Disaster Recovery and Business Continuity Plan
Modern day world is extremely complex and interwoven with a lot of variables and uncertainties. Managing businesses is extremely tricky and requires one to be ahead of times all the while. With the evolution of technology, the business processes and management philosophies on how to nurture and safeguard one’s business have been the subject of […]
Book Building Process – How Are Prices of Shares Decided in an IPO ?
Companies all over the world use either fixed pricing or book building as a mechanism to price their shares. Over the period of time, the fixed price mechanism has become obsolete and book building has become the de-facto mechanism used in pricing shares while conducting an initial public offer (IPO). In this article, we will […]
Innovation and Government Spending
Innovation is and has always been at the center of all human endeavors. People those who are able to perform more complex tasks with relatively fewer resources have often captured world markets and gained the maximum wealth. Every economic textbook acknowledges the value of innovation. It also explains how the printing press made scribes obsolete […]
Development of Compensation System
Compensation system involves the total rewards that are given to the employees for the labour and services they provide to the organization. Compensation includes direct monetary benefits as well as indirect monetary benefits. Wages and salaries form the direct financial benefits that an employee receives from his or her company. Besides, wages and salaries, bonuses […]
Different Types of Accounts in a Business
The entity concept separates the concerns of the owners from the business. An extension of the same concept is the concept of accounts which splits up the business’s affairs further. The account concept becomes clearer once the double entry system of accounting is explained. That is done at a later stage in the tutorial. Transactions […]
Rensis Likert and his associates studied the patterns and styles of managers for three decades at the University of Michigan, USA, and identified a four-fold model of management systems.
The model was developed on the basis of a questionnaire administered to managers in over 200 organizations and research into the performance characteristics of different types of organizations.
The four systems of management system or the four leadership styles identified by Likert are:
The decisions are imposed on subordinates and they do not feel free at all to discuss things about the job with their superior. The teamwork or communication is very little and the motivation is based on threats.
Here again, the subordinates do not feel free to discuss things about the job with their superior. The teamwork or communication is very little and motivation is based on a system of rewards.
Some amount of discussion about job related things takes place between the superior and subordinates. There is a fair amount of teamwork, and communication takes place vertically and horizontally. The motivation is based on rewards and involvement in the job.
There is a high level of confidence that the superior has in his subordinates. There is a high level of teamwork, communication, and participation.
The nature of these four management systems has been described by Likert through a profile of organizational characteristics. In this profile, the four management systems have been compared with one another on the basis of certain organizational variables which are:
On the basis of this profile, Likert administered a questionnaire to several employees belonging to different organizations and from different managerial positions (both line and staff).
His studies confirmed that the departments or units employing management practices within Systems 1 and 2 were the least productive, and the departments or units employing management practices within Systems 3 and 4 were the most productive.
With the help of the profile developed by Likert, it became possible to quantify the results of the work done in the field of group dynamics.
Likert theory also facilitated the measurement of the “soft” areas of management, such as trust and communication.
According to Rensis Likert, the nearer the behavioral characteristics of an organization approach System 4 (Participative), the more likely this will lead to long-term improvement in staff turnover and high productivity, low scrap, low costs, and high earnings if an organization wants to achieve optimum effectiveness, then the ideal system
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