Definition
It is the intelligent and objective concern for the welfare of society that
restrains individual and corporate behaviour from ultimately destructive
activities, no matter how immediately profitable, and leads in the direction
of positive contributions to human betterment.
Interest Groups
The interest groups are those which may affect the functioning of a
business organization like shareholders, workers, customers, creditors,
suppliers, government and society in general. The management owes
responsibility towards all these groups.
Social Responsibility towards various Interest groups
Shareholders: Protection of interests of shareholders through
• Direct participation in management actions
• They should be informed about the functioning of the organization
adequately and timely.
• The investment made by the shareholders should be safeguarded.
Social Responsibility towards various Interest groups
Workers
•Management should treat workers as another wheel of the cart.
•Management should develop administrative powers in such a way that
promotes cooperative endeavour between employers and employees.
•Participation of workers in management, creating a sense of belongingness,
improving their working and living conditions.
•Management should pay fair and reasonable wages and other financial
benefits to workers.
Social Responsibility towards various Interest groups
Customers
•Customers should be charged a fair and reasonable price
•The supply of goods and services should be of uniform standard and of
reasonable quality
•The distribution of goods and services should be widespread
•Management should not indulge in profiteering, hoarding or creating
artificial scarcity
•Management should not mislead the customers by false, misleading and
exaggerated advertisements.
Social Responsibility towards various Interest groups
Creditors, Suppliers and others

•Management should create healthy and cooperative inter- business
relationship between different businesses.
•Management should provide accurate and relevant Information to creditors
and suppliers.
•Payments of price of materials, interest on borrowings, other charges should
be prompt.
Social Responsibility towards various Interest groups
Government
•Management should be law-abiding
•Management should pay taxes and other dues fully, timely and honestly
•It should not corrupt public servants and democratic process
•It should not buy political favour by any means.
Social Responsibility towards various Interest groups
Society
• Management should maintain fair business policies and practices
•It should setup socially desirable standards of living and avoid wasteful
expenditure
•It should play a proper role in civic affairs
•It should provide and promote general amenities and help in creating better
living conditions in general
•It should set example for others about how development programs can be
taken for the benefit of the society.
Arguments against SR
•Contrary to Basic Functions of Business.
•Domination of Business Values
•Inefficiency in the system
Arguments for Social Responsibility
•Business: A Part of the Society
•Avoidance of Government Regulations
•Long Run self interest of Business
•Traditional Values
Making Social Responsibility Operational
•Commitment from Top Management
•Formulating SR policies
•Institutionalization of SR in Decision –Making Process
•Performance Measurement System
Approaches for Measuring SR

•Social cost- benefit analysis
•Social Indicators: Five indicators
•Net income contribution
•Human Resource contribution
•Public creation of jobs
•Environmental contribution
•Product or service contribution
•Social Goal setting
Social Audit
When an organization undertakes social activities ,it must also evaluate the
extent to which these activities are performed effectively. Social audit is
primarily aimed to measure the effectiveness of these activities.
Problems in Social Audit
•Scope of the Social Audit
•Measurement Problems: Determination of yardstick for measuring the costs
and accomplishments of activities included in the social audit.
•Social Audit Report
Case Study
•Haunting memories
More than 3,000 people died, leaving several others severely injured when
a deadly combination of poisonous gases leaked from a union carbide plant
in Bhopal, Madhya Pradesh on Dec 3, 1984. Investigations conducted later
revealed that the mishap occurred due to flouting of safety regulations. An
amount of Rs. 1529.2 crores were paid as compensation to the victims of the
tragedy. To avert such kind of mishap in future, the government also passed
the Environmental Protection Act in 1986.
•In 1998, nearly 60 people died and several injured, in a stampede following
a fire at the Uphaar cinema hall in New Delhi. The mishap resulting from
an electric short circuit could have been easily averted if the precautionary
measures have been strictly undertaken.
What do you mean by Personality?
Personality is a set of characteristics and tendencies that determine those
commonalities and differences in behaviour (thoughts, feelings and actions)
of people that have continuity in time and that may not be easily understood
as the sole result of the social and biological pressures of the moment
Personality Determinants
Biological Factors

