NEW GLOBAL VISION COLLEGE

DIVISION OF DISTANCE EDUCATION

COURSE MODULE FOR

MANAGEMEMENT THOUGHT AND
EMERGING TRENDS
MGMT 441

ADDIS ABABA ETHIOPIA

Contents

1
Chapter One ........................................................................................................................ 4

Evolution Of Management .................................................................................................. 4

Chapter Two...................................................................................................................... 12

Foreruners To Scientific Management.............................................................................. 12

Chapter Three.................................................................................................................... 18

The Era Of Classical Management ................................................................................... 18

Chapter Four ..................................................................................................................... 34

The Human Relation Movement ....................................................................................... 34

Chapter Five ...................................................................................................................... 45

The Modern Era ................................................................................................................ 45

Chapter Six........................................................................................................................ 58

Theories Of Motivation..................................................................................................... 58

Chapter Seven ................................................................................................................... 85

The Emerging Trends In Management ............................................................................. 85

Chapter Eight .................................................................................................................. 111

Change Management ...................................................................................................... 111

Introduction ................................................................................................................. 111

8.1 Nature And Purpose Of Change............................................................................ 112

8.2 Factors/Forces Of Change................................................................................. 113

8.1................................................................................................................................ 113

8.3.1 Change In People ........................................................................................... 116

8.4 Approaches/Models Of Planned Change .............................................................. 117

8.4.1 Force- Field Analysis Model ......................................................................... 117

8.4.2 Lewin's Three-Step Sequential Model ........................................................... 118

8.5 Resistance To Change ........................................................................................... 120

2
 8.1................................................................................................................................ 120

8.5.1 Individual Resistance ..................................................................................... 121

8.5.2 Organizational Resistance .............................................................................. 122

8.6 Overcoming Resistance To Change ...................................................................... 123

8.1................................................................................................................................ 123

References ...................................................................................................................... 133

3
 CHAPTER ONE

EVOLUTION OF MANAGEMENT

Introduction

? Dear students, what do you think is evolution of management ?

The evolution of management thinking in the ancient civilization of Mesopotamian,
Greece, and Roman displayed the marvelous result of good management; and new ways
to increase organizational efficiency and effectiveness. The driving force behind the
evolution of management evolution and theories are the search for better ways to utilize
organizational resources. Advances in management thought typically occur as managers
and researchers find better ways to perform the principal management tasks; planning,
organizing, leading, and controlling human and other organizational resources. The
schools of management through are theoretical frameworks for the study of management.
Each of the schools of management thought are based on somewhat different assumptions
about human beings and the organizations for which they work. Since the formal study of
management began late in the 19th century, the study of management has progressed
through several stages as scholars and practitioners working in different eras focused on
what they believed to be important aspects of good management practice. Over time,
management thinkers have sought ways to organize and classify the voluminous
information about management that has been collected and disseminated. These attempts
at classification have resulted in the identification of management schools. In this course
you will understand the way in which management through and emerging trend have
been evolved over time; and how economic, political, and cultural forces have affected
the development of these theories and the ways in which managers and their
organizations behave.

4
 Chapter Objectives

After studying this chapter, you will be able to:

 understand the concept rational of studying management through,

 understand the concept of evolution of management through,
 explore practice in management,
 understand the significance of studying management.

1.1 Rationale of Studying Management Thought

?
Why we study Management Thought ?

Management has been redefining itself over the years. It extends to several thousand
years into the past, right from the administration of Mohenjordo and Harappa Cities of
Ancient Arab civilization in 2008 B.C. It was also apparent in the organizations of public
life in ancient Greece, the Roman Catholic Church, the works of the Middle Eastern
Ziggarats, the Chinese Great Wall, Egyptian Pyramids, Persian roads and buildings et al.
Even the Bible has referred that Moses had hired his father-in-law as the first
management consultant to formulate a strategy to lead the Hebrews out of Egypt and to
govern the Hebrews.

In the early 19th century, industrialization and the factory system saw the start of
assembly line operation and costing systems. Management Principles in business were
adopted in the latter half of nineteenth century. Car production has changed dramatically
over the years as managers have applied different views or philosophies of management
to organize and control work activities. Prior to 1900, workers worked in small groups,
cooperating to hand-build cars with parts that often had to be altered and modified to fit

5
together. This system, a type of small-batch production, was very expensive, assembling
just one car took considerable time and effort; and workers could produce only a few cars
in a day. To reduce costs and sell more cars, managers of early car companies needed
better techniques to increase efficiency. Henry Ford revolutionized the car industry.

In 1913, Ford, opened the Highland Park car plant in Detroit to produce the Model T.
Ford and his team of manufacturing managers pioneered the development of mass-
production manufacturing, a system that made the small-batch system almost obsolete
overnight. In mass production, moving conveyor belts bring the car to the workers. Each
individual worker performs a single assigned task along a production line, and the speed
of the conveyor belt is the primary means of controlling their activities. Ford
experimented to discover the most efficient way for each individual worker to perform
and assigned task.

The result was that each worker performed one specialized talk, such as bolting on the
door or attaching the door handle, and jobs in the Ford car plant became very repetitive.
Ford‟s management approach increased efficiency and reduced costs so much that by
1920 he was able to reduce the price of a car by two-thirds and sell over two million cars
a year. Ford Motor Company became the leading car company in the world, and many
competitors rushed to adopt the new mass-production techniques. Two of these
companies, General Motors (GM) and Chrysler eventually emerged as Ford‟s major
competitors.

The CEOs of GM and Chrysler - Alfred Sloan and Walter Chrysler - went beyond simple
imitation of the Ford approach by adopting a new strategy: offering customers a wide
variety of cars to choose from. To keep costs low, Henry Ford had offered customers
only one car-the Model T. The new strategy of offering a wide range of models was so
popular the Ford was eventually forced to close his factory for seven months in order to
reorganize his manufacturing system to widen his product range. Due to his limited
vision of the changing market, his company lost its competitive advantage. During the
early 1930s, GM became market leader.

6
The next revolution in car production took place not in the United States but in Japan. A
change management thinking occurred there when Ohno Taiichira, a Toyota production
engineered the development of lean manufacturing in the 1960s after touring the Us
plants of the Big Three car companies. The management philosophy behind lean
manufacturing is to continuously find methods to improve the efficiency of the
production process in order to reduce costs, increase quality, and reduce car assembly
time.

In lean manufacturing, workers work on a moving production line, but they are organized
into small teams, each of which is responsible for a particular phase of car assembly, such
as installing the car‟s transmission or electrical wiring system. Each team member is
expected to learn all the tasks of all members of his or her team, and each work group is
charged with the responsibility not only to assemble cars but also to continuously find
ways to increase quality and reduce costs. By 1970, Japanese managers had applied the
new lean production system so efficiently that they were producing higher-quality cars at
lower prices than their US counterparts, and by 1980 Japanese companies were
dominating the global car market.

To compete with the Japanese, managers at the Big Three car makers visited Japan to
learn lean production methods. In recent years, Chrysler Canada has the North American
model for speed in automobile production. Chrysler's Windsor, Ontario assembly plant
opened in 1928, and over 54 years built in its first five million vehicles. Less than 1l
years later, in 1994, the plant reached the eight million mark.

Chrysler's Windsor facility has made a reputation for itself as "the biggest single
experiment with flexible manufacturing methods at one site." 4 In the last 20 years, the
plant has been so successful that Ken Lewenza, president of Local 444 of the Canadian
Auto Workers, describes it as "Chrysler's high-pressure plant, always expected to meet
peak demand for the firm's most popular products." On July 24, 2000, the plant reopened
its doors after being shut down for just two weeks to retool for the newest generation of
Daimler Chrysler AG minivans, due in dealers' showrooms a month later. That was by far
Windsor's quickest turnover, but flexible, manufacturing-procedures introduced in 1983

7
have enabled the plant to display North America's speediest production turnovers. In
1982-83, the plant shut down for 16 weeks to retool from making sedans to the first
models of the Chrysler minivan, and then in 1995, it closed for 12 weeks for retooling to
produce the next generation of minivans.

While the Windsor facility has been a model for quick turnarounds, Canada's auto
industry in general has fared well with the advancements in lean production methods.
One analyst suggested that Canada is "in the golden era of the auto sector in Canada,"
with a chance to outpace Michigan as early as 2001.

As this sketch of the evolution of global car manufacturing suggests, changes in

management practices occur as managers, theorists, researchers, and consultants seek
new ways to increase organizational efficiency and effectiveness. The driving force
behind the evolution of management thought is the search for better ways to utilize
organizational resources. Advances in management theory typically occur as managers
and researchers find better ways to perform the principal management tasks: planning,
organizing, leading, and controlling human and other organizational resources. Thus, we
examine how management theory concerning appropriate management practices has
evolved in modern times, and look at the central concerns that have guided its
development.

1.2 Early Milestones in Management

Knowledge about management today can itself be considered to be the result of a long
and continuing innovative process. In this section, we first take a short excursion back
into recorded history to trace some famous ground-breaking management practices of
early times. We then take an overall look at the evolution of the major viewpoints in
greater detail in later sections.

1.2.1 Practices in Management

The actual practice of management can be traced back to early recorded history. In fact,
ancient history contains a number of monumental examples of management in practice.
For instance, the Sumerians ran ancient Mesopotamia with the help of temple

8
corporations, communities in priests and scribes kept track of legal and economic
transaction through an elaborate system of records written on clay tablets. The Egyptians
built an extensive irrigation system and major buildings, as well as the famous pyramids.
Hammurabi developed a sophisticated legal system, the code of 282 laws, to help him
rule Babylonia. The Roman controlled their extensive empire through carefully devised
system of four geographic divisions, which were further subdivided into districts and then
provinces. These achievements represent early example of innovative practices in
management. While these management accomplishments were so significant that they are
remembered today, they provided very limited information about how to actually mange.
For example, noted management consultant and writer Peter Drucker has argued that the
best managers in history are the ones who managed the building off the pyramids.
Although these managers had major time constraints, limited transportation facilities, and
few scientific resources, they will still managed to build one of the great wonders of the
world. Yet the Egyptians told us very little about their management method. Thus, these
are a major difference between practicing management well and adding to knowledge
about the field of management so that others also can learn to manage.

1.2.2 Evolution of Theories in Management

Although examples of management practices go back several thousand years, the

development of management as a field of knowledge is much more recent. Much of the
motivation for developing management theories and principle grew out of the industrial
revolution, which lay the growth of factories in the early 1800s.With the proliferation of
factories came the widespread need to coordinate the efforts of large number of people in
the continual production of goods. The challenge posed by the factories brought forth a
number of individuals who began to think in terms of innovative ways to run factories
more effectively.

1.3. Significance of Studying Management Thought

The early age of management mainly settled on strategies such as, fear of punishment,
fear of God, absolute authority, coercion and force. The Roman Catholic Church is an
appropriate example of an organization having huge reliance upon power and authority

9
rather than competence and leadership. These early management thoughts needed to be
refined through sound theoretical and conceptual frame of reference to be called
management principles. As the Age of Enlightenment and Renaissance came, it brought
about a shift in the early managements thoughts and acknowledged the change of societal
values, human worth and individual‟s knowledge, competence, talent and achievement.
Therefore, the schools of management thought are theoretical frameworks for the study
of management.

Check List

S/N Points Yes No

I understand the significance of

1. studying management thought

2 I understood where does management

practice started
3 I understood evolution of management
theories

Self-Exercise 1

Choose the correct answer from the given choices

1. Management principles in business were adopted in .

a. The latter half of nineteenth century
b. July 24, 2004
c. The early 1930s
d. None

2. The driving force behind the evolution of management thought is the search for;

10
 a. Better ways to utilize organizational resources

b. Better business innovation

c. A and B

d. None

3. These early management thoughts needed to be refined through sound theoretical and
conceptual framework of reference to be called .

a. Evolution of management

b. Management principles

c. Theoretical frameworks

d. All

11
 CHAPTER TWO

FORERUNERS TO SCIENTIFIC MANAGEMENT

Introduction

As it is elaborated above, the history of management practice is traced back to evolution

of human kind, though management as a discipline has recent history. In the evolution of
management there are key personalities who play a critical role for today‟s status of
management. So, under this chapter it is tried to discuss the forerunners of scientific
management who basically called pre-classical contributors of management thought.

Chapter Objectives

After studying this chapter, you will be able to:

 understand early contributors of scientific management eras,

 understand the concepts and time of Robert Own and management era,

 identify early works and contributions of Charles Babbage thinking of

management,

 understand the thought of other influential early thinkers and practitioner in

management.

2.1 Early Contributors to Scientific Management

A number of individuals in the pre-classical period of the middle and 1800s began to
offer ideas that laid the groundwork for broader inquiries into nature of management that
are followed. Among the principal pre-classical contributors of that time are Robert
Towne, Robert Owen and Charles Babbage.

12
2.1.1 Time of Robert Owen and the Management Era

A successful British entrepreneur, Robert Owen (1771-1858) was well ahead of his time
in recognizing the importance of human resources. He became particularly interested in
the working and living condition of his employees while he was running a Cotton Mill in
New Lanark, Scotland. As was common, the Cotton Mill employed 400 to 500 young
children, who worked 13 hours days that included 1½ hours off for meals. Although his
business partners resisted some of his ideas, Owen tried to improve the living conditions
of the employees by upgrading streets, houses, sanitation, and the educational system in
New Lanark.

Own tried to convince other factors factory owners to treat workers better by arguing that
such steps often lead to between 50 and 100 percent returns on productivity. When his
efforts to influence other owners failed, Owen proposed a bill limiting employment in the
factories to workers over age 10, reducing the workday to 10½ hours, and prohibiting
night work for children. The bill encountered strong opposition from manufacturers and
politician. When it was finally passed in 1819, the bill was relatively weak; it applied
exclusively to cotton mill, set the age limit at 9 instead of 10, and included no provision
for inspections. Although his views are widely accepted today, Owen was considered to
be radical at the time. His ideas laid the groundwork for the human relations movement.

2.1.2 Early Work and Contributions of Charles Babbage

Although English mathematician Charles Babbage (1792-1871) is widely known as "the

father of modern computing,” he also made direct contribution to thinking about
management. The son of wealth banker, Babbage used his inherence to delve into project
that piqued his interest. In areas related to computing, his projects produced the world's
first practical mechanical calculator (the main principle of which were alter incorporate
into the Burroughs accounting machine) and an “analytical engine” that had the basic
element of a modern-day computer. His management interests stemmed from his
difficulties with the directing his various projects. As a result, he visited a number of
factories to gather ideas about manufacturing and management.

13
Like the 18thcentury economist Adam Smith, Babbage was particularly enthralled with
the idea of work specialization. Work specialization is the degree to which work is
divided into various jobs. Smith had concentrated mainly on ways to divide jobs
involving physical labor into more specialized tasks; but Babbage carried the
specialization idea a step further by recognizing that not only physical work but also
mental work could be specialized. In this sense, he foresaw the prospect of specialists,
such as accountants who specialize in either personal or corporate taxes. In fact, part of
the impetus or motivation behind developing the mechanical calculator and other
machines was the desire to mechanize some of the work of mathematicians so that could
specialize in more important function.

Babbage also had some innovative ideas in the areas of reward systems. He devised a
profit-sharing plan that had two parts, bonus that was awarded for useful suggestions and
a portion of wages that was dependent on factory profits. His ideas foreshadowed some
modem-day group incentive plans, such as the Scanlon Plan in which the workers
actively participate in offering suggestions to improve productivity and then share in the
profits from resulting gain.

Babbage was viewed by his contemporaries as a genius, even if a somewhat irascible one.
For example, he disliked the organ-grinders of the day because they disturbed his
concentration. He was known to blow bugles and create loud scenes to scare them away
from his house. Not surprisingly, his neighbors thought of the genius as somewhat of
impractical.

Activity1: Differentiate the contribution of Robert Owen and Charles Babbage.

2.1.3 Other Influential Early Thinkers and Practitioner in Management

Other influential early thinkers and practitioner in management are;

14
 A. James Montgomery - he wrote the first management texts for his and other
company. They were very technical and practical in style but, nevertheless
addressed the problem of planning, organizing, leading and controlling.

B. Charles Duplin – who was one of the first advocated teaching broader
management skills in college. He emphasizes that managers needed more than
technical skill to maximize output.

C. Daniel McCollum – attempt to develop a formalistic organization structure and

system in for the chaotic industrial gain. He emphasis three major points in his
edition effect

1. Systematic organization is basic to all management and there must be clear

decision of labor

2. Continuous communication via reporting is essential for effective control

3. Communication must be recorded to become useful for future decision

Check List

S/N Points Yes No

I can list early contributors of

1. management

2 I understood the contribution of Robert

Owen to the field of management
3 I understood the role that Charles
Babbage played in the field of
management

15
 Self-Exercise 2
Choose the correct answer from the given choices

1. The Robert Owen Babbage recognition was;

a. Improvement of material resources

b. Improvement of human resources

c. Changing managers

d. All of the above

2. Babbage was particularly absorbed;

a. With the idea of work specialization

b. Division of labor

c. A & B

d. None

3. Which one of the following is not the emphasis of Daniel McCollum

a. Promotion of employees based on effective communication

b. Penalization of supervisor due to poor communication

c. A & B

d. None

4. Until the 18 century with the birth of industrial revolution practice of management
was;

a. Used only by Chief Executive Managers

b. Address the problem by planning process

c. Remained quite stable

d. All of the above

16
17
 CHAPTER THREE

THE ERA OF CLASSICAL MANAGEMENT

Introduction

The evolution of modem management began in the closing decades of the 19 thcentury,
after the industrial revolution had swept through Europe, Canada, and the United States.
In the new economic climate, managers of all types of organizations political,
educational, and economic were increasingly trying to find better ways to satisfy
customers' needs. Henry Towne's call for establishing management as separate field of
inquiry helped leader in a major approach to management called the classical viewpoint.
The classical view point is a perspective on management that emphasizes finding ways to
manage work and organizations work efficiently.

Chapter Objectives

After studying this chapter, you will be able to:

 understand the impression of scientific management theory,

 understand the importance of the concept of classical organizational theories
 understand concepts of scientific management and administrative management,
 understand the idea of bureaucratic management theory and its principles,
 understand overall total appraisal of classical theories.

3.1 Scientific Management Theory (F.W. Taylor)

? How scientific management theories emerge?

Frederick Winslow Taylor (1856-1915) is known as the ''the father of scientific

management.” Born to a relatively wealth Philadelphia family, Taylor become a pattern

18
maker and machinist for local firm before moving on to Midvale Steel. He was best
known for defining the techniques of scientific management, the systematic study of
relationships between people and tasks for the purpose of redesigning the work process to
increase efficiency. Taylor was a manufacturing manager who eventually became
consultant and taught other managers how to apply his scientific management techniques.
Taylor believed that if the amount of time and effort that each worker expends to produce
a unit of output (a finished good or service) can be reduced by increasing specialization
and the division of labor, the production process will become more efficient.

3.1.1 Principles of Scientific Management

According to Taylor, the way to create the most efficient division of labor could best be
determined by scientific management techniques, rather than intuitive or informal rule-
of-thumb knowledge. Based on his experiments and observations as a manufacturing
manager in variety of settings, he developed four principles to increase efficiency in the
workplace:

1. Development of science for each part of men‟s job (replacement of rule of thumb)

a. This principle suggests that work assigned to any employee should be observed,
analyzed with respect to each and every element and part and time involved in it.
b. This means replacement of odd rule of thumb by the use of method of enquiry,
investigation, data collection, analysis and framing of rules.
c. Under scientific management, decisions are made on the basis of facts and by the
application of scientific decisions.
2. Scientific Selection, Training and Development of Workers
a. There should be scientifically designed procedure for the selection of workers.
b. Physical, mental and other requirement should be specified for each and every job.
c. Workers should b selected and trained to make them fit for the job.
d. The management has to provide opportunities for development of workers having
better capabilities.

