Selected Skills of Effective Managers

SETTING GOALS

MANAGING CONFLICT SOLVING PROBLEMS

WORKING EFFECTIVE
WELL WITH GROUPS
MANAGERS

INTERPERSONAL SKILLS TIME MANAGEMENT

VERBAL COMMUNICATION
 Managing Systems

System. A set of interrelated and

interdependent parts arranged in a manner that
produces a unified whole.
Closed Systems. Systems that are not
influenced by and do not interact with their
environment.
Open Systems. Systems that dynamically
interact with their environment.
Today, when we call organizations systems, we mean
open systems; that is, we accept an organization
constantly interacts with its environment.
 Managing Systems

How does the systems perspective add to our

understanding of what managers do?
Systems researchers envisioned an organization as
being made up of interdependent factors, including
individuals, groups attitudes, motives, formal structure,
interactions, goals, status, and authority.
The job of a manager, then, is to ensure that all the
interdependent parts of the organization are working
together so that the organizations goals can be
achieved; that is, the managers job in an organizational
system would be to coordinate and integrate the work
activities of the various parts of the organization.
 Managing Systems
If you were a first-line manager, the part of the
organizational system in which you would coordinate and
integrate work activities would typically be narrow and
limited to one organizational area or a few specific areas.
If you were a top-level manager, the part of the
organizational system that you would be responsible for
managing would, of course, be broader and more
comprehensive and would encompass numerous (if not all)
organizational areas.
If you were a middle manager, you would be responsible for
coordinating and integrating work activities in parts of the
organizational system somewhere between broad and
narrow.
The Organization as an Open System
ENVIRONMENT

SYSTEM

INPUTS TRANSFORMATION OUTPUTS

Raw Materials Employees Work Products and
Human Resources Activities Services
Capital Management Financial Results
Technology Activities Information
Information Technology and Human Results
Operations Methods

FEEDBACK

ENVIRONMENT
Managing in Different and Changing Situations

Contingency Perspective (sometimes called the

situational approach) of management underscores
and emphasizes the fact that organizations are
different, face different circumstances
(contingencies), and thus may require different
ways of managing that is different managerial
decisions and actions.
Therefore, managers must read and attempt to
interpret the situational contingencies facing them
before deciding the best way to coordinate and
integrate work activities.
 Popular Contingency Variables

Organizational Size. The number of people in an

organization.
Routineness of Task Technology. To achieve its purpose,
an organization uses technology; that is, it engages in
the process of transforming inputs into outputs. Routine
technologies require organizational structures, leadership
styles, and control systems that differ from those required
by customized or nonroutine technologies.
Environmental Uncertainty. The degree of uncertainty
caused by political, technological, sociocultural, and
economic changes influences the management process.
Individual Differences. Individuals differ in terms of their
desire for growth, autonomy, tolerance of ambiguity and
expectations.
Social Responsibility and Ethics
 CONTEXT
An open system organization denotes a firm
that interacts with its environment.
Hence, no organization functions in isolation.
Every decision made by the manager, every
product sold by the firm, and even every
promotion and advertising implemented by the
firm affects other persons outside the
organization. Likewise, the organization is
affected by what is happening outside it. Indeed,
the saying goes No Man is an Island fully
applies too to the business organization.
 CONTEXT
As people are part of the community,
therefore, a business organization which
is comprised of people (there can be no
organization without people) is likewise
part of the community. As people are
expected to be responsible citizens in the
community, the people acting as one
organization which comprises the
business, are also called to be
responsible members of the
community.
 Social Responsibility

The obligation of organization management to

make decisions and take actions that will
enhance the welfare and interests of society as
well as the organization.
An obligation, beyond that required by the law
and economics, for a firm to pursue long-term
goals that are good for society.
Seriously considering the impact of the
companys actions on society.
 Social Responsibility

CLASSICAL VIEW. According to Milton

Friedman, managements only social
responsibility is to maximize profit.
SOCIOECONOMIC VIEW. The view that
managements social responsibility goes well
beyond the making of profits to include
protecting and improving societys welfare.
Reminds us that maximizing profits is a companys
second priority, not its first. The first is ensuring its
survival.
Arguments for Social Responsibility

