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Reference Text: “Essentials of Management – a

global perspective” Wiehrich & Koontz (7 Edn; Tata Mcgraw Hill)


th

Course Facilitator: Bijoy S Guha


About the facilitator…
► Joined Philips India as a Management Trainee (1969)
► After O-J-T of 18 months, became a Section In-charge in a factory
► 18 months later, become Shop In-charge
► 24 months later, took over as I/C Engineering & Customer Support
► 18 months later, Project 2nd I/C for new Factory
► 18 months later, Manager Quality Control
► 42months later, Manager Innovation Group
► 42 months later seconded to Philips Germany
► 24 months later returned as Factory Manager, Luminaire Centre/Calcutta
► 36 months later took over as Plant Manager, Kalwa Lamp Factories/
Thane the largest Philips Production complex – first Indian Manager
► 54 months later took over as SBU head- Professional Lighting/India
► 36 months later took over as Head, Corporate Purchasing/India for 12
months;
► Started (1998) up a joint-venture between Tata AutoComp & Yazaki
Corp/Japan for Auto EDCS (C.E.O, Tata-Yazaki) and steered it for 60
months;
► Retired from Tata-Yazaki to start a second career as a Teacher. (2003)
► Lectures duration is 75 minutes gross i.e. 65~70
minutes net:
 Please be on time so as to maximize utilization; late
coming disturbs the lecture flow – apart from it being a
serious breach of management etiquette.
 Let us practice to be ‘Managers’!
► “Lecturing” will be for max. 60 minutes:
 Only one person talks at a time – lecturer or
questioner/commenter/answerer!
 The last 10 minutes are set aside for summarization/
discussion – these being recorded for Internal Marks for
a continuous evaluation basis.
 Absentees/”time-passers”: Bad Luck!!
► At the end of section (4/5 lectures), discussion topics
will be given in advance as home assignment, to be
prepared for a class discussion:
 Individuals will be selected at random to answer/explain
questions - these being recorded for Internal Marks , so
be keen to participate!
 You need to use all acquired knowledge to be a Manager.
Management: Definitions, Roles &
Skills
 Get jobs done by others:
• Motivate/Lead/Direct/Coach/Guide etc.
• Sharing in a group to achieve objective
• Empower
 Structured approach to get goal:
• 5 W’s & 1H
e t’s
• Rules, regulations, processes etc. t ! L &
 Making Profits & growing r ea ore
G pl nd
• Meeting Budgets and Targets Ex xpa
E
• Increasing firm’s value
• Resource & cost controls
 Innovate & compete for Business
Planning  Organizing  Staffing  Directing for
achieving results
…
Management: Definitions
► “Management is the process of designing and
maintaining an environment in which individuals,
working together in groups, efficiently accomplish
selected aim(s) viz. to create a surplus(s).” ….
Weihrich & Koontz

► “Management is not an absolute; rather it is socially


and culturally determined. Across all cultures and in
all societies, people coming together to perform
certain collective acts encounter common problems
having to do with establishing direction, coordination
and motivation. Culture affects how these problems
are perceived and resolved.” …The Art of Japanese
Management by R. Pascale & A. Athos .
Management: Definition …ctd.
♦ Applies to and through any kind of organization:
collective, cohesive and consistent human effort towards
accomplishing a common objective.
♦ Applies to people at all levels
♦ Concerned with “Doing the right things right at all times”:
1. Effectiveness: Achievement of objectives (Right Things);
2. Efficiency: Achieving those objectives with least amount/
sacrifice of resources (Things Right);
3. Continuous Improvement: in creating increasing ‘surplus’
(at all times);
– “Improve or die” = survival of the fittest
– “what gets measured, gets managed and improved” e.g.
Productivity= Output / Input ratio
Management: Definition …ctd.
Doing ‘right things right’ Economic
is affected by forces
of environment:
Globalization Political

ORGANIZATION

Technological Regulatory

For creating a ‘surplus’


Societal
Management: The Art & Science
► Evolution of “Management”- structure/styles/controls:
 From agriculture  manufacturing  services
► Industrial Revolution & Factory System
► Information Technology & societal maturity

 Local  National  Multi/Trans National  Global


► Breaking-down of barriers: “Global Village”
► From “inside-out” to “outside-in”
► Impact of speed: “24x7” mindset

► Contribution of Dominant Personalities (20th Century):


 F.W.Taylor & the “scientists” (20’s)
 Fayol/Peter Drucker & the rationalists (40’s)
 Demming/Juran/Figenbaum & the quality crusaders (60’s)
 Hofsteed and the culture club (70’s)
 Tom Peters & the ‘excellence (soft is hard )’ brigade (80’s)
 Michael Porter & the ‘value’ drivers (80’s)
 Prahalad/Reis & the ‘focus’ specialists (90’s)
 Hammer & the ‘change and reengineer’ dynamos (00’s)
Management: The Art & Science …c’td
► Management – Approach, Roles & Skills:
 Fredrick Taylor’s path-breaking “scientific approach”
 Henri Fayol’s classical definition of ‘functions’, and
process:
► Plan  Organize  Lead(Command&Coordinate)  Control
 Mintzberg’s map of managerial ‘roles’:
► Interpersonal + Informational + Decisional

 Katz’s interpretation of ‘skills’:


► Technical / Human / Conceptual

 Human – ‘get things done through others’:


