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MGMT1001: Managing Organisations and People

Topic 1: Organisations
Organisation - a deliberate arrangement (or structure) of people to accomplish some specific, distinct purpose
Ways to categorise organisations:
1. Nature (similar goals, people, activities, etc) - social (not-for-profit), government, business, sporting
2. Size - small, medium, large
3. Industry - financial, manufacturing, TFC, agriculture
4. Geographic Location - local, multinational
5. Ownership - sole trader, partnership, membership, listed corporations
Characteristics of an organisation:

Distinct purpose - expressed in terms of objectives and goals

Activities are designed to achieve the goals

Deliberate structure - rules around organisational activities and relationship between members

Future oriented - organisations want to exist and continue on

People - organisations must have >1 person

Exist independently of the people within them - organisations go on while its members change

Part of an open system - external forces such as changing society, technology and economic conditions
causes organisations to change and adapt to its environment, and vice versa.
Spot Collection: Differences between a formal organisation and an informal collectivity
Formal Organisation
Informal Collectivity (groups and families)
Deliberately created
Develop spontaneously
Specialise in instrumental goals (involving
Strive to meet instrumental and socioemotional
performance of concrete tasks)
goals (gratifying needs of individual members)
Follow a set pattern which is stable over
More flexible and changeable to accommodate
extended periods of time
the changing need of members
Impersonal (authority from job title) and
Select their leaders through personal means
attained through demonstrating a particular
(eg. Affection, loyalty, etc)
level of training, skills or time with organisation
Longer lifespan
Tend to come and go regularly
SC: Fallacies used when trying to understand issues in organisations
Using any of the three one-size-fits-all concepts tends to oversimplify and create a false sense of clarity about
issues in organisations, as well as unique problems:

Blaming people - while targeting individuals explains everything in terms of individual error, determining
guilt and punishment, it ignores larger system failures and does little to prevent a recurrence

Blame the bureaucracy - in practice, this perspective is better at explaining how organisations should
have worked than why they didnt work. It is hard to draw the line at which more bureaucracy stops being
effective and inhibits freedom, flexibility and initiative.

Thirst for power - this view sees organisations as being filled with predators and prey or political games
and turf wars, and usually offers a plausible analysis of almost anything that goes wrong in organisations.

Topic 2: What is Management

MGMT1001: Managing Organisations and People

Management - the process of coordinating and overseeing the work activities of others so that their activities
are completed efficiently and effectively
Managers - someone who coordinates and oversees the work of others so that organisational goals can be
accomplished. Changing nature of organisations and work has blurred the clear lines of distinction between
managerial and non-managerial responsibilities.



Aim of Management
1. Efficiency - doing things right, or getting the most output from the least inputs
2. Effectiveness - during the right things, or completing activities so that organisational goals are attained
Efficiency (resource usage)
Manager chooses the right goals to pursue, but makes
poor use of resources to achieve these goals

Manager chooses the right goals to pursue and makes a

good use of resources to pursue these goals

Manager chooses wrong goals to pursue and makes

poor use of resources to achieve these goals

Manager chooses the wrong goals to pursue, but makes

a good use of resources to pursue these goals

Result: low quality product customers dont want

Result: high quality product customers dont want

Levels of Management
1. Top Managers - responsible for making organisation-wide decisions, goals and plans
2. Middle Managers - manage first-line managers, less direct contact with workers
3. First-line Managers - supervisors or team leaders who manage the work of non-managerial employees
who are usually directly involved with the production of the organisations products
What Do Managers Do?
The managers job is not universal; it is different between organisational levels, organisations of different type
and size, and different nations. Despite this, there are 3 perspectives to describe this:
a) Management Functions:
In the early part of the 20th century Henri Fayol, a French industrialist, proposed that managers perform five
functions (planning, organisation, commanding + coordinating (now condensed into leading), controlling):
1. Planning - defining organisational goals, establishing
strategies for achieving goals and developing plans to
coordinate activities
2. Organising - determining what needs to be done, how
will be done and who is to do it
3. Leading - because managers work with and though
people, they have to motivate and lead subordinates,
choose effective communication channels and deal in
any way with people
4. Controlling - involves monitoring actual performance,
comparing actual to standard or planned, and taking
action if necessary
Planning / Organising / Leading / Controlling
b) Management Roles:
Henry Mintzberg says that what managers do can best be described by looking at the roles (specific categories
of behaviour) they play at work. Based on his studies, he concluded that managers perform 10 roles:
1. Interpersonal Roles - involve people and other duties that are ceremonial and symbolic in nature
1. Figurehead - managers are symbolic heads of the organisation and are obliged to perform routine
duties of a legal or social nature (eg. Signing legal documents)
2. Leader - managers have to hire, train, motivate and discipline employees
3. Liaison - managers maintain a network of external contacts for favours and information
2. Informational Roles - involve receiving, collecting and disseminating information
4. Monitor - managers need to actively monitor the organisation and its environment for changes
5. Disseminator - managers act as conduits of information to organisational members
6. Spokesperson - managers transmit information about their organisation (eg. Plans) to outsiders
3. Decisional Roles - roles that revolve around making decisions or choices for the organisation
7. Entrepreneurs - managers search for opportunities and initiate performance-enhancing projects
8. Disturbance Handlers - managers need to take corrective action in response to unforseen problems
9. Resource Allocators - managers allocate human, physical and monetary resources of the organisation

MGMT1001: Managing Organisations and People

10. Negotiator - managers represent the organisation to discuss and bargain with other parties
c) Management Skills:
Managers need three essential skills or competencies in order to perform the duties and activities associated
with being a manager (relative importance of these skills varies according to the managers level):
1. Technical Skills - knowledge of and proficiency in
a certain specialised field. More important for lower-level
managers who typically manage production employees.
2. Human Skills - the ability to work well with other people
individually or in a group, and includes skills in
communicating, motivating, leading, delegating, negotiating
and conflict management.
3. Conceptual Skills - the ability to think and to
conceptualise about abstract and complex situations.
Managers need to be able to see the organisation as a
whole for effective decision making. Lower-level managers
normally spend more time dealing with observable things
and processes.
Historical Developments in Management and Understanding of Management Theory
a) The Scientific-Technical Revolution (Classical - Scientific Management)
Scientific Management - the use of scientific methods to define the one best way for a job to be done
o Context: rise of factory system of production (causing a growth in the number of employees and use of
technology) rise of corporations (separation of ownership and control)
o Results: boredom + bad industrial relations -> Led to massive worker strikes
Key Features / Important Contributions:
1. Henry Ford: production lines and specialisation of labour
2. Frank and Lillian Gilbreth: time and motion studies (systematic study of work tasks to create rules or
one best way of performing each task, prevalent to the 1980s)
3. Frederick W. Taylor: job design and 4 principles of scientific management:
o Develop a science for each element of the job instead of the old rule of thumb method
o Managers should scientifically select and then train, teach and develop workers
o Managers should ensure all work is being done in accordance with the scientific principles developed
o An almost equal division of work and the responsibilities between the management and the workers
b) General Administrative Theorists
General Administrative Theories - general theories of what constituted good management practice
Important Contributions:

Henri Fayol: 14 principles of management (division of work, authority, discipline, unity of command, unity
of direction, subordination of individual interests to the general interests, remuneration, centralisation,
scalar chain, order, equity, stability of tenure of personnel, initiative, esprit de corps)