19
 e. According to Taylor efforts should be made to develop each employee to his
greatest level and efficiency and prosperity.
3. Co-operation between management and workers or harmony not discord
a. Taylor believed in co-operation and not individualism.
b. It is only through co-operation that the goals of the enterprise can achieved
efficiently.
c. There should be no conflict between managers & workers.
d. Taylor believed that interest of employer and employees should be fully
harmonized so as to secure mutually understanding relations between them.
4. Division of Responsibility
a. This principle determines the concrete nature of roles to be played by different
level of managers and workers.
b. The management should assume the responsibility of planning the work whereas
workers should be concerned with execution of task.
c. Thus planning is to be separated from execution.
5. Mental Revolution
a. The workers and managers should have a complete change of outlook towards
their mutual relation and work effort.
b. It requires that management should create suitable working condition and solve
all problems scientifically.
c. Similarly workers should attend their jobs with utmost attention, devotion and
carefulness. They should not waste the resources of enterprise.
d. Handsome remuneration should be provided to workers to boost up their moral.
e. It will create a sense of belongingness among worker.
f. They will be disciplined, loyal and sincere in fulfilling the task assigned to them.
g. There will be more production and economic growth at a faster rate.
6. Maximum Prosperity for Employer and Employees‟

20
 a. The aim of scientific management is to see maximum prosperity for employer and
employees.
b. It is important only when there is opportunity for each worker to attain his highest
efficiency.
c. Maximum output and optimum utilization of resources will bring higher profits
for the employer and better wages for the workers.
d. There should be maximum output in place of restricted output.
e. Both managers and workers should be paid handsomely.

3.1.2 Importance of Scientific and Management

Taylor‟s ideas, research and recommendations brought into focus technological, human
and organizational issues in industrial management. Benefits of Taylor‟s scientific
management included wider scope for specialization, accurate planning, timely delivery,
standardized methods, better quality, lesser costs, minimum wastage of materials, time
and energy and cordial relations between management and workers. According to
Gilberths, the main benefits of scientific management are “conservation and savings,
making an adequate use of every one‟s energy of any type that is expended”. The benefits
of scientific management are:

a. Replacement of traditional rule of thumb method by scientific technique.

b. Proper selection and training of workers
c. Incentive wages to the workers for higher production
d. Elimination of wastes and rationalization of system of control
e. Standardization of tools, equipment, materials and work methods
f. Detailed instructions and constant guidance of workers
g. Establishment of harmonious relationship between the workers
h. Better utilization of various resources
i. Satisfaction of the needs of the customers by providing higher quality products at
lower prices.

21
3.1.3 Limitations and Criticisms of Scientific Management

Although it is accepted that the scientific management enables the management to put
resources to its best possible use and manner, yet it has not been spared of severe
criticism.

A. Workers Viewpoint

1. Unemployment – Workers feel that management reduces employment opportunities

from them through replacement of men by machines and by increasing human
productivity less workers are needed to do work leading to chucking out from their
jobs.

2. Exploitation – Workers feel they are exploited as they are not given due share in
increasing profits which is due to their increased productivity. Wages do not rise in
proportion as rise in production. Wage payment creates uncertainty and insecurity
(beyond a standard output, there is no increase in wage rate).

3. Monotony – Due to excessive specialization the workers are not able to take
initiative on their own. Their status is reduced to being mere cogs in wheel. Jobs
become dull. Workers lose interest in jobs and drive little pleasure from work.

4. Weakening of Trade Union – To everything is fixed and predetermined by

management. So it leaves no room for trade unions to bargain as everything is
standardized, standard output, standard working conditions, standard time etc. This
further weakens trade unions, creates a rift between efficient and inefficient workers
according to their wages.

5. Over speeding – the scientific management lays standard output, time so they have
to rush up and finish the work in time. These have adverse effect on health of
workers. The workers speed up to that standard output, so scientific management
drives the workers to rush towards output and finish work in standard time.

22
B. Employer’s Viewpoint

1. Expensive – Scientific management is a costly system and a huge investment is

required in establishment of planning department, standardization, work study,
training of workers. It may be beyond reach of small firms. Heavy food investment
leads to increase in overhead costs.

2. Time Consuming – Scientific management requires mental revision and complete

reorganizing of organization. A lot of time is required for work, study,
standardization and specialization.

Activity 2: what are the principles and importance of scientific management?

3.2 Classical Organizational Theories and Henry Fayol (1841-1925)

Henry Fayol was born in 1841 at Constantinople in France. He graduated as a mining

engineer in 1860 from the national School of Mining. After his graduation, he joined a
French Coal Mining Company as an Engineer. After a couple of years, he was promoted
as manager. He was appointed as General Manager of Principles of Management and
Organizational Behavior his company in 1888. At that time, the company suffered heavy
losses and was nearly bankrupt. Henry Fayol succeeded in converting his company from
near bankruptcy to a strong financial position and a record of profits and dividends over a
long period.

Concept of Management: Henry Fayol is considered the father of modern theory of

general and industrial management. He divided general and industrial management into
six groups.

1. Technical activities – Production, manufacture, adaptation.

2. Commercial activities – buying, selling and exchange
3. Financial activities – search for and optimum use of capital

23
 4. Security activities – protection of property and persons
5. Accounting activities – stock-taking, balance sheet, cost, and statistics
6. Managerial activities – planning, organizational, command, co-ordination and
control

The six functions had to be performed to operate successfully any kind of business. He,
however, pointed out that the last function i.e., ability to manage, was the most important
for upper levels of managers.

The process of management as an ongoing managerial cycle involving planning,

organizing, directing, coordination, and controlling, is actually based on the analysis of
general management by Fayol. Hence, it is said that Fayol established the pattern of
management thought and practice. Even today, management process has general
recognition.

Fayol’s Principles of Management: The principles of management are given below:

1. Division of work: division of work or specialization alone can be give maximum

productivity and efficiency. Both technical and managerial activities can be
performed in the east manner only through division of labor and specialization.

2. Authority and Responsibility: the right to give order is called authority. The
obligation to accomplish is called responsibility. Authority and Responsibility are
the two sides of the management coin. They exist together. They are
complementary and mutually interdependent.

3. Discipline: the objectives, rules and regulations, the policies and procedures must
be honored by each member of an organization. There must be clear and fair
agreement on the rules and objectives, on the policies and procedures. There must
be penalties (punishment) for non-obedience or indiscipline. No organization can
work smoothly without discipline preferably voluntary discipline.

4. Unity of Command: in order to avoid any possible confusion and conflict, each
member of an organization must receive orders and instructions only from one
superior (boss). The more completely reporting relationship to single superior, the

24
 less in the problem of conflicting and greater is the telling of responsibilities for
result.

5. Unity of Direction: all members of an organization must work together to

accomplish common objectives.

6. Emphasis on subordination of personal interest to general or common

interest: this is also called principle of co-operation. Each shall work for all and
all for each. General or common interest must be supreme in any joint enterprise.

7. Remuneration: fair pay with non-financial rewards can act as the best incentive
or motivator for good performance. Exploitation of employees in any manner
must be eliminated. Sound scheme of remuneration includes adequate financial
and nonfinancial incentives.

8. Centralization: there must be a good balance between centralization and

decentralization of authority and power. Extreme centralization and
decentralization must be avoided. Everything which goes to reduce the
importance of subordinate is centralized. In small firms‟ centralization is natural
order, but in large firms, as series of intermediaries is required. Share of authority
and initiative left to intermediaries depend on:

 the personnel character of manager

 his moral worth
 the ability of his subordinate
 the condition of business

9. Scalar Chain: the unity of command brings about a chain or hierarchy of

command linking all members of the organization from the top to the bottom.
Scalar denotes steps. Scalar chain should be of authority and of communication
ranging from highest to the lowest. Each communication going or coming down
must flow through each position the lines of authority.

10. Order: Fayol suggested that there is a place for everything. Order or system alone
can create a sound organization and efficient management.

25
 11. Equity: an organization consists of a group of people involved in joint effort.
Hence, equity (i.e., justice) must be there. Without equity, we cannot have
sustained and adequate joint collaboration.

12. Stability of Tenure: a person needs time to adjust himself with the new work and
demonstrate efficiency in due course. Hence, employees and managers must have
job security. Security of income and employment is a pre-requisite of sound
organization and management.

13. Esprit of Co-operation: Esprit de corps is the foundation of a sound

organization. Union is strength. But unity demands cooperation. Pride, loyalty and
sense of belonging are responsible for good performance.

14. Initiative: creative thinking and capacity to take initiative can give us sound
managerial planning and execution of predetermined plans.

3.3 Bureaucratic Management Theory

Max Weber, a German Sociologist developed the bureaucratic model. Max Weber (1864-
1920) wrote at the turn of the 20th century, when Germany was undergoing its industrial
revolution. To help Germany manage its growing industrial enterprises at a time when it
was striving to become a world power, Weber developed the principles of bureaucracy a
formal system of organization and administration designed to ensure efficiency and
effectiveness. A bureaucratic system of administration is based on the five principles
summarized as follows:

Principle 1: In a bureaucracy, a manager's formal authority derives from the

position he or she holds in the organization.

Authority is the power to hold people to hold accountable for their actions and to make
decisions concerning the use of organizational resources. Authority gives managers the
right to direct and control their subordinates‟ behavior to achieve organizational goals. In
a bureaucratic system of administration, obedience is owed to a manger, not because of
any personal qualities such as personality, wealth, or social status but because the

26
manager occupies position that is associated with a certain level of authority and
responsibility.

Principle 2: In a bureaucracy, people should occupy positions because of their

performance, not because off their standing or personal contacts.

This principle was not always followed in Weber‟s time and is often ignored today. Some
organizations and industries are still affected by social networks in which personal
contacts and relations, not job-related skills, influence hiring and promotional decisions.

Principle 3: The extent of each position’s formal authority and task responsibilities,
and its relationship to other positions in an organization, should be clearly specified.

When the tasks and authority associated with various positions in the organization are
clearly specified, managers and workers know, what is expected of them and what to
expect from each other. Moreover, an organization can hold all its employees strictly
accountable for their actions when they know their exact responsibilities.

Principle 4: Authority can be exercised effectively in an organization when positions

are arranged hierarchically, so employees known whom to report to and who
reports to them.

Managers must create an organizational hierarchy of authority that makes it clear who
reports to whom and to whom managers and workers should go if conflicts or problems
arise. This principle is especially important in the armed forces, FBI and other
organizations that deal with sensitive issues involving possible major repercussions. It is
vital that managers at high levels of the hierarchy be able to hold subordinates
accountable for their actions.

Principle 5: Managers must create a well-defined system of rules, standard

operating procedures, and norms so that they can effectively control behavior
within an organization.

Rules are formal written instructions that specify actions to be taken under different
circumstances to achieve specific goals.

27
Standard Operating Procedures (SOPs) are specific sets of written instructions about
how to perform a certain aspect of a task. A rule might state that at the end of the
workday employees are to leave their machines in good order, and a set of SOPs would
specify exactly how they should do so, itemizing which machine parts must be oiled or
replaced.

Norms are unwritten, informal codes of conduct that prescribe how people should act in
particular situations. For example, an organizational norm in a restaurant might be that
waiters should help each other if time permits. Rules, SOPs, and norms provide
behavioral guidelines that increase the performance of a bureaucratic system because
they specify the best ways to accomplish organizational tasks. Companies such as
McDonald‟s and Wal-Mart have developed extensive rules and procedures to specify the
behaviors required of their employees, such as “Always greet the customer with a smile.”

Weber believed that organizations that implement all five principles establish a
bureaucratic system that improves organizational performance. The specification of
positions and the use of rules and SOPs to regulate how tasks are performed make it
easier for managers to organize and control the work of subordinates. Similarly, fair and
equitable selection and promotion systems improve managers‟ feelings of security,
reduce stress, and encourage organizational members to act ethically and further promote
the interests of the organization.

If bureaucracies are not managed well, however, many problems can result. Sometimes,
managers allow rules and SOPs, “bureaucratic red tape,” to become so cumbersome that
decision making is slow and inefficient and organizations are unable to change. When
managers rely too much on rules to solve problems and not enough on their own skills
and judgment, their behavior becomes inflexible. A key challenge for managers is to use
bureaucratic principles to benefit, rather than harm, an organization.

28
The Advantages of Bureaucracy

Weber identified the essential characteristics of his “ideal” bureaucracy and believed that
specific advantages would accrue to undertakings that embodied them. These
characteristics and sample advantages include:

1. Division of Labor – Labor is divided so that authority and responsibility are

clearly defined. Efficiency will increase through specialization.

2. Managerial Hierarchy – Offices or positions are organized in a hierarchy of

authority.

3. Formal Selection – all employees are selected on the basis of technical

qualification demonstrated by formal examination, education, or training.

4. Career Orientation – Although a measure of flexibility is attained by electing

higher-level officials who presumably express the will of an electorate (for
example, a body of citizens or a board of directors), employees are career
professionals rather than “politicians.” They work for fixed salaries and pursue
“careers” within their respective fields.

5. Formal Rules and Other Controls – All employees are subject to formal rules
and other controls regarding the performance of their duties.

6. Impersonality – Rules and other controls are impersonal and uniformity applied
in all cases.

The disadvantages of Bureaucracy

Although Weber considered bureaucracy to be the most efficient means of organizing,

both his own experience and subsequent research shown that it often results in certain
disadvantages. These include:

1. Rules and other controls may take on significance of their own and, as a
consequence, become ends in themselves. Employees, for example, may accuse
budget personnel off being more interested in applying rules and regulations than
achieving a firm‟s primary goals.

29
 2. Extreme devotion to rules and other controls may lead to situations in which past
decisions are blindly repeated without appreciation or concern for changed
conditions. Such “bureaucratic rigidity” results in managers being compensated
for doing what they are told and not for thinking. The result is “rule by rules”
rather than common sense.

3. Whereas delegation of authority to lower levels may increase operational

effectiveness, it may also encourage an emphasis on submit rather than overall
goals, thereby promoting subunit conflict and decreasing effectiveness. A typical
example can be found in many universities where conflicts over which
department is going to offer what courses often result in unnecessary duplication
of subject offerings, as well as the unnecessary expenditure of resources.

4. Although rules and other controls are intended to counter worker apathy, they
may actually contribute to it by defining unacceptable behavior and, thus,
specifying a minimum level of acceptable performance. That is, it is possible,
once rules have been defined, for employees to remain apathetic, for they now
know just how little they can do and still remain secure.

Activity 3:discuss the principles of administrative management and bureaucratic

management theory.

3.4 Total Appraisal of the Classical Theories

? What does the strengths and limitations of classical theories?

The Empirical School seeks to generalize the nature of management based on the
experience of successful managers. The basic theme of this assumption is that if a
particular business operation is successful, or if a particular problem was effectively

30
tackled by application of a particular strategy, then the methods of strategies through
which success was achieved by the mangers could be equally effectively used by others
in the case of similar business situations in future.

The basic principles laid down by the Classical School may be summed up as follows:

a. Scalar chain: It is the fore-runner of the hierarchy principle under which

authority flows from the top to the bottom level managerial positions.

b. Unity of Command: It lies down that each individual should only receive orders
from one hierarchical superior.

c. Exception: It emphasizes, maximum delegation of authority such that the

superior is required to intervene only is the case of non-routine, exceptional tasks.

d. Span of control: It advocates that each superior should only have a manageable
number of subordinates to direct and control.

e. Specialization: It emphasizes differentiation of organizational activities based on

objectives, processes, location, clients, etc.

f. Scientific method: It advocates the use of experimental methods to develop

sound organizational and management methods.

Check List

S/N Points Yes No

I am able to list the principles of scientific management

2 I am able to discuss importance of scientific management

3 I am able to explain limitations of scientific management

4 I am able to distinguish the principles of Henry Fayol‟s principle

of management

5 I am able to distinguish the principles of Bureaucratic

management theory and advantages and disadvantages of

31
Beaucracy

32
 Self-Exercise 3

Choose the correct answer from the given alternatives

1. He father of scientific management is

a. Daniel McCollum
b. Henry Fayol
c. Fredrick W. Taylor
d. None
2. Which one of the following principle of scientific management is not focus on
increasing productivity of an organization?
a. Replacement of rule of thumb
b. Division of responsibility
c. A & B
d. None
3. Criticisms of scientific management is raised from
a. Employee perspective
b. Employer perspective
c. All
d. None
4. are unwritten, informal codes of conduct that prescribe how people
should act in particular situations.
a. Norms
b. Policies
c. Strategies
d. All
5. Which one of the following is drawback of bureaucracy?
a. Division of labor
b. Impersonality
c. Formal rules and control
d. None

33
 CHAPTER FOUR

THE HUMAN RELATION MOVEMENT

Introduction

As a result of weaknesses and limitations on the part of classical theories of management,

various scholars started to think on improving the ways classical theorists view human
elements of the organization. Accordingly, neoclassical management thought which
emphasize on social need of human being emerged based on views of different
individuals step by step from human relation movement primarily advocated by Mary
parker Follet and Elton Mayo to behavioral school of management.

Objectives of the Chapter

After studying this chapter, you will be able to:

 explain why behavioral school of thought develop

 understand the concept of Elton Mayo‟s concern in behavioral school
 understand the Hawthorne study outcomes and criticisms.

4.1 Behavior School

? Why behavioral school of management though develop?

The behavioral school of management thought developed, in part, because of perceived

weakness in the assumption of the classical school. The classical school emphasized
efficiency, process, and principles. Some felt that his emphasis disregarded important
aspect of organizational life, particularly as it related to human behavior. Thus, the

34
behavioral school focused on trying to understand the factors that affect human behavior
work.

The behavioral approach emerged partly because the classical approach did not achieve
sufficient production efficiency and workplace harmony. Manager should deal with the
“people side” of the organization. Recognizing employee as individual with concrete
human need as part of work groups, and as member of large society.

4.2 Elton Mayo and the Behavioral Schools

An Australian by birth, Mayo read psychology at Adelaide University and, in 1911, was
appointed lecturer in Logic, Ethics and Psychology (and later Professor of Philosophy), at
the University of Queensland. Concerned to move to the USA for professional reasons,
he took at post at Pennsylvania University in 1923. Here, he became involved in one of
the investigation which seemed to act as a dry-run for Hawthorne. In one department at a
spinning mill in Philadelphia, labor turnover was 250% compared with an average of 6%
in other departments of the company. A series of experimental changes in working
conditions was introduced in the department, most notable rest pauses. These changes led
to successive increases in productivity and the raising of morale. After one year, labor
turnover was down to the average level for the company as a whole. It was assumed that
the explanation for this improvement was the introduction and modification of rest
pauses; this explanation was to undergo substantial modification as a result of
Hawthorne.

The Hawthorne experiments began in 1924, Mayo‟s involvement in them in 1928, after
he had moved to he Harvard University School of Business Administration as Associate
Professor of Industrial Research. Later awarded a Chair, he remained at Harvard until his
retirement in 1974. During the Second World War, mayo contributed to the development
of supervisor training within his Training With in Industry (TWI) program, which was
widely adopted in the USA. The last two years of his life were spent in Britain as an
advisor to the British government on problems within industry.

35
Mayo wrote about democracy and freedom and the social problems of industrialized
civilization. It is as the author of Human Problems of an Industrial Civilization which
reports on the Hawthorne Experiments, that he is known for his contribution and
direction of the project.

In the winter of 1927, Pennock invited Clair Turner, Professor of biology and Public
Health at MIT, to consult. Turner quickly resolved that rest pauses in themselves were
not the cause for increased output, although it was observed that longer rest pauses gave
rise to more social interaction, which in turn impacted on mental attitudes. Turner
attributed the rise in output to: the small group; the type ff supervision; earnings; the
novelty of the experiment, and the increased attention to the experimenters generated by
the experiment itself.

