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Employee Relations Management Unit 4

Sikkim Manipal University Page No.: 76

Unit 4 Behavioural Aspects in Employee

Relations ManagementStructure:

4.1 Introduction

Objectives

4.2 Motivation

Theories of Motivation

Motivation and Achievement

Motivation and Money

Motivation and Employee Relations

4.3 Leadership

Leadership TheoriesLeadership Styles

4.4 Communication

Types of Communication

Importance of Organisational Communication

Methods to Improve Organisational Communication

4.5 Decision Making

Types of Decision Making

Models of Decision Making

4.6 Power and Authority

4.7 Summary4.8 Glossary

4.9 Terminal Questions

4.10 Answers

4.11 Case Study

4.1 Introduction

In the previous unit, you learnt about the organisational aspects of

Employee Relations Management (ERM). In this unit, you will learn about

aspects such as leadership, communication and decision-making

capabilities, which are prerequisites for effective employee relations. In thisunit, you will also learn about the behavioural aspects that affect employee

relations.

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Employee relations is closely linked to employee behaviour. Behavioural

aspect in employee relations management is concerned with thedevelopment and motivation of employees. The study of behavioural

aspects in employee relations management helps organisations to create a

work environment that stimulates and enables employees to perform to the

best of their abilities. Any organisation can be successful only if it

understands the people who work in the organisation, their wants and

needs, hopes, fears, desires and aspirations.

We will discuss the following behavioural aspects in this unit:

Motivation: This focuses on how employees can be motivated to

perform better and increase organisational productivity and profitability.

Leadership:This deals with the qualities and capabilities of an effective

leader and the roles and functions adopted by a leader in employee

relations.

Communication: This focuses on the principles of effective

communication, understanding the processes involved and the different

perceptions of people.

Decision-making: This deals with the processes by which effective

decisions are achieved, communication and promulgation of decisions,

and their acceptance by the people in the organisation.

Power and authority: This deals with the sources of power andauthority, and the use of power and authority in employee relations

situations.

Objectives:

After studying this unit, you will be able to:

define motivation and explain theories of motivation.

define the role of employee motivation in employee relations.

explain the necessary leadership qualities for effective employee

relations.

describe the need for effective communication in employee relations. analyse the effective use of power and authority in managing employee

relations.

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4.2 Motivation

You know that one of the aspects of employee behaviour that influencesemployee relation is motivation. Employee motivation describes the intensity

of vigour, commitment and resourcefulness with which employees do their

jobs. The employee relation strategies can be successfully implemented

only if there is a clear understanding of what motivates people at work. The

principles of motivation and the organisational factors that contribute to

individual and group motivation need to be considered. The ways in which

groups and individuals function at work, and their roles and priorities have to

be taken into account. An effective employment relation is based on the

following:

Understanding how human beings react in specific situations and howthey try to satisfy basic needs, drives, instincts and wants.

The effects of education, training, ethics, standards, expectations and

rewards on the individual.

The nature of work and the effect work has on the individual.

The expectations of relations at the workplace. Workplace relations

include inter-group relations and the relation between individuals and the

organisational culture.

There are many theories regarding motivation. Let us examine some

theories of motivation.

4.2.1 Theories of motivation

Rensis Likert System 4 Theory

Likerts system describes the relationship, involvement and roles of

managers, and subordinates in industrial settings. Likert examined highperforming managers and supervisors who achieved high levels of

production at low levels of cost by employee involvement and motivation.

Likert asserted that high levels of productivity and profitability can be

achieved by an organisation only if it makes optimum use of its workforce.

Workgroups are highly productive only if a supportive style of supervision is

present and if the individuals feel a sense of worth, importance and esteem

in belonging to that workgroup. Likert identified the following four styles of

management in his System 4 Model:

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System 1:This style is exploitative authoritative. Power radiates downwards

from the top. The workforce is not consulted or involved in any decisionmaking. The workforce complies with the top management due to fear.

There are low levels of confidence, trust and motivation in the workforce.

The output generated is only slightly above the expected minimum.

Teamwork is absent.

System 2: This style is benevolent authoritative. There is some consultation

and participation of the work force in some areas. Confidence, trust and

communication are at low levels.

System 3: This style is consultative. Aims and objectives are framed after

consultations with subordinates. Teamwork is encouraged. Communication

is two way. Rewards are used to motivate the employees. Productivity is

higher. There are low levels of absenteeism and turnover. Production quality

improves.

System 4: This style is participative. The supervisors have a very

supportive relationship with the workforce. Group decision making is

adopted. Very high performance and ambitious goals are set for the entire

organisation. According to Likert, this system is ideal for employee and

profit-oriented organisations.

Maslow's Hierarchy of Needs Theory

According to this theory, human motivations are classified into physiological,

safety, belongingness and love, esteem, and self-actualisation needs.

Maslow's theory suggests that the most basic level of needs must be met

before the individual will strongly desire (or focus motivation upon) the

secondary or higher level needs.

ERG Theory

To bring Maslows need hierarchy theory of motivation in synchronisation

with empirical research, Clayton Alderfer redefined it in his own terms. His

theory is called the ERG theory of motivation. He re-categorised Maslows

hierarchy of needs into three simpler and broader classes of needs: Existence needs:These include need for basic material necessities. In

short, it includes an individuals physiological and physical safety needs.

