management theory vs practice- a study on grameen bank

Theory Versus Practice

Submitted to: Mr. Mohammed Sawkat Hossain Lecturer and course teacher of Principles of Management (FNB109) Submitted by: Sadia Islam 587 MD. Jobair Bin Habib 602 M.A. Naim 603 MD. Shariar-Al-Arman 612 MD. Shuaib Shahriar Rusho 620 BBA Program Batch 02

Savar, Dhaka September 26, 2011

Letter of Transmittal

Mr. Mohammed Sawkat Hossain Savar, Dhaka Lecturer September 27, 2011 Department of Finance & Banking Jahangirnagar University Savar, Dhaka

Dear Sir:

We are submitting herewith our term-paper entitled as ‘Theory Versus Practice’

Sincerely yours, MD. Shariar-Al-Arman (Coordinator) On behalf of group 02

Methodology

The presented term-paper is one of descriptive type along with the practice of the theory in the

“Grameen Bank”.

All the data presented here are basically collected from the book and Internet and a brief

interview of the manager of “Grameen Bank” was taken to identify the real life practice is of

these theories are applied or not. That’s why the data and information are of both secondary

and primary type.

The theories inside the text and the practice inside the “Grameen Bank” are compared with

each other to find the result of the given term paper “theory vs. practice”

Introduction

Management is the process of managing the organization through different situations in

different environment and in management course; we study the process and different model to

understand how the managerial activities are done in real life.

The subject of the given term paper is Management: “theory vs. practices” in which the objectives are to know how a manager of an organization manages the situations and duties he is authorized and accountable for and the selected company was “Grameen bank”

The origin of Grameen Bank can be traced back to 1976 when Professor Muhammad Yunus, Head of the Rural Economics Program at the University of Chittagong, launched an action research project to examine the possibility of designing a credit delivery system to provide banking services targeted at the rural poor. The Grameen Bank Project (Grameen means "rural" or "village" in Bangla language) came into operation with the following objectives:

Extend banking facilities to poor men and women; Eliminate the exploitation of the poor by money lenders;

Create opportunities for self-employment for the vast multitude of unemployed people in rural Bangladesh;

Bring the disadvantaged, mostly the women from the poorest households, within the fold of an organizational format which they can understand and manage by themselves; and

Reverse the age-old vicious circle of "low income, low saving & low investment", into virtuous circle of "low income, injection of credit, investment, more income, more savings, more investment, more income".

The action research demonstrated its strength in Jobra (a village adjacent to Chittagong University) and some of the neighboring villages during 1976-1979. With the sponsorship of the central bank of the country and support of the nationalized commercial banks, the project was extended to Tangail district (a district north of Dhaka, the capital city of Bangladesh) in 1979. With the success in Tangail, the project was extended to several other districts in the country. In October 1983, the Grameen Bank Project was transformed into an independent bank by government legislation. Today Grameen Bank is owned by the rural poor whom it serves. Borrowers of the Bank own 90% of its shares, while the remaining 10% is owned by the government.

For identifying the practice version, the chosen branch was the main branch of Grameen Bank situated near at Mirpur-2.

A direct interview was taken there to find the organizational theories and objectives of management.

Abstract

Vs.

Introduction

Management is the process of managing the organization through different situations in

different environment and in management course; we study the process and different model to

understand how the managerial activities are done in real life.

The subject of the given term paper is Management: “theory vs. practices” in which the objectives are to know how a manager of an organization manages the situations and duties he is authorized and accountable for and the selected company was “Grameen bank”

The origin of Grameen Bank can be traced back to 1976 when Professor Muhammad Yunus, Head of the Rural Economics Program at the University of Chittagong, launched an action research project to examine the possibility of designing a credit delivery system to provide banking services targeted at the rural poor. The Grameen Bank Project (Grameen means "rural" or "village" in Bangla language) came into operation with the following objectives:

Extend banking facilities to poor men and women; Eliminate the exploitation of the poor by money lenders;

Create opportunities for self-employment for the vast multitude of unemployed people in rural Bangladesh;

Bring the disadvantaged, mostly the women from the poorest households, within the fold of an organizational format which they can understand and manage by themselves; and

Reverse the age-old vicious circle of "low income, low saving & low investment", into virtuous circle of "low income, injection of credit, investment, more income, more savings, more investment, more income".

