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Chapter 5 Basic Element of Organizing

5.1 Organizing

Imagine asking a child to build a castle with a set of building blocks. She selects a few small blocks and other larger ones. She uses some square ones, some round ones, and some triangular ones. The children’s activities—choosing certain combinations of blocks and then putting them together in unique ways—are in many ways analogous to the manager’s job of organizing.

Organizing is deciding how best to group organizational elements.

Just as children select different kinds of building blocks, managers can choose a variety of structural possibilities.

And just as the children can assemble the blocks in any number of ways, so, too, can managers put the organization together in many different ways.

5.2 Six basic building blocks of organizing

There are six basic building blocks that managers can use in constructing an organization: ➢ designing jobs,

➢ grouping jobs,

➢ establishing reporting relationships between jobs,

➢ distributing authority among jobs,

➢ coordinating activities among jobs, and

➢ differentiating among positions

5.3 Designing Jobs

Job design involves conscious efforts to organize tasks, duties and responsibilities into a unit of work to achieve certain objectives.

According to Ricky W. Griffin, “Job design is the determination of an individual’s workrelated responsibilities.”

For Example, for a machinist at Caterpillar, job design might specify

❖ what machines are to be operated,

❖ how they are to be operated, and ❖ what performance standards are expected.

a. Job Specialization

Job specialization is the degree to which the overall task of the organization is broken down and divided into smaller component parts. Job specialization evolved from the concept of division of labor.

Adam Smith, an eighteenth-century economist, first discussed division of labor in his case study about how a pin factory used it to improve productivity. He described how one man pulled the wire from a spool, another straightened it, a third cut it, a fourth ground the point, and so on.

Smith claimed that ten men working in this fashion were able to produce 48,000 pins in a day, whereas each man working alone could produce only 20 pins per day. So total 20*10=200 maximum. (Working alone)

Benefits of Job Specialization

➢ First, workers performing small, simple tasks will become very proficient at each task.

➢ Second, transfer time between tasks decreases. If employees perform several different tasks, sometime is lost as they stop doing the first task and start doing the next.

➢ Third, the more narrowly defined a job is, the easier it is to develop specialized equipment to assist with that job.

➢ Fourth, when an employee who performs a highly specialized job is absent or resigns, the manager is able to train someone new at relatively low cost.

Limitations of Job Specialization

On the other hand, job specialization can have negative consequences.

➢ The foremost criticism is that workers who perform highly specialized jobs may become bored and dissatisfied.

➢ The job may be so specialized that it offers no challenge or stimulation.

➢ Boredom and monotony set in, absenteeism rises, and the quality of the work may suffer.

b. Job Rotation

Job rotation involves systematically moving employees from one job to another.

❖ It reduces the boredom of doing the same work again and again.

❖ Job rotation is also being used more to increase flexibility and lower costs.

c. Job Enlargement

Job Enlargement was developed to increase the total number of tasks workers perform. As a result, all workers perform a wide variety of tasks, which presumably reduces the level of job dissatisfaction.

For example, an employee performed 6 jobs before, now he is performing 8 jobs.

d. Job Enrichment

Job enrichment attempts to increase both the number of tasks a worker does and the control the worker has over the job. To implement job enrichment, managers remove some controls from the job, delegate more authority to employees, and structure the work in complete, natural units. These changes increase subordinates’ sense of responsibility. Another part of job enrichment is to continually assign new and challenging tasks, thereby increasing employees’ opportunity for growth and advancement.

Job Enlargement vs. Job Enrichment

1) A job design strategy in which the number of tasks performed by a single job is increased is known as Job Enlargement. Job Enrichment is defined as a motivational tool, used by the management in which the range of activities performed by a single job is increased to make it better than before.

2) Job Enlargement involves quantitatively extending the scope of activities carried out by the job whereas in Job Enrichment improvements are made in the existing job to increase its quality.

3) Job Enlargement reduces boredom and monotony while performing a single task, on and on. Conversely, Job Enrichment makes the job more challenging, exciting as well as creative.

4) Job Enlargement does not require additional skills but job enrichment does.

5) The consequence of introducing job enlargement is not always positive, but job enrichment will produce positive outcomes.

