MODULE-I

Management and Principles of Management

Concept of Management, Nature, Process, andSignificance of Management

Concept of management: – Management can be defined as the process of achieving

organizational goals through planning, organizing, leading, and controlling the human,
physical, financial, and information resources of the organization in an effective and efficient
manner.
Every business needs planning for the future for a successful business and the person who is
in the authority, has to take decisions and he will be responsible for the consequences of his
decisions whether favorable and unfavorable.

What is management?
Management is what a manager does within the organization. All the activities whether
related to decision making or implementation of such decisions are performed by the
managers with the purpose of achieving common goals.

Definition of management
Concept of management is defined as the process of getting things done from others to
achieve goals effectively and efficiently.
Efficiently: –
 To complete a task with minimum cost.
 For example: – ‘A’ got a task of construction of the Flyover. The estimated target for the
same is 1000 crores and ‘A’ completed the construction of flyover in 900 crores. In this
case, A worked efficiently.
Effectively: –
 It is basically to complete the task on time.

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 For example: – Keeping in mind the above example, Suppose, ‘A’ got two years’ time
period for the construction of flyover. If ‘A’ completes his task within the span of two
years. Here, in this case, we can say A’s management is effective.
 Definitions given by scholars
 A'Management Is a distinct process consisting of planning, organising, actuating and
controlling; utilising in each both science and art, and followed in order to accomplish
pre-determined objectives."
 George R Terry (1877 - 1955)


 "Management is the art of getting things done through others and with formally
organised groups."
 Harold Koontz (1909-1984)


 Peter Ferdinand Drucker
 (November 19, 1909 – November 11, 2005)
 "Management may be defined as the process by means of which the purpose and
objectives of a particular human group are determined, clarified and effectuated"
 Management is a multipurpose organ that manage a business and manages Managers
and manages Workers and work. 

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  "Management is the art of knowing what you want to do and then seeing that they do it in
the best and the cheapest may."
 Frederick Winslow Taylor (March 20, 1856 – March 21, 1915)


 One popular definition is by Mary Parker Follett. Management, she says, is the "art of
getting things done through people."
 Mary Parker Follett (3 September 1868 – 18 December 1933)

 Process of management /Functions of Management

The process includes the functions performed by the management within the organization.
1. Planning: – Planning means thinking in advance. Planning relates to setting goals,
objectives and targets and also describe a mechanism to achieve them at various levels
throughout the organization.
2. Organizing: – It means the arrangement of resources to do different tasks in the
organization.
3. Staffing: – It means the appointment of the right person at the right place or job.
4. Directing: – It includes the instructions, guidance, and motivation given by the
manager to their employees, and the manager adopt their leadership tasks.
5. Controlling: – Control is concerned with measuring and minimizing the difference
between planned and actual performance, monitoring performance, and taking
corrective actions wherever necessary. Thus management is a complex, integrated and
ongoing dynamic process.

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 Functions of Management –
Planning,
Organizing
Staffing,
Directing &Controlling
Management has been described as a social process involving responsibility for
economical and effective planning & regulation of operation of an enterprise in the
fulfillment of given purposes. It is a dynamic
process consisting of various elements and activities. These activities are different
from operative functions like marketing, finance, purchase etc. Rather these
activities are common to each and every manger irrespective of his level or status.

Different experts have classified functions of management. According to George

& Jerry, “There are four fundamental functions of management i.e. planning,
organizing, actuating and controlling”.

According to Henry Fayol, “To manage is to forecast and plan, to organize, to

command, & to control”. Whereas Luther Gullick has given a keyword
’POSDCORB’ where P stands for Planning, O for Organizing, S for Staffing, D
for Directing, Co for Co-ordination, R for reporting & B for Budgeting.

But the most widely accepted are functions of management given by KOONTZ and
O’DONNEL
i.e. Planning, Organizing, Staffing, Directing and Controlling.

For theoretical purposes, it may be convenient to separate the function of

management but practically these functions are overlapping in nature i.e. they are
highly inseparable. Each function blends into the other & each affects the
performance of others.
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According to Henry Fayol, “To manage is to forecast and plan, to organize, to
command, & to control”. Whereas Luther Gullick has given a keyword
’POSDCORB’ where P stands for Planning, O for Organizing, S for Staffing, D
for Directing, Co for Co-ordination, R for reporting & B for Budgeting.

But the most widely accepted are functions of management given by KOONTZ and
O’DONNEL

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According to Henry Fayol, “To manage is to forecast and plan, to organize, to
command, & to control”. Whereas Luther Gullick has given a keyword
’POSDCORB’ where P stands for Planning, O for Organizing, S for Staffing, D
for Directing, Co for Co-ordination, R for reporting & B for Budgeting.

