Week 10-11 Management Theory PDF

1 Sources used and recommended in this section are as below: 2 1. Introduction to Business- Lumen Learning et al.  3 In this course; We aim to obtain information about the management and related concepts. After comple...

1 Sources used and recommended in this section are as below: 2 1. Introduction to Business- Lumen Learning et al.  3 In this course; We aim to obtain information about the management and related concepts. After completing this unit; we will be able to explain the management in general context and distinguish its basic elements. A good understanding of this information will provide a sound footing for future courses. Defining Managers Managers wear many hats and must bring with them an entire toolkit of skills—conceptual skills, human skills, and technical skills—in order to reach organizational goals and objectives effectively. Managerial Levels Top Managers Set organizational objectives and goals Scan external environment for opportunities Help develop long-range plans Make critical decisions that affect the entire organization Middle Managers Allocate resources to achieve the goals and objectives set by top managers Oversee first-line managers First-Line Managers Coordinate activities developed by middle-managers Supervise non-managerial employees and report back to middle- managers Managerial Skills Robert Katz identified three critical skill sets for successful managers Technical Skills A learned capacity in any given field of work, study, or play Front-line managers often need to use technical skills on a daily basis Conceptual Skills Ability to generate ideas creatively and intuitively and show comprehensive understanding of contexts and topics Requires conceptual thinking – an ability to formulate ideas or mental abstractions Often viewed as critical success factors for upper-managerial functions Human Skills A combination of social, interpersonal, and leadership skills Evaluate inefficiencies and make unpopular choices, but also create a healthy work environment conducive to development and constructive criticism The Importance of Managerial Skills at Different Management Levels The Importance of Managerial Skills at Different Management Levels The degree to which a skill is used depends upon the level of the manager’s position. In an increasingly global marketplace, it pays for managers to develop a special set of skills to deal with global management issues. Practice Question 1 Different levels of management generally perform different functions with an organization. Which of the following accurately describes the primary functions of middle management? A. Set organizational goals and objectives B. Supervise non-managerial employees and coordinate and participate in day-to-day operations C. Supervise front-line managers and relay updates on operational progress and any challenges D. Scan external environment and develop long-range organizational plans Practice Question 2 In a management context, technical skills are defined as: A. a learned capacity in just about any given field of work B. the ability to generate new product or process concepts C. effective time and project management D. proficiency in software applications such as Microsoft’s Office suite of programs Practice Question 3 Which of the following examples illustrates use of conceptual skills in a management context? A. Development and delivery of a Power Point sales presentation B. Development of a mission statement for a new business venture. C. Reflecting on and developing a plan to address an ineffective behavior trait. D. A global manager’s development of fluency of a second language Practice Question 4 Which of the following examples illustrates the use of human skills in a management context? A. Briefing upper management on the basic function of a piece of production machinery B. Developing the organization’s ethics policy C. Training an employee how to use a piece of equipment D. Delivering the keynote or opening speech at an organization’s annual kick-off meeting Frederick Taylor’s Scientific Management Theory Scientific management is a management theory that analyzes work flows to improve economic efficiency, especially labor productivity “Taylorism” is: The first form of scientific management Sometimes called the “classical perspective” Still observed for its influence but no longer practiced exclusively Taylor was concerned with reducing process time and worked with factory managers on scientific time studies Four Principles of Taylor’s Scientific Management 1. Look at each job or task scientifically to determine the “one best way” to perform the job. This is a change from the previous “rule of thumb” method where workers devised their own ways to do the job. 2. Hire the right workers for each job and train them to work at maximum efficiency. 3. Monitor worker performance and provide instruction and training when needed. 4. Divide the work between management and labor so that management can plan and train, and workers can execute the task efficiently. Frank and Lillian Gilbreth The Gilbreths used scientific insights to develop a study method based on the analysis of work motions They filmed the details of a worker’s activities while recording the time it took for them to complete those activities Philosophical divide between Taylor and the Gilbreths’ Taylor focused on reducing process time Gilbreths tried to make overall process more efficient by reducing the motions involved, and felt they were more concern for workers’ welfare then Taylor Henri Fayol Henri Fayol worked as a mining engineer and began his work on management structures after an event he perceived to be a failure of management structure. When a horse broke its leg and nobody at the mine had the authority to purchase a new one, the mine was shut down. Fayol’s book General and Industrial Management describes five duties of management and fourteen principles Fayol felt could guide management. Fayol’s Five Duties of Management 1. Foresight: Create a plan of action for the future. 