Contemporary Management PDF

Contemporary Management  1-2 1 Managers and Managing Learning Objectives 1. To be able to explain the concept management key concepts 2. To be able to apply management functions in the organization. 3. To be able to outline the role of a manager in the org...

Contemporary Management  1-2 1 Managers and Managing Learning Objectives 1. To be able to explain the concept management key concepts 2. To be able to apply management functions in the organization. 3. To be able to outline the role of a manager in the organization 4. To be able to analyze management issues and challenges 5. To classify relevant theories in management  1-3 MANAGEMENT KEY CONCEPTS Organizations: People working together and coordinating their actions to achieve specific goals. Goal: A desired future condition that the organization seeks to achieve. Management: The process of using organizational resources to achieve the organization’s goals by... Planning, Organizing, Leading, and Controlling  1-4 Resources are organizational assets and include: 1. People, 2. Machinery, 3. Raw materials, 4. Information, skills, 5. Financial capital. Managers are the people responsible for supervising the use of an organization’s resources to meet its goals. ** someone who coordinates and oversees the work of other people so that organizational goals can be accomplished.  1-5 ACHIEVING HIGH PERFORMANCE Organizations must provide a good or service desired by its customers. David Johnson of Campbell Soup manages his firm to provide quality food products. Physicians, nurses and health care administrators seek to provide healing from sickness. McDonald’s restaurants provide burgers, fries and shakes that people want to buy.  1-6 ORGANIZATIONAL PERFORMANCE Measures how efficiently and effectively managers use resources to satisfy customers and achieve goals. Efficiency: A measure of how well resources are used to achieve a goal. Usually, managers must try to minimize the input of resources to attain the same goal. Effectiveness: A measure of the appropriateness of the goals chosen (are these the right goals?), and the degree to which they are achieved. Organizations are more effective when managers choose the correct goals and then achieve them. MANAGEMENT Managerial Concerns Efficiency “Doing things right” Getting the most output for the least inputs NOT WASTING RESOURCE MEANS Effectiveness “Doing the right things” Attaining organizational goals ENDS MANAGEMENT  1-7 MANAGERIAL FUNCTIONS Henri Fayol was the first to describe the four managerial functions when he was the CEO of a large mining company in the later 1800’s. Fayol noted managers at all levels, operating in a for profit or not for profit organization, must perform each of the functions of: Planning, organizing, leading, controlling.  1-8 FOUR FUNCTIONS OF MANAGEMENT Figure 1.2 Planning Choose Goals Controlling Organizing Monitor & measure Working together Leading Coordinate  1-9 PLANNING Planning is the process used by managers to identify and select appropriate goals and courses of action for an organization. 3 steps to good planning : 1. Which goals should be pursued? 2. How should the goal be attained? 3. How should resources be allocated? The planning function determines how effective and efficient the organization is and determines the strategy of the organization.  1-10 ORGANIZING In organizing, managers create the structure of working relationships between organizational members that best allows them to work together and achieve goals. Managers will group people into departments according to the tasks performed. Managers will also lay out lines of authority and responsibility for members. An organizational structure is the outcome of organizing. This structure coordinates and motivates employees so that they work together to achieve goals.  1-11 LEADING In leading, managers determine direction, state a clear vision for employees to follow, and help employees understand the role they play in attaining goals. Leadership involves a manager using power, influence, vision, persuasion, and communication skills. The outcome of the leading function is a high level of motivation and commitment from employees to the organization.  1-12 CONTROLLING In controlling, managers evaluate how well the organization is achieving its goals and takes corrective action to improve performance. Managers will monitor individuals, departments, and the organization to determine if desired performance has been reached. Managers will also take action to increase performance as required. The outcome of the controlling function is the accurate measurement of performance and regulation of efficiency and effectiveness. FUNCTIONS  1-13 MANAGEMENT LEVELS Organizations often have 3 levels of managers: First-line Managers: responsible for day-to-day operation. They supervise the people performing the activities required to make the good or service. Middle Managers: Supervise first-line managers. They are also responsible to find the best way to use departmental resources to achieve goals. Top Managers: Responsible for the performance of all departments and have cross-departmental responsibility. They establish organizational goals and monitor middle managers.  1-14 Three Levels of Management Top Managers Middle Managers First-line Managers Non-management  1-15 RESTRUCTURING Top Management have sought methods to restructure their organizations and save costs. Downsizing: eliminate jobs at all levels of management. Can lead to higher efficiency. Often results in low morale and customer complaints about service.  1-16 MANAGEMENT TRENDS Empowerment: expand the tasks and responsibilities of workers. Supervisors might be empowered to make some resource allocation decisions. Self-managed teams: give a group of employees responsibility for supervising their own actions. The team can monitor its members and the quality of the work performed.  