Relatedness needs:These include the aspirations individuals have for

maintaining significant interpersonal relationships (be it with family,

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peers or superiors), getting public fame and recognition. Maslows social

needs and external component of esteem needs fall under this class ofneed.

Growth needs:These include need for self-development and personal

growth and advancement. Maslows self-actualisation needs and

intrinsic component of esteem needs fall under this category of need.

Frederick HerzbergsHygiene Motivation (Two-factor) Theory1

According to this theory, the factors causing job satisfaction are different

from that causing job dissatisfaction. Herzberg called the factors causing

satisfaction as motivators and those causing dissatisfaction as hygiene

factors. Table 4.1 lists the factors affecting job attitude in their order of

importance.Table 4.1: Factors Affecting Job Attitude

Hygiene factors Motivators

Company policy Achievement

Supervision Recognition

Relation with the boss Nature of work

Work conditions Responsibility

Salary Advancement

Relation with peers Growth

According to Herzberg, the factors that determine job satisfaction or

dissatisfaction depend on the nature of the job. Incentives or threats can act

as motivators only in the short run. The management ensures that the

hygiene factors do not contribute to job dissatisfaction and that

factors are provided intrinsic to the work itself, which lead to job

satisfaction.

Herzberg believes that job enrichment is required to achieve job satisfaction.

The management ensures that the job is challenging enough and makes full

use of the employee capabilities. If an employee demonstrates increased

ability then more responsibilities may be given to the employee. Accordingto the Two-factor theory, job satisfaction may not cause motivation. The

theory contends that true motivation lies within the employee and not in

1www.netmba.com/mgmt/ob/motivation/herzberg

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external factors. Let us now examine how motivation influences employee

achievement.4.2.2 Motivation and achievement

We have discussed various theories on employee motivation. Let us now

see how motivation is linked to achievements. All employees, irrespective of

their levels, have a need to achieve. High achievers are those individuals

who regularly complete their work with high degrees of quality and

effectiveness. Employees need tasks and targets against which their

achievements can be measured and regular feedback on the work done.

To help employees attain higher levels of achievement, organisations

develop the following characteristics within their employees:

Activity

Autonomy

Long-term vision

Self-discipline

Self-motivation

Self-awareness.

Research conducted by Chris Argyris (1990) in USA has proved that

employees of organisations which encourage the opposite characteristics

(passivity, dependence, short-term vision and so on) become frustrated and

ineffective.

Employees who are achievement-oriented enjoy life and feel in control.

Their motivation to achieve targets keeps them dynamic and enhances their

self-respect. Achievement-motivated people are only concerned with their

personal achievement and not with rewards.

The three motivational factors that influence achievement are:

Attitude or belief about ones capability to achieve targets

Drive or desire to achieve targets

Strategy or techniques employed to attain targets.

Motivation is affected by many factors one of which is money. In the

following section we will see what effect money has on employee

motivation.

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Exhibit 4.1: Motivation at Microso ft

Microsoft, the most successful software company in the world, hascontinually succeeded in motivating its development teams to extreme

degrees. Microsoft has achieved such a high level of motivation that it is

often called the Velvet Sweat Shop. Its employees are routinely found to be

working for 10, 14 or 18 hours a day.

The motivation levels at Microsoft are legendary. While Microsoft was still

involved with OS/2, the OS/2 development group requested the company to

install a washer and dryer in their building so that they need not go home to

do their laundry. Although the group never got its washer and dryer, the

message was clear; this team wanted to work. There was no demand for

promotions, more money, bigger offices, or fancy carpet; the managementwas only asked to remove every conceivable roadblock so that the team

could concentrate on shipping a product.

How does Microsoft achieve this level of motivation?

Microsoft ensures that its employees spend very little time on

unproductive tasks, freeing up all their valuable time for productive

tasks.

Microsoft also makes extensive use of non-monetary rewards, like T-

shirts, team dinners, shirts, etc.

Microsoft shows flexibility in rules so that their employees can manage

both home and office work effectively.

Microsoft does not believe in motivational speeches; motivating yourself

and other employees is part of the Microsoft corporate culture.

Anything is okay as long as it keeps the morale high.

4.2.3 Motivation and money

According to Herzberg, money does not enhance the intrinsic nature of

work. If a person is doing voluntary work, money may not have any effect on

the motivation to do the work. But sometimes, money can make work life

bearable. Money acts as a motivating factor due to the following reasons:

High salary levels enhance self-image and self-esteem.

Wages earned form the basis of inter-occupational comparisons. An

individual who earns more tends to be more satisfied than a person

earning a lower amount.

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The salary paid reflects on the importance the organisation places on

the employee. It also indicates the value of the job that is carried out. Ahigh-sounding job title with a low salary does not increase job

satisfaction.

Research has proved the effect of financial incentives on job performance.

Studies have shown that profit-sharing and performance-linked pay rewards

enhance productivity and organisational performance.

But organisations have to be aware of the limitations of financial incentives.