Public Expectations. Social expectations of business

have increased dramatically since the 1960s. Public
opinion now supports businesss pursuing social as well
as economic goals.
Long-run Profits. Socially responsible business tend to
have more secure long-run profits. This is the normal
result of the better community relations and improved
business image that responsible behavior brings.
Ethical Obligations. A business firm can and should
have a social conscience. Businesses should be socially
responsible because responsible actions are right for
their own sake.
Arguments for Social Responsibility
Public Image. Firms seek to enhance their public image
to get increased sales, better employees, access to
financing, and other benefits. Because the public
considers social goals important, business can create a
favorable public image by pursuing social goals.
Better environment. Business involvement can help
solve difficult social problems, helping create a better
quality of life and a more desirable community in which to
attract and keep skilled employees.
Discouragement of further governmental regulation.
Governmental regulation adds economic costs and
restricts managers decision flexibility. By becoming
socially responsible, business can expect less
government regulation.
Arguments for Social Responsibility
Balance of Responsibility and Power. Business holds
a large amount of power in society. An equally large
amount of responsibility is required to balance against it.
When power is significantly greater than responsibility,
the imbalance encourages irresponsible behavior that
works against the public good.
Stockholder interests. Social responsibility will improve
a businesss stock price in the long run. The stock market
will view the socially responsible company as less risky
and open to public criticism. Therefore, it will award its
stock a higher price-earnings ratio.
Arguments for Social Responsibility
Possession of Resources. Business organizations have
the financial resources, technical experts, and managerial
talent to support public and charitable projects that need
assistance.
Superiority of prevention over cures. Social problems
must be addressed at some time. Business should act
before these problems become serious and costly to
correct, taking managers energies away from
accomplishing their goal of producing goods and
services.
Arguments Against Social Responsibility

Violation of Profit Maximization. Business is being

socially responsible when it attends strictly to its
economic interests and leaves other activities to other
institutions.
Dilution of Purpose. The pursuit of social goals dilutes
business primary purpose: economic productivity.
Society may suffer if both economic and social goals are
poorly accomplished.
Costs. Many socially responsible actions do not cover
their costs. Someone has to pay those costs. Business
must absorb the costs or pass them on to consumers
through higher prices.
Arguments Against Social Responsibility

Too much power. Business is already one of the most

powerful sectors of our society. If it pursues social goals,
it will have even more power. Society has given business
enough power.
Lack of skills. The outlook and abilities of business
leaders are oriented primarily toward economics.
Businesspeople are poorly qualified to address social
issues.
Lack of accountability. Political representatives pursue
social goals and are held accountable for their actions.
Such is not the case with business leaders. There are no
direct lines of social accountability from the business
sector to the public.
 Social Responsiveness

The ability of a corporation to relate its

operations and policies to the social environment
in ways that are mutually beneficial to the
company and to society.
A socially responsive organization acts the way it
does because of its desire to satisfy some
expressed social need.
Social responsiveness is guided by social norms.
The value of social norms is that they can
provide managers with a meaningful guide for
decision making.
Social Responsibility vs. Social Responsiveness

Social Social
Responsibility Responsiveness
Major ETHICAL PRAGMATIC
Consideration

Focus ENDS MEANS

Emphasis OBLIGATION RESPONSES
Decision LONG TERM MEDIUM and
Framework SHORT TERM
VALUES-BASED Management

An approach to managing in which

managers establish, promote, and
practice an organizations shared values.
An organizations values reflect what it
stands for and what it believes in.
The shared organizational values form the
organizations culture and influence the
way the organization operates and
employees behave.
 Purposes of Shared Values

SHARED
ORGANIZATIONAL
VALUES

Guide Managers Build Team Spirit Influence marketing

Decisions and actions efforts
Criteria of Corporate Social Performance

Discretionary
Responsibility
Contribute to the
community
And quality of life.

Ethical Responsibility
Be ethical. Do what is right. Avoid harm.

Legal Responsibility
Obey the law.