The action research demonstrated its strength in Jobra (a village adjacent to Chittagong University) and some of the neighboring villages during 1976-1979. With the sponsorship of the central bank of the country and support of the nationalized commercial banks, the project was extended to Tangail district (a district north of Dhaka, the capital city of Bangladesh) in 1979. With the success in Tangail, the project was extended to several other districts in the country. In October 1983, the Grameen Bank Project was transformed into an independent bank by government legislation. Today Grameen Bank is owned by the rural poor whom it serves. Borrowers of the Bank own 90% of its shares, while the remaining 10% is owned by the government.

For identifying the practice version, the chosen branch was the main branch of Grameen Bank situated near at Mirpur-2.

A direct interview was taken there to find the organizational theories and objectives of management.

1. Management:

The term management is the process of working with and through others to achieve organizational objectives in a changing environment. Central to this process is the effective and efficient use of the limited resources. Five components of this definition require closer examination: 1.1. Working with and through others 1.2. Achieving organizational

objectives, 1.3. Balancing effectiveness and

efficiency, 1.4. Making the most of limited

resources, and 1.5. Coping with the changing

environment.

Working with and through others: Management is above all else, a social process and managers are responsible for getting things done by working with and through others.

Achieving organizational objectives: An objective is a target to be strived for and one hopes attained. Like individuals, organizational are usually more successful when their activities are guided by challenging yet achievable objectives. It requires collective actions and also serves later as measuring sticks for performance. Without organizational objectives, the management process would be aimless and wasteful.

Balancing effectiveness and efficiency: Managers are responsible for balancing effectiveness and efficiency. Too much emphasis in either direction leads to mismanagement. On the one hand, managers must be effective by getting the job done. On the other hand, managers must be efficient by reducing cost and not wasting resources.

Making the most of limited resources: We live in a world of scarcity. Those who are concerned with such matters worry not

only about running out of non-renewable energy and material resources but also about

the lopsided use of those resources. Because of their common focus on resources,

economics and management are closely related. Economics is the study of how limited

resources are distributed alternative uses. In productive organizations managers are the

trustees of limited resources, and it is their job to see that the basic factors of

production- land, labor and capital- are used efficiently as well as effectively.

Management is called ‘Applied Economics’.

Now we will find out whether this theory is actually come up with the reality and

practice-

Theory vs. Practice: Grameen Bank’s response to the five components of management

Theory Practiced Yes or no?

Working with and through others

Achieving organizational objectives

Balancing effectiveness and efficiency

Making the most of limited resources

Coping with the changing environment

Coping with a changing environment:

Successful managers are the ones who anticipate and adjust to changing circumstances rather than being passively swept along or caught unprepared. Employers today are hiring managers who can take unfamiliar situations in stride. Business with served up this amusing but challenging profile of tomorrow’s manager: ‘the next generation of corporate leaders will need the charm of a debutante, the flexibility of a gymnast, and the quickness of a panther. A dew foreign languages and a keen understanding of technology will not hurt either.’ Also in the mix there are a sense of humor, passion and the ability to make fast decisions. The list below shows five major changing issues and sources that today’s managers have to comply with-

Globalization

Evolution of product quality

Environmentalism

An ethical reawakening

Internet and e-business revolution

Theory vs. Practice: Grameen bank’s response to the changing environment

Theory Practiced Yes or no?

Comment

Globalization

There are several foreign branches of Grameen Bank in different countries

Evolution of product quality

Grameen Bank is maintaining continuous research with their credit-service quality

Environmentalism

They have plans for green planet

An ethical reawakening

Basically they don’t have much practice of ethics though they own an organizational code of ethics

Internet and e-business revolution

They are not oriented with e-business

Acts of Financial Managers:

Functions of Management:

Managerial functions are general administrative duties that need to be carried out by virtually all productive organizations. Henri Fayol, a French industrialist turned writer, became the father of the functional approach in 1916 when he identified five managerial functions: planning, organizing, command, coordination and control. Over the years Fayol’s original list of managerial functions has been updated and expanded by management scholars. But now it is based on more than just Fayol’s approach, is organized around 8 different managerial functions: planning, decision making, organizing, staffing, communicating, motivating, leading and controlling.

Figure 1.1: 8 different managerial functions

Roles of a manager:

Roles of manager means the activities what a manager does according to his authority and what he is bound to do.

Figure 1.2: Roles of a manager

Evolution of management thoughts:

There are several approaches to the theory and practice of management.

