What is Objective?

Although some theorists try to draw a fine distinction between goals and objectives, managers usually use the terms interchangeably. Goals or objectives are considered important ends towards which organisational and individual activities are directed.
An objective may be defined as a specific commitment to achieve a measurable result within a given time-period.
According to many experts, objectives are the single most important feature of the planning process. All managers must be able to write good objectives, to be aware of their importance, and to understand how objectives combine to form a means-ends chain.
According to Anthony P. Raia, an authority on Managing By Objectives (MBO), “As far as possible, objectives should be expressed in quantitative, measurable, concrete terms, in the form of a written statement of expected results to be achieved within a given period of time.” In other words, objectives should represent a firm commitment to attain something specific. So a well-written objective should state what is to be accomplished and when.

Nature of Objective

Objectives mean end results, and overall objectives require to be supported by sub-projects. Thus, objectives tend to constitute a hierarchy as well as a network.
A hierarchy ranges from a broad aim to specific individual objectives. The highest peak of the hierarchy is to contribute to the welfare of the people by providing goods and services at a reasonable cost. The next purpose of business might be to supply convenient and cheaper transportation for common people. The stated purpose might be to produce, market, and service automobiles.
A Network of Objectives: If objectives or goals are not interconnected and if they are not mutually supportive, people are quite often likely to pursue paths that may seem good for their own respective departments but may be detrimental to the organisation as a whole. That is why both objectives and planning programs normally form a network of expected results and events.

Management by Objective (MBO)

Management by objectives (MBO) has been defined by Weihrich and Koontz as: “The comprehensive managerial system that integrates many key managerial activities in a systematic manner and that is consciously directed toward the effective and efficient achievement of organizational and individual objectives.”
MBO is a comprehensive management system based on measurable and participatively set objectives. It has come a long way since it was first suggested by Peter F. Drucker in 1954 as a way of promoting managerial self-control. MBO is a management technique for increasing employee involvement in the planning and controlling activities. In MBO, the employee is asked for the ways by which the objectives set by his/her participation can be best achieved.

The MBO Cycle

The four steps or stages of the MBO process are also called the MBO cycle. The steps illustrated below:

• Step 1: Setting objectives: A hierarchy of challenging, fair, and internally consistent objectives is the necessary starting point for the MBO cycle because it serves as the foundation for all that follows. All objectives, according to the principles of MBO, should be reduced to writing and kept aside for future reference during steps 3 and 4. Setting objectives under MBO starts at the top of the managerial pyramid and filters down, one layer at a time.
  The main contribution of MBO to the objective-setting process is its emphasis on participation and involvement of subordinates. There is no place in MBO for either a domineering manager ordering people or a passive manager leaving all at the discretion of the subordinates. Rather, MBO calls for a negotiation of objectives between superiors and subordinates on a give-and-take basis.

• Step 2: Developing action plans: With the development of action plans and addition of these statements to the objectives participatively set, the planning phase of MBO comes to an end. Managers, at each level, tend to develop plans that incorporate the objectives established in step-1. It is the responsibility of higher managers to make sure that plans of their direct subordinates complement rather than conflict with one another.

• Step 3: Periodic review: Attention now turns to step-3 as plans go into action requiring the following-up and monitoring of performance. Face-to-face meetings between superior and subordinate at 3-, 6-, and 9-month intervals should be held regularly. These periodic check-ups help to see whether a particular set of objectives is still valid or needs revision or updating under the changed circumstances. Periodic check-ups also provide managers with excellent opportunities to give subordinates required and well-considered feedback.

• Step 4: Performance appraisal: According to Kreitner, “At the end of one complete cycle of MBO, typically one year after the original goals are set, the final performance is matched with the previously agreed-upon objectives. The pairs of superior and subordinate managers who mutually set the objectives one year earlier meet face to face once again to discuss how things have turned out. MBO calls for emphasis on results, not on personalities or excuses.” Kreitner further adds that the control side of the MBO cycle is completed when success is rewarded with promotion, incentive payments, or other suitable benefits and failure is noted to take corrective action in the future.

Principles of MBO

• Principle of participation: Motivation tends to increase with increased participation in decision-making and objective setting.
• Principle of feedback: Motivation tends to increase when employees know where they stand.
• Principle of reciprocated interest: Motivation tends to increase when the pursuit of organizational objectives goes hand in hand with the achievement of personal objectives.
• Principle of recognition: Motivation to achieve organizational goals or objectives tends to increase when employees are recognized for their contribution.

The MBO cycle repeats itself, after every one round, each cycle contributing to the learning process. As a common practice, MBO starts at the top and introduces a new layer of management to the MBO process each year. Experience shows that adding several layers of management into MBO all at once frequently causes confusion, dissatisfaction, and failure. Actually, five or more years are typically taken even for a moderate-sized organization to evolve a full-blown MBO system that binds together such areas as planning, control, performance appraisal, and the reward system. Votaries of MBO believe that the natural by-products of a proper MBO system are higher productivity and greater motivation resulting from the use of realistic objectives, more effective control, and self-control of the employees.

What is Decision-Making?

A manager faced with two or more feasible alternatives must decide which one to select. Decision-making is, therefore, the process of identifying a set of feasible alternatives and choosing a course of action from them. Weihrich and Koontz defined decision-making as the selection of a course of action from among alternatives. According to them, “It is the core of planning. A plan cannot be said to exist unless a decision - a commitment of resources, direction, or reputation - has been made.”

Decision Making: The Process and Managerial Practices

In this section, we shall examine the main four steps involved in the decision-making process in greater detail. These steps include:
(1) recognizing the need for a decision i.e., problem awareness, definition, and understanding;
(2) generating or searching for alternatives;
(3) evaluating each alternative; and
(4) choosing from among the alternative solutions (choice-making).