2. Organization: Provide resources to implement the plan. 3. Command: Select and lead the best workers through clear instructions and orders. 4. Coordinate: Make sure the diverse efforts fit together through clear communication. 5. Control: Verify whether things are going according to plan and make corrections where needed. Fayol’s Principles Fayol also proposed a set of fourteen principles that he felt could guide management behavior, but he did not think the principles were rigid or exhaustive. Some of Fayol’s principles are still included in management theory and practice, including the following: 1.Scalar chain: An unbroken chain of command extends from the top to the bottom of the organization. 2.Unity of command: Employees receive orders from only one superior. 3.Unity of direction: Activities that are similar should be the responsibility of one person. 4.Division of work: Workers specialize in a few tasks to become more proficient. Key Functions of Management Today Planning Organizing Staffing Leading/directing Controlling/monitoring Motivating Class Discussion: Are these Management Theories Relevant Today? Consider the early management theories of Taylor, Fayol and the Gilbreths. Is Taylor’s “scientific” approach relevant to organizations today? Which elements of his thinking would you consider to be valid and which to be obsolete? How does the administrative theory put forth by Fayol run counter to the current trend towards flatter organizational structure? In what types of businesses do classical management theories best apply? Understanding Planning Planning is a process of thinking about and organizing the activities needed to achieve a desired goal. The business plan provides the foundation for ongoing planning activities. A business without solid strategic, operational, and contingency plans will have a hard time meeting its organizational goals. Vision and Mission Statements Vision Statement Gives employees something to rally behind and can let the world know where the company is going Mission Statement Outlines how the business will turn its vision into reality and becomes the foundation for establishing specific goals and objectives Until a business has determined what its mission is, planning cannot begin Types of Business Plans Strategic Plans translate the company mission into a set of long-term goals and short-term objectives Tactical Plans translate high-level strategic plans into specific plans for actions that need to be taken up and down the layers of an organization Operational Plans establish detailed standards that guide the implementation of tactical plans and establish the activities and budgets for each part of an organization Contingency Plans lay out the course of action a business will take in response to possible future events Defining SWOT Analysis A key planning tool managers have at their disposal Provides a means of projecting expectations, anticipating problems, and guiding decision making An examination of the internal and external factors that impact the organization and its plans SWOT stands for Strengths Weaknesses Opportunities Threats SWOT Analysis Understanding Organizing Organizing involves: Assigning tasks Organizing is highly complex Grouping tasks into departments and often involves a systematic Delegating authority review of human resources, Allocating resources across the finances, and priorities. organization During the organizing process, managers coordinate employees, resources, policies, and procedures to facilitate the goals identified in the plan. Specialization and Organizing Before a plan can be implemented, managers must organize the assets of the business to execute the plan efficiently and effectively. Understanding specialization and the division of work is key to this effort, since many of the “assets” are employees. Where workers are specialists, work should be divided, and the right people should be given the right jobs to reduce redundancy and inefficiency. Benefits of Organizing Organizing harmonizes employees’ individual goals with the overall objectives of the firm A good organizational structure is essential for expansion of business activities, helps business determine the resources it needs to grow Organizing aids business efficiency and helps reduce waste Organizing makes “chain of command” clear so employees know whose directions they should follow Organization Charts and Span of Control An organization’s structure is typically represented by an organization chart (often called simply an “org chart”)—a diagram showing the interrelationships of its positions. This chart highlights the chain of command, or the authority relationships among people working at different levels. It also shows the number of layers between the top and lowest managerial levels. Organizational structure dictates the span of control or the number of subordinates a supervisor has. An organization with few layers has a wide span of control, with each manager overseeing a large number of subordinates; with a narrow span of control, only a limited number of subordinates reports to each manager. Divisional Structure Each organizational function has its own division Each division contains all necessary resources and functions within it to support that particular product line of geography Product Departmentalization - the various activities related to the product or service are under the authority of one manager Geographic Departmentalization - grouping activities based on geography such as Asia/Pacific