2 illustrates the three types of control.
Figure 12.2: Types of control
SELF-CHECK 12.2
There are three types of control that are implemented by organisations.
Match the types of control to the appropriate explanation.
Explanation Type of Control

This is the most desired form of control. This type of Concurrent
control prevents potential problems from occurring."
This type of control is implemented concurrently with the Feedback
activity in question. Managers can take corrective action
before huge costs are incurred.
This is the most popular type of control. Control is Feedforward
implemented after the occurrence.
12.4 COMPULSORY QUALITY REQUIREMENTS

FOR EFFECTIVE CONTROL SYSTEMS
The following are the requirement for effective control systems:
(a) Precision
A quality control system provides data or information that is reliable and
verifiable. It is pointless to have a control system that does not show the
true picture. Increasing sales figures is not meaningful if there are abundant
stocks in the store.

(b) Timeliness
Information provided should be accurate at the time it is being used. It
must be used to prevent a disaster before it happens. Reports about the
financial crisis which occurred five years ago will not have any drastic
impact on present day importers.
(c) Economy
Management must impose the lowest control costs to get the desired
outcome. Any costs imposed for control should not be higher than the
returns.
(d) Flexibility
Effective control must be adequately flexible to adapt to current needs and
maximise existing opportunities.
(e) Understanding
A complicated control system will result in unnecessary mistakes and
disappoint the workers. Eventually, the system will be ignored.
(f) Reasonable Criteria

Control should set challenging standards which will motivate the workers
to accomplish high performance levels and not aim to break their spirit and
prevent them from achieving the goals.
(g) Strategic Position

Managers may not be able to control all activities that occur in an
organisation. They should place controls on factors which are strategic to
organisational performance. Control should be imposed on differences that
cause huge adverse effects. For example, let us say transportation costs
total RM50,000 a month compared to postal costs of RM 1,500 a month. A 5
per cent increase in transportation costs is more critical than a 20 per cent
increase in postal costs.
(h) Importance of Exemptions

The exemption system ensures that managers do not go overboard
regarding information that deviates from standards. If a manager is given
the autonomy to approve a monthly entertainment allowance of RM750 per
worker and a 10 per cent increment in salary, the senior manager should
not be anxious if the differences in standards do not exceed the limits set.
Hence, the senior managers are exempted from worrying about matters like
this.

(i) Multiple-criteria
Managers and workers will try and show their respective strengths only on
criteria within their control. Other criteria may be completely set aside.
Thus, multiple-criteria should be used to prevent outcomes which only
look good superficially.
(j) Corrective Action

An effective control system proposes that action should be taken to correct
a deviation. The system should be able to discern problems and suggest
corrective actions. If production costs go up by 5 per cent, then overtime
costs should be reduced at the same rate.
ACTIVITY 12.3
Draw a mind map of the various qualities that an effective control

system should have.
12.5 WEAKNESSES OF CONTROLLING

It must be emphasised here that if control is done properly, it can achieve the
goals that have been set, but what are the consequences if control is not carried
out in a proper manner? For example, in a plastic making factory, you are
required to increase productivity due to increased orders for new plastic
containers. Besides this, the old system has been replaced by a new computerised
system which takes time to master, in addition to the new design of the plastic
containers having to be programmed into the system. You are also required to
achieve the same productivity level in the same period of time. How do you feel?
Do you feel inundated by such demands? This happens because control has
taken over the organisation, when in fact should be managed by the organisation.
When the control system is not flexible or is unreasonable, workers will lose sight
of achieving the overall organisational goals. As we are aware, a control system
cannot cater to all activities. The problem arises when an individual or a unit in
an organisation tries to give a rosy picture on only what can be controlled.
Weaknesses occur when the control system is not comprehensive. If a control

system only evaluates the output quantity, then workers will ignore quality. If
the control system evaluates activities per se, then the outcome will be sidelined.

