People in organizations(Unit 2)

Manager: responsible for setting objectives, organizing resources and motivating staff so that the organization’s aims are met

Functions of management:

1. Setting objectives and planning2. Organizing resources to meet the objectives3. Directing and motivating staff4. Coordinating activities5. Controlling and measuring performance against targets.

Management roles:• Interpersonal roles: dealing with and motivating staff at all levels of the

organizationRole title Description of activities Examples of management actionFigurehead Symbolic leader of the organization

undertaking duties of a social or legal nature

Opening new factories/offices; hosting receptions; giving important presentations

Leader Motivating subordinates, selecting and training other managers/staff

Any management task involving subordinates

Liaison Linking with managers and leaders of other divisions of the business and other organizations

Leading and participating in meetings; business correspondence with other organizations

• Informational roles: acting as a source, receiver and transmitter of informationRole title Description of activities Examples of management actionMonitor (receiver)

Collecting data relevant to the business’s operations

Attending seminars, business conferences, research groups,

reading research reportsDisseminator Sending information collected from

external and internal sources to the relevant people within the organization

Communicating with staff within the organization, using appropriate means

Spokesperson Communicating information about the organization – its current position and achievements – to external groups of people

Presenting reports to groups of stakeholders (e.g. annual general meetings) and communicating with the press and media

• Decisional roles: taking decisions and allocating resources to meet the organization’s objectives

Role title Description of activities Examples of management actionEntrepreneur Looking for new opportunities to

develop the businessEncouraging new ideas from within the business and holding meetings aimed at putting new ideas into effect

Disturbance handler

Responding to changing situations that may put the business at risk, assuming responsibility when threatening factors develop

Taking decisions on how the business should respond to threats, such as new competitors or changes in the economic environment

Resource allocator

Deciding on the spending of the organization’s financial resources and the allocation of its physical and human resources

Drawing up and approving estimates and budgets; deciding on staffing levels for departments and within departments

Negotiator Representing the organization in all important negotiations, e.g. with government

Conducting negotiations and building up official links between the business and other organizations

Leadership: the art of motivating a group of people towards achieving a common objective.

Qualities of a good leader: - Desire to succeed and natural self confidence that they will succeed

- An ability to think beyond the obvious – to be creative – and to encourage others to do the same

- Multi-talented so that they can understand discussions about a wide range of issues affecting their businesses

- An incisive mind that enables the heart of an issue to be identified rather than unnecessary details

Leadership styles:

Style

Main features Drawbacks Applications

Autocratic

Leader takes all decisions.

Demotivates staff who want to contribute and accept responsibility

Defence forces and police where quick decisions are needed and the scope for “discussion” must be limited

Gives little info to staffSupervises workers closelyOne-way communication

Decisions do not benefit from staff output

In times of crisis when decisive action might be needed to limit damage to the business or danger to others

Workers are only given limited info about the business

Democratic

Participation is encouraged

Consultation with staff can be time consuming

Businesses that expect workers to contribute fully to the production and decision-making, thereby satisfying their higher-order needs

Two-way communication is used which allows feedback from staff

On occasions, quick decision making will be required

An experienced and flexible workforce will be likely to benefit most from this style

Workers are given information about the business to allow full staff involvement

Should staff be involved in all aspects of the business? Some issues might be too sensitive, e.g. job losses; or too secret, e.g. development of new products

In situations that demand a new way of thinking or a new solution then staff input can be very valuable

Laissez-faire

Managers delegate virtually all authority and decision-making powers

Workers may not appreciate the lack of structure and direction in their work. This could lead to a loss of security.

When managers are too busy (or too lazy) to intervene

Very broad criteria or limits might be established for the staff to work within

The lack of feedback – as managers will not be closely monitoring progress – may be demotivating

May be appropriate in research institutions where experts are more likely to arrive at solutions when not constrained by narrow rules or management controls.

