Introduction to Management/Management Theory PDF

TOPIC 1 INTRODUCTION TO MANAGEMENT/ MANAGEMENT THEORY Contents 01 Definition of Management Principal function of Classical 02 06 manager Management Behavioural 03 Level and area of 07...

TOPIC 1 INTRODUCTION TO MANAGEMENT/ MANAGEMENT THEORY Contents 01 Definition of Management Principal function of Classical 02 06 manager Management Behavioural 03 Level and area of 07 Management management Skill and roles of 04 08 Quantitative managers Management Management theory 05 09 Contemporary Management Perspectives What Is Management? Organizations Organizations are collections of people who work together and coordinate their actions to achieve a wide variety of goals or desired future outcomes. Managers Managers are the people responsible for supervising the use of an organization’s resources to meet its goals. Management Management includes the planning, organizing, leading, and controlling of human and other resources to achieve organizational goals effectively and efficiently. Resources People and their skills, know-how, and experience. Machinery. Raw materials. Computers and information technology. Patents, financial capital, and loyal customers and employees. Achieving High Performance: A Manager’s Goal Organizational performance is a measure of how efficiently and effectively managers use available resources to satisfy customers and achieve organizational goals. Efficiency Effectiveness A measure of how well or how A measure of the productively resources are used appropriateness of the goals an to achieve a goal. organization is pursuing and the degree to which the organization achieves those goals. Figure 1.1 Efficiency, Effectiveness, and Performance in an Organization  Why Study Management? 1.Individuals generally learn 3.Learning management through personal experience or principles can help you make the experiences of others. good decisions in nonwork contexts. 2.The economic benefits of becoming a good manager are also impressive. Figure 1.2 Four Tasks of Management  Four Tasks of Management Steps in the Planning Process Organizing 1. Decide which goals the organization will Structuring working relationships so pursue. organizational members interact and 2. Decide what strategies to adopt to attain cooperate to achieve organizational goals. those goals. Managers decide how best to organize 3. Decide how to allocate organizational resources, particularly human resources. resources. Organizational structure Managers identify and select appropriate A formal system of task and reporting organizational goals and develop strategies for relationships that coordinates and motivates how to achieve high performance. organizational members so that they work 01 02 together to achieve organizational goals. Controlling Leading Evaluating how well an organization is Articulating a clear vision and energizing and 03 04 achieving its goals and taking action to enabling organizational members so they maintain or improve performance. understand the part they play in achieving Managers monitor performance of organizational goals. individuals, departments, and the organization Involves managers using their power, as a whole to determine if they are meeting personality, influence, persuasion, and performance standards. communication skills to coordinate people The outcome of the control process is the and groups. ability to measure performance accurately and regulate organizational efficiency and effectiveness.  Managerial Roles Identified: Decisional Type of Role Specific Role Examples of Role Activities Decisional Entrepreneur Commit organizational resources to develop innovative goods and services; decide to expand internationally to obtain new customers for the organization’s products. Decisional Disturbance Move quickly to take corrective action to deal with unexpected problems facing the organization from the external handler environment, such as a crisis like an oil spill, or from the internal environment, such as producing faulty goods or services. Decisional Resource Allocate organizational resources among different tasks and departments of the organization; set budgets and salaries of allocator middle and first-level managers. Decisional Negotiator Work with suppliers, distributors, and labor unions to reach agreements about the quality and price of input, technical, and human resources; work with other organizations to establish agreements to pool resources to work on joint projects. Managerial Roles Identified: Interpersonal Type of Role Specific Role Examples of Role Activities Interpersonal Figurehead Outline future organizational goals to employees at company meetings; open a new corporate headquarters building; state the organization’s ethical guidelines and the principles of behavior employees are to follow in their dealings with customers and suppliers. Interpersonal Leader Provide an example for employees to follow; give direct commands and orders to subordinate; make decisions concerning the use of human and technical resources; mobilize employee support for specific organizational goals. Interpersonal Liaison Coordinate the work of managers in different departments; establish alliances between different organizations to share resources to produce new goods and services; reach agreements about the quality and price of input, technical, and human resources; work with other organizations to establish agreements to pool resources to work on joint projects.  Managerial Roles Identified: Informational Type of Role Specific Role Examples of Role Activities Informational Monitor Evaluate the performance of managers in different tasks and take corrective action to improve their performance; watch for changes occurring in the external and internal environments that may affect the organization in the future. Informational Disseminator Inform employees about changes taking place in the external and internal environments that will affect them and the organization; communicate to employees the organization’s vision and purpose. Informational Spokesperson Launch a national advertising campaign to promote new goods and services; give a speech to inform the local community about the organization’s future intentions. Levels and Skills of Managers Top managers Responsible for the performance of all departments. Establish organizational goals. Decide how different departments should interact. Monitor how well middle managers in each department use resources to achieve goals. Middle managers: Supervises first-line managers Responsible for finding the best way to use resources to achieve organizational goals. First-line managers (often called supervisors) Responsible for the daily supervision of the nonmanagerial employees. Levels and Skills of Managers Figure 1.4 Relative Amount of Time Managers Spend on the Four Managerial Tasks.  