Family and Social factors
Cultural factors
Situational factors
Biological Factors
Heredity
Brain- Left hemisphere
& Right hemisphere
Physical features
Left hemisphere
Speech/verbal
Logical/mathematical
Controlled
Intellectual
Dominant
Active etc
Right hemisphere
Artistic
Emotional
Creative
Spiritual etc.
Family and Social factors
Home Environment
Family Members
Social Groups
Cultural Factors
Situational Factors
Personality theories- Psychoanalytical Theory (Sigmund Freud)

Socio-Psychological Theory- Adler, Horney, Fromm and Sullivan
It recognizes the interdependence of the individual and society.
The individual strives to meet the needs of the society, while society helps
the individual to attain his goal.
Human Behaviour results from three predominant interpersonal
orientations- compliant, aggressive and detached.
Compliant people are dependent on other people and move toward others.
Aggressive people are motivated by the need for power and move against
Trait Theory
Basic assumptions of the theory:
Traits may be defined as any relatively distinguishable way in which one
individual differs from another.
Traits are common to many individuals and vary in absolute amounts
between individuals
Traits are relatively stable and exert a fairly universal effects on behaviour
regardless of the environmental situation
Traits can be inferred from the measurement of behavioural indicators.
Self /Organismic /Field Theoy
Self-image- The self image is the way one sees oneself
Ideal image- The ideal- self denotes the way one would like to be
Looking glass self- It is the perception of a person about how others are
perceiving his qualities and characteristics.
Real Self- The real self is what one really is.
Personality Measurement
Projective method
Personality inventories
Interview method
Case history method
Observation method
Projective Method
Rorschach ink blot test- Developed by Herman Rorschach. The test
contains 10 standardized cards in which five cards have black and white
blots and five cards having colored blots. Every person acc. To his
personality structure perceives various things- man, animal or any other
object –in these blots. Based on this perception, the personality of the person
concern ed is identified.
Thematic apperception test

Designed by Murray and Morgan. An Individual confronted with ambiguous
situation is required to make up a story projects and reveals the personality
in the process.
Personality Inventories
Personality inventories are used as measurement techniques, they take both
external and internal features of the individuals. External features can be
measured by observations for measuring internal features, various
questionnaires and other techniques are used.
Personality Inventories
Minnesota Multiphasic Personality Inventory
Developed by Hathway Makinly, it contains 550 items with each item
having three alternative answers- true, false and not known. Scoring is done
on the basis of answers provided by the individuals. Based on scores,
personality features are ascertained.
Sixteen Personality Factor Questionnaire
Developed by Cattell, this test measures 16 personality traits which are
relatively free to each other.
Interview Method
It is a formal, in-depth conversation conducted to evaluate the personality
characteristics of persons. There are two types of interview- Exhaustive
Interview and Stress Interview.
Case History Method
The personality appraiser appraises the personality characteristics of an
individual based on the information collected from different sources. The
sources include individual’s diaries, his family members and relatives,
workgroups etc.
Observation method
Personality characteristics of an individual are assessed by observing his
behaviour in various situations. The idea behind this is that behavioural
pattern provides clue about the personality.
Personality traits affecting behaviour
Big Five Personality traits
Personality traits affecting behaviour
Self concept and self esteem
Machiavellianism
Locus of control
Tolerance for ambiguity
Type A and Type B

