About the Author
Dipak Kumar Bhattacharyya, currently a professor of organizational behaviour and human resource management at the Xavier Institute of Management, Bhubaneswar, completed his master’s in economics from Jadavpur University and his doctoral work in management from the University of Calcutta. He worked in industry for several years before turning to academia in 1988 as a professor of human resource management in the ICFAI Business School, Kolkata. Since then he has worked with several prominent institutes including the Kolkata branch of the Institute of Management Technology; the Indian Institute of Social Welfare and Business Management (IISWBM); and the Institute of Engineering and Management as both an academic and an administrator. Prior to joining XIMB, Professor Bhattacharyya was the corporate director of the Kolkata-based Camellia Group. In addition, he has been involved in preparing the Entrepreneurship Development Programme at IISWBM conducted in association with Entrepreneurship Development Institute of India, Ahmedabad. He has been a visiting faculty at XLRI School of Business and Human Resources, Jamshedpur and the Indian Institute of Foreign Trade (IIFT), Kolkata. He was also attached to several universities including the external programmes of foreign universities such as the University of London and the DeSales University.
Professor Bhattacharyya has over 35 years of experience in academia and industry across various aspects of management including total quality management, quality circles, statistical quality control and human resource management. He has published two edited volumes—Organizational Development (1994) and Training and Development (1995)—and several textbooks such as Labour Economics and Productivity (1995), Production and Operations Management (1999), Management Principles and Practices (2005), Industrial Management (2010) and Cross-Cultural Management (2010). He has to his credit more than 100 research papers in prominent academic journals including Management Research and Indian Journal of Labour Economics. He continues to pursue research in the area of human resource development, cross-cultural management, six-sigma practices, human resource control systems, and organizational systems.
Professor Bhattacharyya provides consultancy services to organizations such as the IndianOil Corporation Ltd, and the Mitsubishi Chemical Corporation. He is also a member of different committees and institutes such as the Industrial Relations Committee of the Bharat Chamber of Commerce, and the State Labour Institute under the Department of Labour, West Bengal.
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2. Organizational Planning
References 61
Further Reading 62
Annexure 2.1 63
Annexure 2.2 67
3. Organizing 70
Introduction 71
Concept of Organization 71
Theories of Organization 72
Principles of Organization 72
Human Factors Behind Organizing 72
Important Steps in Organizing 73
Benefits of Organizing 73
Types of Organizations 73
Systems View of Organizations 74
Organizational Structure and Systems 76
Organization Structure 76
Types of Organization Structures 77
Organizational Effectiveness 79
Developing an Organization Structure or Design 79
Dynamic Organizational Structure and Departmentation 80
Principles of Departmentation 80
Process of Departmentation 81
Patterns Used in Departmentation 81
Organization Structure in a Globalized World 87
Virtual or Networked Organizations 87
Organizing as Part of the Total Management Task 88
Delegation of Authority 88
Decentralization 90
Line and Staff Relations 93
Span of Management 96
Wide Versus Narrow Spans 97
Factors Determining Spans 98
Open Systems Approach in Organizations 99
CASE: CEOs Can Work as a Team: Lessons from Wipro 101
Summary 102
Key Terms 103
Review Questions 104
Critical Thinking Questions 104
References 104
Further Reading 105
4. Staffing in Organizations
Introduction 109
Concept of Recruitment 109
Functions of Recruitment 109
Internal Recruitment 110
Recruitment Policy 110
Recruitment Process 110
Preliminary Screening of Applicants 112
Review of Application Blanks 112
Reference Checking 113
Psychological Testing 113
Attitude Measurement 114
Techniques of Attitude Measurement 114
Levels of Attitude Measurement 117
Other Measures of Attitudes 119
Physiological Measures 119
Attitude Surveys 119
Human Resource Management and Attitudinal Change 122
Interview 123
