Principles of Organization and Management PDF

**Course**: Principles of Organization and Management **Course Description** This course provides an overview of the fundamental principles of management, focusing on planning, organizing, leading, and controlling within an organization. Emphasis will be placed on the role of management in today's...

**Course**: Principles of Organization and Management **Course Description** This course provides an overview of the fundamental principles of management, focusing on planning, organizing, leading, and controlling within an organization. Emphasis will be placed on the role of management in today's dynamic business environment, the importance of effective leadership, and ethical decision-making. **Course Learning Outcomes ( CLOs )** 1. **Explain Fundamental Management Concepts** - Describe the basic principles of management, including the functions of planning, organizing, leading, and controlling, and explain their significance in achieving organizational goals. 2. **Apply Management Theories** - Identify and differentiate between classical, behavioral, and modern management theories and apply them to solve management problems in real-world scenarios. 3. **Analyze Organizational Structures** - Evaluate various organizational structures and determine the most appropriate design for different business contexts. 4. **Develop Strategic Plans** - Create vision and mission statements, set SMART goals, and develop strategic plans to address long-term objectives for a business organization. 5. **Demonstrate Informed Decisions** - Utilize decision-making tools and models (SWOT analysis, decision trees) to assess business situations and make effective managerial decisions. UNIT 1: INTRODUCTION TO MANAGEMENT ================================== **Learning Outcome**: Explain the nature and purpose of management. Discuss key management theories and their applications. **[DEFINITION OF MANAGEMENT]** **What Is Management?** - Management involves coordinating and overseeing the work activities of others so their activities are completed efficiently and effectively. - Management involves ensuring that work activities are completed efficiently and effectively by the people responsible for doing them. - ***Efficiency*** refers to getting the most output from the least amount of inputs or resources. Managers deal with scarce resources---including people, money, and equipment---and want to use those resources efficiently. Efficiency is often referred to as "doing things right," that is, not wasting resources. - ***Effectiveness*** is often described as "doing the right things," that is, doing those work activities that will result in achieving goals. - ***Efficiency*** is concerned with the means of getting things done, ***effectiveness*** is concerned with the ends, or attainment of organizational goals. **Who Is a Manager?** - They were the organizational members who told others what to do and how to do it. - A manager is someone who coordinates and oversees the work of other people so organizational goals can be accomplished. - Manager's job is not about personal achievement---it's about helping others do their work. -... coordinating the work activities of a team with people from different departments or even people outside the organization such as temporary employees or individuals who work for the organization's suppliers. **Classification of managers in an organization** 1. **First-line (or frontline) managers** - manage the work of non-managerial employees who typically are involved with producing the organization's products or servicing the organization's customers. I.e. supervisor, shift manager, district manager, department head, or office administrator. 2. **Middle managers** - are those between first-line managers and the top level of the organization. I.e. regional manager, store manager, or division manager. Middle managers are mainly responsible for turning the organization's strategy into action. 3. **Top managers** - responsible for making organization-wide decisions and establishing the strategy and goals that affect the entire organization. I.e. executive vice president, president, managing director, chief operating officer, or chief executive officer. **[WHERE DO MANAGERS WORK?]** - Managers work in organizations. - Organizations are an arrangement of people to accomplish some specific purpose. **Characteristics of organization** - An organization has a distinct purpose that is typically expressed through goals the organization seeks to accomplish. - Each organization is composed of people. It takes people to perform the work that's necessary for the organization to achieve its goals. - All organizations develop a deliberate structure within which members do their work. **[WHY ARE MANAGERS IMPORTANT?]