Lecture Notes 1_FUND BUS 200 - Part 1 (PDF)

College of Business Administration Lecture Notes in FUND BUS 200 Prepared by Gabriel R. De Guzman, RMP, MBA Unit 1: Management Concept (Part 1) 1. Concepts and functions of Management 2. Managerial roles, Skills, levels and area...

College of Business Administration Lecture Notes in FUND BUS 200 Prepared by Gabriel R. De Guzman, RMP, MBA Unit 1: Management Concept (Part 1) 1. Concepts and functions of Management 2. Managerial roles, Skills, levels and areas of management Learning Outcomes define and explain the concepts and functions of management; enumerate, classify, differentiate, and explain the managerial roles, skills and different levels of management; Lesson Proper Management Competencies for Today’s World Management is the attainment of organizational goals in an effective and efficient manner through planning, organizing, leading, and controlling organizational resources. Management is everywhere. Management is the act or art of managing : the conducting or supervising of something (such as a business) Management is the process of planning, organizing, leading, and controlling people in the organization to efficiently and effectively use resources to meet organizational goals. There are certain elements of management that are timeless, but environmental shifts also influence the practice of management. In recent years, rapid environmental changes have caused a fundamental transformation in what is required of effective managers. Technological advances such as social media and mobile apps, the rise of virtual work, global market forces, the growing threat of cybercrime, and shifting employee and customer expectations have led to a decline in organizational hierarchies and more empowered workers, which calls for a new approach to management that may be quite different from managing in the past. The figure above shows the shift from the traditional management approach to the new management competencies that are essential in today’s environment.  College of Business Administration Lecture Notes in FUND BUS 200 Prepared by Gabriel R. De Guzman, RMP, MBA The Basic Concepts and Functions of Management Every day, managers solve difficult problems, turn organizations around, and achieve astonishing performances. To be successful, every organization needs good managers. The famed management theorist Peter Drucker (1909–2005), often credited with creating the modern study of management, summed up the job of the manager by specifying five tasks, as outlined in the figure below. In essence, managers set goals, organize activities, motivate and communicate, measure performance, and develop people. These five manager activities apply not only to top executives such as Mark Zuckerberg at Facebook, Alan Mulally at Ford Motor Company, and Ursula Burns at Xerox, but also to the manager of a restaurant in your hometown, the leader of an airport security team, a supervisor at a Web hosting service, or the director of sales and marketing for a local business. The activities outlined in the figure above fall into four fundamental management functions: planning (setting goals and deciding activities), organizing (organizing activities and people), leading (motivating, communicating with, and developing people), and controlling (establishing targets and measuring performance). The graph below illustrates the process of how managers use resources to attain organizational goals through the functions of planning, organizing, leading, and controlling. Chapters of this book are devoted to the multiple activities and skills associated with each function, as well as to the environment, global competitiveness, and ethics that influence how managers perform these functions.  College of Business Administration Lecture Notes in FUND BUS 200 Prepared by Gabriel R. De Guzman, RMP, MBA Planning Planning means identifying goals for future organizational performance and deciding on the tasks and use of resources needed to attain them. In other words, managerial planning defines where the organization wants to be in the future and how to get there. A good example of planning comes from General Electric (GE), where managers have sold divisions such as plastics, insurance, and media to focus company resources on four key business areas: energy, aircraft engines, health care, and financial services. GE used to relocate senior executives every few years to different divisions so that they developed a broad, general expertise. In line with recent strategic refocusing, the company now keeps people in their business units longer so they can gain a deeper understanding of the products and customers within each of the four core businesses. Organizing Organizing typically follows planning and reflects how the organization tries to accomplish the plan. Organizing involves assigning tasks, grouping tasks into departments, delegating authority, and allocating resources across the organization. In recent years, organizations as diverse as IBM, the Catholic Church, Estée Lauder, and the Federal Bureau of Investigation (FBI) have undergone structural reorganization to accommodate their changing plans. Organizing was a key task for Oprah Winfrey as she tried to turn around her struggling start-up cable network, OWN. She took over as CEO of the company, repositioned some executives and hired new ones, and cut jobs to reduce costs and streamline the company. Along with programming changes, such as the comedy series Tyler Perry’s For Better or Worse and the drama series The Haves and the Have Nots, structural