PLANNING

Definition: Planing is the fundamental management function, which

involves deciding beforehand, what is to be done, when is it to be
done, how it is to be done and who is going to do it. It is an
intellectual process which lays down organisation’s objectives
and develops various courses of action, by which the organisation
can achieve those objectives. It chalks out exactly, how to attain a
specific goal.

Planning is nothing but thinking before the action takes place. It

helps us to take a peep into the future and decide in advance the
way to deal with the situations, which we are going to encounter in
future. It involves logical thinking and rational decision making.

1. CHARACTERISTICS/FEATURES/NATURE OF PLANNING

1. First and foremost managerial function: Planning provides the

base for other functions of the management, i.e. organising, staffing,
directing and controlling, as they are performed within the
periphery of the plans made.
2. Goal oriented: It focuses on defining the goals of the organisation,
identifying alternative courses of action and deciding the
appropriate action plan, which is to be undertaken for reaching the
goals.
3. Pervasive: It is pervasive in the sense that it is present in all the
segments and is required at all the levels of the organisation.
Although the scope of planning varies at different levels and
departments.
4. Continuous Process: Plans are made for a specific term, say for a
month, quarter, year and so on. Once that period is over, new plans
are drawn, considering organisation’s present and future
requirements and conditions. Therefore, it is an ongoing process, as
the plans are framed, executed and followed by another plan.
5. Intellectual Process: It is a mental exercise at it involves the
application of mind, to think, forecast, imagine intelligently and
innovate etc.
6. Futuristic: In the process of planning we take a sneak peek of
future. It encompasses looking into future, to analyse and predict it,
so that the organisation can face the future challenges effectively.
7. Decision making: Decisions are made regarding the choice of
alternative courses of action that can be undertaken to reach the
goal. The alternative chosen should be best among all, with least
number of negative and highest number of positive outcomes.

Planning is concerned with setting objectives, targets, and

formulating plan to accomplish them. The activity helps
managers analyse the present condition to identify the ways of
attaining the desired position in future. It is both, the need of the
organisation and the responsibility of managers.

2. IMPORTANCE OF PLANNING

 It helps managers to improve future performance, by

establishing objectives and selecting a course of action, for the
benefit of the organisation.
 It minimises risk and uncertainty, by looking ahead into
future.
 It facilitates coordination of activities. Thus, reduces
overlapping among activities and eliminates unproductive work.
 It states in advance, what should be done in future, so it
provides direction for action.
 It uncovers and identifies future opportunities and threats.
 It sets out standards for controlling. It compares actual
performance with the standard performance and efforts are
made to correct the same.
Planning is present in all types of organisations, households, sectors,
economies, etc. We need to plan because future is highly uncertain
and no one can predict future with 100% accuracy, as the conditions
can change anytime. Hence, planning is the basic requirement of any
organization for the survival, growth and success.

3. STEPS INVOLVED IN PLANNING OR PLANNING PROCESS

By planning process, an organisation not only gets the insights of

future, but it also helps the organisation to shape its future. Effective
planning involves simplicity of the plan, i.e. the plan should be
clearly stated and easy to understand, because if the plan is too
much complicated it will create chaos among the members of the
organisation. Further, the plan should fulfil all the requirements of
the organisation.

4. BARRIERS OF PLANNING

Poor Communication: When communication within or between

groups breaks down or doesn't exist, planning becomes ineffective.
Business plans need to clearly outline the current situation and
goals and objectives along with prioritized strategies and tactics in a
way that everyone involved can understand. Without clear
communication, planning leads to replication of effort and people
working at cross purposes when they should be working together.
Poor communication may be caused by undeveloped skills, rivalries,
misunderstanding of the planning process or excessive complexity
within the planning group structure.
Resistance to Change: The difficulties of the planning process are not
always the result of accident or incompetence. Most people who are
going to be affected by change don't like the idea and resist it.
Resistance to planning for change within organizations can take the
form of malingering, undermining of morale or straightforward
opposition. Contingency plans to accommodate resistance should be
included in any comprehensive planning process.
Insufficient Resources: If plans become excessively ambitious, they
can sometimes be stymied by a simple lack of resources on the part of
a company or organization. This is particularly true if planning
involves physical plant renovation or expansion. Grand plans are
much less expensive to create on paper than in bricks and mortar, and
planners can easily lose track of the eventual cost of their plans.
Situation Analysis: Without an honest analysis of the current
situation bereft of emotions, planning cannot be effective. If you don't
know where you are, you cannot plot a map or plan to take you where
you want to go. All effective plans start with an honest review of the
project or company's specific situation, its competition and a market
analysis of its customer demographics. A forecasting analysis can also
help make a reasonable plan that can be carried out.
Creative Thinking : The human mind tends to base its thoughts,
activities and expectations on what has happened in the past. Often,
this is a valuable trait, but in a planning process it can become a
liability. If planning requires the development of new ways of doing
things, an inability to overcome the past on the part of the planners
can become a liability that obstructs innovative thought. Albert
Einstein said that people cannot solve their problems with the same
thinking that created them.
Inertia Problems: Inertia is most frequently a problem for large and
long-established organizations. Inertia can be created by a
combination of archaic infrastructure, calcified modes of thinking,
oversize bureaucracy and fear of change. Forward thinking elements
within an organization that want to engage in creative planning may
have to spend a lot of time and energy overcoming the inertia of
things that have gone before.
MANAGEMENT PRINCIPLES - TYPES OF PLANS
Plans commit the various resources in an organization to specific
outcomes for the fulfillment of future goals. Many different types of
plans are adopted by management to monitor and control
organizational activities. Three such most commonly used plans are
hierarchical, frequency-of-use (repetitiveness) and contingency
plans.
STRATEGICPLANS
Strategic plans define the framework of the organization’s vision
and how the organization intends to make its vision a reality.
 It is the determination of the long-term objectives of an
enterprise, the action plan to be adopted and the resources to
be mobilized to achieve these goals.
 Since it is planning the direction of the company’s progress, it
is done by the top management of an organization.
 It essentially focuses on planning for the coming years to take
the organization from where it stands today to where it
intends to be.
 The strategic plan must be forward looking, effective and
flexible, with a focus on accommodating future growth.
 These plans provide the framework and direction for lower
level planning.

