ACCA paper 1 3 managing people 2005 answ 1

Answers



Part 1 Examination – Paper 1.3
Managing People
1

December 2005 Answers

Leaders accept responsibility for the outcomes of the groups or teams they lead. While leaders have to exercise authority, the way
in which this is done (the style of leadership) might vary. It is generally accepted that a leader’s style of leading can affect the
motivation, efficiency and effectiveness of the employees. Some leadership theories present two basic choices – a task centred on
one hand and an employee centred on the other. Tannenbaum and Schmidt suggest that leadership style is best described as a
continuum, the appropriate style depending on the characteristics of the leader, the subordinates and of the situation. Adair looks
at three basic needs that result in differing leadership styles. Known as action centred leadership, it is a process made up of three
inter-related variables, the needs of the task, the group and the individual. The leader needs to balance the relative importance of
all three variables. However the situation requires that emphasis is given to identifying and acting upon the immediate priority.
(a)

(i)

Tannenbaum and Schmidt leadership theory is based on a continuum that suggests a range of styles between autocratic
and democratic, but without any suggestion that one style is right or wrong.
DICTATORIAL
The manager makes decisions and enforces them – TELLS
The manager sells his decisions to subordinates – TELLS AND SELLS
AUTOCRATIC
The manager suggests own ideas and asks for comments – TELLS AND TALKS
The manager suggests sketched ideas, asks for comments and amends the ideas as a result – CONSULTS
DEMOCRATIC

The manager presents a problem, asks for ideas, makes a decision from ideas – INVOLVES
The manager allows subordinates to discuss and decides – DELEGATES
LAISSEZ-FAIRE
The manager allows the subordinates to act as they wish within specified limits – ABDICATES

(ii)

Tannenbaum and Schmidt’s continuum recognises that the appropriate style depends upon four factors:
the leader
personality, values, natural style
the subordinates
their knowledge, experience, attitude
the situation
forces such as the organisational culture, time pressures, levels of authority and responsibility
the environment
ecology pressures, education changes, union power base

(b)

Dean Thomas is democratic to laissez-faire. He presents tasks, allows discussion and room for ideas from his team members.
He involves them and gives them relative freedom to carry out their tasks. He fluctuates along the Tannenbaum and Schmidt
continuum.
Lee Allen is group orientated at times, but the need of the task takes priority and then he becomes dictatorial. He obviously
considers the situation and his management style differs depending on the highest priority, how he perceives the capability
of his subordinates, and the environmental pressure he faces.

(c)

A contemporary approach to leadership is to regard it as being made up of a number of different skills. This has been extended
to the approach known as ‘action centred leadership’. This recognises that leadership occurs within three inter-related

variables: the task, group and individual needs.
Action centred leadership is a process made up of three inter-related variables, the needs of the task, the group and the
individual. The leader needs to balance the relative importance of all three variables; however the situation requires that
emphasis be given to identifying and acting upon the immediate priority.
Task needs are setting objectives for the team or group, planning and initiating the task or tasks, allocating responsibilities,
setting and verifying performance standards and establishing a control system.
Group needs involve team building so that mutual support and understanding is achieved, developing appropriate
independence within the group, setting of agreed standards, provision of training as required and appropriate and, most
importantly, establishing communication and information channels.
The individual needs recognise the development of individual needs and achievement, motivation by recognition, the
encouragement of creativity, the delegation as far as possible of authority to encourage group support and to attend to any
problems or grievances.
Lee Allen displays some of the characteristics of action centred leadership, although he is clearly more task driven especially
when deadlines have to be met. He needs to develop greater skills in group and individual needs to address the absentee
problem.

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(d)

Feidler suggests that there is a relationship between styles of leadership and team or group effectiveness. He distinguishes
between two types of leader: psychologically close or psychologically distant managers.
Psychologically close managers prefer informal relationships with staff, are often over concerned with good human relations
and favour informal contacts rather than formal meetings. Feidler also described this approach as relationship oriented. It is
clear from the scenario that this is Dean Thomas’s approach.
Psychologically distant managers prefer formal relationships, tend to be reserved in their personal relationships with staff
(although conversely often have good inter-personal skills) and prefer formal meetings. This approach Feidler also called task
oriented. This is Lee Allen’s approach.
Emma Jenkins is uncomfortable with the formal, distant approach taken by Lee Allen. She would be more comfortable and

productive in the more informal approach taken by Dean Thomas.

2

The management task is not straightforward, nor as prescriptive, as much management teaching suggests. The work of Henry
Mintzberg is particularly interesting because it points to the fractious nature of the task.
(a)

Henry Mintzberg was concerned with what managers actually do, rather than what the long accepted theory suggested they
do.
He showed that there is a difference between what they say they do and what they actually do, and observes that the task
is fragmented.