6) Job Enlargement makes employees feel more responsible and valuable, while Job Enrichment brings satisfaction and efficiency in employees.

e. Job Characteristics Approach

The job characteristics approach suggests that jobs should be diagnosed and improved along five core dimensions:

1. Skill variety, the number of things a person does in a job.

2. Task identity, the extent to which the worker does a complete or identifiable portion of the total job.

3. Task significance, the perceived importance of the task.

4. Autonomy, the degree of control the worker has over how the work is performed.

5. Feedback, the extent to which the worker knows how well the job is being performed.

f. Work Teams

Under this arrangement, a group is given responsibility for designing the work system to be used in performing an interrelated set of tasks. In the typical assembly-line system, the work flows from one worker to the next, and each worker has a specified job to perform. In a work team, however, the group itself decides how jobs will be allocated.

5.4 Departmentalization

Departmentalization refers to the process of grouping jobs according to some logical arrangement. When organizations are small, the owner–manager can personally oversee everyone who works there.

As an organization grows, however, personally supervising all the employees becomes more and more difficult for the owner–manager.

Jobs are grouped according to some plan. The logic embodied in such a plan is the basis for all departmentalization.

5.5 Common Bases for Departmentalization

1. Functional Departmentalization: The most common base for departmentalization, especially among smaller organizations, is by function. Functional departmentalization groups together those jobs involving the same or similar activities.

The computer department at Apex has manufacturing, finance, and marketing departments.

2. Product Departmentalization: Product departmentalization, a second common approach, involves grouping and arranging activities around products or product groups.

Apex Computers has three product-based departments at the highest level of the firm.

❖ personal computer business,

❖ laptop and

❖ the software business.

3. Customer Departmentalization: Customer departmentalization means grouping activities to respond to and interact with specific customers or customer groups.

Apex’s computer business has two distinct departments— ❖ industrial sales and ❖ consumer sales.

The industrial sales department handles marketing activities aimed at business customers, whereas the consumer sales department is responsible for wholesaling computers to retail stores catering to individual purchasers.

4. Location Departmentalization: Location departmentalization means grouping jobs on the basis of defined geographic sites or areas. The manufacturing branch of Apex’s computer business has two plants—one in Dhaka and another in Chittagong.

Transportation companies, police departments, and the Banks all use location departmentalization.

5. Other Forms of Departmentalization: One of the machine shops of Baker Hughes in Houston, for example, operates on three shifts. Each shift has a superintendent who reports to the plant manager, and each shift has its own functional departments. Time is thus the framework for many organizational activities.

5.6 Span of Management

Span of management means the number of employees or subordinates a manager can effectively supervise. In other words, it refers to the number of people who report to a particular manager.

5.7 Tall versus Flat Organizations

What difference does it make whether the organization is tall or flat?

➢ One early study at Sears found that a flat structure led to higher levels of employee morale and productivity.

➢ Researchers have also argued that a tall structure is more expensive (because of the larger number of managers involved) and that it fosters more communication problems (because of the increased number of people through whom information must pass).

➢ On the other hand, a wide span of management in a flat organization may result in a manager’s having more administrative responsibility (because there are fewer managers) and more supervisory responsibility (because there are more subordinates reporting to each manager).

➢ If these additional responsibilities become excessive, the flat organization may suffer.

➢ Wide spans of management result in flat organizations, which may lead to improved employee morale and productivity as well as increased managerial responsibility. Many organizations today, including IBM and General Electric, are moving toward flat structures to improve communication and flexibility.

5.8 Tall Vs Flat Organizations

Establishing reporting relationships: Tall vs Flat organizations:

Tall Organization

Flat Organization



Are more expensive because of the number of managers involved

Foster more communications problems because of the number of people through whom information



Lead to higher levels of employee morale and productivity

Create more administrative responsibility for the relatively few managers

must pass


Create more supervisory responsibility for managers due to wider span of control.

5.9 Factors Influencing the Span of Management

1. Competence of supervisor and subordinates (the greater the competence, the wider the potential span)

2. Physical dispersion of subordinates (the greater the dispersion, the narrower the potential span)

3. Extent of nonsupervisory work in manager’s job (the more nonsupervisory work, the narrower the potential span)

4. Degree of required interaction (the less required interaction, the wider the potential span)

5. Extent of standardized procedures (the more procedures, the wider the potential span) 6. Similarity of tasks being supervised(the more similar the tasks, the wider the potential span)

7. Frequency of new problems (the higher the frequency, the narrower the potential span) 8. Preferences of supervisors and subordinates

5.10 Authority

Authority is the legitimate power and command over the resources. In other words, authority is power that has been legitimized by the organization.

