According to Herzberg's two-factor theory, salary is:

A hygiene factor, whose absence dissatisfies but whose presence does not motivate

A motivator, whose presence creates satisfaction

An element of valence in expectancy theory

In Vroom's expectancy theory, an employee who believes effort will lead to high performance and that the promised reward is valuable, but does not believe performance will actually be rewarded, will show:

Low motivation, because instrumentality is low and the three terms multiply

High motivation, because two of the three terms are high

Motivation determined by valence alone

Motivation determined by expectancy alone

In Blake and Mouton's managerial grid, the 9,1 style represents:

High concern for production and low concern for people

High concern for people and low concern for production

When a manager delegates authority to a subordinate:

The manager remains accountable for the result, since responsibility cannot be delegated

The manager is relieved of all responsibility for the task

The organisation is thereby decentralised

The subordinate acquires the manager's position in the scalar chain

Under Section 149 of the Companies Act, 2013, a listed company must have independent directors constituting at least:

One director, whatever the size of the board

Which leadership theory holds that no single style is best and that the effective style depends on the maturity of the followers?

Hersey and Blanchard's situational leadership

Blake and Mouton's managerial grid

A wide span of control produces an organisation structure that is:

Flat, with fewer levels and more delegation

Tall, with many levels and close supervision

Informal, with no defined reporting lines

Centralised, with all decisions at the top

Management: Principles, Structure, Motivation, Leadership and Governance

Unit 6 has two halves and this chapter is the first: management as a body of principles and a set of functions, the structure through which those functions are carried out, the theories of what moves people and what makes some of them followed, and the ethical frame a company answers to. The paper examines this material almost entirely through attribution — which thinker, which theory, which level of which hierarchy — so the chapter is arranged to make attributions hard to confuse rather than to retell the theories at length.

1. Principles and functions: Taylor, Fayol and the process

Management is getting things done through people towards a stated objective, and the classical writers built the vocabulary the paper still uses. Taylor's scientific management looked at the shop floor and asked how a task should be done; Fayol's administrative theory looked at the whole enterprise and asked how it should be run. The distinction between the two is the most common question on this block.

Taylor against Fayol
Point	Taylor — scientific management	Fayol — administrative theory
Level looked at	The worker and the task	The manager and the enterprise
Method	Time and motion study, standardisation, differential piece rate, functional foremanship	Fourteen principles and five elements of management
Key idea	One best way to do a task, found by science not rule of thumb	Management is a universal skill that can be taught
Unity of command	Violated on purpose — eight functional foremen per worker	A principle — one boss per subordinate

Fayol's fourteen principles are asked by name: division of work, authority and responsibility, discipline, unity of command, unity of direction, subordination of individual interest to general interest, remuneration, centralisation, scalar chain, order, equity, stability of tenure, initiative, and esprit de corps. Two are confused with each other on every paper. Unity of command is one subordinate receiving orders from one superior; unity of direction is one head and one plan for a group of activities with the same objective. The first is about people, the second about activities.

ℹ️ The functions, and whose list

Fayol's five elements are planning, organising, commanding, coordinating and controlling. Luther Gulick compressed them into POSDCORB — planning, organising, staffing, directing, coordinating, reporting, budgeting — and Koontz and O'Donnell's five of planning, organising, staffing, directing and controlling is the list most textbooks use. A question asking who gave POSDCORB wants Gulick, not Fayol, and that is the whole of what it is testing.

2. Structure: formal and informal, span, delegation and decentralisation

The formal organisation is the structure management deliberately designs — positions, reporting lines, rules — and the informal organisation is the network of relationships that grows inside it whether management wants it or not. The informal one carries the grapevine, satisfies social needs the formal structure ignores, and can either speed the formal organisation up or resist it. Managers are told to recognise it rather than suppress it because suppression has never worked.

Span of control is the number of subordinates a manager directly supervises. A narrow span produces a tall structure with many levels, close supervision and slow communication; a wide span produces a flat structure with few levels, more delegation and faster communication. Graicunas showed why spans cannot grow without limit: with n subordinates the number of possible relationships a manager must attend to is n[2ⁿ⁻¹ + (n − 1)], which is 100 for five subordinates and 490 for seven. The right span is wider where work is routine, subordinates are trained, and the manager has staff support.