(b)

He noted three basic management roles, grouped into three areas:
INTERPERSONAL role ‘leading’.
This role arises from the manager’s formal position within the organisation and the consequent authority which arises from
it.
He suggests three categories:
Figurehead:
Because of the formal authority and position in the organisation, the manager acts as a focus both internally and externally,
but this is not necessarily a formal leadership role. Often in reality the manager is simply a figurehead.
Leader:
Brings together organisational and individual goals and needs, especially through motivation, hiring and firing.
Liaison:
Maintains a network of relationships within and especially outside the organisation. A substantial amount of management
time is spent fulfilling this role.
INFORMATIONAL role ‘administrating’.
This role arises because managers have access to and contact with all staff and many contacts outside the organisation.

Monitor:
The manager ‘monitors’ the environment by receiving information (internal and external) and transmitting it to others. A great
deal of information may be of an informal nature.
Disseminator:
Passes on factual and value information to the department.
Spokesman:
Acts as the spokesman for the organisation by providing information about the organisation, both internally but especially
externally.
DECISIONAL role ‘fixing’.
This role is the most crucial and arises from the manager’s position of formal authority, which means that he or she has
unique access to information. Consequently, the manager is the only person able to take decisions which arise from and affect
the department.
Entrepreneur:
The manager makes decisions about changing what happens within the organisation or department by initiating action and
encouraging change, especially in a changed environment.
Disturbance Handler:
Has to make decisions about events because these events are often outside his or her control. Has to react to unpredictable
situations. Thus it is important to be able to react as well as plan.
Resource Allocator:
Central to the organisation, the manager has to take control of the allocation of scarce resources and determine the direction
of the organisation.

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Negotiator:
Negotiates inside and outside the organisation and at the same time commit resources. A great time user.
These three basic management roles are not all embracing and change depending upon the manager’s position in the
organisation.

3

The selection of a suitable employee is fundamental to the success of an organisation. In the first instance, the application form
obtains information about a potential employee simply and in a number of different ways. However, the application form is often
poorly constructed, asks the wrong questions or fails in its function to assist management.
(a)

The main purpose of the application form is to identify candidates closest to the existing or previously prepared person
specification. In addition, it can eliminate unsuitable candidates and act as a preliminary to interview. It can also form the
basis of future human resources by establishing a record keeping system for future reference.

(b)

The application form should be able to provide information on personal details on age, address and family background. It also
provides information about the candidate’s education and employment experience, present employment terms, experience
and leisure interests. It is particularly useful in assessing the candidate’s effectiveness in writing, self expression and ambition
and character.
In addition, the application form should contain a general section allowing the applicant to express career ambitions and
aspirations in his or her own words.

4

A personal development plan is a clear progressive action plan for an individual which incorporates a wide set of developmental
opportunities including formal training. The concept of the personal development plan is one which enables employees to link their
development needs with those of the organisation and thus to motivate them and to improve morale.
Preparation of a personal development plan:
STEP 1 – Analyse the current position/job analysis:
Identifying the skills required for future work and the current skills of each of the job holders. A manual skills analysis can be
conducted where the hand, finger and body movements are recorded in great detail. This can lead to a faults analysis where the
analyst produces a specification showing what typically causes frequently occurring faults and how to identify and resolve them.

Analysis of the required skills can also be achieved through a personal SWOT (Strengths, Weaknesses, Opportunities and Threats)
Analysis. The manager has an input into this by identifying the skills required of the employee on a simple grid:
THE INDIVIDUAL SKILL SWOT ANALYSIS
Performance
High
Low
Liking of
Skills

High

Like and do well

Like but don’t do well

Low

Dislike but do well

Dislike and don’t do well

The outcome of this exercise is to include more of the employees’ individual interests into their actual role. The analysis of the
current knowledge and skills of the job-holder can be found from appraisals and observations.
STEP 2 – Set goals to cover performance in the existing job:
An outline of the individual development needs is found from the skills analysis. Identify deficiencies in the current skills of job
holders and outline the necessary development needs.
Forecast future changes in the current role and identify goals. A deficiency list is produced which is used to formulate an individual
training plan. As far as reasonably possible all objectives should be SMART (Specific, Measurable, Attainable, Realistic and Timely).
This is then used to identify the training required.
STEP 3 – Draw up the action plan:

All the different development needs are collated from the sources outlined in the first two steps and are entered into an action plan
with the most important training identified first.

5

It is often believed that employment rewards are based simply on payment. However, as individuals become more discerning, they
seek more from employment than monetary reward alone.
It is important for managers to understand that monetary rewards are in many ways less important in the modern economy than
previously thought, especially in services and the professions.
(a)

Intrinsic rewards are within the control of the individual and include feelings of personal satisfaction, status, recognition,
responsibility and pride in the work.