Money alone cannot be used as a motivator. It should be used in

conjunction with other non-financial reinforcements to fulfill the

psychological needs of an employee. Money, along with the organisational

conditions, contributes to employee motivation.

Money can be a positive motivator when it addresses basic necessities or a

sense of achievement. Money can be a de-motivator when it is used to gain

superiority or power over others.

Now that we have covered how monetary gains affect employees, let us

now find out how motivation affects employee relations.

4.2.4 Motivation and employee relations

You must know that managers need to learn how to motivate employees

and the factors which affect motivation. They use this knowledge along with

their skills and the processes to enhance employee relations. In order to

motivate employees and improve employee relations, managers should

identify employee needs and frame appropriate strategies. Employee needs

as discussed by Maslows theory of motivation include the following:

Basic needs:These include needs like air, water, food and shelter. If

any of these needs are not met, the employee becomes frustrated.

Safety needs:Employee job security has to be ensured to increase job

satisfaction and help the employee perform better.

Social or interpersonal needs:Employees need to interact with their

colleagues. Managers should plan team outings and teamwork activities. Self-esteem needs: In order to have well motivated workers, their

performances need to be appreciated and rewarded. Praise from higher

authorities has to be conveyed to the concerned employee.

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Self-actualisation needs:Opportunities for growth have to be provided

in order to enhance motivation.The next section deals with the importance of motivating employees.

Managers give high priority to employee motivation due to the following

reasons:

Motivated employees are more productive and profitable.

Motivated employees provide better quality customer service.

Motivated employees are more likely to stay with the company.

The cost of recruiting and training new staff is reduced.

Managers can focus on core business issues without getting distracted

by employee problems.

Supporting employee decisions and trusting and encouraging employees

enhance employee motivation. Financial motivation can take the form of

overtime payment, loyalty bonus or cash incentives. Perks like transport

facilities, training and education, insurance, discounted products and so on

can also help motivate employees.

Employee motivation is an ongoing process. In order to enhance employee

motivation, managers need to eliminate context obstacles, which prevent

the employees from doing a good job. Motivated employees may not be

able to meet their goals if the following conditions prevail: Their targets are not well defined.

Their goals are not well communicated.

The work procedures interfere with their efforts.

Thus we can see that motivation plays an important role in employee

relations and that the two are closely linked. In the next section we will

discuss how leadership as a behavioural aspect affects employee relations.

Self Assessment Questions

1. _______________ is the intensity of vigour, commitment and

resourcefulness with which employees do their jobs.2. In ________ management style power radiates downwards from the

top and the workforce is not consulted or involved in any decision

making.

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3. Herzberg called the factors causing satisfaction as ___________ and

those causing dissatisfaction as __________ factors.

4.3 Leadership

Let us look at the different aspects within leadership in order to understand

about it as a behavioural aspect. Leadership is defined as the process of

social influence in which one person can enlist the aid and support of others

in the accomplishment of a common task.2Leadership is a very important

behavioural aspect that affects organisations and employee relations. The

nature and style of leadership plays an important role in employee relations,

motivation, conflict resolution, and creation of overall organisational vision

and direction.In formal organisations, advancements are based on merit and seniority.

The power held by an individual corresponds to the position the individual

occupies in the hierarchy. But in informal organisations, leaders emerge

from within the organisational structure. The leader is able to attract

followers due to a combination of circumstances and the qualities the leader

possesses.

Exhibit 4.2: Innov ation at P&G

Innovation requires a lot of time and practice. With consistency and

discipline, a degree of standardisation can emerge, creating a businessmodel for others to imitate. It is imperative to integrate innovation into

mainstream decision making for complete effectiveness. It was A. G. Lafley,

CEO of P&G, who decided to use The 5-Building-Block framework that

allows units to work parallel, rather than vertical. The flow of ideas states

that ideas come from both internal and external sources, and there should

be an entity within the organisation capable of receiving this information,

passing it on to others.

Flow of Ideas Selection of Ideas Nurturing Go to Market

Killing Ideas Innovation

Selection and green-lighting ideas help simplify which ideas should move onto the next level. There should be balance between disruptive and

incremental selections. Once an idea is green lighted, the nurturing phase

2Meta-cognitive, social, and emotional intelligence of transformational leadership: Efficacy and

Effectiveness. Chemers, M. M. (2002).

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begins. This requires someone to be accountable for the innovation, making

crucial decisions such as financing and the decision to abort if necessary.The market phase overlaps nurturing because crucial manufacturing and

advertising issues arise, determining if the product truly has the green light.

If deemed appropriate, an innovation can be killed in a timely manner to

help save time and money. It is important for leaders to be objective, rather

than entrenched in a particular idea. Innovation reviews allow for leaders to

take an honest and helpful approach to assess different projects.

Let us now examine some theories of leadership.

