Management Textbook Chapter Summaries

1 Manager and Management  Learning Outcomes After studying this chapter, you should be able to: 1. Define organization and management 2. Explain the importance of management 3. Describe the management process or functions of P-O-L-C 4. Describe a manager, the levels of m...

1 Manager and Management  Learning Outcomes After studying this chapter, you should be able to: 1. Define organization and management 2. Explain the importance of management 3. Describe the management process or functions of P-O-L-C 4. Describe a manager, the levels of management, and management skills  Understand the types of managers, and describe their roles and the changing nature of their work  Discuss the trials of management  Introduction  For most of our lives, we are members of one organization or another.  These organizations are put and kept together by a group of people who see that there are benefits available from working together towards a common goal or goals.  This chapter introduces management principles and theories, and the challenges of applying these principles and theories in today’s business environment.  Importance of Management  Management achieves organizational goals  Management efficiently utilizes resources  Management is essential for prosperity of society  Management addresses the challenges of management  Management establishes equilibrium  1.1 Definition of an Organization  An organization is defined as a systematic arrangement of people brought together to accomplish some specific purpose.  Characteristics of an organization: – A distinct goal and purpose – Comprises people working together to accomplish certain objectives – A systematic structure – An aim to serve society  1.1.1 Definition of Management  Classic definition: – Mary Parker Follett, one of the earlier theorists of management, defined management as the art of getting things done through people.  Broad definition: – Management can be defined as the process of consolidating and managing resources effectively and efficiently in an effort to achieve the goals of the organization.  1.2 The Management Process  A process is a way of doing things, which is on- going (continuous) and systematic.  Management is a process which emphasizes that all managers, regardless of their specific aptitudes or skills, engage in certain interrelated functions to achieve certain desired goals.  1.3 Type of Managers  The term ‘manager’ refers to someone who is responsible for carrying out the four main activities of management in relationships over a specific time.  One way to grasp the complexity of management is to understand that managers play important roles at different levels in an organization.  These managers carry out a wide range of organizational activities related to an organization’s success.  Roles of Managers  Interpersonal  Decisional – Figurehead – Entrepreneur – Liaison – Disturbance – Leader handler  Informational – Resource – Monitor allocator – Disseminator – Negotiator – Spokesperson  Levels of Management  Top level management – responsible for the overall management of an organization – They are called executives. They establish operating policies and guide the organization’s interaction with its environment.  Middle level management – direct the activities of lower level managers and sometimes those of operating employees – direct activities which implement their organization policies and balance organizational demands on managers with the capacities of their employer  Levels of Management (cont.)  Lower level management – responsible for the work of non-management employees, but do not supervise other managers and are also directly responsible for the production of goods or services Levels of Management (cont.)  Scope and Responsibilities of Managers  General Manager – responsible for managing several different divisions or departments – makes decisions across the different functions and ensures that staff rewards are tied to the performance of entire units  Functional Manager – in charge of one major function, for instance a department in an organization – can also be considered someone who manages a work unit that is grouped based on specific functions  Levels and Roles of Managers and the Nature of Organizations The roles played by a manager may differ depending on the size of the company and the nature of its business (e.g. profit-oriented or not-for-profit organization).  Small- and medium-sized companies: the spokesperson and the entrepreneurial roles are important as they establish networking opportunities.  Big companies: the resource allocator and the liaison roles are more important as they have more resources to be distributed.  Even so, all the roles are interrelated and must be executed to the best of the abilities of the managers.  The New Manager or Leader Profile The characteristics of today’s managers include:  No longer considered ‘the boss’, instead act as sponsors, team leaders or internal consultants.  No longer in control from the top of the pyramid, neither try to control actions from the side-line.  Empowering individual employees to do what is necessary to achieve goals.  Making sure employees have the resources to get jobs done.  1.4 Management Functions  Planning – the process of defining goals, establishing strategies and developing action plans to coordinate activities towards accomplishing organizational goals.  Organizing – the process of determining what needs to be done, how it will be done and who is to do it.  1.4 Management Functions (cont.)  Leading – the process of directing and influencing all organizational members involved, motivating them and resolving conflicts towards achieving organizational goals.  Controlling – the process of monitoring activities to ensure that they are accomplished as planned.  