changes brought a lean, entrepreneurial approach that helped put OWN on solid ground. Winfrey said “I prided myself on leanness,” referring to the early days of her TV talk show. “The opposite was done here.” Leading Leading is the use of influence to motivate employees to achieve organizational goals. Leading means creating a shared culture and values, communicating goals to people throughout the organization, and infusing employees with the desire to perform at a high level. As CEO of Chrysler Group, Sergio Marchionne spends about two weeks a month in Michigan meeting with executive teams from sales, marketing, and industrial operations to talk about his plans and motivate people to accomplish ambitious goals. Marchionne, who spends half his time in Italy running Fiat, rejected the 15th-floor executive suite at Chrysler headquarters so he could provide more hands-on leadership  College of Business Administration Lecture Notes in FUND BUS 200 Prepared by Gabriel R. De Guzman, RMP, MBA from an office close to the engineering center. One doesn’t have to be a top manager of a big corporation to be an exceptional leader. Many managers working quietly in both large and small organizations around the world provide strong leadership within departments, teams, nonprofit organizations, and small businesses. Controlling Controlling is the fourth function in the management process. Controlling means monitoring employees’ activities, determining whether the organization is moving toward its goals, and making corrections as necessary. One trend in recent years is for companies to place less emphasis on top-down control and more emphasis on training employees to monitor and correct themselves. However, the ultimate responsibility for control still rests with managers. Michael Corbat, the new CEO of Citigroup, for example, is taking a new approach to control at the giant company, which was kept afloat during the financial crisis with $45 billion in government aid. “You are what you measure,” Corbat says, and he is implementing new tools to track the performance of individual managers as a way to bring greater accountability and discipline Characteristics of Management The salient features which highlight the nature of management is as follows: Management is goal-oriented: Management is not an end in itself. It is a means to achieve certain goals. Management has no justification to exist without goals. Management goals are called group goals or organizational goals. The basic goal of management is to ensure efficiency and economy in the utilization of human, physical and financial resources. The success of management is measured by the extent to which the established goals one achieved. Thus, management is purposeful. Management is universal: Management is an essential element of every organized activity irrespective of the size or type of activity. Wherever two or more persons are engaged in working for a common goal, management is necessary. All types of organizations, e.g., family, club, university, government, army, cricket team or business, require management. Thus, management is a pervasive activity. The fundamental principles of management are applicable in all areas of organized effort. Managers at all levels perform the same basic functions. Management is an Integrative Force: The essence of management lies in the coordination of individual efforts into a team. Management reconciles the individual goals with organizational goals. As the unifying force, management creates a whole that is more than the sum of individual parts. It integrates human and other resources. Management is a Social Process: Management is done by people, through people, and for people. It is a social process because it is concerned with interpersonal relations. The human factor is the most important element in management. According to Appley, “Management is the development of people not the direction of things. A good manager is a leader, not a boss. It is the pervasiveness of human element which gives management its special character as a social process”.  College of Business Administration Lecture Notes in FUND BUS 200 Prepared by Gabriel R. De Guzman, RMP, MBA Management is multidisciplinary: Management has to deal with human behavior under dynamic conditions. Therefore, it depends upon wide knowledge derived from several disciplines like engineering, sociology, psychology, economics, anthropology, etc. The vast body of knowledge in management draws heavily upon other fields of study. Management is a continuous Process: Management is a dynamic and on-going process. The cycle of management continues to operate so long as there is an organized activity for the achievement of group goals. Management is Intangible: Management is an unseen or invisible force. It cannot be seen but its presence can be felt everywhere in the form of results. However, the managers who perform the functions of management are very much tangible and visible. Management is an Art as well as Science: It contains a systematic body of theoretical knowledge and it also involves the practical application of such knowledge. Management is also a discipline involving specialized training and an ethical code arising out of its social obligations. On the basis of these characteristics, management may be defined as a continuous social process involving the coordination of human and material resources in order to accomplish desired objectives. It involves both the determination and the accomplishment of organizational goals. Management Skills A manager’s job requires a range