► Leadership: “The ability to influence a group towards
achievement of goals” (works of Fielder, Blanchard et al)
► Motivation: “The willingness to exert high level of effort towards
goals” (works of Maslow, Herzberg, Mayo et al)
► Communication:”The transference and understanding of
meaning”
Management: The Art & Science …ctd
Managerial Roles (Mintzberg)
Role Description Examples
Interpersonal
•Figurehead symbolic head; required to show Ceremonial,
‘face’ in social & legal conditions. Civic etc.
•Leader Motivating & directing subordinates project plan
•Liaison Networking outside for information Industry -
& favours group meets
Informational
•Monitor nerve centre and interpretator Reports
•Disseminator networking within the organization Meetings etc.
•Spokesperson Transmit intent to outsiders; expert Board Meets

Decisional
•Entrepreneur Opportunity finding& reacting Strategy Plan
•Trouble shooter Handling unexpected disturbance Contingency
•Resource allocator Initiating/approving changes Budgeting
•Negotiator Getting best deal for Organization Contracts
Management: The Art & Science …ctd
Managerial Skills(Katz & others)

► Technical Skills: Skills Needed


Application of specialized
knowledge or expertise
acquired though formal
training & its use. Board

Con
► Human Skills:

cept
Ability to work with people,
Exec.

HUM
understand and motivate

ual
groups & individuals.

AN
► Conceptual Skills: Mgr.

Tec
Mental ability to recognize,

hnic
analyze, diagnose and think
Supr.

al
through complex situations.
Management: The Art & Science …ctd
“Different Doors” to Management
Socio-technical Cooperative Social Systems
Theory

Applied Systems Group/Interpersonal


Theory Behaviour

7-S Framework
Reengineering

Rational choice/ Total Quality Management


Decision Theory

Mathematical Modeling Contingency/Situational Theory


Evolution of Management
► Management, as a concept as we know it today, is
associated with ‘mass consumption’ – leading to
production of ‘standardized’ goods in large volumes;
► Prior to the “Industrial Revolution”, man made
devices were in use in sizeable numbers – but often
one of a kind and crafted rather than manufactured
e.g watches and clocks. However, many of the
supportive processes can be traced to early roots:
logistics, scheduling e.g. boat building; automation
(use of m/c’s) e.g. printing;
► The advent of the management as a science can
therefore be traced to late 18th /early 19th century.
Evolution of Management …ctd
 Elements of modern management, with a focus on ‘man’ i.e.
HR concepts first began to appear in the West around the same
time:
 as a reaction to the harsh behaviour of autocratic businessmen
like Henry Ford. It evolved through ‘(labour) Welfare’, ‘Industrial
Relations’, ‘Personnel Management’ to its current form. (Marxism
was becoming a recognizable philosophy in Europe!);
 as a need to utilize human resource better due the adverse
supply-demand situation. Employment in the ‘industry’ had
overtaken agricultural labour. This was aggravated in Europe, by
WW I.
In the 20’s, Rationalization & Efficiency were the buzz-
words (Taylor, Fayol etc.), calling for a scientific approach to
selection and work allocation – the corner-stones of modern
production management:
 Standardization of parts and work elements resulted in ability
to make work repetitive for individuals (‘do-ers’)
Evolution of Management …ctd
 End of WW II brought in an era of un-sated demand, resulting in a
boom for production activity – more of everything was required.
Quantity backed by efficiency were the guiding principles: an era of
‘Optimization’ driven by suppliers’ choice rather than customers’
wants.
 However, some people – notably Japan – restarted their devastated
economy with different orientation: Quality. The key was true
economy of all resources with the customer as the focal point – since
they did not have the luxury of a surplus funded, hungry market.
 By the late 60’s, demand tended to slow down and the growing
competition gave customers greater choice – ‘quality’ as an important
buying criterion emerged.
 OPEC crisis in mid-70’s turned the world around on its head! Energy
the prime mover of industrial world became very expensive. The
demand boom faded – with customers demanding quality and lower
prices and better service.
Evolution of Management …ctd
► First inventions of ‘mass production’ were linked to textile
manufacturing (Spinning Jenny/ Hargreaves) – which combined with
use of water power (Arkwright), made a powerful social impact in the
late 1700s; Watt’s steam engine completely revolutionized
harnessing of mechanical power for production (first to use were
cotton mills) and transport;
► Poor Reliability of early machines led to the creation of machine
tools – the Lathe (Maudslay) in 1790, with which to turnout parts to
closer tolerances and fit. This led to creation of ‘interchangeable
parts’ – and the first uses were in manufacture of muskets and
pistols!
► These were the triggers for ‘mass production’: mechanical power &
interchangeable parts; leading to production moving away from
homes and craft-shops to work-shops/factories.
► By 1900 (in the West), nearly everything was being produced by the
factory system.
Evolution of Management …ctd
Division of Labour: under this principle, work could be
organized/grouped into a set of specific, related tasks – which were
repetitive in nature. Man could be trained to perform this set of tasks
only, so that efficiency of task performance was maximized.
 When extended throughout the organization, this took the form
of ‘Specialization’ - with the organization benefiting from the
maximum use of specialist skills. Both economically and under
supply-shortage conditions, this worked well.
 Much of this was an extension of trade/craft skill-groups
organization (guilds) which was the hallmark of pre-industrial
‘production’.
Till the end of the 30’s, these fundamentals were refined,
polished(e.g. Organization structures) and extended ( e.g. work-
measurements) in a relentless focus on efficiency.
With WW II, a further need for reliability gave birth to the
principles of sampling & inspection – statistical methods were
introduced to regulate quality of output.
Evolution of Management …ctd
 This brought to the forefront the philosophy and practice of
Total Quality as the guiding force for manufacturing – later to
spread into management of operations and enterprises:
 Central to this theme is the dominance of the Customer;
Customers were any person or person receiving goods and/or
services – internal or external;
 Quality was redefined as ‘fitness for use’ – elevated from the
narrow confines of conformance to specifications;
 Continuous improvement was the key to continuity and
success against demands of customer and competition;
importantly, everybody could contribute – quality is every- body’s
business;
Particularly, for production, quality means best products at least
cost – reduced waste of all resources, spawning a host of
(linked) programs to conserve time, money & effort:
 Just – in – Time, SMED/OTED;
 Lean manufacturing;
 Q-circles/Kaizen/6-sigma;
 5-S, TPM, DoE;
Management: A Systems
Approach
Systems approach to Management
ENVIRONMENT

Transformation
input output
process

Feedback (Reenergizing the system)

System Boundary

Organization as a System receives Input, transforms it


through a Process for Output and operates in an
Environment (economic, regulatory and other forces)
Systems approach to Management …ctd.