Induction and Placement 124
Induction 124
Placement 126
Importance of Induction and Placement 127
Staffing Costs 127
Areas of Staffing Costs 127
Recruitment Ratios 128
CASE: Staffing Solutions of Knowledge Hub: Lessons from the KPO Industry 129
Summary 131
Key Terms 131
Review Questions 132
Critical Thinking Questions 132
References 133
Further Reading 133
Annexure 4.1 134
5. Directing Through Motivation
Introduction 138
Motivation in Organizations 138 Process of Motivation 138
Objectives of Motivation 140
Mechanism of Motivation 140
Significance of Motivation in Organizations 142
137
Theories of Motivation 142
Content Theories 142
Cognitive or Process Theories of Motivation 148
Miscellaneous Theories on Motivation 152
Indian Studies on Motivation 153
Motivation and Morale 155
CASE: Human Resource Development Is Not Enough: The Case of New Life 158
Summary 159
Key Terms 160
Review Questions 160
Critical Thinking Questions 161
References 161
Further Reading 163
6. Directing Through Leadership 164
Introduction 165
Leadership 165
Functions of Leadership 166
Leadership and Management 167
Formal and Informal Leadership 168
Significance of Leadership 169
Principles of Leadership 170
Factors of Leadership 170
Leadership and Environment 171
Leadership and Power 172
Leadership Styles 173
Leadership Attitudes 174
Leadership Skill 174
Leadership Theories and Studies 175
Iowa Leadership Studies 176
Ohio State Leadership Studies 177
Michigan Studies on Leadership Styles 177
Managerial Grid 177
Continuum of Leadership Behaviour 179
Four-framework Model of Leadership 180
Trait Theory of Leadership 181
Behavioural Theory of Leadership 182
Situational Theory of Leadership 182
Great Man Theory of Leadership 182
CASE: Life Savers: The Saga of a Benevolent Employer 182
CASE: GE and Jack Welch’s Style of Leadership 183
Summary 184
Key Terms 185
Review Questions 185
Critical Thinking Questions 186
References 187
Further Reading 188
7. Introduction to Control 189
Introduction 190
Control 191
Characteristics of Control 192
Prerequisites of a Good Control System 193
Essential Features of a Good Control System 193
Types of Control 194
Simons’ Levers of Control 196
Process of Control 197
Methods of Control 198
Usage of Control 200
Importance of Control 200
Shortcomings of Control 201
Tools of Control 202
Control Limits 202
Control Charts 202
Gantt or Bar Charts 202
Precedence Diagrams 203
PERT 204
Control Ratios 204
Control Techniques 205
Functional Task Analysis 205
Budgetary Control 206
Manufacturing Control Systems 206
CASE: Ciziko: Testing Time for Market Intelligence Control 207
CASE: Managing Without Control 208
Summary 209
Key Terms 210
Review Questions 211
Critical Thinking Questions 211
References 211
Further Reading 212
8. Coordination in Organizations 213
Introduction 214
Concept of Coordination 214
Characteristics of Coordination 214
Importance of Coordination 216
Principles of Coordination 217
Objectives and Purposes of Coordination 218
Types of Coordination 218
CASE: Coordination: An Integral Part of Management 220
Summary 221
Key Terms 221
Review Questions 222
Critical Thinking Questions 222
References 223
Further Reading 223
9. Organizational Forms 224
Introduction 225
Sole Proprietorships 225
Partnerships 226
Joint Stock Companies 227
Cooperative Organizations 228
Multinational Organizations 228
Micro-multinationals 229
Globally Integrated Enterprises 229
Transnational Organizations 229
Features of International Organizations 230
Advantages of MNCs 230
Disadvantages of MNCs 231
CASE: The Complex Organizational Web of Cisco 231
Summary 232
Key Terms 233
Review Questions 233
Critical Thinking Questions 234
Further Reading 234
10. Business Environment and Social Responsibility 235
Introduction 236
Social Responsibility of Business 237
Reasons for Social Responsibility 238
Advantages for Socially Responsible Organizations 238
Disadvantages for Socially Responsible Organizations 239
The Business Environment 239
Analysis of the Business Environment 240
Scenario Planning for Environment Analysis 248
CASE: Impact of CSR: Grasim (A Flagship Company of Aditya Birla Group) 248
Summary 250
Key Terms 251
Review Questions 252
Critical Thinking Questions 252
References 252
Further Reading 253
11. Ethics and Values in Organizations 254
Introduction 255
Concepts of Ethics and Values 256
Code of Ethics 256
Training in Ethics 258
Building an Ethical Culture in Organizations 261