• Step one: recognizing the need for a decision: The first step in the decision-making process consists of recognizing that a decision is needed. (Much of the following discussion on the decision-making process will assume the existence of a problem. It is important, however, to remember that a number of occasions, including opportunities as well as problems, can give rise to the need for managerial decision-making.) Problem recognition begins when a decision maker is alerted by a signal that a decision is needed.

• Step two: generating or searching for alternatives: After a problem has been identified, diagnosed, and understood, a manager is ready to move into the second stage of the decision-making process — the generation of a set of alternative solutions. In developing these solutions, decision-makers first must specify the goals that they hope to achieve through their decision.

• Step three: evaluation of alternatives: Appropriate alternatives having been found, the next step in planning is to evaluate them and choose the right one which will best contribute to goal achievement.

• Step four: choosing an alternative: After all the possible alternatives have been evaluated, managers are left with only one remaining viable alternative, which becomes their ultimate decision. Normally, however, several alternatives remain under consideration after the evaluation process. Thus, the final stage in the decision-making process involves making judgments and choices.

Selecting an Alternative: Three Approaches

• Experience: Experience is a great guide. Reliance on past experience, therefore, plays a comparatively large role in decision-making.
• Experimentation: Trying one of the alternatives and seeing how it goes is a usual way of choosing an alternative.
• Research and Analysis: One of the best techniques for selecting from among alternatives when major decisions are involved is research and analysis.

Decision-Making Conditions

Decisions are made under one of three conditions: Certainty, Risk, and Uncertainty.

• Certainty: Under conditions of certainty, the manager has enough information to know the outcome of the decision before it is made.
• Risk: Most management decisions are made under conditions of risk.
• Uncertainty: Uncertainty remains in decision-making when the manager does not know anything about the outcome of the decision to be taken because of a lack of information.

Limitation of Decision Making

Decision-making is a major part of planning. As a matter of fact, given an awareness of an opportunity and a goal, the decision process leading to making a decision might be thought of as (1) premising, (2) identifying alternatives, (3) evaluating alternatives in terms of the goal sought, and (4) choosing and alternative that is making a decision.

CASE Study: OLYMPIC TOY COMPANY

"I expect all the managers in my department to act completely rationally in every decision they make", declared Eleanor Johnson, Vice President for marketing for the Olympic Toy Company. "Every one of us, no matter what his or her position, is hired to be a professional rationalist, and I expect all of us not only to know what they are doing and why but to be right in their decisions..."

Motivation is a psychological characteristic that contributes to a person’s degree of commitment. It includes the facts that cause, channel, and sustain human behavior in a particular committed direction. However, the term motivation has been defined by authors in many ways. Some of the definitions are as follows:

(i) “Motivation may be defined as the state of an individual’s perspective which represents the strength of his or her propensity to exert effort toward some particular behavior” – Gibson
(ii) “Motivation refers to expenditure of effort toward a goal”- Dubrin
(iii) “Motivation is a predisposition to act in a specific goal-directed manner” – Hellriegel and Slocum
(iv) “Motivation is a cyclical process affecting the inner needs or drives that energize, channel, and maintain behavior” – Steers and Lyman.

For our purpose, we shall define motivation as the need or drive within an individual that urges him or her towards goal-oriented action.

The Motivation Process

The motivation process may be represented by a diagram (see, figure 6.1) which begins with inner drives and needs that motivate the individual to work towards certain goals, which the individual has chosen in the belief that those goals will satisfy the inner drives and needs. After attaining these goals, the individual consciously or unconsciously judges whether the effort has been worthwhile. As long as the individual perceives the effort as rewarding, the habit of making the effort is reinforced, and the individual can be persuaded to continue or repeat that kind of effort. Reinforcement, or what happens as a result of behavior, affects other needs and drives as the process is repeated.

Employee motivation is of crucial concern to management, mainly because of the role that employee motivation plays in performance. Basically, performance is determined by (i) ability, (ii) environment, and (iii) motivation. If any of these three factors is missing or deficient, effective performance is impossible. A manager may have the most highly qualified employees under him and provide them with the best possible environment, but effective performance will not result unless the subordinates are motivated to perform.

Inner Drives, Needs or Motives → Behavior or Action → Goals → Reinforcement → Satisfaction

2. Contemporary Theories of Motivation

McGregor’s Theory X and Theory Y

Theory X and Theory Y are two sets of assumptions about the nature of people. McGregor chose these terms because he wanted neutral terminology without any connotation of being “good” or “bad”.

Theory X assumptions

The “traditional” assumptions about the nature of people, according to McGregor, are included in Theory X as follows:

1. Average human beings have an inherent dislike of work and will avoid it if they can.
2. Because of this human characteristic of disliking work, most people must be coerced, controlled, directed, and threatened with punishment to get them to put forth adequate effort toward the achievement of organizational objectives.
3. Average human beings prefer to be directed, wish to avoid responsibility, have relatively little ambition, and want security above all.

Theory Y assumptions

The assumptions under Theory Y are seen by McGregor as follows:

1. The expenditure of physical effort and mental effort in work is as neutral as play or rest.
2. External control and the threat of punishment are not the only means for producing effort toward organizational objectives. People will exercise self-direction and self-control in the service of objectives to which they are committed.
3. The degree of commitment to objectives is in proportion to the size of the rewards associated with their achievement.
4. Average human beings learn, under proper conditions, not only to accept responsibility but also to seek it.
5. The capacity to exercise a relatively high degree of imagination, ingenuity, and creativity in the solution of organizational problems is widely, not narrowly, distributed in the population.
6. Under the conditions of modern industrial life, the intellectual potentialities of the average human being are only partially utilized.