1-17 MANAGERIAL ROLES Described by Mintzberg. A role is a set of specific tasks a person performs because of the position they hold. Roles are directed inside as well as outside the organization. There are 3 broad role categories: 1. Interpersonal (figurehead, leader, liaison) 2. Informational (monitor,disseminator, spokeperson) 3. Decisional (disturbance handler, resource allocator, negotiator)  1-18 INTERPERSONAL ROLES Roles managers assume to coordinate and interact with employees and provide direction to the organization. Figurehead role: symbolizes the organization and what it is trying to achieve. Leader role: train, counsel, mentor and encourage high employee performance. Liaison role: link and coordinate people inside and outside the organization to help achieve goals.  1-19 INFORMATIONAL ROLES Associated with the tasks needed to obtain and transmit information for management of the organization. Monitor role: analyzes information from both the internal and external environment. Disseminator role: manager transmits information to influence attitudes and behavior of employees. Spokesperson role: use of information to positively influence the way people in and out of the organization respond to it.  1-20 DECISIONAL ROLES Associated with the methods managers use to plan strategy and utilize resources to achieve goals. Entrepreneur role: deciding upon new projects or programs to initiate and invest. Disturbance handler role: assume responsibility for handling an unexpected event or crisis. Resource allocator role: assign resources between functions and divisions, set budgets of lower managers. Negotiator role: seeks to negotiate solutions between other managers, unions, customers, or shareholders. MANAGERIAL SKILLS There are three skill sets that managers need to perform effectively. 1. Conceptual skills: the ability to analyze and diagnose a situation and find the cause and effect. 2. Human skills: the ability to understand, alter, lead, and control people’s behavior. 3. Technical skills: the job-specific knowledge required to perform a task. Common examples include marketing, accounting, and manufacturing. All three skills are enhanced through formal training, reading, and practice. SKILL TYPE NEEDED BY MANAGER LEVEL Figure 1.5 Top Managers Middle Managers Line Managers Conceptual Human Technical MANAGEMENT CHALLENGES Increasing number of global organizations. Building competitive advantage through superior efficiency, quality, innovation, and responsiveness. Increasing performance while remaining ethical managers. Managing an increasingly diverse work force. Using new technologies.  MANAGEMENT THEORIES Concepts: These are individual ideas or notions that help describe or categorize aspects of the world. For example, in psychology, concepts might include things like "motivation," "learning," or "personality. "Theories: When several related concepts are organized and supported by evidence or observations, they form a theory. A theory provides a broader explanation that connects multiple concepts and predicts or explains behavior or events. For example, "Cognitive Learning Theory" connects concepts like "learning" and "information processing.“ Concepts are like the ingredients, and a theory is the recipe that explains how these ingredients interact to create a result. SCIENTIFIC MANAGEMENT THEORY Modern management began in the late 19th century. Organizations were seeking ways to better satisfy customer needs. Machinery was changing the way goods were produced. Managers had to increase the efficiency of the worker-task mix. JOB SPECIALIZATION Adam Smith, 18th century economist, found firms manufactured pins in two ways: Craft -- each worker did all steps. Factory -- each worker specialized in one step. Smith found that the factory method had much higher productivity. Each worker became very skilled at one, specific task. Breaking down the total job allowed for the division of labor. EVOLUTION OF MANAGEMENT THEORY Org. Environment Management Science Behavioral Management Administrative Management Scientific Management 1890 1940 2000 SCIENTIFIC MANAGEMENT Defined by Frederick Taylor, late 1800’s. The systematic study of the relationships between people and tasks to redesign the work for higher efficiency. Taylor sought to reduce the time a worker spent on each task by optimizing the way the task was done.  THE 4 PRINCIPLES Four Principles to increase efficiency: 1. Study the way the job is performed now & determine new ways to do it. Gather detailed, time and motion information. Try different methods to see which is best. 2. Codify the new method into rules. Teach to all workers. 3. Select workers whose skills match the rules set in Step 2. 4. Establish a fair level of performance and pay for higher performance. Workers should benefit from higher output. PROBLEMS OF SCIENTIFIC MANAGEMENT Managers often implemented only the increased output side of Taylor’s plan. They did not allow workers to share in increased output. Specialized jobs became very boring, dull. Workers ended up distrusting Scientific Management. Workers could purposely “under-perform” Management responded with increased use of machines.  THE GILBRETHS Frank and Lillian Gilbreth refined Taylor’s methods. Made many improvements to time and motion studies. Time and motion studies: 1. Break down each action into components. 2. Find better ways to perform it. 3. Reorganize each action to be more efficient. Gilbreths also studied fatigue problems, lighting, heating and other worker issues. ADMINISTRATIVE MANAGEMENT Seeks to create an organization that leads to both efficiency and effectiveness. Max Weber developed the concept of bureaucracy. A formal system of organization and administration to ensure effectiveness and efficiency. Weber developed the Five principles shown in Figure 2.2.  