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Chapter Six
Understanding the Management Process
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Learning Objectives
Define management Describe the four basic management functions:
planning, organizing, leading/motivating, and controlling
Distinguish between various kinds of managers, with regard to level and area of management
Identify key management skills and managerial roles Discuss different types of leadership Analyze the steps in the managerial decision-making
process
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Learning Objectives
Describe how organizations benefit from total quality management
Summarize the criteria for becoming a successful manager today
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CEO Pay Compared to Average Worker Pay
0
100
200
300
400
500
600
CEO Pay Times
WorkerPay
1980 1990 2000 2006
Source: 2007 Trends in CEO Pay, http://www.aflcio.org/corporatewatch/paywatch/pay/index.cfm, accessed 2/8/09.
http://money.cnn.com/2009/08/14/news/companies/highest_paid_ceos/
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What Is Management? The process of coordinating people and other resources to achieve
the goals of an organization– Material resources
• The tangible physical resources an organization uses
– Human resources• The people who staff the organization and use the other resources to
achieve the goals of the organization
– Financial resources• The funds the organization uses to meet its obligations to investors and
creditors
– Information resources• The information about internal and external business environmental
conditions that the firm uses to its competitive advantage
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The Four Main Resources of Management
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Basic Management FunctionsThe Management Process
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PlanningPlanning
– Establishing organizational goals and deciding how to accomplish them
Mission– A statement of the basic purpose that makes an
organization different from othersStrategic planning
– The process of establishing an organization’s major goals and objectives and allocating the resources to achieve them
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Planning Establishing goals and objectives
– Goals/Objectives• An end result that the organization is expected to
achieve over a period of time
• Long-term versus short-term
– Properly set goals are• Set at every level in the organization
• Consistent (supportive) with each other
• Optimized (balanced) to reduce conflicts between goals
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Organizing the Enterprise
Organizing– The grouping of resources and activities to accomplish some end
result in an efficient and effective manner
Leading and motivating– Leading
• Influencing people to work toward a common goal
– Motivating• Providing reasons for people to work in the best interests of the
organization
– Directing• The combined processes of leading and motivating
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Controlling Ongoing ActivitiesControlling
– Evaluating and regulating ongoing activities to ensure that goals are achieved
Control function
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Kinds of Managers Levels of management
– Top manager—guides and controls the overall fortunes of the organization; responsible for the performance of all departments
– Middle manager—implements the strategy and major policies developed by top management; responsible for finding the best way(s) to organize human and other resources to achieve organizational goals
– First-line manager—coordinates and supervises the activities of operating (nonmanagerial) employees
•The coordinated effort of all three levels of managers is required to implement the goals of any company
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Areas of Management Specialization
Financial managers– Responsible for the organization’s financial resources
Operations managers– Manage the systems that convert resources into goods and services
Marketing managers– Responsible for facilitating the exchange of products between the
organization and its customers or clients Human resources managers
– Manage the organization’s human resources programs Administrative managers (general managers)
– Not associated with any specific functional area; provide overall administrative guidance and leadership
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Areas of Management Specialization
Other areas may have to be added depending on the nature of the firm and the industry
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What Makes Effective Managers?
Key management skills– Technical skill
• A special skill needed to accomplish a specialized activity
– Conceptual skill• The ability to think in abstract terms
– Interpersonal skill• The ability to deal effectively with other people
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What Makes Effective Managers?
Managerial roles– Decisional roles
• Involve various aspects of management decision making Entrepreneur, disturbance handler, resource allocator, negotiator
– Interpersonal roles• The manager deals with people
Figurehead, liaison, leader
– Informational roles• A manager either gathers or provides information
Monitor, disseminator, spokesperson
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Rules for Leaders Audit your company cultures
Stay informed—informed people don’t fear change
Beware of “aspirational” accounting (e.g. Enron)
Empower your people — turn them loose
Prevent erosion of human assets
Be generous with what you knowSource: “25 Rules for Leaders, 2006,” Fast Company, http://www.fastcompany.com/articles/2002/05/rtsd_quotes.html
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Class ExerciseFor each skill, provide an example of how a
manager could use it in a real-world
situation.
– Technical skill
– Conceptual skill
– Interpersonal skill
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LeadershipThe ability to influence others
Formal leadership
– Legitimate power of position is the basis for authority
Informal leadership
– Not recognized formally by the organization authority
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Styles of Leadership
Authoritarian
– Holds all authority and responsibility, with communication usually moving from top to bottom
Laissez-faire
– Gives authority to employees and allows subordinates to work as they choose with a minimum of interference; communication flows horizontally among group members
Democratic
– Holds final responsibility but also delegates authority to others, who help determine work assignments; communication is active upward and downward
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Debate Issue: Should Managers Use the Authoritarian Leadership Style?