** - Organizations need their skills and abilities more than ever in uncertain, complex, and chaotic times. It deals with today's challenges-changing workforce dynamics, the worldwide economic uncertainty, changing technology-managers play an important role in identifying critical issues and crafting responses. - They're critical to getting things done. Create and coordinate the workplace environment and work systems so that others can perform their tasks. If work isn't getting done or isn't getting done as it should be, managers are the ones who find out why and get things back on track. - Managers make a difference in an organization's performance. It\'s the quality of the relationship between employees and their direct supervisors. The way a company manages and engages its people can significantly affect its financial performance. Leadership is the single largest influence on employee engagement. **[HISTORICAL EVOLUTION OF MANAGEMENT]** **Classical Management Theories** - **Scientific Management (Frederick Winslow Taylor)** 1. Main Idea: Taylor's Scientific Management focused on increasing efficiency through the scientific study of work methods. - **Administrative Theory (Henri Fayol)** 2. Main Idea: Fayol's theory focused on the functions of management and how managers should interact with their teams to ensure smooth operation. - **Bureaucratic Management (Max Weber)** 3. Main Idea: Weber's theory emphasized the need for organizations to operate in a rational, efficient manner through clear rules and a hierarchy. **Behavioral Management Theories** Human Relations Movement (Elton Mayo and the Hawthorne Studies) ================================================================= ○ Main Idea: The Hawthorne Studies conducted by Elton Mayo showed that workers' productivity improved not just because of physical changes in their work environment, but also due to social factors and attention from management. ○ Key Concepts: The "Hawthorne Effect" refers to the phenomenon where workers improve their performance simply because they feel observed and valued. Emphasized the importance of informal social relations, group norms, and worker satisfaction. - **Maslow's Hierarchy of Needs** 1. Main Idea: Abraham Maslow developed a theory that human motivation is driven by a hierarchy of needs, from basic physiological needs to higher-level needs such as self-actualization. ○ Key Concepts: Managers should understand that employees are motivated by more than just money---social recognition, job satisfaction, and personal growth also play a role. The hierarchy includes five levels: physiological, safety, love/belonging, esteem, and self-actualization. - **McGregor's Theory X and Theory Y** 2. Main Idea: Douglas McGregor proposed two contrasting views of human motivation at work: Theory X and Theory Y. ○ Theory X: Assumes that workers are inherently lazy, lack ambition, and need strict supervision. ○ Theory Y: Assumes that workers are self-motivated, enjoy responsibility, and will work toward goals they find meaningful. ○ Key Concepts: A manager's assumptions about their employees can shape their leadership style, with Theory X managers being more authoritarian, while Theory Y managers adopt a more democratic, participative approach. **Modern Management Theories** - **Systems Theory (Ludwig von Bertalanffy)** 3. Main Idea: Organizations are open systems that interact with their external environments, and success depends on how well the organization adapts to changes in the environment. ○ Key Concepts: An organization consists of interrelated parts (subsystems) that must work together to achieve common goals. Inputs (resources) are transformed through processes into outputs ( products or services), and feedback is crucial for improvement. - **Contingency Theory (Fred Fiedler)** 4. Main Idea: There is no single best way to manage an organization. The best management approach depends on the specific situation and external factors. ○ Key Concepts: Factors such as the size of the organization, the complexity of the task, and the external environment determine the most appropriate management style. Flexibility is key---managers must adapt their leadership style based on the context and people involved. - **Total Quality Management (TQM) and Continuous Improvement (W. Edwards Deming)** 5. Main Idea: TQM emphasizes continuous improvement in all aspects of an organization, focusing on quality as the key to achieving long-term success. ○ Key Concepts: Quality should be built into processes, not just inspected at the end. Employees at all levels should be involved in the pursuit of quality improvement. Customer satisfaction is paramount. UNIT 2: THE MANAGER'S ROLE ========================== **Learning Outcome** Identify the roles and skills necessary for effective management at different organizational levels. **[WHAT DO MANAGERS DO?]