Different Views on Managerial Ethics 261
Factors Affecting Managerial Ethics 262
Ethical Decision Making 262
Ways to Test Ethical Decisions 263
Steps in Ethical Decision Making 263
CASE: Market Penetration and the Question of Business Ethics 263
Summary 264
Key Terms 264
Review Questions 265
Critical Thinking Questions 265
References 265
Further Reading 265
Annexure 11.1 267
12. Communication and Negotiation in Organizations 269
Introduction 270
Communication 270
Elements of Communication 270
Nature of Communication 271
Organizational Communication 271
Types of Organizational Communication 272
Effective Communication 274
Psychological and Behavioural Influence on Communication 275
Group Communication 276
Communication Barriers 277
External Barriers 277
Organizational Barriers 278
Personal Barriers 278
Methods of Overcoming Communication Barriers 279
Transactional Analysis 280
Negotiation 281
CASE: Negotiating for Success: The Experience of a Walmart Vendor 283
Summary 284
Key Terms 285
Review Questions 285
Critical Thinking Questions 286
References 286
Further Reading 286
13. Organizational Systems, Structure, and Design 288
Introduction 288
Systems Theory, Systems Analysis, and Systems Thinking 289
Principles of Systems Theory 289
Viable System Model, Organizational Cybernetics, and Organizational Systems 289
Chaos Theory 290
Socio-technical Systems Thinking 291
System Dynamics 291
Business Process Approach to Organization 292
Organizational Systems and Human Resource Management 292
Evolution of the Business Process Model of Organization 293
Description of Business Process Models 293
Types of Business Process Models 295
Role of Critical Success Factors in Organizational Design 295
Business Process Re-engineering 296
Human Resource Information Systems and Its Usage in Organizational Design 296
Organizational Culture 297
Organizational Design 297
Bureaucratic Model 297
Behavioural Model 298
Situational Aspects of Organizational Design 298
CASE: New Organization Structure in Times of Need: The Experience of Bajaj Electricals 300
CASE: Impact of Change in Organizational Culture 301
Summary 302
Key Terms 302
Review Questions 303
Critical Thinking Questions 303
References 304
Further Reading 305
14. Technology Management in Organizations 307
Introduction 308
Technology Management 308
Issues in Technology Management 309
Strategic Technology Management 310
Human Resource Management and Technology Management 311
Technology and Organizational Operations 311
Technology Planning 313
Technology Innovation 314
Technology Transfer 314
Technology and Organizational Design 315
Thompson’s Model 315
Woodward’s Technologies 315
CASE: Innovation in Customer Services of Ford Motors 316
Summary 317
Key Terms 318
Review Questions 318
Critical Thinking Questions 319
References 319
Further Reading 319
15. Globalization and Business Organizations 321
Introduction 322
Globalization 322
Debate on Globalization 322
Benefits of Globalization 323
Factors Promoting Globalization 325
Process of Development of Globalization 326
Important Players in Globalization 326
World Trade Organization (WTO) 326
International Monetary Fund (IMF) 328
World Bank 328
United Nations (UN) 328
Organization for Economic Cooperation and Development (OECD) 328
United Nations Conference on Trade and Development (UNCTAD) 328
Globalization and Its Influence on Business and Managerial Practices 329
Globalization and International Marketing 330
Scope of International Marketing 331
Driving Forces of International Business 331
Interrelations Between Globalization and Culture 331
Globalization and Talent Management 332
CASE: Cross-cultural Teamwork Through Lateral Hierarchy: The Experience of DEC 333
Summary 333
Key Terms 334
Review Questions 335
Critical Thinking Questions 335
References 336
Further Reading 336
16. Organizational Culture
Introduction 339
Concept of Organizational Culture 340
Organizational Culture and Globalization 340
Mergers and Their Impact on Corporate Cultures 342
Hofstede’s Cultural Orientation Model 343
Organizational Culture and Organizational Climate 344
Organizational Culture and Organizational Structure 346
Cultural Issues Across Nations 346
Management of Corporate Culture Change 347
Organizational Diagnostics 348
Attitudes Towards Work 348
Organizational Commitment 349
Organizational Climate 349
Organizational Development 350
Characteristics of Organizational Development 350