Leadership roles in business- Directors: senior managers elected into office by shareholders in a limited

company; they are usually head of a major functional department; responsible for delegating within department, meeting the objectives for the department set by the Board of Directors and communicating these to their department, assisting in the recruitment of senior staff in the department

- Managers: any individual responsible for people, resources or decision-making, or often all three; they will have some authority over other staff below them in the hierarchy; lead, motivate, and if necessary, discipline the staff in their section or department

- Supervisors: appointed by management to watch over the work of others; this is usually not decision-making role, but they will have responsibility for leading a team of people in working towards pre-set goals; less of an inspector and more of a work colleague who is appointed to help staff achieve objectives in a cooperative spirit

- Worker’s representative: elected by workers, either as trade union officials or as representative on works councils, in order to discuss areas of common concern with managers

Theory X and Theory Y: according to Douglas McGregor, one of the most important factors determining the style of leadership managers are using is their attitudes toward workers; he identified two distinct management approaches to the workers and called them Theory X and Theory Y; he did not suggest that there were two types of workers, X and Y, but that the attitudes of management to workers could, in extreme cases be described by these two theories

Summary of Theory X and Theory YTheory X managers believe that

workers:Theory Y managers believe that

workers:Dislike work Can derive as much enjoyment from work

as from rest and playWill avoid responsibility Will accept responsibilityAre not creative Are creative

Informal leader: a person who has no formal authority but has the respect of colleagues and some power over them

Emotional intelligence (EI): the ability of managers to understand their own emotions, and those of the people they work with, to achieve better business performance

EI competencies• Self-awareness: knowing what we feel is important and using that to guide

decision-making. Having a realistic view of our own abilities and having self-confidence in our abilities.

• Self-management: being able to recover quickly from stress, being trustworthy and conscientious, showing initiative and self-control.

• Social awareness: sensing what others are feeling, being able to take their views into account and being to “get on” with a wide range of people

• Social skills: handling emotions in relationships well and accurately understanding different social situations; using social skills to persuade, negotiate and lead.

Motivation: the internal and external factors that stimulate people to take actions that lead to achieving a goal; the desire to see a job done quickly and well; motivation results from the individual’s requirement to achieve objectives and to satisfy needs.

Taylor’s motivation theory: / Scientific management: he made the first attempt to analyze workers’ motivation in order to advise management on the best ways to increase worker performance or productivity; the approach he used include several stages:

1. Select workers to perform a task

2. Observe them performing the task and note the key elements of it

3. Record the time taken to do each part of the task

4. Identify the quickest method recorded

5. Train all workers in the quickest method and do not allow them to make any changes in it

6. Supervise workers to ensure that this “best way” is being carried out and to time them check that the set time is not being exceeded

7. Pay workers on the basis of results – based on the theory of economic man

The theory of “economic man” was widely held, and Taylor himself supported this notion. The view was that man was driven or motivated by money alone and the only factor that could stimulate further effort was the chance of earning extra money. This formed the basis of Taylor’s main motivational suggestion – wage levels based on output. He always maintained that workers should be paid a “fair day’s pay for a fair day’s work” and that the amount should be directly linked to output through a system known as “piece rate”.

Mayo and the human relations theories: Mayo is best known for his “Hawthorne effect” conclusions. These were based on a series of experiments he and his team conducted over a five year period. His work was initially based on the assumption that working conditions – lighting, heating, rest period and so on – had a significant effect on workers’ productivity. Experiments were undertaken to establish the optimum working conditions and the output of a control group was also recorded and this group experienced no changes in working conditions at all. The results surprised all

observers – as lighting and other conditions were changed, both improved and worsened, productivity rose in all groups including the control group. Based on the results, Mayo concluded that working conditions in themselves were not that important in determining productivity levels and other motivational factors needed to be investigated further before conclusions could be drawn

Conclusions from Mayo’s work:

1. Changes in working conditions and financial rewards have little or no effect on productivity.

2. When management consults with workers and take an interest in their work then motivation is improved.

3. Working in teams and developing a team spirit can improve productivity.

4. When some control over their own working lives is given to workers, such as deciding when to take breaks, there is a positive motivational effect.

5. Groups can establish their own targets or norms and these can be greatly influenced by the informal leaders of the group.

Maslow and the hierarchy of human needs

Abraham Maslow was concerned with trying to identify and classify the main needs that humans have. According to his research our needs determine our actions – we will always try to satisfy them and we will be motivated to do so. If work can be organized so that we can satisfy some or all of our needs at work then we will become more productive and satisfied.Hierarchy of needs:1. Physical needs /food, shelter, water, rest/

2. Safety needs /protection from threats, job security, health and safety at work/

3. Social needs /trust, acceptance, friendship, belonging to a group, social facilities/

4. Esteem needs /respect from others, status recognition of achievement/

5. Self actualization /reaching one’s full potential/

Limitations of Maslow’s approach: not everyone has the same needs as it is assumed by the hierarchy; in practice it can be difficult to identify the degree to which each need has been met and which level a worker is ‘on’; money is necessary to satisfy physical needs yet it might also play a role in satisfying the other levels of needs, such as a status and esteem; self-actualization is never permanently achieved; jobs must continually offer challenges and opportunities for fulfillment otherwise regression will occur.