4.3.1 Leadership theories

The Trait Theory: This theory uses traits (characteristics) to distinguish

between leaders and non-leaders. The traits associated with leadershipaccording to this theory are shown in Fig 4.1. The traits that indicate strong

leadership are as follows:

Intelligence:This refers to the mental ability of a person and is only a

moderate predictor of leadership. The Intelligence Quotient (IQ) of a

person can be used as a qualifier for high management jobs, but once

the high position is attained, an effective leader also displays good

levels of Emotional Intelligence (EI). EI helps a leader to empathise with

the emotions of others. Many people feel that Carly Fiorina, the ousted

leader of Hewlett-Packard, had a high IQ, but a low empathy for the

people around her and ignored the human aspects of her decisions.

Extraversion: Extraverts have higher social and interpersonal skills.

They are more energetic, assertive and self-confident. As extraverts are

more dominant, they emerge as natural leaders. For example, Steve

Ballmer, the CEO of Microsoft, is an extraverted leader.

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Figure 4.1 depicts traits associated with leadership.

Figure 4.1: Traits Associated with Leadership

Conscientiousness:Conscientious people are organised, dependable,

systematic, punctual and achievement oriented. They take initiative and

are persistent in all they do.

Openness: People who are open to new ideas and try new things

become effective leaders. Self-esteem: People with good self-esteem assess their worth and

capabilities in a more positive manner. Leaders with high self-esteem

are more supportive to their subordinates. People with higher self-

esteem are more confident and have greater charisma.

Integrity:Effective leaders display honesty and integrity. Such leaders

are more trustworthy.

Behavioural Theory:Behavioural theory of leadership does not deal with

the traits or capabilities of a leader. They focus more on what the leaders

actually do. According to this theory, leadership capabilities are not inherentand can be learned. It correlates the successes of leaders with their actions.

Managerial Grid Model:This is a behavioural leadership model proposed

by Robert Blake and Jane Mouton (1964). This model identifies the different

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leadership styles based on the concern for people and the concern for

production.Figure 4.2 shows the graphical representation of the managerial grid model.

Figure 4.2: Graphical Representation of the Managerial Grid Model3

In this model, the concern for production is represented on the X-axis andthe concern for people on the Y-axis. Each axis is marked from 1 (low) to

9 (high). The different leadership styles that are identified are as follows:

The Indifferent or Impoverished Style (1, 1):Managers adopting this

style have low concerns for both people and production. Managers are

more concerned about preserving their jobs and avoiding getting into

trouble. The managers do not want to be held responsible for any

mistakes and are, therefore, less innovative.

The Accommodating or Country Club Style (1, 9): Managers using

this style are more concerned about the people than the production.

Managers try to ensure security and comfort of the employees hoping

that it will enhance performance. The workplace atmosphere is pleasant,

but not necessarily productive.

3Illustration Source: www.en.wikipedia.org/wiki/File:Management_Grid.PNG#filelinks

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The Dictatorial Style (9, 1): Managers using this style are more

concerned about production than the people. Managers do not considerthe needs of their subordinates. Managers pressurise their employees to

achieve company goals by imposing rules and threatening them with

punishment.

The Status Quo or Middle of the Road Style (5, 5): Managers

adopting this style try to balance employee needs and company goals.

But in trying to compromise the managers do not meet the needs of the

company or that of the employee.

The Sound or Team Style (9, 9): Managers using this style are

concerned about the people and the production. Managers encourage

teamwork and employee commitment. Managers make employees feelthat they are contributing constructively to the company.

The Opportunistic Style: Managers using this style exploit and

manipulate their subordinates. This style does not have a fixed location

on the grid. Managers adopt the behaviour which offers them the

greatest personal benefit.

The Paternalistic Style:Managers using this style praise and support

their subordinates but discourage their being innovative. This style

alternates between the (1, 9) and (9, 1) locations on the grid.

Now that we are familiar with various theories on leadership, let usunderstand the different leadership styles present in organisations. The

following section discusses the same.

4.3.2 Leadership styles

Leadership style refers to the manner in which the leader functions and is a

result of the philosophy, personality and experience of the leader. The

different leadership styles are as follows:

Autocratic:In this style of leadership, the leader always makes the final

decisions. Employees are closely supervised. Employee interest has to

give way to organisational interest. Questioning is discouraged.

Autocratic style can be benevolent or tyrannical.

Participative or democratic: In this style, group decision making is

favoured. The leaders win the co-operation of the group and motivate

them effectively.

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Laissez faire: In this style of leadership, the leader gives maximum

freedom to subordinates. The leader tries to maintain a congenialatmosphere and avoids taking decisions. The employees decide their

own policies and methods.

Inspirational: In this form of leadership, the leader tries to motivate

people from within.

Intellectual: In this style of leadership, the leader stimulates the

employees with novel theories and opportunities.

Individualised: In this form of leadership, the leader takes into

consideration the individual needs, talents and desires, and works

toward fitting the individual into an appropriate position rather than

forcing the person to fit into the position.

Now, you must be familiar with the various aspects of leadership. Next we

will discuss the part communication plays in employee relations.


4. _______________ is defined as the process of social influence in

which one person can enlist the aid and support of others in the

accomplishment of a common task.

5. Managers using the _____________ style of leadership exploit and

manipulate their subordinates.

6. In ______________ style of leadership, the leader gives maximum

freedom to his subordinates.