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(b)

Extrinsic rewards are those forms of reward which are not in the control of the individual but at the disposal of others; usually
the individual’s superior. Extrinsic rewards can be ‘seen’ and include wages and salaries and also ‘perks’ such as bonuses,
prizes and working conditions.

(c)

Common types of extrinsic reward include most importantly basic pay and conditions, often added to by bonuses and
incentive schemes. Performance related pay has entered many service activities where traditional ‘bonuses’ do not readily
apply. In addition, share option schemes have become popular as have car usage or loans and other schemes of various

types, such as holidays as a form of extra bonus. Some organisations offer payment benefits beyond those required by law;
pension scheme generosity often based on non-contributory arrangements or other forms of enhanced pension schemes.
Private health care insurance and other insurance, including life, disability and sickness are offered beyond those required by
law or tradition. Crèches and other facilities aimed at family employees are popular, as are subsidised loans for purchase of
goods other than those of the employer and medical facilities or subsidised payments to private health schemes.

Any organisation which employs individuals will at times be the subject of conflict of some sort. Conflict is not necessarily a sign
of problems, but nevertheless managers need to recognise and control it as appropriate.
(a)

Conflict which is constructive can lead to outcomes which can be seen as beneficial to the organisation because it often
challenges existing business practices and ideas. It can introduce different ideas, solutions to problems and define power,
authority and responsibility limits. It can also encourage creativity, innovation and change and is capable of bringing problems
into the open.

(b)

Destructive conflict can lead to outcomes which can be seen as damaging to the organisation overall. It can undermine
personal relationships, distract attention from the task, dislocate group cohesion and alienate individuals and groups from
another.

(c)

The causes of conflict include departmentalisation and specialisation, the nature of the work involved and formal objectives
diverging from the objectives actually being pursued by management or individual departments or where objectives are
concealed by management. In addition, conflict can occur when individual roles are poorly specified, departmental and
individual boundaries overlap or contractual relationships are unclear. Other causes include issues where individuals are
undertaking simultaneous roles, or there are differences in perception as to an individual’s position in the organisation or the
individual’s effort and output in comparison to others. Differences can also arise through the individual’s perceived authority
and importance, often leading to personality differences and clashes.

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Part 1 Examination – Paper 1.3
Managing People
1

(a)

(i)

(ii)

(b)

December 2005 Marking Scheme

Identification and description of the four broad leadership styles described
by Tannenbaum and Schmidt.
(Three marks per style)
Brief description of the four factors.
(One mark each)

(Up to 12 marks)
(Up to 4 marks)
(Maximum for part (a) 16 marks)

The Tannenbaum and Schmidt leadership style which best describes
(i)

(ii)

Dean Thomas
Lee Allen

(Up to 4 marks)
(Up to 4 marks)
(Maximum for part (b) 8 marks)

(c)

Explanation of action centred leadership and justification of Lee Allen’s approach.

(Up to 8 marks)
(Maximum for part (c) 8 marks)

(d)

Description of Feidler’s two approaches and appreciation of Emma Jenkin’s position.

(Up to 8 marks)
(Maximum for part (d) 8 marks)
(Total for question 40 marks)

2

(a)

Brief description of Mintzberg’s view of the management process.

(b)

Description and discussion of the three management roles

(Up to 3 marks)
(Maximum for part (a) 3 marks)

Interpersonal role
–
Figurehead
–
Leader
–
Liaison

(Up to 4 marks)

Informational role
–
Monitor
–
Disseminator
–
Spokesman

(Up to 4 marks)

Decision role
–
Entrepreneur

–
Disturbance handler
–
Resource allocator
–
Negotiator

(Up to 4 marks)
(Maximum for part (b) 12 marks)
(Total for question 15 marks)

3

(a)

Description of the application form’s purpose.

(One mark per item up to 5 marks)

(b)

Description of the information obtained by the application form.

(One mark per item up to 10 marks)
(Total for question 15 marks)

4

Explanation of the three steps in the preparation of a personal development plan.
Step 1 – Analyse the current position

(Up to 5 marks)

Step 2 – Set goals to cover performance of the existing job

(Up to 5 marks)

Step 3 – Draw up action plan

(Up to 5 marks)
(Total for question 15 marks)

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5

(a)

Explanation of ‘intrinsic’ rewards.

(Up to 3 marks)

(b)

Explanation of ‘extrinsic’ rewards.

(Up to 3 marks)

(c)

Decription of any six extrinsic rewards.

(One and a half marks per reward up to 9 marks)
(Total for question 15 marks)

6

(a)

Explanation of constructive conflict.

(Up to 5 marks)

(b)

Explanation of destructive conflict.

(Up to 5 marks)

(c)

Brief description of any five causes of conflict.
(One mark per cause)

(Up to 5 marks)
(Total for question 15 marks)

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