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MANAGEMENT

THE PROCESS OF PLANNING, ORGANIZING,

LEADNIG, AND CONTROLLING THE WORK

OF ORGANIZATION MEMBERS AND OF

USING ALL AVAILABLE ORGANIZATIONAL

RESOURCES TO REACH STATED

ORGANIZATIONAL GOALS.

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Traditional Definition of ManagementAttainment of organizational goals in an effective

and efficient manner through:PlanningOrganizingLeadingControllingand some authorities add:Staffing

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What is Management?

“[Management] involves people looking beyond themselves and exercising formal authority over the activities and performance of other people.”

[Mullins 1999]

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FAYOL’S PRINCIPLES OF MANAGEMENT

• DIVISION OF LABOR

• AUTHORITY

• DISCIPLINE

• UNITY OF COMMAND

• UNITY OF DIRECTION

• SUBORDINATION OF INDIVIDUAL INTEREST

TO THE COMMON GOOD

• REMUNERATION

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PRINCIPLES OF MANAGEMENT

• CENTRALIZATION

• THE HIERARCHY

• ORDER

• EQUITY

• STABILITY OF STAFF

• INITIATIVE

• EXPRIT DE CORPS.

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Is Management Art or Science?

The Science of Management The Art of Management

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Four Functions Defined Planning

Setting an organization’s goals and selecting a course of action from a set of alternatives to achieve them [Griffin 2003]

Deciding in advance what to do, how to do it, when to do it, and who is to do it

Organizing Determining how activities and resources are grouped

[Griffin 2003]

Determining the composition of work groups and the way in which work and activities are to be coordinated

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Four Functions Defined Leading

The set of processes used to get organizational members to work together to advance the interests of the organization [Griffin 2003]

Motivating and communicating with the organization’s human resources to ensure goals are attained

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Four Functions Defined Controlling

Monitoring organizational progress towards goals [Griffin 2003]

The process of comparing results and expectations and making the appropriate changes

And that fifth one: Staffing The recruitment, selection, assignment,

training, development, evaluation and compensation of staff

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Management Cycle

Planning

Monitoring Getting Resources

Implementation

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Classical Management Functions Planning Organizing Staffing Directing Coordination/Control Reviewing Budgeting

Acronym to remember: POSDCoRB

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New Management Functions:

Problem Solving Innovation Leadership & team building Motivation of staff

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What is a Manager?

Someone whose primary responsibility is to carry out the management process

Someone who plans and makes decisions, organizes, leads, and controls human, financial, physical, and information resources

[Griffin 2003]

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The Evolution of Management Theory

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The Evolution of Management Theory

Figure 2.1Source:

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Theories of Management

ScientificM anagem ent

BureaucraticM anagem ent

Adm inistrativeM anagem ent

ClassicalTheories

BehaviouristTheories

Haw thorneStudies

Hum anRelations

BehaviouralScience

BehaviouralTheories

M anagem entScience

OperationsM anagem ent

M anagem entInform ation

System s

QuantitativeTheories

System sTheory

ContingencyTheory

Em ergingView s

Contem poraryTheories

M anagem entTheory

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Scientific Management Theory

Evolution of Modern Management

Began in the industrial revolution in the late 19th century as:

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Frederick Taylor

Developed the specific principles of Scientific Management

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Taylor’s 4 Principles ofScientific Management

Scientifically study each part of a task and develop the best method for performing the task

Carefully select workers and train them to perform the task by using the scientifically developed method

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Taylor’s 4 Principles ofScientific Management

Cooperate fully with workers to ensure that they use the proper method

Divide work and responsibility so that management is responsible for planning work methods using scientific principles and workers are responsible for executing the work accordingly

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Frank and Lillian Gilbreth Refined Taylor’s work and made many

improvements to the methodologies of time and motion studies.

Also studied worker-related fatigue problems caused by lighting, heating, and the design of tools and machines.

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Administrative Management Theory

Administrative Management The study of how to create an organizational

structure that leads to high efficiency and effectiveness.

Max Weber Developed the concept of bureaucracy as a

formal system of organization and administration designed to ensure efficiency and effectiveness.

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Weber’s Five Principles of Bureaucracy

Authority is the power to hold people accountable for their actions.

Positions in the firm should be held based on performance, not social contacts.

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Position duties are clearly identified so that people know what is expected of them.

Lines of authority should be clearly identified such that workers know who reports to who.