Economic Responsibility
Be profitable
Criteria of Corporate Social Performance

Economic Responsibility. Responsibility to produce

goods and services that society wants and to maximize
profits for its owners and shareholders.
Legal Responsibility. Defines what society deems as
important with respect to appropriate corporate behavior
through rules, laws and regulations.
Ethical Responsibility. Responsibility to act with equity,
fairness, and impartiality, respect the rights of individuals
and provide different treatment of individuals only when
relevant to the organizations goals and tasks.
Discretionary Responsibility. Responsibility that is
voluntary and guided by the organizations desire to
make social contributions not mandated by economics,
law or ethics.
Managing Company Ethics & Social Responsibility

Leadership by Example. Leaders set the tone for an

organizations ethics through their own actions.
Code of Ethics. A formal statement of the companys values
concerning ethics and social issues; it communicates to
employees what the company stands for.
Ethical Structures. Represent the various systems, positions
and programs a company can undertake to implement
ethical behavior.
ETHICS COMMITTEE. A group of executives appointed to oversee
the organizations ethics by ruling on questionable issues and
disciplining violators.
ETHICS OMBUDSMAN. An official given the responsibility of
corporate conscience who hears and investigates ethics complaints
and points out potential ethical failures to top management.
Whistle-blowing. The disclosure by an employee of illegal,
immoral or illegitimate practices by the organization.
DECISION-MAKING:
The Essence of the Managers Job
Why is Decision Making, the essence of the Managers Job?

Making good decisions is something that

every manager strives to do since the
overall quality of managerial decisions
goes a long way in determining
organizational success or failure.
Decision making is particularly important in
every aspect of a managers job; that is, in
planning, organizing, leading and
controlling. Hence, it is correct to say that
decision making is synonymous with
managing.
 DECISION
Decision. A choice made from two or more
alternatives.
Decision-making process. A set of eight steps
that include identifying a problem, selecting an
alternative, and evaluating the decisions
effectiveness.

INDIVIDUALS AT ALL LEVELS AND IN ALL

AREAS OF ORGANIZATIONS MAKE
DECISIONS.
The DECISION-MAKING Process
1. Identification of a Problem
2. Identification of Decision Criteria
3. Allocation of Weights to Criteria
4. Development of Alternatives
5. Analysis of Alternatives
6. Selection of an Alternative
7. Implementation of the Alternative
8. Evaluation of Decision Effectiveness
Characteristics of a Problem
AWARENESS OF
DISCREPANCY
PRESSURE
TO ACT

PROBLEM
A discrepancy between existing and
a desired state of affairs.

SUFFICIENT
TO DO
SOMETHING
 Decisions in the Management Functions
PLANNING
1. What are the organizations long-term objectives?
2. What strategies will best achieve those objectives?
3. What should the organizations short-term objectives
be?
4. How difficult should individual goals be?
ORGANIZING
1. How many subordinates should I have report directly to
me?
2. How much centralization should there be in the
organization?
3. How should jobs be designed?
4. When should the organization implement a different
structure?
 Decisions in the Management Functions

LEADING
1. How do I handle employees who appear to be low in
motivation?
2. What is the most effective leadership style in a given
situation?
3. How will a specific change affect worker productivity?
4. When is the right time to stimulate conflict?
CONTROLLING
1. What activities in the organization need to be
controlled?
2. How should those activities be controlled?
3. When is a performance deviation significant?
4. What type of management information system should
the organization have?
 The Manager as Decision Maker
Making Decisions: Rationality, Bounded Rationality, and Intuition
Rational. Describes choices that are consistent and value-maximizing
within specified constraints.
Assumptions of Rationality:
Problem clarity. The problem is clear and unambiguous. Assumed to
have complete information regarding the decision situation.
Goal Orientation. A single, well-defined goal is to be achieved.
Know options. It is assumed that the decision maker is creative, can
identify all the relevant criteria, and can list all the viable alternatives.
Further, the decision maker is aware of all the possible consequences
of each alternative.
Clear preferences. Rationality assumes that the criteria and
alternatives can be ranked according to their importance.
Constant Preferences. Assumed that the specific criteria are
constant and that the weights assigned to them are stable over time.
No time or cost constraints. The rational decision maker can obtain
full information about criteria and alternatives because it is assumed
that there are no time or cost constraints.
Maximum Payoff. The rational decision maker always chooses the
alternative that will yield the maximum payoff.
 The Manager as Decision Maker
Making Decisions: Rationality, Bounded Rationality,
and Intuition