TACTICALPLANS
Tactical plans describe the tactics that the managers plan to adopt
to achieve the objectives set in the strategic plan.
 Tactical plans span a short time frame (usually less than 3
years) and are usually developed by middle level managers.
 It details specific means or action plans to implement the
strategic plan by units within each division.
 Tactical plans entail detailing resource and work allocation
among the subunits within each division.
OPERATIONALPLANS
Operational plans are short-term (less than a year) plans developed
to create specific action steps that support the strategic and tactical
plans.
 They are usually developed by the manager to fulfill his or her
job responsibilities.
 They are developed by supervisors, team leaders, and
facilitators to support tactical plans.
 They govern the day-to-day operations of an organization.
 Operational plans can be −
o Standing plans − Drawn to cover issues that managers
face repeatedly, e.g. policies, procedures, rules.
o Ongoing plans − Prepared for single or exceptional
situations or problems and are normally discarded or
replaced after one use, e.g. programs, projects, and
budgets.
 ORGANISING

Organizations are systems created to achieve common goals

through people-to-people and people-to-work relationships.
Organizing is the function that managers undertake to design,
structure, and arrange the components of an organization’s internal
environment to facilitate attainment of organizational goals.

IMPORTANCE OF ORGANIZING
A comprehensive approach to organizing helps the management in
many ways. Organizing aligns the various resources towards a
common mission.
Efficient Administration
It brings together various departments by grouping similar and
related jobs under a single specialization. This establishes
coordination between different departments, which leads to
unification of effort and harmony in work.
It governs the working of the various departments by defining
activities and their authority relationships in the organizational
structure. It creates the mechanism for management to direct and
control the various activities in the enterprise.
Resource Optimization
Organizing ensures effective role-job-fit for every employee in the
organization. It helps in avoiding confusion and delays, as well as
duplication of work and overlapping of effort.
Benefits Specialization
It is the process of organizing groups and sub-divide the various
activities and jobs based on the concept of division of labor. This
helps in the completion of maximum work in minimum time
ensuring the benefit of specialization.
Promotes Effective Communication
Organizing is an important means of creating coordination and
communication among the various departments of the
organization. Different jobs and positions are interrelated by
structural relationship. It specifies the channel and mode of
communication among different members.
Creates Transparency
The jobs and activities performed by the employees are clearly
defined on the written document called job description which
details out what exactly has to be done in every job. Organizing
fixes the authority-responsibility among employees. This brings in
clarity and transparency in the organization.
Expansion and Growth
When resources are optimally utilized and there exists a proper
division of work among departments and employees, management
can multiply its strength and undertake more activities.
Organizations can easily meet the challenges and can expand their
activities in a planned manner.

The following illustration shows the five principles of

Organizing −
Work Specialization: Also called division of labor, work
specialization is the degree to which organizational tasks are
divided into separate jobs. Each employee is trained to perform
specific tasks related to their specialized function.
Specialization is extensive, for example running a particular
machine in a factory assembly line. The groups are structured
based on similar skills. Activities or jobs tend to be small, but
workers can perform them efficiently as they are specialized in it.
In spite of the obvious benefits of specialization, many
organizations are moving away from this principle as too much
specialization isolates employees and narrows down their skills to
perform routine tasks.
Also it makes the organization people dependent. Hence
organizations are creating and expanding job processes to reduce
dependency on particular skills in employees and are facilitating
job rotation among them.
Authority :Authority is the legitimate power assigned to a manager
to make decisions, issue orders, and allocate resources on behalf of
the organization to achieve organizational objectives.
Authority is within the framework of the organization structure and
is an essential part of the manager’s job role. Authority follows a
top-down hierarchy. Roles or positions at the top of the hierarchy
are vested with more formal authority than are positions at the
bottom.
The extent and level of authority is defined by the job role of the
manager. Subordinates comply with the manager’s authority as it is
a formal and legitimate right to issue orders.