Pennock had been amount the first to note that supervisory style was important. The
supervisor involved in the illumination experiment had been relaxed and friendly; he got
to know the operators well and was not too worried about company policies and
procedures. Discipline was secured through enlightened leadership and understanding,
and an esprit de corps grew up within the group. This was in stark contrast to standard
practice before the experiment.

When Pennock invited Turner to participate, he also invited Mayo (although it is

unknown whether this was as a result of Mayo‟s achievements at the Philadelphian
Spinning Mill, or because of a desire to involve Harvard). Visits in 1929 and 1930
indicated to Mayo „a remarkable change of attitude in the group‟. Mayo‟s view was that
Test Room Workers had turned into a social unit, enjoyed all the attention they were
getting, and had developed a sense of participation in the project.

In order to understand this further Mayo instituted a series of interviews. These provided
the workers with an opportunity to express their views and let off steam. It emerged that
they would feel better for discussing a situation even if it did not change. Further
exploration into worker complaints revealed that some had little or no basis in fact but
were actually symptoms or indicators of personal situations causing distress.

36
By focusing on a more open, conversational, listening and caring interview approach,
mayo had struck a key which linked the style of supervision and the level of morale to
levels of productivity.

Mayo had read the work of FW Taylor who had already established that social groups
were capable of exercising very strong control over the work behavior of individual
members (Taylor had called it „systematic soldiering‟). The interesting development
which Mayo noted, however, was that whereas in the first set of experiments productivity
went up as the experiments progressed, in the other - the Bank Wiring Room –
productivity was restricted.

In the Human Problems of an Industrial Civilization, Mayo wrote: Human

collaboration in work, in primitive and developed societies, has always depended for its
perpetuation upon the evolution of a non-logical social code which regulates the relations
between persons and their attitude to one another. Insistence upon a merely economic
logic of production … interferes with the development of such a code and consequently
gives rise in the group to a sense of human defeat. This … results in the formation of a
social code at a lower level and in opposite to the economic logic. One of its symptoms is
restriction.

The question which needed to be asked, therefore, was „what was different between the
two groups?‟ The answer was found to lie with the attitude of the observer – where the
observer encouraged participation and took the workers into his confidence, productivity
went up; where the observer merely watched and adopted the trappings of traditional
supervisory practice, output was restricted.

For industry to benefit from the experiments at Hawthorne, mayo first concluded that
supervisors needed training in understanding the personal problems of workers, and also
in listening and interviewing techniques. He held that the new supervisor should be less
aloof, more people-oriented, more concerned, and skilled in handling personal and social
situations.

It was only later, after a period of reflection, that Mayo was able to conclude that:

37
  Job satisfaction increased as workers were given more freedom to determine the
conditions of their working environment and to set their own standards of output;

 Intensified interaction and cooperation created a high level of group cohesion;

 Job satisfaction and output depended more on cooperation and a feeling of worth than
on physical working conditions.

In Mayo‟s view, workers had been unable to find satisfactory outlets for expressing
personal problems and dissatisfactions in their work life. The problem, as Mayo
perceived it, was that mangers thought the answers to industrial problems resided in
technical efficiency, when actually the answer was a human and social one.

Mayo‟s contribution lies in recognizing from the Hawthorne experiments that the
formality of strict rules and procedures spawns informal approaches and groups with their
base in human emotions, sentiments, problems and interactions. The manager, therefore,
should strive for equilibrium between the technical organization and the human one and
hence should develop skills in handling human relations and situations. These include
diagnostic skills in understanding human behavior and interpersonal skills in counseling,
motivating, leading and communicating.

Mayo has been acclaimed by his followers as the Founder of the human Relations school
of management, and he has been criticized by sociologists for not going far enough in his
interpretations.

Analysis Mayo‟s conclusions and interpretations cause no surprise – let alone discovery –
in the 1990s; his findings are increasingly commonplace among social scientists, trade
unionists and managers alike. Perhaps that is a measure of his achievement, because most
critics and commentators agree that he was the first, not necessarily to state the case, but
to demonstrate, infer and provide evidence from it to shift management thinking in a
direction other than the widespread and entrenched dominance of Taylor‟s scientific
management.

38
Hawthorne - thanks to both Mayo and one of his major colleagues and collaborators (F. J.
Roethlisberger) was widely reported and discussed. Roethlisberger said of Mayo that the
data were not his, the results not his, but the interpretations were Mayo‟s. Without those
interpretations, the results of Hawthorne would still be collecting dust in the archives.

The experiment also gave rise to the term – „Hawthorne effect‟- a situation which arose
because people were „singled‟ out for special treatment or a „special situation‟ was
created where workers could feel free to air their problems.

Mayo‟s conclusions influenced others who came in turn to be regarded as experts:

His ideas on the emergence of ‘informal’ organizations were read by

Argyris and others as they developed theories about how organizations
learned and developed the discrediting of the ‘rabble hypothesis’ theory –
based on the assumption that individuals only pursue self-interest – led
directly to the work of McGregor (theory X and Theory Y) with its wider
implications for leadership and organization.

The conclusions drawn by Mayo from the Hawthorne studies established the beginnings
of the importance of management style as a major contributor to industrial productivity,
of interpersonal skills as being as important as monetary incentives or target-setting, and
of a more humanistic approach as a means of satisfying the organization‟s economic
needs and human social skills.

4.3 The Hawthorne Study

The Hawthorne study was conducted from 1924 to 1932 at the Hawthorne Works of the
Western Electric Company. This research, now known as the Hawthorne studies, whose
results ultimately led to the human relations view of management, a behavioral approach
that emphasized concerned for worker. To understand their significance, we need to trace
the studies from the beginning.

When they started, the Hawthorne studies were right in the scientific management
tradition of seeking greater efficiency through improving the tools and methods of work

39
in this case lighting. The studies came about because the General Electric Company
wanted to sell more light bulbs and, along with the other electric companies, supported
studies on the relationship between lighting and productivity that were to be conducted
by a research group called the national Research Council. The tests were to be held at the
Hawthorne Works (Chicago) of the Western Electric Company. Ultimately three sets of
studies were done:

First Set of Studies – the first set of studies called the Illumination Studies, took place
between 1924 and 1927 under the direction of several engineers. In one of these studies,
light was decrease over successive periods for experimental groups (the group for whom
the light was altered), while light was held at constant level for control group (a
comparison group working in separate area). In both group, performance rose steadily,
even though the light in the experimental group finally reached a point at which workers
in the group complained that they could hardly see. At that point, performance in the
experimental group finally began to decline. The researchers concluded that factors other
than lighting were at work (see performance rose at both groups) and the committee on
industrial lighting discontinued the project. In study, one possibly based on the records of
the studies that the experimental and control groups were in contact and may have begun
with one another.

Second Set of Studies – Intrigued with positive change in productivity some of the
engineers and company officials decided to attempt to determine the causes through
further studies. Accordingly, a second set of experiments took place between 1927 and
1933. The most famous study involved five women assembling relays in Relay Assembly
Room, a special room away from other workers where the researcher could alter work
conditions and evaluate the results. Apparently, the researchers were concerned about
possible negative reactions and resistance from the workers who would be included in the
experiment. To lessen potential resistance, the researcher changes the usual supervisory
arrangement so that there would be no official supervisor; rather, the workers would
operate under the general direction of the experiment. The workers also were given
special privileges such as being able to leave their workstation without permission, and
they received considerable attention from experiments and company officials. The study

40
was armed at exploring the best combination of work and rest periods, productivity
increased over the period of the study, regardless of how the factors under consideration
were manipulated. A Harvard University group (who frit become involved in assembling
the result a representative visited the plan in 1928) ultimately concluded that the change
in supervisory arrangement was the major reason for the increase in productivity in Relay
Assembly Test Room study and in two related studies involving different work groups.
The researchers felt that the physical change, such as rest periods, free lunches, and
shortened hours, as well as the group incentives pay plans, were factors of lesser
important (largely because adverse change in some of these factors did not seem to
decrease performance).

Third Set of Studies – the third group of Hawthorne studies built on the emerging
findings of the second set. It concluded the famous bank Wiring Observation Room study
(1931-1932), in which studying a group of male workers provided knowledge about
informational social relations within groups and about groups norms that restrict output
when such steps seem advantageous to the group. It also included a massive interviewing
program (1928-1931) that was initially aimed at improving supervision but evolved into a
means of learning what workers had on their minds and allowing them to let off steam.

Generally, the Hawthorne studies have beer in severely criticized manly because the
studies often had major flaw (such as changing several factors at the same) and because
important data were sometimes ignored in drawing conclusions (especially in discounting
the potential importance of pay). In their defense, the studies were conducted at time
when knowledge about how to conduct such studies was fairly embryonic. Yet, despite
their shortcomings, the effects of these pioneering studies were far-reaching. In contrast
to the impersonality that characterized the classical approach, the Hawthorne studies
pointed to the impact that social aspect the job had on productivity, particularly the
effects of personal attention from supervisor and relationship among group members. As
a result, the focus of management was drastically altered.

Activity 4:discuss and differentiatestages of Hawthorne studies.

41
 Check List

S/N Points Yes No

I am able to understand behavioral school of management

2 I am able to discuss the contribution of Elton Mayo and his

colleagues
3 I am able to explain Hawthorne study

42
 Self-Exercise 4
Choose the correct answer from the given alternatives

1. The behavioral school motivated on trying to realize the factors

a. That affects human behavior work
b. That affects their family
c. A and B
d. None
2. During the Second World War, mayo contributed to the development of
supervisor training within his TWI program, which was widely adopted in the
USA.
a. True
b. False
3. Which one of the following is not Mayo conclusion?
a. Job satisfaction
b. Interaction and worth
c. All
4. The Hawthorne studies were right in the scientific management tradition of
seeking greater efficiency through improving;
a. Interpersonal skill
b. The tools and methods of work in this case lighting
c. Tools and methods for award
d. all
5. One of the following is not among set studies
a. Illumination
b. Relay Assembly Room
c. Massive Interviewing Program
d. All
6. Human collaboration in work written by ELTON MAYO
a. False

43
b. True

44
 CHAPTER FIVE

THE MODERN ERA

Introduction

This chapter deals with modern management thought, particularly systems theory of
management, quantitative management theory of management and contingency theory of
management.

Chapter Objectives

After reading this chapter you will be able to:

 understand the characteristic of modern approaches of management,

 understand the concept of systems approach and differentiate close and open
system,
 understand focuses and views of quantitative approach,
 understand the concept of contingency approach,
 analysis the modern approaches in basic milestone in management.

5.1 Characteristics of Modern Approaches to Management

? What are the characteristics of modern approaches to management?

The past thirty years witnessed, a "Knowledge Explosion" in the field of managements.
During these period management, writer have been primarily concerned with integrating
the findings of scientific management, principles of management and, human relations
movements. These modern management theories considered' all elements the whole
organization as well as components parts. The organization' is viewed as adaptive
systems which must in order to survive and just to environmental changes. The
organization and its environment are Seen as 'interdependent; each depends' on', the

45
'other for resources from scientific management, human relations. It is background that
furnishes a foundation for understanding contemporary management theory and practice.

5.2 Systems Approach

? Define system and discus its basic type?

A system in simple terms is a set of interrelated parts. It is a group of interrelated but

separate elements working towards a common purpose. During the 1960s researchers
began to analyze organizations from a systems perspective based on the physical
sciences. The two basic types of systems are open and closed.

1.A closed system is not influenced by and does not interact with its environment.
2.An open system interacts with its environment.

Using the systems approach, managers envision an organization as a body with many
interdependent parts, each of which important to the well-being of the organization as a
whole. Managers coordinate the work activities of the various parts of the organization,
realizing that decisions and actions taken in one organizational area will affect other
areas. The systems approach recognizes that organizations are not self-contained; they
rely on and are affected by factors in their external environment.

The arrangement of elements must be orderly, there must be proper communication

facilitating interaction between the elements and finally the interaction should lead to
achieve a common goal. The organization transforms input into a variety of outputs and
offers the same to the external environment in the form of products good and services.
Sale of the output provides the necessary energy (feedback) to the system cycle.

The system approach provides a unified focus to organizational efforts. A major

contribution of the system approach results from its strong emphasis on the
interrelatedness or mutuality of the parts of an organization. Another important benefit of
system theory lies in its treatment of the organization as an open system. A close system

46
imports something from the environment and exports something into the environment.
The system theory of management is characterized by the following:

a. Dynamic: Within the organization the process of interaction between subsystems

is dynamic.

b. Multilevel and Multidimensional: It is micro within the nation‟s industrial

network and it is macro with respect to its internal units. The modern manager is
forced to recognize the importance of parts as well as the whole.

c. Multi-motivated: Motivation is extremely complex process and drawing

simplistic equation is a futile exercise.

d. Probabilistic: Modern theory tends to probabilistic. “Statement in modern theory

tends to be qualified with phrases such as “may be”, “in general” and “usually”
because modern theory recognizes that few predictive statements can be made
with certainty.

e. Multidisciplinary: Modern theory of management is enriched by contribution

from disciplines like sociology, psychology, economics, anthropology, ecology
mathematics, operations research and so on.

f. Descriptive: Individual are free to select the objectives and the methods to
improve organizational effectiveness.

g. Multivariable: There is no simple cause effect phenomenon in organizational

activities. An event may be the product of many factors that are in turn
interrelated and interdependent.

h. Adaptive: An organization and its environment are expected to rearrange their

parts. Organization tries to cope with environment changes through the
“feedback” mechanism. An organization must produce output acceptable to
components in environment.

It is true that “system theory provides a broad Philosophical perspective that that bridge
academic disciplines and mounts integrated attack on a wide variety of problem”.

47
5.3 The Quantitative Approach
? Describe the three components of quantitative management thought?

The quantitative approach to management, sometimes known as operations research or

management science, uses quantitative techniques to improve decision making. This
approach includes applications of statistics, optimization models, information models,
and computer simulations. The quantitative approach originated during World War II as
mathematical and statistical solutions to military problems were developed for wartime
use. The relevance of quantitative approach today is that it has contributed most directly
to managerial decision making, particularly in planning and controlling. The availability
of sophisticated computer software programs has made the use of quantitative techniques
more feasible for managers. The quantitative management viewpoint focuses on the use
of mathematics, statistics, and information aids to support managerial decision making
and organizational effectiveness. Three main branches have evolved; management
science, operation management, and management information system.

5.3.1 Management Science

Management science is an approach aimed at increasing decision effectiveness through

the use of sophisticated mathematical models and statistical methods. Another name
commonly used for management science is operation research. The increasing power of
computer has greatly expanded the possibility for using mathematical statistical tools of
management science in organizations. Computers make it possible to quickly do
extensive calculations that are often required.

5.3.2 Operations Management

Operation management is function, or field of expertise, that is primarily responsible for

managing the production and delivery of an organization‟s products and services. It
includes such areas as inventory management; work scheduling, production planning
facilities location and design, and quality assurance. Operations management specialists

48
requirements plan using systems, networking models, statistical quality control methods,
planning and control techniques. Operation management is often applied to
manufacturing setting in which various aspects of product production need to be
managed, including designing the production process, purchasing raw materials,
scheduling employees to work, and storing and shopping the final products. It also
applies to delivering services as well.

5.3.3 Management Information System

Management information system is the name often given to the field of management that
focus on designing and implementing compute-based information for use by
management. Such systems turn raw data into information that is useful to various level
of management. In many industries, compute-based information systems are becoming a
power competitive weapon because organizations are able to handle large amount of
information in new and better ways.

5.4 The Contingency Approach

? Discuss the implication of contingency approach to management?

Another useful viewpoint for understanding behavior in organizations comes from the
contingency perspective. In the early days of management studies, managers searched for
universal answers to organizational questions. They sought prescriptions that could be
applied to any organization under any conditions. For example, early leadership
researchers tried to discover forms of leadership behavior that would always increase
employee satisfaction and effort. Eventually, however, researchers realized that the
complexities of human behavior and organizational settings make universal conclusions
virtually impossible. They discovered that in organizations, most situations and outcomes

49
are contingent; that is, the relationship between any two variables is likely to be
influenced by other variables.

Another milestone in management theory was the development of contingency theory in

the 1960s by Tom Burns and G.M. Stalker in the United Kingdom and Paul Lawrence
and Jay Lorsch in the United States. The crucial message of contingency theory is that
there is no one best way to organize: The organizational structures and the control
systems that managers choose depend on are contingent on characteristics of the external
environment in which the organization operates. According to contingency theory, the
characteristics of the environment affect an organization‟s ability to obtain resources. To
maximize the likelihood of gaining access to resources, managers must allow an
organization‟s departments to organize and control their activities in ways most likely to
allow them to obtain resources, given the constraints of the particular environment they
face. In other words, how managers design the organizational hierarchy, choose a control
system, and lead and motivate their employees is contingent on the characteristics of the
organizational environment an important characteristic of the external environment that
affects and organization‟s ability to obtain resources is the degree to which the
environment is changing. Changes in the organizational environment include: changes in
technology, which can lead to the creation of new products (such as compact discs) and
result in the obsolescence of existing products (eight-track tapes); the entry of new
competitors (such as foreign organizations that compete for available resources); and
unstable economic conditions. In general, the more quickly the organizational
environment is changing, the greater are the problems associated with gaining access to
resources and the greater is the manager‟s need to find ways to coordinate the activities
of people in different departments in order to respond to the environment quickly and
effectively.

The basic idea behind contingency theory that there is no one best way to design or lead
an organization has been incorporated into other areas of management theory, including
leadership theories.

50
The major implication of are:

1. Management is entirely situational and there is nothing like universal principles of

management or best way of doing particular things. What mangers do depends on
the circumstances and environment.

2. The approach suggested suitable alternatives for those managerial actions which
are generally contingent upon external and internal environment. In all these
causes, action alternative cannot arrange in advance.

3. Contingency approach suggested that since organization interacts with its

environment, neither the organization nor its subsystem is free to take absolute
action. The basic problem of managing is to align the internal state with external
state.

 Limitation of contingency approach

1. Inadequate Literature

It has not adequate spelled out various type actions which 'can be taken under
different situation.

2. Complex

Determination of the situation in which managerial action is to be involves

analysis a large number of variables with multifarious dimension.

3. Difficult empirical testing

For empirical testing of a theory, it is necessary that some methodology is

available.

4. Reactive not proactive

Contingency approach is basically reactive in nature. It merely suggests what

manager can do in given situation.

51
5.5 The Modern Approaches and Basic Milestones in Management

Early management thought is often not thought of by many business majors as primitive
in nature, but there is a vast array of management history which most do not know.
Modern management is not often thought of as modern management theory, yet it would
have to be namely modern management. Management thought has been researched in
reference to early management thought verses modern management thought. Most
business executives only have a healthy understanding of current and modern
management thought and little knowledge on the facet of the management history which
has birthed modern management thought.

Management thought involves politics and theory. The politics of management thought
often come from the ones whom want the management styles to be received. It is
commonly know that political institutions are known to establish and restore order to
under established institutions. Management science during the factory era did just that.
During the Great Depression management science was desperately needed for
reestablishing jobs. The Labor Unions were created as a result. This proved to be one of
the most effective changes management science contributed to history.

Management science and thought have aspects that have been the foundation of our
modern management styles. Early management started like everything else in the world
stated; with people wanting a solution to problem. Management thought has been often
thought of as a type of science, and in fact it is. Managerial science uses assets of human
resources and business principles to define and resolve workplace issues. In the early era
of factory modeled companies managerial sciences were basically obsolete and non-
existent. Whereas during the more advanced managerial thought era companies started to
focus on more of a humanistic approach to resolving issues with managerial science by
establishing policies and procedures as well as employee labor relations.