Skills of Management  Technical skills – ability to utilize job specific knowledge of tools, techniques and procedures which are specific to a particular field to perform a task Project management, Problem solving, Marketing, Decision Making, Delegation  Human skills – ability to work effectively with one’s own work group as well as others in an organization empathy, adaptability, communication, listening attentively, and a growth mindset.  Skills of Management (cont.)  Conceptual skills – ability to analyze and diagnose a situation to determine cause and effect. This skill is also defined as an ability to process information from both internal and external environments of an organization and determine related implications Creative Thinking Skills,Interpersonal Communication Skills, Managerial Skills, Decision-Making Skills, Ability to Motivate, Analytical and Critical Thinking Skills, Innovation Skills, Technical Skills.  Challenges of Management  Change is inevitable; today’s managers must view change as a constant feature in their lives.  Managers leading organizations must continuously operate in a context that is very complex and dynamic, forcing them to continually adjust to these changing conditions.  Some of the prevalent and concurrent trials of management are: – Internet and Information Technology – Globalization – Diversity and Intellectual Capital – Ethical Practice and Social Responsiveness  Managing Globalization Managers are expected to possess the following competencies for effective management in managing globalization  2 Decision Making  Learning Outcomes After studying this chapter, you should be able to:  Define the concept of planning  Discuss how organizations use plans at all management levels (from top to bottom)  Describe the different types of special-purpose plans used by organizations (for change, contingencies, product development and speed)  Learning Outcomes (cont.)  Discuss the costs and benefits of planning  Understand the nature of organizational goals, and LEARNING OUTCOMES how they facilitate performance (cont.)  Explain how to plan successfully  Understand management by objectives (MBO)  Define decision-making, and describe the organizational decision-making process  Introduction Each and every one of us is often involved in some form of planning. For example:  Coordinating an event (a sporting event, a charity event or fundraiser, your sibling’s wedding, a school play, a book signing session, a bake sale, a rock concert).  Planning a meeting (a business meeting, an office brainstorming session).  Introduction  Planning a social gathering (a party, a reunion, a holiday with family members, friends or colleagues)  Organizing a seminar or conference.  Organizational Decision- making Process  Involves proper and efficient implementation of strategic plans and methods to achieve desired business objectives.  Multiple divisions are involved in the overall decision-making process—can have different implications for each respective division  Organization wide support is crucial  Key areas that affect the overall process include:  Organizational Decision- making Process (Cont.)  Limits of Rationality Bounder Rationality -Limited information they have -Human mind has limited information processing capability -Limited amount of time to make decision Intuition  Organizational Decision- making Process (Cont.)  Making Choice i. Availability heuristic ii. Representative heuristic iii. Escalation of Commitment  Organizational Decision- making Process (Cont.)  Individual Differences i. Directive Style ii. Analytical Style iii. Conceptual Style iv. Behaviour Style  Decision-Making style  Quality and timely decision-making is essential for the success of any organization.  How an organization chooses to design its decision- making rules are one of the most fundamental aspects of its internal design.  An organization’s ability to make good decisions is particularly important in the face of increasing global competition and greater uncertainty from exposure to more competitors.  Decision-Making style (Cont.)  Characteristic of Decision-Making Certainty Uncertainty Risk Conflict : - Psychological conflict on individual - Conflict between individual & group  Decision-Making style (Cont.)  Decision-Making Process i. Identifying and diagnosing the problem. ii. Generating alternative solution iii. Evaluating alternatives iv. Making the Choice v. Implementing the decision vi. Evaluating the decision Decision-Making style (Cont.)  Decision-Making style (Cont.)  Methods of Group Decision-Making i. Authoritarian style ii. Brainstorming iii. Voting based method  Benefits of Decision Making  Advantages Gives More Information.... Increase People's Participation.... Provide More Alternatives.... Improves the Degree of Acceptance and Commitment.... Improves the Quality of Decision.... Helps in Strengthening the Organization.... Smart Risk-Taking Opportunity.  Benefits of Decision Making  Advantages of Group Decision Making Helps to combine individual strengths of group members Individual opinions can be biased or affected by pre-conceived notions. A group decision always means enhanced collective understanding of the course of action to be taken after the decision is made. Gains greater group commitment since every member share in the decision-making process. Fosters a strong sense of team spirit amongst group members and helps the group to think together in terms of success as well as failure.  Benefits of Decision Making  Disadvantages of Group Decision Making More time consuming than the process of individual decision-making Takes longer to be finalized since there are many opinions to be considered and valued In the case of an authoritarian or a minority group decision-making process, the members whose opinions are not considered tend to be left out from the process. This causes team spirit to diminish. The responsibility and accountability of decisions are not shared equally in some cases which leads to a split in the group. This hampers overall efficiency of the group.  