Employee Relations Management

Unit 4

Unit 4

Behavioural Aspects in Employee Relations Management

Structure: 4.1 Introduction Objectives 4.2 Motivation Theories of Motivation Motivation and Achievement Motivation and Money Motivation and Employee Relations 4.3 Leadership Leadership Theories Leadership 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 Summary 4.8 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 this unit, 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 the development 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 and authority, 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 influences employee 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 how they 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 high performing 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 decision making. 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 of need. 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 Herzbergs Hygiene 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 Company policy Supervision Relation with the boss Work conditions Salary Relation with peers Motivators Achievement Recognition Nature of work Responsibility Advancement 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. According to the Two-factor theory, job satisfaction may not cause motivation. The theory contends that true motivation lies within the employee and not in
1

www.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 Microsoft Microsoft, the most successful software company in the world, has continually 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 management was 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 Tshirts, 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. A high-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.2 Leadership 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: Innovation at P&G Innovation requires a lot of time and practice. With consistency and discipline, a degree of standardisation can emerge, creating a business model 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 on to the next level. There should be balance between disruptive and incremental selections. Once an idea is green lighted, the nurturing phase
2

Meta-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 leadership according 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 selfesteem 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 inherent and 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 Model

In this model, the concern for production is represented on the X-axis and the 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.

Illustration 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 consider the 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 feel that 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 us understand 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 congenial atmosphere 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. Self Assessment Questions 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 us now 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 instrumental music, dancing, painting and sculpturing. playing

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 convey their 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 organisation increases 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 following guidelines 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. Self Assessment Questions 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 mental process 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 is descriptive. 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 complex decisions. 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 that are 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 option helps 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 on whether 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 making are 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 browser for 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.

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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 external factors. 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 Model This 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 Real Estate Web Designing Retail Convenience Store Travels Weight 9 7 4 Inflation Risk 7 5 4 Rate of Return 5 5 3 Compatibility with Current Business 9 6 9 Total

81 64 46

6 4

7 3

7 3

9 1

75

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 in number. 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. Self Assessment Questions 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 chefs to 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. The power an employee has is directly proportional to the skill and expertise of the employee.
4

plato.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, power is 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. Authority is 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 with bureaucratic 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 charismatic leader or a narcissistic leader? Steve Jobs, the charismatic leader of Apple Inc., is an iconic figure. The three characteristics of Steve Jobs leadership 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 the narcissistic 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. Self Assessment Questions 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 Aesthetic Alienation Autonomy Congenial Laissez faire Profit-sharing Predictor Description Concerning or characterised by an appreciation of beauty or good taste Becoming unfriendly or hostile; becoming withdrawn or unresponsive; isolation or emotional dissociation The condition or quality of being independent Of a pleasant disposition; friendly and sociable; suited to one's needs or nature; agreeable Non-interference in the affairs of others A system in which employees of an organisation receive a share of the net profits of the business A variable that estimates the value of another variable Page No.: 102

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Satisficing

Examining alternatives until a most attainable or reasonable solution with adequate level of acceptability is found; Aiming to achieve only satisfactory results; sufficing satisfaction A driving life force that ultimately leads to maximising one's abilities and determining the path of one's life; the desire for self-fulfillment The existing state of affairs at a particular time; the situation as it currently exists

Self-actualisation

Status quo

4.9 Terminal Questions

Explain Likerts System 4 theory of leadership. Explain the role of motivation in employee relations. Explain the different traits which help in identifying a leader. 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. 1. 2. 3. 4.

4.10 Answers
Answers to Self Assessment Questions 1. Employee motivation 2. Exploitative authoritative 3. Motivators, hygiene 4. Leadership 5. Opportunistic 6. Laissez faire 7. Formal 8. One-way 9. Non-verbal 10. Decision making 11. Delegative 12. Decision Matrix 13. Power 14. Authority 15. Charismatic
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Answers to Terminal Questions 1. Refer section 4.2.1 2. Refer section 4.2.3 3. Refer section 4.3.1 4. Refer section 4.3.2 5. Refer section 4.4.1 6. Refer section 4.5.2 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 Minimum Industry 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 to motivate 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. 2. What are the different styles of leadership adopted by the U.K. oil and gas company? 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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