Goals of Organizational Development 351
Steps in Organizational Development 351
Different Stages of Organizational Development 352
Organizational Change 352
Need for Organizational Change 353
Philosophy of Organizational Change 354
Steps to Successful Organizational Change 354
Organizational Transition 355
Differences Between Organizational Change and Transformation 355
Triggers of Change 356
CASE: Strategic Globalization of Business: The Lessons of Barclays 356
Summary 357
Key Terms 358
Review Questions 358
Critical Thinking Questions 359
References 359
Further Reading 360
17. Managing Conflict and Stress in Organizations
Introduction 362
Concept of Conflict 363
Types of Conflict 363
Causes of Conflict 364
Conflict Management 364
Conflict Models and Strategies 365
Stress in Organizations 367 Nature of Stress 367
Stress and the Individual 367
18.
Causes of Stress in Organizations 368
Approaches to Managing Stress 368
Process of Conflict Management 369
Employee Discipline and Grievance Handling as a Workplace
Conflict-resolution Strategy 370
Collective Bargaining as a Conflict-resolution Strategy 370
CASE: Resolve Conflict Through Discussions: The Case of Robin and His People 372
CASE: Managing Stress in Organizations: The Case of an Industrial Chemical Company 373
Summary 373
Key Terms 374
Review Questions 375
Critical Thinking Questions 375
References 376
Further Reading 376
Individual Behaviour and Its Characteristics
Introduction 379
Concept of Perception 380
Perception as a Process 380
Theories of Perception 382
Types of Perception 383
Principles of Perception 384
Perception and Individual Decision Making 384
Rational Decision Making by Individuals 384
Non-rational Models of Individual Decision Making 385
Personality and Individual Behaviour 386
Different Perspectives of Personality 387
Characteristics of Personality 388
Determinants of Personality 388
Personality and Individual Differences 389
Personality Types 389
Personality Opposites 390
Attitude and Individual Behaviour 390
Emotional Intelligence 392
Aspects of Emotional Intelligence 392
Domains of Emotional Intelligence 393
Using Emotional Intelligence at the Workplace 393
Nature of Emotional Intelligence 396
Emotional Intelligence, Individual Behaviour, and Performance 396
CASE: Surviving Competition Through Attitudinal Change 398
Summary 399
Key Terms 400
378
Review Questions 400
Critical Thinking Questions 401
References 401
Further Reading 402
19. Managing People in Groups 404
Introduction 405
Group Dynamics 406
Importance of Studying Groups 406
Important Characteristics of a Group 407
Types of Groups 407
Group Formation 408
Stages of Group Development 409
Models of Group Development 410
Group Effectiveness 410
Decision Making in Groups 410
CASE: Infosys: A Culture that Promotes Achieving Excellence Through Group Efforts 412
Summary 413
Key Terms 414
Review Questions 414
Critical Thinking Questions 415
References 415
Further Reading 415
20. Capability Development, Innovation, and Creativity 416
Introduction 417
People Capability Maturity Model 418
Levels of P-CMM 419
Objectives of P-CMM 420
Significance of P-CMM 420
Organizational Life Cycle 421
Infant Stage 421
Growing Stage 421
Prime Stage 422
Ageing Stage 422
Dying Stage 423
Capability Development 423
Benefits of Capability Development Models 423
Key Areas of Capability Development 424
Talent Management for Capability Development 424
Innovation and Creativity 425
Aligning Innovation to Competitive Strengths and Organizational
Capability Development 426
Aligning Innovation and Creativity to Organizational Practices 428
Critical Success Factors 428
Blockbusting and Product Improvement 429
CASE: Lessons from Mitsubishi Chemicals 430
Summary 430
Key Terms 431
Review Questions 432
Critical Thinking Questions 432
References 432
Further Reading 433
21. Quality Management Practices in Organizations 434
Introduction 435
Quality in Organizations 435
Cost of Quality 435
Quality Management 436 Standards 437
ISO 9001:2000 Family of Standards 438
Quality Gurus and Their Contribution to TQM Practices 439
Modes of TQM 444
Teams and Teamwork 444
Employee Empowerment 445
Quality of Work Life (QWL) 445
Six Sigma Practices 446
Malcolm Baldrige Model 446
Quality Circles and Total Employee Involvement 447
People and Organizational Competencies 447
Lean Management 447
Toyota Production System 449
Quick Response Manufacturing (QRM) 449