or Latin American division, important if tastes or brand response differs across regions Divisional Structure Diagram Functional Structure The organization is divided into smaller groups by areas of specialty Company’s top management team typically consists of several functional heads Communication generally occurs within each department and is transmitted across departments through department heads Allows for increased specialization Functional groups may not communicate with one another which can decrease flexibility and innovation; may be susceptible to tunnel vision with each function seeing the organization only within the frame of its own operation May be more effective for larger corporations that produce relatively homogenous goods Functional Structure Diagram Matrix Structure Individuals grouped by two different operational perspectives at the same time; generally best for companies large enough to justify the increased complexity Company is organized by both function and product Product lines managed horizontally and functions managed vertically Matrix allows for both communication across task boundaries and allows for specialization Increased complexity in chain of command when employees are assigned to both functional and product managers Can increase costs Can lead to conflicting employee loyalties Blurred authority in a matrix can hamper decision making and conflict resolution Matrix Structure Diagram Defining Leading Regardless of their position within an organization, managers need to act as leaders. A manager can take a number of different approaches to leading and overseeing an organization. Different Management Styles 1. Autocratic/Authoritarian 2. Laissez-faire/Free Rein 3. Participative/Democratic Management Styles: Autocratic/Authoritarian Decision-making power is concentrated in the manager. Managers do not take any suggestions or consider initiatives from subordinates. Is effective for quick decision making but is generally not successful in fostering employee engagement or maintaining worker satisfaction. Can be useful in crisis situations, when it’s impractical to solicit employee input. If the workforce is comprised of low-skill workers, employee input isn’t traditionally encouraged because it’s considered to be of low value Management Styles: Laissez-faire/Free-Rein Known as “hands-off” management because the manager delegates the tasks to the followers while providing little or no direction. Can sometimes result in a lack of productivity, cohesion, and satisfaction. Effective when workers have the skills to work independently, are self-motivated, and are held accountable for results. Managers of creative or innovative employees often adopt this approach in order to foster creativity. Management Styles: Participative/Democratic Manager shares the decision-making authority with group members. Can help employees feel more invested in decisions, outcomes, or the choices they’ve made, because they have a say in them. Effective during a transitional period when managers need to guide the workforce through the change. Seeking input from employees at many levels within the organization can uncover people with invaluable experience, advice, and solutions. Different Leadership Styles 1. Transformational 2. Transactional 3. Narcissistic Leadership Styles: Transformational Work with subordinates to identify needed change, create and share an inspiring vision, and bring about change together with committed members of a group. Serves to enhance the motivation, morale, and job performance of followers. Might connect follower’s sense of identity to a project and be a role model in order to inspire followers to raise their interest in a project Transformational leaders are often idealized and viewed as moral exemplars for their contributions to a team, an organization, or a community Leadership Styles: Transactional Focuses on supervision, organization, and performance. Pays attention to their followers’ work in order to find fault or deviation and gain their compliance through a system of rewards and punishments. Two factors that form reward/punishment system: 1. Contingent reward: provides rewards for effort and recognizes good performance 2. Management by exception: the leader intervenes when subordinates do not meet acceptable performance levels Leadership Styles: Narcissistic Narcissistic leaders are visionary and charismatic, with a keen ability to attract and inspire followers. Organizations led by narcissists are typically characterized by fierce internal competition and changing alliances. Narcissists tend to listen only to information and advice that supports their view, regardless of the reality. Their sense of supreme self-worth, combined with a continual need for affirmation, eliminates independent thought and creates a culture of yes people. Corporate Culture The leadership style of managers in an organization is usually indicative of the underlying philosophy, or values, of the organization. Corporate culture: the set of attitudes, values, and standards of behavior that distinguishes one organization from another. Culture may be intangible, but it has a tremendous impact on employee morale and a company’s success. Practice Question 5 Which of the following best reflects an authoritarian management style? A. A manager who solicits employee input and engagement B. A manager who delegates tasks to subordinates with minimal or no direction C. A manager who retains decision-making control and disregards the input of subordinates D. A manager who shares decision-making authority with subordinates Practice Question 6 Leadership styles not only reflect a leader’s personality, they also shape an organization's culture and define how business is done. Which of the following statements exemplify