Chain of Command: The chain of command is an important concept

to build a robust organization structure. It is the unbroken line of
authority that ultimately links each individual with the top
organizational position through a managerial position at each
successive layer in between.
It is an effective business tool to maintain order and assign
accountability even in the most casual working environments. A
chain of command is established so that everyone knows whom
they should report to and what responsibilities are expected at
their level. A chain of command enforces responsibility and
accountability. It is based on the two principles of Unity of
command and Scalar Principle.
Unity of command states that an employee should have one and
only one manager or supervisor or reporting authority to whom he
is directly accountable to. This is done to ensure that the employee
does not receive conflicting demands or priorities from several
supervisors at once, placing him in a confused situation.
However, there are exceptions to the chain of command under
special circumstances for specific tasks if required. But for the most
part organizations to a large extent should adhere to this principle
for effective outcomes.
Scalar principle states that there should exist a clear line of
authority from the position of ultimate authority at the top to every
individual in the organization, linking all the managers at all the
levels. It involves a concept called a gang plank using which a
subordinate may contact a superior or his superior in case of an
emergency, defying the hierarchy of control. However, the
immediate superiors must be informed about the matter.

Delegation: Another important concept closely related to authority

is delegation. It is the practice of turning over work-related tasks
and/or authority to employees or subordinates. Without delegation,
managers do all the work themselves and underutilize their
workers. The ability to delegate is crucial to managerial success.
Authority is said to be delegated when discretion is vested in a
subordinate by a superior. Delegation is the downward transfer of
authority from a manager to a subordinate. Superiors or managers
cannot delegate authority they do not have, however, high they may
be in the organizational hierarchy.
Delegation as a process involves establishment of expected
outcomes, task assignment, delegation of authority for
accomplishing these tasks, and exaction of responsibility for their
accomplishment. Delegation leads to empowerment, as employees
have the freedom to contribute ideas and do their jobs in the best
possible ways.
Span of Control: Span of control (also referred to as Span of
Management) refers to the number of employees who report to one
manager. It is the number of direct reportees that a manager has
and whose results he is accountable for.
Span of control is critical in understanding organizational design
and the group dynamics operating within an organization. Span of
control may change from one department to another within the
same organization.
The span may be wide or narrow. A wide span of control exists
when a manager has a large number of employees reporting to him.
Such a structure provides more autonomy. A narrow span of
control exists when the number of direct reportees that a manager
has is small. Narrow spans allow managers to have more time with
direct reports, and they tend to spark professional growth and
advancement.
THE ORGANIZATION PROCESS CHART
Following is a representation of organization process chart.
A well-defined organizing process leads to improved
communication, transparency and efficiency in the organization.
 STAFFING

NATURE OF STAFFING FUNCTION

1. Staffing is an important managerial function- Staffing

function is the most important mangerial act along with
planning, organizing, directing and controlling. The operations
of these four functions depend upon the manpower which is
available through staffing function.
2. Staffing is a pervasive activity- As staffing function is carried
out by all mangers and in all types of concerns where business
activities are carried out.
3. Staffing is a continuous activity- This is because staffing
function continues throughout the life of an organization due
to the transfers and promotions that take place.
4. The basis of staffing function is efficient management of
personnels- Human resources can be efficiently managed by a
system or proper procedure, that is, recruitment, selection,
placement, training and development, providing remuneration,
etc.
5. Staffing helps in placing right men at the right job. It can be
done effectively through proper recruitment procedures and
then finally selecting the most suitable candidate as per the job
requirements.
6. Staffing is performed by all managers depending upon the
nature of business, size of the company, qualifications and
skills of managers,etc. In small companies, the top
management generally performs this function. In medium and
small scale enterprise, it is performed especially by the
personnel department of that concern.
]
 DIRECTION
Directing is “a managerial function that involves the responsibility of
managers for communicating to others what their roles are in achieving
the company plan.”

Direction initiates action towards achievement of the goals. They act as

catalysts for achieving organizational and individual goals.

Directing is the managerial function, which initiates organized action. It

is one of the most important fundamental functions of management and
is a part of every managerial action taken. This area is primarily geared
towards leadership, motivation and communication.

1. Skills of Managers That Influence The Behaviour Of

Others:
(Qualities in a manger for direction)
1. Diagnose: Managers must know the problem or the situation that
needs direction.
2. Adapt: Managers adapt to the situation and understand it before
directing others to act.

3. Communicate: Having understood, analysed and changed their

behaviour according to the situation, managers communicate the change
in situation to other members so that they understand and change their
behaviour accordingly

2. FUNCTIONS OF DIRECTION:

Pervasive Function - Directing is required at all levels of organization. Every

manager provides guidance and inspiration to his subordinates.
 Continuous Activity - Direction is a continuous activity as it continuous
throughout the life of organization.

Human Factor - Directing function is related to subordinates and therefore it

is related to human factor. Since human factor is complex and behaviour is
unpredictable, direction function becomes important.

Creative Activity - Direction function helps in converting plans into

performance. Without this function, people become inactive and physical
resources are meaningless.

Executive Function - Direction function is carried out by all managers and

executives at all levels throughout the working of an enterprise, a subordinate
receives instructions from his superior only.