For example, when an owner–manager hires a sales representative to market his products, he needs to give the new employee appropriate authority to make decisions about delivery dates, discounts, and so forth.

5.11 Delegation

Delegation is the process by which managers assign a portion of their total workload to others. In other words, delegation is the assignment of any responsibility or authority to another person (normally from a manager to a subordinate) to carry out specific activities.

5.12 Reasons for Delegation

1. The primary reason for delegation is to enable the manager to get more work done.

2. Subordinates help ease the manager’s burden by doing major portions of the organization’s work.

3. In some instances, a subordinate may have more expertise in addressing a particular problem than the manager does.

4. Delegation also helps develop subordinates. By participating in decision making and problem solving, subordinates learn about overall operations and improve their managerial skills.

5.13 Centralization

Centralization is the process of systematically retaining power and authority in the hands of higher-level managers.

In a centralized organization, decision-making power and authority are retained at the higher levels of management.

5.14 Decentralization

Decentralization is the process of systematically delegating power and authority throughout the organization to middle and lower-level managers. A decentralized organization is one in which decision-making power and authority is delegated as far down the chain of command as possible.

No organization is ever completely decentralized or completely centralized; some firms position themselves toward one end of the continuum, and some lean the other way.

5.15 Centralization VS Decentralization

Basis for




1. Meaning

The retention of powers and authority with respect to planning and decisions, with the top management, is known as Centralization.

The dissemination of authority, responsibility and accountability to the various management levels, is known as


2. Involves

Systematic and consistent reservation of authority.

Systematic dispersal of authority.

3. Decision


Comparatively faster


4. Advantage

Proper coordination and Leadership

Sharing of burden and


5. Power of decision making

Lies with the top management.

Multiple persons have the power of decision making.

76 Reasons

Inadequate control over the organization

Considerable control over the organization

7. Best suited for

Small sized organization

Large sized organization

5.16 Coordinating Activities

Coordination is the process of linking the activities of the various departments of the organization.

Structural Coordination Techniques The Managerial Hierarchy Rules and Procedures Liaison Roles Task Forces Integrating Departments

5.17 Differentiating Between Positions

The last building block of organization structure is differentiating between line and staff positions in the organization.

A line position is a position in the direct chain of command that is responsible for the achievement of an organization’s goals.

A staff position is intended to provide expertise, advice, and support for line positions. The most obvious difference between line and staff is purpose—line managers work directly toward organizational goals, whereas staff managers advise and assist.

Chapter 6 Motivation

6.1 Motivation

Motivation is a set of forces that cause people to behave to certain ways. Motivation increases the willingness to do the work. In other words, motivation is a general term applying to the entire class of drives, desires, needs, wishes, and similar forces.

For example: Bonus, good working condition, challenging work, good manners etc. Human motivates are based on needs. The needs can be classified in two ways.

1) Primary Needs: Needs for water, air, food, sleep, and shelter.

2) Secondary Needs: Other needs may he regarded as secondary, such as self-esteem, status, affiliation with others, affection, giving accomplishment, and self-assertion. Naturally, these needs vary in intensity over time among individuals.

6.2 Maslow’s Needs Theory

1. Physiological Needs: These are the basic needs for sustaining human life such as air, water, food, sleep and shelter. If these needs are not satisfies, other needs will not motivate people. 2. Safety needs: People want to be free from physical danger and fear of losing a job, properly, and shelter.

3. Social needs: Since people are social being, they need to belong, to be accepted by others. They want affection and love from other.

4. Esteem Needs: Esteem needs are the basis for the human desire we all have to be accepted and valued by others. This kind of need produces power, prestige, status and self-confidence. 5. Self-actualization needs: It is the desire to become what one is capable of becoming—to maximize one's potential and to accomplish something. This is the highest needs in Maslow's hierarchy. It involves continual growth of an individual.

6.3 Theory “x” and “y”

The nature of people has been expressed by Douglas Mc Gregor in his theory x and y .Theory x and y are two of sets of assumption about the nature of people.

Assumptions of Theory “x”

1) Average human beings have an inherent dislike of work and will avoid it if they can.

2) Most people must be coerced, controlled, directed, and threatened to put them in work.

3) Average human beings prefer to be directed and wish to avoid responsibility and relatively little ambition.

