Chapter 1

Management: Science, Theory, & Click to edit Master subtitle style Practice

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Definition of Management: Its Nature and Purpose

Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims.

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Functions of Management

Planning Organizing Staffing Leading Controlling

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Managerial Functions at Different Organizational Levels

All managers carry out managerial functions, but the time spent for each function may differ.

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Time Spent in Carrying Out Managerial Functions

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Managerial Skills and the Organizational Hierarchy

The four skills required of administrators:

Technical skills Human skills Conceptual And Design skills

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Skills and Management Levels

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The Goals of All Managers and Organizations

The aim of all managers should be to create a surplus. Thus, managers must establish an environment in which people can accomplish group goals with the least amount of time, money, materials, and personal dissatisfaction.

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Characteristics of Excellent & Most Admired Companies

Oriented toward action Learned about the needs of their customers Promoted managerial autonomy and entrepreneurship Achieved productivity by paying close attention to the needs of their people Driven by a company philosophy often based on the values of their leaders Focused on the business they knew best Had a simple organization structure with a lean staff
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as well as decentralized, depending on

Trends

Technology Globalization Entrepreneurship

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Productivity

Productivity implies effectiveness and efficiency in individual and organizational performance. Productivity= Input Output Increasing outputs with the same inputs Decreasing inputs but maintaining the same outputs Increasing the outputs and decreasing the inputs to change the ratio favorably

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Definitions of Effectiveness and Efficiency

Effectiveness is the achievement of objectives. Efficiency is the achievement of the ends with the least amount of resources (time, money, etc.).

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Managing: Science or Art

Managing as practice is an art; the organized knowledge underlying the practice is a science.

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Management & Administration

Administration Traditional & bureaucratic Management More modern & dynamic Refers to decision making & Refers to execution & determination of what is to be implementation of agreed done & how goals Normative by nature Stress on process, & elaborate rule governed procedure Focus on ideology Importance of uniformity & standards Priority is governance Problem solving by nature Stress on output by often not trying to minimize something, but optimizing the opposing forces. Focus on skills Importance of variance & context Priority is performance

The Evolution of Management Thought

Scientific management

Frederick Taylor, Henry Gantt, Frank & Lillian Gilbreth Henry Fayol Hugo Munsterberg, Walter Dill Scott, Max Weber, Vilfredo Pareto, Elton Mayo & F J Roethilisberger Chester Bernard F Drucker, W Edwards Deming, Laurence Peter,

Modern operational management theory

Behavioural sciences

Systems theory

Modern management thought

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Frederick Taylor & Scientific Management

Fundamental principles that Taylor saw underlying scientific management:

Replacing rules of thumb with science (organized knowledge) Obtaining harmony, rather than discord, in group action Achieving cooperation of human beings, rather than restricted output Developing all workers to the fullest extent possible for their own and their companys highest prosperity.

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Henri Fayols 14 Principles of Management

Division of labour Authority Discipline Unity of Command Unity of Direction Subordination of Individual Interest to Common Good Remuneration Centralization The Hierarchy Order Equity
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Stability of staff

Elton Mayo & F J Roethlisberger

The Hawthorne studies

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Patterns of Management Analysis

The Managerial Roles Approach

Interpersonal roles Informational roles Decision roles

The Management Process or Operational Approach

Draws together the pertinent knowledge of management by relating it to the managerial job.

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The Systems Approach to the Management Process

Inputs and claimants The managerial transformation process The communication system External variables Outputs Reenergizing the system

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The Functions of Managers

Planning

Selecting missions and objectives as well as the actions to achieve them, which requires decision making Establishing an intentional structure of roles for people to fill in an organization Filling and keeping filled, the positions in the organization structure Influencing people so that they will contribute to organizational and group roles Measuring and correcting individual and organizational

Organizing

Staffing

Leading

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Controlling

Chapter 2

Management and Society: The External Environment, Social Responsibility, and Ethics

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The Organization and Its External Environment

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Operating in a Pluralistic Society

Managers operate in a pluralistic society, in which many organized groups represent various interests. Each group has an impact on other groups, but no one group exerts an inordinate amount of power. Many groups exert some power over business.

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The Technological Environment

Technology is the sum total of the knowledge we have of ways to do things.

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The Ecological Environment

Ecology pertains to the relationship of people and other living things with their environment, such as soil, water, and air. Land may be polluted by industrial waste such as packaging. Water pollution may be caused, for example, by hazardous waste and sewage. Air pollution can be caused by acid rain, vehicle exhaust fumes, carcinogens from manufacturing processes, and other sources.

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The Social Responsibility of Managers

Corporate social responsibility is seriously considering the impact of the company's actions on society. Social responsiveness is "the ability of a corporation to relate its operations and policies to the social environment in ways that are mutually beneficial to the company and to society.

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Arguments for Social Involvement

Public expectations Long-run profits Ethical obligation Public image Better environment Discouragement of further governmental regulation Balance of responsibility & power Stockholder interests Possession 5/28/12 of resources

Arguments against Social Involvement

Violation of profit maximization Dilution of purpose Costs Too much power Lack of skills Lack of accountability

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Ethics in Managing

Ethics is the discipline dealing with what is good and bad and with moral duty and obligation. Business ethics is concerned with truth and justice.

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Four levels of ethical questions in business

Societal Stakeholder Internal policy Personal

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Ethical Theories

The utilitarian theory suggests that plans and actions should be evaluated by their consequences. The theory based on rights holds that all people have basic rights. The theory of justice demands that decision makers be guided by fairness and equity, as well as impartiality.

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The tools of ethics

Values Rights & duties Moral rules Human relationships Common morality

Promise keeping Non malevolence Mutual aid Respect for others Respect for persons

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Institutionalizing Ethics

A code is a statement of policies, principles, or rules that guide behavior.

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Factors that May Raise Ethical Standards (a study)

Public disclosure and publicity The increased concern of a wellinformed public Government regulations Education to raise the professionalism of business managers

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Guidelines for International Business Ethics Focus China

International Business Ethics Labor Conditions Areas of Justice Toward Virtue Ethics

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Definition of WhistleBlowing

Whistle-blowing is making known to outside agencies what are considered unethical company practices.