As such, it can be said that control has both pros and cons if not implemented
well. Failure to create a flexible control system will give rise to more severe
problems compared to problems which could have been avoided if a proper
control system had been put into place.
12.6 ETHICAL ISSUES IN CONTROLLING

Advancements in technology have simplified control activities but these
advancements have also given rise to several ethical questions. This is because
technological advancements have provided employers with sophisticated control
mechanisms.
One of the topics of discussion on personalising the work place is email

communication. Workers have voiced concerns of being dismissed because of
emails that were sent. The monitoring of the computer is another ethical issue
being debated. The monitoring of computer usage is to collect, process and
provide feedback about performance which can assist managers in monitoring
workersÊ performance and development. It can also help managers to identify
work practices that are unethical or costly. Although this method has a lot of
advantages, several complaints have been voiced about violations of personal
privacy, which in turn lead to increased stress.
The final aspect of ethical issues related to control which is no less important is
work behaviour. The question is how far should an organisation exercise control
on the personal life of its workers? Where do rules and controls of the employer
end? Does the management have the right to direct what you should do in your
personal time, even if you are at home? Are you still tied up with rules and
employer control at 10pm if your working hours are from 8am to 5pm and you
are working overtime voluntarily? Can the employer order you to work overtime
if you do not want to? These are all important issues still being debated upon
today.
Computers were invented to increase productivity. Yet, issues of workerÊs
personal rights are also important. Employers can, among other things, read
emails, listen in on phone conservations, and monitor computer-related work, up
to the point of every movement in the office being observed.

 Management uses controlling mechanisms to ensure goals are achieved by

means of constant monitoring exercises.
 Organisations can incorporate controlling systems into work processes based

on proactive, concurrent and/or reactive approaches.
 Effective control mechanisms do not only require ability to precisely define

and measure problems, identify appropriate solutions and take necessary
actions to close performance gaps but also require the ability to incorporate
quality requirements into the control systems.
"

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MAKLUM BALAS MODUL
If you have any comment or feedback, you are welcome to:
1. E-mail your comment or feedback to modulefeedback@oum.edu.my
OR
2. Fill in the Print Module online evaluation form available on myINSPIRE.
Thank you.
Centre for Instructional Design and Technology

(Pusat Reka Bentuk Pengajaran dan Teknologi )
Tel No.: 03-27732578
Fax No.: 03-26978702


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OUM Business School

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Module Writers: Dr Tee Keng Kok

Assoc Prof Dr Santhi Raghavan

Moderator: Lilian Kek Siew Yick

Developed by: Centre for Instructional Design and Technology

First Edition, November 2007

Copyright © Open University Malaysia (OUM), December 2016, BDPP1103

Copyright © Open University Malaysia (OUM)

Topic 1 Introduction to Management 1

Topic 2 The Historical Development of Management 14

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2.3 Human Resource Management Approach 20

Topic 4 Decision Making 37

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4.5 Group Decision Making 46

Topic 5 Basic Organisational Design 50

Topic 6 Human Resource Management 65

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6.5 Orientation, Training and Development 72

Topic 7 Change Management and Innovation 80

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Topic 8 Understanding Work Teams 84

Topic 9 Leadership 108

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9.4 Current Approaches to Leadership Theories 120

Topic 10 Communication 127

Topic 11 Motivation 144

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11.4 Important Issues in Motivation 157

Topic 12 Controlling 161

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Copyright © Open University Malaysia (OUM)

" Copyright © Open University Malaysia (OUM)

" Copyright © Open University Malaysia (OUM)

COURSE GUIDE DESCRIPTION

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Table 1: Estimation of Time Accumulation of Study Hours

1. Elaborate on the aspects of management principles; and

Topic 2 describes the historical development of management. This topic will

Topic 3 discusses the meaning of planning, types of planning, management by

Topic 4 elaborates the decision making process, particularly the making of

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Topic 6 explains the human resource management process, human resource

Topic 10 defines communication and elaborates on its importance to managers,

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TEXT ARRANGEMENT GUIDE

Self-Check: This component of the module is inserted at strategic locations

Activity: Like Self-Check, the Activity component is also placed at various

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References: The References section is where a list of relevant and useful

Chuck, W. (2007). Management (4th ed.). Canada: Thomson, South-Western.

Robbins, S. & Decenzo, D. (2006). Fundamentals of management: Essential

TAN SRI DR ABDULLAH SANUSI (TSDAS) DIGITAL

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Copyright © Open University Malaysia (OUM)

Copyright © Open University Malaysia (OUM)

1.1.3 Systematic Structure

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What is the definition of „organisation‰?

1.2 DIFFERENCES BETWEEN MANAGERS AND

1.3 LEVELS OF MANAGEMENT