For theoretical purposes, it may be convenient to separate the function of

management but practically these functions are overlapping in nature i.e. they are
highly inseparable. Each function blends into the other & each affects the
performance of others.

1. Planning
It is the basic function of management. It deals with chalking out a future course of action
& deciding in advance the most appropriate course of actions for achievement of pre-
determined goals.

According to KOONTZ, “Planning is deciding in advance - what to do, when to do &

how to do. It bridges the gap from where we are & where we want to be”. A plan is a
future course of actions. It is an exercise in problem solving & decision making.

Planning is determination of courses of action to achieve desired goals. Thus, planning is

a systematic thinking about ways & means for accomplishment of pre-determined goals.
Planning is necessary to ensure proper utilization of human & non-human resources. It is
all pervasive, it is an intellectual activity and it also helps in avoiding confusion,
uncertainties, risks, wastages etc.

2. Organizing

It is the process of bringing together physical, financial and human resources and
developing productive relationship amongst them for achievement of organizational
goals.

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 According to Henry Fayol, “To organize a business is to provide it with everything useful
or its functioning i.e. raw material, tools, capital and personnel’s”. To organize a business
involves determining & providing human and non-human resources to the organizational
structure. Organizing as a process involves:

 Identification of activities.
 Classification of grouping of activities.
 Assignment of duties.
 Delegation of authority and creation of responsibility.
 Coordinating authority and responsibility relationships. 

3. STAFFING: is the function of manning the organization structure and keeping it
manned. Staffing has assumed greater importance in the recent years due to advancement
of technology, increase in size of business, complexity of human behavior etc.

The main purpose o staffing is to put right man on right job i.e. square pegs in square
holes and round pegs in round holes. According to Kootz & O’Donell, “Managerial
function of staffing involves manning the organization structure through proper and
effective selection, appraisal & development of personnel to fill the roles designed un the
structure”. Staffing involves:
 Manpower Planning (estimating man power in terms of searching, choosing the person
and giving the right place). 
 Recruitment, Selection & Placement.
 Training & Development. 
 Remuneration.
 Performance Appraisal.
 Promotions & Transfer.

4. DIRECTING

It is that part of managerial function which actuates the organizational methods to work
efficiently for achievement of organizational purposes. It is considered life-spark of the
enterprise which sets it in motion the action of people because planning, organizing and
staffing are the mere preparations for doing the work.

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 Direction is that inert-personnel aspect of management which deals directly with
influencing, guiding, supervising, motivating sub-ordinate for the achievement of
organizational goals. Direction has the following elements:

Supervision- implies overseeing the work of subordinates by their superiors. It is the act
of watching & directing work & workers.

Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to

work. Positive, negative, monetary, non-monetary incentives may be used for this
purpose.

Leadership- may be defined as a process by which manager guides and influences the
work of subordinates in desired direction.

Communications- is the process of passing information, experience, opinion etc from

one person to another. It is a bridge of understanding.

5. Controlling

It implies measurement of accomplishment against the standards and correction of

deviation if any to ensure achievement of organizational goals. The purpose of
controlling is to ensure that everything occurs in conformities with the standards. An
efficient system of control helps to predict deviations before they actually occur.

According to Theo Haimann, “Controlling is the process of checking whether or not

proper progress is being made towards the objectives and goals and acting if necessary, to
correct any deviation”.

According to Koontz & O’Donell “Controlling is the measurement & correction of

performance activities of subordinates in order to make sure that the enterprise objectives
and plans desired to obtain them as being accomplished”. Therefore controlling has
following steps:

a. Establishment of standard performance.

b. Measurement of actual performance.
c. Comparison of actual performance with the standards and finding out deviation if any.
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 Corrective action.

Concept of management: Nature



1. Goal-Oriented: – The main task of management is to achieve the goals of the

organization. An organization has some goals, which are the basic reason for its
existence.
 Goal: – It means what the organization wants to achieve.
 For example, Reliance Jio; It came up with a goal to capture whole
telecommunication industry and to get the highest market share.
 Here, in the above-mentioned example, the work of management is to achieve
goals set by ‘Reliance Jio’ with effectiveness and efficiency.
 The goal should be clear and simply stated to each member working for the
organization.
2. Management is a group activity: – Management is not a one-person activity.
 It is a group activity and every individual working for the organization fully
knows his responsibilities and duties which he/she is expected to achieve within
the time allotted.
 Every individual joins the organization with different and multiple needs known
as personal objectives but works towards the achievement of organizational goals.
3. Management is an Intangible Force: – Management cannot be touch or seen but its
presence can be observed if its objectives are achieved as per the set goal.
 The satisfaction of stakeholders is a guiding force of good management.
 The decision making of managers should be in the light of objectives to be
achieved.
 Secondly, the implementation of such decisions such target both efficiency and
effectiveness.
(The term stakeholders include all the persons who are interested in business directly and
indirectly. It includes customers, government, public, investors, etc.)