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Trust as the Basis for Change Management

Traditionally, the concept of trust is equated with integrity, loyalty, caring, and keeping promises in the relationships between and among individuals. Belardo points out that trust should go beyond individual relationships and extend to the organization by creating a culture of trust that transcends individual leadership.

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Chapter 3

Essentials of Planning and Managing by Objectives

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Definition of Planning

Planning involves selecting missions and objectives and the actions to achieve them; it requires decision making, that is, choosing from among alternative future courses of action.

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Close Relationship of Planning and Controlling

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Types of Plans
Plans can be classified as: 1. Missions or purposes 2. Objectives or goals 3. Strategies 4. Policies 5. Procedures 6. Rules 7. Programs 8. Budgets

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Types of Plans

The mission, or purpose, identifies the basic purpose or function or tasks of an enterprise or agency or any part of it. Objectives, or goals, are the ends toward which activity is aimed. Strategy is the determination of the basic longterm objectives of an enterprise and the adoption of courses of action and allocation of resources necessary to achieve these goals. Policies are general statements or understandings that guide or channel thinking in decision making.

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Types of Plans cont.

Procedures are plans that establish a required method of handling future activities. Rules spell out specific required actions or nonactions, allowing no discretion. Programs are a complex of goals, policies, procedures, rules, task assignments, steps to be taken, resources to be employed, and other elements necessary to carry out a given course of action. A budget is a statement of expected results expressed in numerical terms.

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Steps in Planning
1. Being aware of opportunities 2. Establishing objectives or goals 3. Developing premises 4: Determining alternative courses 5. Evaluating alternative courses 6. Selecting a course 7. Formulating derivative plans 8. Quantifying plans by budgeting

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Steps in Planning

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Verifiable Objectives

Objectives are the important ends toward which organizational and individual activities are directed. An objective is verifiable when at the end of the period one can determine whether or not the objective has been achieved.

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The Nature of Objectives

Hierarchy of objectives

Key Results Areas: Areas in which performance is essential for success

Setting objectives and the organizational hierarchy Multiplicity of objectives

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Relationship of Objectives and the Organizational Hierarchy

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How to Set Objectives

Compare nonverifiable with verifiable objectives Guidelines for setting objectives

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Evolving Concepts in MBO

MBO as used in this book Management by objectives is a comprehensive managerial system that integrates many key managerial activities in a systematic manner and is consciously directed toward the effective and efficient achievement of organizational and individual objectives.

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Systems Approach to MBO

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Benefits of Management by Objectives

Clear Goals:

Motivate. Improve managing through results-oriented planning. Clarify organizational roles, structures, and the delegation of authority. Encourage commitment to their personal and organizational goals. Facilitate effective controlling, measuring of results, and implementation of corrective actions.

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Failures of Management by Objectives

List some failures and limitations of MBO. What would you do to overcome the failures?

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Chapter 4

Strategies, Policies, and Planning Premises

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Definition of Strategy and Policies

Strategy is the determination of the mission (or the fundamental purpose) and the basic long-term objectives of an enterprise, and the adoption of courses of action and allocation of resources necessary to achieve these aims. Policies are general statements or understandings that guide managers' thinking in decision making.

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The Strategic Planning Process

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The Strategic Planning Process

Inputs to the organization Industry analysis Enterprise profile Orientation, values, and vision Mission (purpose), major objectives, and strategic intent Present and future external environment Internal environment

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The Strategic Planning Process cont.

Development of alternative strategies Evaluation and choice of strategies Medium- and short-range planning Implementation through reengineering, staffing, leadership, and control Consistency testing and contingency planning

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Mission, Objectives, and Strategic Intent

Mission relates to the kind of business. Objectives are the end points for activities. Strategic intent is the commitment to win in the competitive environment.

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Definition of the TOWS Matrix

The TOWS Matrix is a conceptual framework for a systematic analysis that facilitates matching the external threats and opportunities with the internal weaknesses and strengths of the organization.

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TOWS Matrix for Strategy Formulation

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TOWS Matrix: 4 Alternative Strategies

SO strategy:

MaxiMaxi

WO strategy: MiniMaxi ST strategy: MaxiMini WT strategy: MiniMini

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Dynamics of the TOWS Matrix

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Application of the TOWS Matrix for Mergers, Acquisitions, Joint Ventures, and Alliances

Develop a TOWS Matrix for both companies before the merger, etc. Develop a TOWS Matrix of the joint company after the merger, etc. See Illustration of DaimlerChrysler merger in the closing section of Part 2

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Blue Ocean Strategy by Kim & Mauborgne and TOWS Matrix by Weihrich

Explore opportunities in uncontested markets (Opportunities in the TOWS Matrix) Example: Southwest Airline Be aware of competition in red ocean markets (bloody competition). Example, todays personal computers Value innovation: total company commitment to create value for the customer Blue ocean strategy and the TOWS Matrix (SO or WO strategies in uncontested markets)

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Business Portfolio Matrix

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Business Portfolio Matrix

Two dimensions

Relative competitive position (market share) Business growth rate

Four positions

Question marks Stars Cash cows Dogs

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Major Kinds of Strategies and Policies

Products or Services

What is our business? Who are our customers? What do our customers want? How much will our customers buy and at what price? Do we wish to be a product leader? What is our competitive advantage? Do we wish to develop our new products? What advantages do we have in serving customer needs? How should we respond to existing & potential competition? How far can we go in serving customer needs?

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Major Kinds of Strategies and Policies (contd..)

Marketing

Where are our customers & why do they buy? How do our customers buy? How is it best for us to sell? Do we have something to offer that competitors do not? Do we wish to take legal steps to discourage competition? Do we need, and can we supply, supporting services? What are the best pricing strategy & policy for our operation? How can we best serve our customers?

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Hierarchy of Company Strategies

The corporate-level strategy. Executives craft the overall strategy for a diversified company. Business strategies are developed usually by the general manager of a business unit. Functional strategies. The aim is to support the business and corporate strategies.

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Five Forces in Industry Analysis (Michael Porter)

Potential entrants

Suppliers

Competiti ve rivalry

Buyers

Substitutes
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Five Forces in Industry Analysis (Michael Porter) contd..

