Chapter 8

Management and
Leadership

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Learning Goals
1.

2.
3.

4.
5.
6.

Explain how the changes that are occurring in the

business environment are affecting the management
function.
Describe the four functions of management.
Describe the different types of planning and the
importance of decision making in choosing the best
alternative.
Describe the organizing function of management and
the three categories of skills needed by managers.
Explain the differences between leaders and
managers, and describe the various leadership styles.
Summarize the five steps of the control function of
management.

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Principles of Management
Leadership
Leadership

Management
Management

Top
Topleadership
leadershipis
iscritical
criticalfor
for
the
thesuccess
successin
inorganizations.
organizations.
Today
Todaycompanies
companiesrely
relyon
on
managers
managersto
toguide
guidethe
thedaily
daily
process
processusing
usinghuman,
human,
technological,
technological,financial,
financial,and
and
other
otherresources
resourcesto
tocreate
createaa
competitive
competitiveadvantage.
advantage.
The
Theprocess
processof
ofguiding
guiding
the
thedevelopment,
development,
maintenance,
maintenance,and
and
allocation
allocationof
ofresources
resources
to
toattain
attain
organizational
organizationalgoals.
goals.

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New Paradigms and resulting

Management Styles

Managers are now guiding,

training, supporting, motivating,
and coaching employees.
Employees are better educated.
Emphasis on teamwork and
cooperation.
Employees are seen as partners.
Employees tend to be more
transient
More females and younger
workers
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Management Functions

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Planning: Create Vision

o

Set vision, goals,

objectives

Vision/missionwhy organization

o
o

Goals- broad,
long-term aims
Objectivesspecific, shortterm statements

exists, purpose of
organization
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Canadian Tire Mission Statement

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Questions of Strategic
Planning
1)

What is the environmental

situation now? (SWOT
Analysis)

2)

3)

Where do we want to go?

(mission)
How can we get there from
here? (strategy)
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SWOT

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4 levels of Planning

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Planning: A Vision for the

Organization
Long-term

plans - set the

major goals and the strategy to

obtain those goals
Short-term plans - detailed
plan, who does what, when and how
will it be done
Contingency plans - alternative
plans (including crisis plans) to
remain flexible and react to new
opportunities and challenges
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The Decision Making Process

Define

Describe

Do

Decide
Determine
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Develop
Alternativ
es

Develop
Agreeme
nt

Organizing
o
o

Trend toward selfmanaged teams

Stakeholders-who
are affected by the
organization
Staffing-hiring and
keeping good
employees
Managing increased
diversity

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The Org Chart

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Levels of Management

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Tasks and Skills at Different

Levels of Management

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Leading
Communicate a vision and rally
others around that vision
Establish corporate values
Promote corporate ethics
Embrace change

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Primary Sources of Power

18

Legitimate
Legitimate power
power

Derived
Power
from
from
position
Derived
Power derived
derived
from individuals
individuals
from individuals
individuals
position
position
in
organization
an
position
in an
anin
in
organization
an organization
organization

Reward
Reward power
power

Derived
Derived from
from individuals
individuals
control
control over
over rewards
rewards

Coercive
Coercive power
power

Derived
Derived from
from individuals
individuals ability
ability to
to
threaten
threaten negative
negative outcomes
outcomes

Expert
Expert power
power

Derived
Derived from
from individuals
individuals
extensive
extensive knowledge
knowledge

Referent
Referent power
power

Derived
Derived from
from individuals
individuals charisma
charisma
and
and respect/admiration
respect/admiration inspired
inspired

Copyright 2008 by Nelson, a division of

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Leadership Styles
Amount of authority held
by the leader

Autocratic
AutocraticStyle
Style

Free-Rein
Free-Rein
Participative
Style
Participative Style (Laissez-Faire) Style
(Laissez-Faire) Style

Amount of authority held by

group members

19

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Participative Leadership
Democratic
Democratic
Participative
Participative
Leadership
Leadership
Types
Types

Consensual
Consensual
Consultative
Consultative

20

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Concept Check

21

What are the 5 power bases? What

is the source of that power?
What are the 3 leadership styles?
When is each appropriate?
Explain:
democratic leaders
consensual leaders
consultative leaders
Copyright 2008 by Nelson, a division of
Thomson Canada Limited

Reasons for Empowering

Non-Supervisory Employees
o

o
o
o

It leads to better decisions made by

those closest to the customer
Fewer, busier managers
Predominance of knowledge workers
Leads to better decisions and more
valuable employees

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Rules of Leadership

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Controlling

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Summary
1)

2)

3)

4)

5)

6)

Management functions are changing because employees are

better educated and seen as partners, there is an emphasis on
teamwork and there are more females and younger workers.
The four functions of management are planning, organizing,
controlling and motivating.
The types of planning that managers undertake are strategic,
tactical, contingency, and operational.
Management is stratified into three levels. Top, middle and
supervisory. They need skills such as technical, human relations
and conceptual.
Leaders create the vision for others to follow. Managers carry out
the leaders visions.
The five steps of control are establish clear standard, monitor and
record, compare results, communicate results and take corrective
action if needed.
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Chapter 9
Adapting
Organizations to
Todays Markets

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Learning Goals
1.
2.
3.
4.