– The universal process approach

– The operational approach

– The behavioral approach

– The systems approach

– The contingency approach

– The attributes of excellence approach

Universal Process Approach

– Assumes all organizations require the same rational management process.

• Core management process remains the same regardless of the purpose of the organization.

• The management process can be reduced to a set of separate functions and related principles.

– Fayol published Administration Industrielle ET Générale in 1916.

Divided the manager’s job into five functions:

Planning, organizing, command, coordination, and control.

Developed 14 universal principles of management.

Division of work Specialization of labor is necessary for organizational success.

Authority The right to give orders must accompany responsibility.

Discipline Obedience and respect help an organization run smoothly.

Unity of command Each employee should receive orders from only one superior.

Unity of direction The efforts of everyone in the organization should be coordinated and focused in the same direction.

Subordination of individual interests to the general interest Resolving the tug of war between personal and organizational interests in favor of the organization is one of management’s greatest difficulties.

Remuneration Employees should be paid fairly in accordance with their contribution.

Centralization The relationship between centralization and decentralization is a matter of proportion; the optimum balance must be found for each organization.

Scalar chain Subordinates should observe the formal chain of command unless expressly authorized by their respective superiors to communicate with each other.

Order Both material things and people should be in their proper places.

Equity Fairness that results from a combination of kindliness and justice will lead to devoted and loyal service.

Stability and tenure of personnel People need time to learn their jobs.

Initiative One of the greatest satisfactions is formulating and carrying out a plan.

Esprit de corps Harmonious effort among individuals is the key to organizational success.

Theory Vs Practice: Grameen bank’s response to Fayol’s 14 universal principles of management

theory Practice Yes or No?

Comment

Division of work.

There are several divisions like- finance, international relationship, administration, audit, co-ordination, planning etc.

Authority.

Managers give orders in accordance with their authority

Discipline.

Strict rules and regulations, as well as discipline prevail in this organization

Unity of command

Employees receive orders from only one superior

Unity of direction

Everyone is totally oriented to the organizations objectives and goals

Subordination of individual interests to the general interest

Every manager gives more priority to the objectives of organization rather than accomplishing his own interests

Remuneration

Employees are fairly paid in accordance with their contribution

Centralization

The optimum balance between centralization and decentralization is found here

Scalar chain

Organization follows a formal chain of command to communicate each other

Order

Material things as well as people are oriented in their proper places.

Equity

A profound imposing of kindliness and justice results equity and fairness

Stability and tenure of personnel

Grameen Bank provides training facility to make their personnel stable and tenure

Initiative

Employees are given initiatives

Esprit de corps

Continuous assessment and effort is a part of organizational success

Operational Approach

Describes the production-oriented area of management dedicated to improving efficiency, cutting waste, and improving quality and Covers the technical and quantitative approaches ofmanagement:

• Management science

• Operations research

• Production management

• Operations management

Frederick W. Taylor’s Scientific Management:

It means • Developing performance standards on the basis of systematic

observations and experimentation, • Standardization of work practices and methods reduce waste and

increase productivity, • Time and task study of workers’ efforts to maximize productivity and

output • Systematic selection and training of workers to increase efficiency and

productivity and differential pay incentives based on established work standards.

Theory Vs. Practice: Grameen Banks response to operational approach

Theory Practice Yes or No?

Comment

Operational Approach

Basically Grameen Bank does not follow this approach

Organization Behavior:

It is a modern research-oriented approach seeking to discover the causes of work

behavior and to develop better management techniques.

Human relations movement: an effort

to make managers more sensitive to

their employees’ needs, supported by

three influences- treat of

unionization, philosophy of industrial

humanism, Hawthrone studies.

Douglas McGregor Developed Theory X and Theory Y

Theory X: management’s traditionally negative view of employees as unmotivated and unwilling workers.

Theory Y: the positive view of

employees as energetic, creative, and willing workers

Theory Vs. Practice: Grameen Banks response to theory x and theory y


Comment

Douglas McGregor Developed Theory X and Theory Y

Grameen Bank follows X theory

Systems Approach

– Posits that the performance of the whole is greater than the sum of the

performance of its parts.

– Analytic versus synthetic thinking: outside-in thinking versus inside-out

thinking.

– Seeks to identify all parts of an organized activity and how they interact.

General Systems Theory:

An area of study based on the assumptions that everything is part of a larger,

interdependent arrangement.

Levels of systems:

• Each system is a subsystem of the system above it.