Common Error in Decision- Making Process  Common decision-making biases are: i. Overconfidence bias ii. Anchoring bias iii. Hindsight bias iv. Confirmation bias v. Availability bias  4 Organizing  Learning Outcomes After studying this chapter, you should be able to:  Define the concept of organizing, and explain the importance of the organizing function.  Describe the process of organizing.  Describe the types of organizing structures and organizational relationships.  Explain the types of organizational structures or designs.  Introduction  This chapter will explore organizing as one of the management functions.  It will also explore the division of work between people and groups, the work carried out by managers at different levels, and the coordination of work produced by these people and groups to enable the achievement of organizational aims and objectives.  Definition of Organizing Defined as the process of determining what needs to be done, how it will be done and who is to do it. (For example: Organizing company annual program) It also can be understood as the process of organizing organizational resource, assemble human, physical and financial in obtaining result.  The Importance of Organizing 1) Identification of organizational 3) Classifying authority. activities.  Manager will classify the powers,  Help to identify important and and rank will be given to relevant activities. differentiated level of management.  For example, top-level management  For example, achievement of sales target, quality control, inventory (formulated of policies), middle-level control and etc. management (for their department) and lower-level management (supervision of non-managerial 2) Departmentalization of organizational employees). activities.  Manager tries to combine and group 4) Coordination between authority and similar and related activities into responsibility. department and units.  To ensure smooth interaction  For example, marketing department, towards the achievement of production/operation department, organizational goals. finance department and etc.  Individuals will be aware of their authority.  Organizing Process 1.Determining task and define jobs. 2. Determining 5.Monitoring the locus of and feedback decision making. 3.Grouping 4.Coordinating organizational resources members  Organizational Structure and Relationships  Understanding organizing structure helps us to understand the different types of organizational relationships.  Organizational or working relationships that exist within an organization affect how its activities are accomplished and coordinated.  Formal and Informal Organizations  Formal organization – A formal organization has a structure comprising of well-defined jobs; each of which bears a measure of authority and responsibility.  Informal organization – An informal organization, has a network of both personal and social relationships that spontaneously originates within the formal set up.  Types of Organizational Relationships 1) Chart and chain of command 2) Span of control 3) Delegation 4) Centralization and Decentralization  i) Chart and Chain of Command  Is an organizational structure that documents how each member of a company reports to one another.  At the top of the chart would be the founder, owner or CEO, and the people who report to them would appear directly below.  1) Chart and Chain of Command (Cont.) Organization chart helps managers to verify the following below:  Levels of Management: Always show the hierarchy information that describe different levels of management in organization.  Chains of Command : Shows work department and units in relation to each other For example: marketing department in charges of sales and adverts, HR department in charge of staffing. It announces the delegation authorities which specifies who reports to whom.  Position and type of works performed: The titles of positions indicate the type of work that these managers perform.  Departmentalization or division of work: The grouping or clustering of similar task under one common task indicates departmentalization (specialization of work).  2) Span of Control  Also known as span of management.  There are two types of span of control: 1) Narrow Span of Control : - Manager to supervise a small group of employees. - More costly as there will be more managers and higher numbers of communication issues. - But more growth opportunities as the number of levels is comparatively more. - For example, a company has three levels of authority: directors, division heads, and managers. 2) Wide Span of Control : - Requires manager to supervise a larger group. - May result manager to be over utilized. - Employees also may receive inadequate guidance from managers. - If a department that have dozens of employees that requires feedback and attention, may occurred potential error. - However, it is less overhead cost of supervision, quick response from employees, better communication and suitable for repetitive job or tasks. 2) Span of Control (Cont.)  2) Span of Control (Cont.)  Manager span of control depend on several factors: 1) Complexity of task assigned to subordinate: More complex a task, the more optimal the span of control required by employees. Narrow span of control is preferable 2) Similar task are performed repeatedly: If employees repeatedly performing similar task, Wide of control is preferable since they involved only minimal supervision. 3) Task are closely interconnected and interdependent: A manager may encounter problems with coordination which creates the needs for a minimal span of control. Thus, the manager may opt for a narrow span of control. 