The competition among companies The threat of new companies entering the market The possibility of using substitute products or services The bargaining power of suppliers The bargaining power of the buyers or customers

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Porters Generic Strategies

Overall Cost Leadership Strategy Differentiation Strategy Focused Strategy (low cost or differentiation)

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Premising and Forecasting

Planning premises are the anticipated environments in which plans are expected to operate. Environmental Forecasting

Values and areas of forecasting Forecasting with the Delphi technique

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Forecasting with Delphi Technique

A panel of experts on a particular area are selected from both within & outside the organization. The experts are asked to make a forecast (anonymously). Answers are compiled & composite results fed back to the panel members. Further estimates of future are made with this result. Process may be repeated several times. When convergence of opinion begins to evolve, the results are then used as an acceptable forecast.

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Chapter 5

Decision Making

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Decision Making

Decision making is the selection of a course of action from among alternatives.

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Decision - Making Process

1. 2. 3.

Premising Identifying alternatives Evaluating alternatives in terms of the goal sought Choosing an alternative, that is, making a decision

4.

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Limited, or Bounded, Rationality

Limitations of information, time, and certainty limit rationality, even though a manager tries earnestly to be completely rational. Satisficing is picking a course of action that is satisfactory or good enough under the circumstances.

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Development of Alternatives and the Limiting Factor

A limiting factor is something that stands in the way of accomplishing a desired objective. The principle of the limiting factor: By recognizing and overcoming those factors that stand critically in the way of a goal, the best alternative course of action can be selected.
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Quantitative and Qualitative Factors

Quantitative factors are factors that can be measured in numerical terms. Qualitative, or intangible, factors are those that are difficult to measure numerically.

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Marginal Analysis

Marginal analysis is to compare the additional revenue and the additional cost arising from increasing output.

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Cost-Effectiveness Analysis

Cost-effectiveness analysis seeks the best ratio of benefit and cost.

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Selecting an Alternative: Three Approaches

When selecting from among alternatives, managers can use:
1. 2. 3.

Experience. Experimentation. Research and analysis.

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Bases for Selecting From Among Alternative Courses of Action

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Programmed and Nonprogrammed Decisions

Programmed decisions are used for structured or routine work. Non-programmed decisions are used for unstructured, novel, and illdefined situations of a nonrecurring nature.

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Nature of Problems and Decision Making in the Organization

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Creativity and Innovation

Creativity refers to the ability and power to develop new ideas. Innovation means the use of new ideas.

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The Creative Process

The creative process is seldom simple and linear. It generally consists of four overlapping and interacting phases:

1. Unconscious scanning 2. Intuition 3. Insight 4. Logical formulation or 5/28/12 verification

Rules for Brainstorming

1. 2.

No ideas are criticized. The more radical the ideas are, the better. The quantity of idea production is stressed. The improvement of ideas by others is encouraged.

3.

4.

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Chapter 6

The Nature of Organizing, Entrepreneuring, and Reengineering

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Organizational Roles
For an organizational role to exist and be meaningful, it must incorporate: 1. Verifiable objectives, which are a major part of planning. 2. A clear idea of the major duties or activities involved. 3. An understood area of discretion or authority so that the person filling the role knows what he or she can do to accomplish goals.

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Organizing involves:
1. The identification and classification of required activities. 2. The grouping of activities necessary to attain objectives. 3. The assignment of each grouping to a manager with the authority (delegation) necessary to supervise it. 4. The provision for coordination horizontally (on the same or a similar organizational level) and vertically (for example, corporate headquarters, division, and department) in the organization structure.
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Definition of Organization

Organization implies a formalized intentional structure of roles or positions.

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Formal and Informal Organization

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Formal and Informal Organization

Formal organization pertains to the intentional structure of roles in a formally-organized enterprise. The informal organization is a network of interpersonal relationships that arise when people associate with each other.

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Organization Chart

A graphical representation of an organization.

Conveys four kinds of information:

Includes different units of organization Work performed by different personnel Reporting relationships indicated by connecting lines

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What is a Department?

The department designates a distinct area, division, or branch of an organization over which a manager has authority for the performance of specified activities.

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Organization with Narrow Spans

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Organization with Wide Spans

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What is the Principle of the Span of Management?

The principle of the span of management states that there is a limit to the number of subordinates a manager can effectively supervise, but the exact number will depend on the impact of underlying factors.

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What Determines an Effective Span of management?

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Types of Business Organization

Criterion or basis Size Ownership Types of business organizations SME, Large organizations Sole proprietorship, partnership, Pvt. Ltd., Public Ltd., Co-operatives, Trusts & associations For-profit, not for profit Manufacturing, trading & services Domestic & Multinational, transnational or global, joint ventures and alliances Public sector & Private sector

Purpose Activity Origin Sector

Style of managementTraditionally managed, managed as per the western models, using adapted or hybrid management models. Reach of markets 5/28/12 Local, regional, national, international or multinational, global

Types of Business Organization (contd.)

Criterion or basis Decision making Product offering Types of business organizations Centralized, decentralized Standard and coordinated product offering in different markets or uncoordinated product offering in different markets adapted to the local conditions & preferences Ownership capital or debtfinanced, domestic funds or financed through FDI Listed or unlisted

Sources of finance

Listing on the stock exchange

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Difference between an Intrapreneur and an Entrepreneur

An intrapreneur is a person who focuses on innovation and creativity and who transforms a dream or an idea into a profitable venture by operating within the organizational environment. The entrepreneur is a person who does similar things as the intrapreneur, but outside the organizational setting.

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Environment for Entrepreneurship

Steve Wozniak and Steve Jobs at Apple Computers Entrepreneurship programs

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Situations for Innovations

An unexpected event, failure, or success An incongruity between what is assumed and what really is A process or task that needs improvement Changes in the market or industry structure Changes in demographics Changes in meaning or in the way things are perceived Newly acquired knowledge
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Definition of Reengineering

The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service, and speed. The underlined words are considered key aspects of reengineering by Hammer and Champy.

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Key Aspects of Reengineering

Fundamental rethinking of what the organization is doing and why. Radical redesign of the business processes.

(Note: Downsizing or rightsizing is not the primary purpose of reengineering, although in many cases it does result in a need for fewer people.)