• Identification of systems at various levels helps translate abstract

systems theory into more concrete terms.

Closed Versus Open Systems

• Closed system means a self-sufficient entity.

• Open system means something that depends on its surrounding

environment for survival.

• Systems are classified open (closed) by how much (how little) they

interact with their environments.

New Directions in Systems Thinking:

Organizational learning and knowledge management

– Organizations are living and thinking open systems that learn from

experience and engage in complex mental processes.

Lecture Outlines, Appendix A–13

Chaos theory

• Every complex system has a life of its own, with its own rule book.

• Complex adaptive systems

• Complex systems are self-organizing

Theory Vs. Practice: Grameen Banks response to system approach


Comment

Systems Approach

Grameen Bank strongly follows this theory. They are running most of the organizational works with groups

Contingency Approach

– A research effort to determine which managerial practices and

techniques are appropriate in specific situations.

– Different situations require different managerial responses.

– Can deal with intercultural feelings in which custom and habits cannot be

taken for granted.

Contingency Characteristics

An open-system perspective

• How subsystems combine to interact with outside systems.

A practical research orientation

• Translating research findings into tools and situational

refinements for more effective management.

A multivariate approach

• Many variables collectively account for variations in performance.

Lessons from the Contingency Approach

– Approach emphasizes situational appropriateness rather than rigid adherence to

universal principles.

– Approach creates the impression that an organization is captive to its

environment.

Theory Vs. Practice: Grameen Banks response to the contingency approach


Comment

The contingency approach

Managers are given a freedom to act in accordance with the situations that are new and challenging

A Critical Appraisal of the Excellence Approach

– Raises more questions than it answers.

– Ignores the contingency approach to management.

– Relies heavily on unsupported generalizations.

– Fails to position management effectiveness as important to sustaining corporate

excellence.

Lessons from the Excellence Approach

– Reminded managers to pay close attention to the basics.

– Reminded managers of the importance of on-the-job experimentation.

Theory Vs. Practice: Grameen Banks response to different approaches of management


Comment

The operational approach

The behavioral approach

Douglas McGregor’s Theory X and Theory Y

The systems approach

The contingency approach

The attributes of excellence approach

Planning

Planning means looking ahead and chalking out future courses of action those areto be followed. It is a preparatory step. It is a systematic activity which determines when, how and who is going to perform a specific job. Planning is a detailed program regarding future courses of action. It is rightly said “Well plan is half done”. Therefore planning takes into consideration available & prospective human and physical resources of the organization so as to get effective co-ordination, contribution & perfect adjustment. It is the basic management function which includes formulation of one or more detailed plans to achieve optimum balance of needs or demands with the available resources.

According to Urwick, “Planning is a mental predisposition to do things in orderly way, to think before acting and to act in the light of facts rather than guesses”. Planning is deciding best alternative among others to perform different managerial functions in order to achieve predetermined goals.

According to Koontz & O’Donell, “Planning is deciding in advance what to do, how to do and who is to do it. Planning bridges the gap between where we are to, where we want to go. It makes possible things to occur which would not otherwise occur”.

Steps in Planning Function

Planning function of management involves following steps:-

1. Establishment of objectives 2. Establishment of Planning Premises 3. Choice of alternative course of action 4. Formulation of derivative plans 5. Securing Co-operation 6. Follow up/Appraisal of plans

Figure: Planning: The primary management functions

Purpose Time Horizon

Distribution Hallmarks

Strategic Planning

To bring the entire community together working toward the same future vision of success in the context of its core values A Strategic Plan is a framework for strategic thinking that helps a school stay competitive, live into its core values, ward off threats and take advantage of opportunities.

3-5 years As wide as possible

Mission

Vision

Core Values Statements

Overarching Goals

Strategies

Initiatives

Evaluation System

Organic in areas of strategy and initiatives; static for the duration of the plan in areas of mission, vision, values and goals. Process hallmarks are: Inclusivity, accountability, shared responsibility, evaluation and institutionalization.

Intermediate Planning

To serve as a management tool to create a system that will help the school analyze, plan and deliver products and services that meet the needs of its various target markets; lead with its strengths; and create an identity that differentiates it from competitors Intermediate planning is a framework for a way of thinking that focuses on creating desired exchanges with target audiences order to obtain for the school its desired outcomes.