Herzberg and the “Two factor” theory: his research was based around questionnaires and interviews with employees with the intention of discovering those factors that led to them having very good feelings about their jobs and those factors that led to them having very negative feelings about their jobs.

His conclusions were that:1. Job satisfaction resulted from five main factors – achievement, recognition

for achievement, the work itself, responsibility and advancement. Herzberg called these factors “motivators”.

2. Job dissatisfaction resulted from five different factors – company policy and administration, supervision, salary, relationships with others and working conditions. He termed these factors “hygiene factors”. These were the factors that surround the job itself /extrinsic factors/ rather than the work itself /intrinsic factors/. Herzberg considered that the hygiene factors had to be addressed by management to prevent dissatisfaction, but even if they were in place they would not, by themselves, create a well-motivated workforce.

Conclusions from Herzberg’s work:1. Pay and working conditions can be improved and these will help to remove

dissatisfaction about work; but they will not, on their own, provide conditions for motivation to exist.

2. The motivators need to be in place for workers to be prepared to work willingly and to always give of their best.

3. A business could offer higher pay, improved working conditions and less heavy-handed supervision of work.

McClelland and motivational needs theory: he developed an achievement-based motivational theory and promoted improvements in employee assessment methods. He is best known for describing three types of motivational needs, identified in his book, The Achieving Society (1961)

• Achievement motivation: a person with strong motivational need for achievement will seek to reach realistic and challenging goals and job advancement. There is a constant need for feedback regarding progress and achievement and a need for a sense of accomplishment. This result-driven attitude is almost always a common characteristic of successful business people and entrepreneurs

• Authority/power motivation: a person with this dominant need is “authority motivated”. The desire to control others is a powerful motivating force – the need to be influential, effective and to make an impact. There is a strong leadership instinct and when authority is gained over others, it brings personal status and prestige.

• Affiliation motivation: the person with need for affiliation as the strongest driver or motivator has a need for friendly relationships and is motivated towards interaction with other people. These people tend to be good team members – there is a need to be liked and popular and to be held in high regard.

Vroom and expectancy theory: Vroom suggested that individuals choose to behave in ways they believe will lead to outcomes they desire and value. His expectancy theory states that individuals have different sets of goals and can be motivated if they believe that:• There is a positive link between effort and performance• Favourable performance will result in a desirable reward• The reward will satisfy an important need• The desire to satisfy the need is strong enough to make the work effort worthwhile

His expectancy theory is based on the following three beliefs:

• Valence: the depth of the want of an employee for an extrinsic reward, such as money, or an intrinsic reward such as satisfaction

• Expectancy: the degree to which people believe that putting effort into work will lead to a given level of performance

• Instrumentality: the confidence of employees that they will actually get what they desire, even if it has been promised by the manager.

Financial reward system:

The most common payment systems include- Hourly or time wage rate: this is the most common way of paying manual,

clerical and “non-management” workers; an hourly “time rate” is set for the job – perhaps by comparing with other firms or similar jobs – and the wage level is determined by multiplying this by the number of hours worked; the total is usually paid weekly

Advantages DisadvantagesWorkers will not rush their work and this could lead to high quality.

Too much time may be taken to do a job as there is no additional reward for extra effort or faster work. To prevent this, additional supervision of workers may be required.

Gives workers some security of payment even if there are unavoidable production hold ups.Wage rates can be adjusted easily to reflect different skill levels required to do a job.

Higher “overtime rates” are paid after a contractual number of hours has been worked – these could encourage slow working to delay completing a job.Most suitable when the output of

individual workers cannot be identified or measured.Fairer than piece rates in situations when employees have no control over the speed at which they work.

Wages will still have to be paid even if production is halted – unless the workers are on very flexible hours’ contracts.