Delegate Function - Direction is supposed to be a function dealing with

human beings. Human behaviour is unpredictable by nature and conditioning
the people’s behaviour towards the goals of the enterprise is what the
executive does in this function. Therefore, it is termed as having delicacy in it
to tackle human behaviour.

3. TECHNIQUES OF DIRECTION

1. Consultative direction: In this method executive consults with his

subordinates concerning the feasibility, the work ability and the extent and
content of a problem before the superior makes a decision and issues a
directive.
The following advantages are claimed in this type of method:

 Participation occurs on every level of organisation.

 Better communication.
 Least resistance from subordinates, experience and knowledge of
subordinate also can be used to arrive at right directives.
 It induces better motivation and morale.
 It leads to better co-ordination and effective results.
 This method has the following disadvantages:

 It is time consuming.
 Subordinates may consider it their right and prerogative to be
consulted before a directive is given to them by their superiors.
 Sometimes unnecessary arguments arise leading to wastage of time.

2. Free rein direction: The free rein technique encourages and enables the
subordinate to contribute his own initiative, independent thought, drive,
perspicacity and ingenuity to the solution of the problem. The free rein
technique of direction will probably show the best and quickest results, if
the subordinate is highly educated, brilliant young man a sole performer,
who has a sincere desire to become a to p level manager.

3. Automatic direction: In this method manager gives direct, clear and

precise orders to his subordinates, with detailed instructions as how and
what is to be done allowing no room for the initiative of the subordinate.

4. IMPORTANCE OF DIRECTION OR REQUIREMENT OF

EFFECTIVE DIRECTION:

Well executed direction function has the following merits:

1. Initiates action: Direction initiates action that motivates people to convert
the resources into productive outputs. It gives substance to managerial
functions of planning, organising, staffing and controlling. People learn to
manage the resources in the most effective way that results in their optimum
utilisation.
2. Creates a sound work environment: If directions are issued in
consultation with employees (participative), it creates an environment of
understanding where people work to their maximum potential, willingly and
enthusiastically to contribute towards organisational goals.

3. Develops managers: Managers who are personally motivated to work can

also direct others to work. Managers develop their skills and competence to
direct others to follow. If managers and employees work in harmony, it
promotes skills of the employees and develops managers to assume
responsibilities of higher levels in the organisation.
Motivation, leadership and communication help in bringing people together.
They exploit employees’ talent to the fullest and also provide scope for their
skill enhancement. This is beneficial for both the employees and organisation.
Direction, thus, prepares future managers.

4. Behavioural satisfaction: Since direction involves human behaviour and

psychology, employees feel behaviourally satisfied and personally inspired to
achieve organisational goals.
5. Increase in productivity: Personally satisfied employees contribute
towards output and efficiency of the organisation.
Direction gets maximum out of subordinates by exploiting their potential and
increasing their capabilities to work.

6. Achieves coordination: Directing aims at continuous supervision of

activities. It achieves coordination by ensuring that people work towards
planned activities in a coordinated manner. It integrates the actions of
employees that increases their understanding of mutual interdependence and
their collective effort to achieve the organisational goals. It also helps to
harmonies individual goals with organisational goals.

7. Facilitates control: Coordination brings actual performance in conformity

with planned performance. The controlling function is, thus, facilitated
through effective direction.

8. Facilitates change: Direction helps in introducing change in the

organisation structure and adapting the organisation structure to external
environment. Organisation operates in the society as an open system and has
to accept social changes for its survival and growth. People are not easily
receptive to changes. Direction helps in changing attitude of people towards
change and accepts it as a way of life.
9. Facilitates growth: Organisation open to change is responsive to growth.
Direction harmonizes physical, financial and human resources, balances
various parts of the organisation and creates commitment amongst people to
raise their standards of performance.
 LEADERSHIP

Leaders and their leadership skills play an important role in the

growth of any organization. Leadership refers to the process of
influencing the behaviour of people in a manner that they
strive willingly and enthusiastically towards the achievement
of group objectives.A leader should have the ability to maintain
good interpersonal relations with the followers or subordinates and
motivate them to help in achieving the organizational objectives.

1. FEATURES OR CHARACTERISTICS OF LEADERSHIP

 INFLUENCE THE BEHAVIOUR OF OTHERS: Leadership is an

ability of an individual to influence the behaviour of other
employees in the organization to achieve a common purpose or
goal so that they are willingly co-operating with each other for
the fulfilment of the same.
 INTER-PERSONAL PROCESS: It is an interpersonal process
between the leader and the followers. The relationship between
the leader and the followers decides how efficiently and
effectively the targets of the organization would be met.
 ATTAINMENT OF COMMON ORGANIZATIONAL GOALS: The
purpose of leadership is to guide the people in an organization to
work towards the attainment of common organizational goals.
The leader brings the people and their efforts together to achieve
common goals.
 CONTINUOUS PROCESS: Leadership is a continuous process. A
leader has to guide his employees every time and also monitor
them in order to make sure that their efforts are going in the
same direction and that they are not deviating from their goals.
 GROUP PROCESS: It is a group process that involves two or more
people together interacting with each other. A leader cannot lead
without the followers.
 DEPENDENT ON THE SITUATION: It is situation bound as it all
depends upon tackling the situations present. Thus, there is no
single best style of leadership.