Assumptions of Theory “y”

1) The expenditure of physical and mental effort in work is as natural as play or rest.

2) People will exercise self-direction and self-control to perform the task.

3) The degree of commitment to objective is in proportion to the size of the rewards associated with their achievement

4) Average human being learn under proper condition they will not only accept responsibility but also seek it.

6.4 Two factor theory

Two factor theory is developed by Frederick Herzberg.

1) Hygiene factors

2) Motivation factors

Another popular content perspective is the two-factor theory of motivation. Frederick Herzberg developed his theory after interviewing 200 accountants and engineers. He asked them to recall occasions when they had been satisfied and motivated and occasions when they had been dissatisfied and unmotivated.

1. Hygiene factors: Their existence does not motivate in the sense of yielding satisfaction, their lack of existence would result in dissatisfaction. They are only dissatisfies and not motivators.

This group of factors will not motivate people in an organization; yet they must be present, or dissatisfaction will arise. For example: Salary

2. Motivation factors: Motivation factor are the job content factors that will motivate people. They are the real motivators because they ensure satisfaction of employees but if they do not present dissatisfaction will not arise. For example: bonus, recognition.

Hygiene factors

Motivation factors

• • • • • •

Supervisors Salary

Working conditions

Interpersonal relations Pay and security

Company policies and administration Job security

• • • •



The work itself


Advancement and growth

Based on these findings, Herzberg argued that there are two stages in the process of motivating employees.

First, managers must ensure that the hygiene factors are not deficient. Pay and security must be appropriate; working conditions must be safe, technical supervision must be acceptable, and so on. Employees whom managers attempt to “satisfy” through hygiene factors alone will usually do just enough to get by. Thus managers should proceed to stage two—giving employees the opportunity to experience motivation factors such as achievement and recognition. The result is predicted to be a high level of satisfaction and motivation.

6.5 Equity theory

J. Stacy Adams described the equity theory.

Equity theory suggests that people are motivated to seek social equity in the rewards they receive for performance.

People observe one another, judge one another and make comparison. They also want the reward system to be fair.

J Stacy Adams states that employees tend to judge fairness by comparing the ratio of one’s output and input with the ratio of other people output and input.

Inputs include all the elements that employees believe they bring or contribute to the job.

Such as, education, seniority, experience, loyalty, commitment, time and effort.

Outcomes are the rewards employees get from their jobs and employers; outcomes includes salary, bonus, fringe benefits, job security, social rewards etc.

6.6 Expectancy theory (by Victor H. Vroom)

Expectancy theory suggests that motivation depends on two things—how much we want something and how likely we think we are to get it. Assume that you are approaching graduation and looking for a job.

Motivation = valance × expectancy × instrumentality

• Valance: How much one wants a reward.

• Expectancy: Ones estimate of probability that effort will result in successful performance.

• Instrumentality: Ones estimate that performance will result in receiving rewards.

6.7 Motivational Drives

David C. McClelland of Harvard University developed a classification scheme highlighting three dominant drives and pointed out their significance to motivation. McClelland research focused on the drives for achievement, affiliation, and power.

a) Achievement Motivation: Achievement motivation drive some people to pursue and attain goals. And individual with this drive wishes to achieve objectives and advance up the leader of success. Accomplishment is seen as important primarily for its own sake, not just for the rewards. People with a high drive for achievement take responsibility for their actions and results, control their destiny, seek regular feedback and enjoy being part of a winning achievement. They work harder when they perceive that they will receive personal credit for their efforts.

b) Affiliation Motivation: Affiliation motivation is a drive to relate people on a social basis. People with affiliation motives work better when their complimented for their favorable attitude and cooperation. Affiliation motivated people tend to select friends and likable people to surround them. They receive inner satisfaction from being with friends and they want to job freedom to develop those relationship.

c) Power Motivation: Power is the ability to influence other people or events. Power motivation is a drive to influence people, take control and change situations. Power motivated people wish to create an impact on their organization and are willing to take risks to do so. Once this power is obtained, it may be used either constructively or destructively.

6.8 ERG theory

Clayton Alderfer proposed a modified need hierarchy named ERG model. Alderfer advocated three need patterns of an individual as against five steps proposed by Maslow.

a) Existence needs: He suggested that employees are initially interested in satisfying their existence needs, which combine physiological and security factors. Pay, physical working conditions, job security, and fringe benefits can all address these needs.

b) Related needs: Related needs are at the next level, and these involve being understood and accepted by people above, below and around the employee at work and away from it.

c) Growth needs: Growth needs are in third category, these involve the desire for both self-esteem and self-actualization.