4) Operation take place in unstable environment : Narrow span of control will be effective  3) Delegation  The delegation of authority by managers to employees is necessary for the efficient functioning of any organization as no manager can personally accomplish or completely supervise everything that happens in an organization.  Authority, Responsibility and Accountability: Authority allows person authorized to carry out the responsibility assigned successfully. Responsibility in order hand defined as the obligation to perform the task that have been assigned. Accountability is the liability created of the assigned duties for the used of the authority. It is the answerability for the performance.  Line, Staff and Functional Authorities: Manager apply authority by dividing into line authority, staff authority and functional authority. Type of authority differs according to types of powers which they are based on.  4) Centralization and Decentralization  Centralization is a process where the central point of approval for decisions made are subjected to the approval of the top management.  But when the authority in the making decision is delegated from one unit of organization to another (usually lower-level manager), a decentralized organization appears.  Decentralized decision poses several implications: Less burden to top management. Subordinate will have chance to decide and develop skills & capabilities. Decision can be made at divisional levels. Boosting employee’s motivation.  Types of Organizational Structures (Departmentalization)  The types of organizational structures chosen are influenced by certain factors—nature of an organization, its specialization and its decision- making hierarchy.  A successful organization tends to follow a pattern of structural development as it grows and expands.  For example; a simple structure of an entrepreneur organization as the organization gradually become more successful and expand its business, it may opt for a functional structure consisting of departments, such as marketing, production and finance.  Types of Departmentalization 1) Functional departmentalization – The authority grouping of related work activities according to functions. – Example: group of advertising and sales functions under the marketing department.  Types of Departmentalization (Cont.) 2) Divisional departmentalization – An organization structure, whereby corporate divisions operate as relatively autonomous businesses under a larger corporate umbrella. 1) Product departmentalization – done according to products or services available. – Example: Maybank may handle customer loans in one department and commercial loans in another. Advantages: increased attention on specific product line or services. 2) Customer departmentalization – groups related work activities according to what customers are likely to buy in terms of an organization’s products or services. – Example: Sogo divided their departmental store into men and women department, cosmetic department and children department. 3) Process departmentalization – groups related work activities according to production processes. – Example: automobile manufacturing process.  Types of Departmentalization (Cont.) Divisional Departmentalization  Types of Departmentalization (cont.) 3) Geographical departmentalization – the grouping of related work activities according to areas that are served by a business. – For example, marketing a product in Western Europe may have different requirements than marketing the same product in Southeast Asia. – The Coca-Cola Company has a somewhat complex matrix organizational structure with geographic divisions, product divisions, business-type units, and functional groups.  Types of Departmentalization (cont.)  Geographical Departmentalization  Types of Departmentalization (cont.) 4) Matrix Departmentalization - teams are formed in which individuals report to two or more managers. - usually, the functional manager and project manager brings together personnel from several specialties to complete limited-life tasks. - Advantages; enable open communication and coordination of activities among relevant functional specialist, allows for hierarchical flexibility that enables an organization to respond rapidly to the need of change. - Disadvantages: Cause confusion and contradict policies by allowing dual accountability. - For example, a software company might have functional departments such as Product Management, Software Development, Quality Assurance, Technical Operations, etc. But each individual product the company produces would also have dedicated teams with representatives from the different functional specialties. - In a matrix, there are typically two management chains – a functional manager and a product or project manager. Employees report to both managers simultaneously for different aspects of their work.  Types of Departmentalization (cont.) Matrix Departmentalization Example: Manager Project 1:Manages all activities related to Projek 1,including direct all teamwork from all functions such as marketing, R&D, dan Financial. Manager Marketing: Responsible to all marketing strategy, control all marketing activities including marketing activies Projek 1, 2, dan 3.  5 Human Resource Management  Introduction  HRM is both a strategic function and a people-oriented process aimed at achieving a balance between organizational success and employee satisfaction.  HRM plays a vital role in building a productive workforce, fostering a positive work environment (organizational culture), and enhancing employee engagement.  Human Resource Management Process Main elements including  Recruitment and Selection  Training and Development  Performance Appraisal  Compensation and Benefits  Employee Relations  Human Resource Planning HR planning:  Comparing current workforce with its future goals (eg: expansion of business & adding new business activities)  Identify numbers and types of employees that are needed to support the future goals.  