Aim for dramatic results Careful analysis of business processes

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Management by Processes

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The Steps in the Organizing Process:

1. Establishing enterprise objectives. 2. Formulating supporting objectives, policies, and plans. 3. Identifying, analyzing, and classifying the activities necessary to accomplish these objectives. 4. Grouping these activities in light of the human and material resources available and the best way, under the circumstances, of using them. 5. Delegating to the head of each group the authority necessary to perform the activities. 6. Tying the groups together horizontally and vertically, through authority relationships and information flows.
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The Organizing Process

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Basic Questions for Effective Organizing

It is useful to analyze the managerial function of organizing by raising and answering the following questions: 1.
2.

What determines the span of management and hence the levels of organization? What determines the basic framework of departmentation, and what are the strengths and weaknesses of the basic forms? What kinds of authority relationships exist in organizations? How should authority be dispersed throughout the organization structure, and what determines the extent of this dispersion? How should the manager make organization

3.

4.

5.

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Chapter 7

Organization Structure: Departmentation

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Departmentation by Enterprise Function

Most widely employed basis for organizing activities and is present in almost every enterprise at some level in the organization structure.

No generally accepted terminology for functional departments: A manufacturing enterprise employs the terms production, sales, and finance; a wholesaler is 5/28/12 concerned with such activities as

Departmentation by Enterprise Function

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Departmentation by Territory or Geography

Rather common in enterprises that operate over wide geographic areas.

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Departmentation by Territory or Geography

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Departmentation by Customers

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Departmentation by Product

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Matrix Organization

The combining of functional and project or product patterns of departmentation in the same organization structure.

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Matrix Organization (in engineering)

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1. Define the objectives of the project or task. 2. Clarify the roles, authority, and responsibilities of managers and team members. 3. Ensure that influence is based on knowledge and information, rather than on rank. 4. Balance the power of functional and project managers. 5/28/12 Select an experienced manager 5.

Guidelines for Making Matrix Management Effective

Strategic Business Units (SBUs)

Distinct little businesses set up as units in a larger company to ensure that a certain product or product line is promoted and handled as though it were an independent business.

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Strategic Business Units

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Organization Structures for the Global Environment

Organization structures differ greatly for enterprises operating in the global environment. The kind of structure depends on a variety of factors, such as the degree of international orientation and commitment.

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The Virtual Organization

A rather loose concept of a group of independent firms or people that are connected often through information technology. These firms may be suppliers, customers, and even competing companies.

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Boundaryless Organization

Jack Welch, former CEO at GE (General Electric), stated his vision for the company as a boundaryless company, an open, anti-parochial environment, friendly toward the seeking and sharing of new ideas, regardless of their origin. The purpose was to remove barriers between the various departments as well as between domestic and 5/28/12

Choosing the Pattern of Departmentation

There is no one best way of departmentation that is applicable to all organizations and all situations. Managers must determine what is best by looking at the situation they face.

The jobs to be done and the way they should be done The people involved and their personalities The technology employed in the department

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Chapter 8
Line/Staff Authority, Empowerment, and Decentralization

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Authority and Power

Power is the ability of individuals or groups to induce or influence the beliefs or actions of other persons or groups. Authority is the right in a position to exercise discretion in making decisions affecting others.
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Different Bases of Power

Legitimate power normally arises from position and derives from our cultural system of rights, obligations, and duties whereby a position is accepted by people as being legitimate. Expert power is the power of knowledge. Referent power is influence that 5/28/12 people or groups may exercise

Different Bases of Power cont

Reward power is the power to grant or withhold rewards, such as high grades given by a university professor. Coercive power is closely related to reward power and normally arises from legitimate power; it is the power to punish.
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What is Empowerment?

Employees, managers, or teams at all levels in the organization have the power to make decisions without asking their superiors for permission. Power should be equal to responsibility (P=R) If power is greater than responsibility (P>R), then this 5/28/12 could result in autocratic

THE BASIS OF FORMAL AUTHORITY: TWO VIEWS

A Classical View: Authority originates at some very high level, and then is lawfully passed down form level to level. At the top of this hierarchy may be God, King, Elected President, or the collective will of the people. According to the classical view of formal authority in organizations, management has a right to give lawful orders and employees have an 5/28/12

THE BASIS OF FORMAL AUTHORITY: TWO VIEWS (CONT.)

The Acceptance View: The basis of authority lies with the influencee rather than the influencer. This view starts with the observation that not all legitimate laws or commands are obeyed in all circumstances. The key point is that the receiver decides whether or not to comply.
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ACCEPTANCE VIEW

Chester Barnard, a strong proponent of the acceptance view, has defined the conditions under which a person will comply with higher authority: He can understand the communication At the time of decision he believes that it is consistent with the purpose of the organization At the time of decision he believes it

1.

2.

3.

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Scalar Principle in Organization

The clearer the line of authority from the ultimate management position in an enterprise to every subordinate position, the clearer will be the responsibility for decision making and the more effective will be organizational communication.
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Line, Staff, and Functional Authority

Line authority is the relationship in which a superior exercises direct supervision over a subordinate.

Line authority is based primarily on legitimate power. The activities classified in line will differ in each organization as it is identified in terms of companys goals.

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LINE, STAFF, AND FUNCTIONAL AUTHORITY

Functional authority is the right delegated to an individual or a department to control specified processes, practices, policies, or other matters relating to activities undertaken by persons in other departments.
In reality, staff departments especially those responsible for audit functions, may have formal authority over line managers within the limit of their 5/28/12 functions

LINE & STAFF AUTHORITY

Line Authority
Advantages:

Staff Authority
Advantages:

Everything kept Simple Authority relationship graphically illustrated by hierarchy Close to employees so decisions can be made quickly Neglects advisers Too many decisions to make in short time period Requires very skilled managers

Uses the best experts Frees line managers for dayto-day activities Can be used as screening and training for future line managers Confusing to some employees Creates line-staff conflicts Places staff in submissive role

Disadvantages:

Disadvantages:

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Decentralization of Authority

Decentralization is the tendency to disperse decision making authority in an organized structure.