The perfectly rational Model of decision making is

not realistic with respect to managerial decision
making. Most decisions that managers face in the
real world dont meet all the assumptions of
Rationality. Instead, managers tend to operate under
assumptions of bounded rationality.
Bounded Rationality. Behavior that is rational within
the parameters of a simplified model that captures
the essential features of a problem.
Two Views of the Decision-Making Process
Decision-making PERFECT BOUNDED
Steps RATIONALITY RATIONALITY
1. Problem An important and A visible problem that
Formulation relevant organizational reflects the managers
problem is identified. interests and
background is
identified.
2. Identification of All criteria are A limited set of criteria
decision criteria identified. is identified.
3. Allocation of All criteria are A simple model is
weights to evaluated and rated in constructed to evaluate
criteria terms of their and rate the criteria; the
importance to the decision makers self-
organizations goal. interest strongly
influences the ratings.
4. Development of A comprehensive list of A limited set of similar
alternatives all alternatives is alternatives is
developed creatively. identified.
 Decision-making PERFECT BOUNDED
Steps RATIONALITY RATIONALITY

5. Analysis of All alternatives are Beginning with a

alternatives assessed against the favored solution,
decision criteria and alternatives are
weights; the assessed, one at a
consequences for time, against the
each alternative are decision criteria.
known.

6. Selection of an Maximizing decision: Satisficing decision:

alternative the one with the the search continues
highest economic until a solution is
outcome (in terms of found that is
the organizations satisfactory and
goal) is chosen. sufficient, at which
time the search stops.
Decision-making Steps PERFECT BOUNDED
RATIONALITY RATIONALITY
7. Implementation of Because the Politics and power
alternative decision considerations will
maximizes the influence the
chance of acceptance of, and
achieving the commitment to, the
single, well- decision.
defined goal, all
organizational
members will
embrace the
solution.
 Decision-making PERFECT BOUNDED RATIONALITY
Steps RATIONALITY

8. Evaluation The decisions Measurement of the

outcome is decisions results are rarely
objectively so objective as to eliminate
evaluated self-interests of the evaluator;
against the possible escalation of
original problem. resources to prior
commitments despite both
previous failures and strong
evidence that allocation of
additional resources is not
warranted.
 Role of Intuition

Intuitive Decision Making. An unconscious process of

making decisions on the basis of experience and
accumulated judgment.
Making decisions on the basis of gut feel
A manager who has had experience with a particular, or
even similar type of problem or situation often can act
quickly with what appears to be limited information. Such
a manager doesnt rely on a systematic and thorough
analysis of the problem or identification and evaluation of
alternatives but instead uses his or her experience and
judgment to make a decision.
Types of Problems and Decisions
Well-structured Problems & Programmed Decisions
Well-structured Problems. Straightforward, familiar,
easily defined problems. The goal of the decision maker,
hence, is clear, the problem is familiar, and information about
the problem is easily defined and complete. In handling this
problem situation, the manager uses a programmed decision.
Programmed Decision. A repetitive decision that can be
handled by a routine approach.
PROCEDURE. A SERIES OF INTERRELATED SEQUENTIAL
STEPS THAT A MANAGER CAN USE FOR RESPONDING TO A
STRUCTURED PROBLEM.
RULE. AN EXPLICIT STATEMENT THAT TELLS A MANAGER
WHAT HE OR SHE OUGHT OR OUGHT NOT TO DO.
POLICY. A GUIDE THAT ESTABLISHES PARAMETERS FOR
MAKING DECISIONS.
Types of Problems and Decisions

Ill-structured Problems & Nonprogrammed

Decisions
Ill-structured Problems. New problems
in which information is ambiguous or
incomplete.
Nonprogrammed Decision. A unique
decision that requires a custom-made
solution.
Types of Problems, Decisions and Level in the Organization