3 months – 1 year

Limited to Project Team

Situation Analysis

Target Market Segmentation with exchanges identified

Strategy, including (service/product, price, place, promotion, position)

Goals

SMART1 Objectives

Tactics

Budget Organic, flexible, short planning horizons; in schools, marketing plans are best implemented “by the project” and managed by project teams

Operational Planning

To operationalize the vision and mission of the school through specific work plans that lead to shared responsibility and accountability and fulfillment of specific planning goals. Operational plans are the teeth of strategic plans.

One year Limited to Project Team

SMART Objectives

Assigned responsibilities

Outcome Measurements

Theory Vs. Practice: Grameen Banks response to different planning theories


Comment

Steps in Planning Function

Grameen Bank follows several steps in planning which are some predefined, some are newly added

Strategic Planning

Due to different types of services

Intermediate Planning


Operational Planning


The planning / control cycle

To put the planning in perspective it is important to show it is connected with the control

function. The figure shows the cyclical relationship between planning and control. Planning gets

things headed in the right direction, and control keeps them headed in the right direction.

Figure: planning control cycle

Theory Vs. Practice: Grameen Banks response to the planning/ control cycle


Comment

The planning / control cycle

Grameen Bank has a division that control the planning/control cycle. But they have a different method

Decision Making

Definition: Decision making is the process of identifying and choosing among alternative

courses of action in a manner appropriate for the demand of the situation.

3 stages in this process:

i) Consideration of the expected alternative

ii) Do a comparative analysis, based on setup criteria

iii) Choose the best alternatives

The factors that affect the decision making process:

1. Expansion

2. Diversification

3. Cost saving

4. Legal or safety issues

5. Lease or buy decisions

Types of complexity in decision making:

1. Multiple criteria: a decision today must satisfy a number of often-conflicting criteria

representing the interests of different groups. Identifying the stakeholders and

balancing their conflicting interests is a major challenge for today’s decision makers.

2. Intangibles: Factors such as customer good-will, employee morale, increased

bureaucracy, and aesthetic appeal, although difficult to measure, often determine

decision alternatives.

3. Risk and uncertainty: along with every decision alternatives goes the chance that it will

fail in some way. Poor choices can prove costly.

4. Long term implications: major decisions generally have a ripple effect, with today’s

decisions creating the need for later rounds of decisions.

5. Inter disciplinary input: decision complexity is greatly increased when technical

specialists such as lawyers, consumer advocates, tax advisers, accountants, engineers

and production and marketing experts are consulted before making a decision.

Types of decision making approach:

1. Programmed decision: Programmed decisions are those that are repetitive and

routine. Most decisions made by the typical managers on a day-basis are of the

programmed variety.

2. Non-programmed decision: Non-programmed decisions are those made in complex

important and non-routine situation, often under largely and new unfamiliar

circumstances. This kind of decision is made much less frequently than programmed

decisions.

Information flow in decision making approaches:

1. Thinking style > (Logical, built-in system)

2. Intuitive style > (Creative, innovative)

A general decision making model: Although different decision procedures are required for

different situations, it is possible to contrast a general decision making model.

Figure: General decision making model

Decision making process:

1. Identifying the problems

2. Selecting the decision making approach implementing monitor and follow up

3. Implementing

4. Monitor and follow-up

Figure: decision making process

Knowledge management: It is based on information and development. In case of knowledge

management there are two types of approaches: - Explicit information and Implicit

information

Efficient market hypothesis: If there is any shortage of linkage in the information flows, it’ll be

captured by the whole market within a short time.

Theory Vs. Practice: Grameen Banks response to decision making process


Comment

Decision Making process

Grameen Bank has a very good centralized decision makers who are continuously taking creative and extraordinary steps through decision making process

Organizing, and Managing Human Resource

Organization: An organization is defined as a co-operative social system involving the co-

ordinated efforts of two or more people pursuing a shared purpose.

Characteristics of an organization:

Co-ordination of effort

Common goal or purpose

Division of labor

Putting all the pieces together

Hierarchy of authority

Figure: Management Hierarchy

Organization charts: An organization chart is a diagram of an organization’s official position

and formal lines of authority. In effect, an organization chart is a visual display of an

organization’s structural skeleton.

Figure: Organogram of Grameen Bank

Human Resource Management/ Staffing: Human resource management involves the

acquisition, retention, and development human resources necessary for organizational success.