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Centralization & decentralization as tendencies

Complete centralization (no organization structure)

Complete decentralization (no organization structure)

Authority delegated

Authority not delegated

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Different Kinds of Centralization

1. Centralization of performance pertains to geographic concentration; it characterizes, for example, a company operating in a single location. 2 Departmental centralization refers to concentration of specialized activities, generally in one department. For example, maintenance for a whole plant may 5/28/12

DELEGATION

Delegation: The act of assigning formal authority and responsibility for completion of specific activities to a subordinate.

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The process of delegation involves:

Determining the results expected from a position. Assigning tasks to the position. Delegating authority for accomplishing these tasks. Holding the person in that position responsible for the accomplishment of the tasks.
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Personal Attitudes Toward Delegation

Receptiveness Willingness to let go Willingness to allow mistakes by subordinates Willingness to trust subordinates Willingness to establish and use broad controls
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Overcoming Weak Delegation

Define assignments and delegate authority in light of results expected. 2. Select the person in light of the job to be done. 3. Maintain open lines of communication. 4. Establish proper controls. 5. Reward effective delegation 5/28/12 and successful assumption of
1.

RECENTRALIZATION OF AUTHORITY AND BALANCE AS THE KEY TO DECENTRALIZATION

Recentralization

Centralization of authority that was once decentralized; normally not a complete reversal of decentralization, as the authority delegated is not wholly withdrawn.

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ADVANTAGES & LIMITATIONS OF DECENTRALIZATION

Advantages

Relieves top management of some burden of decision making. Encourages decision making & assumption of authority. Gives manager more freedom in decision making. Promotes establishment & use of broad controls. Makes comparison of performance of different organizational units possible. Facilitates setting up profit centers. Facilitates product diversification. Promotes development of general managers. Aids in adaptation to fast-changing environment.

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ADVANTAGES & LIMITATIONS OF DECENTRALIZATION (CONT)

Disadvantages

Makes it more difficult to have a uniform policy Increases complexity of co-ordination of decentralized organizational units. May result in loss of some control by upper level managers. May be limited by inadequate control techniques. May be constrained by inadequate planning & control systems. Can be limited by the lack of qualified managers. Involves considerable expenses for training managers.

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centralization

The extent to which important decisions that can affect the performance and decisions of others are retained in the hands of one or a few persons indicated centralization of authority in an organization.

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Advantages: appropriate delegation

The task/job goes to the right person. Speeding up of decision, task performance & response to the demands of the changing business environment. The skill and competence of the staff to whom the responsibility is delegated improves. When the person to whom tasks 5/28/12

Limitations: inadequate / inappropriate delegation

The person accepting responsibility needs to have the required ability & willingness to perform. Success of delegation also requires co-ordination among other performing staff & other organizational arrangements. Even if the staff is skilled, if the trust between the superior and the subordinate is missing, then there 5/28/12

Chapter 9

Human Resource Management & Selection

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Definition of Staffing

Staffing is filling, and keeping filled, positions in the organization structure.

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The Systems Approach to Human Resource Management: An Overview of the Staffing Function

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Manager Inventory Chart Satisfactory, but not promotable = oo

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Personnel Actions

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Situational Factors Affecting Staffing

External factors include the level of education, the prevailing attitudes in society (such as the attitude toward work), the many laws and regulations that directly affect staffing, the economic conditions, and the supply of and demand for managers outside the enterprise.
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Situational Factors Affecting Staffing cont.

Internal factors include, for example, organizational goals, tasks, technology, organization structure, the kinds of people employed by the enterprise, the demand for and the supply of managers within the enterprise, the reward system, and various kinds of policies.
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Definition of Managerial Selection

Selection is the process of choosing from among candidates, from within the organization or from the outside, the most suitable person for the current or future positions.

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Systems Approach to Selection

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Position Requirements and Job Design

Selecting a manager effectively requires a clear understanding of the nature and purpose of the position that is to be filled. An objective analysis of position requirements must be made, and the job must be designed to meet organizational and individual needs. Positions must be evaluated and compared so that the incumbents can 5/28/12

Skills & Personal Characteristics needed in managers Analytical & problem solving abilitites
Personal Characteristics

Desire to manage Communication skills & empathy Integrity & honesty Past performance as mangers

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Intragroup and Intergroup Communication

Intragroup communication is communication with people in the same organizational unit. Intergroup communication is communication not only with other departments but also with groups outside the enterprise.
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Selection, Placement, and Promotion

In the selection approach, applicants are sought to fill a position with rather specific requirements. In the placement approach, the strengths and weaknesses of the individual are evaluated, and a suitable position is found or even designed. Promotion is a move within the 5/28/12

The Peter Principle

Managers tend to be promoted to the level of their incompetence. Specifically, if a manager succeeds in a position, this very success may lead to a promotion to a higher position, often one requiring skills that the person does not possess.
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Selection process, techniques & instruments

Validity is the degree to which the data predicts the candidate's success as a manager. Reliability refers to the accuracy and consistency of the measurement.

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Steps in Selection Process

1.

Completed Job Application: Requests only information that predicts the success in the job Initial screening Interview: Provides quick evaluation of applicant's suitability. Asks Questions on experience, background, salary expectation, willingness to relocate, etc. Testing: Measures applicants job skills and the ability to learn on the job. May include computer testing software, handwriting analysis, listening skills test, Team skills test, Sales ability test, etc.

2.

3.

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Steps in Selection Process (contd.)

4. Background Investigation: Checks truthfulness of the applicants resume or application form. Calls the applicants previous supervisor (with permission) and confirms information from applicant. In-Depth Interview: Finds out more about the applicant as an individual. Conducted by manager to whom the applicant will report.
5.

Physical Examinations: Ensures effective performance by applicant; protects other employees against diseases; establishes health record; protects the firm against unjust workers compensation claims.
6.

7. Job Offer: Fills a job vacancy or position. Offers a salary plus benefit package.
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Interviews

Every manger hired is interviewed by one or more people. Every interviewer should be trained so that they know what they are looking for. Interviewers should be prepared to ask right questions To improve selection, conduct multiple interviews using different interviewers It should be supplemented by data from application form, results of tests & information obtained from references.

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Commonly-used Tests on Managerial Candidates

Intelligence tests

Test mental capacity & memory, speed of thought, ability to see relationships in complex situations.