ILL-STRUCTURED TOP

NONPROGRAMMED
DECISIONS LEVEL
TYPE
IN
OF
ORGANIZATION
PROBLEM
PROGRAMMED
DECISIONS

LOWER
WELL-STRUCTURED
 Decision-Making Conditions
Certainty. A situation in which a manager can
make accurate decisions because the outcome
of every alternative is known.
Risk. Those conditions in which the decision
maker is able to estimate the likelihood of
certain outcomes.
Uncertainty. A situation in which a decision
maker has neither certainty nor reasonable
probability estimates available.
 Decision-Making Styles
Three Ways Managers Approach Problems in the
Workplace:
Problem Avoider. A person who approaches problems by
avoiding or ignoring information that points to a problem.
An avoider is inactive and does not want to confront
problems.
Problem Solver. A person who approaches problems by
trying to solve them as they come up. Solvers are
reactive, they deal with problems after they occur.
Problem Seeker. A person who approaches problems by
actively seeking out problems to solve or new
opportunities to pursue. He/she takes a proactive
approach by anticipating problems.
 Decision-Making Styles

Another perspective on
Decision-making styles
proposes that people differ
along two dimensions: way of
thinking and tolerance for
ambiguity.
 Decision-Making Styles
WAY OF THINKING:
RATIONAL AND LOGICAL. A rational type looks at information
in order and makes sure that its logical and consistent before
making a decision.
CREATIVE AND INTUITIVE. Intuitive types dont have to
process information in a certain order but are comfortable
looking at it as a whole.
TOLERANCE FOR AMBIGUITY:
LOW TOLERANCE. People with low tolerance for ambiguity
must have consistency and order in the way they structure
information so that ambiguity is minimized.
HIGH TOLERANCE. People who can tolerate high levels of
ambiguity and are able to process many thoughts at the same
time.
 Decision-Making Styles
High
Analytic Conceptual
Tolerance for Ambiguity

Directive Behavioral

Low

Rational Way of Thinking Intuitive

 Decision-Making Styles

Directive Style. Have low tolerance for ambiguity and

are rational in their way of thinking. Theyre efficient and
logical. They make fast decisions and focus on the short
run. Their efficiency and speed in making decisions often
result in their making decisions with minimal information
and assessing few alternatives.
Analytic Style. Have much greater tolerance for
ambiguity than do directive types. They want more
information before making a decision and consider more
alternatives than a directive style decision maker does.
They are best characterized as careful decision makers
with the ability to adapt or cope with unique situations.
 Decision-Making Styles

Conceptual Style. Individuals tend to be very broad in

their outlook and will look at many alternatives. They
focus on the long run and are very good at finding
creative solutions to problems.
Behavioral Style. They work well with others. Theyre
concerned about the achievements of subordinates and
are receptive to suggestions from others. They often use
meetings to communicate, although they try to avoid
conflict. Acceptance by others is important to the
behavioral style decision maker.
Management Function 1:

planning
 Planning
A process that involves defining the organizations
objectives or goals, establishing an overall
strategy for achieving those goals, and
developing a comprehensive hierarchy of plans
to integrate and coordinate activities.
Purposes of Planning
Gives direction
Reduces the impact of change
Minimizes waste and redundancy
Sets the standards that are used for
controlling
Planning and Performance
Generally speaking, formal planning is associated with
higher profits, higher return on assets and other positive
financial results.
The quality of planning process and the appropriate
implementation of the plans probably contribute more to
high performance than does the extent of planning.
In those studies in which formal planning didnt lead to
higher performance, the environment was the culprit.
Governmental regulations, powerful labor unions, and
similar environmental forces constrain managers
options and thereby reduce the impact of planning on an
organizations performance.
WHY? Because managers will have fewer choices for
planning viable alternatives.
 Types of Plans
Strategic vs. Operational Plans
Strategic Plans. Plans that are organization-wide,
establish overall objectives, and position an
organization in terms of its environment.
Operational Plans. Plans that specify details on how
overall objectives are to be achieved.

