GROUP DYNAMICS

ASST PROF. JONLEN DESA

GROUPGROUP

Group can be defined as two or more persons interacting & working together for a common purpose.

When people work together in groups rather than individuals, goals can be achieved.

However working in a group is a complex task. Different groups are formed for different purposes. A group is a collection of interacting individuals for a

particular purpose Members of a group have mutually dependent

relationships. Crowds do not constitute groups

FEATURES

Interaction among the members Common interests or goals People see themselves as members of the group Two or more people are required to form a group Groups vary in their size.

GROUP DYNAMICS

Group Dynamics refers to the interactions between the members of a group.

The social process by which people interact face to face in small groups is called group dynamics.

Group dynamics is a social process where people interact with one another.

REASONS FOR JOINING OR FORMING GROUPS

Proximity Interaction Security Affiliation Self esteem Identity

CONCEPTS/COMPONENTS OF GROUPS

GROUP SIZE GROUP COMPOSITION GROUP LEADERSHIP GROUP NORMS GROUP COHESIVNESS GROUP TASKS ROLES

TYPES OF GROUPS

ORGANIZATIONAL STRUCTURE

FORMAL GROUPS Formal Groups are those created by the top level

management for the purpose of achieving a common objective.

These groups are created for the accomplishment of a particular objective or task.

An entire department in a firm can be considered as a formal group as members work towards achievement of departmental and organizational goals.

The organization allocates tasks and responsibilities to each group member.

FORMAL GROUPS

Formal group is a group formed by the organization to achieve a common task.

It has mutual benefit for all the group members. Hierarchy of authority exists. Committees, departments, management teams

are some examples of formal groups Command Group and Task Group are the two

types of formal groups.

FEATURES OF FORMAL GROUPS A formal group represents people working

together, towards the achievement of organizational objectives.

It mutually benefits all the members. Formal groups exists in all organizations. Formal groups have an official status. Formal groups are governed by rules and

procedures. There exists authority, responsibility and

accountability relationship between superior and subordinates.

ADVANTAGES OF FORMAL GROUPS

Objectives are easily achieved. Efforts of all members are well

coordinated. Subordinates are made accountable for

the work.

DISADVANTAGES OF FORMAL GROUPS

Formal groups are rigid. Individual objectives often influence group

objectives. Decision making is time consuming due to

constant consultation. Employees get limited opportunity to show

initiative.

INFORMAL GROUPS

An informal group is one that is formed by the employees themselves.

Informal group is a network of personal relations which arises spontaneously as people interact with each other.

These groups are not established by the organization and they exist within the organization and formal group itself.

The main reasons for forming informal groups are the need for companionship, common interests and recreation.

INFORMAL GROUPS

Informal groups emerge out of constant interaction among the members of a group and this interaction includes non-official conversations.

Interest groups and friendship groups are the two types of informal groups.

Informal groups have no definite structure and there are no formal rules as in the case of formal groups.

Informal groups fulfill the need for affiliation.

INFORMAL GROUPS

Managers in organizations know the need for informal group and hence they do not prohibit the formation of such groups.

Informal groups are the best means of human communication.

Grapevine is the channel used in informal communication. Rumors are a common feature of informal communication.

Sometimes managers make use of informal communication to bring about changes in the firm.

FEATURES OF INFORMAL GROUPS

It is unwritten and develops unconsciously. It is not governed by any established rules. It exists within the formal organization. It helps develop close relationships among the

members. It uses grapevine as a means of communication. It brings people together to realize common

interests.

ADVANTAGES OF INFORMAL GROUPS

It reinforces each member’s individual personality.

It provides opportunity to display creativity.

It reduces the burden of supervision. It help fulfill social and affiliation needs.

DISADVANTAGES OF INFORMAL GROUPS

It puts up resistance to change. It spreads rumors through grapevine. It bounds an individual by group decisions. It may wipe out individual identity because the

group dominates. It may use the group as a protective shield

against the management.

FORMAL & INFORMAL GROUPS

FORMAL VS INFORMAL GROUPSSR.NO

Point of Distinction

FORMAL GROUPS(FGs)

INFORMAL GROUPS(IFGs)

1. Meaning A group created by the TLM for accomplishment of a particular task.

A group created among the employees to meet affiliation needs.

2. Formation FGs are created by the TLM deliberately and consciously.

IFGs develop among employees within the formal organizations spontaneously.

3. Relationship Superior-Subordinate relationship is clearly defined.

Superior-Subordinate relationship is absent.

4. Communication Communication is through formal channels.

Communication is normally through grapevine.

FORMAL VS INFORMAL GROUPS5. Suitability Suitable for large firms. Suitable for small firms

6. Appearance It can be shown through organizational charts.

It cannot be shown through organizational charts.

7. Behavior Norms FGs operate as per rules & procedures.

IFGs operate as per informal understandings.

8. Stability It is a stable type of group.

There is no stability.