Max Weber: Bureaucracy - form of organisation characterised by division of labour, a clearly defined
hierarchy, detailed rules and regulations, impersonal relationships and career advancement based on merit
c) Behavioural Approaches to Management Theory
Behavioural Management - focus on human motivation and behaviour as a mechanism to improve
organisational performance
o Context: Developed in response to ineffectiveness and inefficiency (worker productivity declined over
time, despite initial increases) of Scientific management
Key Features / Important Contributions:

Hawthorne Studies - series of studies during the 1920s and 30s that provided new insights into
individual and group behaviour, especially on how to motivate employees (eg. Non-monetary remuneration)

Maslows Hierarchy of Needs - argued that each step in the hierarchy must be satisfied before the next
can be activated, and that once a need was substantially satisfied, it no longer motivated behaviour (eg. For
high-salary employees, increasing salary will give less and less motivation)

McGregors 2 theories about human nature:

MGMT1001: Managing Organisations and People


Theory X which is pessimistic and negative, and is how scientific managers perceive their workers
Believed that managers could achieve more if they start perceiving their employees with Theory Y
(more modernised approach); as self-energized, committed and responsible and creative beings

d) Systems Approach
System - set of interrelated and independent parts arranged in a manner that produces a unified whole, either:
o Closed: not influenced by, and do not interact with, their environment
o Open: dynamically interact with their environment
This approach sees organisations as an open system; an organisation takes in inputs (resources) from the
environment and transforms or processes these resources into outputs that are distributed into the
environment. Thus the organisation is open to, and interacts with, that environment.
e) Contingency Approach
Contingency (or situational) Approach - organisations are different, face different situations (contingencies)
and require different ways of managing appropriate for the situation
Eg. At times of stability, a more behavioural style of management can be most effective to raise morale and
encourage innovation, but at times of uncertainty and instability, a more autocratic style of management can
ensure rapid response to change and reduce threat to the organisation.
21st Century Understandings of Management

Increasing emphasis on motivation, leadership and relationships and communication (ability to develop and
effectively communicate a vision or position to different audiences)

Less overt control as organisations take advantage of technology (eg. Swipe cards for building access, login
to PCs, keystroke monitoring)

Demands on Modern Managers

Work harder and smarter - increased hours, doing more with less resources, globalisation of business
environment means being available for work 24/7

Pressures of conflicting demands - shareholder values vs. societal values (eg. Ethical and
environmentally responsible)

Increased demands for flexibility - due to empowerment efforts in the 1990s, work life balance and
learning opportunities by staff
SC: There is no one best style of management
A one best style of management implies that any organisation which adopts it can achieve both maximum
efficiency and effectiveness. But this cannot be true:

As no organisations are exactly the same, varying in type (eg. Industry, profit or non-profit, etc), size and
culture (informal rules to interaction), different organisations will find that they operate most efficiently and
effectively under different styles of management.

As the business environment is constantly changing, different styles of management can become
appropriate during different circumstances or times.
SC: Management is not just something one does, but is more crucially who one is and how we
relate to others
Cunliffes main argument is that management is a continually emerging, embodied practice and a way of being
and relating, rather than a realist, rational, neutral and legitimate ideology (ie. existence of a set of universal
managerial characteristics, roles and competencies that can be generalised across organisation and managers).
He supports the more contemporary ways of viewing management as a social construct (being shaped by our
interactions with others) and managers as practical authors, managers of meaning and reflexive
practitioners, whereby one is always becoming a manager because there is no one rational model for being a
manager. He believes that in this way, management and managerial ideas become open to reinvention, and
managers can have the freedom to explore how they may act in more responsible and ethical ways.

Topic 3: The Organisational Environment

MGMT1001: Managing Organisations and People

Organisational Environment - the set of forces and conditions which affect the way the organisation operates
and decision-making. Either from outside the organisation (external environment) or inside the organisation
(organisational culture).
o Assumes an open systems approach, where organisations are influenced by society and potentially
feedback into society
The External Environment - influences boundaries of what an organisation can do, as well as opportunities
and threats to their current processes. 2 components
a) Task or Specific Environment
Specific Environment - external forces that have a direct and immediate impact on the organisation. Main
forces are:
1. Suppliers - individuals and companies that provide the input resources (materials, financial, labour)
needed to produce goods and services. Managers seek to ensure a steady flow of needed inputs at the
lowest price possible.
2. Distribution - organisations that help other organisations sell their good or service (transport, marketing,
advertising, retailers, etc). Managers need to sustain a stable distribution system.
3. Customers - customer tastes can change, or they can become dissatisfied with the organisations products.
Managers need to ensure that their products are still in demand.
4. Competitors - organisations that produce similar goods or services to your organisation. The actions and
decisions of an organisations competitors will have a direct influence on that organisation.
b) General Environment
General Environment - broad external conditions that may affect the organisation. Mainly:
1. Demographic - changes to the characteristics of a population (eg. Gender, age, level of education,
geographic location, racial or ethnic composition, income, family composition, etc).
2. Sociocultural - social structures influence things such as educational systems and employment decisions.
Cultural factors include national culture, values and shared experiences (globalisation of workforce can
cause a clash of cultures within organisations).
3. Political / Legal - political processes shape a countrys laws, and laws constrain the operations of
organisations (eg. Industrial relations, occupational health and safety (a cost), superannuation).
4. Global - changes in international relationships (eg. Wars, development of trade agreements between
countries such as NAFTA, ASEAN, EU).
5. Technological - affect the way organisations design, produce or distribute goods or services. Can make
established methods of production or products obsolete.
6. Economic - interest rates, inflation, unemployment, economic growth, etc affects demand and thus supply
Managing the Stakeholder Relationship
Stakeholder - any constituencies in the organisations external environment that are affected by the
organisations decisions and actions
o Customers, social and political action groups, competitors, government, media, suppliers,
communities, shareholders, unions, employees
The nature of external stakeholder relationships is another way in which the environment influences managers.
The more obvious and secure these relationships become, the more influence managers will have over
organisational outcomes.

Environmental Uncertainty
Environmental Uncertainty - the degree of change and complexity in an organisations environment


Environmental Dynamism

MGMT1001: Managing Organisations and People

Small number of external elements

Elements are similar
Elements remain the same or change slowly
Eg. Funeral companies

Large number of external elements

Elements are dissimilar
Elements remain the same or change slowly
Eg. Insurance companies

Small number of external elements

Elements are similar
Elements change frequently and
Eg. Womens fashion

Large number of external elements

Elements are dissimilar
Elements change frequently and
Eg. Software companies

Environmental Complexity

The Internal Environment (Organisations Culture)

Organisational Culture - the shared knowledge, values, principles, traditions and day-to-day rituals that
provide the unwritten rules about how things are done in an organisation
Strong versus Weak Cultures: the more employees accept the organisations key values and the greater
their commitment to those values, the stronger the culture is.
o Culture tends to be stronger in organisations that are smaller, been around for a period of time, have
low employee turnover, etc
o Increasing body of evidence suggesting that strong cultures are associated with high organisational
Culture serves 3 purposes:

Control system - what is acceptable and unacceptable behaviour

Social glue - friendship, relationships, networking

Sense-making - serving as a justification for seemingly irrational actions or decisions

SC: Three Levels of Cultural Phenomenon (Schein)
1. Artefacts - physical aspects of organisational culture, its proportion of total culture comparable to the tip of
an iceberg (values and assumptions are the invisible, main part of culture). Consists of:
o Organisational stories and legends: eg. Organisations founders, rule breaking, rags-to-riches success
o Rituals and ceremonies: eg. Birthday parties, Friday night drinks
o Organisational language: eg. Jargons to describe equipment, personnel, behaviours, etc
o Material symbols: eg. Dress code, size of offices
2. Values or Ideology - a culture synchronises the ideology or philosophy held by members of the
organisation, and coordinates decision-making
3. Basic Assumptions / Beliefs - preconscious level of awareness
SC: 3 Types of Sub-Cultures
In any organisation, there may be a dominant culture (shared by a majority of the organisations members) and
various cultures that might coexist with it. At least 3 types of subcultures are conceivable:
1. Enhancing - where members adhere to the core values of the dominant culture more fervently than in the
rest of the organisation
2. Orthogonal - where members would simultaneously accept the core values of the dominant culture and a
separate, unconflicting set of values particular to themselves
3. Countercultural - subcultures whose core values and possibly artefacts present a direct challenge to the
core values and artefacts of a dominant culture, and thus take opposite positions on value issues.