Rules, standard operating procedures (SOPs), and norms guide the firm’s operations.

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Behavioural Theories

Emphasise the importance of attempting to understand the various factors that affect human behaviour in organisations.

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Behavioral Approach

Behavioral Approach theorists believe that effectiveness is attained through:

decreased control greater autonomy for people encouragement of innovation creativity

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Behavioral Approach Examples

Ad agencies

Design firms

Most dotcoms

Software development

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Elton Mayo

Believed emotional factors were more important determinants of productive efficiency than were physical and logical factors.

The Philosophy of Industrial Humanism

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Douglas McGregor

Developed Theory X and Theory Y Theory X: management’s traditionally negative view

of employees as unmotivated and unwilling workers. Theory Y: the positive view of employees as

energetic, creative, and willing workers.

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Management Science Theory

An approach to management that uses rigorous quantitative techniques to maximize the use of organizational resources. Quantitative management—utilizes linear

programming, modeling, simulation systems.

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Total Quality Management (TQM)—focuses on improving quality throughout an organization.

Operations management—techniques to analyze all aspects of the production system.

Management Information Systems (MIS)—provides information about the organization.

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Management InformationSystemsFocuses on designing and

implementing computer-based information systems for use by management.

These systems turn raw data into information that is useful to various levels of management.

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Systems Theory

Based on the idea that organisations can be visualised as systems

System

A set of interrelated parts that operate as a whole in pursuit of common goals

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The Systems Approach

Chester I. Barnard’s Early Systems Perspective Wrote Functions of the Executive. Characterized all organizations as cooperative

systems. Defined principle elements in an organization as

willingness to serve. common purpose. communication.

Strong advocate of business ethics.

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Systems Approach Examples

Military & government agencies Traditional major industrial production

(automobiles, etc.) Some service firms (insurance,banking)

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Contingency Theory

A viewpoint that argues that appropriate managerial action depends on the circumstances of the situation.

In other words ………..

there is no single right way to managethere is no single right way to manage

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Contingency Theory of Organizational Design

Figure 2.5Source:

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Management Levels Defined

First line Managers

Middle Managers

Top (or Senior) Managers

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Horizontal Differences

Functional managers Responsible for departments that perform a single

functional task General managers

Responsible for several departments that perform different functions

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Managers by Area Marketing Managers Financial Managers Operations Managers Human Resource Managers Administrative Managers Other Kinds of Managers

[Griffin 2003]

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Top Managers

Middle Managers

First-Line Managers

Non-managers

(Personnel)

Top Managers

Middle Managers

First-Line Managers

Non-managers

(Personnel)

Management Skills required by management levels

Conceptual Skills “People” Skills Conceptual Skills “People” Skills Technical SkillsTechnical Skills

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SOCIAL

RESPONSIBILITY

AND ETHICS

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CORPORATE SOCIAL RESPONSIBILITY

WHAT AN ORGANIZATION DOES TO

INFLUENCE THE SOCIETY IN WHICH IT

EXISTS, SUCH AS THROUGH

VOLUNTEER ASSISTANCE PROGRAMS.

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ETHICS

THE STUDY OF RIGHTS AND OF

WHO IS– OR SHOULD BE–

BENEFITED OR HARMED BY AN

ACTION.

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Provide clear guidelines for ethical behavior.

Teach ethical guidelines and their importance.

Where it is likely that the acts of a managers can be questioned, avoid such areas. In other words, don’t get into problem areas that invite criticism.

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Appoint an outside agency (that reports directly to the Board of Directors) to audit the ethical behavior of managers. Such controls facilitate a check on illegal or unethical deeds. Conduct frequent and surprise audits.

Punish trespassers in a meaningful way, and make it public so that it may deter others.

Emphasize regularly that loyalty to the company does not excuse improper behavior or actions.

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CORPORATE SOCIAL RESPONSIVENESS

A THEORY OF SOCIAL RESONSIBILITY THAT FOCUSES ON HOW COMPANIES RESPOND TO ISSUES, RATHER THAN TRYING TO DETERMINE THEIR ULTIMATE SOCIAL RESPONSIBILITY.

CORPORATE SOCIAL PERFORMANCE

A SINGLE THEORY OF CORPORATE SOCIAL ACTION ENCOMPASSING SOCIAL PRINCIPLES, PROCESSES, AND POLICIES.

