(i) Informal Groups:

The behavior of an individual worker is regu­lated by the informal social group. The group determines the norms of behavior and exercises a powerful influence on employees’ attitudes and performance. Therefore, management should deal with workers as members of work-groups rather than as individuals.

(ii) Social factors in output:

An organization is a social system, some­thing more than a formal structure of functions. People are no simply economic beings but socio-psychological beings. Therefore, social and psychological factors (non-economic rewards, interpersonal relations, etc exercise a much greater influence on their behavior and performance than economic and physiological factors. Management is a social process wherein the human element predominates.


Therefore, every manager should adopt a sound human approach to all managerial problems in his dealing with day-to-day activities.

(iii) First-line Supervision:

The supervisory climate exercises an important influence on employee satisfaction and productivity. For instance, in the bank wiring room friendly and cooperative supervision helped in increasing productivity.

The first-line supervisor holds the key to employee motivation. Effective supervision calls for understanding of individual problems of group renumbers through intimate personal contacts.


(iv) Communication and Consultation:

Hawthorne Experiments revealed the significance of two-way communication in securing wor­kers’ cooperation and participation in the decision-making process. Workers tend to be more productive when they are given the opportunity to express their feelings, opinions and grievances.

The desire of emp­loyees to express their views and have a voice in decision-making pro­vides them social satisfaction. In order to win Mr. Cooperation and support employees should be kept informed and consulted-in the deci­sion-making process.

(v) Leadership:


Leadership practices and work group pressures have significant impact on employee satisfaction and performance. Democ­ratic style is conducive to employee satisfaction and higher productivity. The informal leader exercises a greater influence than the supervisor on the behavior and output of workers.

(vi) Employee behavior and Conflict:

Conflicts may arise between the organization and the groups composing it. Maladjustment of indi­vidual and organisation may also give rise to conflicts. Bad behavior and poor performance on the part of employees is an expression of their discontent with work situation.

An effective manager should find out the causes of employee behavior rather than reprimanding the emp­loyees out rightly.


(vii) Integrating Pay with Social Needs:

Employees are not purely rational economic beings. They do not work for material rewards alone with reasonable satisfaction of physiological needs, social needy become the prime motivator of human behavior.

Therefore, financial incentives must be designed for increasing the informal relations rather than disintegrating groups through pay competition between indivi­duals.

(viii) New conception of Personnel Management:


New techniques and tools of personnel management are required to satisfy the higher level needs of employees and to carry out social responsibilities of manage­ment.