Topic 4: Creating Sustainable Organisations

Two views of Social Responsibility:

MGMT1001: Managing Organisations and People


Classical View - view that managements only social responsibility is to maximise profits
Socioeconomic View - view that managements social responsibility goes beyond making profits to include
protecting and improving societys welfare

From Obligations to Responsiveness to Responsibility

Social Obligation - when a firm engages in social actions because of its economic and legal obligation (ie. the
organisation does only what it is obligated to do, out of a social duty to run the business for its shareholders)
Social Responsiveness - when a firm engages in social actions to respond to or satisfy some popular social
need (potential increase in sales makes it economically rational to take the social action)
Social Responsibility - a businesss intention, beyond that is required by law or economics, to pursue longterm goals that are good for society
o A socially responsible organisation is one that goes beyond what it must do by law or chooses to do
because it makes economic sense (social obligation and responsiveness), to do what it can to help
improve society because it believes it is the right thing to do.
o Thus social responsibility and sustainability is ultimately about moral philosophy / ethics
Corporate Sustainability Model
The central question whether the current
model of corporation needs to be modified

contribute to the continuing health of

the planet

development of a just and humane


creation of work that brings dignity and

self-fulfilment to those undertaking it.

in Organisations
- what is good or right for human
Ethics is a normative undertaking - aims to discover what ought to be than what is
Ethics can be proactive (ethics as doing good) or reactive (ethics as not harming)

Relationship between ethics and:

Values - ethics may reflect values at times

Behaviour / Etiquette - just following rules doesnt always mean being ethical

Law - following law does not equal being ethical; there could be bad laws, which lead to people acting
against those laws. Law will always lag to changing society views and values.
Why Should Organisations Be Ethical?
1. Public perceptions of business practice - affects share price, who works in organisations or not
2. Regulation reflecting societys concerns - unethical behaviour -> regulation -> burden and
requirements -> cost
3. Demonstrated ethical leadership, trust - awards for ethical behaviour -> publicity
4. Good ethics is good business - external benefits (eg. Consumers attracted), internal benefits (eg.
Employer of choice) -> financial sense
5. Cost of criminal / civil liability

Ethics in Organisations: Many Facets, Levels of Focus

MGMT1001: Managing Organisations and People


Individual - individual choices, professional ethics; what kind of person or leader am I?)
Organisational - organisation actions, decisions, strategies; culture, corporate social responsibility
Macro / Systemic - economic, political, legal and social systems in which business operate;
environmental, social, political consequences of business activity

Multiple facets of ethics in an organisation -> several factors that influence ethical managerial behaviour:

Stakeholder Theory

Due to the large number of stakeholders to an organisation, it is difficult to judge impact of decisions on all
these stakeholders. As such, it is almost impossible to please all stakeholders (a decision that is ethical for
one group may be harmful or unethical for another group).

Thus, ethical decision making is about minimising negative effects on most people.

To judge ethicality of decisions, one can employ various frameworks.

Ethical Frameworks
1. Consequence-based Frameworks
o The end goal can justify the means to get there; as long as its a positive outcome for most people, it is
a good decision
o Utilitarianism - seeking the greatest good (benefit) for the greatest number of people
o Typical in business settings
o Problems: where to draw boundaries - number of people and who to benefit, how to define good
2. Universal Principles or Duties
o Actions can be judged as right or wrong in themselves (regardless of consequences); dont care what
outcome is, as long as action is right
o Eg. People should be treated as ends in themselves, and never as instruments (or means to ends)

o General principles and specific rules relating to fairness, resource distribution
o Types of justice:


Ethical Imperative of early 21st century

Problems are the result of a few rotten apples? or the result of something deeper or large scale
(imperative for shareholder value forces corporations to act unethically)

The culture of greed, self-interest and culture of prosperity - mindset that things can only improve

Misalignment of executive incentives and shareholder expectations

Legal structures - regulation -> self-regulation of organisations, assuming executives behave ethically

Political structures and processes?

Topic 5: Strategy and Human Resource Management

MGMT1001: Managing Organisations and People

Strategy - direction in which an organisation intends to move and creation of a path by which it intends to get
Strategic Management - the set of managerial decisions and actions that determine the long-run
performance of an organisation
o A process or approach to addressing the competitive challenges faced by an organisation: Where to
compete, how to compete, with what will we compete?
Importance of Strategic Management

Studies have shown positive relationship between strategic planning and performance (ie. a strategy may
lead to higher organisational performance)

Strategy helps coordinate diverse organisational units, helping them to focus on organisational goals

Strategic management process requires an examination of internal organisational characteristics and

external environmental changes, thus helping managers to better cope with environmental uncertainty
Survey of business owners found that 69% had strategic plans, and 89% of them found their plans to be
effective. They stated, for eg, that strategic planning gave them specific goals and a unified vision with staff.
Strategic Management Process
1. Identifying the organisations current mission, goals and strategies
Mission - a statement of the purpose of an organisation
o Components include: customers, markets, products or services, concern for survival, growth and
profitability, philosophy (beliefs, values and ethical priorities), concern for public image, technology,
self-concept (main competitive advantage and core competencies) and concern for employees.
o Defining the organisations mission forces managers to identify carefully the scope of its products
Goals - looking at what an organisation hopes to achieve in the medium to long-term future.
Current Strategies - looking at whether current strategies are meeting current performance targets
2. External Analysis
The scanning of the organisations specific and general environments, focus on identifying:

Opportunities - positive trends in external environmental factors that organisations could exploit

Threats - negative trends in external environmental factors that organisations need to counteract
3. Internal Analysis (organisations resources and capabilities)
The internal analysis assesses the organisations resources, capabilities, activities and culture.

Resources - an organisations assets that are used to develop, manufacture and deliver products or
services to its customers. Either tangible or intangible (eg. Organisational culture, corporate reputation)

Capabilities - an organisations skills and abilities in doing work activities needed in its business

Core Competencies - the organisations major value-creating skills and capabilities. A specific factor that a
business sees as being central to the way it, or its employees, work.
After doing the internal analysis, managers should be able to identify:

Strengths - activities the organisation does well, or any unique resources that it has

Weaknesses - activities the organisation does poorly or not at all, or resources it needs but not possess.
The combined external and internal analyses are called SWOT Analysis - an analysis of the organisations
strengths, weaknesses, opportunities and threats.
4. Formulating Strategies
Develop strategies that aim to:
a) Exploit an organisations strengths and external opportunities
b) Buffer or protect the organisation from external threats
c) Correct critical weaknesses

relative advantage over competitors

5. Implementing Strategies
6. Evaluating Results
How effective have the strategies been? Have they helped the organisation reach its goals? What adjustments,
if any, are necessary?