Selection process:

Figure: Selection process

Theory Vs. Practice: Grameen Banks response to the selection process


Comment

Selection process

Grameen Bank follows the exact process which is in the theories of selection

Motivation

Motivation: The internal or external factors that exchange the regular productivity of an

individual in a specific period to get the objectives done are called the motivation. By appealing

to this process, managers attempt to get individuals to pursue organizational objectives

willingly.

Maslow’s Hierarchy of Needs Theory:In 1943 psychologist Abraham Maslow proposed that

people are motivated by a predictable 5-step hierarchy of needs.

Physiological Needs: At the bottom of the hierarchy are needs based on physical drives,

including the needs for food, water, sleep and sex. The fulfillment of these lowest-level

needs enables the individual to survive and nothing else is important when these bodily

needs have not been satisfied. As Maslow observed, “It’s quite true that man lives by

bread alone-when there is no bread.” But today the average employee experiences little

difficulty in satisfying the physiological needs. Figuratively speaking, the prospect of

eating more bread is not motivating when one has plenty bread to eat.

Safety Needs: After our basic physiological needs have been relatively well satisfied, we

next become concerned about our safety from the elements, enemies and other

threats. For reasons that are not entirely clear (terrorism? Work place violence?),

researchers have documented a recent jump in the need for (feeling safe at work).

Love Needs: Psychologically satisfied and secure person focuses next on satisfying needs

for love and affection. It is a powerful motivator of human behavior.

Esteem Needs: People who perceived themselves as worthwhile are set to possess high

self-esteem. Self-respect is the key to esteem needs. Much of our self-respect and

esteem comes from being accepted and respected by others.

Self-actualization Needs: At the very top of Maslow’s Hierarchy is the open ended

category self-actualization needs. One may satisfy this need being a better home maker

rock singer or manager.

Figure: Maslow’s hierarchy of needs theory.

Theory vs. Practice: Grameen Banks response to Maslow’s Hierarchy of needs theory


Comment

Maslow’s Hierarchy of Needs Theory

According to the employees’ needs Grameen Bank can fulfill the demands step by step like the theory

Herzberg’s two factor theory: During the 1950s Frederick Herzberg proposed a theory of

employee motivation based on satisfaction. According to this theory there are 2 types of

employee in the organization. One is satisfied and the other is dissatisfied. The satisfied

employee is motivated from within to work harder and that a dissatisfied employee is not self-

motivated.

Theory Vs. Practice: Grameen Banks response to Herzberg’s two factor theory


Comment

Herzberg’s two factor theory

We can also classify that there are two types of employees, dissatisfies and satisfiers in Grameen Bank.

Expectancy Theory: Expectancy theory based largely on Victor H. Vroom’s 1964 classic Work

and Motivation. According to this theory motivational strength is determined by perceived

probabilities of success. Expectancy is one’s belief or expectation that one thing will lead to

another.

Theory Vs. Practice: Grameen Banks response to Expectancy Theory


Comment

Expectancy Theory

Grameen Bank does not follow this theory

Goal-setting Theory: It is a process of improving performance with objectives, deadlines or

quality standards. Accordingly goal-setting is acknowledged today as a respected and useful

motivational theory.

Theory Vs. Practice: Grameen Banks response to Goal-setting Theory


Comment

Goal-setting Theory

Grameen Bank strongly follow this theory

Motivation through Job Design: Creating task, responsibilities best upon strategy, technology

and structure.

Strategy one: Fitting people to job

Strategy two: Fitting jobs to people

Three mechanisms are used to motivation through job design:-

Job rotation:Job rotation involves periodically moving people from one specialized job to

another. Such movement, prevents, stagnation other reasons for rotating personally include

compensating for a labor storage, enhancing safety, training and preventing fatigue.

Job enlargement: It is a process of combining two or more specialized task in a work flow

sequence into a single job.

Job enrichment: In general terms job enrichment is re-designing a job to increase its motivating

potential. Job enrichment increases the challenge of one’s work by reversing the trend toward

greater specialization.

Figure: How job enrichment works

Theory Vs. Practice: Grameen Banks response to Motivation through Job Design


Comment

Strategy one: Fitting people to job

Grameen Bank set their employees to specific jobs and train them for that, rather than setting jobs to people

Strategy two: Fitting jobs to people

Grameen Bank set their employees to specific jobs and train them for that, rather than setting jobs to people

Motivation through Rewards: Rewards can be defined broadly as the material and psychological payoffs

for their performing tasks in the workplace. Mangers have found that job performance and satisfaction

may be improved by properly administered rewards.