2. IMPORTANCE OF LEADERSHIP:

 INITIATING ACTION: Leadership starts from the very beginning,

even before the work actually starts. A leader is a person who
communicates the policies and plans to the subordinates to start
the work.
 PROVIDING MOTIVATION: A leader motivates the employees by
giving them financial and non-financial incentives and gets the
work done efficiently. Motivation is the driving force in an
individual’s life.
 PROVIDING GUIDANCE: A leader not only supervises the
employees but also guides them in their work. He instructs the
subordinates on how to perform their work effectively so that
their efforts don’t get wasted.
 CREATING CONFIDENCE: A leader acknowledges the efforts of
the employees, explains to them their role clearly and guides
them to achieve their goals. He also resolves the complaints and
problems of the employees, thereby building confidence in them
regarding the organization.
 BUILDING WORK ENVIRONMENT: A good leader should
maintain personal contacts with the employees and should hear
their problems and solve them. He always listens to the point of
view of the employees and in case of disagreement persuades
them to agree with him by giving suitable clarifications. In case of
 conflicts, he handles them carefully and does not allow it to
adversely affect the entity. A positive and efficient work
environment helps in stable growth of the organization.
 CO-ORDINATION: A leader reconciles the personal interests of
the employees with the organizational goals and achieves co-
ordination in the entity.
 CREATING SUCCESSORS: A leader trains his subordinates in
such a manner that they can succeed him in future easily in his
absence. He creates more leaders.
 INDUCES CHANGE: A leader persuades, clarifies and inspires
employees to accept any change in the organization without
much resistance and discontentment. He makes sure that
employees don’t feel insecure about the changes.
Often, the success of an organization is attributed to its leaders. But,
one must not forget that it’s the followers who make a leader
successful by accepting his leadership. Thus, leaders and followers
collectively play a key role to make leadership successful.

3. QUALITIES OR IMPORTANCE OF A LEADER

 PERSONALITY: A pleasing personality always attracts people. A

leader should also friendly and yet authoritative so that he
inspires people to work hard like him.
 KNOWLEDGE: A subordinate looks up to his leader for any
suggestion that he needs. A good leader should thus possess
adequate knowledge and competence in order to influence the
subordinates.
 INTEGRITY: A leader needs to possess a high level of integrity
and honesty. He should have a fair outlook and should base his
 judgment on the facts and logic. He should be objective and not
biased.
 INITIATIVE: A good leader takes initiative to grab the
opportunities and not wait for them and use them to the
advantage of the organization.
 COMMUNICATION SKILLS: A leader needs to be a good
communicator so that he can explain his ideas, policies, and
procedures clearly to the people. He not only needs to be a good
speaker but also a good listener, counsellor, and persuader.
 MOTIVATION SKILLS: A leader needs to be an effective
motivator who understands the needs of the people and
motivates them by satisfying those needs.
 SELF-CONFIDENCE AND WILL POWER: A leader needs to have a
high level of self-confidence and immense will-power and should
not lose it even in the worst situations, else employees will not
believe in him.
 INTELLIGENCE: A leader needs to be intelligent enough to
analyze the pros and cons of a situation and take a decision
accordingly. He also needs to have a vision and fore-sightedness
so that he can predict the future impact of the decisions taken by
him.
 DECISIVENESS: A leader has to be decisive in managing his work
and should be firm on the decisions are taken by him.
 SOCIAL SKILLS: A leader should possess empathy towards
others. He should also be a humanist who also helps the people
with their personal problems. He also needs to possess a sense of
responsibility and accountability because with great authority
comes great responsibility.
 4. LEADERSHIP STYLES

 Autocratic leadership style: It refers to a style where the leader

takes all the decisions by himself.
 Democratic leadership style: It refers to a style where the
leader consults its subordinates before taking the final decision.
 Laissez-faire or Free-rein leadership style: It refers to a style
where the leader gives his subordinates complete freedom to
take the decisions.

5. LEADERSHIP THEORIES
1. Trait Theories – What Type of Person Makes a Good Leader?
Trait theories argue that effective leaders share a number of
common personality characteristics, or "traits."

Early trait theories said that leadership is an innate, instinctive

quality that you do or don't have. Thankfully, we've moved on from
this idea, and we're learning more about what we can do to develop
leadership qualities within ourselves and others.

Trait theories help us identify traits and qualities (for example,

integrity, empathy, assertiveness, good decision-making skills, and
likability) that are helpful when leading others.

However, none of these traits, nor any specific combination of them,

will guarantee success as a leader.