Among all of the management thought theories there are some key principles that have
been defined. The fundamentals of the past have been neglected by scholars of the
present day. The evolution of management thought has been deprived of the past which

52
has the backbone of modern day management. It is a known fact that anything that is
currently in existence as we as humans may know it to be, had to come from somewhere.

"The past exists in a reciprocal relationship with the present (Bedeian, 2004).”
Management is a trade and ordnance which has been around for centuries and has always
had its own place in any history, which is studied. Early management thought ha~
evolved over this time period with more advance thinking in how to better manage and
keep order. Significant contributions have deemed necessary in order for management
thought to become evolved as we know it today. Modern management thought is
surrounded by policies, procedures and ethical methodologies which guide corporate
America. Many aspects of modern management thought derived from the economic
history of traditional management. Factory era management science concepts such as
well-defined hierarchy, labor relations, rules and regulations, interpersonal skills,
competence and records management cultivated the framework of the 21stcentury of
modem management.

Modern management science is obviously shaped by every aspect of the past. Education
can teach management thought, but it is only truly understood by experience.
Management thinking and science involves many lessons that are considered to be
invaluable which are explained by Bedeianin the Gift of Professional Maturity in five
lessons.

The first lesson is that of "realizing ideas are a product of their own time and place."
This is an epiphany for business majors because it denounces the idea of management
thought being universal to all times. In fact, one particular management style may only be
justified and useful in that particular time period such as the Great Depression. Them
management thought of that time period and that of the current time period of entirely
different and only aspects of the management thought of the Great Depression are
applicable to modern times.

The second lesson in management thinking is the “advantage of being an informed

consumer of "received knowledge," This is simple but one of the truest statements I have
ever read in my entire life. Information is vitally important when it comes to management

53
thought. Information is the only important adversary when it comes to management
thought; everything in management theory is based off of acclaimed information.
Without "received-knowledge” management is obsolete.

The third lesson is “the danger of inherent in relying on secondary source materials."
When it comes to secondary information, it may as well be a piece of trash - in my
professional opinion. Secondary information; when it comes to management thought is
useless. Which is why modern management thought has a bit of an advantage over factor
era management thought.

The forth lesson in management information is “widely accepted facts are often wrong.”
This was stunning, because as an accelerated scholar I have been often told that what I
read and see is true when it comes to research. The researcher suggests accepted facts are
widely wrong this begs the explanation of what is considered to be accepted as fact. In
management thought fact may not always be determined as fact unless the information to
support the facts is true in nature. During the factory era the employees were not
receiving managerial facts about the actual conditions with which they had been working.
Compensation was greatly understand, child labor was widespread and employees were
not sure who to put their faith into modern management thought has learned lessons from
the factory era management history and has taken great strides to improve these facts of
management.

The fifth and last lesson is the “special advantage of the past history.” Modern
management thinking has had the advantage of learning from the past events that were so
devastating to the world and has the advantage of making better management economic
choices.

In conclusion early management thought is the foundation of modern management

thought. Without the past managerial mistakes and lessons learned we would not have
future accomplishments in management. Many aspects of the factory era have allowed us
to make better managerial decisions and improve on the world in reference to
management thought. The lessons have established foundations for improving modern
management though and are applicable to these modern times. History teaches us more

54
than what we may be able to discover on our own. If we take the time to remember the
foundations of our current situations, maybe we will see the opportunity to become more
than what we thought we could grow to be.

Activity 5: discuss characteristics of system and the limitation of contingency

approach to management.

Check List

S/N Points Yes No

I am able to describe modern management thought

2 I am able to elaborates systems theory of management

3 I am able to explain quantitative management theories

4 I am able to describe implications and limitations of contingency

management thought

55
 Self-Exercise 5
Part One: Choose the correct answer from the given alternatives

1. Consideration of modern management is

a. Environment
b. All organization system
c. A and B
d. None
2. Closed system can interactive environment.
a. True
b. False
3. Which one the following is not characteristic of system approach;
a. Descriptive
b. Adaptive
c. Probabilistic
d. None
4. The quantitative management viewpoint focuses on the use of
a. mathematics,
b. statistics, and
c. information aids to support managerial decision making and organizational
effectiveness
d. All

56
Part Two - Short Answer
1. Discuss the major implication and limitation of contingency approach?

2. What management thought involved in modem approach?

57
 CHAPTER SIX

THEORIES OF MOTIVATION

Introduction

Under this particular chapter we are going to discuss what motivation means and its
concepts in general and specifically we will discuss elements of motivation, the different
earlier theories of motivation like Abraham Maslow‟s hierarchy of needs theory,
Alderfer‟s three hierarchy of needs theory, Herzberg‟s motivation theory, etc. and
contemporary motivation theories like McClelland‟s acquired need theory, Adam‟s
equity theory, Edwin Lockey‟s goal setting theory, expectancy theory of motivation and
others. Finally, we will discuss implication of these theory for managers and impact of
motivation on performance.

Chapter Objectives

After reading this chapter you will be able to:

 define motivation.
 explain need hierarchy theory and how it applies in organizations.
 describe equity theory‟s approach to motivation in the workplace.
 outline the basic assumptions of expectancy theory and its implications in
organizations.
 explain how goals can be set to motivate high levels of job performance.

6.1 Motivation

? Define Motivation and identify its components?

58
Scientists have defined motivation as the process of arousing, directing, and maintaining
behavior toward a goal. As this definition suggests, motivation involves three
components.

The first component, arousal, has to do with the drive, or energy behind our actions. For
example, when we are hungry, we are driven to seek food.

The second component, direction involves the choice of behavior made. A hungry person
may make many different choices eat an apple, have a pizza delivered, go out for a burger
and so on.

The third component, maintenance is concerned with people‟s persistence, their

willingness to continue to exert effort until a goal is met. The longer you would continue
to search for food when hungry, the more persistent you would be.

Putting it all together, it may help to think of motivation by using the analogy of driving a
car. In this manner, arousal may be likened to the energy generated by the car‟s engine
and fuel system. The direction it takes is dictated by the driver‟s manipulation of the
steering wheel. And finally, maintenance maybe thought of as the driver's determination
to stay on course.

While motivation, in general, can be described by this simple analogy. It is really a highly
complex concept. This is reflected by the fact that people often are motivated by many
things at once, sometimes causing internal conflicts. For example, a factory worker may
be motivated to make a positive impression on his supervisor by doing a good job, but at
the same time he may be motivated to maintain friendly relations with his co-workers by
not making them look bad. This example has to do with job performance, and indeed,
motivation is a key determinant of performance. However, it is important to note that
motivation is not synonymous with performance. In fact, as we will explain later, even
the most highly motivated employee may fall short of achieving success on the job-
especially if he or she lacks the required skills or works under unfavorable conditions.
Clearly, while motivation does not completely account for job performance, it is an

59
important factor. More importantly, it is a factor that managers may have some control
over. This chapter covers the different approaches for motivating people on the job.

6.1.1 The Concept of Motivation

Motivation could be described as a driving force that makes willingly want to put in their
best in what they do. The concept of motivation is that there is no need to force or
threaten people to work harder, as any such force or threat is likely to be ineffective in the
long run. Rather, it is better that people should be motivated as it is believed that driving
force which results from motivation will compel people to put in their best out of
willingness and not out of force or threat.

Motivation is believed to lead to an increase in employees' work performance. That in

turn leads to an increase in overall organizational productivity levels. Furthermore,
motivation is said to improve employee job satisfaction.

Nevertheless, it should be borne in mind that motivation is not a „magic show' that can
perform miracles. Thus, we should not expect a secondary school leaver to be able to do
the work of a qualified engineer simply because he is highly motivated. Rather for
motivation to be effective not only should staff‟ be motivated but management should
make sure that the staff has the ability to do the job in the first place. It is when they have
the ability and skills that motivation would work. Thus, if a staff member who fails to
improve in work performance even though he is clearly motivated it could be a sign of
lack of ability, which in turn could be a sign of training need. Motivation in this case
would only improve if this particular member of staff is trained to acquire the vital skills
and ability such training could be both on-the-job and off-the-job.

It is very important that managers continue to have this in mind as they may feel
frustrated and disappointed; in some cases, for instance, they may become angry with the
staff, because they fail to appreciate the handicaps the member of staff is experiencing.

60
6.1.2 Early Theories of Motivation

A. Maslow’s Hierarchy of Needs Theory. In this, perhaps best known (and least
supported) of all motivational theories, Abraham Maslow proposed that there are five
levels of human needs. As each of the lower level needs are satisfied, the next unsatisfied
need becomes dominant. Satisfied needs no longer motivate, only unsatisfied needs
motivate people.

a. Physiological: lower order need, includes hunger, thirst, shelter, sex, and other
bodily needs. Lower order needs are satisfied externally, through forces outside of
the person.

b. Safety: lower order need, includes security and protection from physical and
emotional harm.

c. Social: upper order need, includes affection, belongingness, acceptance, and

friendship. Upper order needs are satisfied internally, that is, from within the
person.

d. Esteem: upper order need, includes internal (Self-respect, autonomy, and

achievement) and external (status, recognition, and attention) esteem factors.

e. Self-actualization: upper order need, defined as the drive to “be all one can be” it
includes growth, achieving one‟s potential, and self-fulfillment.

B. McGregor’s Theory X and Theory Y. Douglas McGregor‟s theory proposed that

there were two basic views of human nature, one essentially negative (Theory X) and the
other positive (Theory Y). Which view a manager believed was true would give that
manager a pre-set series of assumptions and related behaviors.

1. Theory X. In this negative view of human nature, workers are basically lazy and need
firm guidance. The assumptions related to Theory x are:

a. Work Avoidance. Employees dislike work and so will try to avoid it.

61
 b. Need for Control. Since employees‟ dislike work, they must be coerced,
controlled or threatened with punishment to get them to achieve organizational
goals.
c. Avoidance of Responsibility. Workers seek formal direction and dislike taking
responsibility.
d. Security is Paramount. Employees value security above all else and display little
ambition.
In Maslow‟s terms, a Theory X viewpoint means that lower-order needs dominate
individual needs. Theory X managers tend to be very directive, are seen as harsh and
unbending, and will often be accused of “micro-management.”

2. Theory Y. In this positive view, employees are willing workers who actively seek
responsibility. The underlying assumptions are:

a. Work as play. Work is as natural as play or rest.

b. Commitment. When employees are committed, they will exercise self-direction
and self-control.
c. Accepting Responsibility. Workers accept, and will even seek, responsibility.
d. Innovation is Common. The ability to make innovative decisions is widely
disbursed throughout the population; it does not only exist in the managerial
ranks.

In Maslow‟s terms, a Theory Y viewpoint means that higher-order need dominate

individual needs. Managers who hold to this view tend to use participative decision
making, create responsible and challenging jobs, and build good group relations in an
attempt to motivate employees. Unfortunately, as with Maslow‟s theory, there is no
research evidence that either view of human nature is valid or that taking actions based
on Theory Y will increase motivation in workers.

C. Herzberg’s Two-Factor (Motivation-Hygiene) Theory. Fredrick Herzberg proposed

that an individual‟s relation to work is basic and that one‟s attitude toward work can very
well determine success or failure. In other words, things that people feel good about at
work are motivating and those things they don‟t feel good about are de-motivating. In

62
this research, Herzberg realized that the opposite of satisfaction is not dissatisfaction;
rather there are two different factor scales, one ranging from satisfaction to on
satisfaction and the other from dissatisfaction to on dissatisfaction. When he related a
number of workplace factors against these two scales, he realized they were very
different concepts. He called the first set of factors motivation factors and the second
hygiene factors.

a. Hygiene Factors. These workplace factors, when not met, lead to job satisfaction.
When they are met, they do NOT lead to job satisfaction, but rather, to a lack of
dissatisfaction. So, meeting hygiene factors does NOT increase motivation, it
merely placates the workers. Hygiene factors include quality of supervision, pay,
company policies, physical working conditions, relations with others, and job
security.
b. Motivation Factors. These are intrinsically rewarding factors in the work
environment such as promotion and personal growth opportunities, recognition,
responsibility, and achievement. Meeting these factors will increase motivation by
creating a satisfying work environment. There are many criticisms of the Two-
Factors Theory, mostly dealing with the methodology Hertzberg used in his initial
studies.

6.1.3 Contemporary Theories of Motivation Advertisement

? List and discuss the contemporary theories of motivation?

Unlike the theories of motivation, these contemporary theories of motivation do have a

reasonable degree of supporting documentation. It is important to remember that these
are still theories. None of these has been totally proven to be true.

A. McClelland’s Theory of Needs. David McClelland created a theory based on three

needs:

63
 i. Need for Achievement: the drive excels and to achieve in relation to a set of
standards. Achievers seek rapid feedback on performance, they like tasks of
intermediate difficulty, and they accept personal responsibility for success or
failure. High achievers tend to be successful entrepreneurs. However, having a high
need for achievement does not necessarily mean the person would be a good
manager for larger organizations, as his or her desire for recognition supersedes his
or her concern for the organization. Employees with low achievement needs can be
trained to increase their need for achievement.

ii. Need for Power: the need to make others behave in a way they would not have
behaved otherwise. People with high power needs feel they have to an impact or be
influential with other people. They prefer to be placed into competitive and status-
oriented situations. High power people are more concerned with prestige and
gaining influence over others than wide effective performance.

iii. Need for Affiliation: the desire for friendly and close interpersonal relationships.
Affiliates strive for friendship, prefer cooperative situations, and desire friendships
with a high degree of mutual understanding. The best managers appear to be those
with a high need for power, and a low need for affiliation.

B. Cognitive Evaluation Theory. This theory proposes that the introduction of extrinsic
rewards, such as pay, tends to decrease overall motivation. This is because the intrinsic
reward of the work itself declines in the face of extrinsic rewards.

i. One of the implications of this theory is that a truism in management, pay or other
extrinsic rewards should be tied to effective performance is false. This technique
will actually decrease the internal satisfaction the employee receives from doing the
job. Therefore, the cognitive evaluation theory suggests that an individual‟s pay
should be non-contingent on performance, in order to maintain maximum intrinsic
motivation.

ii. This is not a hard and fast rule, however. The type of rewards makes a difference.
Verbal rewards are intrinsic and can increase intrinsic motivation, while tangible

64
 rewards, such as pay, undermine it. Managers should provide intrinsic rewards in
addition to any extrinsic incentives in order to make employees more motivated.

C. Goal-Setting Theory. This theory studies the effects goal specificity, challenge, and
feedback has on performance. The study of goal setting has created the following general
rules:

a. Specific goals produce a higher level of output than do generalized goals

b. Typically, the more difficult the goal, the higher level of performance assuming
that goal has been accepted by the employee. This is because:

i. Difficult goals focus attention on the task and away from distractions

ii. Difficult goals energize employees

iii. Difficult goals tend to make people persist in efforts toward attaining
them.

iv. Difficult goals force employees to discover strategies to help them

perform the task or job more effectively

c. Feedback is important in goal-setting theory, especially self-generated feedback.

d. The question of whether participative goal-setting increases motivation has not
yet been resolved. The assumption is that when employees are involved in setting
the goals, they have greater buy-in and therefore will have a higher level of
commitment.

Commitment: when an individual believes that he or she can achieve a goal and wants
to achieve it.

D. Contingencies in Goal-setting Theory:

a. Goal commitment increased when goals are made public, when the individual has
an internal locus of control, and when goals are self-set rather than assigned.

b. Goals are better in terms of performance on simple rather than complex tasks,
when tasks are familiar, and when they are accomplished by a single individual

65
 c. Goal-setting theory is culture-bound. It is important that the key components of
goal-setting theory match the culture traits.

E. Management by Objectives. To formalize goal-setting theory into an organization

one of the more effective ways to do this is through management by objectives or MBO.
Management by objectives emphasizes participative set goals that are tangible, verifiable,
and measurable. MBO operationalizes the concept of objectives by devising a process by
which objectives cascade down through the organization. The result of MBO is a
hierarchy of objectives that build toward organizational objectives. It also provides
specific performance goals for individuals.

1. Four ingredients common to MBO programs:

a. Goal specificity,
b. Participation in decision-making,
c. An explicit time period, and
d. Performance feedback.

2. MBO and Goal-Setting: the primary difference between MBO programs and goal
setting theory relates to the issue of participation. MBO strongly advocates it, while goal
setting theory demonstrates that having managers assign goals is usually just as effective.

3. Primary Reasons for MBO Failure: MBO failure can come from cultural
incompatibility or the following internal organizational issues:

a. Unrealistic expectations regarding results

b. Lack of commitment by top management, and
c. An inability or unwillingness by management to allocate rewards based on goal
accomplishment.

F. Bandura’s Self-Efficacy Theory: (also known as “social cognitive theory” or “social

learning theory”). Typically, people with high self-efficacy respond better to challenges
and negative feedback than those with low self-efficacy.

Self-efficacy: related to confidence, this is an individual’s belief that he or she is capable

of performing a task.

66
1. Goal-Setting Theory and Self-Efficacy Theory Complement Each Other – while
managers set difficult goals for employees, this leads employees to have a higher level
of self-efficacy and they set higher goals on their own. This is because when managers
set difficult goals for people, it communicates their confidence in those people.

2. Four ways to Increase Self-Efficacy:

a. Enactive Mastery: gaining relevant experience with the task or job. The most
important source of increasing self-efficacy.

b. Vicarious Modeling: becoming more confident, because another person is

observed doing the task. Most effective when the observer and the target are
perceived to be very similar.

c. Verbal Persuasion: confidence gained because another person convinces the target
of the target's abilities.

d. Arousal: an energized state, which may drive a person to complete a task. Not
always effective in tasks that require detail-orientation or finesse.

3. Personality and Intelligence - While not part of self-efficacy theory, intelligence,

conscientiousness, and emotional stability have all been shown to increase self-efficacy.
In fact, the relationship is so strong that some researchers believe that self-efficacy itself
is merely a reflection of the effects of a highly confident personality.

G. Adam’s Equity Theory: This view holds that motivation can be affected by the
employees make of their job inputs (effort, experience, education, and the job's outcomes
(salary levels, raises, recognition) relative to the inputs of other employees. If the ratios
of inputs to outputs are roughly equal between employees, a state of equity is said to
exist. The situation is perceived to be fair.

However, when the rations are seen as unequal, employees may experience tension and
emotion. Employees who believe they are under-rewarded may be angry, while those
who feel they are over-rewarded might feel guilty. This emotional tension provides the
motivation to do something to correct the situation.

67
1. Referent Comparisons - the individuals that the employees compare themselves to
(their referents). The four basic comparisons are:

a. Self-Inside: an employee‟s own experiences in a different position within the

current organization.
b. Self-Outside: an employee‟s experiences in the situation or position outside the
current organization.
c. Other-Inside: Other individuals within the current organization.
d. Other-Outside: other individuals outside the employee‟s current organization.

2. Four Moderating Variables – the selection of which referent to use in comparison will
depend upon four moderating variables.

a. Gender - both genders prefer same-sex comparisons.

b. Lengths of Tenure – employees with little experience in the current organization
will tend to use their own personal experiences, while employees of long tenure
will tend to use coworkers as referents.
c. Level in the Organization - upper-level employees tend to make other-outside
comparisons more often than do lower-level employees.
d. Amount of Education or Professionalism -the higher the educational level of
the employees; the more likely they are to use other-outside comparisons.