CASE: Quality Measurement: The Experience of Zed Plus 450
Summary 450
Key Terms 451
Review Questions 452
Critical Thinking Questions 452
References 452
Further Reading 453
Index 455
Preface
During the years since Independence, Indian organizations have evolved to adopt and implement management practices adhering to global standards. Today, many Indian organizations have a dynamic presence in industrially advanced countries, competing with the best-in-class organizations globally. For Indian companies to sustain their competitive advantage and gain a stronger foothold in the international business scenario, it is imperative for students (and future managers) to understand the fundamentals of management clearly and imbibe the essence of Indian business practices. They need a textbook that will help them achieve this goal.
Principles of Management: Text and Cases addresses these needs of students. It is designed to cater to the requirements of undergraduate and postgraduate students of management. Written in accordance with the curriculum requirements of management courses, this book integrates theory with practice. The 26 case studies in the book along with the opening vignettes introduce students to real-world situations and problems that managers face. These cases also highlight the management practices of successful Indian and foreign companies. Samples of a leave policy, a code of ethics, etc., have been appended as annexures to some chapters to further illustrate the way these organizations function.
In creating this textbook I have drawn on my experience as an academic and industry professional. Written in a crisp, lucid, and business-like style, it covers all facets of the principles of management. Each chapter is structured as a self-sufficient unit addressing each concept in its totality. The end-ofchapter questions have been framed to review the comprehension of concepts and foster the development of students’ managerial skills. Additional material on skill development has been provided on the companion site of the book to enhance the managerial skills of students.
THE ORGANIZATION OF THE BOOK
The book is divided into 21 chapters covering all aspects of the principles of management.
Chapter 1, ‘Introduction to Management’, discusses the concepts and process of management, its various functions, important characteristics, and different dimensions, structures and systems. It also explains the evolution of various management thoughts and the differences between them.
Chapter 2, ‘Organizational Planning’, elaborates on the concepts of planning in organizations, encompassing policy formulation, framing of strategies, budgeting and forecasting, and various forms of decision making.
Chapter 3, ‘Organizing’, presents the various methods of organizing, types and forms of organization structures, line and staff management issues, processes of delegation, centralization and decentralization of authority, span of management, systems view of organization, the relationship of organizational systems with structure, and the open systems approach in an organization.
Chapter 4, ‘Staffing in Organizations’, explains the functions of recruitment, the methods of recruitment, the process of induction and orientation after recruitment, and the process of the placement of the employee.
Chapter 5, ‘Directing Through Motivation’, begins with a discussion of the meaning and characteristics of directing. It then delves into the concepts and process of motivation, relating motivation to employees’ morale and productivity. It concludes with a discussion on the different theories of motivation.
Chapter 6, ‘Directing Through Leadership’, elaborates on the theories of leadership, outlines the differences between a leader and a manager, discusses the different styles of leadership, highlights the importance of leadership in managing an organization, and finally, suggests how leadership can be developed in an organization.
Chapter 7, ‘Introduction to Control’, describes the essentials of good control, interdependence of control on other functions of management, steps, methods and importance of control, and the various tools and techniques used in enforcing control.
Chapter 8, ‘Coordination in Organizations’, elaborates on the needs, the significance, principles, objectives and purposes of coordination, the various types of coordination, and the concepts of internal and external coordination.