** **Management Functions** Managers perform certain activities or functions as they efficiently coordinate the workplace environment of others. Henry Fayol, a French businessman suggested that all managers perform (5) functions: planning, organizing, commanding, coordinating and controlling. Today, we use (4) functions: planning, organizing, leading, and controlling. **Planning** - set goals, establish strategies for achieving those goals, and develop plans to integrate and coordinate activities. **Organizing** - arranging and structuring the work. This determines what tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom , and where decisions are to be made. **Leading** - when managers motivate subordinates, help resolve work group conflicts, influence individuals or teams as they work, select the most effective communication channel, or deal in any way with employee behavior issues. **Controlling** - there has to be an evaluation of whether things are going as planned. To ensure goals are met and work is done as it should be; managers monitor and evaluate performance. Actual performance is compared with the set goals. **[Management Roles by Henry Mintzberg]** It refers to specific actions or behaviors expected of and exhibited managerial roles by a manager. - **Interpersonal roles** involve people (subordinates and persons outside the organization) and other ceremonial and symbolic duties. (I.e. figurehead, leader, and liaison). - **Informational roles** involve collecting, receiving, and disseminating information. (I.e. monitor, disseminator, and spokesperson). - **Decisional roles** entail making decisions or choices. (I.e. entrepreneur, disturbance handler, resource allocator, and negotiator). **[MANAGEMENT SKILLS]** **Technical skills.** - These are job-specific knowledge and techniques needed to proficiently perform work tasks. - These skills tend to be more important for first-line managers because they typically manage employees who use tools and techniques to produce the organization's products or service the organization's customers. - Often, employees with excellent technical skills get promoted to first-line manager. **Interpersonal skills.** - This involves the ability to work well with other people both individually and in a group. - Since all managers deal with people, these skills are equally important to all levels of management. - Managers with good human skills get the best out of their people. Managers know how to communicate, motivate, lead, and inspire enthusiasm and trust. **Conceptual skills.** - Skills managers use to think and to conceptualize abstract and complex situations. - Managers see the organization as a whole, understand the relationships among various subunits, and visualize how the organization fits into its broader environment. **[CHALLENGES IN MANAGEMENT]** - **Focus on Technology** 1.... technology has been changing how things get done. ○ Keeping employees updated on new technologies presents a challenge to many managers. ○ Managers need to work with employees to help them understand why new technology is an improvement over present ways of conducting business. ○ Manager is to help people cross the bridge---to get them comfortable with the technology, to get them using it, and to help them understand how it makes their lives better. - **Focus on Disruptive Innovation** 2.... a disruptive innovator or competing against a disruptive innovator. **○** Technology has provided opportunities for small, upstart companies to take on long-standing and well-established businesses. - **Focus on Social Media** 3.... managers struggled with the challenges of providing guidelines for using the internet and email in their organizations. ○ Nearly all organizations use social media, forms of electronic communication through which users create online communities to share ideas, information, personal messages, and other content. ○ And employees don't just use these on their personal time, but also for work purposes. ○ Managers need to understand and manage the power and peril of social media. - **Focus on Ethics** 4. The long-term success of an organization depends on building trust with customers, clients, suppliers, and employees. ○... to take responsibility for setting high ethical standards and creating ethical workplaces. - **Focus on Political Uncertainty** 5.... imposing new laws and regulations that affect business. - **Focus on the Customer** 6.... manager understands the importance of customers and clearly believes that focusing on customers is essential to success. ○ managers realize that delivering consistent, high-quality customer service is essential for their organization's survival and success. ○ Managers must create a customer-responsive organization where employees are friendly and courteous, accessible, knowledgeable, prompt in responding to customer needs, and willing to do what's necessary to please the customer. **[WHY STUDY MANAGEMENT?]** **The Universality of Management** - Management is needed in all types and sizes of organizations, at all organizational levels, in all organizational work areas, and in all universality of management organizations. -... managers must plan, needed in all types and sizes, organize, lead, and control. -... organizations that are well managed develop a loyal customer base, grow, and prosper, even during challenging times. **The Reality of Work** - For those who plan to be managers, an understanding of management forms the foundation upon which to build your management knowledge and skills. **Rewards from Being a Manager** -... satisfaction of creating a work environment in which organizational members can do their work to the best of their ability and thus help the organization achieve its goals. - Find