- Piece rate: a rate is fixed for the production of each unit, and the worker’s wages therefore depend on the quantity of output produced; the piece rate can be adjusted to reflect the difficulty of the job and the “standard” time needed to complete it; the level of the rate could be very important – if set too low it could demotivate the workers but if too high it could reduce the incentives because workers will be able to meet their target wage level by producing relatively few units.

Advantages DisadvantagesEncourages greater effort and faster working.

Requires output to be measurable and standardized – if each product is different, then piece work is inappropriate.May lead to failing quality and safety levels as workers rush to complete units.

The labor cost for each unit is determined in advance and this helps to set a price for the product.

Workers may settle for a certain pay level and will therefore not be motivated to produce more than a certain level.Provides little security over pay level, for example in the event of a production breakdown.Discourages workers from accepting change at work as this might result in loss of pay.

- Salary: this is an annual sum that is usually paid on a monthly basis; it is the most common form of payment for professional, supervisory and management staff; the salary level is fixed each year and it is not dependent on the number of hours worked (time rate) or the number of units produced (piece rate); the fixing of the salary level for each job is a very important process because it helps to determine the status of that post in the whole organization.

Advantages DisadvantagesGives security of income Income is not related to effort levels or

productivityGives status compared to time rate or piece rate payment systems

May lead to complacency of the salary earner

Aids in costing – the salaries will not vary for one year

Regular appraisal may be needed to assess whether an individual should move up a salary band, although this could be an advantage if this becomes a positive form of worker appraisal

Suitable for jobs where output is not measurableSuitable for management positions where staff are expected to put in extra time to complete a task or assignment

- Commission: this is most frequently used in personal selling, where the salesperson is paid a commission or a proportion of the sales gained; it has the same advantages and disadvantages as piece rates used in production industries.

- Performance-related pay /PRP/: this is a scheme to reward staff for above-average work performance; it is usually in the form of bonus payable in addition to the basic salary; it is widely used for those workers whose ‘output’ is not measurable in quantitative terms, such as management, supervisory and clerical posts. It requires the following procedure:

1. Regular target setting, establishing specific objectives for the individual

2. Annual appraisals of the worker’s performance against the pre-set targets

3. Paying each worker a bonus according to the degree to which the targets have been exceeded

There are some problems with PRP systems. The main issue is one that Herzberg would recognize – as there is no change in the nature of the work being undertaken most of the ‘motivators’ would not be satisfied by PRP. In addition, the concentration on individual performance can create divisions within teams and groups, and this can work against the findings of the Hawthorne effect. There is also a widely held view that PRP bonuses are often inadequate, even to achieve short-term productivity gains or improvements in effort. The last problem concerns the style of management that PRP can lead to. By giving senior managers the power to decide which subordinates have achieved performances above target, it can lead to claims of favoritism and the ability to control staff by means of the “carrot” of extra rewards.

- Profit sharing: this scheme shares some of the company profit not just with the shareholders but also with workers. The essential idea behind these arrangements is that staff will feel more committed to the success of the business and will strive to achieve higher performances and cost savings.

Advantages DisadvantagesReduces the potential conflict between owners and workers as everyone now has an interest in higher profits

The reward offered is not closely related to individual effort – why should one worker put in greater effort when everyone will be benefiting?

Designed to lead to higher worker effort levels and a greater preparation to accept cost reduction measures and changes that benefit the business

The schemes can be costly to set up and operate, especially in large firms with many employees

Business is likely to attract better recruits drawn by the chance of sharing profits or owning shares in the firm

Small profit shares paid at the end of the financial year are unlikely to promote motivation throughout the year

As the bonuses are paid out of profits the scheme does not add to business costs, unlike a normal increase in pay levels

Profit-sharing schemes will reduce profits available to be paid to owners (reducing dividends) and to be reinvested in the business (retained profits)

If successful in increasing motivation then the schemes could lead to an increase in overall business profitability

Worker share ownership schemes can increase the total number of shares issued and “dilute” the value of existing shares.