Systems Concepts
♦ System Boundaries and Subsystems
> Systems often consist of numerous
subsystems.
> Each subsystem has elements, interactions
with other subsystems, and objectives.
> Subsystems perform specialized tasks for
the overall system.

Sub-System 1 Sub-System 2 Sub-System 3


e.g. Purchasing e.g. Production e.g. Sales
Systems approach to Management …ctd.
Outputs and Inputs
♦ Systems produce Outputs from Inputs – i.e. the
Inputs are converted to Outputs.
♦ Outputs of one subsystem become inputs to
another subsystem.
♦ Outputs must adhere to standards to be useful
or acceptable to the next subsystem.
System Environment
♦ Environment consists of people, organizations
and other systems that supply data to or that
receive data from the system
♦ Managers at different levels perceive
‘Environment” differently
Systems approach to Management …ctd.
“Inputs”: 5 Ms of Management
 Inputs or the resources managers deal with are:
 Man: human resources, both inside and connected with an
organization;
 Materials: goods (hard & software, processed or semi-
finished) and services required to create the sellable end
product;
 Machines: technology and expertise deployed towards the
transformation process;
 Methods: systems, procedures and processes seamlessly
put together for the transformation;
 Measurement: score-keeping and in-process monitoring
continuously with due feedback to keep on-course on time.
 “Money” is required for generating all theses Ms –
managers need to acquire, deploy, generate and
distribute money as a primary need for business!
Systems approach to Management …ctd.
“Output”: for “Stake-holders” in Business
“Stake”: Something wagered or risked; an interest in an
enterprise with contingent gain or loss …Webster ‘s dictionary
“Holders” who have stake in Business:
 Shareholders: are the owners. They have put in their money in
the enterprise, expecting better returns from it than from other
ventures;
 Society: includes the State, provincial and local governments
for the improvement of ‘quality of life’ of its citizens;
 Suppliers: continuity of their enterprise depends on the
success of the customer enterprise;
 Customers: require the goods and services provided by the
enterprise, better than those from its competitors. The
enterprise is, in turn, a supplier to its customers;
 Employees: livelihood depends on the health, progress and
success of the employing enterprise;
Systems approach to Management …ctd.
Output for “Stake-holders” in Business …ctd.
► There is a “freedom of choice” (for association)
between each of these stake-holders and the
enterprise in the longer term:
 But they sink or swim together in the shorter term
 Length of term definition varies with individuals!
► They have varied interests in terms of specific
outcomes, e.g. Society in Ethics & Environment, and
often prioritize differently – even divergently, e.g.
Shareholder on higher Profit & Employees on higher Wages.
► Managers need to balance different interests,
harmonizing the Business Processes towards
sustainability i.e. shareholders & customer
satisfaction.
Systems approach to Management …ctd.
Transformation/Business process
A business process or business method is a collection of related,
structured and sequenced activities or tasks that produce a
specific service or product (serve a particular goal) for a
particular customer or customers. It often can be visualized with
a flowchart (of activities) repeated over time for same outcome.
There are three types of business processes:
> Management processes, that govern the operation of a
system. Typical management processes are "
Corporate Governance" & "Strategic Management".
> Operational processes: constitute the core business and
create the primary value stream. Typical operational processes
are Purchasing, Manufacturing, Marketing, and Sales.
> Supporting processes, which support the core processes.
E.g. Accounting, Recruitment, Technical support.
Systems approach to Management …ctd.
Management as a system transforms inputs as a
whole & in each type of Business Process by:
Planning (What, where & when to do?)
+ Organizing (How to do?)
+ Staffing (who to do?)
+ Leading (same direction?)
+ Controlling (OK?)
to accomplish certain pre-determined, (as
derived from stakeholder needs) goals &
objectives i.e. outcomes
Systems approach to Management …ctd.
Man, Machine Stakeholders Product/Services,
Material, Shareholders; Profits, Customer &
Methods, Society; Customers; Societal satisfaction,
Measurement Employees; Suppliers Other Long-term Goals

Mgt

Controlling
Organizing
Planning

Staffing

Leading
Outputs
Inputs
(External
Core (Goal
To
Oriented)
Orgnzn.)
Sup

Stake holder Feedback (reenergizing the system)

EXTERNAL ENVIRONMENT(Opportunities,
Constraints)
Management Process
First Step: Planning
► Planninginvolves selecting
objectives or goals and defining the
course of actions to achieve them:
 Provides the road-map to take us from
where we are to where we want to go;
 Is a rational approach to achieving pre-
selected objectives - based on
innovation, knowledge and purpose;
 Decision making in choosing the best
from alternative courses of action is
integral to planning;
Planning What kind of
requires asking Quo Vadis? ? resources
& answering: needed?