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THE FOUR LEVELS OF ETHICAL QUESTIONSTHE FOUR LEVELS OF ETHICAL QUESTIONS

LEVEL 4THE INDIVIDUAL

LEVEL 3INTERNAL POLICY

LEVEL 2STAKEHOLDERS

LEVEL 1SOCIETY

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SOCIAL RESPONSIBILITY OF SOCIAL RESPONSIBILITY OF MANAGERSMANAGERS

Responsibility towards shareholders

Responsibility towards consumers

Responsibility towards employees

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Responsibility towards creditors Responsibility towards the government Responsibility towards suppliers Responsibility towards competitors Responsibility towards general public

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ORGANIZATIONAL

DECISION MAKING

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PROBLEM

SITUATION THAT OCCURS WHEN AN ACTUAL STATE OF AFFAIRS DIFFERS FROM A DESIRED STATE OF AFFAIRS.

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PROBLEM RECOGNITION

PROBLEM RECOGNITION CAN NOT BE SEPARATED FROM THE HISTORICALTIME IN WHICH MANAGERS MAKE DECISIONS. IN THE EARLY YEARS OF THE AUTO INDUSTRY, PASSENGER SAFETY WAS LESS A CONCERN THAN IT IS TODAY, AS WE CAN SEE IN THE DEVELOPMENT OF AIR BAGS.

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APPROACHES TO MANAGEMENT APPROACHES TO MANAGEMENT PROBLEM SOLVINGPROBLEM SOLVING

R O U T IN E S C IE N T IF IC D E C IS IO N A L C R E A T IV E Q U A N T IT A T IV E

M A N A G E M E N TP R O B L E M S

D E S IR E D R E S U LT

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RATIONAL MODEL OF DECISION MAKINGRATIONAL MODEL OF DECISION MAKING

A FOUR-STEP PROCESS THAT HELPS

MANAGERS WEIGH ALTERNATIVES

AND CHOOSE THE ALTERNATIVE

WITH THE BEST CHANCE OF

SUCCESS.

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1. INVESTIGATE THE SITUATION

2. DEVELOP ALTERNATIVES

4. IMPLEMENT AND MONITOR

3. EVALUATE ALTERNATIVES AND SELECT THE BEST ONE AVAILABLE

THE RATIONAL DECISION-MAKING PROCESSTHE RATIONAL DECISION-MAKING PROCESS

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How are decisions madein organizations?

Decision environments include:

Certain environments.

Risk environments.

Uncertain environments.

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How are decisions madein organizations?

Types of decisions. Programmed decisions.

Involve routine problems that arise regularly and can be

addressed through standard responses.

Nonprogrammed decisions. Involve nonroutine problems that require solutions

specifically tailored to the situation at hand

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What are the usefuldecision making models?

Classical decision theory. Views the decision maker as acting in a world of

complete certainty.

Behavioral decision theory. Accepts a world with bounded rationality and

views the decision maker as acting only in terms of what he/she perceives about a given situation.

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A PLAN IS A REAL THING, AND THINGS PROJECTED

ARE EXPERIENCED. A PLAN ONCE MADE AND

VISUALIZED BECOMES A REALITY ALONG WITH

OTHER REALITIES – NEVER TO BE DESTROYED BUT

EASILY TO BE ATTACKED.

John Steinbeck,

The Pearl

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PLANNINGPLANNING

PLANNING IS A PARTICULAR KIND OF DECISION

MAKING THAT ADDRESSES THE SPECIFIC FEATURE

THAT MANAGERS DESIRE FOR THEIR ORGANIZATION.

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THE HIERARCHY OF PLANSTHE HIERARCHY OF PLANS

MISSION STATEMENT

STRATEGIC PLANS

OPERATIONAL PLANS

CREATED BY:

Founder, Boardof Directors, orTop Managers

Top and MiddleManagers

Middle andFirst-LineManagers

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GOALS

STRATEGIC PLANS

OPERATIONAL PLANS

SINGLE-USE PLANS STANDING PLANS

PROGRAMS

PROJECTS

BUDGETS

POLICIES

STANDARDPROCEDURES

AND METHODS

RULES

FOR NONRECURRING ACTIVITIES FOR RECURRING ACTIVITIES

THE HIERARCHY OF ORGANIZATIONAL PLANSTHE HIERARCHY OF ORGANIZATIONAL PLANS

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TYPES OF PLANSTYPES OF PLANS

Purpose

of mission

Objectives

Strategies

Policies: major or minor

Procedures

Rules

Programs: major or minor and supporting

Budgets: numberized or dollarized progams

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MAJOR STEPS IN PLANNINGMAJOR STEPS IN PLANNING

• CLARIFY THE PROBLEM.