of skills. Although some management theorists propose a long list of skills, the necessary skills for managing a department or an organization can be placed in three categories: conceptual, human, and technical. As illustrated below, the application of these skills changes dramatically when a person is promoted to management. Although the degree of each skill that is required at different levels of an organization may vary, all managers must possess some skill in each of these important areas to perform effectively. Relationship of Technical, Human, and Conceptual Skills to Management Technical Skills Many managers get promoted to their first management jobs because they have demonstrated understanding and proficiency in the performance of specific tasks, which is referred to as technical skills. Technical skills include mastery of the methods, techniques, and equipment involved in specific functions such as engineering, manufacturing, or finance. Technical skills also includes specialized knowledge, analytical ability, and the competent use of tools and techniques to solve problems in that specific discipline.  College of Business Administration Lecture Notes in FUND BUS 200 Prepared by Gabriel R. De Guzman, RMP, MBA Human Skills Human skills involve the manager’s ability to work with and through other people and to work effectively as a group member. Human skills are demonstrated in the way that a manager relates to other people, including the ability to motivate, facilitate, coordinate, lead, communicate, and resolve conflicts. Human skills are essential for frontline managers who work with employees directly on a daily basis. A recent study found that the motivational skill of the frontline manager is the single most important factor in whether people feel engaged with their work and committed to the organization. Conceptual Skills Conceptual skills include the cognitive ability to see the organization as a whole system and the relationships among its parts. Conceptual skills involve knowing where one’s team fits into the total organization and how the organization fits into the industry, the community, and the broader business and social environment. It means the ability to think strategically—to take the broad, long-term view—and to identify, evaluate, and solve complex problems. When Skills Fail Good management skills are not automatic. Particularly during turbulent times, managers really have to stay on their toes and apply all their skills and competencies in a way that benefits the organization and its stakeholders—employees, customers, investors, the community, and so forth. In recent years, numerous highly publicized examples have shown what happens when managers fail to apply their skills effectively to meet the demands of an uncertain, rapidly changing world. Top Causes of Manager Failure Management Types Managers use conceptual, human, and technical skills to perform the four management functions of planning, organizing, leading, and controlling in all organizations—large and small, manufacturing and service, profit and nonprofit, traditional and Internet based. But not all managers’ jobs are the same. Managers are responsible for different departments, work at different levels in the hierarchy, and meet different requirements for achieving high performance.  College of Business Administration Lecture Notes in FUND BUS 200 Prepared by Gabriel R. De Guzman, RMP, MBA Levels of Management Vertical Differences An important determinant of the manager’s job is the hierarchical level. The figure below illustrates the three levels in the hierarchy. A study of more than 1,400 managers examined how the manager’s job differs across these three hierarchical levels and found that the primary focus changes at different levels. For first-level managers, the main concern is facilitating individual employee performance. Middle managers, though, are concerned less with individual performance and more with linking groups of people, such as allocating resources, coordinating teams, or putting top management plans into action across the organization. For top-level managers, the primary focus is monitoring the external environment and determining the best strategy to be competitive. Top managers are at the top of the hierarchy and are responsible for the entire organization. They have titles such as president, chairperson, executive director, CEO, and executive vice president. Top managers are responsible for setting organizational goals, defining strategies for achieving them, monitoring and interpreting the external environment, and making decisions that affect the entire organization. Middle managers work at middle levels of the organization and are responsible for business units and major departments. Examples of middle managers are department head, division head, manager of quality control, and director of the research lab. Middle managers typically have two or more management levels beneath them. They are responsible for implementing the overall strategies and policies defined by top managers. Middle managers generally are concerned with the near future, rather than with long-range planning. Middle managers’ status also has escalated because of the growing use of teams and projects. A project manager is responsible for a temporary work project that involves the participation of people from various functions and levels of the organization, and perhaps from outside the company as well. Many of today’s middle managers work  College of Business Administration Lecture Notes in FUND BUS 200 Prepared by Gabriel