meaning and fulfillment in their work; to support, coach, and nurture others and help them make good decisions. -... receiving recognition and status in your organization and in the community, playing a significant role in influencing organizational outcomes **Gaining Insights into Life at Work** - Because understanding management concepts and how managers think will help you get better results at work and enhance your career. -... successful employees are promoted to managerial roles. UNIT 3: PLANNING AND DECISION MAKING ==================================== **Learning Outcome** Explain the planning process and its significance in achieving organizational goals. Apply decision-making tools in managerial scenarios. **[THE DECISION-MAKING PROCESS]** - Executives often face difficult decisions. Managers, regardless of their position, regularly make decisions by choosing between alternatives. Top-level managers make strategic decisions like setting organizational goals or entering new markets, while middle- and lower-level managers handle issues like production schedules, product quality, and employee discipline. - Decision-making is better understood as a process rather than just a choice. Even simple decisions, such as where to have lunch, involve more than merely picking between options. **Step 1: Identify a Problem** - Decision-making begins by recognizing a problem, which is a gap between the current situation and a desired outcome. **Step 2: Identify Decision Criteria** - After identifying the problem, the manager must determine the criteria important for solving it. - Every decision maker has specific criteria, whether stated or unstated, that influence their choices. **Step 3: Allocate Weights to the Criteri**a - Not all criteria are of equal importance, so the decision maker must assign weights to prioritize them. - A simple approach is to assign a weight of 10 to the most important criterion, and then scale the others accordingly. - The goal is to assess the relative significance of each criterion to ensure appropriate prioritization. **Step 4: Develop Alternatives** - The decision maker must list possible alternatives that could solve the problem. - This step involves creativity, as the focus is solely on identifying options without evaluating them yet. **Step 5: Analyze Alternative** - After identifying alternatives, the decision maker evaluates each one based on the criteria established in Step 2. - Research is conducted, and values are assigned to each alternative based on how well they meet the criteria. **Step 6: Select an Alternative** - In this step, the decision maker selects the best alternative, which is the one with the highest total score from the analysis in Step 5. **Step 7: Implement the Alternative** - This step involves putting the chosen decision into action and communicating it to those affected. - Gaining commitment from the team is crucial for successful implementation. - Research shows that when individuals involved in executing the decision participate in the decision-making process, they are more likely to support and embrace the decision, rather than simply being instructed on what to do. **[APPROACHES TO DECISION-MAKING]** **Rationality** - It is assumed that managers will engage in rational decision-making, making logical and consistent choices to maximize value. - Rationality suggests that emotions or expediency should not influence decisions. - Assumptions of Rationality: A rational decision maker is objective and logical. **Bounded Rationality** - While managers are expected to make rational decisions, they often face limitations in processing information. - Good decision makers demonstrate logical behaviors by identifying problems, considering alternatives, gathering information, and acting decisively. - Bounded rationality suggests that managers are satisfied---accepting solutions that are satisfactory rather than striving for the absolute best. - Concept Explanation: a) Managers are rational but limited by their ability to analyze all available information on every alternative. b) They settle for "good enough" solutions rather than maximizing options. **Intuition** - This approach relies on experience, feelings, and accumulated judgment rather than formal analysis. - A survey revealed that nearly half of executives preferred using intuition over formal analysis in managing their companies. - Complementing Decision-Making Styles: a) Intuition can enhance both rational and bounded rational decision-making. b) Experienced managers can make swift decisions based on past situations, even with limited information. c\) Evidence suggests that experiencing strong emotions during **Evidence-Based Management** - Evidence-Based Management (EBMgt) refers to the systematic use of the best available evidence to enhance management practices. - This evidence can include hard data, expert opinions, or the experiences of colleagues. - EBMgt aims to operationalize rationality in decision-making processes. **Crowdsourcing** - Crowdsourcing involves seeking ideas and solutions from a network outside the traditional decision-makers within an organization, often