6.7 Goal-setting theory

– Developed by Edwin Locke.

– Properly set and well-managed task goals can be highly motivating.

– Motivational effects of task goals:

• Provide direction to people in their work.

• Clarify performance expectations.

• Establish a frame of reference for feedback.

• Provide a foundation for behavioral self-management.

In the original version of goal-setting theory, two specific goal characteristics—goal difficulty and goal specificity—were expected to shape performance.

Goal Difficulty: Goal difficulty is the extent to which a goal is challenging and requires effort. If people work to achieve goals, it is reasonable to assume that they will work harder to achieve more difficult goals. But a goal must not be so difficult that it is unattainable.

Goal Specificity: Goal specificity is the clarity and precision of the goal. A goal of

“increasing productivity” is not very specific; a goal of “increasing productivity by 3 percent in the next six months” is quite specific.

6.8 Reinforcement Theory (by B. F. Skinner)

Reinforcement perspectives explain the role of those rewards as they cause behavior to change or remain the same over time. Specifically, reinforcement theory argues that behavior that results in rewarding consequences is likely to be repeated, whereas behavior that results in punishing consequences is less likely to be repeated.

6.9 Kinds of Reinforcement in Organizations

1. Positive reinforcement: A method of strengthening behavior, is a reward or a positive outcome after a desired behavior is performed. When a manager observes an employee doing an especially good job and offers praise, the praise serves to positively reinforce the behavior of good work. Other positive reinforces in organizations include pay raises, promotions, and awards.

2. Avoidance: The other method of strengthening desired behavior is through avoidance. An employee may come to work on time to avoid a reprimand. In this instance, the employee is motivated to perform the behavior of punctuality to avoid an unpleasant consequence that is likely to follow tardiness.

3. Punishment: Punishment is used by some managers to weaken undesired behaviors. When an employee is loafing, coming to work late, doing poor work, or interfering with the work of others, the manager might resort to reprimands, discipline, or fines. The logic is that the unpleasant consequence will reduce the likelihood that the employee will choose that particular behavior again.

4. Extinction: Extinction can also be used to weaken behavior, especially behavior that has previously been rewarded. When an employee tells an off-color joke and the boss laughs, the laughter reinforces the behavior and the employee may continue to tell off-color jokes. By simply ignoring this behavior and not reinforcing it, the boss can cause the behavior to subside and eventually become “extinct.”

6.10 Popular Motivational Strategies

1. Empowerment and Participation

• Empowerment is the process of enabling workers to set their own work goals, make decisions, and solve problems within their sphere of responsibility and authority.

• Participation is the process of giving employees a voice in making decisions about their own work.

Thus empowerment is a somewhat broader concept that promotes participation in a wide variety of areas, including but not limited to work itself, work context, and work environment.

2. Providing an effective reward system

A reward is a work outcome of positive value to the individual. Rewards need to satisfy the basic needs of all employees. Rewards need to be included in the system and be comparable to ones offered by a competitive organization in the same area.

3. Recognition

The simple of act of letting an employee know they are doing a great job and recognizing their efforts can do wonders for their motivation. As humans, we like to hear when what we are doing is appreciated and it creates a sense of accomplishment. In turn, this motivates us to keep achieving and keep receiving recognition.

4. Redesigning jobs

People become bore to do the same work again and again. Managers can redesign the job to reduce monotony and to increase the interest of employees. Job can be redesign by job enlargement, job enrichment, job rotation, work team etc. Such variations in work will motivate employees to perform better

5. Flexibility Work Arrangement

• Compressed work Schedule Working a full 40-hour week in fewer than the traditional five day.

• Another promising alternative work arrangement is flexible work schedules, sometimes called flextime. Flextime gives employees more personal control over the times they work.

• Yet another potentially useful alternative work arrangement is job sharing. In job sharing, two part-time employee share one full-time job.

• Telecommuting— allowing employees to spend part of their time working offsite, usually at home. By using e-mail, the Internet, and other forms of information technology, many employees can maintain close contact with their organization.

Chapter 7 Leadership

7.1 Leadership

Leadership is the process of influencing and supporting others to work enthusiastically toward achieving objectives.