Chapter 9, ‘Organizational Forms’, explains various organizational forms and their relative advantages and disadvantages, with a specific focus on multinational, transnational, and globally integrated enterprises.
Chapter 10, ‘Business Environment and Social Responsibility’, presents the reasons for organizational responsibility to the society, the advantages and disadvantages of social responsibility, and internal task environmental issues.
Chapter 11, ‘Ethics and Values in Organizations’, discusses the concepts of ethics and values, and the benefits of ethical practices in organizations. It also elaborates on the various components of a code of ethics, the process of building an ethical culture in organizations, different views on managerial ethics, and ethical decision making.
Chapter 12, ‘Communication and Negotiation in Organizations’, explains the concepts of communication and negotiation, the various types and nature of communication, effective techniques of communication, psychological and behavioural influences on communication, group communication, and barriers to communication. It also examines the use of transaction analysis.
Chapter 13, ‘Organizational Systems, Structure, and Design’, discusses the systems view of organization, the principles of systems theory, and organizational structure and its relationships with the systems. It also talks about the open systems approach in an organization, the viable systems approach, the business process approach, socio-technical systems, and the relationship of organizational culture with organizational design.
Chapter 14, ‘Technology Management in Organizations’, defines the concept of technology management, sociological issues related to it, and its link with innovation. It covers issues pertaining to strategic technology management, technology planning, and technology transfer.
Chapter 15, ‘Globalization and Business Organizations’, begins by explaining the context of globalization. It then elaborates upon the benefits of globalization to organizations, various factors involved in promoting globalization, process of development of globalization, important players of globalization, and the relation of globalization to international marketing, culture and talent management.
Chapter 16, ‘Organizational Culture’, examines organizational culture and its influences, mergers and their implications on organizational culture, Hofstede’s cultural orientation model, relationship of organizational culture, climate and structure, cultural issues across nations, managing corporate cultural change, organizational diagnostics, and various organizational development issues.
Chapter 17, ‘Managing Conflict and Stress in Organizations’, highlights the causes of conflict and stress in organizations, and explains the process of conflict management and stress management.
Chapter 18, ‘Individual Behaviour and its Characteristics’, discusses the process of perception, relationship between perception and individual decision-making styles, personality and its constructs, and the influence of personality, attitude and emotional intelligence on individual behaviour.
Chapter 19, ‘Managing People in Groups’, discusses the concept of groups, types of groups, theories of group formation, and the effectiveness of groups. It also explains the group-decision making process, the influence of groups on organizational culture, the process of team development through group formation, group roles and norms, and group dynamics and group conflict.
Chapter 20, ‘Capability Development, Innovation, and Creativity’, focuses on the concept of capability development, the use of the people capability management model, organizational life cycle analysis, and talent management. It then goes on to elaborate on the concepts of innovation, creativity, and critical success factors which help in building organizational capability.
Chapter 21, ‘Quality Management Practices in Organizations’, elaborates on the basics of quality management practices, and their impact on the people management function in organizations and on customer satisfaction. It touches upon the concepts of six sigma, lean management, employee empowerment, quality of work life, quality circles, Toyota production systems, and quick response manufacturing.
FEATURES
Each chapter contains useful pedagogical features to facilitate the understanding of students.
Learning objectives: Well-defined learning objectives specify the learning outcome of each chapter.
Opening vignettes: A short opening vignette introduces students to real-world situations which lay the foundation for the concepts discussed in the chapter.
Closing cases with case questions: Chapter-end case(s) depict real-life situations and problems which help students correlate theory with practice. The case questions specify the line of inquiry students need to take while analysing the case.
Summary: A chapter-end summary recapitulates important concepts and definitions.
Key terms: A list of key terms captures the important terminology for a quick review.
Review questions: Review questions help students assess their understanding of concepts.
Critical thinking questions: Critical thinking questions encourage students to apply the concepts to real-world situations.
Further reading: A list of articles and books is provided for the benefit of those students who want to delve deeper into the concepts discussed in the chapter.