There are 2 different categories of rewards.

Extrinsic Rewards:Extrinsic rewards are payoffs granted to the individual by other

people. Examples include money, employee benefits, promotions, recognition, status

symbols and praise.

Intrinsic Rewards: The rewards that are self-granted and internally experienced payoffs,

such as a feeling of accomplishment, are called intrinsic rewards.

Theory Vs. Practice: Grameen Banks response to Motivation through Rewards


Comment

Extrinsic Rewards

Grameen Bank and its managers motivate their employees by offering Extrinsic Rewards

Intrinsic Rewards

Grameen Bank does not practice this Intrinsic Rewards system much.

Employee Compensation: Compensation deserves special attention at this point because

money is the universal extrinsic reward. Moreover since “labor costs are about two-thirds of

total business expenses”, compensation practices need to be effective and efficient. Employee

compensations are complex areas fraught with legal and tax implications.

Motivation through employee participation:

Participative management means empowering employees to assume greater control of the

workplace. Employees may participate in goal stings, making decisions, solving problems and

resigning and implementing organizational changes. There are three approaches to employee

participation.

Quality control process:

Quality control circles, commonly referred to as QC circles, are voluntary problem solving

groups of 5-10 employees of same work area who meet regularly to discuss quality

improvement and ways to reduce costs.

Theory Vs. Practice: Grameen Banks response to Quality control process


Comment

Quality control process

This process most often happens when situations trigger to be done so

Open-book management:

It involves opening a company’s financial statements to all employees and providing the

education that will enable them to understand how the company makes money and how their

actions affect its success and bottom line.

Figure: the four S.T.E.P approach to open-book management

Flexible work schedule: It’s a work scheduling plan that allows employees to determine their

own arrival and departure times within specific limits.

Theory Vs. Practice: Grameen Banks response to Flexible work schedule


Comment

Flexible work schedule

Grameen Bank follows Government’s rule for work schedule, which is not flexible

Family support services: Family friendly companies recognize that employees have lives and

priorities outside the workplace and make appropriate accommodations. They strive to help

their employees achieve a productive and satisfying work/life balance with supportive policies,

programs and culture.

Wellness programs: Progressive companies are coming to the rescue with wellness programs

featuring a wild range of offerings. Among them are stress reduction, healthy eating and leaving

clinics, quit-smoking and weight loss programs, exercise facilities, message breaks, behavioral

health counseling, health screening etc. The ultimate objective is to help employees achieve a

sustainable balance between their personal lives and work lives, with win-win benefits all

around.

Theory Vs. Practice: Grameen Banks response to family support services and wellness programs


Comment

Family support services

Grameen Bank provides these services

Wellness programs

Grameen Bank provides these services

Controlling

Control is the process of taking the necessary preventive or collective actions to ensure that the

organizations missions and objectives those are accomplished as effectively and efficiently as

possible.

Controlling process: Controlling is the key factor of evaluating the performance.

Figure: Performance Management

Theory Vs. Practice: Grameen Banks response to controlling process


Comment

Controlling process

Grameen Bank measure the performance of the employees through the controlling model, and takes necessary steps if required.

Influence:

The conduct, courses of action taken by specific person, entity or organization to alter behavioral level of other person is called influence.

Motives of influence

-selfish interest

-to get any objectives done

-to establish effectiveness and efficiency

-to manipulate the behavioral level of other

Power: It’s the ability to marshal the human, informational and material resources to get something done.

Five Bases of Power

• Reward power: having the ability to grant rewards.

• Coercive power: gaining compliance through threats or punishment.

• Legitimate power: gaining compliance based on the power associated with holding a superior position.

• Referent power: gaining compliance based on charisma or personal identification.

• Expert power: gaining compliance based on the ability to dispense valued information.

Theory Vs. Practice: Grameen Banks response to power and influence

Grameen Bank

Practice of influence Practice of power

Empowerment: Empowerment occurs when employees are adequately trained, provided with all relevant information and the best possible tools, fully involved in key decisions, and fairly rewarded for results.

Leadership:it is a systematic approach by which the planners influence or authorizing some power to control the targeted group to achieve the organizational goal.

Classification of leadership:

Formal leadership: it is the process of influencing relevant others to pursue official organizational objectives.

Informal leadership: it is the process of influencing others to pursue unofficial objectives that may or may not serve the organization’s interest.