MGMT1001: Managing Organisations and People

Types / Levels of Organisational Strategies
Strategic Business
Units (SBUs) single businesses of
an organisation
having several
different businesses
that are independent
and formulate their
own strategies
1. Corporate-level Strategies
Corporate Level Strategies - an organisational strategy that seeks to determine what businesses a company
should be in or wants to be in. 3 types:
1. Growth Strategy - seeking to increase the organisations business by expansion into new products and
markets. Types include:

Concentration - concentrating and increasing operations within its primary business

Vertical Integration - attempt to gain control of suppliers of inputs (backward) and/or purchasers
of outputs (forward)

Horizontal Integration - combining with other organisations in the same industry (competitors)

Related Diversification - merging with or acquiring firms in different but related industries (eg.
Making milk -> other dairy, yoghurt, etc)

Unrelated Diversification - merging with or acquiring firms in different and unrelated industries
(eg. Virgin group) -> reduces risk, promises high returns

Stability Strategy - seeking to maintain the status quo to deal with times of high environmental
uncertainty or when the industry is experiencing little growth (ie. an absence of significant change)


Renewal Strategy - seeking to address organisational weaknesses that are leading to performance
declines. Includes:

Retrenchment - (for problems that are not as serious) a short-run renewal strategy that focuses
on eliminating non-critical weaknesses and restoring strengths

Turnaround - (for problems that are more serious) addressing critical long-term performance
problems through strong cost elimination and large-scale organisational restructuring


Emergent Strategies - normal strategies usually come from top to bottom, but emergent strategies
are those that spread from bottom to top

BCG Matrix - strategy tool that guides resource allocation decisions on the basis of market share and growth
rate of SBUs
o Useful when an organisations corporate strategy involves a number of SBUs
o Organisations should aim to:
Market Share

make SBUs stars and question marks


Sell off or liquidate dogs

Cash cows

milk cash cows by limiting any new

investment in them and invest its profits into stars and question marks
2. Business-Level Strategies
Business-level Strategies - an organisational strategy that seeks to determine how an organisation should
compete (ie. gain a competitive advantage) in each of its SBUs
o For organisations (small or large) in only one line of business, the business-level strategy typically
overlaps with corporate-level strategy
Competitive Advantage - an organisations distinctive competitive edge that is sourced from its core
competencies and organisational assets or resources
Generic business-level strategies to create competitive advantage (Porter, 1980):
1. Cost Leadership Strategy - seeking to attain the lowest costs of production in its industry
2. Differentiation Strategy - seeking to create a unique and distinctive product or service for which
customers will pay a premium

MGMT1001: Managing Organisations and People


Focus Strategy - using a cost or differentiation advantage to exploit a particular market segment
(niche) rather than a larger market
Stuck in the middle - situation in which an organisation has not been able to develop either a low cost
or differentiation competitive advantage (associated with lower profitability)
Sustainable Competitive Advantage
Sustainable Competitive Advantage - an ongoing ability to exploit resources and develop core competencies
that allows organisation to maintain a continual edge over its competitors.
o While business-level strategies can be employed to create a competitive advantage, more important is
whether or not it can be sustained.
o Traditional sources of competitive advantage eroding; specific products and technology can be easily
copied by competitors. But a cohesive, skilled workforce and appropriate organisational culture cannot
be easily replicated by competitors.
o Sustainability of competitive advantage depends on whether an SBUs resources or core competencies
are valuable, rare, imperfectly imitable or non-substitutable.

Tax Advice





to Imitate


Implications for Competitiveness

Competitive disadvantage
Competitive parity
Temporary competitive advantage
Sustainable competitive advantage

Below normal
Above normal
Above normal

Human Resource Management

Human Resource Management (HRM) - the policies, practices and systems that influence and manage
employees behaviour, attitudes and performance (ie. anything involving people practices)
Importance of HRM

HRM is an important tool in implementing strategy - strategies cannot be implemented without the people

A cohesive, skilled workforce and appropriate organisational culture is an increasingly important source of
sustainable competitive advantage

Necessary part of the organising function of management: selecting, training and evaluating the workforce

Legal compliance: laws governing the employment relationship

Adds value to the organisation: high performance work practices leads to both high individual and
organisational performance
HRM Process
Human Resource Planning



Identification and Selection

of Competent Employees


TrainingAdapted and competent employees

with up-to-date skills and knowledge


and benefits


Competent and high-performing employees who

are capable of sustaining high performance over
the long term

Human Resource Planning - Current Assessment

Human Resource Planning - process by which managers ensure that they have the right number and kinds
of capable people in the right places, and at the right times. Process involves:
1. Human Resource Inventory - review of the current make-up of the organisations human resources,
concerned with telling management what individual employees can do
2. Job Analysis - an assessment that defines a job and the minimum knowledge, skills, abilities and
behaviours necessary to perform the job adequately. Methods include interviews, questionnaires,
engaging in direct observation, collecting self-reports of employees and their managers, etc. With
information from job analysis, managers develop or revise job descriptions and job specifications.
3. Job Description - a written statement of what the job holder does, how it is done, and why it is done.
4. Job Specification - a written statement of the minimum qualifications that a person must possess to
perform a given job successfully
Once managers know their current human resource status (either a shortage or excess), they can undergo:

MGMT1001: Managing Organisations and People

Recruitment - process of locating, identifying and attracting capable applications to an organisation.

Decruitment - techniques for reducing the labour supply within an organisation

Aims of Recruitment:

increase pool of qualified job applicants + reduce number of under / over-qualified applicants

Increase the probability that job applicants, once recruited and selected, will remain with the organisation
for a long period of time

Meet equal employment opportunity (EEO) and other legal and social obligations
Recruitment Sources:
1. Internal
o Skills inventory (computerised record systems)
o Job posting via bulletin boards (including electronic or intranet), newsletters or personal letters
2. External
o Advertising (including web-based)
o Employment agencies (public or private)
o Educational institution recruiting
o Employee referrals
o Professional recruiting associations
Selection Process - process of screening job applications to ensure that the most appropriate candidates are
hired. Any selection decision can result in 4 outcomes:

Later Job


Selection Decision
Correct decision Reject error
Accept error
Correct decision

Selection Criteria:

Reliability (of prediction): ability of a selection device to measure the same thing consistently

Validity (of prediction): proven relationship between the selection device used and relevant criterion for
successful performance in an organisation

Generalisability - accuracy and usefulness of results (not 100% sure ><)

Utility - cost

Legality - compliance with law

Types of Selection Devices: interviews, reference checks, biographical information, physical ability tests,
cognitive ability tests, personality inventories, work-sample tests, honesty tests, drug tests
Orientation - introducing a new employee to his or her job and the organisation.
o Main objective is to reduce the initial anxiety and confusion employees feel as they begin a new job; to
familiarise new employees with the job, the work unit and the organisation as a whole; and to facilitate
the outsider-to-insider transition
Training and Development
Training - a planned effort by a company to facilitate employees learning of job-related competencies (eg.
Interpersonal skills, technical or job-related, business knowledge, problem solving, decision making, etc).
Training Methods:

Presentation methods - classroom instruction, audiovisual methods

Group-building methods - adventure learning, team training

Hands-on methods - on-the-job training, simulations and activities, case studies, behaviour modelling,
guidance from a senior veteran (apprenticeship for trades and mentor relationship in white collar jobs)
Purposes of Training and Development:

Improve performance -> results in terms of efficiency and return on investment

MGMT1001: Managing Organisations and People

Update employee skills or orient new employees

Satisfy personal growth needs

Performance Management
Performance Management System - process of establishing performance standards that are used to
evaluate employee performance
o Aims to ensure that employees activities and outputs are congruent with the organisations goals
Performance Appraisal - obtaining data on how well an employee is doing his or her job. Its methods

Written Essays - evaluator writes out a description of an employees past performance, potential, etc

Critical Incidents - evaluator focuses on the critical behaviours that separate effective from ineffective job

Graphic Rating Scales - lists a set of performance factors (eg. Quantity and quality of work) and
evaluator rates employee on each factor using an incremental scale

Behaviourally Anchored Rating Scales (BARS) - lists behavioural descriptions (eg. Anticipates, plans,
executes, solves immediate problems, carries out orders) and evaluator rates employee on each behaviour

Multi-person Comparisons - comparing one individuals performance with that of others

Management by Objectives (MBO) - employees are evaluated by how well they accomplish a specific set
of objectives that have been determined to be critical in the successful completion of their jobs

360-degree feedback - utilising feedback from the full circle of people with whom the manager interacts
(eg. Supervisors, employees, co-workers)
Performance Feedback - providing data to employees about their performance effectiveness
Compensation and Benefits
Benefit of a Fair, Effective and Appropriate Compensation System:

Helps attract and retain high-performance employees

Impacts on the strategic performance of the firm

Compensation systems that reflect the changing nature of work can keep people motivated (eg. Increasing
focus on non-monetary remuneration)
Approaches to Determining Amount of Compensation
1. Skills-based Pay - pay system that rewards employees for the job skills they can demonstrate
2. Variable Pay - pay system in which an individuals compensation is contingent on performance
Types of Compensation:

Base wage or salary

Wage and salary add-ons

Performance related pay: merit pay, incentive pay, profit sharing, ownership, skills-based, group incentives
Career Development
Career - sequence of positions held by a person during their lifetime
o In the past, career development programs were typically designed by organisations to help employees
advance their work lives within a specific organisation and way to retain highly talented employees
o Downsizing, restructuring, etc has meant that now the individual - not the organisation is responsible
for his or her own career
SC: 3 Types of Competitive Strategies
1. Innovative Strategy - used to develop new products or services or ones different from those of
competitors (eg. Apple and release of innovative products such as iPod, iPhone, iPad)
2. Quality Enhancement Strategy - focuses on enhancing the product and/or service quality, so as to stand
out from competition (eg. Cathay Pacific and focus on customer service to increase value for passengers
and justify higher fares)
3. Cost-reduction Strategy - firms aim to be the lowest cost producer in the market (eg. Jetstar, Tiger
Airways, Virgin Blue and their competition for cheaper airfares)

MGMT1001: Managing Organisations and People

Topic 6: Understanding Groups and Teams

Group - two or more interacting and interdependent individuals who come together to achieve specific goals
Teams - are formalised groups whose members work intensely on a specific, common goal
o Needed because complex projects need more than one person (not enough skills, time, diversity of
knowledge, ideas and opinions and more efficient if tasks are sequential)
Two Models for Group Development
a) Group development stages (Tuckman & Jensen 1977)
1. Forming people join the group and define the groups purpose, structure and leadership.
2. Storming intragroup conflict, where members resist the control that the group imposes on
individuality and over who will control the group.
3. Norming where close relationships develop and the group becomes cohesive.
4. Performing stage where the group is considered to be fully functional, because group members
energies have moved from getting to know each other to performing the task at hand
5. Adjourning Final stage of group development in which members are concerned with wrapping-up
activities rather than task performance.
b) Punctuated equilibrium model
1. Inertia nothing is getting done, the group is relatively at ease.
2. Punctuated equilibrium the leader or group member punctuates this inertia, constructing an
atmosphere of urgency and positive levels of stress.
3. Work Subsequently, activities are completed with haste and efficiency.
Group structure
1. Member Roles - behaviour patterns expected of someone occupying a given position in a social unit.
Informal roles in groups include:
1. Task-Related - roles that help the group to focus on the task at hand
Clarifying, diagnosing, evaluating, opinion-seeking, information gathering, summarising
2. Maintenance-Related - roles that help maintain good interpersonal relationships within the group
Encouraging, gate-keeping (even participation), setting standards, following, compromising,
3. Self-Oriented - dysfunctional roles that may hinder or even undermine the teams progress
Attacking, blocking, dominating, withdrawing, special pleading, clowning
2. Member Goals - each member have individual goals to achieve through participation, which may differ from
the groups goal

Norms - standards or expectations that are accepted and shared by a groups members.
o Norms can develop based on previous events of a groups existence and the transition of norms from
individual to the rest of the group (ie. bringing norms with us as we move into a new group).
o Norms can be explicit or implicit
o Eg. Level of formality, language (which language, what type of language), dress code


Conformity - because individuals want to be accepted by groups to which they belong, they are susceptible
to conformity pressures.

Groupthink: A form of conformity in which group members feel extensive pressure to align their opinions with
others opinions.
o Certain group characteristics encourage groupthink, such as a strong group identity, members applying
pressure to those who dont support group, or where critical thinking is not encouraged or rewarded
o Can be prevented by:

Encouraging critical, independent thinking

Being aware of different status differences

Getting an external party to evaluate the decision-making

Assigning the role of devils advocate to one of the group members

MGMT1001: Managing Organisations and People


Cohesiveness - the degree to which group members are attracted to one another and share the groups
Size - size of a group affects its overall behaviour. Although there are problems when a group is too small,
there are also problems when a group is too big.

Social Loafing - the tendency for individuals to expend less effort when working collectively than when
working individually.
o Easier to occur in large groups than smaller groups - the larger the group, the more unclear the
relationship between an individuals input and groups output, and thus individuals can more easily
become free-riders and coast on the groups efforts without consequences

Status - a prestige grading, position or rank within

Talk more and to the entire team, but still
communicate more often with high-status members
Are less likely to be ignored
Have more influence and more likely to take a
leadership position

a group
Target conversation more towards members with
high status than low status
Are more likely to have their comments ignored

Leadership Positions - who takes control of the group? Leads action?

Team conflict
Peterson and Harvey conflict classification
Source of conflict
Type of team conflict
1. Differences in information,
background, skills
2. Differences in values

Possible resolution
Knowledge is shared, participation is encouraged

3. Differences in interests /
goals / method of attaining

Compromise needed. Team requires more

transparency (more communication with one
another, sharing thoughts)


Leader acts as a mediator to reconcile differences

between members

Task work and Team work

Task work - what the team is doing. To improve, teams can develop a performance strategy deliberate set
of plans for what the team intends to do, including goals, tactics, and alternative courses of action.