Activity 1:

Think of a leader you admire. The leader can be a statesman or a CEO

of a company. Note down the traits of the leader you think are worth

emulating? Identify the leadership style adopted by the leader? Do you

think that this style can be taught to others?

4.4 Communication

Let us discuss what communication is and about its different types.Communication is a process of exchange of information between people.

Organisational communication includes the symbols, messages,

interactions, discourses and campaigns within an organisation.

Organisational communication can also include public relations,

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advertisements, investor relations and other external communications.

Effective communication is essential for an organisation to succeed. Let usnow consider the different forms of communication in an organisation.

4.4.1 Types of communication

Communication in an organisation can be formal or informal. Formal

communications follow certain rules and guidelines. Informal

communications are unofficial communications and are influenced by the

culture of the organisation. Effective communication has both transmission

and feedback phase. The feedback phase helps in clear understanding of

the communication. The different forms of communication in an organisation

are as follows:

Passive communication:This is an ineffective form of communication.

People using this form of communication avoid confrontation. They do

not communicate their wishes or desires. This style of communication

can cause alienation, anger, frustration and depression.

One-way communication: This communication travels only in one

predetermined direction. This is common in formal organisations and in

military structures. In this form of communication, messages are issued

by organisations and their managers without any regard for whom the

messages are addressed to. The subordinates are not given an

opportunity to communicate their opinions to their superiors. Examples

of one-way communication are edicts, rules and procedures. One-way

communication enhances feelings of alienation.

Two-way communication: This form of communication encourages

dialogue between the employees and their superiors. Consistent

communication between employees and their managers helps in

building trust and loyalty. Employees are given an opportunity to clarify

their doubts, seek support and express their opinions.

Active communication: In this form of communication, messages

which everyone can understand and respond to are issued. The

employees raise issues and respond to any problem without any fear.Misunderstandings are clarified easily.

Non-verbal communication: In this form of communication, people

communicate their attitudes without using words. G.W. Porter classifies

non-verbal communication as follows:

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Physical: This includes facial expressions, gestures, tone of voice,

body motions, touch and so on. Aesthetic: This includes creative expressions like playing

instrumental music, dancing, painting and sculpturing.

Symbolic: This makes use of religious and organisational symbols.

Props and settings: These are used to put others at ease or to put

someone in a position of disadvantage. Not providing a seat to a

person can make a person uncomfortable and feel annoyed.

Signs: This is a mechanical means of communication and includes

signaling flags, gun salutes, horns and sirens.

In the next section we will see the importance of communication in

organisations.

4.4.2 Importance of organisational communication

Communication is essential in an organisation for better co-ordination and

for maintaining good inter-personal relations. Organisations establish good

communication channels for the following reasons:

Good working relations: Effective communication is essential in an

organisation to establish good working relations with peers,

subordinates and superiors. Good working relations ensure a friendly

and conflict-free environment.

Problem solving: Good communication skills help employees conveytheir problems and issues in an effective way. This helps in preventing

problems from escalating. Problems can be resolved quickly.

Enhance production: Effective communication is necessary to keep

employees informed about the rules, policies and procedures. This helps

employees understand their duties better and perform their work in a

better way. This increases the productivity and accuracy of the work

done.

Engaging employees:Effective communication makes employees feel

that their opinions and suggestions are being considered. This increases

employee involvement and commitment. Loyalty for the organisationincreases and this enhances employee engagement.

4.4.3 Methods to improve organisational communication

Now that you know why communication is important, let us discuss how to

make communication effective. Certain etiquettes and rules are followed

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while communicating in the organisation. These help to improve the quality

of communication and ensure effective communication. The followingguidelines ensure better communication:

Be clear and transparent: Communication has to be unambiguous,

clear and transparent. All rules, policies and procedures need to be

communicated clearly so that the employees have a clear understanding

of them.

Be comprehensive: Ensure that the communication includes all the

points to be communicated. Check if additional changes are made to the

matter to be communicated. Ensure that the communication is accurate.

Be precise and concise:Communication needs to be concise and not

elaborate. Simple words are used in order to avoid misunderstandings.

Use short sentences.

Be generic: Ensure that discussions are generic. Successes and

failures need to be discussed in a generic manner. This helps in

avoiding conflicts. Use we more than you in discussions.

Be assertive:Communication needs to be assertive and positive. This

helps in making decisions and arriving at conclusions.

Be attentive:Develop listening skills. Verbal communications can only

be clearly understood if the parties involved are attentive.

Encourage two-way communication: Two-way communication helps

improve employee relations as this considers the opinions and views of

both parties involved.

In this section you learned how effective communication can influence

employee relations. In the next section we will see how decision making is

an important aspect of behaviour with respect to employee relations.


7. _____________ communications follow certain rules and guidelines.

8. In _____________ form of communication the subordinates are not

given an opportunity to communicate their opinions to their superiors.

9. In ___________ form of communication, people communicate their

attitudes without using words.

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4.5 Decision Making

Let us first understand what decision making is. Decision making is a mentalprocess which results in the selection of an option from many alternatives.

Decision making is both a logical and emotional process. We will now

examine the different types of decision-making tactics employed by

managers and supervisors.