These two sets of assumptions obviously are fundamentally different. Theory X is pessimistic, static, and rigid. Control is primarily external, that is, imposed on the subordinate by the superior. In contrast, Theory Y is optimistic, dynamic, and flexible, with an emphasis on self-direction and the integration of individual needs with organizational demands.

The Hierarchy of Needs Theory

One of the most widely mentioned theories of motivation is the hierarchy of needs theory put forth by psychologist Abraham Maslow. The basic needs placed by Maslow in an ascending order of importance and shown in the figure are these:

(a) Physiological needs: These are the basic needs for sustaining human life itself, such as food, water, warmth, shelter, and sleep. Maslow took the position that until these needs are satisfied to the degree necessary to maintain life, other needs will motivate people.
(b) Security or safety needs: These are the needs to be free of physical danger and of the fear of losing a job, property, food, or shelter.
(c) Affiliation, or acceptance, needs: Since people are social beings, they need to belong, to be accepted by others.
(d) Esteem needs: According to Maslow, once people begin to satisfy their need to belong, they tend to want to be held in esteem both by themselves and by others. This kind of produces such satisfactions as power, prestige, status, and self-confidence.
(e) Need for self-actualization: Maslow regards this as the highest need in his hierarchy. It is the desire to become what one is capable of becoming—to maximize one’s potential and accomplish something.

McClelland’s Need Theory of Motivation

David C. McClelland has identified three types of basic motivating needs as (a) need for power, (b) need for affiliation, and (c) need for achievement. They are all relevant to management and must be recognized to make an organized enterprise work well.

• Need for power: It deals with the degree of control a person desires over his or her situation.
• Need for affiliation: Many people spend much of their time thinking about developing warm, friendly, personal relationships with others in the organization.
• Need for achievement: A strong need for achievement – the drive to succeed or excel – is related to how well individuals are motivated to perform their tasks.

The Two-Factor (Motivation-Hygiene) Theory of Motivation

Maslow’s needs approach has been considerably modified by Fredrick Herzberg and his associates. In the late 1950s, Herzberg and his associates conducted a study of the job attitudes of 200 accountants and engineers in Pittsburgh. Herzberg placed responses from the engineers and accountants interviewed in one of 16 categories—the factors on the right side of the figure were consistently related to job satisfaction and those on the left side to job dissatisfiers and satisfiers emerged.

Satisfiers (Motivating factors): Achievement, recognition, work itself, responsibility, advancement, and growth – all related to job content and rewards for performance.
Dissatisfiers (Hygiene factors): Company policy and administration, supervision, relationship with supervisors, work subordinates, status, and security – most of which are related to the work environment.

Herzberg’s study led him to conclude that the traditional model of job satisfaction was incomplete. He recommended redesigning jobs to provide higher levels of the motivation factors.

The Satisfaction-Dissatisfaction Continuum under the Traditional View and the Two-Factor Model

• Maintenance Factors (Hygiene factors): Company policy and administration, supervision, working conditions, interpersonal relations, salary, status, job security, and personal life.
• Motivators: Achievement, recognition, challenging work, advancement, and growth in the job.

The Expectancy Theory of Motivation

Another approach, one that many believe goes far in explaining how people are motivated, is the expectancy theory. According to psychologist Victor H. Vroom, people will be motivated to do things to reach a goal if they believe in the worth of that goal and if they can see that what they do will help them in achieving it.

Vroom’s theory may be stated as:
Force = Valence × Expectancy
Where force is the strength of a person’s motivation, valence is the strength of an individual’s preference for an outcome, and expectancy is the probability that a particular action will lead to a desired outcome.

Techniques of Motivation

Experience suggests that some specialized techniques to motivate can be used as follows:

1. Management by Objective (MBO) and goal setting
2. Participation in management
3. Monetary incentives
4. Modified work week/flexible working hours
5. Quality of working life (QWL)
6. Effective criticism
7. Job enrichment

Motivation through Reward Systems

Organizational reward systems are key in improving performance and success. These systems include both financial and non-financial rewards.

• Financial rewards
• Non-financial rewards: Social rewards, feedback as a reward

Motivators

Motivators are things that induce an individual to perform. Managers can influence behavior by establishing environments favorable to certain drives, such as creating a reputation for excellence.

Motivating

Motivating is the management process of influencing people’s behavior based on the knowledge of what causes and channels human behavior in a particular committed direction.

Satisfaction

Satisfaction is the end result of the need-want-satisfaction chain. Motivation and satisfaction are related, but there is a fine difference between the two. Motivation refers to the drive and effort to satisfy a want or goal, while satisfaction refers to the contentment experienced when a want is satisfied.

Need-Want-Satisfaction Chain

Needs give rise to wants, which cause tensions that give rise to actions, resulting in satisfaction.

 Authority and Power’ Line, Staff and Functional Authority, Delegation of Authority, Centralization and Decentralization

Authority and Power

Organisations must somehow drive and galvanise their workers into action, and in order to do so, managers must be properly vested with authority. Before concentrating on the authority in organisation, it is necessary to distinguish between authority and power. Power is the ability of individuals to induce groups. Authority in organisation is the right in a position (and, through it, the right of the person occupying the position) to exercise discretion in making decisions affecting others. It is, of course, one type of power, but power in an organisation setting.

As we shall see later on, there are many different bases of power. The power of primary concern – the subject of our present discussion – is legitimate power. It normally arises from organisational position, and this position validates it as authority. Also, this authority owes its origin to the prevailing cultural system of rights, obligations, and duties of industrial society, whereby a "position" is accepted by people as "legitimate."

Power may also come from the expert knowledge of a person or a group. This is the power of expertise or knowledge. Physicians, lawyers, and university professors may have considerable influence on others because they are respected for their special knowledge. Power may further exist as referent power, which people or groups may exercise because people believe in them and their ideas. Thus Mahatma Gandhi had very little legitimate power, but by dint of his personality and ideas of nonviolence, he strongly influenced the behaviour of many people.