Work ethic orientation
Risk Propensity
Organizational application of personality
Matching jobs and individuals
Designing motivation system
Designing control system
CASE STUDY
What is Perception?
Perception is the process of receiving information and making sense of the
world around us.
Perception is basically the process by which individuals organize and
interpret their sensory impressions in order to give meaning to their
environment
Features of Perception
Perception is an intellectual process-Person selects the data from the
environment, organizes it and obtains meaning from it.
Perception is a psychological process- The manner in which a person
perceives the environment affects his behaviour. Thus, people’s actions,
emotions, thoughts are triggered by the perception of their surroundings.
Perception being an intellectual psychological process becomes a
subjective process and different people may perceive the same
environmental event differently.
Sensation and Perception
Factors Influencing the Perceptual Process
External Factors in Perceptual Selectivity
Size
Intensity
Repetition
Novelty and Familiarity
Contrast
Motion
Internal Factors in Perceptual Selectivity

Self-Concept
Beliefs
Expectations
Inner Needs
Response Disposition – A person’s tendency to perceive familiar stimuli
rather than unfamiliar ones. Disposition ( a person’s inherent qualities of
mind and character)
Response Salience-Familiarity of Stimulus situations. Salience ( most
noticeable)
Perceptual Defense- Denying the existence or importance of conflicting
information.
Examples of Perception
Young /Old woman illusion
Disappearing Dots
Center circles
Perceptual Process
Organization
Selection/Stimulation
Factors in Perceptual Selectivity
External Internal
Size Self concept
Intensity Beliefs
Repetition Expectations
Novelty and Familiarity Response disposition
Contrast Response Salience
Motion
Perceptual Organization
Figure Ground Principle: The tendency to keep certain phenomena in
focus and other phenomena in background.

Perceptual Organization
The Law of Proximity: Stimulus elements that are closed together tend to
be perceived as a group
The Law of Similarity: Similar stimuli tend to be grouped. Similar
features of various stimuli irrespective of nearness.
The Law of Closure: Stimuli tend to be grouped into complete figures
The Law of Good Continuation: Stimuli tend to be grouped as to
minimize change or discontinuity
The Law of Simplicity: Ambiguous stimuli tend to be resolved in favor of
the simplest Figure.
The Law of Figure Ground Principle: The tendency to keep certain
phenomenon in focus and other phenomenon in background.
Perceptual Organization
Distortions in Perception
Distortions in perception may occur because of the following factors:
Factors in perceiver- personality, mental set, attribution, first impression ,
halo effect, stereotyping
Factors in person perceived- status, visibility of traits etc.
Situational factors
Shortcuts in Judging Others:
1.) Selective Perception
2.) Halo Effect
3.) Contrast Effects
4.) Projection
5.) Stereotyping
Perception and Attribution
Attribution
Attribution refers to how people in situations like the workplace construct
explanations of other people's behavior. People are not exactly rocket
scientists: these explanations can be highly simplified and strongly biased.
What is interesting and helpful is that people's biases tend to be systematic
and predictable.
For example, people tend to overestimate personal/individual causes
(abilities, motives, morals) and tend to underestimate situational causes, like
nature of the job, compensation system, the economy, luck, the percentage
of the population who are young.

Another kind of bias occurs with the nature of a person's participation
in a situation, and how it comes out. For example, if a student gets an A on a
test, the student thinks it was because he or she is so smart. But if they get an
F, the book is lousy, or some other reason. In general, people seem to think
this way:
Another basic principle is that people tend to attribute motives to
people's behavior. So when people don't behave as you expect them to, you
think they are doing it on purpose (usually, just to annoy you). In other
words, people tend to assume a common understanding of a situation, but
different motives and interests. They also tend to assume that other people
do everything consciously: no oversight is truly an oversight, no
inconsiderate action was just thoughtless.
Specific Applications in Organizations
Employment Interview
Performance Expectations
Performance Evaluation
 Employee Effort
Managerial Implications of Perception
Interpersonal Working Relationships
Selection of Employees
Performance Appraisal
Developing Perceptual Skills
Perceiving oneself correctly
Enhancing Self concept
Having positive attitudes
Being Empathic
Communicating More openly
Avoiding Common Perceptual Distortions
CASE STUDY
What is Management?
Management is the process of designing and maintaining an environment
in which individuals, work together in groups to accomplish their aims
effectively and efficiently.
Or