4.5.1 Types of Decision Making

Different kinds of decisions are made by organisational leaders at different

times according to the prevailing situation. The decisions made have to

ensure that the organisation is moving in the right direction. The decisions

taken are broadly classified as follows:

Authoritative: In this form of decision making, the manager makes all

the decisions and the subordinates follow them. The manager faces the

consequences of all the decisions made.

Facilitative: In this form of decision making, the manager and the

subordinates together make the decisions after discussing the options.

The subordinates need to have the expertise to make decisions. Easy

access to information is enabled. Such decisions are taken in situations

of low-risk. These forms of decisions involve the employees in the

business operations.

Consultative: In this form of decision making, the managers consult

their subordinates, but make decisions by themselves. Good leaders

consult their subordinates, if they believe that the subordinates have the

right expertise.

Delegative: In this kind of decision making the managers pass on the

responsibility of making decisions to their subordinates. The managers

trust their subordinates to make the correct decisions.

4.5.2 Models of decision making

There are different kinds of decision-making models. A model that guides

the decision-making process is normative as it suggests a set of rules to be

followed. A model which describes the decision-making process isdescriptive. Let us now examine the popular models of decision making.

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Rational Model

This is a normative decision-making model. This model is used for complexdecisions. It provides a structured approach to decision making. It finds an

optimal solution to problems. It assumes that all the components of the

problem and the various alternatives are known. It also assumes that the

decision makers have all the expertise and unlimited time to make the

decision. It outlines a sequence of steps to rationally find a solution. Figure

4.3 outlines the rational decision-making model. The steps involved in

making a rational decision are as follows:

1. Identify the problem or opportunity:First, identify and understand the

problem. Then examine the useful opportunities.

2. Gather information: Gather information which is relevant to the

problem and which helps in making the right decision.

Figure 4.3: Rational Decision-Making Model

3. Analyse the situation: Analyse the alternative courses of action thatare available. Find out the ways in which the data can be interpreted.

4. Develop options:Generate all possible options and try to be creative

and positive.

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5. Evaluate options: Choose criteria and evaluate the options for

feasibility, acceptability and desirability. Try to determine which optionhelps in achieving the objectives.

6. Select an alternative: Determine the possible consequences of the

preferred option and evaluate the risks involved. Make a decision based

on this observation.

7. Act on the decision: Formulate a plan to implement the decision.

Determine the resources needed. Find if the people involved accept and

support the decision.

The main advantage of this model is it imparts a structure and logic to the

process of decision making. The disadvantages are it does not consult all

stakeholders and uses a lot of time.

Carnegie Model

This model was formulated by Richard Cyert, James March and Herbert

Simon. This is a model of decision satisficing and adopts a bounded

rational approach. Decision satisficing is selecting the first alternative that

meets a given need or selecting the alternative that addresses most needs.

Satisficing is chosen for consensual decisions when the group finds a

solution everyone can agree on even if it is not the best solution. This model

of decision making is less costly and less time consuming.

The CEO of General Electric (GE), Jack Welch, had to make a decision onwhether the company should invest in its washing machine division or

outsource it. The mangers used the bounded rational approach of the

Carnegie decision model and decided to invest $70 million in the washing

machine division.

Incremental Model

This model was developed by Henry Mintzberg. Here, decision makers

choose actions that are related to their past actions as this reduces risk.

Decision makers move forward in a series of incremental steps. Decision

makers identify familiar solutions and choose alternatives that only slightly

differ from the status quo. The three phases in this form of decision makingare identification, development and selection.

Typical decisions made using this model are deciding which aircraft is to be

bought for an airline, identifying a new market for a perfume, introducing a

new form of treatment in a hospital. The Gillette Company uses incremental

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decision making to improve the design of its razors like Mach3 Turbo or the

fusion shaving system.Garbage Can Model

This model was developed by Michael D Cohen, James G March and Johan

Olsen. This model considers organisations to be uncertain about the

problems and solutions. According to this model, the process of decision

making begins with solutions. Organisations generally produce solutions

which are not appropriate for the problem and hence get discarded. But

these discarded solutions can be used to solve other problems. The

Garbage Can Model disconnects problems, solutions and decision makers

from each other.

When Netscape was introduced in 1994, Bill Gates the founder of Microsoft

had to quickly harness his resources and develop an alternate web browserfor the market. Bill Gates used the Garbage Can Model to make the

decision to develop Internet Explorer working back from the identified

solution of developing a new browser.

Figure 4.4 depicts the Garbage Can Model of making decisions.

Figure 4.4: Garbage Can Model

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The streams of events identified by this model are as follows:

Problems:These arise from within the organisation and due to externalfactors.

Solutions:These are considered to be distinct from problems. Important

solutions may be prepared without knowledge of the problem.

Choice opportunities: These are conditions in which organisations

make decisions.

Participants:They are people who are involved in the problem or in the

solutions. Participants store knowledge of different problems and

solutions. This can be made use of to arrive at decisions.

Decision Matrix ModelThis model was invented by Stuart Pugh. It is a quantitative technique and

ranks the different options of the option set based on certain criteria. It is

used to make design decisions in engineering. This model can also be used

to rank investment options, product options and vendor options. Table 4.2

shows a sample decision matrix.