9. Authority Members get authority through delegation or from official position.

Some members may command more authority by virtue of their personal qualities.

10. Focus It is built around jobs It is built around people and their roles.

FORMAL VS INFORMAL GROUPS11. Rewards &

PunishmentsRewards are monetary & non-monetary, whereas punishments is for breaking rules.

Reward is continuation of group membership whereas punishment may be removal from the group.

12. Termination FGs may be terminated by organizational process or when a particular task is accomplished.

IFGs are terminated when relationships become sour.

13. Types Command & Task Groups. Interest & Friendship Groups.

14. Status FGs have an official status. IFGs have no official status.

DIRECTORS A Director is an appointed or elected member of

the board of directors of a company. He is responsible for managing the affairs of the

company and also for implementing the company’s policies.

Directors are the agents of the company and the representatives of the shareholders.

Individually Directors Collectively Board of Directors Only an individual can be appointed as a director

of the company.

BOARD OF DIRECTORS (B.O.D)

A BOD is a body of elected or appointed members who jointly oversee the activities of the company.

They are the representatives of the company who are entrusted with the responsibility of running the business of the company.

A company is an artificial person, which acts through human agency.

This human agency is termed as B.O.D. The B.O.D is the top administrative organ of the

company.

BOARD OF DIRECTORS (B.O.D)

BODs are termed as the brain of the company, as the company acts only through its directors.

They are elected representatives of the shareholders.

The BODs have to function within the scope of the company’s MOA & AOA.

The directors should use their powers for the benefit of the company.

QUALIFICAIONS OF A DIRECTOR

The Companies Act 1956, has not laid down any specific academic or shareholding qualifications for a director.

A director need not be a shareholder of a company, unless the articles state so.

However, a director should have some stake in the company.

Hence, a director is required to purchase qualification shares, only if the articles permit the same.

QUALIFICAIONS OF A DIRECTOR Qualification shares are those shares purchased by a

person in order to become a director of the company. If the articles require, then such eligible person is

required to purchase qualification shares, within 2 months of his appointment as director.

On the expiry of 2 months, he automatically vacates his office, if he fails to acquire these qualification shares.

These qualification shares can be purchased from the open market and not only from the company.

The value of qualification shares should not exceed Rs 5000.

APPOINTMENT OF DIRECTORS

Only, individuals and not firms or association can be appointed as a director.

Private Co. Minimum 2 Directors Public Co. Minimum 3 Directors The person eligible to be a director should

purchase qualification shares, within 2 months of his appointment.

The minimum and maximum number of directors are mentioned in the co.’s AOA.

DISQUALIFICATION FOR APPOINTMENT AS A DIRECTOR

The following persons shall not be capable of being appointed as directors of any company:

A person of unsound mind.

An insolvent person.

A convicted person.

A defaulter with respect to payment of call money.

APPOINTMENT OF FIRST DIRECTORS

The first directors of a company are appointed by the promoters of the company.

Their names are mentioned in the AOA.

In the absence of the both the above points, the subscribers to the MOA, are deemed to be the first directors of the company, until further directors (subsequent directors) are appointed.

FIRST DIRECTORS APPOINTMENT

The first directors are required to purchase qualification shares.

They have to sign the prospectus before it is filed and issued to the public.

They are liable for misstatements in the prospectus. The first directors will retire at the first AGM of

the company and at this meeting, the shareholders will elect the subsequent directors.

APPOINTMENT OF SUBSEQUENT DIRECTORS The subsequent directors of the company are elected by

the shareholders at the AGM. At every AGM, 2/3rds of the directors retire by rotation

and new ones are appointed. Hence only 1/3rds are permanent directors. These provisions are applicable only for public

companies. A retiring director shall be eligible for re-election. He can be reappointed if he is eligible and offers himself

for reappointment. Directors are elected by simple majority and through

passing of a resolution.

POSITION OF DIRECTORS IN COMPANY MANAGEMENT( LEGAL STATUS OF DIRECTORS)

A. DIRECTORS AS AGENTS Agents are people who act on behalf of another person

termed as the principal. Agents are required to carry out all the tasks and

activities assigned by the principal. A director is an agent of the company, who represents it. The directors must conduct the business with reasonable

care and diligence and within the scope of the MOA and AOA.

They enter into contracts and put their signatures on behalf of the company.

The directors represent the company to third parties.

B. DIRECTORS AS TRUSTEES A trustee is a person entrusted with a particular

responsibility or object. As a trustee, a director should use his powers for the

benefit of the company. He should not misuse them for his own gain.

They should protect the funds, assets, property and the overall interest of the company.

They should not make any secret profits nor should they disclose internal and confidential policies of the co.

Even though, they are not the owners of the company, they have to safeguard its assets & properties.

C. DIRECTORS AS MANAGING PARTNERS Directors are responsible for managing the operations of

the company. Directors are elected by the shareholders to represent

them in the management of the company. They have decision making power and this power should

be used for their benefit and that of the company. Directors make decision regarding issue, allotment,

forfeiture, calls, transfer of shares and also deciding upon the rate of dividend.