Theory Vs. Practice: Grameen Banks response to formal and informal leadership

Grameen Bank

Formal leadership Informal leadership

Evolution of leadership theory:

Figure: Evolution of leadership approaches

1. Trait Theories:

Similar in some ways to "Great Man" theories assume that people inherit certain qualities and traits that make them better suited to leadership. Trait theories often identify particular personality or behavioral characteristics shared by leaders. If particular traits are key features of leadership, then how do we explain people who possess those qualities but are not leaders? This question is one of the difficulties in using trait theories to explain leadership.

Basic concepts of Trait theory

• Emotional Intelligence (EI) • Dependence and reliability

Adjustment between short term and long term goals

Transparent and viable system

2. Behavioral Theories:

Behavioral theories of leadership are based upon the belief that great leaders are made, not born. Rooted in behaviorism, this leadership theory focuses on the actions of leaders not on mental qualities or internal states. According to this theory, people can learn to become leaders through teaching and observation.

Behavioral Styles Theories of Leadership

• The Ohio State Model: leader’s efforts to get things organized and get things done considering the degree of trust, friendship, respect, and warmth that the leader extended to subordinates.

Figure: the Ohio state model

• The Leadership Grid®: The belief that there is one best style of leadership. The Concern for production is the desire to achieve greater output, cost-effectiveness, and profits and the concern for people in this theory is promoting friendships, helping coworkers get the job done, and attending to things that matter to people.

• The Leadership Grid® Styles

http://psychology.about.com/od/behavioralpsychology/f/behaviorism.htm

Figure: Blake and McCanse’s leadership Grid®

• 9, 1 style: primary concern for production; people secondary.

• 1, 9 style: primary concern for people; production secondary.

• 1, 1 style: minimal concern for production or people

• 5, 5 style: moderate concern for both production and people to maintain the status quo.

• 9, 9 style: high concern for both production and people (commitment, trust, and teamwork)

Situational Theories of Leadership:

It is convinced that no one best style of leadership exists; some management scholars have advocated situational or contingency thinking.

• Fiedler’s Contingency Theory:

Contingency theories of leadership focus on particular variables related to the environment that might determine which particular style of leadership is best suited for the situation. According to this theory, no leadership style is best in all situations. Success depends upon a number of variables, including the leadership style, qualities of the followers and aspects of the situation.

Performance of the leader depends on

• The degree to which the situation gives the leader control and influence (favorableness of the situation).

• The leader’s basic motivation to either accomplish the task or having supportive relationships with others (task or relationship motivation).

• The challenge is to match the leader with a suitable situation: easier to move the leader than to change the leader’s style.

Transformational Leadership Theory:

Transformational leaders are capable of charting new courses for their organization.

Are visionaries who challenge people to do exceptional things, above and beyond the plan?

Monitor people to so they do the expected, according to plan in order to maintain the status quo.

Get people to do things by offering a reward or threatening them with a punishment.

Theory Vs. Practice: Grameen Banks response to leadership theories

Grameen Bank

Trait Theories Behavioral Theories

Situational Theories of Leadership

Transformational Leadership Theory

Group Dynamics & Team Work Group: In order to achieve the predetermined or pre-specified target or goal, if two or more individuals intend to interact with others with one another with the same norms and approaches depending on same purpose.

Types of groups:

1. Formal group 2. Informal group

Formal group:If two or more individuals intend to interact with others with one another with the same norms and approaches depending on business purpose, this type of group is called formal group.

Informal group:If two or more individuals intend to interact with others with one another with the same norms and approaches depending on non-business purpose, this type of group is called formal group.

Figure: Stages of group development

Theory Vs. Practice: Grameen Banks response to group development


Comment

Group development

Grameen bank forms different types of group based on the situation. And these groups are developed throughout several stages gradually

Merger: When two or more companies combine with each other to start a new business in order to diversify risk and to maximize profit, then this type of business is called merger.

Types of Merger:

1. Horizontal integration 2. Vertical integration 3. Conglomerate merger

Significance of merger:

Risk diversification

Existence in the market

Managerial motives

Organizational commitment

Productivity and growth rate

Theory Vs. Practice: Grameen Banks response to merger

Types of group Practice Yes or No?

Comment

Merger

Grameen Bank has not merged with any other organization, rather it has some partners as well as some subordinate organizations

management theory vs practice- a study on grameen bank

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