Line and Staff Concepts

Much confusion has arisen among both scholars and managers as to what "line" and "staff" mean. As a result, there is probably no area of management that causes more difficulties, more friction, and more loss of time and effectiveness. Yet the line-and-staff relationships of the members of an organisation must necessarily affect the operation of the enterprise.

The Nature of Line and Staff Relationships

A more precise and logically valid concept of line and staff is that they are simply a matter of relationships. Line authority gives a superior a line of authority over a subordinate. It exists in all organisations as an uninterrupted scale or series of steps. Hence, the scalar principle in organisation: the clearer the line of authority from the ultimate management position in an enterprise to every subordinate position is, the clearer will be the responsibility for decision-making and the more effective will be organisation communication. In many large enterprises, the steps are long and complex; but even in the smallest, the very fact of organisation introduces the scalar principle.

It therefore becomes apparent from the scalar principle that line authority is that relationship in which a superior exercises direct supervision over a subordinate-authority relationship in direct line or steps.

The nature of the staff relationship is advisory. The function of people in a pure staff capacity is to investigate, research, and give advice to line managers.

Functional Authority

Functional authority is the right that is delegated to an individual or a department to control specified processes, practices, policies, or other matters relating to activities undertaken by persons in other departments. If the principle of unity of command were followed without exception, authority over these activities would be exercised only by their line superiors. But numerous reasons - including a lack of special knowledge, a lack of ability to supervise processes, and the danger of diverse interpretations of policies - explain why these managers are occasionally not allowed to exercise this authority. In such cases, line managers are deprived of some authority. It is delegated by their common superior to a staff specialist or to a manager in another department. For example, a company controller is ordinarily given functional authority to prescribe the system of accounting throughout the company, but this specialised authority is really a delegation from the chief executive.

Functional authority is not restricted to managers of a particular type of department. It may be exercised by line, service, or staff department heads, but more often by the latter two because service and staff departments are usually composed of specialists whose knowledge becomes the basis for functional controls.

LINE AND STAFF ORGANISATION OF A TYPICAL MANUFACTURING COMPANY

Delegation of Functional Authority

One can better understand functional authority by thinking of it as a small slice of the authority of a line superior. A corporation president, for example, has complete authority to manage a corporation, subject only to limitations placed by such superior authority as the board of directors, the corporate charter and by laws, and government regulation. In the pure staff situation, the advisers on personnel, accounting, purchasing, or public relations have no part in this line authority, their duty being merely to offer counsel. But when the president delegates to these advisers the right to issue instructions directly to the line organisations, as shown in Figure 6-10, that right is called "functional authority." The four staff and service executives have functional authority over the line organisations with respect to procedures in the field of accounting, personnel, purchasing and public relations. What has happened is that the president, feeling it unnecessary to clear such specialised matters personally, has delegated line authority to staff assistants (or managers) to issue their own instructions to the operating department.

Delegation of Authority, Centralization and Decentralization

Delegation of Authority

Simple as delegation of authority might appear to be, studies show that managers fail more often because of poor delegation than of any other cause. For anyone going into any kind of organisation, it is worthwhile to study the science and art of delegation.

The primary purpose of delegation is to make organisation possible. Just as no one person in an enterprise can do all the tasks necessary for accomplishing group purpose, it is impossible, as an enterprise grows, for one person to exercise all the authority for making decisions. As was discussed under the subject of span of supervision, there is a limit to the number of persons managers can effectively supervise and for whom they can make decisions. Once this limit is passed, authority must be delegated to subordinates, who will make decisions within the area of their assigned duties.

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How Authority is Delegated?
Authority is delegated when discretion is vested in a subordinate by a superior. Clearly, superiors cannot delegate authority they do not have, whether they are board members, presidents, vice-presidents, or supervisors. Equally clear, superiors cannot delegate all their authority without, in effect, passing on their position to their subordinates.
The entire process of delegation involves determination of results expected, assignment of tasks, delegation of authority for accomplishing these tasks, and exaction of responsibility for their accomplishment. In practice, it is impossible to split this process, since expecting a person to accomplish goals without the authority to achieve them is meaningless, as is the delegation of authority without knowing what end results it is to be used for. Moreover, since responsibility cannot be delegated, a boss has no practical alternative but to exact responsibility from subordinates for completing the assignment.

Clarity of Delegation
Delegation of authority may be specific or general, written or unwritten. If the delegation is unclear, a manager may not understand the nature of the duties or the results expected. The job assignment of a company controller, for example, may specify such functions as accounting, credit control, cash control, financing, export-license handling, and preparation of financial statistics, and these broad functions may even be broken down into more definite duties. Or a controller may be told merely that he or she is expected to do what controllers generally do.
Specific written delegations of authority are extremely helpful both to the manager who receives them and to the person who delegates them. The latter will more easily see conflicts or overlaps with other positions and will also be better able to identify those things for which a subordinate can and should be held responsible.
The fear that specific delegations will result in inflexibility is best met by developing a tradition of flexibility. It is true that if authority delegations are specific, a manager may regard his or her job as a staked claim with a high fence around it. But this attitude can be eliminated by making necessary changes in the organisation structure. Much of the resistance to change through definite delegations comes from managerial laziness and the failure to reorganise things often enough for the smooth accomplishment of objectives.

Principles of Delegation
The following principles are guides to delegation of authority. Unless carefully recognised in practice, delegation may be ineffective, organisation may fail, and poor managing may result.

Principle of delegation by results expected: Since authority is intended to furnish managers with a tool for so managing as to assure that objectives are achieved, authority delegated to individual managers should be adequate to assure their ability to accomplish expected results. Too many managers try to partition and define authority on the basis of the rights to be delegated or withheld, rather than to look first at the goals to be achieved and then to determine how much discretion is necessary to achieve them.