YES
Some employees need the close supervision that authoritarian leaders provide.
When authoritarian leadership is used, communication moves from top (supervisor) to bottom (employees).
An authoritarian leader assigns workers to specific tasks and expects precise results, so workers know exactly what is expected.
NO
Workers resent the close supervision that results from the authoritarian leadership style.
The democratic and laissez-faire leadership styles allow workers to communicate with the supervisor and other members of their group.
Authoritarian leaders stifle the workers’ creativity and their ability to solve problems.
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Which Leadership Style Is Best?
Matching style to the situationEffective leadership depends on
– Interaction among the employees– Characteristics of the work situation– The manager’s personality
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0%
5%
10%
15%
20%
25%
30%
35%
40%
SustainedTop-LineGrowth
ProfitGrowth
ConsistentExecution of
Stratey
Adaptabilityto Change
ConsumerRetention
Source: Data from The Conference Board 2006; Challenge survey of 658 CEOs and chairmen.
CEOs’ Top Concerns
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Managerial Decision MakingThe act of choosing one alternative from
among a set of alternativesMajor steps in the managerial decision-
making process
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Managerial Decision MakingIdentifying the problem or opportunity
– Problem• The discrepancy between an actual condition and a desired
condition
– Opportunity• A “positive” problem
– Problem-solving impediments• Preconceptions about the problem• Focusing on unimportant matters while overlooking significant
issues• Analyzing symptoms rather than causes• Failing to look ahead
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Managerial Decision-Making Process
Generating alternatives– Brainstorming
• Encouraging participants to come up with new ideas
– “Blast! then refine”• Reevaluating objectives, modifying them if necessary, and
devising a new solution
Selecting an alternative– Satisficing
• Choosing an alternative that is not the best possible solution, but one that adequately solves the problem
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Managerial Decision-Making Process
Implementing and evaluating the solution– Requires time, planning, preparation of personnel,
and evaluation of the results
– An effective decision removes the difference between the actual condition and the desired condition
– If a problem still exists, managers may• Decide to give the chosen alternative more time
• Adopt a different alternative
• Start the process all over again
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Managing Total QualityTotal Quality Management (TQM)
– The coordination of efforts directed at • Improving customer satisfaction• Increasing employee participation• Strengthening supplier partnerships• Facilitating an organizational atmosphere of continuous
quality improvement
Issues crucial to TQM– Top management commitment– Coordination of efforts
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What It Takes to Become a Successful Manager
Personal skills – Oral communication– Written communication– Computer skills– Critical thinking
Education and experience– A solid academic background– Practical work experience
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Chapter Quiz1. People in an organization are what type of resources?
a) Materialb) Informationalc) Inventoryd) Humane) Financial
2. In executing their functions, managers must firsta) organize activities.b) establish goals.c) motivate employees.d) evaluate activities.e) select employees.
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Chapter Quiz
3. Roles such as entrepreneur, disturbance handler, and resource allocator are types of _______ roles.a) interpersonalb) informationalc) decisionald) leadershipe) ownership
4. One type of leadership style isa) laissez-faire.b) CEO.c) entrepreneur.d) negotiator.e) bureaucratic.
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Chapter Quiz 5. All of the following are reasons for a greater
focus on quality by U.S. firms except a) competition from foreign firms.b) customers that are more demanding.c) unpredictability on Wall Street.d) poorer financial performance.e) reduced market share.
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Answers to Chapter Quiz1. People in an organization are what type of resources?
a) Materialb) Informationalc) Inventoryd) Human (Correct)e) Financial
2. In executing their functions, managers must firsta) organize activities.b) establish goals. (Correct)c) motivate employees.d) evaluate activities.e) select employees.
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Answers to Chapter Quiz
3. Roles such as entrepreneur, disturbance handler, and resource allocator are types of _____________roles.a) interpersonalb) informationalc) decisional (Correct)d) leadershipe) ownership
4. One type of leadership style isa) laissez-faire. (Correct)b) CEO.c) entrepreneur.d) negotiator.e) bureaucratic.
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Answers to Chapter Quiz
5. All of the following are reasons for a greater focus on quality by U.S. firms except a) competition from foreign firms.b) customers that are more demanding.c) unpredictability on Wall Street. (Correct)d) poorer financial performance.e) reduced market share.
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