⚠️ Delegation is between two people; decentralisation is a property of the whole firm

Delegation is a manager entrusting a subordinate with authority to do a defined task, while remaining accountable for the result — authority can be delegated, responsibility cannot. Decentralisation is the extent to which decision-making authority is systematically dispersed to lower levels across the organisation, and it is delegation practised as policy. Every question that says 'authority is delegated but responsibility remains' is right; every option that says responsibility is delegated is wrong.

3. Motivation: the theories and how they map onto one another

Content theories ask WHAT motivates — which needs, in which order. Process theories ask HOW — the reasoning a person goes through before exerting effort. The paper draws from both and expects the mapping between the content theories, because they describe the same hierarchy of needs with different boundaries.

The content theories laid over one another
Maslow — five needs	Herzberg — two factors	Alderfer — ERG	McClelland — three needs
Self-actualisation	Motivators: achievement, recognition, the work itself, responsibility, growth	Growth	Achievement
Esteem	Motivators	Growth	Power
Social or belonging	Hygiene: supervision, relationships, policy, working conditions, salary, security	Relatedness	Affiliation
Safety	Hygiene	Existence	—
Physiological	Hygiene	Existence	—

⚠️ Herzberg: salary is a hygiene factor

Herzberg's claim is that hygiene factors prevent dissatisfaction but cannot create satisfaction, and motivators create satisfaction but their absence does not by itself dissatisfy. Salary sits on the hygiene side — poor pay demoralises, good pay merely removes a grievance — and it is the item candidates most often misplace. McGregor's Theory X and Theory Y belong beside this: X assumes people dislike work and must be coerced, Y assumes they seek responsibility, and the assumption a manager holds decides which factors they reach for.

Vroom's expectancy theory — effort follows from three beliefs multiplied together: that effort leads to performance (expectancy), that performance leads to a reward (instrumentality), and that the reward is worth having (valence). If any one is zero, so is motivation.
Adams' equity theory — people compare their ratio of outcomes to inputs with a referent's, and inequity in either direction produces tension they act to reduce, by changing inputs, outcomes, the comparison, or the job.
Locke's goal-setting theory — specific and difficult goals, accepted by the person and accompanied by feedback, produce higher performance than vague or easy ones.

4. Leadership: from traits to situations

Leadership is influencing people to work willingly towards a goal, and the theories are a history of where that influence was thought to come from: first from the person, then from the person's behaviour, then from the fit between behaviour and situation.

Leadership theories by what they attribute leadership to
Approach	Named theories	Core claim
Trait	Great man theory, trait theory	Leaders are born with qualities others lack
Behavioural	Ohio State (consideration and initiating structure), Michigan, Blake and Mouton's managerial grid, Likert's four systems	What leaders do matters, on two axes — concern for people and concern for task
Contingency	Fiedler, Hersey and Blanchard's situational leadership, House's path-goal, Vroom-Yetton	No one style is best; the right style depends on the follower and the situation
Contemporary	Transactional, transformational (Bass), charismatic, servant	Transformational leaders change what followers want; transactional leaders reward what they already want

🧠 The managerial grid, in one number each

Blake and Mouton score concern for production and concern for people from 1 to 9. The five named styles are 1,1 impoverished; 9,1 task or authority-compliance; 1,9 country club; 5,5 middle of the road; and 9,9 team management, which the grid holds to be best. The first number is always production, so 9,1 is the taskmaster and 1,9 the people-pleaser, and questions reverse the pair to catch candidates who learned the names without the order.

5. Corporate governance and business ethics

Corporate governance is the system by which a company is directed and controlled — the relationships among the board, management, shareholders and other stakeholders, and the mechanisms that hold management accountable. It exists because ownership and control are separated in a company, so the people who run it are not the people who own it, and the agency problem that follows needs a structure to contain it.

Independent directors — Section 149 of the Companies Act, 2013 requires every listed company to have at least one-third of its board independent, and prescribes a code for them in Schedule IV.
Board committees — an audit committee, a nomination and remuneration committee and a stakeholders relationship committee, each with a prescribed composition weighted towards independent directors.
Woman director — required on the board of prescribed classes of company under Section 149(1).
Committees that shaped the Indian code — Cadbury in the United Kingdom set the template; in India the Kumar Mangalam Birla committee produced the original Clause 49 of the listing agreement, and Narayana Murthy and Uday Kotak revised it. SEBI's Listing Obligations and Disclosure Requirements now carry the rules for listed companies.