Management is the art of knowing what you want to do and then seeing
that it is done in the best and cheapest way.
What is Management?
•Management is a process. It is a process of carrying out the essential
functions of planning, organize, staffing, leading and controlling.
•Management applies to every kind of organization, whether it is
government, profit making or non profit making organizations.
•It applies to managers at all levels in the organization.
•The aim of all managers is the same: To create surplus
• Management is concerned with productivity : This implies effectiveness
and efficiency.
Management
•Our own scriptures- the Bhagavad Gita, the Vedas, the epics and even the
fables speak a lot on management in detail. For e.g. Sahaviryam
Karavavahai (Rig Veda) which means “Let us get strengthened together by
working together”, underline the true spirit of teamwork in a working
environment.
•When things are outside our control , we apply the Indian concept of actions
divorced from desire and thus to de-stress the self. Niskhama Karma Yoga
states that one must perform one’s own work, without expecting a
result(2.47 Sankhya Yoga, Bhagavad-Gita )
Leadership and Integrity:
A Lesson from the Mahabharata
After the Mahabharata war is over, while Bheeshma is lying on the
bed of arrows waiting for an appropriate time to die, Krishna sends the
victorious Yudhishthira to his grandsire to learn about life, about human
nature and about leadership from the dying man who was a master of every
major branch of knowledge known to man then. He tells an ancient story
about Narada and Prahlada.
Prahlada the Asura was then emperor of all the three worlds, conquered by
the power of his integrity. As it always happens, Indra becomes jealous of
Prahlada’s power and feels shaky – there is the threat of losing his throne to
someone like the mighty Asura. For the throne of Indra belonged to the man
who had the highest character, who performed the most difficult austerities.
Indra assumes the form of a Brahmin and goes to Prahlada and serves him as
a disciple, with the desire to learn from him the secret of his success. Indra
continues to serve Prahlada and eventually the Asura emperor, pleased with

the devotion shown and the service rendered, asks his disciple to ask for a
boon, not knowing he is Indra.
Initially Indra refuses politely, saying that all his desires have been fulfilled.
But when Prahlada insists, he asks: “If you are pleased with me, Emperor,
please give me your character, your integrity.”
Prahlada is shaken by the request, but he grants the boon since he had
offered it: after all, that is what a man of integrity does. Indra accepts the
boon and goes away.
Soon Prahlada sees a dazzlingly lustrous being emerging from his
body and leaving him.
When Prahlada asks him who he is, the being tells him that he is
Sheela [Hindi: Sheel.
Integrity], and he is
Leaving him because Prahlada has given him away. “I
shall now happily live,” Sheela
adds, “in the Brahmin to whom you have given me
away.”
Leadership and Integrity:
A Lesson from the Mahabharata
Soon Prahlada sees another radiant being emerging from his body.
Asked who he is, the being introduces himself as Dharma: virtue and
righteousness. After Dharma too leaves him, telling him he is going to join
Integrity to live in the body of the Brahmin since he, Dharma, lives only
where Integrity is. Soon Prahlada finds another effulgent being emerging
from him, this time Satya, Truth, and then another, Vritta, Uprightness, and
then yet another Bala, Strength, all leaving him one by one to live in the
Brahmin, following Integrity.
Following Bala, it is a splendorous goddess that emerges from Prahlada’s
body and when asked she tells him she is Shree, the goddess of wealth,
prosperity, good fortune and all else that is auspicious. Shree tells Prahlada
that she had on her own come and begun living in his body, but now she had
no choice but to leave him, because she always followed Integrity, Virtue,
Truth, Uprightness and Strength.