Seeing & living the future – but What kind of people


not fortune telling! ? & org. structure
• “Dreams” backed by clear actions to to have?
achieve them (Ws & Hs)
• People must know what they are How & Who to lead
expected to accomplish, to make the ? them to reach
group effort effective. planned goals?
• without a plan any road leads you to
nowhere! How & when to
• Finally, the ‘plan’ serves as the basis ? control in case of
Deviation from plan?
for control.
Plans as foundation of Management
…ctd
Directional;
Strategic
Operational
;
Tactical
Top level
Managers

Planning

Controlling
Organizing

Leading
Middle level
Managers

Supervisors

Short-term; Time spent in Managerial functions


Routine at different levels of organization
 Mission / Purpose
• The basic function or ‘reason for existence’
of an enterprise/ organization

Case in point: Mission of Indira


Institute
“To train our students to become the best
business minds and entrepreneurs today,
who will lead their companies successfully
into the future tomorrow , locally, nationally
and globally.”
 Objectives/ Goals
• The end towards which activity of an
organization is aimed, e.g.
 For a Business enterprise – profit, surplus creation;
For a Management Institute: The number of
employable/useful trainees;
 Strategies
• Determination of the long term objectives and
adoption of a course of action
• Gives a frame work for linked action-plans,
communicated systematically to guide
thinking and actions.
 Business Policies
• “Plans” that are general directional statements (or
understandings) that guide/help in decision making:
 Repeat decisions taken ‘reflexively’;
Delegation of tasks without loss of control.
• Some discretion is permissible depending on
circumstances thus encouraging initiative within
limits and situational adjustments;
• Issues with “Policy”
Seldom documented in writing
 Subject to interpretations
 Procedures
• Plans that are chronological sequences of
required actions: task-oriented in nature;
• Cuts across department boundaries (sub-
systems) in an organization: e.g. customer
complaint handling procedure;
• Procedures and policies are inter related:
e.g. authorization for paid leave
 Policy governs quota, responsible authority etc.
Procedure governs application, grant and record-
keeping.
Rules
• Specific actions or non-actions allowing no
discretion
Caution: rules (and procedures too) limit initiative!
Programs
• Action plans (mainly non-routine or for
changed activities) including, task
assignments, steps to be taken, resources to
be deployed etc. to achieve a (new/renewed)
goal;
 Primary program may require supporting programs,
spreading across the enterprise;
Perfect coordination between supporting & primary
programs essential to avoid delays, unnecessary
costs and expected roll-out.
• Programs can be a complex of (sub)goals,
policies, rules and other elements necessary
for the course of action e.g. obtaining ISO
certification.
Budgets
• A statement of expected results expressed
in “Numerical terms” e.g. financial
operating budget = “profit plan”;
• Budgets enforce precision in thinking:
Making a budget is ‘planning’ by itself;
Encourages innovation – a “different” way to
work
• Budgets serve for ‘Control’:
Enforces discipline in execution of plans;
Instills cost consciousness;
Makes people (constantly) plan!
 By Planning Period:
• Short range plans e.g. material procurement
plan in a factory
• Long range plans e.g. product development
plan, plant/production facility installation;
“Urgent” drives out the “Important” – mismatch
between short & long term plans!
• Planning horizon must allow for actions to run
their course – requiring ‘commitments’:
Thus “decisions today” are key to good plans;
Long-term plans reap benefits of good short-term
plans.
Steps in Planning
Planning premises
Internal & external Decision Making,
Environment/conditions Key Success
Factors
Being aware of Setting Goals/ Comparing &
Identifying
challenges Objectives choosing an
alternatives
alternative
Market, Customer’s
What to accomplish
wants, Competition,
& when
Own strengths
& weakness

Formulating
Budgeting Supporting
(Numberizing Plans) plans
e.g., Sales budget, Operational e.g., plan to buy material,
Expense budget, Capital expenditure recruit & train employees,
Mission Board of
Directors
Overall
Objectives & CEO
Key result areas.
Division Division
Head Head
Divisional objectives Product X Product Y

Sales & Mktg


Production Dept
Departmental objectives Dept

Individual objectives Sales Manager A Sales Manager B

Objectives set end results – they need to be supported by a hierarchy of


sub-objectives, duly networked through the organization to avoid discord and
wasted effort.
 Management must ensure that the components of the network fit each
other. This is the “Cascade Principle”.
 Are areas in which performance is essential for
the success of an enterprise
 Examples of ‘generic KRA’s:
• Market share
• Return on Investment (ROI)
• Service level
• Customer satisfaction
 Peter Drucker recommends: Market standing,
innovation, productivity, physical & financial
resource, profitability, managerial performance
& development, worker performance & attitude
and public responsibility.
Planning premises

Comparing &
Setting Goals/ Identifying
choosing an
Objectives alternatives
alternative
What to accomplish Decision
& when making

Strategic Planning/formulating Process

Strategy = determination of the purpose / the basic long-ter


objectives; the adoption of courses of action and
allocation of resources required to achieve the aim
Stakeholder
Wishes &
Shareholder Current
demands External
situation
External
Opportunity
& Threat
Management Enterprise Forecast
Orientation Profile External
situation Key success factors &
Alternative Strategies
Purpose &
Major objectives
of enterprise Current Internal
resource Strengths &
situation Weakness

Strategic
choice
The Strategic Planning/formulating Process
Planning Premises & Strategies
…ctd.
Porter’s Five Forces : an
Model for analysis of the
External environment.
Forecasting Techniques:
 Extrapolation
• Time-series  statistically project demand
analyzing historical data;
• Causal method  seek co-relation on cause and
effect basis between two (or more) variables to
quantify demand;
 Statistical modeling • Un-quantifiable
 Brainstorming factors e.g. national
pride
 Expert opinion • Quality of
 Scenario writing: assumptions
• Coping with uncertainties • Excessive data
required (often
 Sensitivity analysis & “What if” scenarios (trust
instinct!); unobtainable) to make
 Planning for contingencies – with accurate forecasts
defined cut-in
milestones. • Environmental
changes: Technology,
Customer Competitive
Advantage
Relationship
1. Cost Leadership:
To continually work reducing
the cost prices of products.
Company Supplier Q-C-D has very high
priority.