3. Six Choices in Conditions of Perceived Inequity- when motivated to change are

inequitable situation, employees have six basic choices to relieve the tension.

a. Change their inputs

b. Change their outcomes
c. Distort perceptions of self
d. Distort perceptions of others
e. Choose a different referent
f. Leave the field

68
4. Equity Theory and Pay - the following prepositions are based on equity theory under
conditions of inequitable pay. The purpose of each of the prepositions is to bring the
ratios back into balance.

a. When paid based on time (hourly wages or salary), over-rewarded employees will
produce more than will equitably paid employees.

b. When paid by quantity of output (piecework), over-rewarded employees produce

fewer, but higher-quality, units than will equitably paid employees.

c. When paid based on time, under-rewarded employees will produce less output of
poorer quality.

d. When paid by the piece, under-rewarded employees will produce a large number
of low quality units in comparison with equitably paid employees. Research has
shown that overpayment does not have a very significant effect on behavior in
most work situations and that not all people are equally equity sensitive.

5. Justice and Equity - equity is closely tied to a desire for fairness and fairness is
normally associated with justice. There are a number of ' views of justice that relate
equity theory.

a. Distributive Justice - The historical type of justice used in equity theory,

distributive justice is the perceived fairness of the amount and allocation of
rewards among individuals. This form of justice is most strongly related to
satisfaction with outcomes and organizational commitment.

b. Organizational Justice - In this, more recently accepted view of justice, justice is

the employee's overall perception of what is fair in the workplace. The key
element in organizational justice is perception, and since we've already learned
that perception is a highly individual process, it should be obvious that judgments
of fairness in organizations can vary significantly between individuals.

c. Procedural Justice - this view of justice focuses on the fairness of the process used
to distribute rewards. The two key elements of procedural justice are:

69
 i. Process Control: the opportunity to present one's point of view about desired
outcomes to decision-makers.

ii. Explanations: the clear reasons given to a person by managers for the outcome.
In the absence of distributive justice, research has shown that procedural justice
becomes more important to employees. This form of justice is most strongly
related to job satisfaction, employee trust, turnover, job performance, and
citizenship behaviors.

d. Interactional Justice-Defined as the individual's perception of the degree to which

he or she is treated with dignity, concern, and respect. This is a more interpersonal
view of justice, normally related directly between supervisor and employee.

To promote fairness in the workplace, managers should consider openly sharing

information on how allocation decisions were made, following consistent unbiased
procedures, and engaging in similar practices to increase the perception of procedural
justice.

H. Vroom's Expectancy Theory. This widely accepted explanation of motivation deals

with a coupling of three beliefs. The belief that

a. effort will lead to a good performance appraisal,

b. good appraisals will lead to organizational rewards, and
c. Organizational rewards will satisfy the employee's personal goals.

The relationship between these three beliefs and the strength of the links between them
are the focus of this theory.

1. The Three Key Relationships:

i. Effort-Performance Relationship - Defined as the probability perceived by the

individual that exerting a given amount of effort will lead to successful performance.
If the employee believes that effort will not result in successful performance or that the
performance will not be accurately reflected in the performance appraisal, little effort
will be expended.

70
ii. Performance-Reward Relationship - The degree to which the individual believes
that performing at a particular level will lead to the attainment of a desired outcome.
Unless the relationship between strong performance appraisals and rewards is clear,
little effort will be expended to achieve those high appraisal marks.

iii. Rewards-Personal Goals Relationship- The degree to which organizational rewards

satisfy an individual's personal goals or needs and the attractiveness of those potential
rewards for the individual. Unless organizational rewards are tailored to individual
employee wants and needs, they will not be very motivational and little effort will be
expended. While the research results are mixed, there is some support for this theory.
It may be considered somewhat idealistic, considering the current realities of the
workplace.

6.2 Maslow'sNeed Hierarchy

Abraham Maslow developed a theory that humans have five sets of needs that are
arranged in a hierarchy. He contends that people start by trying to satisfy their most basic
or compelling needs and progress toward the most fulfilling. These needs are as follows:

i. Physiological needs: These include the need for food, water, shelter, clothing and
money. Until an individual has access to these necessities, there can be no further
progress. These needs are very basic, and for the most part, society and our social
network have ensured that they are present. Intrinsic values include personal comfort and
satisfaction, while the extrinsic values are most often provided by the organization, the
community, or society.

ii. Safety needs: These include security, stability, and a structured environment. Here, the
individual expects and pursues job security, a comfortable work environment, pension
and insurance plans, and freedom to organize in order to ensure continuation of these
benefits. Individual's main objective is to ensure that benefitsare protected or
employment needs are being met rather than contributing to long-term organizational
goals. Again, we see a dependence on the external environment to provide these supports.

71
Personal motivation may include the peace of mind that can be provided as a result of
these needs being secured.

iii. Relationship needs: Relationship needs include socialization, affection, love

companionship, and friendship. The individual at this level participates for personal or
intrinsic rewards. Since no person can live for extended periods without interaction with
other people, the individual may be drawn to participate simply to fulfill this need.
Organizations that provide these opportunities include social clubs, singles clubs, seniors
clubs and service clubs, depending on the level of personal need. The organization can
assist by ensuring that the opportunity for social and relationship expectations are created
and met.

iv. Esteem needs: These include feelings of adequacy, competence, independence,

confidence, appreciation, and recognition by others. Again, the individual is driven more
by internal or intrinsic needs. The external environment is needed more to provide
recognition than to provide material rewards. At this point, the intrinsic value is more
important than that which can be provided by outside influences. The ego seems to take
over here and the need is to ensure that it is satisfied.

v. Self-actualization: This area is the most difficult to define and therefore, may be the
most difficult to explain. Why does the successful business person need to pursue further
wealth when they have already accumulated more than they will ever need? The answer
may lie in the fact that motivation is more internal and therefore, even more
individualistic. Different people have different ideas about what they need to achieve in
order to obtain true happiness. For the wealthy person, money may no longer be the
motivator, it may now be a need to exercise power or the adventure and adrenalin rush
created as a result of playing "high stakes games". This becomes the intrinsic motivation.
People who pursue self-actualization are more accepting of reality, themselves, and
others. Organizational requirements may include the opportunity for creativity and
growth. Frequently, individuals aspiring to this level often operate outside existing
organizations and instead build their own structures to suit their individual needs. In
discussing this theory, it appears, that the further up the scale an individual moves, the

72
more the rewards or motivators move from the external environment to an internal need.
It also, becomes more difficult to influence motivation, since material rewards become
less relevant and internal rewards become more difficult to identify and address. In order
to enhance organizational performance, it is important that the organization recognize the
individual need and provide opportunities for satisfaction.

6.3 Hertzberg’s Theory

? List and discuss hygiene and motivator factors of Herzberg?

Herzberg's two-factor hygiene theory was based on interview research that he carried out
on about two hundred accountants and engineers in 1959. The objective of the interview
was for the accountants and engineers to recall what they thought created satisfaction and
what created dissatisfaction at work. The ones that created satisfaction, he called
motivators while the ones that created dissatisfaction he called hygiene or maintenance
factors.

The resulting Motivators are as follows: -

a. Achievement
b. Recognition
c. Work
d. Responsibility
e. Promotion and Advancement
f. Prospect for growth

On the other hand, the hygiene factors that were identified were:

a. Company Policy and Administration.

b. Supervision
c. Relationship with Supervision
d. Work Conditions

73
 e. Salaries
f. Relationship with Peers
g. Personal Life
h. Relationship with Staff
i. Status
j. Job Security

Other that may be included as hygiene factors are:

a. Proper Lighting and Ventilation at Work

b. Health and Safety Facilities
c. Noise Levels etc.

Herzberg believed that the motivators can create job satisfaction but the hygiene factors
cannot. Rather, the hygiene factors if taken care of can only play a preventative role i.e.
preventing existing satisfaction from declining though they themselves cannot improve
satisfaction. Thus, managers should not be complacent in thinking that once the hygiene
factors are tackled the staff would have been motivated. Instead, what it simply means is
that the condition is now right for the motivators to be applied to achieve a positive
result. Which brings us to the next point which is that for the motivators to yield positive
results, the hygiene factors should be taken care of first. This clearly shows that
consideration of both factors is important. Thus, no amount of effort in applying the
motivators would work if staff has not been paid salary – which is hygiene factors.
Another way of looking at it is that it could be likened to the different but equally
important roles that a car and petrol plays. For instance, the petrol cannot take you home,
only the car can, but without the petrol, the car cannot take you home. Herzberg called
his research “hygiene” theory as the concept is derived from the principles of hygiene,
which is that hygiene only plays a preventative role and is not a cure.

Take for example the common practice that we wash our hands before eating, which is
part of common hygiene. This certainly is not intended to improve our health as there is
no correlation between washing hands and improvement in health.

74
Instead, it is intended to prevent our health from deteriorating. This certainly will be
equivalent to the hygiene or maintenance factors of Herzberg‟s theory.

On the other hand, if we want to improve our health; amongst other things it would
include proper and regular exercise, eating balanced diet, having enough rest and sleep.
These would be equivalent to the motivators as they are a plus to our health.

However, if we fail to wash our hands before eating and as a result we contracted
diarrhea, then no amount of exercise would work at this point. Instead, we would have to
arrest the diarrhea first before we preoccupy ourselves with exercise. Though there are
some criticisms of the theory, it is in general very highly regarded by managers.

6.4 Expectancy and Equity Theories

? What is the difference between Expectancy and Equity theories?

6.4.1 Expectancy Theory: Believing You Can Get What You Want

Beyond seeking fair treatment on the job, people are also motivated by the expectation
that they will achieve certain desired rewards by working hard. If you've ever put in long
hours studying in the hopes of receiving an “A” in one of your classes, then you
understand expectancy theory. This is one of the basic ideas behind the popularity of pay
systems known as merit pay plans, or pay for-performance plans, whichformally
establish links between job performance and rewards. However, a recent surely found
that only 25 percent of employees see a-clear link between good job performance and
their rate of pay. Clearly, companies are not doing enough to affect motivation. To get an
understanding of why companies are failing to significantly increase motivation, let's take
a closer look at expectancy theory.

75
  Components of Motivation

Expectancy theory claims that people will be motivated to exert effort on the job when
they believe that doing so will help them achieve the things they want. It assumes that
people are rational beings who think about what they have to do to be rewarded and how
much the reward means to them before they perform their jobs. Specifically, expectancy
theory views motivation as the result of three different types of beliefs that people have.
These are: expectancy the belief that one's effort will affect performance, instrumentality
the belief that one‟s performance will be rewarded, and valence the perceived value of
the expected rewards.

I. Expectancy. Sometimes people believe that putting forth a great deal of effort will
help them get a lot accomplished. However, in other cases, people do not expect that
their efforts will have much effect on how well they do. For example, an employee
operating a faulty piece of equipment may have a very low expectancy. Someone
working under such conditions probably would not continue to exert much effort.
After all, there is no good reason to go on trying to fill a bucket riddled with holes.
Accordingly, good managers will do things that help their subordinates believe that
their hard work will lead them to do their jobs better. With this in mind, training
employees to do their jobs better can be very effective in helping enhance expectancy
beliefs. Indeed, a large part of working more effectively involves making sure that
one's efforts will pay off. Some companies have taken a more direct approach by
soliciting and following their employees‟ suggestions about ways to improve their
work efficiency. For example, United Electric Controls (a manufacturer of industrial
temperature and pressure controls located in Watertown, Massachusetts) routinely
asks its employees for ways it can help them do their jobs more effectively. Since
instituting this approach, not only have individual employees become more
productive, but the company as well. In fact, important indicators revealed that the
company's performance improved dramatically after it began following its employees'
suggestions (For instance, on time deliveries rose from 65 percent to 95 percent).

76
II. Instrumentality Even if an employee performs at a high level, his or her motivation
may suffer if that performance is not appropriately rewarded - that is, if the
performance is not perceived as instrumental in bringing about the rewards. So, for
example, an extremely productive employee may be poorly motivated if he or she has
already reached the top level of pay given by the company. Recognizing this
possibility, several organizations have crafted pay systems that explicitly link desired
performance to rewards.

III. Valence. Thus far; we have been assuming something that needs to be made explicit-
namely, that the rewards the organization offers in exchange for desired performance
is, in fact, desirable. In other words, using terminology from expectancy theory, they
should have a positive valence: This is no trivial point if you consider that rewards
are not equally desirable to everyone. For example, whereas a bonus of $500 may hot
be seen like much of a reward to a multimillionaire CEO, it may be quite valuable to
a minimum-wage employee struggling to make ends meet. Valence is not just a
matter of the amount of reward received, but what that reward means to the person
receiving it.

These days, with a highly diverse workforce, it would be erroneous to assume that
employees are equally attracted to the same rewards. Some, like single, young employees
for example, might recognize the incentive value of a pay raise, whereas others, such as
those raising a family, might prefer additional vacation days, improved insurance
benefits, and day-care or eldercare facilities. So, how can an organization find out what
its employees want? Some companies have found a simple answer ask them. Many more
companies have taken a completely individualized approach, introducing Cafeteria-style
benefit plans-incentive systems which allow employees to select their fringe benefits
from a menu of available alternatives. Given that fringe benefits represent almost 40
percent of payroll costs, more and more companies are recognizing the value of
administering them flexibly.

77
  Role of Motivation in Performance

Thus far, we have discussed the three components of motivation identified by expectancy
theory. However, expectancy theory views motivation as just one of several determinants
of job performance. Motivation combines with a person's skills and abilities, role
perceptions, and opportunities to influence job performance.

It's no secret that the unique characteristics, special skills, and abilities of some people
predispose them to perform their jobs better than others. For example, a tall, strong, well-
coordinated person is likely to make a better professional basketball player than a very
short, weak, uncoordinated one even if the shorter person is highly motivated to succeed.

Recognizing this, it would be a mistake to assume that someone performing below par is
poorly motivated. Instead, some poor performers may be very highly motivated, but
lacking the knowledge or skills needed to succeed. With this in mind, companies often
make big investments in training employees so as to ensure that they have what it takes to
succeed, regardless of their levels of motivation.

Expectancy theory also recognizes that job performance will be influenced by people's
role perceptions-that is, what they believe is expected of them on the job. To the extent
that there are uncertainties about what one's job duties may be, performance is prone to
suffer.

For example, a shop foreman who believes his primary job duty is to teach new
employees how to use the equipment may find that his performance is downgraded by a
supervisor who believes he should be spending more time doing routine paperwork
instead. In this case the foreman's performance wouldn't suffer due to any deficit in
motivation, but because of misunderstandings regarding what the job entails.

Finally, expectancy theory recognizes the role of opportunities to perform one's job. Even
the best employees may perform at low levels if their opportunities are limited. This may
occur, for example, if there is an economic downturn in a salesperson's territory, or if the
company‟s available inventory is insufficient to meet sales demand.

78
In conclusion, expectancy has done a good job of sensitizing managers to several key
determinants of motivation, variables that are frequently controllable. Beyond this, the
theory clarifies the important role that motivation plays in determining job performance.

Activity 6: Discuss the role of motivation in improving employees‟

performance.

6.4.2 Equity Theory: The Importance of Being Fair

There can be little doubt about the importance of money as a motivator on the job.
However, it would be overly simplistic and misleading to say that people only want to
earn as much money as possible. Even the highest-paid executives, sports figures, and
celebrities sometimes complain about their pay despite their multi-million-dollar salaries.
Are they being greedy? Not necessarily. Often, the issue is not the actual amount of pay
received, but rather, pay fairness, or equity.

Organizational scientists have been actively interested in the difficult task of explaining
exactly what constitutes fairness on the job, and how people respond when they believe
they have been unfairly treated. The major concept addressing these issues is known as
equity theory.

Balancing Outcomes and Inputs

Equity theory proposes that people are motivated to maintain fair, or equitable,
relationships between themselves and others, and to avoid those relationships that are
unfair, or inequitable. To make judgments of equity people compare themselves to others
by focusing on two variables:

79
a. Outcomes: what we get out of our jobs (e.g., pay, fringe benefits, prestige, etc.); and

b. Inputs: the contributions made (e.g., time worked, effort exerted, units produced). It
helps to think of these judgments as ratios that is, the outcomes received relative to the
inputs contributed (e.g., $1,000 per week in exchange for working 40 hours). It is
important to note that equity theory deals with outcomes and inputs as they are
perceived by people, not necessarily by objective standards. As you might imagine,
well-intentioned people sometimes disagree about what constitutes equitable
treatment.

According to equity theory, people make equity judgments by comparing their own
outcome/input ratios to the outcome/input ratios of others. This so-called "other" may be
someone else in one's work group, another employee in the organization, an individual
working in the same field, or even oneself at an earlier point in time - in short, almost
anyone against whom we compare ourselves. These comparisons can result in one of
three different states: overpayment inequity, underpayment inequity, or equitable
payment.

How can inequitable states be turned into equitable ones? The answer lies in adjusting the
balance of outcomes and/or input. Among people who are underpaid, equity can be
created by raising one's outcomes and/or lowering. Likewise, those who are overpaid
may either raise their inputs or lower their outcomes. In both cases, either action would
effectively make the two outcome input ratios equivalent. For example, the underpaid
person, Bill, might lower his inputs such as by slacking off, arriving at work late, leaving
early, taking longer breaks, doing less work, or lowering the quality of his work - or, in
an extreme case, quit his job. He also may attempt to improve, his outcome, such as by
asking fora raise, or even taking home company property, such as tools or office supplies.
In contrast, the overpaid person, Andy, may do the exact opposite-raise his input or
reduce his outcome. For example, he might put forth much more effort, work longer
hours, and try to make a greater contribution to the company. He also might lower his
outcome, such as by working while on a paid vacation or by not taking advantage of
fringe benefits the company offers.

80
These are all specific behavioral reactions to inequitable conditions-that is, actions
people may take to turn inequitable states into equitable ones. However, people may be
unwilling to do some of the things necessary to respond with typical behaviors toward
inequities. In particular, they may be reluctant to steal from their employers, or unwilling
to restrict their productivity, for fear of getting caught "goofing off." In such cases,
people may attempt to resolve inequity cognitively, by changing the way they think about
the situation. As noted earlier, because equity theory deals with perceptions, inequitable
states may be redressed by altering one's thinking about their own, and others', outcomes
and input. For example, underpaid people may rationalize that others' input is really
higher than their own (e.g., "I suppose she really is more qualified than me"), thereby
convincing themselves that those individual's higher outcomes are justified. Similarly,
overpaid people may convince themselves that they really are better; and deserve their
relatively higher pay. So, by changing the way they see things, people can come to
perceive inequitable situations as equitable, thereby effectively relieving their feelings of
guilt and anger, and transforming them into feelings of satisfaction.

Responding to Inequities on the Job

There is a great deal of evidence to suggest that people are motivated to redress inequities
at work, and that they respond much as equity theory suggests. Consider two examples
from the world of sports. Research has shown that professional basketball players who
are underpaid (i.e., ones who are paid less than others who perform as well or better)
score fewer points than those who are equitably paid. Similarly, among baseball players,
those paid less than others who play comparably well tend to change teams or even leave
the sport when they are unsuccessful at negotiating higher pay. Cast in terms of equity
theory, the underpaid players may be said to have lowered their inputs.

6.5. Goal Theory

Another theory similar to that of Vroom is the goal theory (1984) by Locke which says
that a person's intentions or goals in life would determine his level of motivation.
Remember that, though similar, this is different from Vroom's expectancy theory. While

81
Vroom talks about a person's expectations, Locke's theory is concerned with a person's
goals which are much more positive than expectations.

Thus, based on this theory, a person who has clear goals in mind is much more likely to
be motivated to accomplishing these goals. L. J. Mullins in Management and
Organization Behavior (1993) identifies some practical implications for managers in
applying the goals theory:

1. Specific performance goals should systematically be identified and set in order to

direct behavior and maintain motivation.

2. Goals should be set at a challenging but realistic level. Difficult goals lead to higher
performance. However, if goals are set at too high as level, or are regarded as
impossible to achieve, performance will suffer, especially over a long period.