Principle of functional definition: To make delegation possible, activities must be grouped to facilitate accomplishment of goals, and managers of each subdivision must have authority to coordinate its activities with the organisation as a whole. These requirements give rise to the principle of functional definition: the more a position or a department has clear definitions of results expected, activities to be undertaken, organisation authority delegated, and authority and informational relationships with other positions understood, the more adequately the individuals responsible can contribute towards accomplishing enterprise objectives.

Scalar principle: The scalar principle refers to the chain of direct authority relationships from superior to subordinate throughout the organisation. The clearer the line of authority from the top manager in an enterprise is to the subordinate position, the more effective the responsible decision-making and organisation communication will be.
A clear understanding of the scalar principle is necessary for proper organisation functioning. Subordinates must know who delegates authority to them and to whom matters beyond their own authority must be referred. Although the chain of command may be safely departed from for purposes of information, departures for purposes of decision-making tend to destroy the decision-making system and undermine managership itself.

Authority-level principle: Functional definition plus the scalar principle gives rise to the authority level principle. Clearly, at some organisation level, authority exists for making a decision within the power of an enterprise. Therefore, the authority-level principle derived would be as follows: maintenance of intended delegation requires that decisions within the authority of individuals be made by them and not be referred upwards in the organisation structure. In other words, managers at each level should make whatever decisions they can in the light of their delegated authority, and only matters that authority limitations keep them from deciding should be referred to superiors.

Principle of unity of command: A basic management principle, often disregarded for what are believed to be compelling circumstances, is that of unity of command: the more completely an individual has a reporting relationship to a single superior, the less the problem of conflict in instructions and the greater the feeling of personal responsibility for results.

Principle of absoluteness of responsibility: Since responsibility, being an obligation owed, cannot be delegated, no superior can escape, through delegation, responsibility for the activities of subordinates, for it is the superior who has delegated authority and assigned duties. Likewise, the responsibility of subordinates to their superiors for performance is absolute, once they have accepted an assignment and the right to carry it out, and superiors cannot escape responsibility for the organisation activities of their subordinates.

Principle of parity of authority and responsibility: Since authority is the discretionary right to carry out assignments and responsibility is the obligation to accomplish them, it logically follows that authority should correspond to responsibility.

Guides for Overcoming Weak Delegation
Unclear delegations, partial delegations, delegations inconsistent with the results expected, and the hovering of superiors who refuse to allow subordinates to use their authority are among the many widely found weaknesses of delegation of authority.
In overcoming these errors - and emphasising the principles outlined above - the five following guides are practical in making delegation tangible:

1. Define assignments and delegate authority in the light of results expected.
2. Select the person in the light of the job to be done. This is the purpose of the managerial function of staffing. It is important to remember that qualifications influence the nature of the authority delegated.
3. Maintain open lines of communication. This means that there should be a free flow of information between the superior and the subordinate, and subordinates should be furnished with information with which to make decisions and properly interpret the authority delegated.
4. Establish proper controls. But if controls are not to interfere with delegation, they must be relatively broad and designed to show deviations from plans rather than interfere with detailed actions of subordinates.
5. Reward effective delegation and successful assumption of authority. It is seldom sufficient to suggest that authority be delegated, or even to order that this be done. Managers should be ever watchful for means of rewarding both effective delegation and effective assumption of authority. Although many of these rewards will be in terms of money, the granting of greater discretion and prestige - both in a given position and in promotion to a higher position - often works as a stronger incentive.

Decentralisation Vs. Centralisation
Decentralisation is a fundamental aspect of delegation: to the extent that authority is not delegated, it is centralised. Absolute centralisation in one person is conceivable. But it implies no subordinate managers and therefore no structured organisation. Consequently, it can be said that some decentralisation characterises all organisations. On the other hand, there cannot be absolute decentralisation, for if managers should delegate all their authority, their status as managers would cease, their position would be eliminated, and there would, again, be no organisation. Centralisation and decentralisation are therefore tendencies; they are qualities like "hot" and "cold."
"Centralisation" has been used to describe tendencies other than the dispersal of authority, as in centralisation of performances. This is a problem of geography: a business characterised by centralised performance operates in a single location or under a single roof. Furthermore, centralisation often refers to departmental activities. Service divisions centralise similar or specialised activities in a single department. But when centralisation is discussed as an aspect of management, it refers to withholding or delegating authority for decision-making.
Although closely related to delegation of authority, decentralisation is something more: it reflects a philosophy of organisation and management. It requires careful selection of what decisions to push down into the organisation structure and what to hold at or near the top, specific policy-making to guide the decision-making, selection and training of people, and adequate controls. A policy of decentralisation affects all areas of management and can be looked upon as an essential element of a managerial system. It is a fact that, without decentralisation, managers cannot use their discretion to handle the ever-present and ever-changing situations they continually face.

Factors Determining the Degree of Decentralisation of Authority
Managers cannot be ordinarily for or against decentralisation of authority. They may prefer to delegate authority, or they may like to make all decisions. A well-known despot in a certain large enterprise, who would like to make all the decisions, finds that he cannot. Even the autocrat in a smaller enterprise is often forced to delegate some authority.
Although the temperament of individual managers influences the extent of authority delegation, other factors also affect it. Most of these are beyond the control of individual managers. They may resist their influence, but no successful manager can ignore them.