B’marking Partnering 2. Differentiation:


To constantly offer
innovative
Competitor Supplier and unique solutions.
Supplier
technology & quality has
Ultimate competitive position: focus.
- position w.r.t major Customers
- K.S.Fs of Competitors 3. Customization:
- leveraging of suppliers To offer required services in
the
The SWOT analysis & Strategy
formulation
Internal Strengths Weaknesses
Factors e.g. strengths e.g. areas not
in R&D, showing up in
knowledge, ‘strengths’ box
External finance etc.
Opportunitie S/O Strategy W/O Strategy
Factors
s (maxi-maxi) (mini-maxi)
e.g. economic using strengths overcoming
upturns, to leverage weakness to
opportunities leverage
political/
Threats social S/T Strategy W/T Strategy
opportunity
changes etc.
e.g. (maxi-mini) (mini-mini)
competition, using strengths take cover for
new entrants, to avoid or both
reduction of overcome weaknesses &
threats threats
Budgeting Formulating Comparing &
( Numberizing Plans) Supporting choosing an
plans alternative
Say, Sales budget Say, plan to buy Decisio
Operational Expense Equipment, recruit & train n
budget, Employees, develop product making
Capital expenditure etc
budget
Deployment (MBO etc.)

Decision Making = is the core of the planning process; a plan


does not come into being unless a ‘decision’ i.e. certain
commitments of resources, managerial time and money
are made and risks are taken.
Caution: A “Plan” is not intentions and should not suffer from
“Analysis Paralysis”.
Planning Premises & Strategies …
ctd.
Bottom-up
Top-down Mission Response Board of
Directors
Approach Overall
Objectives & CEO
Key result areas.
Division Division
Head Head
Divisional objectives Product X Product Y

Sales & Mktg


Production Dept
Departmental objectives Dept

Individual objectives Sales Manager A Sales Manager B

This is the “Cascade Principle”, discussed earlier.

While setting Objectives, ideally, Top Management should get


information / ‘buy-in’ from lower levels to set tough but
achievable goals for a good result.
 A comprehensive managerial system that integrates many
key managerial activities in a systematic manner and that is
consciously directed towards the effective and efficient
achievement of organizations’ and individual objectives:
• Set-out by Peter Drucker in 1954; integrated to personal
performance appraisal by Douglas McGregor in 1957;
• Has formed the basis for many theories on motivation;
• Has been criticized for introducing a short-term focus and
undesirable (individualistic) behaviour;
• Currently viewed as a ‘way of managing’ (deployment cascade) –
not a specific tool.
 Decision making is a ‘rational choice’ process,
bounded by:
• Limitations: time, information and ‘logic’;
• Behaviour: Risk averseness and biases.
A key step in the process is to identify those limiting
factors, ‘road-blocks’ to each effective (‘right thing’)
alternative – then finding a ‘solution’ with least
sacrifice of resources (‘thing right’):
• Factors: quantitative, qualitative/intangible;
• Nature: structured/unstructured
• Finding solutions:
marginal analyses – benefits with incremental inputs;
cost-effectiveness – assessment of benefits over costs;
Intuitive/judgmental – making ‘connections’ that are not obvious
Decision Making…ctd.
Nature of decision making in Organizations
Non Programmed decisions: used for unstructured, novel and ill-
defined situations of non-recurring nature
Programmed decision: is applied to structured or routine problems;
very often recurring maybe under varying circumstances

Top level
Managers Non-
programmed
Middle level Decisions
Managers
Programmed
Decisions
Supervisors
“Experience”: good teacher and useful when
routine/repeat situations arise under similar
circumstances. Without due analysis of the
conditions, mistakes tend to repeat or a poor
fit results.
How to select
Amongst the “Research & analysis”: the approach is in at firs
Alternatives ? understanding the problem (‘half the solution’!)
then finding relations between various factors
which hinder or foster goal attainment. This is a
structured, analytical approach quantitative or
otherwise.
“Experimentation”: arguably, the best technique
to use, particularly when either experience or
rationale is lacking/limited. However is expensiv
and ‘success/failures’ are magnified, results are
subject to interpretational errors.
 Decision making takes place under varying
degrees of uncertain conditions and risks.
Techniques used to aid the process are:
• Risk analysis: every decision is based on
interactions amongst different factors/variables –
each of which have their own probabilities (towards
‘success’). Analysis of these probabilities yield a risk
profile for each alternative path. In the absence of
defined probabilities, estimates can be used.
• Decision trees: the outcome (measure pre-decided
e.g. cost or time) of every step in the decision is
charted and a course selected on the most
favourable outcome. Very much like making a trip,
navigating by using a road-map (refer example in W &
K, “Management – a global perspective/10th edn. Pg. 209)
• Flow Charts: as a process-guide to taking a decision and
helps as a check-list of key variables, the sequence in
which they fall and the interrelations. Key to making a
choice or re-examining the path taken are also indicated
as risk-reduction devices.
(refer example in W & K, “Management – a global perspective/10th
edn. Figure 8-5)
• Decision Support Systems: a wide variety of
(proprietary) computer based programs are available for
managers to use their time more effectively for decision
making of semi-structured tasks – by providing
alternative evaluations. They focus on the process of
decision making, taking data provide by the
management information systems in enterprises.
Principles of
Management 4
Management Process:
Organizing for results
 Organizing may be broadly defined as:
1. The identification and classification of
required activities;
2. The grouping of those activities towards
attaining their set objectives;
3. The assignment of those groupings to a
responsible manager, duly empowered;
4. The provision for coordination among, within
and across the groups in the organization.
 Organization structures are designed to:
• Clarify tasks & responsibilities,
• Remove obstacles,
• Furnish decision making & communication
network
• Support attainment of enterprise objectives
The Business Organization Model: “Value
Chain” (Porter,1985)
Support Activities