3. Complete, accurate and timely feedback and knowledge of results is usually

associated with high performance. Feedback provides a means of checking progress
on goal attainment and forms the basis for a revision of goals.

4. Goals can be determined either by a supervisor or by individuals themselves, goals

set by other people are more likely to be accepted when there is participation.
Employee participation in the setting of goals may lead to higher performance.

Activity 7: discuss and differentiate the different theories of motivation.

82
 Check List

S/N Points Yes No

I am able to describe concepts of motivation and its elements

2 I am able to elaborates Maslow‟s need theory of motivation

3 I am able to explain Alderfer‟s theory of motivation

4 I am able to describe Herzberg‟s theory of motivation

5 I am able to describe Equity theory of motivation

6 I am able to understand McClelland‟s theory of motivation

7 I am able to elaborate expectancy theory of motivation

8 I am able to appreciate implication of motivation theories for

performance

83
 Self-Exercise6

Par One: Choose the correct answer from the given alternatives
1. Motivation is
a. Arousal c. Direction
b. Maintenance d. All
2. Herzberg's two factors theory focuses:
a. On workplace c. A&B
b. On work environment d. None
3. The study or goal setting has created the following general rulesexcept:
a. Specific goals
b. The high level of performance
c. Feedback
d. None
4. When motivated to change an inequitable situation, employees have the following
varieties to relieve the tension except,
a. Change their inputs
b. Change their outcomes
c. Distort perceptions of self
d. None
Part Two: Discussion Questions
1. Discuss the three concepts of motivation?

2. What are the implications that managers used in applying goal theory?

84
 CHAPTER SEVEN

THE EMERGING TRENDS IN MANAGEMENT

Introduction

the focus of this chapter is on emergent trends and ongoing debates in the field of
management with particular emphasis on total quality management, six sigma, theory Z
and business process reengineering. Therefore, in the next sections of this chapter we are
going to discuss concepts of quality and quality management; meaning, origin, focus and
other aspects of total quality management. In addition, meaning, origin, components,
processes and other detail issues of six sigma will be elaborated. Moreover, origin,
meaning and other dimensions of Z-theory will be touched. Las but not least, meaning,
origin, challenges and application of BPR in Ethiopia will be discussed.

Chapter Objectives

After studying this chapter, you will be able to:

 define quality,
 define TQM,
 understand the concept of TQM in effective business leadership,
 analysis how six sigma tools and techniques perform in improvement of
efficiency,
 understand the concept of theory Z,
 understand the concept of BPR and its contribution in Ethiopia Public Sector.

7.1 Total Quality Management (TQM)

? What is quality?

85
A frequently use definition of quality is “delighting the customer by fully meeting their
needs and expectations.” These may include performance, appearance, availability,
delivery, reliability, maintainability, cost effectiveness and price. It is, therefore,
imperative that the organization knows what these needs and expectations are. In
addition, having identified them, the organization must understand them, and measure its
own ability to meet them. Quality starts with market research to establish the true
requirements for the product or service and the true needs of the customers. However, for
an organization to be really effective, quality must span all functions, all people, all
departments and all activities and be a common language for improvement. The
cooperation of everyone at every interface is necessary to achieve a total quality
organization, in the same way that the Japanese achieve this with companywide quality
control.

7.1.2 What is Total Quality Management (TQM)?

? Explain TQM?

TQM is the way of managing for the future, and is far wider in its application than just
assuring Product or service quality - it is a way of managing people and business
processes to ensure complete customer satisfaction at every stage, internally and
externally.

TQM, combined with effective leadership, results in an organization doing the right
things right, first time. The core of TQM is the customer-supplier interfaces, both
externally and internally, and at each interface lay a number of processes. This core must
be surrounded by commitment to quality, communication of the quality message, and
recognition of the need to change the culture of the organization to create total quality.
These are the foundations of TQM, and they are supported by the key management
functions of people, processes and systems in the organization.

86
7.1.3 Customers and Suppliers

There exist in each department, each office, and each home, a series of customers,
suppliers and customer supplier interfaces. These are ''the quality chains", and they can
be broken at any point by one person or one piece of equipment not meeting the
requirements of the customer, internal or external. The failure usually finds its way to the
interface between the organization and its external customer, or in the worst case,
actually to the external customer.

Failure to meet the requirements in any part of a quality chain has a way of multiplying,
and failure in one part of the system creates problems elsewhere, leading to yet more
failure and problems, and so the situation is exacerbated. The ability to meet customers'
(external and internal) requirements is vital. To achieve quality throughout an
organization, every person in the quality chain must be trained to ask the following
questions about every customer-supplier interface:

A. Customers (internal and external)

 Who are my customers?

 What are their true needs and expectations'?
 How do, or can, I find out what these are?
 How can I measure my ability to meet their needs and expectations?
 Do I have the capability to meet their needs and expectations? (If not, what must I do
to improve this capability?)
 Do I continually meet their needs and expectations? (If not, what prevents this from
happening when the capability exists?)
 How do I monitor changes in their needs and expectations?

B. Suppliers (internal and external)

Who are my internal suppliers?

What are my true needs and expectations?
How do I communicate my needs and expectations to my suppliers?

87
 Do my suppliers have the capability to measure and meet these needs and
expectations?
How do I inform them of changes in my needs and expectations?

As well as being fully aware of customers' needs and expectations, each person must
respect the needs and expectations of their suppliers. The ideal situation is an open
partnership style relationship, where both parties share and benefit.

C. Poor practices

To be able to become a total quality organization, some of the bad practices must be
recognized arid corrected. These may include:

 Leaders not give clear direction

 Not understanding, or ignoring competitive positioning
 Each department working, only for itself
 Trying to control people through systems
 Confusing quality with grade
 Accepting that a level of defects or errors is inevitable
 Firefighting, reactive behavior
 The "It's not my problem" attitude

 How many of these behaviors do you recognize in your organization?

7.1.4. The Essential Components of TQM - commitment & leadership

TQM is an approach to improving the competitiveness, effectiveness and flexibility of an

organization for the benefit of all stakeholders. It is a way of planning, organizing and
understanding each activity, and of removing all the wasted effort and energy that is
routinely spent in organizations. It ensures the leaders adopt a strategic overview of
quality and focus on prevention not detection of problems.

Whilst it must involve everyone, to be successful, it must start at the top with the leaders
of the organization.

88
All senior managers must demonstrate their seriousness and commitment to quality, and
middle managers must, as well as demonstrating their commitment, ensure they
communicate the principles, strategies and benefits to the people for whom they have
responsibility. Only then will the right attitudes spread throughout the organization.

A fundamental requirement is a sound quality policy, supported by plans and facilities to

implement it. Leaders must take responsibility for preparing, reviewing and monitoring
the policy, plus take part in regular improvements of it and ensure it is understood at all
levels of the organization.

Effective leadership starts with the development of a mission statement, followed by a

strategy, which is translated into action plans down through the organization. These,
combined with a TQM approach, should result in a quality organization, with satisfied
customers and good business results. The 5 requirements for effective leadership are:

 Developing and publishing corporate beliefs, values and objectives, often asa
mission statement
 Personal involvement and acting as role models for a culture of total quality
 Developing clear and effective strategies and supporting plans for achieving the
mission and objectives
 Reviewing and improving the management system
 Communicating, motivating and supporting people and encouraging effective
employee participation

The task of implementing TQM can be daunting. The following is a list of points that
leader's should consider; they are a distillation of the various beliefs of some of the
quality gurus:

 The organization needs a long-term commitment to continuous improvement.

 Adopt the philosophy of zero errors/defects to change the culture to right first
time

 Train people to understand the customer/supplier relationships

 Do not buy products or services on price alone - look at the total cost

89
  Recognize that improvement of the systems must be managed

 Adopt modern methods of supervising and training - eliminate fear

 Eliminate barriers between departments by managing the process improve

communications and teamwork

 Eliminate goals without methods, standards based only on numbers, barriers to

pride of workmanship and fiction - get facts by studying processes

 Constantly educate and retrain - develop experts in the organization

 Develop a systematic approach to manage the implementation of TQM

7.1.5 Culture change

The failure to address the culture of an organization is frequently the reason for many
management initiatives either having limited success or failing altogether. Understanding
the culture of an organization, and using that knowledge to successfully map the steps
needed to accomplish a successful change; are an important part of the quality journey.

The culture in any organization is formed' by the beliefs, behaviors, norms, dominant
values, rules and the “climate". A culture change, e.g., from one of acceptance of a
certain level of errors or defects to one of right first time, every time, needs two key
elements:

 Commitment from the leaders

 Involvement of all of the organization's people

There is widespread recognition that major change initiatives will not be successful
without a culture of good teamwork and cooperation at all levels in an organization, as
discussed in the section on People.

7.1.6 Building blocks of TQM

 processes, people, management systems and performance measurement

Everything we do is a Process, which is the transformation of a set of inputs, which can

include action, methods and operations, into the desired outputs, which satisfy the

90
customers' needs and expectations. In each area or function within an organization there
will be many processes taking place, and each can be analyzed by an examination of the
inputs and outputs to determine the action necessary to improve quality. In every
organization there are some very large processes, which are groups of smaller processes,
called key or core business processes. These must be carried out well if an organization is
to achieve its mission and objectives. The section on Processes discusses processes and
how to improve them, and implementation covers how to prioritize and select the right
process for improvement.

The only point at which true responsibility for performance and quality can lie is with the
people who actually do the job or carry out the process, each of which has one or several
suppliers and customers.

An efficient and effective way to tackle process or quality improvement is through

teamwork. However, people will not engage in improvement activities without
commitment and recognition from the organization's leaders, a climate for improvement
and a strategy that is implemented thoughtfully and effectively. The section on people
expands on these issues, covering roles within teams, team selection and development
and models for successful teamwork.

An appropriate documented Quality Management System will help an organization not

only achieve the objectives set out in its policy and strategy, but also, and equally
importantly, sustain and build upon them. It is imperative that the leaders take
responsibility for the adoption and documentation of an appropriate management system
in their organization if they are serious about the quality journey. The Systems section
discusses the benefits of having such a system, how to set one up and successfully
implement it.

Once the strategic direction for the organization's quality journey has been set, it needs
Performance Measures to monitor and control the journey, and to ensure the desired
level of performance is being achieved and sustained. They can, and should be,
established at all levels in the organization, ideally being cascaded down and most

91
effectively undertaken as team activities and this is discussed in the section on
Performance.

7.1.7 How is TQM organized?

The process of TQM implementation varies largely, depending on factors such as the size
of the company, changes in business environment, and the mission of the company. Yet,
it is important to note that there is an overall flow of the implementation process. The
following shows common steps to be taken by management in those processes and some
of the key elements required when implementing TQM in a company for the first time;

1. Preparation Phase

 Investigation on implementation of TQM methods

 Seminars for top and middle management
 Discussion on pros and cons of introducing TQM

2. Introductory Phase

 Decision on responsible department

 Announcement by CEO that TQM will be introduced
 Company-wide TQM implemented and members appointed
 QCC training provided
 Individual departments and sections commence improvement activities

3. Promotion Phase

 Introduction of policy management and linking of improvement activities to

management policy
 Standardization activities
 Operation of cross-functional management
 Introduction of management quality audit

4. Consolidation Phase

 Collection and analysis of market quality

92
  New product development
 Quality training
 QC Circle activities

It is important to note that some of the features of these processes vary from company to
company. Yet as Kanji states, the fundamental and common factors that each
organization has to go through during these processes are somewhat the same-the change
will be "the change in management style (Kanji and Asher 1993, 104)."

The first stage of development is a preparation phase in which managers discuss the
approach toward TQM. They "identify and. collect information about the organization in
the prime areas where improvement will have most impact on performance" (ibid.), while
exploring their knowledge on TQM by attending internal and external seminars. As has
been discussed, the commitment of management and its strong leadership are two of the
most important elements in quality management. Therefore, management needs to be
fully familiarized with TQM and fully understand the objectives, the methodology, and
its impacts on the company operations before disseminating them company-wide.

7.2 Six-Sigma

? What is Six- Sigma?

Sigma is a measurement that indicates how a process is performing. Six Sigma stands for
Six Standard Deviations (Sigma is the Greek letter used to represent standard deviation in
statistics) from mean. Six Sigma was developed by Motorola in the 1980s but has its
roots in Statistical Process Control (SPC), which first appeared in 1920s.Six Sigma
methodology provides the techniques and tools to improve the capability and reduce the
defects in any process.

Six sigma is a fact-based, data-driven philosophy of improvement that values defect

prevention over defect detection.

93
 a. Philosophy: The philosophical perspective views all works as a process that can
be defined, measured, analyzed, improved & controlled (DMAIC). Processes
require inputs & produce outputs. If you control the inputs, you will control the
outputs. This is generally expressed as the y= f (x) concept.
b. Set of Tools: Six Sigma as a set of tools includes all the qualitative and
quantitative techniques used by the six-sigma expert to drive process
improvement. A few such tools include statistical process control (SPC), Control
charts, failure mode & effects analysis, process mapping etc.

c. Methodology: This view of Six Sigma recognizes the underlying and rigorous
approach known as DMAIC. DMAIC defines the steps a Six Sigma practitioner is
expected to follow, starting with identifying the problem and ending with the
implementation of long-lasting solutions. While DMAIC is not only Six Sigma
Methodology in use, it is certainly the most widely adopted and recognized.

d. Metrics: In simple terms, Six Sigma quality performance means 3.4 defects per
million opportunities.

7.2.1 How Does Six Sigma Work?

There are three basic elements to Six Sigma.

1. Process improvement

The purpose of process improvement is to eliminate the root causes of performance

deficiencies in processes that already exist in the organization. These performance
deficiencies may be causing real problems for the organization, or may be preventing it
from working as efficiently and effectively as it could.

To eliminate these deficiencies a five-step approach is used.

1. DEFINE - a serious problem is identified and a project team is formed and given the
responsibility and resources for solving the problem.

94
2. MEASURE - data that describes accurately how the process is working currently is
gathered and analyzed in order to produce some preliminary ideas about what might
be causing the problem.

3. ANALYSE - based upon these preliminary ideas, theories are generated as to what
might be causing the problem and, by testing these theories, root causes are identified.

4. IMPROVE - root causes are removed by means of designing and implementing

changes to the offending process.

5.CONTROL - new controls are designed and implemented to prevent the original
problem from returning and to hold the gains made by the improvement.

7.2.2 The Six Sigma Strategy

To achieve Six Sigma quality, a process must produce no more than 3.4 defects per
million opportunities. An "opportunity" is defined as a chance for nonconformance, or
not meeting the required specifications. This means we need to be nearly flawless in
executing our key processes. Six Sigma is a vision we strive toward and a philosophy that
is part of our business culture.

7.2.3 Key Concepts of Six Sigma

At its core, Six Sigma revolves around a few key concepts.

 Critical to Quality: Attributes most important to the customer

 Defect: Failing to deliver what the customer wants

 Process Capability: What your process can deliver

 Variation: What the customer sees and feels

 Stable Operations: Ensuring consistent, predictable processes to improve what

the customer sees and feels

 Design for Six Sigma: Designing to meet customer needs and process capability

95
7.2.4 Our Customers Feel the Variance, Not the Mean

Often, our inside-out view of the business is based on average or mean-based measures of
our recent past. Customers don't judge us on averages; they feel the variance in each
transaction, and each product we ship. Six Sigma focuses first on reducing process
variation and then on improving the process capability. Customers value consistent,
predictable business processes that deliver world class levels of quality. This is what Six
Sigma strives to produce.

7.3 Theory Z
? What is theory Z?

Theory Z is a Japanese approach to management which was introduced by an American -

W. Ouchi in 1981."Over the course of the past two decades considerable attention has
been given to the success of Japanese manufacturing industries. One of the key factors in
their success, according to Ouchi, has been their approach to their management of
resources, especially people. Among the key features of Japanese industrial
organizations, notes Ouchi are the following personnel-related factors:

a. There is a high degree of mutual trust and loyalty between management and
employers.

b. Career paths are non-specialized with life-long job rotation as a central feature of
career development.

c. Decision-making is shared at all levels.

d. Performance appraisal is long-term (i.e. the first appraisal takes place 10 years
after joining the company).

e. There is a sense of collective responsibility. For the success of the organization,

co-operative effort rather than individual achievement is encouraged.

96
Although Ouch recognizes that many of the features of Japanese management cannot be
translated into Western Industrial Society, he believes that certain features can be applied
in a Western context. The move from the present hierarchical type of organization to a
Theory Z type organization which, says Ouchi: has the objective of developing the ability
of the organization to co-ordinate people, not technology, to achieve productivity.

In his view this requires a new philosophy of managing people based on a combination of
the following features of Japanese management.

1. Lifelong employment prospects.

2. Shared forms of decision making.

3. Relationships between boss and subordinate based on mutual respect.

This step requires the following strategy:

a. The adoption of a 'top-down' approach, based on a definition of the 'new

„philosophy agreed and supported by the organization's top management.

b. The 'new' philosophy should embrace the ideas of security of employment, shared
decision making, career development, team spirit and acknowledgement of
individual contribution within the team.

c. The implementation of the new approach should be carried through on the basis of
consultation and communication with the workforce and with full training support
to develop relevant skills for managers, supervisors and their teams. Despite the
participative management style implied by the above theory, it is important to note
that the Japanese have taken up many of the ideas of F.W. Taylor. "

97
7.4. Business Process Reengineering(BPR)

? What does BPR is?

Business process reengineering (BPR) has been receiving attention from industries as
well as the academic community, because it is likely to change management practice and
working processes in organizations in the future. However, it is commonly agreed that
BPR is important but also problematic. PR is known by many names, such as 'core
process redesign', 'new industrial engineering' or 'working smarter', All of them imply the
same concept which focuses on integrating both business process redesign and deploying
IT to support the reengineering work. In this section we attempt to explore two questions:
where does BPR come from and what is involved in BPR (i.e. its principles and
assumptions).

Generally, the topic of BPR involves discovering how business processes currently
operate, how to redesign these processes to eliminate the wasted or redundant effort and
improve efficiency, and how to implement the process changes in order to gain
competitiveness.

The aim of BPR, according to Sherwood-Smith (1994), is "seeking to devise new ways of
organizing tasks, organizing people and redesigning IT systems so that the processes
support the organization to realize its goals".

7.4.1 The Definition of BPR

It is argued by some researchers (for example, van Meel et al., 1994; MacIntosh and
Francis, 1997; Peltu et al., 1996) that there is no commonly agreed definition of BPR.
Peltuet al. consider that this lack of an accepted definition of BPR makes it difficult to
assess the overall success or failure of its concept. Thus, it is essential to make clear what
the definition of BPR is before we propose any framework and techniques for BPR. The
book Reengineering the Corporation: A Manifesto for Business Revolution by Hammer

98
and Champy (1993) is widely referenced by most BPR researchers and is regarded as one
of the starting points of BPR. The following is their definition of BPR:

'Reengineering is the fundamental rethinking and radical redesign of business processes

to achieve dramatic improvements in critical, contemporary measures of performance,
such as cost, quality, service and speed.

Another BPR father, Davenport (1993), describes 'business process redesign' as:

... the analysis and design of workflows and processes within and between organizations.
Business activities should be viewed as more than a collection of individual or even
functional tasks; they should be broken down into processes that can be designed for
maximum effectiveness, in both manufacturing and service environment.

These definitions suggest that we should concentrate on processes rather than functions
(or structures) as the focus of the redesign and management of business activity. The
definitions of the term 'process' by different researchers are also slightly different. For
example, Hammer and Champy (1993) define a process as:

A collection of activities that takes one or more kinds of input and creates an output that
is of value to the customer.

For Davenport (1993) it is:

A process is a specific ordering of work activities across time and space, with a
beginning, an end, and clearly identified inputs and outputs: a structure for action.