• Costliness of the Decision: Perhaps the overriding factor determining the extent of decentralisation is, as in other aspects of policy, the criterion of costliness. As a general rule, the more costly the action to be decided is, the more probable it is that the decision will be made at the upper levels of management.
• Uniformity of policy: Another, and somewhat related factor favouring the centralisation of authority, is the desire to obtain uniform policy. Those who value consistency above all are invariably in favour of centralised authority, since this is the easiest road to such a goal. They may wish to ensure that customers will be treated alike with respect to quality, price, credit, delivery, and service; that the same policies will be followed in dealing with suppliers; or that public relations policies will be standardised.
• Size: The larger the organisation, the more decisions to be made and the more places in which they must be made, the more difficult it is to co-ordinate them. These complexities of organisation may require policy questions to be passed up the line and discussed not only with many managers in the chain of command but also with many managers at each level, since horizontal agreement may be as necessary as vertical clearance.
• Slow decisions - slow because of the number of specialists and managers who must be consulted - are costly. To minimise this cost, authority should be decentralised wherever feasible. Indeed, the large enterprise that prides itself on the right kind of decentralisation recognises the inevitable, although the extent and effectiveness of decentralisation may differ widely among companies, depending largely upon the quality of their management.
• History of the enterprise: Whether or not authority will be frequently decentralised depends upon the way the business has been built. The enterprises that expand from within in the main – such as Marshall Field and Company and International Harvester Company – show a marked tendency to keep authority centralised, as do those which expand under the direction of their owner-founders. The Ford Motor Company was, under its founder, an extraordinary case of centralised authority; Henry Ford, Sr., prided himself on having no organisational titles in the top management except that of president and general manager, insisting, to the extent he could, that every major decision in that vast company be made by himself.
• Management philosophy: The character of top executives and their philosophy have an important influence on the extent to which authority is decentralised. Sometimes top managers are despotic, brooking no interference with the authority and information they jealously hoard. At other times, top managers keep authority not merely to gratify a desire for status or power but because they simply cannot give up the activities and authorities they enjoyed before they reached the top or before the business expanded from an owner-manager shop.
• Desire for independence: It is a characteristic of individuals and of groups to desire a degree of independence. Individuals may become frustrated by delay in getting decisions, by long lines of communication, and by the great game of passing the buck.
• Availability of managers: A real shortage of managerial manpower would limit the extent of decentralisation of authority, as delegation of decision-making assumes the availability of trained managers. But too often the lamentable scarcity of good managers is used as an excuse for centralising authority; executives who complain that they have no one to whom they can delegate authority often try to magnify their own value to the firm or confess to a failure to develop subordinates. There are managers, also, who believe that a firm should centralise authority because it will then need very few good managers. One difficulty is that the firm that so centralises its authority may not be able to train managers to take over the duties of top executives, and external sources must be relied upon to furnish necessary replacements. Thus the key to safe decentralisation is adequate training of managers. By the same token, decentralisation is perhaps the most important key to training.
• Control techniques: Another factor affecting the degree of decentralisation is the state of development of control techniques. One cannot expect a good manager at any level of the organisation to delegate authority without having some way of knowing whether it will be used properly.
• Decentralised performance: This is basically a technical matter depending upon such factors as the economics of division of labour, the opportunities for using machines and the nature of the work to be performed.
• The pace of change: The fast-moving character of an enterprise also affects the degree to which authority may be decentralised. If a business is growing fast and facing the complex problems of expansion, its managers, particularly those responsible for top policy, may be forced to make a large share of the decision. But, strangely enough, this very dynamic condition may force these managers to delegate authority and take a calculated risk on the costs of error.
• Environmental influences: The factors determining the extent of decentralisation discussed above have been largely internal to the enterprise, although the economics of decentralisation of performance and the character of change include elements well beyond the control of an enterprise's manager. In addition, there are definite external forces affecting the extent of decentralisation. Among the most important of these are governmental controls, national unionism, and tax policies.

Definition of Leadership

Leadership can simply be defined as the ability to influence others. In the course of his survey of leadership theories and research, Stogdil came across innumerable definitions of leadership. For our purpose, we may define leadership as the process of directing and influencing people so that they will strive willingly and enthusiastically towards the achievement of group objectives. Ideally, people should be encouraged to develop not only willingness to work but also willingness to work with confidence and zeal. Confidence reflects experience and technical expertise; zeal is earnestness, and intensity in the execution of work. A leader acts to help a group achieve objectives through the exploitation of its maximum capabilities. A leader does not stand behind a group to push and prod; she/he places herself/himself before the group, facilitates progress, and inspires the group to accomplish organisational goals.

Qualities/Ingredients of Leadership

Undoubtedly, leadership is one of the most talked about, written about, and researched topics in the field of management. It is inherent in management. Every group of people that performs satisfactorily has somebody among them who is more skilled than any of them in the art of leadership. This skill is a compound of at least four major ingredients:

a) The ability to use power effectively and in a responsible manner b) The ability to comprehend that human beings have different motivational forces at different times and in different situations c) The ability to inspire

d) The ability to act in a manner that will develop a climate conducive to responding and arousing motivations

These are elaborated below:

a) Power: This is the first ingredient of leadership. Power is the potential ability to affect the behaviour of others. The word potential suggests that one can have power without actually using it. In organisational settings, there are usually five kinds of power - legitimate, reward, coercive, referent, and expert power. A manager may have one or more of these kinds of power.