Types of Managerial Skills Conceptual skills Human skills Technical skills The ability to analyze The ability to Job-specific and diagnose a understand, alter, knowledge and situation and lead, and control the techniques required distinguish between behavior of other to perform an cause and effect. individuals and organizational role. groups. Core Competency Specific set of departmental skills, knowledge, and experience that allows one organization to outperform another. Skills for a competitive advantage: Dell’s materials management produced PCs at lower cost than competitors. Recent Changes in Management Practices Restructuring Downsizing an organization by eliminating the jobs of large numbers of top, middle, and first-line managers and nonmanagerial employees. Outsourcing Contracting with another company, usually abroad, to perform a work activity the company previously performed itself.  Empowerment and Self-Managed Teams Empowerment Self-managed teams Empowerment involves giving Groups of employees who employees more authority assume collective and responsibility over how responsibility for organizing, they perform their work supervising, and controlling activities. their own work activities. Example: Valve Corporation has no managers, no hierarchy or top-down control. Employees pick their own projects. Challenges for Management in a Global Environment Build a competitive advantage. Maintain ethical and socially responsible standards. Manage a diverse workforce. Utilize new technologies. Practice global crisis management. Figure 2.1 The Evolution of Management Theory  Scientific Management Theory Job Specialization and F.W. Taylor and Scientific The Gilbreths the Division of Labor Management Frank and Lillian Gilbreth, followers of Adam Smith (18th-century economist): The systematic study of the relationships Taylor: between people and tasks for the purpose of Smith found that the performance of redesigning the work process to increase 1. Analyze every individual action the factories in which workers efficiency. necessary to perform a particular specialized in only one or a few tasks 1. Study the way workers perform their tasks, task and break it into each of its was much greater than the gather all the informal job knowledge that component actions. performance of the factory in which workers possess, and experiment with 2.Find better ways to perform each each worker performed all 18 pin- ways of improving how tasks are component action. making tasks. performed. 3.Reorganize each of the component 2.Codify the new methods of performing actions so that the action as a whole Job specialization tasks into written rules and standard could be performed more efficiently Smith concluded that increasing the operating procedures. at less cost in time and effort. level of job specialization—the process 3.Carefully select workers who possess skills by which a division of labor occurs as and abilities that match the needs of the different workers specialize in tasks— task, and train them to perform the task improves efficiency and leads to according to the established rules and higher organizational performance procedures. 4.Establish a fair or acceptable level of performance for a task, and then develop a pay system that provides a reward for performance above the acceptable level. Administrative Management Theory The study of how to create an organizational structure and control system that leads to high efficiency and effectiveness. The Theory of Fayol’s Principles of Bureaucracy Management Max Weber Henri Fayol (1841–1925) was the CEO of Comambault Mining. Developed the principles of bureaucracy as a formal system of Working at the same time as Weber, but independently, Fayol organization and administration designed to ensure efficiency and identified 14 principles that he believed essential to increase the effectiveness. efficiency of the management process Authority - The power to hold people accountable for their actions and to make decisions concerning the use of organizational resources. - Hierarchy Rules - Formal written instructions that specify actions to be taken under different circumstances to achieve specific goals. Standard operating procedures (S OPs) - Specific sets of written instructions about how to perform a certain aspect of a task. Norms - Unwritten, informal codes of conduct that prescribe how people should act in particular situations and are considered important by most members of a group or an organization. Figure 2.2 Weber’s Principles of Bureaucracy  Principle Description Division of labor Job specialization and the division of labor should increase efficiency, especially if managers take steps to lessen workers’ boredom. Authority and Managers have the right to give orders and the power to exhort employees for obedience. responsibility Unity of command An employee should receive orders from only one superior. Line of authority The length of the chain of command that extends from the top to the bottom of an organization should be limited. Centralization Authority should not be concentrated at the top of the chain of command. Unity of direction The organization should have a single plan of action to guide managers and workers. Equity All organizational members are entitled to be treated with justice and respect. Order The arrangement of organizational positions should maximize organizational efficiency and provide employees with satisfying career opportunities. Initiative Managers should allow employees to be innovative and creative. Discipline Managers need to create a workforce that strives to achieve organizational goals. Remuneration of The system that managers use to reward employees should be equitable for both employees and the organization. personnel Stability of tenure of Long-term employees develop skills that can improve organizational efficiency. personnel Subordination of Employees should understand how their performance affects the performance of the whole organization. individual interests to the common interest Esprit de corps Managers should encourage the development of shared feelings of camaraderie, enthusiasm, or devotion to a common cause.  