Traits are external behaviors that emerge from the things going on
within our minds – and it's these internal beliefs and processes that
are important for effective leadership.
2. Behavioral Theories – What Does a Good Leader Do?
Behavioral theories focus on how leaders behave. For instance, do
leaders dictate what needs to be done and expect cooperation? Or
do they involve their teams in decision-making to encourage
acceptance and support?
In the 1930s, Kurt Lewin developed a framework based on a
leader's behavior. He argued that there are three types of leaders:

 Autocratic leaders make decisions without consulting their

teams. This style of leadership is considered appropriate when
decisions need to be made quickly, when there's no need for
input, and when team agreement isn't necessary for a
successful outcome.
 Democratic leaders allow the team to provide input before
making a decision, although the degree of input can vary from
leader to leader. This style is important when team agreement
matters, but it can be difficult to manage when there are lots of
different perspectives and ideas.
 Laissez-faire leaders don't interfere; they allow people within
the team to make many of the decisions. This works well when
the team is highly capable, is motivated, and doesn't need close
supervision. However, this behavior can arise because the
leader is lazy or distracted; and this is where this style of
leadership can fail.
Clearly, how leaders behave affects their performance. Researchers
have realized, though, that many of these leadership behaviors are
appropriate at different times. The best leaders are those who can
use many different behavioral styles, and choose the right style for
each situation.
3. Contingency Theories – How Does the Situation Influence
Good Leadership?
The realization that there is no one correct type of leader led to
theories that the best leadership style depends on the situation.
These theories try to predict which style is best in which
circumstance.
For instance, when you need to make quick decisions, which style is
best? When you need the full support of your team, is there a more
effective way to lead? Should a leader be more people-oriented or
task-oriented? These are all questions that contingency leadership
theories try to address.
 THEORIES OF LEADERSHIP
Over the decades, many great scholars, researchers and
academicians have conducted various research and studies to
discover the factors that contribute to effective leadership. In this
process, the following theories of leadership have evolved:

THE GREAT MAN THEORY :

 Thomas Carlyle proposed the Great Man Theory in the 1840s,

and it merely believes that leadership is an inherent trait of a
person who is destined to become a great leader by birth and
they prove themselves when the great need arises. In other
words, some people are born to become leaders and leadership is
a heroic act.:

Criticism: This theory was criticised or questioned due to the

following reasons:
 It was a male-centric approach when women have proved to
be great leaders too.
  This theory explains that leadership cannot be learned or
taught it’s an inherent trait.
 There is no scientific validation to support this theory.
 It neglected the environmental and situational factors which
affect the leadership process.

THE TRAIT THEORY :

 Ralph M. Stogdill proposed the trait theory of leadership in the

late 1940s; he explained that an individual must possess the key
personality traits and characteristics to be an effective leader and
these traits are inherent by birth.
Some of the core leadership traits based on this theory can be
categorised as follows:
 Physiological traits: Height, weight, structure, colour,
appearance and so forth.
 Socioeconomic characteristics: Gender, religion, marital
status, age, occupation, literacy and earnings.
 Personality traits: Extraversion, self-confidence, patience,
agreeable, reliable, honesty and leadership motivation.
 Intellectual traits: Decisiveness, intelligence, judgemental
ability, knowledge and emotional attribute.
 Task-related traits: Attainment drive, dedication, initiative,
determination and business expertise.
 Social characteristics: Socially active, cordiality and
cooperation.
 Some of the other traits being charisma, adaptiveness,
creativity, uniqueness.
This theory was criticised since it neglected the environmental
factors which may not always remain the same. The list of traits is
quite vast and keeps on changing from time to time. It was unable to
explain failures despite possessing the certain traits specified in the
theory. Moreover, of the identified traits can be acquired through
learning and training.

BEHAVIOURAL THEORY :

 The behavioural theory of leadership evolved in the 1950s. After

understanding that the personal traits of a leader are essential
for effective leadership, the researchers were now keen to know
that what leaders do to become effective leaders
Thus, they now focussed on the leader’s behaviour rather than
traits. To study the behaviour of leaders, two major research
programs were started by two different universities namely, the
Ohio State Leadership Studies and the University of Michigan
Studies.

 The Ohio State University Studies: A group of researchers at

Ohio State University prepared a questionnaire to be
surveyed in military and industrial setups, to determine the
perception of the subordinates for the actual behaviour of
their leaders. From their findings, the researchers identified
two major categories of leader behaviour:
 Consideration: The leaders are attentive towards their
subordinates and build up an excellent inter-personnel
relationship with them. They are very supportive and
friendly. This was termed as ‘people-oriented behaviour’.
 Initiating structure: The leaders are majorly concerned
about the achievement of goals and schedule and structure
work accordingly. For such leaders, subordinates are just
 resources, and they have to make the optimal utilisation of
them. This was termed as ‘task-oriented behaviour’.
 The University of Michigan Studies: This study is based on
how the leader’s behaviour is related to group performance.
Researchers made a comparison of effective managers with
the ineffective ones and found that the two can be
discriminated on the basis of their behaviour, i.e. job-centric
behaviour and organisational-member centric behaviour.
The study further resulted in the identification of four
additional behaviours essential for effective leadership which
are:

 Support
 Goal emphasis
 Work facilitation
 Interaction facilitation
 Blake and Mouton’s Leadership Grid: Robert R. Blake and
Jane S. Mouton gave the Leadership/Managerial Grid Theory
and discovered the five different styles of leadership by
categorising the managers into 81 possible ways arising out of
the combination of rating depending on two variables,
concern for people and concern for results.
Following are the various styles of Leadership according to
this model:

 Indifferent: Neither the attention is paid towards the

work, nor towards the employees, it is the most ineffective
style of leadership.
 Controlling or the country club: All that matters is the
well-being of the staff.
 Accommodating or task oriented: All that matters is
production and output.
 Status Quo or balance: Moderate and equal importance
and attention are given to work as well as employee
welfare.
  Sound: A high level of concern is shown towards both, the
output as well as the employees, it is the most effective
style of leadership.