Proficiency and aptitude tests

Discover interests, existing skills, potential for acquiring skills.

Vocational tests

Indicate a candidates most suitable occupation or the areas in which the candidates interests match

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Personality tests

What is an Assessment Center?

The assessment center is a technique for selecting and promoting managers. Intended to measure how a potential manger will act in a typical managerial situations. Candidates take part in a series of exercises. 5/28/12

Orientation of New Employees

Orientation involves the introduction of new employees to the enterprise its functions, tasks, and people.

Organization Benefits Requirements of confidentiality & secrecy

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Organizational Socialization
A global view includes three aspects:

Acquisition of work skills and abilities Adoption of appropriate role behaviors Adjustment to the norms and values of the work group

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Managing Human Resources While Moving Toward 2020

The Economist Intelligence Unit Survey Managing knowledge Providing services & support for customers Improving operation & production processes Developing businesses & strategies Managing marketing & sales Managing human resources & training 5/28/12

Chapter 10

Human Resource Development

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The Importance of Human Resource Management (HRM)

As a significant source of competitive advantage

People-oriented HR creates superior shareholder value.

As an important strategic tool

Achieve competitive success through people by treating employees as partners.

To improve organizational performance

High performance work practices lead to both high individual and high organizational performance.

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The HRM Process

The HRM process is an ongoing procedure that tries to keep the organization supplied with the right people in the right positions, when they are needed.

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The HRM Process: Traditional View

Includes seven basic activities

Human resource planning Recruitment Selection Socialization Training and development Performance appraisal Promotions, transfers, demotions and separations

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The HRM Process: Traditional View

Human Resource Planning Recruitment Selection

Training & Development

Socialization

Performance Appraisal

Promotions, Transfers, Demotions & Separations

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Managing Human Resources

Human Resource (HR) Planning
Planning for the future personnel needs of an organization, taking into account both internal activities and factors in external environment. Basic aspects in HR planning:
Planning for future needs Planning for future balance Planning for recruiting or laying off employees Planning for the development of employees

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Recruitment Selection Socialization

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Training and Development

Training programs are directed toward maintaining and improving current job performance while development programs seek to develop skills for future jobs. Employee Training

Types of training Training Method

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Training Methods

On-the-job Training Methods

Coaching Job rotation Training positions Planned work activities

Off-the-job Training Methods

Vestibule training Behaviorally experienced training Role play Computer assisted instruction Management development programmes

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Employee Performance Management

Performance Management System

A process of establishing performance standards and appraising employee performance.

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Advantages and Disadvantages of Performance Appraisal Methods

Method Advantage Disadvantage
More a measure of evaluators writing ability than of employees actual performance Time-consuming; lack quantification Written essays Simple to use Critical incidents Rich examples; behaviorally based

Graphic rating Provide quantitative data; less Do not provide depth of job behavior scales time-consuming than others assessed BARS Multiperson comparisons MBO 360-degree appraisals Focus on specific and measurable job behaviors Time-consuming; difficult to develop

Compares employees with one Unwieldy with large number of another employees; legal concerns Focuses on end goals; results Time-consuming oriented Thorough Time-consuming

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Promotions, transfers, demotions, & separation

Reflect an employees value to the organization. High performers may be promoted or transferred to help them develop their skills. Low performers may be demoted, transferred to less important positions or even separated.

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Compensation and Benefits

Benefits of a Fair, Effective and Appropriate Compensation System

Helps attract and retain high-performance employees. Impacts the strategic performance of the firm. Base wage or salary Wage and salary add-ons Incentive payments Skill-based pay Variable pay

Types of Compensation

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Factors That Influence Compensation and Benefits

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Contemporary Issues in Managing Human Resources

Managing Downsizing The planned elimination of jobs in an organization

Provide open and honest communication. Provide assistance to employees being downsized. Reassure and counseling to surviving employees.

Managing Workforce Diversity

Widen the recruitment net for diversity. Ensure selection without discrimination. Provide orientation and training that is effective.

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Tips for Managing Downsizing

Communicate openly and honestly:

v

Inform those being let go as soon as possible. Tell surviving employees the new goals and expectations. Explain impact of layoffs.

Follow any laws regulating severance pay or benefits. Provide support/counseling for surviving employees. Reassign roles according to individuals talents and backgrounds. Focus on boosting morale:

Offer individualized reassurance.

Continue to communicate, especially one-on-one. 5/28/12 Remain involved and available.

Current Issues in HRM (cont.)

Work-Life Balance
Employees have personal lives that they dont leave behind when they come to work. Organizations have become more attuned to their employees by offering family-friendly benefits:
On-site child care Summer day camps Flextime Job sharing Leave for personal matters Flexible job hours

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Chapter 11

Human Factors & Motivation

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Leading and Managing

Leading is the process of influencing people so that they will contribute to organizational and group goals. Managing requires the creation and maintenance of an environment in which individuals work together in groups toward the accomplishment of common objectives.

Harmonizing Objectives: Individuals have personal goals that may be distinct from the goals of an organization. One of the important duties of the modern manager is to get things 5/28/12 done through others in such a manner that the

Human Factors:

Multiplicity of Roles No average person Importance of Personal Dignity Consideration of the Whole Person

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What is Motivation?

Motivation is a general term applying to the entire class of drives, desires, needs, wishes, and similar forces.

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Motivational Theories

McGregors Theory X & Theory Y Maslows Hierarchy of Needs Theory Alderfers ERG Theory McClellands Needs Theory of Motivation Herzbergs Motivation-Hygiene Theory: Two Factor Theory

Need Theories

Expectancy Theory of Motivation

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Equity Theory

McGregors Theory X and Theory Y

Theory X and Theory Y are two sets of assumptions about the nature of people. Example of Theory X

Average human beings have an inherent dislike of work and will avoid it if they can. The expenditure of physical and mental effort in work is as natural as play or rest.

Example of Theory Y

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Clarification of Theory X and Y

They are assumptions that need to be tested against reality They are intuitive deductions They are not on a continuous scale, not a matter of degree Theory Y is not consensus management nor an argument against use of authority Variety of tasks & situations require different approaches

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Maslows Hierarchy of Needs Theory

Maslow saw human needs in a form of a hierarchy, ascending from the lowest to the highest He concluded that when one set of needs is satisfied, this kind of need ceases to be a motivator.