- Fringe benefits: these are non-monetary forms of reward; they include company cars, free insurance and pension schemes, private health insurance, discounts on company products and low interest rates loans; they are used by business in

addition to normal payment systems in order to give status to higher-level employees and to recruit and retain the best staff

Non-financial reward system:

- Job rotation: increasing the flexibility of the workforce and the variety of work they do by switching from one job to another

- Job enlargement: a term used to refer to any attempt to increase the scope of a job by broadening or deepening the tasks undertaken

- Job enrichment: this involves the principle of organizing work so that employees are encouraged and allowed to use their full abilities, not just physical effort; the process often involves a slackening of direct supervision as workers take more responsibility for their own work and are allowed some degree of decision-making authority

Job enrichment’s key features:1. Complete units of work so that the contribution of the worker can be

identified and more challenging work offered

2. Direct feedback on performance to allow each worker to have an awareness of their own progress

3. Challenging tasks offered as part of a range of activities, some of which are beyond the worker’s recent experience

- Job redesign: involves the restructuring of a job – usually with employees’ involvement and agreement – to make work more interesting, satisfying and challenging

- Team working: places each member of staff into a small team of employees; team working leads to lower labor turnover, more and better ideas from the workforce on improving the product and the manufacturing process, consistently higher-quality, especially when TQM is incorporated

- Quality circles: voluntary groups of workers who meet regularly to discuss work-related problems and issues

- Worker participation: workers are actively encouraged to become involved in decision making within the organization

Target setting: this is clearly related to the technique of Management by Objectives; as well as making work more interesting and rewarding, the purpose of target setting is to enable direct feedback to workers on how their performance compares with agreed objectives; the basic idea behind this is that people are more likely to do well when they are working towards a goal that they helped to establish and identify

Delegation and empowerment: involve passing down authority to perform tasks to workers.

Human resource management (HRM): the strategic approach to the effective management of an organization’s workers so that they help the business gain a competitive advantage

HRM purpose and roles:• Planning the workforce needs of the business• Recruiting and selecting staff using a variety of techniques• Appraising, training and developing staff at every stage of their careers• Preparing contracts of employment for all staff and deciding on whether these

should be permanent or temporary, full- or part-time• Involving all managers in the development of their staff – emphasizing that this is

not just an HR responsibility• Improving staff morale and welfare• Developing appropriate pay systems for different categories of staff• Measuring and monitoring staff performance

Workforce planning: analyzing and forecasting the numbers of workers and the skills of those workers that will be required by the organization to achieve its objectives• Workforce audit: a check on the skills and qualifications of all existing workers• The number of staff required depends on: forecast demand for the firm’s products;

the productivity levels of staff; the objectives of the business; changes in the law regarding workers’ rights; the labour turnover and absenteeism rate

• The skills of the staff required depends on: the technological change in the industry; the need for flexible and multi-skilled staff

Recruitment: the process of identifying the need for a new employee, defining the job to be filled and the type of person needed to fill it, attracting suitable candidates for the job and selecting the best one.

Recruitment and selection process involves the following steps:1. Establishing the exact nature of the job vacancy and drawing up a job description: a

job description is a detailed list of the key points about the job to be filled, stating all its key tasks and responsibilities.

2. Drawing up a person specification: a detailed list of the qualities, skills and qualifications that a successful applicant will need to have

3. Preparing a job advertisement reflecting the requirements of the job and the personal qualities needed

4. Drawing up a shortlist of applicants5. Conducting interviews or using other selection methods

Training: work-related education to increase workforce skills and efficiency• On-the-job training: instruction at the place of work on how a job should be

carried out.• Off-the-job training: all training undertaken away from the business• Induction training: introductory training programme to familiarize new recruits

with the systems used in the business and the layout of the business site

Staff appraisal” the process of assessing the effectiveness of an employee judged against pre-set objectives.

Employment contract: a legal document that sets out the terms and conditions governing a worker’s job.

• Temporary: employment contract that lasts for a fixed time period, e.g. six months• Part-time: employment contract that is for less than the normal full working week• Flexi-time: employment contract that allows staff to be called in at times most

convenient to employers and employees Outsourcing: not employing staff directly, but using an outside agency or organization

to carry out some business functions.

Teleworking: staff working from home but keeping contact with office by means of modern IT communications

Core vs. Peripheral workers

Shamrock organization:

Hard vs. Soft HRM• Hard HRM: an approach to managing staff that focuses on cutting costs, e.g.

temporary and part-time employment contracts, offering maximum flexibility but with minimum training costs.

• Soft HRM: an approach to managing staff that focuses on developing staff that focuses on developing it so that they reach self-fulfillment and are motivated to work hard and stay with the business