BUREAUCRATIC PRINCIPLES Figure 2.2 Written rules System of task A Bureaucracy Hierarchy of relationships should have authority Fair evaluation and reward KEY POINTS OF BUREAUCRACY ▪ Authority is the power to hold people accountable for their actions. ▪ Positions in the firm should be held based on performance not social contacts. ▪ Position duties are clearly identified. People should know what is expected of them. ▪ Lines of authority should be clearly identified. Workers know who reports to who. ▪ Rules, Standard Operating Procedures (SOPs), & Norms used to determine how the firm operates. ▪ Sometimes, these lead to “red-tape” and other problems.  FAYOL’S PRINCIPLES Henri Fayol, developed a set of 14 principles: 1. Division of Labor: allows for job specialization. Fayol noted firms can have too much specialization leading to poor quality and worker involvement. 2. Authority and Responsibility: Fayol included both formal and informal authority resulting from special expertise. 3. Unity of Command: Employees should have only one boss. 4. Line of Authority: a clear chain from top to bottom of the firm. 5. Centralization: the degree to which authority rests at the very top. FAYOL’S PRINCIPLES 6. Unity of Direction: One plan of action to guide the organization. 7. Equity: Treat all employees fairly in justice and respect. 8. Order: Each employee is put where they have the most value. 9. Initiative: Encourage innovation. 10. Discipline: obedient, applied, respectful employees needed. FAYOL’S PRINCIPLES 11. Remuneration of Personnel: The payment system contributes to success. 12. Stability of Tenure: Long-term employment is important. 13. General interest over individual interest: The organization takes precedence over the individual. 14. Esprit de corps: Share enthusiasm or devotion to the organization. BEHAVIORAL MANAGEMENT Focuses on the way a manager should personally manage to motivate employees. Mary Parker Follett: an influential leader in early managerial theory. Suggested workers help in analyzing their jobs for improvements. The worker knows the best way to improve the job. If workers have the knowledge of the task, then they should control the task. THE HAWTHORNE STUDIES Study of worker efficiency at the Hawthorne Works of the Western Electric Co. during 1924-1932. Worker productivity was measured at various levels of light illumination. Researchers found that regardless of whether the light levels were raised or lowered, productivity rose. Actually, it appears that the workers enjoyed the attention they received as part of the study and were more productive.  THEORY X AND Y Douglas McGregor proposed the two different sets of worker assumptions. Theory X: Assumes the average worker is lazy, dislikes work and will do as little as possible. Managers must closely supervise and control through reward and punishment. Theory Y: Assumes workers are not lazy, want to do a good job and the job itself will determine if the worker likes the work. Managers should allow the worker great latitude, and create an organization to stimulate the worker.  THEORY X V. THEORY Y Figure 2.3 Theory X Theory Y Employee is lazy Employee is not lazy Managers must closely supervise Must create work setting to build Create strict rules initiative & defined rewards Provide authority to workers  THEORY Z William Ouchi researched the cultural differences between Japan and USA. USA culture emphasizes the individual, and managers tend to feel workers follow the Theory X model. Japan culture expects worker committed to the organization first and thus behave differently than USA workers. Theory Z combines parts of both the USA and Japan structure. Managers stress long-term employment, work-group, and organizational focus. MANAGEMENT SCIENCE Uses rigorous quantitative techniques to maximize resources. Quantitative management: utilizes linear programming, modeling, simulation systems. Operations management: techniques to analyze all aspects of the production system. Total Quality Management (TQM): focuses on improved quality. Management Information Systems (MIS): provides information about the organization. ORGANIZATION-ENVIRONMENT THEORY Considers relationships inside and outside the organization. The environment consists of forces, conditions, and influences outside the organization. Systems theory considers the impact of stages: Input: acquire external resources. Conversion: inputs are processed into goods and services. Output: finished goods are released into the environment. SYSTEMS CONSIDERATIONS An open system interacts with the environment. A closed system is self-contained. Closed systems often undergo entropy and lose the ability to control itself, and fails. Synergy: performance gains of the whole surpass the components. Synergy is only possible in a coordinated system.  THE ORGANIZATION AS AN OPEN SYSTEM Figure 2.4 Input Stage Conversion Output Stage Stage Raw Materials Machines Goods Human skills Services Sales of outputs Firm can then buy inputs CONTINGENCY THEORY Assumes there is no one best way to manage. The environment impacts the organization and managers must be flexible to react to environmental changes. The way the organization is designed, control systems selected, depend on the environment. Technological environments change rapidly, so must managers.  STRUCTURES Mechanistic: Authority is centralized at the top. (Theory X) Employees closely monitored and managed. Very efficient in a stable environment. Organic: Authority is decentralized throughout employees. (Theory Y) Much looser control than mechanistic. Managers can react quickly to changing environment. WHAT ELSE: During pandemic Covid 19 : State 3 challenges………… Post it in Eleap all your answers under Unit 1 Forum QUESTION & ANSWER