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4. Management is all-pervasive: – Management is a pervasive function as it is applied
to all kinds of organization.
 It is applied in all types of organization irrespective of the following factors: –
 Size (small scale, medium scale or large scale)
 Purpose (profit earning or non- profit earning organizations)
 Level (top, middle or lower level of organizations)
 For example: – The lower level does day to day planning, the middle level does
departmental level planning and the top-level does organizational-level planning.
5. Management is multi-dimensional: – It is a complex activity with three main
dimensions.
 Management of work: – Management of work aims to manage the work i.e.,
which work to be performed at what time.
 Management of people: – Management of people includes management of
individuals i.e., to allot authorities, responsibilities and their duties. Managing
people has two dimensions: –
 Management of individuals: – It means dealing with employees as individuals
with their diverse needs and behaviors.
 Management of people: – It means dealing with individuals as a group of
people i.e., to maintain coordination among individuals at the same level.
 Management of operations: – It is interlinked with both management of work
and management of people.
 This has some basic products and services to provide in order to survive.
 For example: – the main activity of banks is to provide loans and to take
loans from the public but they are providing other activities as well as online
banking, ATM services at no cost, etc.
6. Management is a continuous process: –
 Management is a process of continuous activities, but separate functions i.e.,
planning, organizing, staffing, directing and controlling.
 Management starts with the organization and ends with organization.
7. Management is a dynamic function: –

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  In order to survive, management should make changes according to the business
environment. In order to ensure regular growth, managers should make changes in
the policies as per the needs of the stakeholders.
 For example: – Paytm is making the ventures with all types of business units
such as schools, universities and other companies and professionals to provide a
single platform for all payment solutions

Significance/Importance of concept ofmanagement

1. Optimal use of resources: – A manager eliminates wastage of resources that
leads to efficiency in all business functions.
2. Effective leadership and motivation: – It helps employees to work in
harmony and achieve goals in a coordinated manner. It provides effective
leadership and motivation for employees to work hard.
3. Sound industrial relations: – A manager maintains a balance between
employees demands and organizational needs, helping to reduce industrial
disputes.
4. Achievement of goals: – It helps in realizing goals with maximum efficiency
by minimizing unnecessary deviations, overlapping efforts and waste motions.
5. Improvement in living standards: – It improves the standard of living of
people by ensuring optimum utilization of scarce resources and survival of the
firm in a dynamic environment.
6. Establishing a sound organization: – Managers help to establish a sound
organization through effective authority and responsibility relationships.
7. Reduces Cost: – A manager uses cost-effective techniques to reduce
production costs and increase production.

Describe and Outline Types of Management Approaches

There are four types of management approaches.

Types of management approaches

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Management plays a crucial role in the making of the organisation and therefore effective
management is required to ensure every organisation is working towards a common objective or
goal. Hence, it is essential to produce a good organisation structure and organisation relatioship.
The four different major types of management approaches will discuss in the following.

1) Classical Approach

Classical approach can be classified into three management includes

 scientific management,
 administrative management
 bureaucratic management.

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Taylor’s Scientific Management Theory
Taylor's philosophy focused on the belief that making people work as hard as they
could was not as efficient as optimizing the way the work was done.

In 1909, Taylor published "The Principles of Scientific Management." In this, he

proposed that by optimizing and simplifying jobs, productivity would increase

Objectives of Scientific Management Theory by Taylor:

The major objectives of Scientific Management Theory by Taylor are a

maximum improvement of workers. This improvement shows on efficiency and
effectiveness performance. Such development is the revolution in management
procedure and employee’s actual performance.

If the procedures and principles of scientific management theory by Taylor apply,

itcan huge change on the following things.

For instance:-

 Prevent the wastage of time.