• OBTAIN COMPLETE INFORMATION ABOUT THE

ACTIVITIES INVOLVED.

• ANALYZE AND CLASSIFY THE INFORMATION.

• ESTABLISH PLANNING PREMISES AND CONSTRAINTS.

• DETERMINE ALTERNATE PLANS.

• CHOOSE PROPOSED PLAN.

• ARRANGE DETAILED SEQUENCE AND TIMING FOR

THE PROPOSED PLAN.

• PROVIDE PROGRESS CHECKUP TO PROPOSED PLAN.

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MAJOR TYPES OF MANAGEMENT PLANSMAJOR TYPES OF MANAGEMENT PLANS

• POLICY

• PROCEDURE

• METHOD

• STANDARD

• BUDGET

• PROGRAM

• TECHNOFACTOR

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ADVANTAGES OF PLANNINGADVANTAGES OF PLANNING

• MAKES FORFOR PURPOSEFUL AND ORDERLY

ACTIVITIES.

• POINTS OUT NEED FOR FUTURE CHANGE.

• ANSWERS “WHAT IF” QUESTIONS.

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PROVIDES A BASIS FOR CONTROL.

ENCOURAGES ACHIEVEMENT. COMPELS VISUALIZATION OF

ENTIRETY. INCREASES AND BALANCES

UTILIZATION OF FACILITIES. ASSISTS MANAGER IN GAINING

STATUS.

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DISADVANTAGES OF PLANNINGDISADVANTAGES OF PLANNING

• PLANNING IS LIMITED BY THE ACCURACY

OF INFORMATION AND FUTURE FACTS.

• PLANNING COSTS TOO MUCH.

• PLANNING HAS PSYCHOLOGICAL

BARRIERS.

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PLANNING STIFLES INITIATIVE.

PLANNING DELAYS ACTIONS.

PLANNING IS OVERDONE BY PLANNERS.

PLANNING HAS LIMITED PRACTICAL VALUE.

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Organizing

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Organizing

The process of arranging people and other resources to work together to accomplish a goal.

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Organizing and organization structureOrganizing

The process of arranging people and other resources to work together to accomplish a goal.

Organization structure The system of tasks, workflows, reporting

relationships, and communication channels that link together diverse individuals and groups.

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Organizing viewed in relationship with the other management functions.

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FORMAL ORGANIZATION ELEMENTSFORMAL ORGANIZATION ELEMENTS

1. DIVISION OF LABOR

2. DEPARTMENTATION

3. SPAN OF CONTROL.

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DIVISION OF WORKDIVISION OF WORK

The breakdown of a complex task into components so that individuals are responsible for a limited set of activities instead of the task as a whole. Sometimes referred to as division of labor.

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DEPARTMENTALIZATIONDEPARTMENTALIZATION

The grouping into departments

of work activities that are similar

and logically connected.

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Organizational Structure:

The ways in which an organization’s activities are divided, organized and coordinated

The system of tasks, workflows, reporting relationships, and communication channels that link together diverse individuals and groups.

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Formal structures Informal structures

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Major types of organization structures

Functional structures People with similar skills and performing similar

tasks are grouped together into formal work units. Members work in their functional areas of

expertise. Are not limited to businesses. Work well for small organizations producing few

products or services.

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Functional structures in a business, branch bank, and community hospital.

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Potential advantages of functional structures:

Potential disadvantages of functional structures:

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Divisional structures

Group together people who work on the same

product or process, serve similar customers,

and/or are located in the same area or

geographical region.

Common in complex organizations.

Avoid problems associated with functional

structures.

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Divisional structures based on product, geography, customer, and process.

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Potential advantages of divisional structures:

Potential disadvantages of divisional structures:

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Types of divisional structures and how they group

job and activities: Product structures focus on a single product or service.

Geographical structures focus on the same location or

geographical region.

Customer structures focus on the same customers or

clients.

Process structures focus on the same processes.

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MATRIX STRUCTUREMATRIX STRUCTURE

An organizational structure in which each

employee reports to both a functional or

division manager and to a project or group

manager.