According to Weihrich and Koontz, “Leadership is the art or process of influencing people so that they will strive willingly and enthusiastically toward the achievement of group goals.” In short we can say, leadership indicates:

✓ Influencing and supporting others

✓ Others accept as leaders

✓ Achievement of group goals

7.2 Management and Leadership

1. Leadership is an important part of management, but it is not the whole history.

2. The primary role of a leader is to influence others to achieve the objective whereas manager’s role is to conduct a set of activities including planning, organizing, staffing and controlling.

3. Managers hold formal positions where as anyone who has the ability to influence others can be a leader.

4. Managers achieve result by directing the activities of others, whereas leaders create a vision and inspire others to achieve this vision.

7.3 Trait Theory of Leadership

❑ Trait theory of leadership states that physical, intellectual or personal characteristic that differentiate between leader and non-leaders or between successful and unsuccessful leader.

❑ In other word, physical characteristic such as height, body size and shape, and personal attractiveness as well as psychological factors such as intelligence, ambition and aggressiveness will make a leader.

❑ The Current research on leadership traits suggests that some factors do help differentiate leaders from non-leaders.

According to trait theory the leader must have the following traits:

1) Honesty and integrity

2) Personal drive and energy

3) Desire to lead

4) Self-confidence

5) Charisma

6) Flexibility and adaptiveness

7) Cognitive ability

8) Creativity and originality

7.4 Leadership Style

1. Autocratic leaders

Autocratic leaders centralize power and decision making in themselves. They structure the complete work situation for their employees and they expect subordinate will do what they are told. The leaders take full authority and full responsibility.



1. Satisfying for the leader

1. Most employees dislike it

2. Permits quick decisions

2. Creates fear and frustration

3. Allows the use of less competent


3. Seldom generate strong organizational commitment

4. Strong direction and structure for employees

4. High turnover

2. Consultative Leaders

These leaders ask employees for inputs prior to making a decision. This leader may then choose to use or ignore the information and advice received from employees.

If the inputs are seen as used, employees are likely to feel as though they had a positive impact.

If the inputs are consistently rejected, employees are likely to feel that their time has been wasted.

3. Participative leaders

These leaders decentralize authority. They use input from followers and participation by them. The leaders and groups are acting as social unit. Employees are informed about conditions and encouraged to express their ideas, make suggestions, and take action. The general trend is toward wider use of participative practices because they are consistent with the supportive and collegial.

The general trend is toward wider use of participative practices because they are consistent with the supportive and collegial.

4. Free-rein leaders

Free-rein leaders use his/her power very little and subordinates get a high degree of independence in their operations. Such leaders largely depend on subordinates to set their own goals and achieving them.

This leadership is effective when the subordinates are highly knowledgeable, skilled and committed to take decision, authority and responsibility to achieve goals of the organization.

7.5 Contingency Theory of Leadership

Fred E. Fiedler and his associates at the University of Illinois came up with a contingency theory of leadership.

Contingency theory states that people become leaders not only because of their personal attributes but also various situational factors and the interactions between leaders and group members. On the basis of Fiedler’s studies, there are three critical dimensions of leadership situation that help to determine what style of leadership will be most effective.

7.6 Three Critical Dimensions of Contingency Theory

1) Position power: This is the degree to which the power of a position enables a leader to get group members to comply with directions. In this case of managers, this is the power arising from organizational authority. As Fiedler points out, a leader with clear and considerable power can obtain good followership more easily than one without such power.

2) Task structure: This is the extent to which task can be clearly spelled out and people held responsible for them. If the tasks are clear, the quality of performance can be more easily controlled and group members can be held more definitely responsible for performance. 3) Leader member relations: This is the degree to which the group members like, trust and are willing to follow the leader. This is most important dimension in this approach of leadership.

7.7 Path Goal Theory by Robert House & Others

Robert house and others have developed the path goal view the leadership. Path goal theory of leadership states that leaders identify employee needs, provide appropriate goals and connect goal accomplishment to rewards. Here leaders provide both task support and psychological support.

According to path goal theory the leader’s roles are to help employees understand-- What needs to be done (The goals) How to do it (The path)

The path goals theory identifies four alternatives:

i. Directive leadership: The leader focuses on clear task assignments, standards of successful performance, and work schedules. ii. Supportive leadership: The leader focuses on employees’ well-being and needs, and create comfortable work environment.

iii. Achievement Oriented Leadership: The leader sets high expectations for employee and encourages the followers that they should have the confidence to achieve these goals.

iv. Participative leadership: The leader invites employees to provide input to decisions, and seriously seeks to use their suggestions as final decisions are made. The staff is given pertinent information regarding company issues, and a majority vote determines the course of action the company will take.