 Reduce the cost of production.
 Secure the labor in industry.
 Increase the efficiency of the workers.
 Develop the relationship between workers and managers

Principles of Scientific Management Theory by Taylor:

Frederick Winslow Taylor mentioned core principles of management in

his Principles of Scientific Management book. These principles refer to the
scientificmanagement theory by Taylor. Such as:-

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 1. Science, not the Rule of Thumb: The basic principles of scientific management
theory by Taylor is the adoption of a scientific approach to decision making.
Even abandons the all unscientific approach from managerial activities. So,
wecan say that these principles suggest thinking before doing.
2. Harmony, not Discord: An organization constitutes by two groups i.e.
‘workers’ and ‘management’. They must create the ‘Give and Take’
relationship in the workplace. Therefore, Taylor emphasized on Mental
Revolution which

3. Co-operation, not Individualism: It shows the importance of each other

(management and workers). Management should reward and appreciate the
employees for their helpful suggestions. At the same time, employees also
cooperate with the management for the improvement of the organization.
4. Development of Each and Every Person to his/her Greatest Efficiency
and Prosperity: Employees should be properly trained and selected in a
scientific manner. And it is essential for each organization. For implementing
this task, Taylor arranged some techniques, for instance, work-study, time
study, motionstudy, fatigue study and method study.
5. Maximum, not Restricted Output: Maximum productivity is the basic
purpose of an organization. In this case, Taylor has emphasized the
production maximization in his principles.

Henri Fayol 14 Principles of Management

Henry Fayol, also known as the ‘father of modern management theory’ gave a new perception of
the concept of management. He introduced a general theory that can be applied to all levels of
management and every department. The Fayol theory is practiced by the managers to organize
and regulate the internal activities of an organization. He concentrated on accomplishing
managerial efficiency.
The fourteen principles of management created by Henri Fayol are explained below.

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1. Division of Work-

Henri believed that segregating work in the workforce amongst the worker will enhance the
quality of the product. Similarly, he also concluded that the division of work improves the
productivity, efficiency, accuracy and speed of the workers. This principle is appropriate for both
the managerial as well as a technical work level.

2. Authority and Responsibility-

These are the two key aspects of management. Authority facilitates the management to work
efficiently, and responsibility makes them responsible for the work done under their guidance or
leadership.

3. Discipline-

Without discipline, nothing can be accomplished. It is the core value for any project or any
management. Good performance and sensible interrelation make the management job easy and
comprehensive. Employees good behaviour also helps them smoothly build and progress in their
professional careers.

4. Unity of Command-

This means an employee should have only one boss and follow his command. If an employee has
to follow more than one boss, there begins a conflict of interest and can create confusion.

5. Unity of Direction :Whoever is engaged in the same activity should have a unified goal. This
means all the person working in a company should have one goal and motive which will make
the work easier and achieve the set goal easily.

6. Subordination of Individual Interest-

This indicates a company should work unitedly towards the interest of a company rather than
personal interest. Be subordinate to the purposes of an organization. This refers to the whole
chain of command in a company.

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7. Remuneration-

This plays an important role in motivating the workers of a company. Remuneration can be
monetary or non-monetary. However, it should be according to an individual’s efforts they have
made.

8. Centralization-

In any company, the management or any authority responsible for the decision-making process
should be neutral. However, this depends on the size of an organization. Henri Fayol stressed on
the point that there should be a balance between the hierarchy and division of power.

9. Scalar Chain-

Fayol on this principle highlights that the hierarchy steps should be from the top to the lowest.
This is necessary so that every employee knows their immediate senior also they should be able
to contact any, if needed.

10. Order-

A company should maintain a well-defined work order to have a favourable work culture. The
positive atmosphere in the workplace will boost more positive productivity.

Equity- All employees should be treated equally and respectfully. It’s the responsibility of a
manager that no employees face discrimination.

11. Stability-

An employee delivers the best if they feel secure in their job. It is the duty of the management to
offer job security to their employees.

12. Initiative-

The management should support and encourage the employees to take initiatives in an
organization. It will help them to increase their interest and make then worth.
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 13. Esprit de Corps-

It is the responsibility of the management to motivate their employees and be supportive of each
other regularly. Developing trust and mutual understanding will lead to a positive outcome and
work environment.

This 14 principles of management are used to manage an organization and are beneficial for
prediction, planning, decision-making, organization and process management, control and
coordination.

What Is Maslow’s Hierarchy of Needs?

In order to better understand what motivates human beings, Maslow proposed that human needs
can be organized into a hierarchy. This hierarchy ranges from more concrete needs such as food
and water to abstract concepts such as self-fulfillment. According to Maslow, when a lower needis met, the
next need on the hierarchy becomes our focus of attention.

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These are the five categories of needs according to Maslow:

Physiological

These refer to basic physical needs like drinking when thirsty or eating when hungry. According
to Maslow, some of these needs involve our efforts to meet the body’s need for homeostasis; that
is, maintaining consistent levels in different bodily systems (for example, maintaining a body
temperature of 98.6°).1

Maslow considered physiological needs to be the most essential of our needs. If someone is
lacking in more than one need, they’re likely to try to meet these physiological needs first. For
example, if someone is extremely hungry, it’s hard to focus on anything else besides food.
Another example of a physiological need would be the need for adequate sleep.