(i) Legitimate power: This power is granted through the organisational hierarchy. It is the same as authority. All managers have legitimate power over their subordinates. (ii) Reward power: Reward power is the power to give or withhold rewards. In general, the greater the number of rewards controlled by a manager and the more important the rewards are to the subordinates, the greater the manager's reward power. (iii) Coercive power: This type of power is the power to force compliance via psychological, emotional, or physical threat. In some isolated settings, coercion can take the form of physical punishment. It is likely that the more a manager uses coercive power, the more likely he or she is to provoke resentment and hostility. (iv) Referent Power: Referent power is more abstract than the other types of power. It is usually based on identification or imitation. That is, followers may react favourably to a leader because somehow they identify with the leader, who may be like them in background, attitude, affiliation, or personality. Referent power may also take the form of charisma, an intangible attribute in the leader's personality that inspires loyalty and enthusiasm. (v) Expert power: Expert power is derived from expertise. A scientist who is capable of achieving an important technical breakthrough or a manager who knows how to deal with an important but eccentric customer are examples of expert power.

b) Fundamental understanding of people: It is not enough to know the theoretical aspects of motivation. The more important is the ability of the manager to apply them to real people and situations. But a manager who understands the elements of motivation and motivation theories is more aware of the nature and strength of human needs and is better able to define and design ways of satisfying them and to administer so as to get the desired responses.

c) The ability to inspire followers to apply their full capabilities: Inspiration to do something usually comes from leaders, who may have qualities of charm and appeal that give rise to loyalty, devotion, and a strong desire on the part of followers to promote what leaders want. This is not a matter of need satisfaction; rather, it is a matter of unselfish support from followers to their leader. The best examples of inspirational leadership come from hopeless and frightening situations. The workers of a dying concern may come forward and follow the leader to overcome crises.

d) The ability to develop a climate conducive to arousing motivation: This ingredient of leadership has to do with the style of the leader and the climate she or he develops. As we know, the strength of motivation greatly depends on factors that are part of an environment, as well as an organisational climate. There is no denying the fact that the primary tasks of managers are the design and maintenance of an environment for performance. The fundamental principle of leadership is this - since people tend to follow those who, in their view, offer them a means of satisfying their own personal goals, the more managers understand what motivates their subordinates and how these motivations operate, and the more they reflect this understanding in carrying out their managerial actions, the more effective they are likely to be their leaders.

Styles/Types of Leadership Leadership styles/types can be classified under the following categories:

1. Leadership style based on the use of authority

2. Leadership continuum, involving a variety of styles ranging from a maximum to a minimum use of power and influence

3. Leadership styles described in Managerial Grid by Blake and Mouton

4. Systems of management by Rensis Likert

5. Leadership Style Based on the Use of Authority The traditional way of classifying leadership is based on the use of authority by the leader. Those classifications are:

a) Autocratic leadership: This type of leadership is based on the use of coercive power. An autocratic leader gives orders and expects compliance. He is dogmatic and leads by the ability to withhold or give punishment or rewards. However, some autocratic leaders may happen to be "benevolent autocrats". Usually, they are willing to hear and consider subordinates' ideas and suggestions but when a decision is to be made, they turn to be more autocratic than benevolent.

b) Democratic leadership: The type or style of leadership that uses legitimate power can be called democratic leadership. A democratic leader usually consults with subordinates on proposed actions and decisions and encourages participation from them. This type of leader ranges from the person who does not take action without subordinates’ concurrence to the one who makes decisions but consults with subordinates before doing so.

c) Free-rein leadership: The leadership style which allows maximum freedom to followers may be called free-rein leadership. A free-rein manager gives workers a high degree of independence in their operations. He or she depends largely on subordinates to set their own goals and the means of achieving them, and they see their role as one of aiding the operations of followers by furnishing them with information and acting primarily as a contact with the groups' external environment.

The use of any style may depend on the situation. A democratic leader may turn into an autocrat in an emergency. The reverse may also happen when an autocratic manager finds no alternative to winning the cooperation of his subordinates in combating a crisis.

2. Leadership Continuum Robert Tennenbaum and Warren H. Schmidt developed the leadership continuum depicting the adaptation of different leadership styles to different contingencies (situations), ranging from one that is highly subordinate-centred to one that is highly boss-centred. The styles vary with the degree of freedom a leader or manager grants to the subordinates. Thus, instead of suggesting a choice between the two styles of leadership, democratic or autocratic, this approach offers a range of styles.

Robert Tannenbaum and Warren H. Schmidt described the various factors thought to influence a manager's choice of leadership style. While they personally favour the employee-centred type, they suggest that a manager considers three sets of "forces" before choosing a leadership style: forces in the manager, forces in employees (subordinates), and forces in the situation.

3. Leadership Styles in Managerial Grid A most useful approach to describing leadership styles is the managerial grid, developed by Robert Blake and Jane Mouton. The grid has two dimensions - concern for people and concern for production. Concern for people may include such elements as provision of good working conditions, placement of responsibility on the basis of trust rather than obedience, maintenance of self-esteem of workers, and good interpersonal relations. Concern for production may also include the attitudes of a supervisor toward a wide variety of things, such as quality of staff services, work efficiency, volume, and quality of output.

The bi-dimensional managerial grid identifies a range of management behaviours based on the various ways that task-oriented and employee-oriented styles (each expressed as a continuum on a scale of 1 to 9) can interact with each other.

4. Systems of Management by Rensis Likert Professor Rensis Likert of Michigan University studied the patterns and styles of managers and leaders for three decades. He suggests four styles of management as:

a) Exploitative-authoritative management: Under this type, the managers are highly autocratic, have little trust in subordinates, motivate people through fear and punishment, engage in downward communication, and limit decision-making to the top.

b) Benevolent-authoritative management: Managers under this type have a patronising confidence and trust in subordinates, motivate with rewards and some punishment, permit some upward communication, solicit some ideas and opinions from subordinates, and allow some delegation of decision-making but with close policy control.

c) Consultative management: Under this type of management, managers have substantial but not complete confidence and trust in subordinates, use rewards for motivation with occasional punishment and some participation, usually try to make use of subordinates' ideas and opinions, engage in communication flow both up and down, make broad policy and general decisions at the top while allowing specific decisions to be made at lower levels and act consultatively in other ways.

d) Participative management: This is the most democratic type of management. Under this type, managers have complete confidence and trust in subordinates in all matters. They use group participation and involvement in decision-making, provide ample communication in all directions, and encourage a high degree of commitment to organisational goals and a strong team spirit among workers.