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Maslows Hierarchy of Needs

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Alderfer's ERG Theory

ERG theory has three categories: existence needs, relatedness needs, and growth needs. Alderfer stressed that when people experience frustration on one level, they may focus on the needs at a lower level need category.

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McClelland's Needs Theory of Motivation

McClellands types of motivating needs are: Need for power (nPow): Degree of Control a person desires over his situation. This need can be related to how people deal with the fear of failure or losing success Need for affiliation (nAff): The desire for friendly and close interpersonal relationships. Reason why telecommuting has not become as popular as predicted

Need for achievement (nAch): The drive to excel, to achieve in relation to a set of standards, to strive to succeed. High Achievement, sets more 5/28/12 difficult goals, take calculated risks and value

Herzbergs Motivation Hygiene Theory

Dissatisfiers are not motivators. They are also called maintenance, hygiene factors. This includes salary, company policy and working conditions. Satisfiers are motivators and are related to job content. This includes achievement, recognition, responsibility, and advancement.

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Comparison of Maslows and Herzbergs Theories of Motivation

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The Expectancy Theory of Motivation

Vroom holds that people will be motivated to do things to reach a goal if they believe in the worth of that goal and if they can see that what they do will help them in achieving it. Force = Valence x Expectancy

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Components of Expectancy Theory:

Force is the strength of a persons motivation Valence is the strength of an individuals preference for an outcome Expectancy is the probability that a particular action will lead to a desired outcome The force exerted to do something will depend on both valence and expectancy.

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Expectancy Theory Cont

Think of these three components as three questions: If I do this, what will be the outcome? Is the outcome worth the effort to me? What are my chances of achieving an outcome that will be worthwhile for me?

1.

2.

3.

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Expectancy Theory Cont

Expectancy theory is more complicated as performance-outcome, valence and effortperformance expectancy are linked in a multiplicative chain. E.g. You are working on a project for which the outcome of your performance is clear, you know from experience the amount of effort required, but the outcome isnt worth very much to you. The valence is low. In such a situation, your behaviour might be to procrastinate until the last minute. E.g. Filing your Tax Returns, Submission of Assignments

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Porter and Lawlers Expectancy Theory

An employee must want to perform; the desire of the employee to do the assigned jobs A person must have the necessary abilities and skills A person must have an accurate knowledge of the requirements of the job if he is expected to devote his energies fully on the assigned tasks
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Porter and Lawlers Motivation Model

1 1 4 8

7a 3 6 7b 5

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Equity Theory

Equity theory refers to an individuals subjective judgment about the fairness of the reward he or she gets, relative to the inputs, in comparison with the rewards of others. Outcomes by a person Outcomes by another person ---------------------------- = ---------------------------Inputs by a person person Inputs by another

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Equity Theory

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Equity Theory Cont

Studies have shown that an individuals reaction to an inequity is dependent on that persons history of inequity Richard Cosier & Dan Dalton point out that work relationships are not static and that inequities are not usually isolated or one-time events They suggest that there is a threshold up to which an individual will tolerate a series of unfair events, but that too many incidents can push him or her over the edge People use different methods to reduce inequity.
5/28/12Sour Eg.

Grapes

Lockes Goal Setting Theory

According to Edwin Locke, the natural human inclination to set and strive for goals is useful only if the individual both understands and accepts a particular goal For objectives to be meaningful, they must be clear, attainable and verifiable. Furthermore, workers will not be motivated if they do not possess and know they do not possess-the skills needed to achieve a goal Research show that when goals are specific and challenging, they function more effectively as motivating factors in both individual and group

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Objective Setting for Motivation

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Skinners Reinforcement Theory

Positive reinforcement or behaviour modification:

Individuals can be motivated by proper design of their work environment and by praise for their performance and that punishment for poor performance produces negative results.

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Skinners Reinforcement Theory

This theory shows how the consequences of past behaviour affect future actions in a cyclical learning process. This process may be expressed as follows: Stimulus Response Future Response Consequences

The individuals own voluntary behaviour (response) to a situation or event (stimulus) is the cause of specific consequences. If these consequences are unpleasant, the individual will tend to change his or her behaviour in order to avoid them
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Skinners Reinforcement Theory

Behaviour Modification: Uses Reinforcement theory change human behaviour. Thus, a manager who wishes to change employee behaviour must change the consequences of that behaviour There are four common methods of behaviour modification: Positive Reinforcement: Desirable behaviour is encouraged

1.

Avoidance Learning: Employees change behaviour to avoid unpleasant consequences like criticism or 5/28/12 poor evaluation
2.

Special Motivational Techniques

Money whether in form of wages, bonus, stock options or any other form, is often the most important factor. Money is often more than monetary value. It can also mean status or power, or other things. Intrinsic rewards may include a feeling of accomplishment, or even selfactualization.

Extrinsic rewards include benefits, recognition, status symbols, and, 5/28/12 money.

Special Motivational Techniques cont.

Pay may be based on individual, group, and organizational performance. Participation is a form of recognition and gives people a sense of accomplishment. Quality of working life (QWL) usually involves a labour committee and QWL specialist or staff, which is charged with finding ways of enhancing dignity, attractiveness, and productivity of jobs through job enrichment and redesign.

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Job Enrichment

Job enrichment is an attempt to motivate employees by giving them the opportunity to use the range of their abilities. It is an idea that was developed by Frederick Herzberg in the 1950s. It can be contrasted to job enlargement which simply increases the number of tasks by adding similar tasks without enhancing the responsibility.

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Ways to Job enrichment

Giving more freedom in deciding work methods, sequence, etc. Encouraging participation of subordinates Giving workers a feeling of personal responsibility Make sure that workers can see how their tasks contribute to the finished product Feedback on their job performance

Involving workers in the analysis and change 5/28/12physical aspects of the work environment of

Limitations of Job enrichment

Technology: With specialized machinery and assembly line techniques it may not be possible to make all the jobs meaningful There is also a question as to whether or not workers really want job enrichment Limitations mainly apply to low-skill jobs

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Making Job Enrichment Effective

Better understanding of people want If productivity is the main goal of enrichment, the program must show how workers will benefit People like to be involved, to be consulted, and to be given an opportunity to offer suggestions People like to feel their managers are truly concerned with their welfare
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Chapter 12

Leadership

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Defining Leadership

Leadership is the art or process of influencing people so that they will strive willingly and enthusiastically toward the achievement of group goals.