Behavioral Management Theory The study of how managers should behave to motivate employees and encourage them to perform at high levels and be committed to the achievement of organizational goals. Mary Parker Follett The Hawthorne Studies and Theory X and Theory Y Human Relations Suggested workers help in analyzing their The Hawthorne studies looked at how the characteristics of Theory X jobs. the work setting affected worker fatigue and performance at A set of negative assumptions about workers Suggested if workers have relevant the Hawthorne Works of the Western Electric Company. that leads to the conclusion that a manager’s knowledge of the task they should be in Hawthorne effect task is to supervise workers closely and control control of the work process. The finding that a manager’s behavior or leadership their behavior. She advocated “cross-functioning”: approach can affect workers’ level of performance. Assumes the average worker is lazy, dislikes work, members of different departments and will try to do as little as possible. working together in cross-departmental Human relations movement teams to accomplish tasks. A management approach that advocates the idea that Theory Y supervisors should receive behavioral training to A set of positive assumptions about workers that manage employees in ways that elicit their cooperation and increase their productivity. leads to the conclusion that a manager’s task is Behavior of managers and workers in the work setting is to create a work setting that encourages as important in explaining the level of performance as the commitment to organizational goals and technical aspects of the task. provides opportunities for workers to be Demonstrated the importance of understanding how the imaginative and to exercise initiative and self- feelings, thoughts, and behavior of work-group members direction. and managers affect performance. Informal organization: The system of behavioral rules and Assumes workers are not inherently lazy, do not norms that emerge in a group. naturally dislike work, and will do what is good for Organizational behavior: The study of the factors that the organization. have an impact on how individuals and groups respond to and act in organizations.  THEORY X THEORY Y The average employee is lazy, dislikes work, and Employees are not inherently lazy. Given the will try to do as little as possible. chance, employees will do what is good for the To ensure that employees work hard, managers organization. should closely supervise employees. To allow employees to work in the Managers should create strict work rules and organization’s interest, managers must create a implement a well-defined system of rewards work setting that provides opportunities for and punishments to control employees workers to exercise initiative and self-direction. Managers should decentralize authority to employees and make sure employees have the resources necessary to achieve organizational goals.  Management Science Theory Contemporary approach to management that focuses on the use of rigorous quantitative techniques to help managers make maximum use of organizational resources to produce goods and services. Quantitative management Utilizes mathematical techniques, like linear programming, modeling, simulation, and chaos theory. Inventory management practices. New factory locations. Operations management Gives managers a set of techniques they can use to analyze any aspect of an organization’s production system to increase efficiency. How to acquire raw materials and distribute finished products more efficiently. Management information systems Give managers information about events occurring inside the organization as well as in its external environment—information that is vital for effective decision-making.  Organizational Environment Theory The set of forces and conditions that operate beyond an organization’s boundaries but affect a manager’s ability to acquire and utilize resources. Raw materials to produce goods.  The Open-Systems View A system that takes resources for its external environment and transforms them into goods and services that are then sent back to that environment where they are bought by customers. Closed system A self-contained system that is not affected by changes in its external environment. Likely to experience entropy: The tendency to lose its ability to control itself and, thus, dissolve and disintegrate. Synergy The performance gains that result from the combined actions of individuals and departments. Possible only in an organized system. Teams composed of people from various departments in decision making. Contingency Theory Contingency theory is the idea that the organizational structures and control systems managers choose depend on the characteristics of the external environment in which the organization operates. “There is no one best way to organize.” Rapidly changing environments create a greater need for managers to respond quickly and effectively. Figure 2.5 Contingency Theory of Organizational Design Type of Structure Mechanistic structure An organizational structure in which authority is centralized, tasks and rules are specified, and employees are closely supervised. Most efficient in a stable environment. McDonald’s Restaurants. Organic structure An organizational structure in which authority is decentralized to middle and first-line managers, and tasks and roles are left ambiguous to encourage employees to cooperate and respond quickly to the unexpected. Most efficient in a rapidly changing environment. Google, Apple, 3M.  Dynamic Capabilities Organizations can build, integrate, and reconfigure processes to address rapidly changing internal and external environments. These capabilities are unique to each organization. Sensing Identifying and assessing opportunities outside the company. Steve Jobs recognized consumers' need for smaller, more attractive MP3 players. Seizing The action of mobilizing company resources to capture value for the organization. Producing Apple’s iPod, a sleek alternative to competitive products. Transforming The organization’s ability to continue making changes as needed to maintain success. Organizational shift to expand computer product line to include consumer electronics and digital music streaming. Thank You For Your Attention