7.8 Full-range Leadership Theory (FRLT)

Full-range leadership theory (FRLT) is a well-established leadership theory developed by Bass and Avolio (1994) which consists of three leadership behavior:

– transformational leadership

– transactional leadership and

– laissez-faire leadership

Transactional leadership:

Bass (1985) added his points of view with the theory of transactional leadership and stated the theory as an exchange relationship between leaders and followers that exits as rewards or requirements of the parties to satisfy the conditions and achieve objectives.

Followers meet the requirements of the leaders expecting praise, rewards on fear of punishment (Bass et al., 2003).

This theory is a realistic one as it gives importance on goal accomplishment and exchange for both parties (Aarons, 2006).

Transactional leaders are goal oriented rather focusing on the development of the followers (Northouse, 2007).

Burns (1978) stated that they emphasize task clarification and offer reward and punishment based on positive and negative performance.

They try to influence followers using their power to achieve the expected outcome (Avery, 2004).

Transactional leaders try to motivate followers by providing clear set of goals, way to achieve goals, clarify about performance appraisal, providing feedback on performance and ensuring reward for if targets are achieved (Bass, 1985).

Politis (2002) stated that transactional leaders make clear about the role of followers to achieve the predetermined goals. Then, leaders play the role of evaluator and based on performance reward or punishment will be offered.

Transactional leaders identify what subordinates need to do to achieve objectives, clarify organizational roles and tasks, set up an organization structure, rewarding performance and provide for the social needs of their followers. Such leaders work hard try to run the organization effectively and efficiently.

- Contingent Reward:

It is the negotiation process between the leaders and the followers as the leader’s exchange rewards to accomplish the task by followers.

Leaders develop specific goals and expectations and communicate reward to stimulate followers (Bass et al., 2003). Contingent reward is based on the level of employee performance.

Leaders provide the reward if the followers meet the desired performance level or expectation of the leaders. On the contrary, followers will be criticised or punished if they cannot reach the standard outcome (Yahaya and Ebrahim, 2016).

Therefore, duties, responsibilities and work outcome are determined by leaders and also by followers to gain rewards and avoid punishment (Bass, 1985).

- Active management by exception:

Active management by exception denotes to a leader who plays an active role to find deviation comparing with the standard, initiate corrective measures and implement rules and regulations (Gill, 2006).

Wu et al. (2006) illustrated that under this concept of transactional leadership, leaders critically observe the behaviour of employees and convict unwanted behaviours.

Leaders take initiative to monitor the activities of the followers in a systematic way and actively intrude when problems occur (Yahaya and Ebrahim, 2016).

Then, leaders try to find the reasons of the problems and take required corrective action. They intervene into the problem to solve it so that followers can perform according to the standard.

- Passive management by exception:

When leaders do not actively involve and react to the problems, then it is known as passive management by exception.

Here, leaders state the expectation and clarify the standard and wait till the problem occurred but highly reluctant to intervene into the problem (Yahaya and Ebrahim, 2016).

Leaders allow the followers to do the job in their own way and only intervene when any mistakes done by the followers (Gill, 2006).

So, they wait till the subordinates face any difficulties which are visible and then interfere only due to the errors occurred.

Transformational leadership:

The concept of transforming leader was first initiated by Burns (1978) and he stated that transformational leadership occurs when leaders can increase the level of followers’ motivation and morality.

In other words, transformational leaders play a crucial role to motivate the followers and under this leadership style both leaders and followers motivate each-other in terms of morality (Burns, 1978).

This leadership is more than the common exchange on interest between leaders and subordinates.

Transformational leaders focus on ideals and moral values to involve followers and empower them to bring changes in the organization.

Transactional leaders emphasize on the development of the followers based on their needs and encourage to achieve more than the actual expectations (Bass, 1985).

Bass stated that transactional leaders achieve goals by making aware the followers about the values of the target, encouraging followers to think beyond the self-interest and focusing on the high-level need of the employees.

Transactional leaders give importance on the emotions of the subordinates and their achievements. Leaders are concerned about the growth and development of the subordinates as well as intrinsic motivation.