Selecting the capable and high quality candidates to ensure work efficiency and effectiveness  Ensures that the organization successfully achieves its goals along with profitable returns  Enhances an organizations’ competitive edge over its peers  Surplus and Shortage of Labour Supply  Employee surplus and employee shortage are caused by an inconsistency between supply and demand – Surplus of employees (downsizing) Early retirement programs Voluntary separation scheme Layoffs / Force dismissal / termination – Shortage of employees Recruiting temporary employees Contract employees Outsourcing  Recruitment & Selection  The first step in staffing process in identifying, attracting, and selecting qualified candidates to fill job vacancies within an organization.  It involves a series of activities aimed at finding the right person for the right job at the right time.  It influence the number and types of applicants who apply for a job and whether the applicants accept jobs that are offered  Directly related to HR planning and staff selection  Recruitment Process  Step 1: Determining a need  Step 2: Applicant search and selection  Step 3: Decision- making process  Step 4: Adaptation to the workplace  Recruitment Process (Cont.)  Job Analysis Entails documentation of actual or intended requirements of a job that are to be performed in organization.  Recruitment Involved advertising. Common medium are internet, newspaper, publications, windows advertise, job centre and campus graduate recruitment programmes.  Recruitment Process (Cont.)  Screening Selection Chose candidate based on capability and suitability in relation to job or task by looking skill such as communication, typing and computer skills. Job fit and organization fit  Interview Shortlisted are to be contacted and interviewed  Recruitment Process (Cont.)  Making a Decision Stage to choose the right candidate who fulfil all the basic requirement of organization  Notification and employment offer Successful candidate is notified of the decision.  Orientation / Onboarding Adaption to the workplace  Recruitment  The process of finding and attracting job candidates who are qualified to fill job vacancies. – Internal recruitment Identifying candidates from inside the organization and encouraging them to apply for vacant jobs. – External recruitment Advertising for and soliciting applicants from outside the organization to vacant jobs.  Training and Development  Training and development are educational activities within an organization that are designed to improve the job performance of an individual or group. These programs typically involve advancing a worker’s knowledge and skill sets and instilling greater motivation to enhance job performance.  Training and Development  Employee Training and Development: A strategic tool for improving business outcomes by implementing internal educational programs that advance employee growth and retention. On-job-training or job rotation  Management Training and Development: The practice of developing employees into managers and enhancing managers into effective leaders by the ongoing enhancement of certain knowledge, skills and abilities.  Training and Development  The benefits of employee training and development programs include: Increased productivity Train future leaders Increased job satisfaction and retention Attract highly skilled employees Ability to experience in other departments Experience to different work scope (job rotation) Upskill employee work knowledge Foster good organization culture  Performance Appraisal  A formal assessment process to evaluate an employee's job performance, skills, achievements, and overall contribution to an organization.  This evaluation is typically conducted by a supervisor and is used to provide feedback, identify strengths and areas for improvement, set goals, and inform decisions related to promotions, salary adjustments, training, and development.  Performance Appraisal  Types of Performance Appraisals Most performance appraisals are top-down where supervisors evaluate their staff (based on quality of work done – KPI and the perception of supervisor)  Other types: Self-assessment (staff self rating) Peer assessment by colleagues 360-degree feedback assessment (by staff to his supervisor)  Compensation & Benefits Total rewards that employees receive from an employer in exchange for their work. Two main types of compensation: Direct compensation (financial) Basic pay Overtime Commissions Bonus Profit sharing  Compensation & Benefits Indirect compensation (non-financial) Employee Share Option Scheme Hospitalization Holiday / Umrah Handphone / Laptop Emergency loan to employee Parking Childcare support (tadika / taska dalam kawasan company)  Employee Relations  Handles the relationship between an employer and its employees. It focuses on creating a positive work environment, handling workplace issues, and ensuring mutual respect and fair treatment.  Strong employee relations contribute to higher employee satisfaction, improved performance, and reduced turnover.  Employee Relations  Key components – Transparent communication: eg: suggestion box, notification on corruption and bribery (whistleblowing), discrimination, unfair job dismissal – Conflict resolution: resolving disputes or grievances between employees or between employees and management – Ensure compliance with company policies – Reduces the risk of lawsuits or regulatory penalties from JABATAN BURUH, PERKESO, OSHA (occupational, safety and health act)  Equal Employment Opportunity  It is a legal framework aims giving an equal chance for employment  Preventing discrimination in hiring, promotion, training, pay, and other aspects of employment  Eg: OKU (blind, deaf, wheelchair)