Safety

Once people’s physiological requirements are met, the next need that arises is a safe
environment. Our safety needs are apparent even early in childhood, as children have a need for
safe and predictable environments and typically react with fear or anxiety when these are not

met. Maslow pointed out that in adults living in developed nations, safety needs are more
apparent in emergency situations (e.g. war and disasters), but this need can also explain why we
tend to prefer the familiar or why we do things like purchase insurance and contribute to a
savings account.

Love and Belonging

According to Maslow, the next need in the hierarchy involves feeling loved and accepted. This
need includes both romantic relationships as well as ties to friends and family members. It also
includes our need to feel that we belong to a social group. Importantly, this need encompasses
both feeling loved and feeling love towards others.

Since Maslow’s time, researchers have continued to explore how love and belonging needs
impact well-being. For example, having social connections is related to better physical health

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and, conversely, feeling isolated (i.e. having unmet belonging needs) has negative consequences
for health and well-being

Esteem Needs: Our esteem needs involve the desire to feel good about ourselves.
According to Maslow, esteem needs include two components. The first involves feeling self-
confidence and feeling good about oneself. The second component involves feeling valued by
others; that is, feeling that our achievements and contributions have been recognized by other
people. When people’s esteem needs are met, they feel confident and see their contributions and
achievements as valuable and important. However, when their esteem needs are not met, they
may experience what psychologist Alfred Adler called feelings of inferiority.

Self-Actualization: It refers to feeling fulfilled, or feeling that we are living up to our

potential. One unique feature of self-actualization is that it looks different for everyone. For one
person, self-actualizations might involve helping others; for another person, it might involve
achievements in an artistic or creative field. Essentially, self-actualization means feeling that
we are doing what we believe we are meant to do. According to Maslow, achieving self-
actualization is relatively rare, and his examples of famous self-actualized individuals include
Abraham Lincoln, Albert Einstein, and Mother Teresa

Douglas McGregor’s Theory X and Theory Y

Professor Douglas McGregor highlighted that there is a significant relationship between
motivation and leadership among people. He summarized the findings of the Hawthorn
experiment by introducing both theory X and theory Y. It is important to note that both theory X
and theory Y are based on the argument that there are specific approaches to managing people
based on their traits.
What is Theory X?

Theory X is formulated on the traditional approach to human behavior, which states that severe
form of leadership must be used to persuade workers towards achieving the organizational goals.
Some of the assumptions adopted in this theory include;

 People dislike work and are geared towards searching reasons to avoid working
 Workers avoid responsibilities and lack ambitions or goals.

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  Employees are lazy, and as such, they must be threatened or forced to work.
What is theory Y?

This is the modern approach to management, which emphasizes on a harmonious corporation

between employees and control of the company. According to this theory, employees’ goals and
those of the organization do not contradict one another. Theory Y has its fundamental concern on
the satisfaction of employees. The following are some of the assumptions have in this theory.

 Employees love to work, and they treat work as natural

 People are innovative and will formulate creative decisions for their growth and growth
of the company
 People are self-controlled and self-directed on the way to achieving their set goals and
objectives
 Lastly, proper working conditions help people to learn and seek responsibilities.

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Table Showing Difference Between Theory X and Theory Y

Theory X Theory Y

Inherent dislike for work High affinity for work, i.e., work is natural

Lacks ambitions Highly ambitious

Accepts and seeks duties under favorable

Avoids responsibility
conditions

Not creative and innovative High-level creativity and innovations

Resist change Takes change

Focuses on psychological needs as a form of Focuses on both lower and higher order needs
motivation like social needs and self-actualization as

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 sources of motivations

High-level supervision required to achieve Employees have self-control, self-direction, and

organizational goals therefore no external control.

Decentralization of authority and decision

Centralization of authority and decision making
making

Employees lack self-motivation Employees are self-motivated

Democratic style of leadership and

Autocratic form of leadership and management
management

Tight control Lenient control

Predominant in 20th century Modern style of leadership and management

Summary

 McGregor’s theory of motivation, which is based on the Hawthorn experiment, offers a

convenient framework for analyzing the relationship between motivation and leadership
style.
 One of the critical difference between theory Y and theory X is that employees in theory
X are associated with adverse traits while employees under theory Y are associated with
positive characteristics.
 It is believed that managers who adopted theory X produce poor results while managers
who take theory Y are likely to deliver better performance while at the same time
offering employees a chance to grow and develop.
 There is a significant relationship between McGregor theory XY and Maslow’s theory of
motivation where employees at lower levels are in theory X while those high in the
hierarchy are in theory Y.