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Major types of organization structures

Matrix structure Combines functional and divisional structures to gain

advantages and minimize disadvantages of each. Used in:

Manufacturing Service industries Professional fields Non-profit sector Multi-national corporations

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THE DOW-CORNING MATRIXTHE DOW-CORNING MATRIX

BOARD CHAIRMAN

Bus. No.1

Bus. No.2

Bus. No.3

Bus. No.4

Functional ProfessionalismFuture

MKTGMGR

MFGMGR

TS & DMGR

RESMGR

EVALCONTR

PRESIDENT

Functions

Cost Centers Other Services

Business Board

Profit Centers

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Potential advantages of matrix structures:

Potential disadvantages of matrix

structures:

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Team structures

Extensively use permanent and temporary

teams to solve problems, complete special

projects, and accomplish day-to-day tasks.

Often use cross-functional teams.

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How a team structure uses cross-functional teams for improved lateral relations.

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Potential advantages of team structures:

Potential disadvantages of team structures:

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Network structures

A central core that is linked through networks

of relationships with outside contractors and

suppliers of essential services.

Own only core components and use strategic

alliances or outsourcing to provide other

components.

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A network structure for a Web-based retail business.

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Potential advantages of network

structures

Potential disadvantages of network

structures:

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The boundary less organization eliminates internal and external barriers.

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Boundaryless organizations (cont.)

Encourage creativity, quality, timeliness, flexibility, and

efficiency.

Knowledge sharing is both a goal and essential

component.

Virtual organization.

A special form of boundaryless organization.

Operates in a shifting network of external alliances that

are engaged as needed, using IT and the Internet.

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POWER AND THE POWER AND THE

DISTRIBUTION DISTRIBUTION

OF AUTHORITYOF AUTHORITY

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POWERPOWER::The ability to exert influence; that is, the ability to change the attitudes or behavior of individuals or groups.

REWARD POWERREWARD POWER

COERCIVE POWERCOERCIVE POWER

LEGITIMATE POWERLEGITIMATE POWER

EXPERT POWEREXPERT POWER

REFERENT POWERREFERENT POWER

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AUTHORITY:AUTHORITY:

A form of power, often used more broadly to refer to a people’s

ability to wield power as a result of qualities such as knowledge

or titles such as judge.

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LINE AUTHORITY:LINE AUTHORITY:

The authority of those managers directly responsible, throughout

the organization’s chain of command, for achieving organizational

goals.

STAFF AUTHORITY:STAFF AUTHORITY:

The authority of those groups of individuals who provide line

managers with advice and services.

FUNCTIONAL AUTHORITY:FUNCTIONAL AUTHORITY:

The authority of members of staff departments to control the

activities of other departments as they relate to specific staff

responsibilities.

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DELEGATION:DELEGATION:

The act of assigning formal authority and responsibility for

completion of specific activities to a subordinate.

DELEGATION OF AUTHORITY:DELEGATION OF AUTHORITY:

Efficient functioning of an organization requires that managers

must delegate responsibility and authority to employees.

Delegating maximizes the effectiveness of employees, speeds-up

decision-making, and can lead to better decisions.

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TASKS OF EFFECTIVE DELEGATIONTASKS OF EFFECTIVE DELEGATION

1. Decide which tasks can be delegated.

2. Decide who should get the assignment.

3. Provide sufficient resources for carrying out

the delegated task.

4. Delegate the assignment.

5. Be prepared to run interference, if

necessary

6. Establish a feedback system.

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CENTRALIZATION:CENTRALIZATION:

The amount of authority and autonomy given to a

multinational divisional manager is a reflection of the

relative centralization or decentralization of the

organization.

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BENEFITS OF DECENTRALIZATIONBENEFITS OF DECENTRALIZATION

• PROXIMITY OF THE MARKET.

• LOCAL KNOWLEDGE.

• CUSTOMER ACCEPTANCE AND KNOWLEDGE.

• DEALER’S COMFORT.

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Decentralization with centralization

Centralization is the concentration of authority

for making most decisions at the top levels of

the organization.

Decentralization is the dispersion of authority

to make decisions throughout all levels of the

organization.

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Decentralization with centralization (cont.)

Centralization and decentralization not an “either/or” choice.

Organizing trend: Delegation, empowerment, and horizontal

structures contribute to more decentralization in organizations.

Advances in information technology allow for the retention of centralized control.