Table 4.2: Sample Decision Matrix

Safety

Risk

Inflation

Risk

Rate of

Return

Compatibility

with Current

Business

Total

Real Estate 9 7 5 9 81

Web

Designing

7 5 5 6 64

Retail

Convenience

Store

4 4 3 9 46

Travels 6 7 7 9 75

Weight 4 3 3 1

The steps to construct a decision matrix are as follows:

1. Make a list of the options.

2. Identify the evaluation criteria and select the criteria that are most

important.

3. Give a relative weight to each criterion based on its significance.

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4. Draw an L shaped matrix with the criteria and the weights as rows and

the options as columns or vice-versa depending on which is lesser innumber.

5. Evaluate each option against each criterion and assign a score or a

rank.

6. Multiply the score of each option by the weight of the criterion. Add the

points for each option and find the option which has the highest score.

We have discussed the different models of decision making and the different

styles of decision making. We will next discuss how employees with power

and authority impact employee relations in an organisation.


10. _______________ is a mental process which results in the selection of

an option from many alternatives.

11. In _____________ kind of decision making the managers pass on the

responsibility of making decisions to their subordinates.

12. ____________ model of decision making is a quantitative technique

which ranks different options based on certain criteria.

Activity 2:

You are the manager of a fast food restaurant and have to make

decisions such as the food items to be included in the menu, the chefsto be hired, the groceries to be ordered and so on. Identify the kind of

decision-making model you will use. Justify your choice.

4.6 Power and Authority

To understand how power influences employee relations, let us first

understand what power is. Different theorists define power differently. Max

Weber defines power as the probability that one actor within a social

relationship will be in a position to carry out his own will despite resistance.4

According to this definition, power is the potential or capacity to do

something. All employees in an organisation have some form of power. Thepower an employee has is directly proportional to the skill and expertise of

the employee.

4plato.stanford.edu/entries/feminist-power/

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According to Robert Dahl, A has power over B to the extent that he can get

B to do something that B would not otherwise do. According to Dahl, poweris the control a person has over another person. Power is relational in

nature. We always talk in terms of a person being more powerful or less

powerful than another person. Managers have power in an organisation as

they control decisions of awarding bonus, promotion and task allocation of

their subordinates. Power is generally used when conflicts of goals occur.

Now that we know how power affects employees, let us see what authority

is. Authorityis a special form of power and the legal right bestowed upon a

person to make decisions and to direct others. For example, a manager has

the authority to give approval for new projects.

Weber classified authority in the following way:

Traditional: This form of authority is given to someone by virtue of

tradition or custom. For example, a son or a daughter succeeds a parent

in a dynastic organisation.

Charismatic: This form of authority arises due to the personality and

inherent qualities of an individual. These qualities generate strong

feelings of loyalty and commitment in the followers of that individual.

Many union leaders, managers and department heads are able to carry

out their duties due to their charisma.

Rational or legal: Weber associates this form of authority withbureaucratic organisations. The person has authority due to the position

the person occupies. Rules and norms justified by law and customs

enable the selection. Legitimacy of the authority arises from the manner

in which the person is selected for the position. For example, the

legitimacy of an official arises from the belief that fair methods and

criteria were the basis for the appointment of that official. The authority

of the official would be undermined if fair processes were not adopted

for the selection.

When a person has authority, then the orders of that person are carried out

without any implicit bargaining. But there are limitations to authority. When a

person makes unreasonable demands, the authority of the person gets

undermined.

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Exhibit 4.3: Steve Jobs - a char ismatic leader or a narcissist ic leader?

Steve Jobs, the charismatic leader of Apple Inc., is an iconic figure. Thethree characteristics of Steve Jobsleadership qualities that are undoubtedly

his trademark are his vision for emerging technologies, his ability to

collaborate with other great leaders and his insatiable appetite for

excellence. Apples corporate coffers, once emptied by mismanagement,

were full to the brim thanks to his vision. Apples iconic product, iMac along

with an equally iconic ad campaign like "Think Different" were all products of

his vision and were so successful that Apples stock remained rising for

seven consecutive quarters and Apples consumer market share nearly

quadrupled to about 12%.

On the other side of the same coin, there are many stories about thenarcissistic leadership qualities of Steve Jobs. At Apple, he was seen as a

leader whose brilliance and idealistic vision of providing computers as a tool

to change the world drew other talented people to him. Yet, Steve Jobs was

said to have the habit of publicly humiliating subordinates. His management

style tended towards throwing tantrums and to berating and humiliating

employees who disagreed with his ideas. Also, his habit of making decisions

and then suddenly changing his mind has been given as part of the reason

he is difficult to work with.


13. According to Dahl, ___________ is the control a person has over

another person.

14. _____________ is a special form of power and the legal right bestowed

to a person to make decisions and to direct others.

15. In ____________form of authority, the authority arises due to the

personality and inherent qualities of an individual.

4.7 Summary

The behavioural aspects to be considered in employee relations

management are motivation, leadership, communication, decision making,

power and authority.