Answering Prahlada’s question, she also tells him the Brahmin was none
other than Indra, Indra has robbed him of his Integrity and where Integrity is
not, there can be no Dharma, no Truth, no Morality, no Strength and no
wealth, prosperity or good fortune.
“dharmah satyam tatha vrttam balam chaiva tathapyaham
sheelabhoota mahaprajna sada nastyatra samshayah.” - Mahabharata
12.124.62
“Learns from this story and practice what it says,” Bheeshma tells
Yudhishthira
concluding the story about the importance of integrity to a leader.
Yudhishthira sums up the lesson he has learnt from his
grandsire: Sheelam
pradhanam purushe. Integrity is the most important
thing in man.
Concept of Management
•Management as a discipline
•Management as a group of People
•Management as a process
Features of Management
•Organized activities
•Existence of objectives
•Relationship among resources
•Working with and through people
•Decision making
Functions of Management
•Planning- It involves selecting missions and objectives and the actions to
achieve them.

•Organizing- It involves establishing a structure of roles for people to fill in
an organization and ensuring that all the tasks necessary to accomplish goals
are assigned to people who can do them best.
•Staffing- It involves the process of filling positions in the organization
structure.It involves recruitment, selection,appraisal, training etc.
•Leading- It is influencing of people so that they can contribute to the
organization and group goals.
• Controlling- It is measuring and
• correcting of activities of subordinates to
• ensure their conformity.
Management and Administration
Various approaches
Administration is above management;
Administration is a part of management;
Management and Administration are same.
Administration- Administration is that phase of a business enterprise
that concerns with the overall determination of institututional objectives and
the policies necessary to be followed in achieving those objectives.
Management on the other hand is an executive function which is primarily
concerned
with carrying out broad policies laid down by the administration.
Difference between Administration & Management
•Top level
•Policy formulation & objective determination
•Determinative
•Broad & conceptual
•External factors
•Entrepreneurs & owners
•Administrative
•Middle & lower level
•Policy execution for objective achievement
•Executive
•Narrow & operational
•Mostly internal
•Employees
•Technical
Top Managerial Roles

Interpersonal Roles- The leader role, The liaison role(communicating,
particularly with outsiders, The figurehead role( performing ceremonial and
social duties as the organization's representative.
s Decision Roles- The entrepreneurial role, the disturbance handler role, the
negotiator role etc.
Nature of Management
•Multidisciplinary
•Dynamic Nature of principles
•Relative not Absolute Principles
•Management; Science or Art
•Management as profession
•Universality of Management
Importance of Management
•Effective utilization of Resources
•Development of Resources
•To Incorporate Innovations
•Integrating Various Interest Groups
•Stability in the society
Evolution of Management thought
Though the practice of management can
definitely be traced back to ancient time say during the era of building huge
structures like pyramids in Egypt or temples in India or the churches, but the
formal
discipline of management as we find it today evolved only during the later
part of
nineteenth century.
Systems approach to Management
Every business organization is a part of industry and has to operate in a
given economic system and society. It receives inputs, transforms them and
exports the output to the environment. The various inputs are transformed
through the managerial functions into outputs. So ,any business must be
described as an open system.
System’s approach

Contingency approach
Contingency or situational approach is that there cannot be a particular
management action which will be suitable for all situations. Rather, an
appropriate action is one which is designed on the basis of environment and
internal states.
What do you mean by Organizational Behaviour
Organizational Behaviour is a field of study that investigates the impact
that individuals, groups and structure have on behaviour within
organisations, for the purpose of applying such knowledge toward
improving an organization’s effectiveness.
Contributing disciplines
Organization Behavior. There are
mainly six disciplines that contribute
to the body of organizational
behavior viz. psychology, sociology,
social psychology, anthropology and
economics
Models of Organizational
Behavior
There are 4 models of OB
•Autocratic - The basis of this model is power with a managerial orientation
of authority. The employees in turn are oriented towards obedience and
dependence on the boss. The employee need that is met is subsistence. The
performance result is minimal.
•Custodial - The basis of this model is economic resources with a
managerial orientation of money. The employees in turn are oriented
towards security and benefits and dependence on the organization. The
employee need that is met is security. The performance result is passive
cooperation.
•Supportive - The basis of this model is leadership with a managerial
orientation of support. The employees in turn are oriented towards job
performance and participation. The employee need that is met is status and
recognition. The performance result is awakened drives.
•