Firm Infrastructure

Human Resource Management

M
ar
gi
Technology Development

n
Procurement

Inbound OutboundMarketing

n
Operations Service

gi
Logistics Logistics & Sales

ar
M
Primary Activities
margin reflects the reward for the risks run by the company.
All activities together need to generate ‘value’ greater
The Value Chain: “Primary Activities”
 Inbound Logistics: relate to receiving, storing
and disseminating inputs;

 Operations: associated with transformation of


inputs into final product form;

 Outbound Logistics: relate to collecting,


storing and physically distributing the
products to buyers;

 Marketing & Sales: relate to advertising,


Promotion, sales, distribution-channel
selection & management and Pricing;

 Service: associated with enhancement or


The Value Chain: “Support Activities”
 Procurement: relates to the function of
purchasing inputs used across the firm’s
primary and support activities;

 Technology Development: relates to know-how,


processes & procedures, ‘technology’
embodied in the product design and delivery.
Most activities have their own sub-set of
technology;

 Human Resource Management: directed at


recruiting, training, developing and
compensating all personnel;
 Most practicing mangers would translate this
“value chain” to imply an organization as:
e.g. a Football
team
“ a formalized, intentional structure of roles and
positions”
• Thus ‘formal organization’ implies the intentional
structure of roles in an enterprise.
 However, in an enterprise ‘informal organization’
e.g.
will form, not necessarily bad and is: “Senior”
“ a network of personal and social relations notPlayers
established or required by formal organizations but
arising spontaneously as people associate with each
other”.
The building block of an organizat
is the Department: a group charg
Hierarchical levels with independent task & responsib
(6)
*
Manuf.

G Fy *

Car ProdC C
Sales Gr1
C

Assembly *
NCR
#
Test *
G’oan
Informal Organization
Span of Management
*
Office Golf team
(8)
C
Car Pool to/from work
 Grouping activities & people into departments
makes it conceptually possible to expand
organizations to an infinite degree.
 Different patterns have been successfully used
to group activities:
• By simple nos. is a simple method – works well for
the lowest levels where work is routine, uniform and
non-specialized; time-grouping is an extension of
this method where shift-working is required;
• By enterprise functions – embodies what enterprises
typically do e.g. Production, Engineering, Sales etc.
This method, defined by F.W.Taylor, is arguably the
most prevalent method still used.
• By territory or geography – is very common when the
geographical spread is wide. It was a device introduced to
speed up management in similar units for easy and swift
communication e.g. Sales: N/E/W/S; Fire Brigade: Camp,
Hinjewadi, Aundh etc.
• By Customer/Account orientation – reflecting the primary
interest in nature of markets/business/customer e.g. Banks:
Institutional banking, Small Savings etc.
• By Process groups – encountered primarily in specialized/
manufacturing operations where processes are vital e.g.
Advertising: Copy-writing, Creative etc.; Manufacturing: Steel
Melting, Wire-drawing etc.
• By Product Lines – has evolved with enterprises becoming
“multi-line” with ‘function’ needing adaptation/integration to
suit specific products e.g. Tata Motors: Passenger Vehicles /
Commercial vehicles
• By ‘grid’ control – in essence combining the
‘functional’ and the ‘product-line’ patterns to best
effect. Functional excellence is not subjugated to
Operational ease. In ‘projects’,
this serves to bring together the diversity of skills
required into one team.
• The Strategic Business Unit: companies today are
organizing themselves as ‘companies within a
company’ to allow for maximum flexibility and
freedom of operations, especially when the
products/businesses are unconnected e.g. General
Electric. Generally, SBU’s have:
 Their own Missions, Goals and Strategies;
Distinct and definable set of competitors;
Deploy and manage resources in key areas;
A reasonable ‘size’.
“Departmentation” …ctd.
Example of “Grid Control” & S.B.U’s
C.E.O

Finance Qual. HRM BU 1 BU 2

I.S.O I.R.M G/H.R G/H.R

Recr. Plant 1 Ind.

Sin.
T&D
Nature of Organizing …ctd.
Span-of-Management
 The purpose of organizing is to make human
cooperation effective and is limited by:
 the number of persons a manager can ‘supervise’
effectively and efficiently;
 while the total number is dictated by the quantum of
work/ nature of task/spread etc. Thus the two
dimensions, “Level” (depth) and “Span of control”
(width) are interrelated .
 The reason for creating Levels of organization is the
limitation in the span of control. “Effective span” is
influenced by:
 Training/skill of subordinates and personal contact
required;
 Clarity of delegation of authority;
 Clarity of plans, use of objective standards and
communication techniques;
Span-of-Management …ctd.
 Levels, per se, are not desireable:
 They are expensive – as they increase, both
infrastructure costs and staffing tends to increase;
 Real work is accomplished at the ‘gemba’ (Japanese:
workplace) where the actual value-
addition/transformation takes place. The contribution of
levels on top are not directly co- relatable, thus best
avoided;
 Communication become complicated – omissions,
filterations and misinterpretations lead to wasted and
misdirected effort;
 Planning and control become tortuous, requiring
complicated coordination and alignment between levels.
 Studies reveal that between 8 to 10 people at ‘higher’
levels and upto 15 at lower levels is a good “span”.
Principles of
Management 5
Management Process:
Staffing
 Staffing seeks to:
• Put “the Right people in the Right Job at the Right
time”
• Further, the process needs to ensure that these
right people are retained and enabled to perform
• And prepared for the right job since these change
with the operating environment.
 i.e. management of Human Resources.
What is H.R.M?
 The Michigan State Univ. Model:
• Looks at employees as a means to achieving
the organization’s Strategy:
 as a ‘resource’ that is used in a calculative and
mainly rational manner,
as a means towards competitive success;
What is HRM? (cont’d)
• This ‘hard’ model thus proposes that increasing
productivity and competitiveness is the
principal reason for H.R.M:
Therefore, a framework in which the needs of the
organization are paramount;
And Organizations exist to accomplish a mission or
achieve an objective, leading to 3 inter-connected

issues:
The Michigan Model (cont’d)