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  However, many people have criticized this theory by highlighting that no person can
belong to these extreme behaviors because human being possesses the qualities of both
theory X and theory Y.
 Additionally, it is clear from the theory that it appears that theory X is highly related to
unskilled and uneducated employees who focus on attaining psychological needs while
theory Y is related to professional employees who understand their roles and
responsibilities in the management of the company.
 Scholars propose that managers should use situational management style to generate
maximum results because employees are likely to portray both negative and positive
traits depending on each situation.

Herzberg’s Two-Factor Theory of Motivation

American psychologist Frederick Herzberg is regarded as one of the great original thinkers in
management and motivational theory. Herzberg set out to determine the effect of attitude on
motivation, by simply asking people to describe the times when they felt really good, and really
bad, about their jobs. What he found was that people who felt good about their jobs gave very
different responses from the people who felt bad.

The results from this inquiry form the basis of Herzberg’s Motivation-Hygiene Theory
(sometimes known as Herzberg’s “Two Factor Theory”). Published in his famous article, “One
More Time: How do You Motivate Employees,” the conclusions he drew were extraordinarily
influential, and still form the bedrock of good motivational practice nearly half a century later.
He’s especially recognized for his two-factor theory, which hypothesized that are two different
sets of factors governing job satisfaction and job dissatisfaction: “hygiene factors,” or extrinsic
motivators and “motivation factors,” or intrinsic motivators.

Hygiene factors, or extrinsic motivators, tend to represent more tangible, basic needs—i.e., the
kinds of needs included in the existence category of needs in the ERG theory or in the lower
levels of Maslow’s hierarchy of needs. Extrinsic motivators include status, job security, salary,
and fringe benefits. It’s important for managers to realize that not providing the appropriate and

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expected extrinsic motivators will sow dissatisfaction and decrease motivation among
employees.

Motivation factors, or intrinsic motivators, tend to represent less tangible, more emotional
needs—i.e., the kinds of needs identified in the “relatedness” and “growth” categories of needs
in the ERG theory and in the higher levels of Maslow’s hierarchy of needs. Intrinsic motivators
include challenging work, recognition, relationships, and growth potential. Managers need
to recognize that while these needs may fall outside the more traditional scope of what
a workplace ought to provide, they can be critical to strong individual and team performance.

The factor that differentiates two-factor theory from the others we’ve discussed is the role of
employee expectations. According to Herzberg, intrinsic motivators and extrinsic motivators
have an inverse relationship. That is, intrinsic motivators tend to increase motivation when they
are present, while extrinsic motivators tend to reduce motivation when they are absent. This is
due to employees’ expectations. Extrinsic motivators (e.g., salary, benefits) are expected, so they
won’t increase motivation when they are in place, but they will cause dissatisfaction when they
are missing. Intrinsic motivators (e.g., challenging work, growth potential), on the other hand,
can be a source of additional motivation when they are available.

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If management wants to increase employees’ job satisfaction, they should be concerned with the
nature of the work itself—the opportunities it presents employees for gaining status, assuming
responsibility, and achieving self-realization. If, on the other hand, management wishes to reduce
dissatisfaction, then it must focus on the job environment—policies, procedures, supervision, and
working conditions. To ensure a satisfied and productive workforce, managers must pay
attention to both sets of job factors.

Leadership

Leadership is the ability of an individual or a group of individuals to influence and

guide followers or other members of an organization.

Leadership involves making sound -- and sometimes difficult -- decisions, creating

and articulating a clear vision, establishing achievable goals and providing followers
with the knowledge and tools necessary to achieve those goals.

Leadership theory

Just as there are multiple definitions of leadership, many different leadership

theories exist. These theories are often grouped into buckets based on the ideas
each theory professes.

For example, one group is the Great Man Theory, a category that originated in the
19th century and stresses that great leaders were men born to the task. Another
group is the Trait Theory, which dates to the mid-20th century and also centers on
the idea that some people are born with the traits that make them great leaders,
such as integrity and self-confidence.

The second half of the 20 th century saw the arrival of several more categories.
Those include situational leadership, where the leadership style is adjusted based
on the readiness or skill level of followers in a given situation, and contingency
theories, in which effective leadership depends on having the right leader for the
right situation; transactional leadership theories, in which leaders reward or punish

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followers to achieve results; and transformational leadership theories, where leaders
help transform followers through example.