And Warboys et al. (1999) define a process as:

A process is structured change, i.e. there is a pattern of events which an observer may
recognize across different actual examples (or occurrences) of the process, or which may
be made manifest, or implemented, in many different occurrences.

In EPR, the process to be reengineered is the so-called business process. Davenport

describes a business process as "simply a structured, measured set of activities designed
to produce a specified output for a particular customer or market". Riemer (1998)

99
describes business processes in an object-oriented style: "business processes are series of
steps that change states of business objects (that is, customers, orders and inventory),
thereby causing business events". However, we should note. that BPR is concerned with
customer orientation. Thus, the outputs of business processes should not only achieve the
company's objectives, but also need to satisfy customers' requirements. From these
definitions we can conclude that business processes start and end with customers, and the
value of business processes is dependent upon customers.

7.4.2 The Origins of BPR

Some researchers argue that the original concept of reengineering can be traced back to
the management theories of the nineteenth century. As one report in The Financial Times
(1994) the purpose of reengineering is to make all your processes the best-in-class.
Frederick Taylor suggested in the 1880's that managers use process reengineering
methods to discover the best processes for performing work, and that these processes be
reengineered to optimize productivity .... In the early 1900's, Henri Fayol originated the
concept of reengineering: To conduct the undertaking toward its objectives by seeking to
derive optimum advantage from all available resources.

Similarly, Galliers (1998) observes that "BPR ... far from being a new departure is in fact
a reversion to the classical school1 of strategic thinking popularized in the 1960s". That
is, organizations make such radical changes when they meet competitive pressures which
challenge their current processes. BPR can be viewed as a response to such change and
therefore fits in the classical school of strategy where organizations adjust themselves to
new forms in order to maximize their profits. However, it is commonly agreed that BPR
first came and attracted academic and industrial attention in 1990 as a result of two
papers by Michael Hammer (on reengineering, see Hammer, 1990) and Thomas
Davenport (on business process redesign, see Davenport and Short, 1990). In 1993 they
further published two key books (Hammer and Champy, 1993 and Davenport, 1993)
which brought widespread attention to the emerging field of BPR.

The concept of BPR is widely regarded as having been introduced as a perceived solution
to the economic crisis and the recession of the late 1980's and early 1990's (Butler, 1994;

100
Amott and O'Donnell, 1994). As Butler describes it: "the'80s were a time for financial
reengineering .... the '90s are for technological reengineering". Hammer and Champy
(1993) propose that "BPR can help organizations out of crisis situations2 by becoming
leaner, better able to adapt to market conditions, innovative, efficient, customer focused
and profitable in a crisis situation".

Before BPR emerged (and even today), it was widely accepted by industries and business
enterprises that a work should be broken down into its simplest (and most basic) tasks.
This leads to the structure of enterprises becoming hierarchical - or functional - in order
to manage such divided tasks.

7.4.3 The Key Concepts

BPR seeks to break from current processes and to devise new ways of organizing tasks,
organizing people and making use of IT systems so that the resulting processes will better
support the goals of the organization. This activity is done by identifying the critical
business processes, analyzing these processes and redesigning them for efficient
improvement and benefit. Vidgen et a1. (1994) define the central tenets of BPR as:

 radical change and assumption challenge;

 process~ and goal 'orientation;
 organizational re-structuring;
 the exploitation of enabling technologies, particularly information technology.

That is, by focusing on business objectives, we analyze the processes of the organization,
eliminate non-essential or redundant procedures, and then use IT to redesign (and
'streamline') organizational operations.

 BPR as Radical Change

BPR is a radical change, rather than incremental change. Hammer and Champy (1993)
highlight this tenet as:

Re-engineering is … about rejecting the conventional wisdom and received assumptions

of the past. …reengineering is the search for new models of organizing work. Tradition

101
counts for nothing. Re-engineering is a new beginning. …To successes at reengineering,
you have to be a visionary, a motivator, and a leg breaker.

Similarly, Davenport (1993) advocates radical change:

Objectives of 5% or 10% improvement in all business processes each year must give way
to efforts to achieve 50%, 100%, or even higher improvement levels in a few key
processes. … „Radical change‟ is the only means of obtaining the order-of-magnitude
improvements necessary in today‟s global marketplace. …Existing approaches to
meeting customer needs are so functionally based that incremental change will never
yield the requisite interdependence.

Possible [radical] changes to the organization are not limited to internal re-orderings;
links can be forged with other organization as a fluid mix of interests rather than a fixed
entity with in objective existence. It is recognized in the BPR literature that advances in
technology bring opportunities that were difficult to imagine before the technology had
been created. There is a sense of innovatory solutions looking for problems and the
exploitation of unexpected consequences that cannot be predicted by a purely conceptual
approach. At its best, BPR can be seen as a mix of conceptual thinking and practical
experience gained through creative experimentation and faith.

 BPR, DSS and TQM

When discussion radical change in BPR, we find that BPR, DSS (Decision support
systems) and TQM (total quality management) have much common with each other.
Firstly, they are all focusing on business processes. Arnott and O‟Donnell (1994)
characterize DSS as relevant to BPR as it was the first information system (IS) movement
to explicitly focus on the fundamental redesign of business processes rather than on the
efficient application of a new computer technology. Also, BPR and DSS have a common
aim which is to improve business processes via radical change. The most significant
difference between BPR and DSS is the scope of analysis: BPR focuses on the whole
organization whereas DSS focuses on one individual decision.

102
BPR is also different from TQM in that BPR concentrates on major discrete changes to
business processes, whereas TQM concentrates on minor continuous improvement to
business processes. That is, the improvements in TQM are smaller than the ones in BPR.
Butler (1994) elucidates the difference between BPR and TQM as:

[TQM approach] which favors steady incremental gain, may often take a number of years
to complete. For firms in highly competitive industries, this lag time can allow
competitors to forge ahead. In contrast, results from BPR can be realized within 12-18
months, but it is a far riskier undertaking, and should not be regarded as a 'quick fix‟
solution.

Furthermore, whereas BPR is commonly viewed as a top-down solution from

management, TQM involves staff from all levels for problem solving and suggests
bottom up improvement. Employees' resistance to change has been identified as one
major barrier to the success of BPR. It was reported by MacIntosh and Francis (1997)
that those companies that had introduced TQM prior to taking on board BPR, faced less
resistance to change. As we believe that these two approaches are compatible, we
propose in this thesis a concept of 'participative BPR' which combines both of them.

 Process-Orientation: From Structure to Process

Many current business processes - with their functional structures - were designed to
enable efficient management by separating processes into small tasks that could be
performed by less skilled workers with little- responsibility. Under this structure, the
important decisions were made by the higher skilled and more trusted managers.
Traditional (structural) approaches to business engineering generally follow this
sequential order: firstly, business strategy is proposed, then the business structures and
processes are planned, and finally they are implemented with IT.

In comparison, BPR is regarded as process-oriented which is trying to overcome some

problems raised by hierarchical structures. That is, BPR as a process-orientation changes
the structural relationships between management and employers into the interactive
processes between them. BPR aims to break radically the existing process structures and
replace them by fundamental and innovative solutions.

103
The functional structure is a vertical structure in which there may exist barriers to
separate the functions in organizations. BPR emphasizes business processes which are
regarded as horizontal flows and cut across organizational functions. MacIntosh and
Francis (1997) justify the claim that BPR highlights the delays, errors and inefficiencies
which are introduced when passing information and work from one function to another.

7.4.4 Five Step Approach to Business Process Reengineering

Davenport (1992) prescribes a five-step approach to the Business Process Reengineering

model:

1. Develop the business vision and process objectives: The BPR method is driven by a
business vision which implies specific business objectives such as cost reduction,
time reduction, output quality improvement.

2. Identify the business processes to be redesigned: most firms use the 'high impact'
approach which focuses on the most important processes or those that conflict most
with the business vision. A lesser number of firms use the 'exhaustive approach‟ that
attempts to identify all the processes within an organization and then prioritize
hemin order of redesign urgency.

3. Understand and measure the existing processes: to avoid the repeating of old
mistakes and to provide a baseline for future improvements.

4. Identify IT levers: awareness of IT capabilities can and should influence BPR.

Design and build a prototype of the new process: the actual design should not be viewed
as the end of the BPR process. Rather, it should be viewed as a prototype, with
successive iterations. The metaphor of prototype aligns 'the Business Process
Reengineering approach with quick delivery of results, and the involvement and
satisfaction of customers.

7.4.5 Problems Facing BPR

In 1996 Davenport published an article entitled Why Re-Engineering Failed: The Fad
that Forgot People in which he reports:

104
"To most business people in the United States, re-engineering has become a word that
stands for restructuring, lay-offs, and too often, failed change programs ... companies that
embraced [re-engineering] as the silver bullets are now looking for ways to re-build the
organization's torn fabric".

Also in 1998 it was reported that only around 30% of BPR projects were regarded as a
success (Galliers, 1998). The earlier promise of BPR had not been fulfilled. There are
many reasons for the limited success of BPR. Some explanation of such high rates of
failure for BPR projects have been discussed in BPR literature. For example, employees'
resistance of change as they consider BPR as threats to their jobs (i.e. the increase in
short-term contracts and lack of promotion); Galliers (1998) and Gerrits(l994) point out
that currently BPR approaches lack detailed guidance and support for the actual
implementation of reengineering: many publications describe the situation before and
after BPR but do not discuss the path to reach the final situation; Chen et al. (2000a)
explain that one reaction to this failure was to retain faith in IT as a dominant support and
just admit that since it could not adapt - or at least not at acceptable levels of cost - then
business activities must adapt to IT. For example:

The pendulum has swung from 'continuous reengineering and re-inventing' to 'pick an
application package and force our business processes to comply with the package.

7.4.6 BPR in Ethiopia

As soon as the current government came to power, it started rigorous reforms (first phase
reforms from 1991 to 1995) in three fronts:

 Economic reform - from central planning to market economy

 Political reform - federalism, and power and fiscal decentralization
 Constitutional reform - enacting the Ethiopian constitution

The question was whether Ethiopia has a bureaucracy that is capable of doing these
reforms or not. The government employed private domestic and foreign consultants to
study the implementing capacity and effectiveness of the bureaucracy. The consultants
identified that Ethiopian bureaucracy is characterized by

105
  Very hierarchical with many non-value adding works/positions/staffs
 Nepotism and lack of transparency and accountability, and corruption)
 Lack of leadership capacity
 Input based and not output based - i.e. output not measured.

It was difficult to undertake reform with this bureaucracy. The consultants recommended
the establishment of new institutions. The "Ministry of Capacity Building" with the
mandate of undertaking reforms in all public institutions (esp. education and the civil
service) was established. Also "Anti-corruption Commission" with the mandate of
avoiding unaccountable and transparent procedures in public institutions was established.

Over time it was believed that an important condition to undertake the reforms was to
implement BPR. It was identified that to solve the problems of hierarchical bureaucracy
with many non-value adding works/staffs/positions, nepotism, etc; BPR is seriously
implemented in all public institutions gradually. The reason why the Ethiopian
government adopted BPR is that the current system has to be completely changed and
redesigned and BPR can do this job.

Services delivered by the public institutions are characterized by

 Long time taking

 Costly (high transaction cost)
 Incompetence (not up to the needs of customers)
 Not responsive (many complaints, questions, comments etc from customers but
nonresponse)
 Not dynamic (the world is changing but our public institutions are stagnant)

People have choices when they buy products from private firms. However, government
services are one (no choice). At the same time it is people are democratic right to get
appropriate and satisfactory services from public institutions. As a result of the
implementation of BPR, painful practices in each public office were identified, and many
non-value adding works/positions are avoided. For example, it was found that deputy
head departments were actually doing nothing.

106
At the end of the day BPR enables a 'one stop shop mechanism" - where customers get all
public serves in one place at low cost.

So far BPR is implemented in public offices and publicly owned big institutions such as
"the Ethiopian Telecommunication Corporation", "The Ethiopian Power Corporation"
and government banks. However, private firms have not adopted it yet in Ethiopia.

 Examples of Improved Service Delivery: Making Public Institutions

Transparent, Efficient and Effective

The experiences of the Ministry of Trade and Industry (MOTI), the Ethiopian Investment
Commission, and the Ethiopian Customs Authority are instructive examples of how
institutions can be transformed to be more responsive, efficient and effective. These three
public institutions were taken as good examples in the IMF Country Report No. 06/27 for
Ethiopia (2006). By way of highlighting the major achievements of the implementation
of the Civil Service Reform Program, the following are worth noting:

a. The Ethiopian Investment Commission: It used to take 18 steps, and 25 days on

average for an individual business person to secure an 'investment license, whereas
now after the conduct of Business Process Reengineering (BPR) by the Commission
it only takes an individual 4 step's and 2 days to get his/her investment license. The
same service used to take 39 steps and 108 days for a company whereas now (after
BPR) it only takes 4 steps and 2days. Securing main registration certificates used to
take 18 steps and 28days for an individual businessperson before the BPR whereas
now it only takes 4 steps and 2 days. The same service used to take 39 steps and 96
days for a company, whereas now it takes the steps and time as the individual
business to secure registration certificates.

b. The Ministry of Trade and Industry (MOTI): It used to take 14 working steps
(processes) and two and a half days to secure a trade license for an individual
business person whereas now (after the Ministry conducted BPR), it now only takes a
business person 6 work steps and 34 minutes to get a trade license. This same service
used to take a company 26 working steps and 35 days. After the conduct of the BPR,

107
 it only takes the same work steps and time as an individual business (6 work steps and
34 minutes respectively).

c. The Ethiopian Custom Authority: Securing loading permits from Djibouti used to take
43 work steps (processes) and 2 days whereas after the Authority has been re-
organized and undertook BPR, it only takes 6 steps 15 minutes to get the service.
Checking and fixing a container with a customer seal used to take 8 steps and two
days before the BPR, whereas now it only takes 3 steps and 40 minutes to get the
same service. Declaration acceptance, approval, examination, release of exported
items and distribution of declaration used to take 8 steps and 2 to 15 days, whereas
now it only takes three steps and 26 minutes to get same service fora business entity.

Activity 8: discuss and distinguish the different trends emerging (TQM, 6σ, Z
theory, BPR and others) in the field of management.

Check List

S/N Points Yes No

I am able to describe emerging trends in management

2 I am able to explain concepts of quality and total quality

management
3 I am able to explain origin and strategic focus of six sigma

4 I am able to describe theory Z

5 I am able to describe concepts of BPR and its implementation in

Ethiopia

108
 Self-Exercise 7

Part one: Choose the correct answer from the given alternatives

1. Quality is

a. Meeting standard requirement

b. Reliability
c. Delighting customer
d. All

2. Which one of the following is not a core issue of TQM?

a. Culture
b. Commitment
c. Customer-supplier relation
d. None

3. In which phase of TQM implementation require quality training?

a. Consolation phase
b. Promotion phase
c. Introductory phase
d. None

4. BPR is

a. Reengineering
b. Redesigning
c. Restructuring
d. None

5. Which one of the following is not vital doctrine of BPR?

a. Radical change
b. Process and goal orientation

109
 c. Assumption of challenges
d. None

6. Government of Ethiopia taken the following reform before BPR except

a. Economic reform
b. Political reform
c. Constitutional reform
d. None

Part Two - Short Answer

1. Discuss the five - step approach to Business Reengineering Model?

2. Discuss the contribution of BPR in Public Institution after implemented by

government?

110
 CHAPTER EIGHT

CHANGE MANAGEMENT

Introduction

Change is a pervasive influence. We are all subject to continual change of one form or
another. Change is an inescapable part of both social and organizational life.

The effects of change can be studied over different time scales, from weeks to hundreds
of years, and they can be studied at different levels. Change can be studied in terms of its
effects at the individual, group, organizational, society, national or international level.
However, because of its pervasive nature, change at any one level is interrelated with
changes at other levels, and it is difficult to study one area of change in isolation. But our
main focus of attention is on the management of organizational change. Organizational
change can be initiated deliberately by managers, it can evolve slowly within a
department, it can be imposed by specific changes in policy or procedures, or it can arise
through external pressures. Change can affect all aspects of the operation and functioning
of the organization.

Chapter Objectives

At the end of this chapter, you should be able to:

 explain the nature of organizational change and the components of change

 understand the effects of change on people and on the organization
 know the models of change
 understand the sources of resistance to change at the individual and organizational
level
 choose appropriate methods of managing and implementing change

111
8.1 Nature and Purpose of Change
? What does change and organizational change mean?

Many authors defined organizational change differently. Here are few working
definitions.

Organizational change refers to "the movement of an organization away from its

present state towards some desired future state to increase its effectiveness”
(Broome: 1998). This definition is further explained in figure 8.1 (below)

Where
you are Where
How to get there?
you want

Present condition Desired future condition

Organizational change is defined as "the process of altering, modifying or

transforming one state, condition or phase of an organization to another"
(Mostly, Megginson and Pietric: 1997).
Organizational change refers to "the way an organization adapts to its external
and internal environment” (Wilson: 1994).
Organizational change involves attempts to modify organization structure,
procedures or processes. These changes may be focused on particular jobs,
individuals, work group or the organization as a whole " (Mitchell: 1982).

The following are the major purposes of organizational change

 To meet changing customer needs

112
  To take advantage of new opportunities
 To meet changing market conditions
 To respond to internal pressures
 To respond to external-competitive pressures

Essentially, the concept of change implies that there is a perceptible difference in a

situation, a person, a work team, an organization or a relationship, between two
successive points in time. How does this difference occur, what are its causes, and what
does it mean to a manager? To answer these and similar questions, we will first look at
the various levels and areas of change, and at the relations between them.

8.2 Factors/Forces of Change

8.1
?
What are the major forces that affect change in the organzation?

Forces for change may be external or internal to the organization. Changes in

organization are stimulated by a number of internal and external forces, often interacting
to reinforce one another External forces for change are derived from the organization‟s
general and task environments. So, there is nothing new about change: it has always been
a feature of the very existence and history of the human race. We all know that without
change there is no life and that human efforts to obtain better living conditions imply
coping with change. There is a new phenomenon, however: the unprecedented depth,
complexity and pace of technological, social and other changes occurring at the present
time. Today's organizations operate in an environment which is continually changing.
The ability to adapt to changes in the environment has become a fundamental condition
of success and survival in business. Today the processes of change concern all aspects of
human and social life, both nationally and internationally.

113
In a particular business or other organization, the practical question is what to regard as
its external environment? This question is increasingly difficult to answer. Often
managers are totally perplexed when they realize that their organization can be affected
by forces economic, social or political-which they would previously never have
considered when making business decisions. Competition can come from sectors and
countries which in the past were never thought of as potential competitors. New sources
of finance and new ways of mobilizing resources for business development and
restructuring have required profound changes in corporate financial strategies. New
information and communication technologies have enabled many new ways of doing
business and running complex organizations that were unthinkable with old technologies.
Environmental considerations, increased mobility of people and changing social values
have created new constraints and new opportunities for decision makers responsible for
running business firms.

Therefore, organizations do not change for the sake of change, but because they are part
of a wider process of development and have to react to new environmental changes,
constraints, requirements and opportunities. They are continually forced to adapt to the
environment within which they exist and operate. But more than that - businesses and
other organizations also generate changes in their external environment, for example by
developing and marketing new products and services that capture a significant part of the
market, launching and publicizing products that will change consumer taste, or
pioneering new technologies that become dominant and change the shape of whole
industrial and service sectors. Thus they modify the business environment, both
nationally and internationally. Generally the following figure shows forces of
organizational change.

114
Figure 8.1forcesof organizational change

External forces Internal forces

8.3 Components of Organizational Change

?
What does the components of organizational change?