Political Economic
Forces Forces
Mission & Strategy

Orgn. Structure HR Management

Cultural
Forces
The Michigan Model: Human Resource
Cycle

Rewards

Selection Performance Appraisal

Development
HRM – the Operating
environment

National Culture

Sector

Orgn: Size & Culture


Behaviour

HR Strategy
• Recruitment
Corporate • Training
Strategy • Pay HR Management
• Empl. Relations
• Flexibility etc.
Performance
A HRM Process Model

Feedback

Input Transformation Output

• Challenges • Management • Contributions


• Resources • Recruiting • Capable staff
• Education • Selection • Motivated employees
• skills • Training & Dev.
HRM Systems: Preparation &
Selection
Based on HR information system
Job-analysis & Design which collates needs and ‘fits’.

Matching organization’s future


Human Resource Planning objectives dynamically with needs

Balancing organization’s policies &


Recruitment plans with capability/costs/supply.

Series of steps leading to a “hire”;


Selection Testing,interviewing & validation.
HRM Systems: Selection
► The process of choosing the ‘right ones’ involves a series
of steps with multiple evaluation points which adds time
and complexity to the hiring process:
 Frustration among candidates/applicants,and
 Among managers who need the job openings filled!
 But hiring is a long-term decision for the firm, whereas it is
at best a mid-term engagement for the applicant and the
hiring Manager.
► The step-wise progression in the selection process is :
# 1: Reception of applications
# 2: Employment tests
# 3: Selection Interviews # 8:Hiring Decision
# 4: references & background checks # 7: Realistic job preview
# 5: Medical Evaluation # 6: Supervisory Interview
HRM Systems: Development &
Evaluation
When a new employee is hired or present employee is
reassigned, orientation /placement should follow;
new job-holders need to be trained to do their present
jobs & developed to handle future tasks/responsibilities.

The success of the individual and of the HR process/dept.


depends on the feedback about performance; through a
performance appraisal, the employee evaluates the degree
of success.

Employers offer career planning to further encourage the


development of employees.
Development & Evaluation: T & D …
cont’d.

A usual step-by-step approach to preparing T&D is:

Program
content
Skills,
Needs T&D Actual Knowledge &
assessment Objectives Program ability
Learning
Evaluation principles
criteria

Evaluation
Development & Evaluation: Performance
Appraisal
► The basis for Appraisal must be job related
standards of performance; if performance
standards are not job related, evaluation can be
biased.
► The approach must:
 Identify performance related standards;
 Measure those criteria;
 Give feedback to the employee
 Keep HR Dept. informed for follow-up.

Performance Appraisal Feedback

Records
Standards Measures
Interventions
HRM Systems: Compensation &
Protection

Employees must be compensated for their


efforts;
But this more than salaries: it may include
incentives, benefits and services as a total
package for financial and other security;
This forms the key concern of HR
department’s efforts to obtain, maintain and
retain an effective work force; the role this
plays in employee (future & current) well-
being.
Compensation & Protection:…cont’d.
► The major phases of compensation management are:
 Job-analysis  comprising Position description, Job description &
job standards i.e. Identify and study jobs
 Job-evaluation  comprising Job ranking/job grading through
Factor comparisons or Point systems i.e. Define internal equity
 Wages & salaries surveys Labour directorate, Employer
associations, Professional associations & (self) commissioned
surveys i.e. Establish external equity
 Pricing Jobs  Match job evaluation worth with employment
market worth; i.e Match external and internal worth
► Challenges affecting compensation are:
 Market forces forcing pay to be more than the relative worth;
 Union interventions/interference;
 Government constraints & legislation;
 International wage/compensation rates: offshore challenge;
 Productivity & cost constraints;
 Social constraints.
Principles of
Management 6
Management Process:
Controlling & Leading
Controlling
Elements of Control Assessor: Comparison
Control Device (With standard)

Detector: Information of Effector: Behaviour


What is happening. Alteration, if needed.

Controlled Entity

Detector: or a sensor that measures what is actually happening in the


Process being controlled.
Assessor: a device that determines the significance of what is actual
situation in comparison with some standard or expectation.
Effector: a device (often called ‘feedback’) that alters behaviour if the
Assesor indicates the need to do so.
+ a communication network that transmits information
Controlling … cntd.
Management Control Focuses primarily on Strategy Implementation.
Three distinct systems/activities that require planning and control can be
defined:
Planning
Strategy Goals, Strategies, Policies
Formulation Coordinating

Communicating
Management
Implementation of Strategies Evaluating
Control
Deciding
Task Influencing
Control Performance of specific Tasks

• Management control does not necessarily require that all actions are per
the previously determined Plan;
• It, however, requires inducing people to act in pursuit of own goals in ways
that organization’s goal are also met: Goal Congruence.
Controlling … cntd.
Management control hinges on the ability to influence
human behaviour towards achievement of the Strategic
Objective, i.e.
 What actions do control initiatives motivate people to take in
their own self interest?
 Are these actions in the best interest of the Organization?
 Goal Congruence: implies that actions people are led to take
in their perceived self-interest are also in the interest of the
firm:
 Both Formal and Informal processes influence human behaviour
in organizations;
 Informal processes need to be recognized since they are ill-
defined and are both intrinsic and extrinsic to an Organization.
Controlling … cntd.
Implementation Mechanism