High quality performance strategy

Reactive strategy (creating one ad-hoc) Low quality performance strategy
Proactive strategy (forward planning)

Team work - how the members work together. A team contract aims to maximise team cohesiveness.
Task work + Team work = Team effectiveness
Topic 6 - Spot Collection:
Leadership and Conflict Peterson & Harvey (2009)

Conflict is proposed to be beneficial in nature

Key sources of conflict: information, goals and values

Three types of conflict: task-based, relationship-based and process-based

Leader roles in managing conflict should be indirect rather than direct since direct use of power can lead to
negative feelings and disrupt group cohesion

Three effective indirect strategies are offered: structuring the group, directing an inclusive group process,
and managing external boundaries

MGMT1001: Managing Organisations and People

Topic 7: Communication and decision making

Communication - the transfer and understanding of meaning. Managerial communication encompasses both:
o Interpersonal communication communication between two or more people
o Organisational communication patterns, networks and systems of communication in an organisation
Functions of Communication
1. Control formally (eg. Guidelines that employees are required to follow) or informal (eg. Teasing)
2. Motivation communication can clarify tasks and provide feedback, consequently motivating employees to
improve performance
3. Emotional expression communication provides a release for emotions and for fulfilment of social needs.
4. Information communication provides info. to separate departments and facilitates effective group work
Interpersonal Communication - can be verbal, written and non-verbal (including kinesics (body languages),
oculesics (eye contact), haptics (touch), proxemics (distance), paralanguage (tempo, pitch, intonation).
Linear Transmission Model of Interpersonal Communication:
Sender -> Message -> Channel (medium) -> Receiver -> Message
o Noise disturbances that interfere with the transmission, receipt or feedback of a message
o Encoding converting a message into symbols (eg. the English language)
o Decoding retranslating the senders message
Transaction Model:
Transaction Model the model that sees
communication or negotiation of meaning as
two or more parties continuously and
simultaneously responding to their
environment and to each other (through the
sending and receiving of messages).
Extends the Linear transmission model:
1. The participants overlapping fields of
2. Occurrence of simultaneous
communication in both directions
3. Recognises relationships and context
4. Communication channels include all our
5. Extends definition of noise (barriers) by differentiating it into: aural (hearing), visual, physical intrusions,
semantic (meaning of words), psychological (eg. Emotions)
Other Barriers to Effective Interpersonal Communication:
o Filtering the deliberate manipulation of information to make it appear more favourable
o Emotions can hinder correct interpretation of a message (eg. Anger -> bias interpretation of messages)
o Information overload information a person has to work with exceeds their processing capacity
o Language words mean different things to people based on their age, culture and education backgrounds
o National culture eg. Asian countries -> indirect forms of communication and maintaining interpersonal
relationships, Western countries -> to-the-point communication and professional / formalised relationships
o Stereotyping - where people assign an individual to a group base on 1 piece of perceptual information,
and then broad range of other characteristics of the group are then assigned to this individual
o Medium used - face-to-face versus virtual (refer to spot collection)

MGMT1001: Managing Organisations and People

Minimising interpersonal communication barriers:
1. Active listening listening for full meaning without making premature judgements or interpretations.
2. Use feedback asking receivers to restate message in own words to ensure they understood the sender
3. Simplify language structure messages in ways that will make it clear and understandable to receiver.
4. Constrain emotions communicating only when composed and in a rational manner
5. Watch non-verbal cues ensuring actions align with and reinforce the words that go along with them.
Organisational communication - can often be distinguished as formal or informal.
Formal communication - communication that follows the organisations chain of command or is part of the
communication required to do ones job. Either:
o Chain network - communication flows as a chain through organisational levels
o Wheel network - leader serves as the hub through whom all communication passes
Informal communication - communication that is not defined by the organisations structural hierarchy.
o All-channel or Grapevine network - communication flows freely among all members of an
organisation (rumours, eavesdropping, personal conversations during breaks, etc).
Direction of communication flow can be:
o Downward/Upward manager to employees and vice versa
o Lateral communication between employees on the same organisational level
o Diagonal communication that cuts across work areas and organisational levels
8- Step Decision Matrix Method
1. Identify the problem the existence of a problem
2. Identify the decision criteria determining the factors that are relevant in making a decision
3. Allocation of weights to criteria - prioritising factors which are more important for the decision (D1)
4. Identify alternatives developing viable solutions to the problem
5. Analyse alternatives rating these solutions under the criteria and their allocated weightings (D2)
6. Select from alternatives choosing the alternative which scored the highest on the decision criteria
7. Implement chosen alternative putting the decision into action
8. Evaluating decision effectiveness

D1 - Example
D2of Analysing
a Decisionalternatives
and selecting the
Weighting highest scoring one
Making decisions: Rationality, bounded rationality and intuition
Rational decision making - choices that are consistent and value maximising within specified constraints.
o Assumes that the problem is unambiguous, a specific goal is to be attained, all alternatives and
consequences are known and that the final choice will maximises the likelihood of achieving that goal.
o Managerial decision making is assumed to be rational decision making (they make decisions in the best
economic interest of the organisation)
In reality, managerial decision making is rarely perfectly rational. Instead, managers tend to operate under:
Bounded rationality - behaviour that is rational within the parameters of a simplified decision-making process
that is limited (or bounded) by an individuals ability to process information.
o Limited information -> managers satisfice (accept solutions that are satisfactory) than maximise.
o Other factors reducing rationality of managerial decisions include the organisations culture, internal
politics and Escalation of commitment - an increased commitment to a previous decision despite
evidence that it may be wrong (dont want to admit their flawed decision).

MGMT1001: Managing Organisations and People

Intuitive decision making - A subconscious process of making decisions on the basis of experience and
accumulated judgement
o Managers who have had experience with a particular, or even simular, type of problem or situation often
can act quickly with what appears to be limited information.
Types of Problems and Decisions
Structured problems - straightforward, familiar and easily defined problems
Responded with a programmed decision repetitive decision that can be handled by a routine / procedure
Unstructured Problems: new or unusual problems for which information is ambiguous or incomplete
Responded with a non-programmed decision unique decisions that require custom-made solutions
Decision-making Conditions
1. Certainty A situation in which a manager can make accurate decisions because the outcome of every
alternative is known
2. Risk Those conditions in which the decision maker is able to estimate the likelihood of certain outcomes
3. Uncertainty A situation in which a decision maker has neither certainty nor reasonable probability
estimates available
Decision-making styles

High tolerance for ambiguity (multi

High tolerance for ambiguity (multiprocessing/tasking)

Rational thinking

Intuitive thinking

High amount of information and

Focuses on numerous alternatives

assessing numerous alternatives

Creative solutions of the big picture

May divide problem into several parts


Low tolerance for ambiguity (Consistent

Low tolerance for ambiguity (Consistent

in the way information is structured)
in the way information is structured)

Rational thinking

Intuitive thinking

Efficient and logical fast decisions

Receptive to suggestions from others

Minimal information and assessing few

Communicate through meetings

**Refer to decision-making biases and errors Pg 231 if perceived necessary.
SC: Wrong versus bad decisions
Wrong decisions imply that there is a possibility of faults being present in the decision-making process or
that there were unforeseen risks
Bad decisions are simply of a foolish and inappropriate nature where acquired information was not correctly
interpreted or utilised
SC: Why effective communication is not synonymous with agreement

Effective communication is the transmission of ideas and information from one individual to others

An understanding of the meaning of the transmitted message means that effective communication has
taken place, although this does not necessarily imply that the recipients agree or should agree with the
speaker as many often assume
SC: Alge, Wiethoff and Klein (2003) When does the medium matter? Knowledge-building
experiences and opportunities in decision-making teams

A study of three different types of teams: future (anticipate working together in future), ad hoc
(temporary), and past (experienced as a group) teams.

Three variables are used to assess communication effectiveness openness/trust, team member exchange,
and information sharing.

Communication medium is also studied: face to face versus virtual teams

Task interdependence was found to be a key correlation between communication and decision-making

Teams higher in openness/trust and team member exchange were found to have performed better on the
high interdependence negotiation tasks.