Hence, employees feel faith, appreciation, loyalty, and dignity toward the leaders (Yulk, 2010).

The focus of leadership theory is on transforming abilities of the leaders and changing employees by ensuring the upward move of motivation, commitment and empowerment to achieve the organizational objectives (Yulk, 2010).

Empathising on collective interest rather than self-interest, transactional leaders articulate a vision and inspire followers to follow the vision (Lussier and Achua, 2007).

Idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration are the four important components of this style of leadership (Bass and Avolio, 1994).

Transformational leaders articulate a vision and inspire followers. They also have the capacity to motivate subordinates. They shape organizational culture and bring positive climates for organizational change.

- Idealized influence:

Idealized influence refers to the ability of the leader by which he can be a role model for the followers and this is related to charismatic power (Bass, 1985).

Followers’ needs prioritized over leaders’ need by idealized influence leaders (Bass et al., 2003). Leaders with charisma have power to develop moral standard that influence subordinates to pursue and admire leaders’ mission (Northouse, 2007; Yahaya and Ebrahim, 2016).

Leaders communicate a clear sense of goals, attach emotions and shares potentials and perils with followers that become the reasons of high commitment of the followers.

Self-confidence and self-esteem are the unique features of charismatic leaders that lead to influence followers to exert extra effort (Bass, 1985).

- Inspirational motivation:

Inspirational leaders stimulate encouragement and boost up confidence of the followers to achieve group goals and perform the assigned task successfully (Yulk and Van Fleet, 1982).

Such stimulation drive employees to work hard and be committed to attain the targets. Leader sets high expectations, articulate a vision, communicate the vision with followers, inspire to achieve goals which are aligned to organizational goals and treat challenges as opportunities (Gill, 2006).

The spirits of employees are enhanced by providing meaningful and challenging tasks (Bass et al., 2003) that will evolve a better future. As a result, employees think to go beyond their own interest for the sake of organizational or group interest.

- Intellectual stimulation:

Intellectual stimulation refers that leaders arouses followers to think creatively and believe on their ability to solve problems (Bass, 1985).

In other words, it is the ability of the leaders to influence followers to go extra mile, face challenges creatively and intellectually involve in the decision making (Limsila and Ogunlana, 2008).

Intellectual stimulation includes new ideas, innovative solution, new ways of doing things and solving problems, creative tactics to face challenges and wisdom in making decision.

- Individualized consideration:

Bass (1985) stated that consideration is an important base of leader-follower relationship. When leaders focus on individualized consideration, it leads to a strong relationship with each of the subordinate (Yahaya and Ebrahim, 2016) and the relationship is not limited to exchange of interest.

Leaders, believe in individualized consideration, emphasize on individual follower’ need and focus on personal development (Limsila and Ogunlana, 2008).

Leaders delegate power to perform responsibilities and appreciate the performance of the subordinates.

Delegation often contribute to develop the followers to current level of solving problem and facing challenges, but leader also involves as a guide or mentor.

Laissez-faire Leadership:

When there is an absent of effective leadership, it is denoted as laissez-faire (Yulk, 2010).

Under this leadership style, leaders avoid problem, less aware about decision making, dislike to take feedback and refuse to involve (Gill, 2006).

They hardly interact with group members, don’t like to take the responsibility and play a passive role in team activities (Sadler, 2003).

In most of the cases, leaders ignore challenges and problems (Yulk, 2010) and don’t emphasize rewards and feedback regarding the performance of the employees.

Under this leadership style, leaders delegate most of the decision to their subordinates (Zareen et al., 2015).

Besides, subordinates suffer lack of guidance and supervision and receives little support under the laissez-faire leaders (Bradford and Lippitt, 1945).

But, subordinates enjoy complete freedom to make decision and use the required resources and materials. It is expected that followers will solve their own problem and as a result they get a learning opportunity to develop themselves (Eagly et al., 2003).

However, laissez-faire leadership is considered as an effective leadership approaches only when the followers are highly skilled, knowledgeable, capable and belonging high intention to do by their own (Chaudhry and Javed 2012).

7.9 Transactional VS Transformational Leader


Transactional Leadership

Transformational Leadership


A leadership style that employs rewards and punishments for motivating followers is

Transactional Leadership.

A leadership style in which the leader employs charisma and enthusiasm to inspire his followers is Transformational Leadership.


Leader lays emphasis on his relation with followers.