Business ethics is the application of moral principles to business conduct, and the frameworks the paper names are three. Utilitarianism judges an act by its consequences for the greatest number; deontology judges it by whether it conforms to a duty or rule regardless of consequence; virtue ethics judges the character the act expresses. A question describing a manager who lies to save jobs is asking you to see that utilitarianism may excuse what deontology forbids.

🎯 Why governance is a Unit 6 topic and not a Unit 9 one

The statute sits in the Companies Act and could have been filed under legal aspects. It is placed here because governance is a question about how a company is MANAGED — who decides, who checks, who answers — and the law is only the floor beneath a practice. Whistle-blower policies, related-party scrutiny and board evaluation are management choices before they are compliance items, and the syllabus files them accordingly.

Key takeaways

Taylor looked at the task and Fayol at the enterprise; unity of command is one boss per person, unity of direction is one plan per group of activities; POSDCORB is Gulick's.
Authority can be delegated and responsibility cannot; decentralisation is delegation practised as policy across the whole firm, and a wide span makes a flat structure.
Maslow's lower needs are Herzberg's hygiene factors and Alderfer's existence and relatedness; salary is hygiene, not a motivator, and Vroom multiplies expectancy, instrumentality and valence.
In the managerial grid the first number is production: 9,1 is the taskmaster, 1,9 the country club, 9,9 the team; contingency theories say the right style depends on the situation.
Governance exists because ownership and control are separated; Section 149 requires one-third of a listed board to be independent, and the three ethical frameworks judge by consequence, by duty and by character.

Practice questions (9)

Attempt each one before opening the answer. Every explanation names the tempting wrong option as well as the right one, because that is where marks are lost.