CONTINGENCY THEORY :

 Contingency theories of leadership state that effective leadership

comprises of all the three factors, i.e. traits, behaviour and
situation. A leader’s behaviour varies as per the situation. To
support this theory of leadership various models were
developed, and multiple studies were conducted in this direction.

Following are the models of contingency theory:

 Fred Fiedler’s Contingency Model: Dr Fred E. Fiedler tried
to explain that the performance of a group or team is banked
on the pleasant and unpleasant situations and style of
leadership.
 Leadership style can be assessed with the help of Least
Preferred Co-worker (LPC) scale. It is a technique in which a
leader is asked to think of a person whom they least like to
work with and score them on different bipolar scales.

For instance: Friendly-unfriendly, Efficient-inefficient,

Cooperative-uncooperative, etc

 Fiedler’s findings:
 Leader’s Traits: On the basis of the LPC Scale, a
leader’s style of leadership can be determined. If a
leader scores high on the LPC scale, that means he is
highly relationship-oriented and treats even the least
preferred co-worker generously.If he scores low on the
LPC scale, he is a task-oriented leader prioritising the
work and performance.
 Situational factor: Leaders manage to perform
effectively in the favourable situations. They feel that
they have control and command over the group of
employees in such situations.
 Situation Matches: Fiedler gave a Contingency Model
named Leader Situation Matches in which he explained
that leadership style could be either task-oriented or
people-oriented, based on the favourableness of the
situation.
 Hersey Blanchard Situational Theory: The Hersey-
Blanchard Situational Theory states that the style of
leadership depends upon the maturity of the subordinates;
accordingly the following four styles were developed:

 Telling: When a new person enters the organisation, he

has to be told everything, i.e. he is given training and
orientation to make him understand the task to be
performed.
 Selling: The leader leads by providing social and
emotional support to the subordinates and convincing the
groups to give maximum output.
 Delegating: The leaders are least concerned about and
hardly interferes with the execution of the tasks. They are
not even concerned about the subordinates and their
issues.
 Participating: It is a democratic style where subordinates
are allowed to participate in the decision-making process.
 Here, the leader is less focussed on the achievement of
objectives.
 Evans and House Path-Goal Theory: The Path-Goal Theory
was proposed by Robert J. House and Martin Evans in 1970s.
This theory pro-founded that leader’s noticeable behaviour,
and the situation in which he is placed are inter-connected. To
increase the organisation’s effectiveness, the managers should
either match the situation with the leader’s behaviour or
change his behaviour according to the situation in which he is
placed. This theory focused on the need for flexibility while
adopting different leadership styles in different situations.

The situational factors involved are Subordinate

characteristics and Organisational environment. This model
emphasised four different behaviours of a leader:

 Directive
 Supportive
 Participative
 Achievement-Oriented
 Vroom-Yetton-Jago Decision-Making Model: This model
suggested that leadership style varies on the basis of the
decision-making ability of the leaders in different situations.
Leadership style was merely based on the degree of
employee’s contribution and activeness in the decision-
making process.
The various aspects taken into consideration were decision
timeliness, decision acceptance and the decision quality.
Following are the Leadership Styles derived out of this model:

 Autocratic (AI): The leader solely decides with the

available information.
 Autocratic (AII): This is stringic autocratic leadership
style where the leader takes the opinion of group members
to gather more information but may or may not share the
final decision with the group members.
 Consultative (CI): The leaders consult with the group
members to explore opinions but solely takes the decision.
 Consultative (CII): The leaders consult with the group
members to explore opinions and also invites suggestions
but solely takes the decision.
  Collaborative (GII): The leader allows the group to take
their own decisions collectively and plays a supportive role
in the process.
 Cognitive Resource Theory: This theory explains that if the
leader is experienced he will be able to perform effectively
even under the stressful situations whereas an intelligent
leader performs well in less stressful situations.
 Strategic Contingencies Theory: This theory says that the
effectiveness of a leader depends upon his problem-solving
skills and ability to handle critical situations and make
decisions wisely. A person with better problem-solving skills
can secure his position and cannot be easily replaced.
 Charismatic Leadership Theory: This theory believes that a
leader must possess some extraordinary and exceptional
qualities to become an effective leader. Such leaders lead by their
 key traits i.e.

 Envisioning/Foreseeing: Leaders foresees future

possibilities and create a vision accordingly, usually having
high expectations and dreams.
 Energizing/Empowering: Leaders are highly enthusiastic,
proactive, energetic and confidently aiming towards success.
 Enabling/Guiding: Leaders provide complete support and
guidance and show compassion and trust in followers. Such
leaders are highly focussed and committed towards their goal
accomplishment.
 Transactional Leadership Theory: Transactional Leadership
Theory emphasises the realisation of a desired outcome and
result. The leaders motivate the followers by way of a reward
 system, i.e. rewarding the performers and punishing the non-
performers.
The theory emphasises maintaining a cordial relationship with
the followers, leaders and followers must work mutually to meet
organisational goals.