MGMT1001: Managing Organisations and People

Although future teams shared more information than past and ad hoc teams, information sharing was found
to not be as important as originally thought.
Shared team experience was found to be a major contributing factor of success.

Topic 8: Organisational Structure

Organisational structure - the formal arrangement of jobs within an organisation, or the relatively stable and
formal network of vertical and horizontal interconnections among jobs that constitute the organisation.
Organisational Design - process of developing and changing an organisations structure, involving decisions
about six key elements:
1. Work Specialisation - the degree to which tasks in are divided into smaller, separate jobs. Each job is
completed by a different person who is specialised in completing their assigned job(s).

Departmentalisation - the degree to which work units are grouped according to functional similarity or
similarity of work flow. Five common forms of departmentalisation or job grouping include:
1. Functional: by functions performed - eg. Manager of Engineering / Accounting / Manufacturing / HR
2. Product: by product line - eg. Heavy Vehicle Division Manager, Car and SUV Division Manager
3. Geographic: by geographical location - eg. Sales Manager of WA / QLD / NSW / Victoria / SA
4. Process: by product or customer flow - eg. Manager of Sawing / Planing / Assembling / Lacquering
5. Customer: by specific and unique customers who have common needs - eg. Manager of Retail /
Wholesale / Government accounts
o Popular trends are the increasing use of customer departmentalisation and cross-functional teams
(groups of individual experts across various specialities, such as researchers + scientists + engineers)


Chain of command - continuous line of authority that extends through the levels of an organisation and
clarifies who reports to whom. Today, chains of command are loosely enforced, as employees are able to
make decisions that previously belonged to management due to improved technology and access to info.


Span of control - number of employees who can be effectively and efficiently supervised by a manager.
Wider span of control = less managers = lower cost, more flexibility, faster decision making but
ineffectiveness beyond some point. Recent trend towards larger span of control, but depends ultimately on
skill of employees (eg. Narrow -> casual fast food staff, wide -> office jobs due to high skill).


Centralisation & Decentralisation - Centralisation is the degree to which decision making is concentrated
at upper levels of the organisation. Decentralisation is the degree to which lower level employees provide
input or actually make decisions. Decentralisation allows modern organisations to be more flexible and
responsive, as lower managers are typically more knowledgeable about organisational operations.


Formalisation - the degree to which jobs within the organisation are standardised and the extent to which
employee behaviour is guided by rules and procedures. Although formalisation is important for consistency
and control, there is less reliance upon strict rules and employee behaviour in contemporary times.

Mechanistic vs. Organic organisations

Mechanistic organisation organisational design
that is rigid and tightly controlled. There is a limited
information network (mostly downward
communication) and little participation in decision
making by lower-level employees.
Organic organisation organisational design that is
highly adaptive and flexible. Jobs may be specialised
but not standardised. There is a wide span of control,
minimal formal rules, and there is a frequent use of
employee teams.
Structural contingency factors:
1. Strategy and structure support each other (ie. a new strategy often requires a new structure)
2. Size and structure - firms change from organic to mechanistic as they grow in size
3. Technology and structure firms adapt their structure to the technology they use.

MGMT1001: Managing Organisations and People

4. Environmental uncertainty and structure dynamic environments encourage organic structures;
mechanistic structures need stable environments.

SC: Effect of Flat and Tall organisation structure Carzo & Yanouzas

Tall organisational structures: Many levels of supervision, narrow span of control

Flat organisational structures: Few levels of supervision, wide span of control

Decisions, resolutions and delegation were more quickly achieved in tall structures than flat structures

Tall structures performed better than flat structures possibly due to chain of command and more
frequent evaluation of decisions as it passed each layer of management

Topic 10: Leadership

Leadership - ability of an individual to influence, motivate, and enable others to contribute towards the
effectiveness and success of an organisation, or the process of influencing a group to achieve goals
Leadership & its Influence

Choice of objectives and strategies to pursue

Motivation of members to achieve their


Organisation and coordination of work


Learning and sharing of new knowledge by


Shared beliefs and values of members

Allocation of resources to achieve objectives

Credibility and trust
Credibility - assessment of a leaders honesty, competence and ability to inspire by his or her followers.
Trust - belief of followers and others in integrity, character, and ability of leader.
o Dimensions of trust: integrity, competence, consistency, loyalty and openness.
o To build trust, leaders should: speak their feelings, practice openness, show consistency, fulfil their
promises, tell the truth, maintain confidences and demonstrate competence.
Early Leadership Theories
Trait Theories - leadership theories that tried to isolate characteristics that differentiated leaders from nonleaders. Later research identified seven traits associated with leadership:
o Job-relevant knowledge: allows them to make informed decisions
o Intelligence: can gather, synthesise and interpret large amounts of information, solve problems and
make correct decisions
o Drive: leaders are ambitious, they show initiative, and are persistent in their activities
o Self-confidence: leaders need to show confidence
o Honesty and integrity: build trustworthy relationships with team members
o Extraversion: energetic, lively, sociable and assertive
o Desire to lead: willingness to take responsibility, lead and influence others
Behavioural Theories
Behavioural Theories: leadership theories that identified behaviours that differentiated effective leaders from
ineffective leaders.
a) Kurt Lewins Three Leadership Styles
1. Laissez-faire (hands off approach) gives the group complete freedom to make decisions and
complete the work in whatever way they saw fit
2. Autocratic tends to centralise authority, make unilateral decisions and limit employee participation
3. Democratic involve employees in decision making, delegate authority and use feedback as an
opportunity for coaching and motivating employee

MGMT1001: Managing Organisations and People

b) The Ohio State Studies: two dimensions of leadership behaviour
1. Initiating structure extent to which a leader defined and structured their role and the roles of group
members in the search for goal attainment (eg. Attempts to organise work, relationships and goals)
2. Consideration extent to which a leader had job relationships characterised by mutual trust and
respect for group members ideas and feelings (Eg. A leader high in consideration would help group
members with personal problems, being friendly and approachable)

University of Michigan Studies: Another two dimensions of leadership behaviour

1. Employee oriented: emphasising personal relationships, taking a personal interest in members
needs. Studies found employee oriented leaders were associated with higher group productivity /
2. Product oriented: emphasising task accomplishment and technical or task aspects of the job.

Contingency Theories
Contingency Theories - theories that go beyond looking at traits and behaviours of leadership, but try to
account for the context or situation in which the leader is attempting to lead. 4 models:
a) Fiedler model - proposes that effective group performance depends upon the proper match between the
leaders style of interaction with followers and the degree to which the situation allows the leader to control
and influence
o Fiedler assumed that a persons leadership style was always the same regardless of the situation
o However, he acknowledges that there was a small group of people who fell in between the two extremes
(task-oriented vs. relationship oriented)
o Least-preferred co-worker questionnaire (LPC) questionnaire that determines whether a leader is
task or relationship oriented.
o Compares the leaders situation with three contingency variables from followers point of view:
1. Leader-member relations: degree of confidence, trust and respect; good or poor.
2. Task structure: degree to which tasks were formalised and procedurised; high or low.
3. Position power: degree of influence the leader had over power-based activities such as hiring,
firing, discipline, promotions etc; strong or weak.
b) Hersey-Blanchard situational theory - focuses on selecting the right leadership
style by examining the contingent variable of followers readiness.
o Readiness - extent to which people have the ability and confidence to
accomplish a specific task
o Theory also uses the leadership dimensions of task and relationship
behaviour, but divides them into four specific leadership styles:
1. Telling - leader defines roles and tells people what to do and how,
when and where to do the various tasks.
2. Selling - leader provides both directive and supportive behaviour
3. Participating - leader and follower share in decision making, the main
role of the leader is facilitating and communicating.
4. Delegating - leader provides little direction or support.
o The final component in Herseys model is the defining of four stages in
readiness, each of which require different leadership styles

R1: leader needs to give clear and specific directions (telling)

R2: leader needs to display high task orientation to compensate for the
followers lack of ability and high relationship orientation (selling)

R3: leader needs a supportive and participative

style (participating)

R4: leader can turn over responsibility for

decisions and implementation

Leader-participation model (time-driven model) - a

contingency model that relates leadership behaviour and
participation in decision making.