According to Herzberg's two-factor theory, salary is:
1. A hygiene factor, whose absence dissatisfies but whose presence does not motivate
2. A motivator, whose presence creates satisfaction
3. A self-actualisation need
4. An element of valence in expectancy theory
Show answer
Answer: A — A hygiene factor, whose absence dissatisfies but whose presence does not motivate
Herzberg divided job factors into hygiene factors — company policy, supervision, relationships, working conditions, salary and security — which prevent dissatisfaction when adequate but cannot produce satisfaction, and motivators — achievement, recognition, the work itself, responsibility and growth — which produce satisfaction. Salary sits firmly on the hygiene side, and it is the single item candidates most often misplace, because pay feels like it should motivate. Self-actualisation is Maslow's vocabulary, and valence is Vroom's; neither is how Herzberg classifies anything.
Fayol's principle that one group of activities with the same objective should have one head and one plan is:
1. Unity of direction
2. Unity of command
3. Scalar chain
4. Esprit de corps
Show answer
Answer: A — Unity of direction
Unity of direction is about activities: every group of activities sharing an objective is directed by one manager under one plan, so that effort is not scattered. Unity of command is about people: each subordinate receives orders from one superior only, so that instructions do not conflict. The two are confused on every paper because both begin with the word unity, and the test is whether the sentence speaks of a plan or of a boss. Scalar chain is the line of authority from top to bottom, and esprit de corps is the promotion of team spirit.
In Vroom's expectancy theory, an employee who believes effort will lead to high performance and that the promised reward is valuable, but does not believe performance will actually be rewarded, will show:
1. Low motivation, because instrumentality is low and the three terms multiply
2. High motivation, because two of the three terms are high
3. Motivation determined by valence alone
4. Motivation determined by expectancy alone
Show answer
Answer: A — Low motivation, because instrumentality is low and the three terms multiply
Vroom's model is multiplicative: motivational force equals expectancy times instrumentality times valence, where expectancy is the belief that effort produces performance, instrumentality the belief that performance produces the reward, and valence the value of the reward. Because the three are multiplied, a near-zero value in any one drives the product towards zero however high the other two are. The employee described has high expectancy and high valence but low instrumentality — the link from performance to reward is broken — so motivation is low. Averaging or adding the terms is the standard misreading of the theory.
In Blake and Mouton's managerial grid, the 9,1 style represents:
1. High concern for production and low concern for people
2. High concern for people and low concern for production
3. High concern for both
4. Low concern for both
Show answer
Answer: A — High concern for production and low concern for people
The grid's coordinates are always written with concern for production first and concern for people second, each scored from 1 to 9. So 9,1 is the authority-compliance or task style — maximum attention to output and minimum to the people producing it. The reverse, 1,9, is the country club style, 1,1 is impoverished management, 5,5 is middle of the road, and 9,9 is team management, which the grid regards as ideal. Questions swap the pair to catch candidates who learned the style names without the order of the two numbers.
When a manager delegates authority to a subordinate:
1. The manager remains accountable for the result, since responsibility cannot be delegated
2. The manager is relieved of all responsibility for the task
3. The organisation is thereby decentralised
4. The subordinate acquires the manager's position in the scalar chain
Show answer
Answer: A — The manager remains accountable for the result, since responsibility cannot be delegated
Delegation transfers the authority to act and creates in the subordinate an obligation to perform, but the delegating manager stays answerable to their own superior for the outcome — which is what the maxim that authority can be delegated and responsibility cannot means. A single act of delegation between two people does not make an organisation decentralised; decentralisation is the systematic dispersal of decision-making authority to lower levels as a matter of policy across the whole firm. Nothing in delegation alters positions in the scalar chain.
Under Section 149 of the Companies Act, 2013, a listed company must have independent directors constituting at least:
1. One-third of the board
2. One-half of the board
3. Two-thirds of the board
4. One director, whatever the size of the board
Show answer
Answer: A — One-third of the board
Section 149(4) requires every listed public company to have at least one-third of the total number of directors as independent directors, and Schedule IV lays down the code of conduct they must follow. Independence is the mechanism that addresses the agency problem created by the separation of ownership from control: directors with no material relationship to management are expected to check it on the shareholders' behalf. SEBI's listing regulations go further for some companies — requiring half the board to be independent where the chairperson is an executive or a promoter — but the statutory floor in the Companies Act is one-third.
Which leadership theory holds that no single style is best and that the effective style depends on the maturity of the followers?
1. Hersey and Blanchard's situational leadership
2. The great man theory
3. Blake and Mouton's managerial grid
4. Trait theory
Show answer
Answer: A — Hersey and Blanchard's situational leadership
Situational leadership is a contingency theory: it matches four styles — telling, selling, participating and delegating — to the readiness or maturity of the followers, moving from high direction for the inexperienced to high delegation for the capable and willing. Its whole premise is that the right style is not fixed. The great man and trait theories attribute leadership to inborn qualities of the leader and say nothing about followers. The managerial grid is a behavioural theory that does hold one style, 9,9 team management, to be best in all cases, which is precisely what contingency theories deny.
An ethical framework that judges an action solely by whether it conforms to a duty or rule, regardless of its consequences, is:
1. Deontology
2. Utilitarianism
3. Virtue ethics
4. Ethical relativism
Show answer
Answer: A — Deontology
Deontology, associated with Kant, holds that some acts are right or wrong in themselves because of the duty they fulfil or breach — telling the truth, keeping a promise — and that a good outcome cannot redeem a wrongful means. Utilitarianism is its opposite on exactly this point: it judges by consequences, seeking the greatest good for the greatest number, so it can excuse a lie that saves jobs where deontology cannot. Virtue ethics judges neither the rule nor the outcome but the character the act expresses. Relativism denies that any standard applies across cultures and is not one of the three frameworks the syllabus names.
A wide span of control produces an organisation structure that is:
1. Flat, with fewer levels and more delegation
2. Tall, with many levels and close supervision
3. Informal, with no defined reporting lines
4. Centralised, with all decisions at the top
Show answer
Answer: A — Flat, with fewer levels and more delegation
Span of control is the number of subordinates reporting directly to one manager. If each manager supervises many people, fewer managers and fewer layers are needed to cover the same workforce, so the structure is flat; communication travels through fewer levels and managers, unable to watch everyone closely, must delegate. A narrow span produces the opposite, a tall structure with many levels and close supervision. The formal-informal distinction and the degree of centralisation are separate dimensions of structure and are not determined by the span, though a wide span usually accompanies decentralisation in practice.