Models of Organizational
Behavior
•Collegial - The basis of this model is partnership with a managerial
orientation of teamwork. The employees in
turn are oriented towards responsible behavior and self-discipline.
The performance result is moderate enthusiasm.
Organizational behavior –Case
study
Too nice to People
John has graduated from the college of Business administration at State
Universityand has joined his family’s small business, which employees
twenty-five semi skilled workers.During the first week on the job, his dad
called him in and said: “ John, I’ve had a chance to observe you working
with the men and women for the past two days and,although I hate to, I feel I
must say something. You are just too nice to people. I know they taught you
that human relations stuff at the university, but it just doesn’t work here. I
remember when we discussed the Hawthorne studies when I was in school
and everybody at the university got all excited about them, there is more to
managing people than just being nice to them.
-
If you were John how would you explain to your father the new
perspective that is needed and how the study of organizational
behavior will help the business be successful in the new Paradigm?
Nature of Management Process
Management process can be treated as dynamic in which events and
interrelationships must be seen as dynamic, flexible and continuous, and
must be considered as a whole. Thus, management as a process involves a
number of activities and assumes that the totality of what managers do can
be divided into a set of interrelated activities.
What is a Manager?

Someone whose primary responsibility is to carry out the management
process.
Someone who plans and makes decisions, organizes, leads, and controls
human, financial, physical,
and information resources.
Kinds of Managers by Level and Area
Kinds of Managers by Level
Top Managers
The relatively small group of executives who manage the organization’s
overall goals, strategy, and operating policies.
Middle Managers
Largest group of managers in organizations
Implement top management’s policies and plans.
Supervise and coordinate lower-level managers’ activities.
First-Line Managers
Managers who supervise and coordinate the activities of operating
employees.
Kinds of Managers by Area
Marketing Managers
Work in areas related to getting consumers and clients to buy the
organization’s products or services.
Financial Managers
Deal primarily with an organization’s financial resources.
Operations Managers
Concerned with creating and managing the systems that create
organization’s products and services.
Kinds of Managers by Area (cont’d)
Human Resource Managers
Involved in human resource processes
Planning, recruiting and selection, training and development, designing
compensation and benefit systems, formulating performance appraisal
systems.
Administrative Managers
Serve as generalists in functional areas and are not associated with any
particular management specialty.
Other Kinds of Managers
Assigned as specialists in positions directly related to the needs of the
organization.
Management in Organizations

Figure 1.2
The Management Process
Skills and the Manager
Fundamental Management Skills
Technical
Skills necessary to accomplish or understand the specific kind of work
being done in an organization.
Interpersonal
The ability to communicate with, understand, and motivate both
individuals and groups.
Conceptual
The manager’s ability to think in the abstract.
Diagnostic
The manager’s ability to visualize the most appropriate response to a
situation.
Fundamental Management Skills (cont’d)
Communication
The manager’s abilities both to convey ideas and information effectively to
others and to receive ideas and information effectively from others.
Decision-Making
The manager’s ability to recognize and define problems and opportunities
correctly and then to select an appropriate course of action to solve the
problems and capitalize on opportunities.
Time-Management
The manager’s ability to prioritize work, to work efficiently, and to
delegate appropriately.
Management: Science or Art?
The Science of Management
Assumes that problems can be approached using rational, logical,
objective, and systematic ways.
Requires technical, diagnostic, and decision-making skills and techniques
to solve problems.
The Art of Management
Decisions are made and problems solved using a blend of intuition,
experience, instinct, and personal insights.
Requires conceptual, communication, interpersonal, and time-management
skills to accomplish the tasks associated with managerial activities.
Sources of Management Skills
Management Roles
Interpersonal roles