Leadership Styles

Autocratic leadership is defined by a top-down approach when it comes to all

decision-making, procedures, and policies within an organization. An autocratic
leader focuses less on collecting input from team members and tends to make
executive decisions that others are expected to follow.
Pros
 Can be efficient, especially when it comes to decision making
 Keeps teams cohesive and consistent since one person is taking charge
 May make everyone’s individual roles clearer since they’ll be delegated
specific duties and won’t be encouraged to step outside of that role

Cons
 Can stifle creativity, collaboration, and innovation
 Doesn’t lead to diversity in thought
 May lead to disengaged individuals and teams who feel like they don’t have a
voice
 Doesn’t allow any room for mentorship or professional growth

2. Transactional Leadership
Transactional leadership is defined by control, organization, and short-term planning.
Leaders who adopt this style rely on a system of rewards and punishment to motivate
their followers. As you can see, there are many similarities between transactional
leadership and autocratic leadership. The main difference is that transactional
leadership, as the name implies, involves a clear exchange between the leader and the
team members. For instance, in exchange for compliance and high performance, an
employee might be rewarded with a promotion.
Pros
 Can be an efficient way to reach short-term goals
 Clearly defines expected behavior from team members due to system of reward
and punishment 
 Provides structure and stability

Cons
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 Limits creativity, growth, and initiative
 May not be impactful on people who aren’t driven by extrinsic motivation
 Can be discouraging for those who are looking for professional and personal
development opportunities

3. Bureaucratic Leadership
Bureaucratic leadership relies on a clear chain of command, strict regulations, and
conformation by its followers. As the name implies, this is a leadership style that’s
commonly found in government entities, as well as military and public organizations.
Pros
 Stable in terms of job security and outcomes
 Removes favoritism from the equation
 Very clear roles, responsibilities, and expectations
 A highly visible set of processes and regulations

Cons
 Inefficient since everything has to go through a chain of command
 Doesn’t encourage an individual’s personal or professional growth
 Stifles creativity, innovation, and free thinking
 Doesn’t foster collaboration or relationship building within teams
 Can make it difficult to respond to change

4. Charismatic Leadership
Charismatic leadership is defined by a leader who uses their communication skills,
persuasiveness, and charm to influence others. Charismatic leaders, given their ability
to connect with people on a deep level, are especially valuable within organizations
that are facing a crisis or are struggling to move forward.
Pros
 Highly inspirational and motivating
 Encourages a sense of camaraderie, collaboration, and union
 Makes followers feel heard and understood
 Creates movement toward positive change

Cons
 Can become more focused on themselves than their people
 Has the potential to become self serving
 Frequently viewed as shallow or disingenuous

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5. Transformational Leadership
Transformational leaders create a vision based on identified needs and guide their
teams toward that unified goal through inspiration and motivation. The main
difference between transformational leadership and the other styles we’ve covered so
far is that this one is focused on changing the systems and processes that aren’t
working – unlike transactional leadership or bureaucratic leadership, which don’t aim
to change the status quo.
Pros
 Motivating for the team
 Conducive to building strong relationships and encouraging collaboration
 Gives team members autonomy to do their jobs
 Can lead to more creativity, growth, and empathy on teams

Cons
 May not be the best fit for specific organizations (i.e. bureaucratic)
 Can cause feelings of instability while disrupting the status quo
 Lots of pressure on the leader, who needs to lead by example

6. Coaching Leadership
Coaching leadership is a style defined by collaboration, support, and guidance.
Coaching leaders are focused on bringing out the best in their teams by guiding them
through goals and obstacles.
Pros
 Encourages two-way communication and collaboration
 Involves lots of constructive feedback
 Facilitates the personal and professional development of individuals
 Focuses on being supportive, not judgmental
 Creates opportunities for growth and creative thinking

Cons
 Resource intensive since it requires a lot of time and energy
 Doesn’t always lead to the fastest, most efficient results
 May not be the ideal choice for high-pressure or strictly results-driven
companies

7. Democratic Leadership

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Democratic leadership, which is also commonly known as participative leadership, is
about letting multiple people participate in the decision-making process. This type of
leadership can be seen in a wide range of contexts, from businesses to schools to
governments.
Pros
 Encourages collaboration
 Inclusive of a variety of opinions and ways of thinking
 Leads to higher group engagement and productivity
 Can result in more creative solutions
 The outcome is supported by the majority

Cons
 The minority opinion is overridden
 The involvement of multiple people can lead to more communication gaps and
confusion
 Can take a longer time to come to a decision
 An unskilled or untrained group can result in more decision making

8. Collaborative Leadership
Collaborative leadership is focused on encouraging people to work together across
functional and organizational boundaries. The purpose of this leadership style is to
encourage collaboration with other teams and departments to accomplish shared
goals.
Pros
 Can lead to more creative, innovative ways of thinking
 More opportunities for diversity
 Can strengthen cross-team relationships
 Builds trust within an organization

Cons
 May lead to ambiguity in roles and responsibilities 
 Can create cross-team conflict
 Potential power struggle between leaders