transactional leadership? A. There’s a respect for independent thought and openness to new ideas. B. A charismatic leader who seeks to create the future. C. A leader who seeks to engage subordinates and develop and implement a vision for change as a group. D. There’s a focus on maintaining the status-quo and associated performance standards Practice Question 7 An accomplished manager is one who can adapt his or her management style to the situation. A democratic management style would be best suited to which of the following situations? A. Workers are highly-skilled and self-motivated B. In crisis situations C. When managing in an organization undergoing a transition such as a merger or a consolidation D. Supporting a culture of creativity and innovation  In a business context, control is the activity of observing a given organizational process, measuring performance against a previously established metric, and improving it where possible Upper-level manager – setting strategic objectives for the short and long term and measuring overall organizational success Mid-level manager –measure success within their span of control (division, region, or particular product) Line manager – responsible for controlling actions of workers The Control Process The process of control usually consists of the following five cyclical steps: 1. Setting standards and goals 2. Measuring performance 3. Compare actual performance to established performance standards 4. Take corrective action 5. Use information gained from process to set up future performance standards The controlling function in business is a process of repeatedly checking in and correcting, resembling the continuous process of navigation The controlling functions is meant to be proactive The Control Process Figure Why is Controlling Important? Discussion: Control In Class How could you apply the control process to your performance in this course? Setting Standards and Objectives Standards and objectives Guide managerial decision making Stated in monetary terms = costs, profits Stated in other terms = units produced, number of defective products, quality, degree of customer satisfaction S.M.A.R.T operational objectives Specific Measurable Achievable Realistic Time constrained Discussion: Goal Setting Divide into small groups of 2–3. How can setting standards and objectives apply outside of management or your career? What kind of goal could help you in your every day life? Set a SMART goal, measure your performance, analyze your performance, and take any needed corrective action. Performance Measurement Performance measurement is the process of collecting, analyzing, and/or reporting information regarding the performance of an individual, group, organization, system, or component. The rubric for measuring organizational performance is called a performance metric and those metrics vary significantly across industries The performance metric development process includes: 1. Describing the target objective(s) 2. Evaluating possible measurements 3. Identifying the correct metric for each objective 4. Setting targets and determining how data will be interpreted 5. Defining and documenting the performance metric and repeated processes and procedures Analyzing Performance: The Balanced Scorecard Methods of analyzing performance vary but one tool has gained widespread adoption – the Balanced Scorecard The Balanced Scorecard is a semi-standardized strategic management tool used to analyze and improve key performance indicators within an organization Four Perspectives on the Balanced Scorecard 1. Financial – includes measures focused on the question “How do we look to shareholders?” 2. Customer – includes measures focused on the question “How do customers perceive us?” 3. Internal business process – includes measures focused on the question “What must we excel at?” 4. Learning and growth – includes measures focused on the question “How can we continue to improve and create value?” The Balanced Scorecard Figure Taking Corrective Action Once the cause of non performance or underperformance has been identified, managers can take corrective action Corrective action is a planned response at fixing the problem The manager must accurately identify the problem before a method of corrective action can be determined A method of corrective action should be implemented quickly and a map of checkpoints and deadlines can facilitate prompt implementation The company must review and evaluate the solution to see if it’s having the desired effect Practice Question 8 A manager who exhibits effective control: A. Is a micromanager B. Has a process in place to measure performance relative to an established target C. Impairs the performance of staff who seek more operating freedom D. Sets unrealistic short- and long-term objectives to challenge employees Practice Question 9 SMART is an acronym that summarizes the objective-setting approach recommended by management consultant and author Peter Drucker. The acronym translates as: A. Specific, manageable, achievable, replicable and time-bound B. Strategic, manageable, actionable, relevant and time constrained C. Specific, measureable, achievable, realistic and time- constrained D. Strategic, measureable, actionable, relevant and timely Quick Review What are the three levels of management and the key skills needed by managers? What are the key functions of management? What types of planning and decision making do managers engage in? How do they help organizations reach their goals? What are the organizing functions of management and common types of organizational structure? What are common management and leadership styles, and when are they most effective? Why is control an essential part of effective management, and what are the steps of the control process?