Management and Society

Environmental Influences on Management

Management is influenced by a number of different factors. Some are related to the nature of the organization (organizational influences) and others to outside sources (external environmental influences). In both cases, the environmental influences are the context within which specific personnel decisions are made.

1. Organizational Influences: Defined as all elements inside an organization that are relevant to its operations which control is beyond the management, such as:

• Nature of the organization
• Nature of the industry
• Level of the technology of an organization
• Long-range strategy of organizations

1. External Influences: Defined as all elements outside an organization that are relevant to its operations. Organizations take inputs (raw materials, money, labour, and energy) from the external environment, transform them into products or services, and then send them back as outputs to the external environment. The elements of external environmental factors are:

• Economical
• Technological
• Social
• Political and legal
• Ethical

Economical Factors

Some economical factors influence an organization. They are:

Capital: Almost every kind of organization needs capital—machinery, buildings, inventories of goods, office equipment, tools of all kinds, and cash. Some of this may be produced by the organization itself, as when a business builds its own machinery or a church group prepares a church supper. Capital is one of the most important prerequisites to establish an enterprise. Availability of capital facilitates the organization to bring together the land, machinery, and raw materials. This results in an increase in profit, which ultimately contributes to capital formation.

Labour: Another important input from the economic environment is the availability, quality, and price of labour. In some societies, untrained common labour may be plentiful, while highly trained labour may be in short supply. The price of labour is also an important economic factor for an enterprise, although automation mitigates high labour costs. The relatively high wages in the United States and many European countries often create cost problems for producers in these countries. Many items can be produced at a lower cost in countries such as Mexico, Korea, and Taiwan.

Price Level: The input side of an enterprise is clearly affected by price-level changes. If prices go up fairly rapidly, as happened in most parts of the world in the 1970s and early 1980s, the turbulence created in the economic environment on both the input and output sides can be severe. Inflation not only upsets businesses but also has disturbing influences on every kind of organization through its effects on the costs of labour, materials, and other items.

Government Fiscal and Tax Policies: Another important input to the enterprise is the nature of government fiscal and tax policies. Although these are, strictly speaking, aspects of the political environment, their economic impact on all enterprises is tremendous. If taxes are levied on sales, prices will rise and people will tend to buy less. If heavy taxes are placed on real estate, people may find it too expensive to own a house and may opt for cheaper and less comfortable living quarters.

Customers: One of the most important factors for the success of an enterprise is its customers. Without them, a business cannot exist. To capture customers, a business must try to find out what people want and will buy.

Technological

One of the most pervasive factors in the environment is technology. It is science that provides knowledge, and it is technology that uses it. The impact of technology is seen in new products, new machines, new tools, new materials, and new services. A few of the benefits of technology are greater productivity, higher living standards, more leisure time, and a greater variety of products. However, the benefits of technology must be weighed against the problems associated with technological developments, such as traffic jams and polluted air and water.

Categories of Technological Change:

• Increased ability to master time
• Increased ability to generate, store, and transport
• Increased ability to design new materials
• Mechanization or automation of physical processes
• Mechanization or automation of certain mental processes
• Extension of human ability to store information
• Increased understanding of individual and group behavior
• Increased understanding of diseases and their treatment

Social

In any classification of environmental elements impacting a manager, it is extremely difficult to separate the social, political, and ethical environments. The social environment is made up of the attitudes, desires, expectations, degrees of intelligence and education, beliefs, and customs of people in a given group or society.

Political and Legal

As pointed out earlier, the political and legal environment of managers is closely intertwined with the social environment. Laws are ordinarily passed as the result of social pressure and problems.

Ethics in Management

All persons, whether in business, government, a university, or any other enterprise, are concerned with ethics. Ethics is defined as “the discipline dealing with what is good and bad with moral duty and obligation.” Business ethics is concerned with truth and justice and has a variety of aspects such as the expectations of society, fair competition, advertising, public relations, social responsibilities, consumer autonomy, and corporate behavior in the home country as well as abroad.

Challenges for Today's Management

A number of critical changes and challenges are faced by managers today. Let’s compare today’s work environment with that of ten years ago. Below is a list of six to eight items, along with their rationale.

1. Globalization: Certainly, the emergence of a ‘borderless’ world has had a tremendous impact on how organizations behave. They are no longer insulated from foreign competition, forcing them to examine cost efficiencies, structure, job design, human capital, and other sources of competitiveness.

2. Technology: Tremendous technological advances in the last decade have significantly impacted organizational behavior. The Internet has enabled small, start-up companies to become global organizations. It has given organizations access to larger, more diverse markets and has helped reduce costs.

3. Mergers and Acquisitions: Many organizations seek to increase market share and profitability through mergers and acquisitions. However, the complexity of these integrations often impacts employees in newly merged organizations, leading to conflicts and potential failures.

4. Workplace Diversity: Changing demographics have made the workforce more diverse, necessitating careful planning to create a welcoming and comfortable work environment for all employees.

5. Organizational Structures: Increased competition has driven organizations to focus on cost efficiencies and effectiveness. This has resulted in a focus on ‘value-added’ services to distinguish themselves from competitors.

6. Work-Life Balance: Many employees now prioritize personal time over career advancement. Organizations have responded by offering flexible work hours, remote work opportunities, extended vacations, and other benefits to retain talent.

7. The Rate of Change: Change is now a constant in organizational environments. Flexibility, market awareness, and tolerance for ambiguity are necessary for survival and success.

8. Increased Competition: Globalization and technological advances have intensified competition, requiring radical changes in strategy, structure, and operations.

9. Increased Ethical and Social Responsibility: Consumers now have more access to information and demand ethical and socially responsible behavior from organizations. Failure to meet these expectations can lead to reputational damage and loss of trust.