9. Servant Leadership

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Servant leadership puts the needs and wellbeing of followers first. In other words,
these types of leaders adopt a serve-first approach and growth mindset to prioritize
their organization, employees, and community above themselves.
Pros
 Focuses on the development and growth of others
 Can lead to improved performance, innovation, and collaboration
 Creates a safe environment where people aren’t afraid to fail
 Reduces turnover and disengagement 
 Increases trust with leaders

Cons
 Servant leaders can become more easily burnt out
 Resource intensive
 Difficult to train other leaders in the serve-first mindset
 Can take longer to see results or reach goals
 Has the potential to be perceived as ‘weak’

10. Laissez-Faire Leadership

Laissez-faire leadership takes a hands-off approach to leadership and gives others the
freedom to make decisions. While leaders still provide their teams with the resources
and tools they need to succeed, they remain largely uninvolved in the day-to-day
work. This is a leadership style you’ll commonly find in creative settings, such as
advertising agencies or startups, due to its encouragement of independent thinking.
Pros
 Empowers individuals to practice their leadership skills
 Can lead to increased creativity and innovation
 Less fear of failure
 Encourages trust between team members and leader
 Instill a sense of independence

Cons
 Can result in low productivity
 Conflict amongst team members is common
 May lead to confusion about roles and responsibilities 
 Won’t be effective with an unskilled or unmotivated team.

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 Corporate Social responsibility
Corporate Social Responsibility is a management concept whereby companies
integrate soscial and environmental concerns in their business operations and
interactions with their stakeholders.

Companies are increasingly ramping up their focus on social responsibility,

whether they are championing women’s rights, protecting the environment, or
attempting to obliterate poverty, on local, national, or global levels. From an optics
perspective, socially responsible companies project more attractive images to both
consumers and shareholders alike, which serves to positively affect their bottom
lines.

KEY POINTS

 Social responsibility empowers employees to leverage the corporate

resources at their disposal to do good.
 Being a socially responsible company can bolster a company's image and
build its brand.
 Social responsibility programs can boost employee morale in the
workplace and lead to greater productivity, which has an impact on how
profitable the company can be.
 Businesses that implement social responsibility initiatives can increase
customer retention and loyalty.
 Socially responsible companies have the opportunity to stand out from the
competition because they cultivate superior and
Social Responsibility (CSR)
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 Definition

Corporate Social Responsibility:

The European commission defines CSR as “ the responsibility of entity for
their impact on society”.
The world business council for sustainable development defines CSR as “
The continuing commitment by business to contribute to economic
development while improving the quality of life of the workforce and their
families, as well as of the community and society at large ”.
The united nations industrial development organization Defines “
Corporate social responsibility ” as a management concept whereby
companies integrate social and environmental concerns in their business
operations and interactions with their stakeholders.
CSR is generally understood as being the way through which a company
achieves a balance of economic, environmental and social imperatives while
at the same time addressing the expectations of shareholders and
stakeholders.

 The new rules, which are applicable from the fiscal year 2014-15 onwards,
also require companies to setup a CSR committee consisting of their board
members, including at least one independent director.
 The Act encourages companies to spend at 2% of their average net profit in the
previous three years on CSR activities.
 The indicative activities, which can be undertaken by a company under CSR,
have been specified under schedule VII of the Act.
 Only CSR activities undertaken in India will be taken into consideration.
 Activities meant exclusively for employees and their families will not qualify
under CSR.
 Social Responsibility: Social responsibility refers to the process with includes
several activities from providing safe products and services to giving apportion
of the company’s profits to welfare organizations.

 Responsibility towards shareholders: The business enterprise has the

responsibility to provide fair return on capital to the shareholders. The firm
must provide them regular, accurate, and full information about the working
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 of enterprise in order to fulfill and encourage their interest in the affairs of the
company.
 Responsibility towards consumers: The management has to provide quality
products and services to the customers at reasonable prices. It should
consider customer suggestions and also plan it services more effectively
through consumer satisfaction survey.
 Responsibility towards employees: Good working conditions motivate
workers to contribute their best it is the responsibility of the management
recognize their unions and respect their right to associate with a union of their
choices.
 Responsibility towards creditors: The business has to repay the loans it has
taken from the financial institutions as per the repayment schedule also it
should inform the creditors about the developments in the company form time-
to-time.
 Responsibility towards Government: The business firm has to pay its taxes
and be fair in its endeavours. It should also support the government in
community development projects.
 Responsibility towards competitors: The business firm should always
maintain the highest ethical standards and maintain cordial relations with
each of the competitors, which is a critical and sensitive segment.
 Responsibility towards public: Business units have tremendous
responsibility towards the general public to support the cause of community
development. Most of the companies maintain public relations departments
exclusively to maintain good relations with the community

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