They have to manage the company in accordance with the MOA & AOA of the company.

POWERS AND FUNCTIONS OF DIRECTORS

Since the directors are elected representatives of the company, they have certain powers and functions which are stated in the MOA & AOA of the company.

They should use these powers for the benefit of the firm.

Their powers fall under 2 categories:

1. STATUTORY POWERS

To act as a board in order to exercise their powers. Directors shall exercise powers only at board

meetings. They can make calls on shares, issue debentures

of the company and borrow money. The directors can delegate powers to other

managerial personnel by passing resolutions at board meetings.

2. MANAGERIAL POWERS The directors can make contracts on behalf of the

company. Power to recommend dividends and decide terms of

issue of additional shares and debentures. Power to allot, forfeit and transfer of shares of the

company. Determine the organizational structure of the company. Deciding on the general objectives and formulation of

policies for the company. Power to appoint directors to fill up any casual

vacancies and also to appoint higher executives.

ROLE OF BOD The BOD of the company play a very important role in

managing the company. They are responsible for its operations & functioning. They act in accordance to the provisions of the

company’s MOA & AOA. They play a crucial role in representing the company to

outsiders. They help raise funds for the company when required. Directors should fulfill all their duties & responsibilities

COMMITTEES

COMMITTEES A group of people officially delegated to perform a

function, such as investigating, reporting, or acting on a matter is known as a committee.

Committees are adopted within staff and line functions of an organization.

These are appointed for quick and coordinate decisions through collective thinking.

Committees refer to a body of persons, jointly entrusted with the responsibility of performing a particular task.

The success of a committee depends upon the efficiency of the chairman.

RECENTLY FORMED COMMITTEES

Committee to probe IPL match fixing Committee to probe black money Committee to look investigate swine flu cases

These committees are appointed to investigate a particular event, collect maximum information on it and then report it to the appointing authority.

Based upon the reports received, final decisions or judgments are passed.

TYPES OF COMMITTEES

Formal & Informal Committees Permanent & Temporary Committees Joint Advisory Committees Consultative Committees Finance Committees

DEFINITION

“Committee is a group of persons to whom as a group some matter is committed” - Koontz & O’Donnell.

CHARACTERISTICS

Committees are normally of departmental executives. Members of committees are experienced and skilled. Committees are normally temporary in character. Reporting after study. Existence of a chairman. Recommendations through deliberations.

NEED FOR COMMITTEES

Collective decisions Effective communication Democratic Management Effective coordination Widening outlook of managers

ADVANTAGES OF COMMITTEES Pools information, knowledge & ideas. Promotes coordination. Brings continuity in policy matters. Facilitates decentralization in decision making. Introduces dispersal of authority Facilitates effective communication. Facilitates training for management development. Facilitates pooling of managerial resources. Motivates executives.

DISADVANTAGES OF COMMITTEES Delay in decision making. No responsibility for decision suggested. Costly decisions. Compromised decisions. Decisions lack secrecy. Wastage of time of executives. Breeding ground for inefficiency Dominance by strong personality Problem of instability. Lack of personal appeal.

GROUP BEHAVIOUR IN COMMITTEES

It refers to how committee members behave in a group when they officially come together.

Group behavior in committees can be understood with reference to the following.

Chairman-Member relationship Decision process Group pressure Participation

1. Chairman – Member relationship

Every member in the committee are expected to be knowledgeable and made responsible to make the task successful

Committees operate on the principle of one- man one vote.

The Chairman enjoys casting vote in case of a tie to arrive at a decision.

The chairman is responsible to integrate the ideas of committees members.

He has to see that the meetings are conducted smoothly. Proper decorum should be maintained during the conduct

of the meeting to make discussions meaningful

2. Decision Process

There are 3 stages of group decision making: Firstly all relevant facts and information pertaining to

the items on the agenda are collected by the group

Secondly ,the relevant facts and information collected is evaluated by the group to form common opinion.

Thirdly these steps enable the group to obtain healthy suggestions and appropriate solutions to the problem

3. Group Pressure

In committee meetings group members want to get popular support for their ideas , suggestions and discussions

Members follow the lines of the group decision to avoid confrontation

When members follow the group decisions they establish loyalty to the group

4. Participation

Group behaviour motivates members to participate in the discussions.

All members are expected to participate willingly in discussions.

Only when members participate in the discussions they make positive contribution.

Decision making becomes easier when members participate considering various pros and cons.

Hence, whole hearted participation and cooperation among the members will help bring positive results to such meetings.

MEASURES FOR MAKING COMMITTEES EFFECTIVE

Compact Group Proper Selection of members Dynamic and capable chairman Precise purpose Supply necessary data and facilities Suitable training to committee members Economical operations Periodic review of committees Systematic follow-up