(Management)

Performance
Controls
Strategy

Organization H. R.
Structure Management

Culture

• Org. Structure specifies roles, reporting relationships, responsibilities that shape


decision making;
• Culture refers to the set of common beliefs, attitudes that guide management actions;
• HR Management is related to activities which enable people to execute strategy;
Controlling … cntd.
 Policies & Rules:
• Organograms, protocols and defined communication structure;
• Written instructions/Code of Conduct/Manuals etc.;
• ISO and allied systems – down to task control level;
• Physical controls e.g. Access cards, locked stores etc.
 The Process:

Goals & Other “Rules”


•Task Control
Strategies Info. •Safeguards “Reward”
Y
Strategic Department Reports: Analysis/
BudgetingPerformance OK?
Planning “A vs P” Actions

Revision Measurement N
Controlling … cntd.
Management control process is the process by
which managers at all levels ensure that people
they supervise implement their intended
strategies:
Unlike the simpler systems, the
standard is not pre-set;
Control is not automatic;
Requires coordination amongst
individuals;
The link between ‘need for action’ and
determining the action is not always
clear;
Much of control is self control.
Leadership: The ability to influence a group towards
the achievement of goal, objective or target. Not all
Leaders are Managers and not all Managers are
Leaders !!
 Kotter: Management is about coping with complexity,
Leadership is about coping with change;
 Zalenznik: Managers adopt impersonal and passive
attitude to goals, Leaders take an active, personal
attitude towards goals.
 Trait theories  seek to explain ‘leadership’ in terms of
personality, social, physical and/or intellectual traits to
differentiate between leaders & others.
 Behavioral theories  propose that specific behaviors
differentiate leaders from non-leaders.
Contingency Model (Fiedler)  effective group performance
depends on the proper match between leader’s style of
interaction with subordinates & the degree to which the
situation control and influence to the leader: concept of Task
& Relationship (“position/power”) orientation.
Task Behavior: The extent to which leaders are likely to
organize and define the role of group members, to explain
5W+1H of assigned tasks – characterized by well defined
structures, channels and way of working;
Relationship Behavior: The extent to which leaders are likely
to maintain personal relationships with group members,
opening up channels of communication, providing
“psychological strokes” and facilitating behaviors.
Hersey & Blanchard’s Situational Theory  a contingency
theory, focusing on the followers’ readiness.
Hersey & Blanchard’s Situational Theory
L Task Behavior H
H

Participating Selling
“Able & unwilling” Relationship “Unable & willing”
Behavior

Delegating Telling
“Able& willing” “Unable & unwilling”

Mature Immature
Follower Readiness
Leading: Nature …cntd.
Path – Goal Theory  a leader’s behavior is acceptable to
subordinates in so far as they view it as a source of either
immediate or future satisfaction. The underlying premise is that
effective leaders clarify the path to help their followers achieve of
work goals, making the journey easier by reducing road-blocks &
pitfalls: directing / supporting / participating or orienting.

Directive more satisfying when tasks arePerceived as controlled by


ambiguous/stressful;
Supportive leads to higher satisfaction & Environment
performance with structured tasks; •Task structure
•Formal Orgn.
•Work group Performance
&
Subordinates Satisfaction
Achievement orientation increases •Locus of control
effort for performance in ambiguity; •Experience
•Perceived ability
Participative gives satisfaction to
members with “internal” Locus of control.
Leading: Power & Politics
 Power: capacity of an individual (or group) to influence the
behavior of other(s), implying: a potential that need not be
cashed-in for effecting change & dependence as a basis of
relationship. In organizations, there are 5 sources of power:
 Coercive  Power that is based on fear;
Reward  compliance based on ability to distribute largess;
Legitimate  derived from (formal) hierarchical position;
Expert  influence based on special skills or knowledge;
Referent  influenced by possession of desirable objects;
 Where does Power lie: Organo-grams do not always give the
implicit picture; ‘where’ can be assessed as an answer to:
How many people at the top have come from a dept./divn. etc?
How well is the dept./divn represented in Key teams/committees?
Salary/other quality level of Senior Mangers in the dept/divn?
Location, facilities and ‘perquisites’ extended;
Staffing strength/resource allocation, promotions extended;
Symbolic perquisites to individuals: ‘first among equals’.
Leading: Power & Politics …cntd.

 Power Tactics: is the way in which individuals translate


power bases into specific actions:
• Reason use of data to make logical/rational presentation;
• Friendliness Use of emotions (flattery, humility etc.) in preparation;
• Coalition  getting or inducing group support to the issue;
• Bargaining  negotiating exchange of benefits and/or favors;
• Assertiveness  forcing (demands, reminders, orders etc.) often
using rules and formal structures;
• Higher authority  gaining support before acting;
• Sanctions  use of organizationally derived reward/punishment.
Leading: Power & Politics …cntd.

 Politics = Power in action: Political behavior comprise those


activities that are not required as a part of one’s formal role, but
influence the distribution of advantages/disadvantages within
organizations:
• “legitimate” political behavior  normal everyday influencing tactics
acceptable as routine to get work done;
• “illegitimate” political behavior  in violation of the “rules of the game”:
e.g. ‘whistle-blowing’, sabotage, mass leaves etc.
• Politics is a fact of life in any organizations. There will continue to be ‘forces’
for grabbing a share of the (limited) resource pie.