Change can concern any aspect or factor of an organization. Therefore it can involve
products and services, technologies, systems, relationships, organizational culture,
management techniques and style, strategies pursued competences, performances and any
other features of a business. It also involves changes in the basic set-up of the
organization, including the nature and level of business, legal arrangements, ownership,
sources of finance, international operations and impact, diversification, mergers and
alliances with new partners, and similar endeavors.

Planned organizational change is designed and implemented in advance in an orderly and

timely fashion in anticipation of future events. It can be incremental-evolutionary rather
than revolutionary change, e.g. instituting a new human resource system. Or it can be
radical (transformational) - revolutionary change or a paradigm shift E.g. BPR.

115
Organizational change involves change in:

 Strategy – Develop new visions, missions, strategic plans

 Structure – Add a new department or division, or consolidate two existing ones
 People – Replace a person or change knowledge, skills, attitudes, or behaviors
 Technology – upgrade a data processing system
 Management –Encourage participation by those involved in solution of problems

8.3.1 Change in People

The human dimension of organizational change is a fundamental one. For it is people in

the organization - its managerial and technical staff, and other workers - whose behavior
ultimately determines what organizational changes can be made and what real benefits
will be drawn from them. Business firms and other organizations are human systems
above all. People must understand, and be willing and able to implement changes which
at first glance may appear purely technological or structural, and an exclusive province of
higher management, but will affect the working conditions, interests and satisfaction of
many other people.

In coping with organizational change, people have to change, too: they must acquire new
knowledge, absorb more information, tackle new tasks, upgrade their skills, give up what
they would prefer to preserve and, very often, modify their work habits, values and
attitudes to the way of doing things in the organization. Change in values and in attitudes
is essential. There probably cannot be any real and lasting change without a change in
attitudes.

It is important to recognize that in an organization this requirement relates to everyone,

116
starting with the top manager. Those who want their subordinates and colleagues to
change must be prepared to assess and change their own behavior, work methods and
attitudes! This is a golden rule of organizational change.

But how do people change? What internal processes bring about behavioral change?
Many attempts have been made to describe the change process by means of models, but
none of these descriptions has been exhaustive and fully satisfactory. Different people
change in different ways, and every person has many unique features that influence his or
her willingness and ability to change. The influence of the culture in which a person has
grown up and lived is paramount, when considering change in people.

8.4 Approaches/Models of planned Change

Change involves a shift from a present state to a future state - it implies growth or
movement, hopefully, from a relatively poorer state to a better state. Thus effective
change is achieved when the organization is moved from a less desired state to a more
desired one; the functioning of the organization meets planned expectation; the transition
does not elicit undue costs to the organization and the change is effected without undue
cost to individual members of the organization.

8.4.1 Force- Field Analysis Model

Sociologist Kurt Lewin (1951) envisioned that any potential change is interplay of
multiple opposing forces. These forces are broadly categorized under two major fields:
the driving forces and restraining forces (see figure 9.2. below). The driving forces are
the factors that encourage or facilitate the change, while the restraining forces are the
factors that obstruct change. If these opposing forces are approximately equal, there will
be no movement away from status quo. For change to occur the driving forces must be
increased and/ or the restraining forces must be reduced. This requires thorough
understanding and analysis of the forces likely to resist change as well as those creating
the need for change. Lewin called this process "force-field analysis." He noted that force-
field analysis is an important diagnostic and problem-solving technique. It involves:

I. Analyzing the restraining forces or driving forces, this will affect the transition to the
future state. These restraining forces will include the reactions of those who see change

117
as unnecessary or constituting a threat.

II. Assessing which of the driving or restraining forces are critical.

III. Taking steps both to increase the critical driving forces and to decrease the critical
restraining forces.

Figure 8.2 Force Field Analysis Model

Source: Gordon Lippith and Ronald Lippith: The consulting process in Action,
California, University Associates, Inc. (1978)

8.4.2 Lewin's Three-Step Sequential Model

Kurt Lewin further studied the process of bringing about effective change. He noted that
individuals experience two major obstacles to change. First, they are unwilling (or
unable) to alter long-established attitudes and behavior. Second, .their change of behavior
frequently last only a short time. After a brief period of trying to do things differently,
individuals often return to their traditional behavior. To overcome obstacles of this sort,
Lewin developed a three-step sequential model of the change process. The model
involves "unfreezing" the present behavior pattern, "changing" or developing a new
behavior pattern, and then "refereeing" or reinforcing the new behavior.

118
 Figure 8.3 Three-Step Sequential Change Process.
Re freezing
Changing
Unfreezing
Behavior stabilized;
Changes advocated and
Raised state of tensions, desired attitudes and values
implementation begins;
dissatisfaction with status quo; internalized and reinforced.
changes tested/adapted
climate adapted to minimize
for desired results
resistance

Source: David H.Holt. Management: Principles and Practices, 1993:477

I. Unfreezing. It involves making the need for change so obvious that the individual,
group, or organization can readily see and accept it. It is the process-of creating a climate
ready for-change. In this stage, the management realizes that the current strategy is no
longer appropriate

and the organization must break out of (unfreeze) its present mold. As such, it tries to
make other people (employees) realize that some of the past ways of thinking, feeling,
and doing things are obsolete. It convinces individuals and groups that present conditions
or behavior are inappropriate.

II. Changing: Once the members have been prepared to accept change, their behavioral
patterns have to be redefined. There are three methods of reassigning individuals' new
patterns of behavior. These are:

a. Compliance. It is achieved by strictly enforcing the reward and punishment strategy

for good or bad behavior. The fear of punishment or actual reward seems to change the
behavior for the better.

b. Identification. Identification occurs when the members are psychologically impressed

upon to identify themselves with some given role models, whose behavior they would
like to adopt;

c. Internalization. Internalization involves some internal changing of the individual's

thought processes in order to adjust to a new environment. Members are left alone and

119
given the freedom to learn and adopt new behavior in order to succeed in the new set of
circumstances.

In this stage (changing), new behavior is developed and change is effected through a
conscious process as individuals seek to resolve the anxieties that surfaced during
unfreezing stage.

III. Refreezing. It means locking the new behavior pattern into place by means of
supporting or reinforcing mechanisms, so that it becomes the new norm. It is the process
of institutionalizing the new state of behavior or work by rewards.

In the end, Lewin's model is concerned with psychological adaptation to changes that
modify personal behavior. If employees view changes as unjustified, the adaptation
process may fail to take place. Difficult interpersonal relationships, uncommitted leaders,
inflexible authority structures, corporate politics and many other factors can thwart
change. In fear of these factors, many organizations often hire skilled consultants to
facilitate the change process.

8.5 Resistance to change

8.1
?
What are the sources of resistance to change and how can we manage it?

Despite the potential positive outcomes, change is often resisted at both the individual
and organizational level. Resistance to change or the thought of the implications of the
change appears to be a common phenomenon. People are naturally wary of change.

Resistance to change can take many forms and it is often difficult to pinpoint the exact
reasons for the resistance. The forces against change in work organizations include:
ignoring the needs and expectations of members; when members have insufficient
information about the nature of the change; or if they do not perceive the need for

120
change. Fears may be expressed over such matters as employment levels and job security,
de-skilling of work, loss of job satisfaction, wage rate differentials, changes to social
structures and working conditions, loss of individual control over work, and greater
management control.

8.5.1 Individual resistance

Some common reasons for individual resistance to change within organizations include
the following:

 Obsolescence of skills: when never people sense that new work method poses a
threat of replacing or degrading them they simply resist such a change. This kind of
phenomenon is commonly found in those managers who possess no real marketable
skills and whose knowledge is obsolete and outdated. These people strongly resist
change and try their best to maintain the status quo.
 Fear of economic loss. Whenever people perceive the consequences of change in
terms of income /pay, they have the tendency to resist it. When people perceive
psychological degradation of tl1e job or loss of their job they resist change.
 Status quo: The biggest and most sound reason for the resistance to change is the
status quo. Change may pose disturbance to the existing comforts of status quo.
Change may involve uncertainty and risk and may be at the cost of the convenience
of workers, People typically develop patterns for coping with or managing the
current structure and situation.
 Fear of the unknown: Change may present unknown which cause anxiety.
Whenever people do not know exactly what happens they are likely to resist it.
Uncertainly in the situation arises not from the change itself, but from the
consequences surrounding the change. Any gap in the information may make
employees feel uncertain about the future and they think the better way would be to
oppose change.
 Social displacement: Change often results in disturbance of the existing social
relationships. It may also result in breaking up of work groups and friendship. When
social relationship develops people try to maintain them and oppose social
displacement by resisting change.

121
 Peer pressure: Sometimes individuals may be prepared to accept change at their
individual level but refuse to accept it for the sake of the group. Whenever change is
unacceptable to the peers they force the individual subordinate employees who are
bent of accepting the change to resist it.
 Habit, People tend to respond to situations in an established and accustomed manner.
Habits may serve as a means of comfort and security, and as a guide for easy
decision-making. Proposed changes to habits, especially if the habits are well
established and require little effort, may well be resisted.
 Inconvenience or loss of freedom. If the change is seen as likely to prove
inconvenient, make life more difficult, reduce freedom of action or result in
increased control, there will be resistance.

8.5.2 Organizational Resistance

Although organizations have to adapt to their environment, they tend to feel comfortable
operating within the structure, policies and procedures which have been formulated to
deal with a range of present situations. To ensure operational effectiveness, organizations
often set up defenses against change and prefer to concentrate on the routine things they
perform well. Some of the main reasons for organizational resistance against change are
as follows.

 Organization culture. The culture of an organization develops over time and

may not be easy to change. The pervasive nature of culture in terms of how things
are done around here also has a significant effect on organizational processes and
the behavior of staff. An ineffective culture may result in a lack of flexibility for,
or acceptance of change.
 Maintaining stability. Organizations, especially large-scale ones, pay much
attention to maintaining stability and predictability. The need for formal
organization structure and the division of work, narrow definitions of assigned
duties and responsibilities, established rules, procedures and methods of work,
can result in resistance to change. The more mechanistic or bureaucratic the
structure, the less likely it is that the organization will be responsive to change.
 Investment in resources. Change often requires large resources which may

122
 already be committed to investments in other areas or strategies. Assets such as
buildings, technology, equipment and people cannot easily be altered.
 Threats to power or influence. Change may be seen as a threat to the power or
influence of certain groups within the organization, such as their control over
decision, resources or information.
There could also so misunderstanding and lack of trust through:

 Lack of information
 Misinformation
 Low trust of organizational climate
 Past history of unsuccessful change attempts and their consequences.

8.6 Overcoming Resistance to Change

8.1
?
What strategies are there to overcome resistance to change?

The following steps may be helpful in overcoming resistance to change.

 Identify if possible the type of resistance you expect to meet: cultural, social,
organizational, psychological.
 Analyze resistance by: intensity; source; and focus.
 Look for behavioral factors such as emotional reasons for resistance and rational
or system factors.
 View resistance to organizational change as perfectly rational rather than
irrational.
 Ask what useful purpose the resistance is serving.
 Identify real or perceived negative consequences of the change, then, reduce
rather than eliminate resistance by measures such as avoiding surprises; obtaining
top management support for the change; providing information; participation; and
so on. .

123
Broadly, objectors can be classified as "sharpeners" or "levelers". Sharpeners include
those who ask specific, detailed questions concerning the change process. Usually these
types are genuine objectors who can be influenced more readily than other types by
logical arguments. Levelers are those who generalize and broaden the issue under review.
These types are usually very difficult to convince as they are interested in the form rather
than the content of the change.

Generally, if the change is to be implemented successfully it needs full acceptance and

cooperation from employees. But how can managers get employees cooperation to
cooperate? Specifically, how can they manage their employees' resistance to change?

A diligent review of different research results shows that there are several effective
approaches to managing employees' resistance. More specifically, Kotter and Schlesinger
(1979: 110) have put forward six valuable ways of overcoming resistance to change.
These techniques are discussed as follows:

(a) Education and Communication. Management should educate employees about

upcoming changes before they occur. It should communicate not only the nature of the
change but its logic. This process can include one-on-one discussions, presentations to
groups (variety of conferences), brochures, or reports and memos.

(b) Participation and Involvement. If management involves those who might resist
change with the design and implementation of the change, resistance may be prevented.
When employees participate in the decision to change, they are committed to
implementing it. Therefore, employees should also be involved in the changes design and
implementation. When feasible, management should use their advice. Often it will be
useful, and it may lead to consideration of important issues previously overlooked by
management.

(c) Facilitation and Support. Management should make the change as easy as possible
for employees and be supportive of their efforts. This could be achieved through
providing training in new skills, or giving employees‟ time off after a demanding period
of change, or simply listening and providing emotional support.

124
(d) Negotiation and Agreement. When necessary, management can offer concrete
incentives for cooperation with the change. Rewards such as bonuses, wages and salaries,
recognition," job "assignments, and perks can be examined and perhaps restructured to
reinforce the direction of change. For example, an employee may receive additional
wages for accepting a new work procedure. This is particularly helpful when it is obvious
that a person has something to lose as a result of the change.

(e) Manipulation and Co-optation. This process involves making covert attempts to
influence others. It can be done through the selective use of information and the
conscious structuring of events. One common form of manipulation is co-optation. Co-
optation involves giving an informal leader (a resisting individual) a desirable role in the
design or implementation of a potential change. For instance, management might invite a
union leader to be a member of an executive committee or ask a key member of an
outside organization to join the company's board of directors. As a person becomes
involved in the change, he or she may become less resistant to the actions of the coopting
group or organization.

(f) Explicit and Implicit Coercion. Some managers apply punishment to those who
resist change. With this approach, managers use force to make people comply with the
change. For instance, a boss may force employees to go along with a change by
threatening them with dismissal, with being passed over for promotion, with unattractive
job assignment, or through other negative suggestions.

Each approach to overcoming resistance has advantages and. disadvantages, and each is
useful in different situations. Table 9.1 below summarizes the advantages, disadvantages,
and appropriate circumstances for these approaches to managing resistance to change. As
the table implies, managers should not use just one or two general approaches, regardless
of the circumstances. Effective change managers are familiar with the various approaches
and know how to apply them according to the situation.

8.7 Phases/Process of Change

The comprehensive approach to change takes a system view and delineates a series of 12
steps that often lead to successful change. These steps include:

125
 1) Scanning of environmental & internal conditions
2) Recognition of gap between current conditions and desired conditions
3) Perceptions and assessment
4) Planning and analysis
5) Determining change goals
6) Determining change tactics and program
7) Unfreezing of behaviors
8) Evaluating change plan
9) Adjusting or modifying plan
10) Implementing plan
11) Following up
12) Refreezing

Generally, the change process has series of interrelated phases as indicated by the
following figure.

126
 Activity 8: discuss meaning of organizational change, components of
organizational change, forces for organizational change and as well causes of
individual and organizational resistance to change and how to overcome.

127
 Check List

S/N Points Yes No

I am able to describe concepts of change

2 I am able to explain nature and purpose of change

3 I am able to explain forces of organizational change

4 I am able to describe components of organizational change

5 I am able to explain models of organizational change

6 I am able to describe resistance to change and how to overcome it

7 I am able to appreciate steps in the change process

128
 Self-Exercise 8

1. Define the term change in your own word.

2. What are the major forces that drive change?

3. Distinguish the two models of change and discuss them.

4. What is resistance to change and how to overcome it?

129
 Answer Key for Self-Exercise

I. Self -Exercise 1
1.A 2.A 3.B
II. Self -Exercise 2
l.B 2. C 3.D 4.C
III. Self -Exercise 3
l.C 2.D 3.C 4.A 5.D
IV. Self -Exercise 4
1.A 2.A 3. D 4.B 5.D 6.B
V. Self -Exercise 5
1. C 2. B3. D4. D
VI. Self -Exercise 6
l.D 2.C 3. D4. D
VII. Self -Exercise 7
1. D 2.D 3.A 4.D 5.D 6.D

130
 PESC Information Systems College

Undergraduate Department of Management

Tutor Marked Assignment
Course Title: Management Thought and Emerging Trends
Total weight: 30 % Submission Deadline: Final exam date
Name:
ID Number:
Department: Year of Study:
Branch: Cellphone:
General Directions:

 Hesitate not to write your name, ID number, center, year of study, and
department on your assignment before submitting.
 Only perform your own as copying from others or identical answers disqualify
your result.
 Submit the assignment only on or before the course final exam.

Instruction: Read Your Whole Module and Answer the Following

Questions as Per the Specific Instructions Given by Each
Question. (6 pts each)

1. Discuss the different contributors of pre-classical management thought with their

contribution and as well elaborate the strength and weakness of pre-classical theory of

management.

131
2. Discuss the three major components of classical management thought (scientific

management, administrative management and bureaucratic management) with their

contributors, contributions, strength and limitation.

3. Discuss and elaborate neoclassical/behavioral theories of management and its

strength and weakness.

4. Elaborate modern theories of management with their implication for today‟s

management

5. Discuss what changes is in your own word and, the forces and processes of change in

your organization.

132
 References

ASCON (2002), Participants‟ Manual on Total Quality Management

Bartol, K. and Martin, D.C. (1991) Management, McGraw-Hill, New Jersey, U. S. A.

Bedeian, A. G. (2004). The Gift of Professional Maturity. Academy of Management

Learning and Education, 3(O'Connor, 1999),92-98.

BerihuAsseffa (2009) Business Process Re-engineering in Ethiopia.

C.B Gubta, "Business Organizationand Management”. SultanChand& Sons,NewDelhi.

Davenport, Thomas & Short. 1. (1990), The New Industrial Engineering: - Information

Technology and Business Process Redesign, in: Sloan Management Review,

Summer1990, pp 11-27

David R.Hampton, "Contemporary Management", McGraw HillInc., New York,

1981.ErnestDale. "Management. Theory and Practices." McGraw Hilllnc. New York,

1981.

FredLuthans, "Introduction to Management, a Contingency Approach", McGrawHill

BookCompanyNew York,1973.

133
Gale, T. (2006). Contingency Approach to Management. Retrieved November 3, 2009,

from BookRags :http://www.bookrags.com/research/contingency-approach•to-

management-eom/#bro _copy

GeorgeR.TerryandStephenG.Franklin, “Principles of Management",Ail

IndiaTravellerbookSellenNewDethi,1991.

Hammer, Michael (1990), Reengineering Work: Don't automate, obliterate, Harvard

Business Review, Jul/Aug 1990, pp 104-112

HaroldKooz,Cyriio 'DonnelandHeinz Weihrich, "Management",McGraw

HillInternationalNew York,1980.

Henrysisik, "Management and Organization",South WesternpublishingCo.,

Chicago,1982.

Johns, Gary. Concordia University. "Theories of Work Motivation" "Leadership"

Organizational Behavior: Understanding and Managing Life at Work. Harper Collins

College Publishers, 1996.

Mullins, L. J. (1999) Management and Organisational Behaviour, 5th Ed., London,

Financial Times, Pitman Publishing

PeterF. Druker, “Management: Task and Responsibility, Ilaper& Row, New York,1973.

PeterF. Druker,"The Practice of Management"Haper& Brothers, New York, 1986.

134
Robbins, S. P. (2005) Essentials of Organizational Behaviour, Prentice-Hall, New Delhi,

India

RobertN.Lussier,Management: Concepts, Applications, and Skill Development, South

Western College Publishing, 1997.

Samu1C.Certo,"Principiesof Modem Management", Allynand Bacon Inc., Boston 1986.

Schermerhotn, J. R. jr. (1996) Management and Organizational Behaviour, John Wiley&

Sons, New Jersey, U.S.A.

Senior, B. (2002): Organisational Change, 2nd Ed., London, Financial Times, Pitman

Publishing

Wren, D. A., &Bendein, A. G. (2009). The Evolution of Management - Thought (6thed).

Hoboken, NJ: John Wiley & Sons

Y.Kbushan, "Fundamentals of business Organization and Management", Sultanchand

&Sons, New Delhi.

135