Discuss the various issues involved in

structuring organizations.
Describe and differentiate the various
organizational models.
List the concepts involved in interfirm cooperation and coordination.
Explain how restructuring, organizational
culture, and informal organizations can
help businesses adapt to change.

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Organizational Structure

Structuring an organization consists

of devising a division of labour,
setting up teams or departments to
do specific tasks and establishing
procedures for accomplishing the
organizational objectives.

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Purpose of an Organizational Chart

Shows the activities of the

organization.
Highlights sub divisions of the
organization.
Identifies different types of
work performed.
Provides information about
different management levels.
Shows lines of authority and
the flow of organizational
communications.
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Fayols Principles
of Organization

Unity of
command

Degree of
centralization

Hierarchy of
authority

Communication
channels

Division of labour

Order

Subordination of
individual interest

Equity

Esprit de corps

Authority

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Webers
Organizational Principles

Similar to Fayol and added:

Job descriptions
Written rules, decision guidelines, and
detailed records
Consistent procedures, regulations, and
policies
Staffing and promotions based
on qualifications

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Fundamentals of Bureaucracy
o

Hierarchy

B oss
o

Chain of command

V ic e P r e s id e n t

Rules and regulations

Set up by function

S u p e r v is o r

Communication between
departments is minimal

E m p lo y e e
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Issues Involved in Structuring

Organizations

When designing responsive

organizational structures firms have
to deal with several issues.
Centralization

vs Decentralization
Span of Control
Tall vs Flat organizational design
Departmentalization

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Centralization vs Decentralization

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Variables To Consider
in Span of Control

Capabilities of the manager

Capabilities of the subordinates

Geographical closeness

Functional similarity

Need for coordination

Planning demands

Functional complexity

Boss
S u b o r d in a te

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S u b o r d in a te

S u b o r d in a te

Narrow vs Wide Span of Control

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Narrow vs Wide Span of Control

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Organizational Structures
o

o
o
o

Tall Organizations
Many layers of
management
Span of control
limited
Costly to maintain
Lots of paperwork
Inefficient
communication and
decision making

Flat Organizations
o

Few layers of
management

Broad span of control

Highly responsive to
customer demands due
to increased employee
empowerment

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Departmentalization

Dividing of organizational functions

into separate units.
Functional structure is the grouping
of workers into departments based
in similar skills.

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Departmentalization by
Function
Advantages

C o lle g e
P re s id e n t
B u s in e s s E d u c a tio n

Skill development
Economies of scale
Better coordination of
activities

C o m m ., H u m a n itie s ,
S o c ia l S c ie n c e s
D e v e lo p m e n ta l
S tu d ie s
M a th , S c ie n c e s ,
H e a lth S c ie n c e s
T e c h n ic a l, In d u s tr ia l
S e r v ic e O c c u p a tio n s

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Departmentalization by Function
Disadvantages
o

Lack of communication

Employees identify with

department instead of
company

Slow response to
external demands

Narrow specialists

Silos of knowledgegroup think

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Ways to Departmentalize

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Departmentalization

By product

By function

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By customer
By location
By process

Organization Models
Line organizations
Line-and-staff organizations
Matrix-style organizations
Cross-functional self-managed
teams

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Line and Staff Organization

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Matrix Organization

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Types of Organizations

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Cross Functional Teams

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Managing Interactions Among Firms

Networking is using communications

technology to link organizations.
Real time is the current moment.
Transparency occurs when a company
is see-through from another
companies perspective. It means firms
can work closely together.

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Virtual Corporation

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Benchmarking and Core

Competencies

Benchmarking: comparing an
organizations practices, procedures
and products against the worlds
best.
Core Competencies: Those functions
that an organization can do as well
as or better than other
organizations in the world.
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Restructuring and Empowerment

Restructuring: redesigning an
organization so that it can more
effectively and efficiently serve its
customers.
Inverted Organization: An
organization that has contact people
at the top and the CEO at the
bottom of the organizational chart.
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Comparison of Traditional vs
Inverted Structure

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Restructuring Process

Total Quality Management (TQM)

Striving

for maximum customer satisfaction

by ensuring quality from all departments.
Re-engineering is the fundamental
rethinking and radical redesign of
organizational processes to achieve
dramatic improvements in critical measures
of performance.
Continuous Improvement (CI)
Constantly improving the way the organization
does things so that customer needs can me
better satisfied.
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Summary
1) Fayol and Weber introduced principals of command, hierarchy,
division of labour, subordination authority, communication
channels, order, equity, job descriptions, rules consistent
procedures, staffing and promotions based on qualifications.
2) Issues involved in structuring and restructuring organizations
include: centralization, decentralization, span of control, tall
and flat structures and departmentalization.
3) The different organizational models are line and staff, matrix
and cross functional teams.
4) Interfirm co-operation occurs when companies use networking
to communicate with each other and as a result become
transparent to each other.
5) The best organizations have cultures that emphasize service
to others, especially customers.
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