via the internet. - Crowdsourcing can be used to gather insights from customers, suppliers, and other groups to inform decisions about product development, investment, and promotions. - By leveraging the collective experiences and ideas of a diverse crowd, managers can enhance their decision-making processes with broader input beyond the usual management hierarchy. **[TYPES OF DECISIONS]** **Structured Problems and Programmed Decisions** Structured Problems: ○ Examples include customer returns, late deliveries, and routine situations in businesses. ○ For instance, a restaurant manager handles a spilled drink on a customer's coat using established routines. - Programmed Decisions: ○ Since the problems are structured, managers often skip extensive decision-making processes. - Types of Programmed Decisions: ○ Policy: Guidelines for decision-making that provide general parameters but require interpretation. Examples of policy statements include: a) "The customer always comes first." b) "We promote from within whenever possible." c) "Employee wages shall be competitive within community standards." **Unstructured Problems and Nonprogrammed Decisions** - Not all problems can be addressed with programmed decisions; some situations involve unstructured problems. - Unstructured Problems: These are new or unusual issues where information is ambiguous or incomplete. - Nonprogrammed Decisions: a) These decisions are unique and nonrecurring, requiring custom-made solutions. b) When faced with unstructured problems, managers must rely on nonprogrammed decision-making to create tailored responses. **[DECISION-MAKING STYLES]** **Dimensions of Decision-Making** - Thinking Style ○ Creative/Intuitive: Prefers a holistic view, comfortable with non-linear processing. - Tolerance for Ambiguity ○ Low Tolerance: Prefers structure and certainty; seeks to minimize ambiguity. ○ High Tolerance: Comfortable with uncertainty; can manage multiple ideas simultaneously. **Four Decision-Making Styles** - Directive Style ○ Efficient and logical but often makes quick decisions with minimal information. - Analytic Style - Conceptual Style - Behavioral Style ○ Seeks consensus and avoids conflict, often relying on meetings for communication. **Flexibility in Styles** - Most managers exhibit traits from multiple styles, with a dominant style and backup styles. - More flexible managers can adapt their style based on the situation. **Decision-Making Biases and Errors** - **Overconfidence Bias** - Decision makers overestimate their knowledge and have an overly positive view of their abilities. - **Immediate Gratification Bias** - Preference for immediate rewards over delayed benefits, leading to choices that provide quick payoffs. - **Anchoring Effect** - Fixation on initial information, leading to inadequate adjustments based on new data. - **Selective Perception Bias** - Interpreting information based on biased perceptions, influencing which problems are identified and alternatives developed. - **Confirmation Bias** - Seeking information that reaffirms past choices while discounting contradictory evidence. - **Framing Bias** - Highlighting certain aspects of a situation while downplaying others, distorting perception and decision-making. - **Availability Bias** - Reliance on recent and vivid memories, skewing judgment and probability estimates. - **Representation Bias** - Assessing the likelihood of events based on their similarity to past events, drawing false analogies. - **Randomness Bias** - Attempting to find meaning in random events, struggling to accept chance occurrences. - **Sunk Costs Error** - Focusing on past investments rather than future consequences, leading to poor decision-making. - **Self-Serving Bias** - Taking credit for successes while blaming failures on external factors. - **Hindsight Bias** - Believing one could have predicted an outcome after it has occurred. **Types of Plans** - **Strategic Plans** ○ Definition: Long-term plans that outline an organization's overall goals and the strategies to achieve them. ○ Example: A company's plan to enter new markets or launch a new product line. - **Tactical Plans** ○ Definition: Shorter-term plans that specify how to implement the strategic plans. ○ Focus: Specific actions and resources needed to achieve strategic objectives. ○ Example: A marketing department's plan to increase brand awareness through a targeted advertising campaign. - **Operational Plans** ○ Definition: Detailed plans that outline day-to-day operations and activities. ○ Time Frame: Typically spans less than a year, often monthly, weekly, or daily. ○ Example: A production schedule for a manufacturing facility detailing daily output and staff assignments. **[TOOLS FOR DECISION MAKING]** **SWOT Analysis** ○ Definition: A strategic planning tool used to identify an organization's internal Strengths and Weaknesses, as well as external Opportunities and Threats. ○ Use: Helps organizations assess their current position and develop strategies for improvement. - **Decision Trees** ○ Use: Assists in visualizing complex decisions, evaluating options, and understanding potential risks and benefits.