Short-Term vs. Long-Term Plans

Short Term Plans. Plans that cover 3 years or less
Medium Term Plans. Plans that cover 4 to 5 years.
Long-Term Plans. Plans that extend beyond five (5)
years.
 Types of Plans
Specific vs. Directional Plans
Specific Plans. Plans that are clearly defined and
leave no room for interpretation.
Directional plans. Flexible plans that set out general
guidelines.

Frequency of Use
Single-use Plan. A one-time plan that is specifically
designed to meet the needs of a unique situation and
is created in response to nonprogrammed decisions
that managers make.
Standing Plans. Ongoing plans that provide guidance
for activities repeatedly performed in the organization
and that are created in response to programmed
decisions that managers make.
 Contingency Factors in Planning
Level in the Organization
Operational planning dominates the planning
activities of lower-level managers. As managers
move up the hierarchy, their planning role
becomes more strategy oriented. The planning
effort by top executives in large organizations is
mostly strategic. In a small business, the owner-
manager does both.
Degree of Environmental Uncertainty
The greater the environmental uncertainty, the
more plans need to be directional and emphasis
placed on the short term.
 Contingency Factors in Planning
Length of Future Commitments
Related to the time frame of plans. The more
that current plans affect future commitments,
the longer the time frame for which managers
should plan. This commitment concept
means that plans should extend far enough
to meet those commitments made today.
Objectives: The Foundation in Planning

Objectives are desired outcomes for

individuals, groups or entire
organizations. These are goals.
They provide the direction for all
management decisions and form the
criterion against which actual
accomplishments can be measured. That is
why we call them the foundation of planning.
Objectives: The Foundation in Planning

Multiplicity of Objectives
Closer analysis reveals that all organizations have
multiple objectives. For example, businesses also
seek to increase market share and satisfy employee
welfare, aside from making profit.
Real versus Stated Objectives
Stated Objectives. Official statements of what an
organization says and what it wants various publics
to believe its objectives are.
Real Objectives. Objectives that an organization
actually pursues, as defined by the actions of its
members.
Objectives: The Foundation in Planning

Traditional Objective Setting

Objectives are set at the top and then broken
down into subgoals for each level in an
organization. The top imposes its standards
on everyone below.
Objectives: The Foundation in Planning

MANAGEMENT BY OBJECTIVES (MBO)

First described by Peter Drucker. It consists of 4
elements: goal specificity, participative decision
making, an explicit time period and performance
feedback.
A system in which specific performance objectives are
jointly determined by subordinates and their superiors,
progress toward objectives is periodically reviewed,
and rewards are allocated on the basis of this
progress.
Do MBO Programs work? Studies of actual MBO
programs confirm that MBO effectively increases
employee performance and organizational productivity.
A review of 70 programs, for example, found
organizational productivity gains in 68 of them.
Steps in a Typical MANAGEMENT BY OBJECTIVES (MBO)

1. The organizations overall objectives and strategies are

formulated.
2. Major objectives are allocated among divisional and
departmental units.
3. Unit managers collaboratively set specific objectives for
their units with their superiors.
4. Specific objectives are collaboratively set for all
department members.
5. Action plans, defining how objectives are to be achieved,
are specified and agreed upon by managers and
subordinates.
6. The action plans are implemented.
7. Progress toward objectives is periodically reviewed, and
feedback is provided.
8. Successful achievement of objectives is reinforced by
performance-based rewards.
Increasing Importance of Strategic Management

Before the early 1970s, managers who made

long-range plans generally assumed that
better times were ahead. Plans for the future
were merely extensions of what the
organization had done in the past.
However, environmental shocks such as
energy crises, deregulation of many
industries, accelerating technological
change, and increasing global competition
undermined this approach to long-range
planning.
Increasing Importance of Strategic Management

These changes in the rules of the game

forced managers to develop a
systematic approach to analyzing the
environment, assessing their
organizations strengths and
weaknesses, and identifying
opportunities that would give the
organization a competitive advantage.
The value of thinking strategically
began to be recognized.