Employee motivation is the intensity of vigour, commitment and

resourcefulness with which employees do their jobs. The different theories

of employee motivation include Likerts System 4 Theory and Herzbergs

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Hygiene Motivation (Two-factor) Theory. Motivation affects employee

achievement and employee relations. Money in the form of wages paid,bonuses and performance incentives can affect motivation.

Leadership is the process of influencing people in the organisation. The

nature and style of leadership plays an important role in employee relations,

motivation, conflict resolution and creation of overall organisational vision

and direction. The different theories of leadership include the Trait theory

and the behavioural theory. Trait theory of leadership deals with the

character or capabilities of a leader while behavioural theory focuses more

on what leaders actually do.

Effective communication is essential for an organisation to succeed. The

different kinds of communication that exist within an organisation are

passive, active, one-way, two-way, verbal and non-verbal communication.

Decision making is a mental process, which results in the selection of an

option from many alternatives. The different models of decision making

include: Rational Model, Carnegie Model, Incremental Model, Garbage Can

Model and Decision Matrix Model.

Power is the potential or capacity to do something or the ability to control

others. Authority is a special form of power and it is the legal right bestowed

on a person to make decisions and to direct others.

4.8 Glossary

Term Description

Aesthetic Concerning or characterised by an appreciation of beauty orgood taste

Alienation Becoming unfriendly or hostile; becoming withdrawn orunresponsive; isolation or emotional dissociation

Autonomy The condition or quality of being independent

Congenial Of a pleasant disposition; friendly and sociable; suited to one'sneeds or nature; agreeable

Laissez faire Non-interference in the affairs of others

Profit-sharing A system in which employees of an organisation receive ashare of the net profits of the business

Predictor A variable that estimates the value of another variable

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Satisficing Examining alternatives until a most attainable or reasonablesolution with adequate level of acceptability is found; Aimingto achieve only satisfactory results; sufficing satisfaction

Self-actualisation A driving life force that ultimately leads to maximising one'sabilities and determining the path of one's life; the desire forself-fulfillment

Status quo The existing state of affairs at a particular time; the situationas it currently exists

4.9 Terminal Questions

1. Explain Likerts System 4 theory ofleadership.

2. Explain the role of motivation in employee relations.

3. Explain the different traits which help in identifying a leader.

4. Explain the different styles of leadership according to the Managerial

Grid Model.

5. What are the different types of organisational communication?

6. Explain the rational model of decision making. Contrast it with the

incremental model.

7. Differentiate power and authority.

4.10 Answers

Answers to Self Assessment Questions

1. Employee motivation2. Exploitative authoritative

3. Motivators, hygiene

4. Leadership

5. Opportunistic

6. Laissez faire

7. Formal

8. One-way

9. Non-verbal

10. Decision making

11. Delegative12. Decision Matrix

13. Power

14. Authority

15. Charismatic

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Answers to Terminal Questions

1. Refer section 4.2.12. Refer section 4.2.3

3. Refer section 4.3.1




7. Refer section 4.6

4.11 Case Study

An oil and gas company in the U.K. encourages its managers to show

leadership at every level. Every manager has a set of objectives and all

managers are responsible for the successes and failures in their area of

work. Employees are hired to perform varying functions like drilling for oil

in the North Sea, developing legal agreements and so on. The skills and

expertise of the employees vary widely. Managers have to manage their

employees effectively and organise resources in order to achieve their

objectives. Different managers display different styles of leadership

depending on their area of operation.

Autocratic style: Managers who work offshore have to oversee crucial or

dangerous maintenance work. Managers have to adhere to the MinimumIndustry Safety Standard. Hence such managers adopt an autocratic

style and just instruct workers on what to do. For example, the Offshore

Installation Manager (OIM) is responsible for the safety of all employees

on the installation. Hence, the OIM uses an autocratic style to ensure that

all employees have undergone safety training and follow the established

rules and procedures strictly.

Democratic style: In some matters, managers consult employees before

making a decision. For example, shutting down a piece of equipment that

affects other production systems. In such cases, the operations manager

consults the engineers and then arrives at a decision.Paternalistic style: Sometimes, managers make decisions for the benefit

of the employees without consulting them. At times, managers adopt a

paternalistic style and arrange for training of the employees and thus

responding to the developmental needs of the employees.

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The oil and gas industry motivates its employees in different ways.

Managers ensure a safe, rewarding and challenging work environment tomotivate the employees. Employees are encouraged to undergo many

training programmes, which contribute to their career development.

Employees are enabled to choose their career paths. Employees are

given more responsibilities and encouraged to solve problems. This

shows the trust the management has in the employees. Management

also encourages commitment by providing various benefits and rewards.

1. What are the different styles of leadership adopted by the U.K. oil

and gas company?

2. How does the company motivate its employees?

References:

Chemers, M. M. (2002). Meta-cognitive, Social, and Emotional

Intelligence of Transformational Leadership: Efficacy and Effectiveness.

Cohen, M. D., March, J. G. & Olsen, J. P. (1972). A Garbage Can Model

of Organizational Choice Administrative Science Quarterly, Vol. 17.

Gamage, D. T. (2006). Professional Development for Leaders and

Managers of Self-governing Schools.

Daft, R. L. (2007). Organisation Theory and Design.

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