 Transformational Leadership Theory: The transformational

theory states that a leader is effective only if he can transform or
change the perceptions, behaviour and expectations of the
followers and direct them towards a common goal which will
lead to the accomplishment of the leader’s vision. Such leaders
have a charismatic and influential personality.
Following are the key factors behind Transformational
Leadership:

 Psychological transformation: Bring about a change in the

perception and mindset of the follower.
 Influential: Creates a strong impact on the followers.
 Motivational: Generates positive energy within followers.
 Inspirational: Encourages them to achieve something.
 Individual impact: Creates a powerful effect on the
behaviour and perception of the followers.
From the above description, we can conclude that a leader needs to
follow different leadership theories based on the situation and
circumstances.
 6. MANAGER VS LEADER

Basis Manager Leader

A person becomes a manager by A person becomes a leader on basis

Origin
virtue of his position. of his personal qualities.

Manager has got formal rights in

Formal Rights an organization because of his Rights are not available to a leader.
status.

The subordinates are the The group of employees whom the

Followers
followers of managers. leaders leads are his followers.

A manager performs all five Leader influences people to work

Functions
functions of management. willingly for group objectives.

A leader is required to create

A manager is very essential to a
Necessity cordial relation between person
concern.
working in and for organization.

Stability It is more stable. Leadership is temporary.

Mutual
All managers are leaders. All leaders are not managers.
Relationship

Manager is accountable for self

Leaders have no well defined
Accountability and subordinates behaviour and
accountability.
performance.
 A manager’s concern is A leader’s concern is group goals
Concern
organizational goals. and member’s satisfaction.

People follow manager by virtue People follow them on voluntary

Followers
of job description. basis.

A manager can continue in office

A leader can maintain his position
Role till he performs his duties
only through day to day wishes of
continuation satisfactorily in congruence with
followers.
organizational goals.

A leader has command over

Manager has command over
different sanctions and related task
Sanctions allocation and distribution of
records. These sanctions are
sanctions.
essentially of informal nature.

MOTIVATION

 Motivation is one of the basic psychological processes.

Motivation is an inner motive that encourages human behavior.
Motivation can be activated by various stimuli (stimulating or
motivating factors). Motivation is closely related to
human performance.
 Motivating is the effort of a individual or individuals to create
within another individual (other individuals) motivation for the
desired behavior and in practice, it is a necessary part
of management, and it is based on that person in terms of its
 natural motives of not wanting to work unless he has a
motivation.
 Self motivating is an effort of a human individual to motivate
himself.
Basic motivation factors is:

Positive motivation - is based on reward for better performance

Negative motivation - is based on the power factors:

NEEDS THEORY -:

 All Needs theories focus on specific needs people want to satisfy. There
are several theories that explain motivation as a result of these needs.
 The underlying concept is the belief that an unsatisfied need creates
tension and a state of disequilibrium. To restore balance, a goal is
identified that will satisfy the need and a behavior pathway to this goal is
selected.
 All behavior is motivated by unsatisfied needs.
 People will be better motivated if their work experience satisfies their
needs and wants.
 Needs theories distinguish between primary needs, such as
food, sleep and other biological needs, and secondary
psychological needs that are learned and vary by culture and by
individual.

MASLOWS HIERARCHY OF NEEDS:

 Maslow’s hierarchy of needs

 If a lower need is satisfied, it no longer motivates behavior; the

next higher one becomes dominant. (Deficit principle)
 The five needs exist in a hierarchy. Higher needs only become
important when lower needs are satisfied
 Higher-order needs provide greater motivation.
 Different people may have different priorities.

The theory helps managers to identify which particular needs are

relevant for employees and thus to determine appropriate
motivators.

MCCLELLAND’S NEEDS THEORY

Based mainly on studies of managers. 3 most important needs:

  Achievement – need for competitive success measured against
a personal standard of excellence
 Affiliation – need for warm, friendly relationships with others,
interpersonal relationships
 Power – need to control and influence others

The hierarchy of these three groups of needs may differ from

individual to individual. Hence, there are different motivators
depending on a person’s high-priority needs.

HERZBERG’S TWO-FACTOR MODEL

There are some factors that result in satisfaction and some factors
that just prevent dissatisfaction. According to Herzberg, the
opposite of Satisfaction is No Satisfaction and the opposite of
Dissatisfaction is No Dissatisfaction.

 Motivators – factors that really motivate people, also called

satisfiers, provide intrinsic motivation
Examples for Motivators: recognition, growth and career
development opportunities, responsibility, autonomy, self-
fulfillment
 Hygiene factors – dissatisfiers; their absence would
demotivate people, but their presence not necessarily improves
motivation; essentially describe the environment, little effect on
positive job attitudes
Examples for Hygiene factors: salary, work conditions,
relationships with superios and peers, company policy