MGMT1001: Managing Organisations and People


Argues that leader behaviour must be adjusted to reflect the task structure; whether it is routine,
non-routine, or in between
Model is normative; provides a sequential set of rules (norms) that the leader should follow in
determining the form and amount of follower participation in decision making, as determined by the
different situations.
An example of a current leader-participation model is the time-driven model

d) Path-goal theory - a leadership theory that says it is the leaders job to assist followers and provide the
direction or support needed to ensure that their goals are compatible with the overall organisational goal.
o Four leadership behaviours 1. Directive: gives specific guidance as to how to accomplish tasks
2. Supportive: friendly and shows concern for the needs of followers
3. Participative: consults with group members and uses their suggestions in decision-making
4. Achievement-oriented: sets challenging goals and expects followers to perform at their peak
o Two situational variables: Environment and subordinate characteristics.
Some predictions from path-goal theory:
o Directive leadership is redundant among
subordinates with high perceived ability or
with considerable experience.
o Supportive leadership results in high
employee satisfaction when subordinates are
performing structured tasks.
o Subordinates with an internal locus of control
(like to be in control) will be more satisfied
with a participative style. Contrastingly,
subordinates with an external locus of control
will be more satisfied with a directive style.
Factors that make leadership less critical:
1. Substitutes for leadership experience, training, professional orientation, or the need for independence.
2. Job characteristics routine, unambiguous, and satisfying jobs.
3. Organisation characteristics explicit formalised goals, rigid rules and procedures, or cohesive work
SC: The validity of consideration and initiating structure in leadership research Judge et al

Both consideration and initiating structure will be positively related to follower satisfaction, leader
performance or effectiveness

Compared with Initiating Structure, consideration will be more strongly related to follower satisfaction,
where initiating structure will be more strongly related to leader performance.

Both dimensions of leadership behaviour seem to still be valid.

Structuring leaders might result in greater team efficacy and performance and considerate leaders
might produce greater team cohesiveness.

MGMT1001: Managing Organisations and People

Topic 11: Power and Conflict

Power - the capacity to produce intended and foreseen effects on others, where the greater an individuals
dependence on another, the greater the power the other person has over the individual.
Influence - the process of altering the attitudes and behaviours of others, using sources of power.
Different Types of Power
1. Legitimate power power associated with ones position in an organisation
2. Coercive power power from capacity to punish or control (suspension/demotion)
3. Reward power power to give positive benefits or rewards (monetary value/performance appraisals)
4. Expert power is influence that is based on expertise or knowledge.
5. Referent power power that rises because of a persons desirable resources or personal traits.
[Expert power + legitimate power + persuasiveness = compliance]
Common Influence Tactics

Rational appeal presenting logical arguments and factual evidence to demonstrate rationality of request

Ingratiation using flattery, praise or friendly behaviour prior to making a request

Assertiveness - demonstrating passion for request

Exchange rewarding the targets with benefits or favours in exchange for their support

Pressure using warnings, repeated demands and threats

Blocking rejecting a person from activities or information until they adhere to your objectives or plan

Upward appeal asking people from higher levels of management to back up your ideas as support

Personal appeal asking for compliance based on friendship and loyalty

Coalition enlisting the aid of other people to persuade the target, or using the support of others as a
reason for the target to agree.
Credibility - is the objectively determined truthfulness, follow-through, and accuracy of a person.
o A person with high credibility is consistently both honest and accurate in his/her communications.
People with high credibility are perceived to have more power. Vice versa.
o 4 factors affecting credibility: Rank, Goodwill, Expertise, Common ground
Conflict - process that occurs when one party perceives that its interests are being opposed or negatively
affected by another. Team conflict consists of:

Task-based conflict over content and goals of the work


Relationship conflict over interpersonal relationships

Negative outcomes

Process conflict over how the work gets done

Positive outcomes
Advantages / Positive Outcomes
Stimulates interest and curiosity
Promotes group identity and cohesion
Encourages dialogue
Provide opportunities for creative problem solving
Causes of Conflict
Individual Differences
Differences in personality and temperament
Gender, generational and cultural differences
Power differences
Lack of effective communication skills
Different perspectives
Personal stress outside of work (eg. Family problems)

Disadvantages / Negative Outcomes

Provokes anxiety, anger and stress
Hurts relationships, communication and group cohesion
Provoke violence (verbal, psychological and physical)
Lack of support, poor solutions

Organisational Issues
Written rules conflict with social norms
Weak system for conflict resolution
Differences in policy, procedure and practices
Outside Influences
Wider social, economic and political environment

MGMT1001: Managing Organisations and People

Organisational Situations That Can Cause Conflict

Employees are withheld information about structural or policy changes

Workplace culture that encourages bullying, blame, harassment or rivalry

Competition for promotion and recognition

Unclear grievance procedures

Negative Impacts of Workplace Conflict
Overt: staff turnover, workplace violence, legal costs
Covert: sabotage, theft and damage, absenteeism
Wasted time, bad decisions, decreased motivation
The Conflict Process

Possible response to conflict: The fight or flight theory

highlights that an individual will either confront or avoid the conflict situation.
Dispute resolution
1. Negotiation a discussion intended to produce a mutually acceptable solution to a complex transaction,
and it is a optional process both parties engage in.
2. Mediation confidential discussion of issues through the objective intervention a neutral third party
3. Arbitration an adversarial process involving the hearing and determining of a dispute by a person(s)
chosen or agreed to by both parties, and producing a legally binding decision
4. Litigation using legal proceedings to settle a conflict
Role of Mediators

Provide ideas and suggestions or even formal proposals for settlement

Help the conflicting parties negotiate productively and orderly

Persuade them to compromise and settle for an acceptable solution

When should a manager mediate

Intense emotions are prolonging conflict

When the poor communication is beyond the ability of those involved to fix it

Misperceptions or stereotypes inhibit productive interactions

Repeated negative behaviours create barriers (name-calling, blaming others, swearing)

Interests are perceived incompatible

When SHOULDNT a manager mediate

When what you need to do is to establish innocence or guilt (or right or wrong)

When you need to discipline or punish

If you think the conflict is caused by personal problems

SC: Power and Politics Robbins et al

Expert and referent are considered to be personal power

When you possess anything that others require but that you alone control, you make them dependent
on you and, there, you gain power over them.

Dependency is increased when the resource you control is important, scarce and non-substitutable

MGMT1001: Managing Organisations and People

Individuals try to increase their own power, but if that fails, then coalitions are formed as the
Political behaviour: activities that are not required as part of ones formal role in organisation, but that
influence the distribution of advantages and disadvantages within the organisation. This can be
distinguished as either legitimate or illegitimate behaviour.
Legitimate political behaviour: Complaining to supervisor, developing connections or contacts outside
Illegitimate political behaviour: sabotage, employees simultaneously calling in sick.