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230230

Ingredients of Leadership
1. 1.

Power A fundamental understanding of people The ability to inspire followers to apply their full capabilities The leaders style and the development of a conducive organizational climate
231231

2.

3.

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Fundamental Principle of Leadership

Since people tend to follow those who, in their view, offer them a means of satisfying their personal goals, the more managers understand what motivates their subordinates and how these motivators operate, and the more they reflect this understanding in carrying out their managerial actions, the more effective they are likely to be as leaders.
232232

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Trait and Charismatic Approaches to Leadership

Attempt to identify leadership traits Great Man theory assumes that leaders are born and not made Lost much of its acceptability has limitations Robert House suggests that charismatic leaders have certain characteristics, such as self confidence, strong conviction, articulating a vision, being able to initiate change, communicating high expectations etc. 233233

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Leadership Styles Based on Use of Authority

The autocratic leader commands and expects compliance, is dogmatic and positive, and leads by the ability to withhold or give rewards and punishment. The democratic, or participative, leader consults with subordinates and encourages their participation. The free-rein leader uses power very little, if at all, giving subordinates a high degree of independence.
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Flow of Influence with Three Leadership Styles

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235235

The Managerial Grid

The grid has two dimensions:

concern for people concern for production.

1.

2.

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236236

Leadership as a Continuum

Leadership continuum conceptualizes leadership as involving a variety of styles, ranging from one that is highly boss centered to one that is highly subordinatecentered.

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237237

Continuum of Manager-Nonmanager Behavior

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238238

Fiedler's Contingency Approach to Leadership

People become leaders not only because of their personality attributes but also because of various situational factors and the interactions between leaders and group members.

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239239

Fiedlers Model of Leadership

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240240

Critical Dimensions of the Leadership Situation (Fiedler)

Position power Task structure

Leadermember relations

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241241

The PathGoal Approach to Leadership Effectiveness

The main function of the leader is to clarify and set goals with subordinates, help them find the best path for achieving the goals, and remove obstacles.

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242242

Approach to Leadership Effectiveness

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243243

Transactional and Transformational Leadership

Transactional leaders identify what subordinates need to do to achieve objectives, clarify organizational roles and tasks, set up an organization structure, reward performance, and provide for the social needs of their followers. Transformational leaders articulate a vision and inspire followers. They have the capacity to motivate, shape the organization culture, and create a climate favorable for organizational change.
244244

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Chapter 13 Communication

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What is Communication?

Communication is the transfer of information from a sender to a receiver, with the information being understood by the receiver.

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The Purpose of Communication

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Communication Process Model

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The communication model provides an overview of the communication process, identifies the critical variables, and shows their relationships.

The Communication Process

Sender of the message

His/her thought gets encoded

Use of a channel to transmit the message Receiver of the message

Reception, decoding, understanding Anything that hinders communication

Noise hindering Communication

Feedback in communication Situational & organizational factors

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Noise Hindering Communication

Noise is anythingwhether in the sender, the transmission, or the receiverthat hinders communication For example:

Encoding may be faulty because of the use of ambiguous symbols. Transmission may be interrupted by static in the channel, such as may be experienced in a poor telephone connection. Inaccurate reception may be caused by inattention. or a confined environment may hinder

5/28/12 A noise

Feedback in communication

To check the effectiveness of communication, a person must have feedback.

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Situational & organizational factors in communication

Factors in the external environment affecting the communication process may be educational, sociological, legal-political, and economic. Geographic distance is another situational factor. The communication model provides an overview of the communication process, identifies the critical variables and shows their 5/28/12

The Communication Flow in the Organization

Downward communication Upward communication Horizontal communication (between people on the same or similar organizational levels) Diagonal communication (between persons from different levels who are not in direct reporting relationships with one another)
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Information Flow in an Organization

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What is the Function of an Ombudsperson?

An ombudsperson investigates employees' concerns and provides a valuable upward communication link to enhance effective upward communication

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Communication in the Organization

Written communication Oral communication Nonverbal communication

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Communication methods

Oral, written, using IT Face-to-face communication Group meetings Video-conferencing Wireless, telephone, fax, voicemail, e-mail etc.

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Barriers and Breakdowns in Communication

Lack of planning Unclarified assumptions Semantic distortion Poorly expressed messages Communication barriers in the international environment Loss by transmission and poor retention Poor listening and premature evaluation Impersonal communication Distrust, threat, and fear Insufficient period for adjustment to change

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Other Communication Barriers

Selective perceptionpeople tend to perceive what they expect to perceive. The influence of attitudethe predisposition to act or not to act in a certain way. Differences in status and power between the sender and the receiver of information.

Information passing through several organizational levels tends to be 5/28/12

Guidelines for Improving Communication?

See the eight guidelines in the textbook that can help overcome the barriers to communication. Analyze a situation using the guidelines Listening: A Key to Understanding How have you solved communication problems in your life?

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How to Improve Written Communication?

Use simple words and phrases. Use short and familiar words. Use personal pronouns (such as you) whenever appropriate. Give illustrations and examples; use charts. Use short sentences and paragraphs. Use active verbs, such as The manager plans. Avoid unnecessary words.

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Electronic Media in Communication

Telecommunication Teleconferencing

A group of people interacting with each other by means of audio and video media with moving or still pictures.

Use of Computers for Information Handling and Networking

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E.g. instant messaging shows whether a friend or colleague is connected to the Internet; if connected, messages can be exchanged instantly.

ESSENTIALS OF EFFECTIVE COMMUNICATION

If the sender is using multiple media & channels, the receiver needs to pick up and understand both verbal & non-verbal parts of the message. Issues of communication should be clearly separated from other problems. If the communication involves speech, effective communication requires active listening where the listener reflects on what the other person has said, interprets it without bias and is able to summarize it. Effective communication includes raising of appropriate questions and probing by the receiver.

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