R. De Guzman, RMP, MBA with a variety of projects and teams at the same time, some of which cross geographical and cultural boundaries as well as functional ones. First-line managers are directly responsible for the production of goods and services. They are the first or second level of management and have such titles as supervisor, line manager, section chief, and office manager. They are responsible for teams and non- management employees. Their primary concern is the application of rules and procedures to achieve efficient production, provide technical assistance, and motivate subordinates. Horizontal Differences The other major difference in management jobs occurs horizontally across the organization. Functional managers are responsible for departments that perform a single functional task and have employees with similar training and skills. Functional departments include advertising, sales, finance, human resources, manufacturing, and accounting. Line managers are responsible for the manufacturing and marketing departments that make or sell the product or service. Staff managers are in charge of departments, such as finance and human resources, that support line departments. General managers are responsible for several departments that perform different functions. A general manager is responsible for a self-contained division, such as a Nordstrom department store or a Honda assembly plant, and for all the functional departments within it. Project managers also have general management responsibility because they coordinate people across several departments to accomplish a specific project. Manager Roles A role is a set of expectations for a manager’s behavior. The figure below describes activities associated with each of the roles. These roles are divided into three conceptual categories: informational (managing by information), interpersonal (managing through people), and decisional (managing through action). Each role represents activities that managers undertake to ultimately accomplish the functions of planning, organizing, leading, and controlling. Although it is necessary to separate the components of the manager’s job to understand the different roles and activities of a manager, it is important to remember that the real job of management isn’t practiced as a set of independent parts; all the roles interact in the real world of management.  College of Business Administration Lecture Notes in FUND BUS 200 Prepared by Gabriel R. De Guzman, RMP, MBA Informational Roles Informational roles describe the activities used to maintain and develop an information network. General managers spend about 75 percent of their time communicating with other people. The monitor role involves seeking current information from many sources. The manager acquires information from others and scans written materials to stay well informed. The disseminator and spokesperson roles are just the opposite: The manager transmits current information to others, both inside and outside the organization, who can use it. Monitor: Seek and receive information; scan Web, periodicals, reports; maintain personal contacts Disseminator: Forward information to other organization members; send memos and reports, make phone calls Spokesperson: Transmit Informational information to outsiders through speeches, reports Interpersonal Roles Interpersonal roles pertain to relationships with others and are related to the human skills described earlier. The figurehead role involves handling ceremonial and symbolic activities for the department or organization. The manager represents the organization in his or her formal managerial capacity as the head of the unit. The presentation of employee awards by a branch manager for Commerce Bank is an example of the figurehead role. The leader role encompasses relationships with subordinates, including motivation, communication, and influence. The liaison role pertains to the development of information sources both inside and outside the organization. Figurehead: Perform ceremonial and symbolic duties such as greeting visitors, signing legal documents  College of Business Administration Lecture Notes in FUND BUS 200 Prepared by Gabriel R. De Guzman, RMP, MBA Leader: Direct and motivate subordinates; train, counsel, and communicate with subordinates Liaison: Maintain information links inside and outside the organization; use e-mail, phone, meetings Decisional Roles Decisional roles pertain to those events about which the manager must make a choice and take action. These roles often require conceptual as well as human skills. The entrepreneur role involves the initiation of change. Managers are constantly thinking about the future and the changes needed to achieve a future goal or vision. The disturbance handler role involves resolving conflicts among subordinates or between the manager’s department and other departments. The resource allocator role pertains to decisions about how to assign people, time, equipment, money, and other resources to attain desired outcomes. The manager must decide which projects receive budget allocations, which of several customer complaints receive priority, and even how to spend his or her own time. Entrepreneur: Initiate improvement projects; identify new ideas, delegate idea responsibility to others Disturbance Handler: Take corrective action during conflicts or crises Resource Allocator: Decide who gets resources; schedule, budget, set priorities Negotiator: Represent team or department’s interests; represent department during negotiation of budgets, union contracts, purchases