Informational roles
Decisional roles
Evolution of Management Thought
Scientific Management: 1900-1930
Administrative Management: 1916-1940
Human Relations Approach: 1930-1950
Social Systems Approach : 1940-1950
Decision Theory Approach: 1945-1965
Management Science Approach: 1950-1960
Human Behavior Approach: 1950-1970
Systems Approach: 1960’s
Contingency Approach: 1970’s
Scientific Management-Frederick Taylor
Features of Scientific Management:
Separation of Planning and Doing
Functional Foremanship
Job Analysis
Standardization
Scientific Selection and Training of workers
Financial Incentives
Economy
Mental Revolution
Administrative Management-Henri Fayol
Principles
1.Division of work-- Dividing the work into small convenient components
and giving each component to one employee. It encourages employees for
continuous improvement in skills and the development of improvements in
methods.
2. Authority and Responsibility-- The right to give orders and the power to
exact obedience with responsibility.
3. Discipline-- Self imposed and command discipline. No bending of rules.
4. Unity of command-- Each employee has one and only one boss.
5. Unity of direction-- A single mind generates a single plan and all play
their part in that plan.
6. Subordination of individual interests-- When at work, only work things
should be pursued or thought about. There should be constant vigilance and
supervision.

7. Remuneration-- Employees receive fair payment for services, not what
the company can get away with.
Administrative Management-Henri Fayol
contd…
8. Centralization-- Consolidation of management functions. Decisions are
made from the top.
9. Scalar chain (line of authority)-- Formal chain of command running from
top to bottom of the organization, like military
10. Order-- All materials and personnel have a prescribed place, and they
must remain there.
11. Equity-- Equality of treatment . Justice and kindness.
12. Personnel tenure-- Limited turnover of personnel. Lifetime
employment for good workers.
13. Initiative-- Thinking out a plan and do what it takes to make it happen.
14. Esprit de corps– Union is strength. Harmony, cohesion among
personnel. Manager should encourage espirit de corps among workers.
Bureaucracy- Weber
Features of Bureaucracy:
Administrative Class- Bureaucratic organizations generally have
administrative class responsible for maintaining coordinative activities of the
members.
Hierarchy-There are hierarchy of positions in the organization.
Division of Work- Work of the organization is divided on the basis of
specialization to take the advantages of division of labour.
Official Rules- Administrative process is continuous and governed by
official rules.
Impersonal Relationships- Decisions are governed by rational factors rather
than personal involvement, emotions and sentiments.
Official Records- Organization is characterized by maintenance of proper
official records.
Human Relations Approach- George Elton Mayo
The study continued for an extended period of time and had gone through
various phases, which is briefly described here. Hawthorne Experiments-
General Electric Company, Chicago
• Phase I: Illumination Experiments

• Phase II: Relay Assembly Test Room
• Phase III: Interviewing Program
• Phase IV: Bank Wiring Test Room
Phase-I: Illumination Experiments
Phase-I: Illumination Experiments
In order to test the traditional belief that better illumination will lead to
higher level of
productivity, two groups of employees were selected. In one, the control
group, the
illumination remained unchanged throughout the experiment while in the
other the
illumination was increased. As had been expected, the productivity went up
in the
latter or what was known as the experimental group. But what baffled the
experimenters was the fact that the output of the control group also went up.
As the
lighting in the formal group was not altered, the result was naturally
puzzling and
difficult to explain. The investigators then started to reduce the illumination
for the
test group. But in this case as well the output shoot up again. Thus the
researchers had
to conclude that illumination affected production only marginally and there
must be
some factor which produced this result.
Phase-II: Relay Assembly Test Room
In this phase, apart from illumination, possible effects of other factors such
as length
of the working day, rest pauses and their duration and frequency and other
physical
conditions were probed. The researcher who was continuously present with
the group
to observe the functioning of the group acted as their friend and guide.
Surprisingly,
here also the researchers found that the production of the group had no
relation with

the working conditions. The outcome of the group went increasing at an all-
time high
even when all the improvements in the working conditions were withdrawn.
Nobody
in the group could suggest why this was so. Researchers then attributed this
phenomenon to the following:
• Feeling of perceived importance among the group members as they were
chosen to participate in the experiment.
• Good relationship among the group
• High group cohesion.
Phase III: Interviewing Program
From the Relay Assembly Test Room, the researchers for the first time
became aware about the existence of informal groups and the importance of
social context of the organizational life. To probe deeper into this area in
order to identify the factors responsible for human behavior, they
interviewed more than 20,000 employees. The direct questioning was later
replaced by non-directive type of interviewing. The study revealed that the
workers’ social relationship inside the organizations has a significant
influence on their attitude and behavior. It was also found that merely giving
a person an opportunity to talk and air his grievances has a beneficial effect
on his morale.
Phase IV: Bank Wiring Test Room
It had been discovered that social groups in an organization have
considerable
influence on the functioning of the individual members. Observers noted that
in
certain departments, output had been restricted by the workers in complete
disregard
to the financial incentives offered by the organization. Mayo decided to
investigate
one such department which was known as the bank wiring room where there
were
fourteen men working on an assembly line.
It was found that the group evolved its own production norms which were
definitely

much lower than that set by the authority. This was done deliberately by the
group to
protect the slow workers and because of the apprehension that if the pace of
production were increased, a sizeable number of the workforce would
eventually be
redundant. The group norm was so strictly adhered to by most of the group
members
that nobody dared to violate it for the fear of being ostracized by the group.
An
individual who had emerged as the informal leader controlled the group
Thus the Hawthorne study pointed out the following:
The business organization is essentially a socio-technical entity where the
process of social interactions among its members is also extremely
important.
 There is not necessarily a direct correspondence between working
conditions and high production.
 Economic motives are not the only motive for an employee. One’s social
needs can also significantly affect their behavior. Employee-centered leaders
always tend to be more effective than the task-oriented leaders.
 The informal groups and not the individuals are the units of analysis in a
group.
Social Systems Approach- Chester Barnard
According to this Approach:
Concept of organization- Organizations exists when, persons are able to
communicate ,they are willing to contribute and they attempt to accomplish
a common purpose.
Formal and Informal Organizations
Elements of Organization-specialization, incentives, power and logical
decision making.
Authority- Authority acceptance-understand the communication, not
inconsistent with the organizational purpose, not incompatible with personal
goal, mental and physical compliance.
Functions of the Executive- Maintenance of org. communication, securing
of essential services for achieving organizational purpose, the formulation
and definition of organizational purpose.
Motivation
Executive Effectiveness- Leadership

Organizational Equilibrium- Matching of individual efforts and
organizational efforts to satisfy individuals.
Decision Theory Approach- Simon
Concept of organization- To analyze an organization we should find out
where and by whom decisions are made.
Decision making- Intelligent activity, phase of inventing developing and
analyzing possible courses of action.
Bounded Rationality- Managers are satisfied with good enough decisions.
Administrative Man- Simplifies things, takes decisions by simple rules
likes tricks of trade or habit etc.
Organization Communication- More importance given to informal
communication.
Peter Drucker- Contemporary Approach
Nature of Management- Lead towards innovation.
Management Functions- Three basic functions of a manager are to make its
contributions for- specific purpose and mission of the institution, making
work productive and the worker achieving, managing social impacts and
social responsibilities.
Organization Structure- organized , least no. of managerial levels, catch
them young.
Federalism- Centralized control in decentralized structure.
Management by Objectives (MBO)-concept introduced in 1954.
Organizational Changes- Dynamic organizations for accepting the changes
in the organizations.