PRINCIPLES OF

MANAGEMENT

by
Dr. Gopal Iyengar
Director - KIAMS
 MANAGEMENT DEFINED

1) Management is the process of designing

and maintaining an environment in which
individuals, working together in groups,
efficiently accomplish selected aims.

2) Management is a set of activities (including

planning & decision making, organizing,
leading, and controlling) directed at an
organization’s resources (human, financial,
physical, and information), with the aim of
achieving organizational goals in an
efficient and effective manner.
 FUNCTIONS OF MANAGERS

Planning
Planning involves selecting missions and
objectives and the actions to achieve them; it
requires decision making.

Organizing
It involves establishing an intentional structure
of roles for people to fill in an organization.

Staffing
It involves filling, and keeping filled, the
positions in the organization structure.
 FUNCTIONS OF MANAGERS
(Contd.)

Leading
Leading is influencing people so that they
will contribute to organization and group
goals.

Controlling
Controlling is measuring and correcting
individual and organizational performance
to ensure that events conform to plans.

Coordination
To reconcile differences in approach,
timing, effort, or interest and harmonize
individual goals to contribute to
organization goals.
 The Process of Management
Organizing
Planning LeadingControlling
& Staffing
Human
Resources

Financial
Resources
Manager Goals

Physical
Resources

Information
Resources

Managerial Functions
 MANAGERIAL SKILLS

1. Technical Skill is knowledge of and

proficiency in activities involving
methods, processes, and procedures.
2. Human Skill is the ability to work with
people.
3. Conceptual Skill is the ability to see the
“big picture”
4. Design Skill is the ability to solve
problems in ways that will benefit the
enterprise
 Time spent in carrying out
Managerial Functions

H Y
RC

Top-
RA

level

ing

ing
IE

g
managers

Controlling
in
LH

niz

inat
Plann
Middle-
NA

ga
level
IO

rd
managers
AT

Or

Co-o
Z
NI
GA

First-level
OR

supervisors

Partly based on and adapted from Thomas A. Mahoney, Thomas H. Jerdee, and
Stephen J. Carroll, “The Job(s) of Management”, Industrial Relations (February 1965),
pp. 97-110.
SKILLS AND MANAGEMENT
LEVELS
SYSTEMS VIEW OF ORGANISATION
COMMUNICATION GRID

FEEDBACK/
REENGINEERING

INPUT TRANSFORMATION OUTPUT

EXTERNAL
ENVIRONMENT
 KEY MANAGEMENT THEORIES
The dates on which each theory began are approximate
In Search of Excellence
becomes bestseller (mid-
1980s)

“Muckrakers” begin The Great Deming lectures on Apple Corp. Baldrige

exposes Depression quality in Japan formed (1977) Award
of business (1902) begins initiated
(1987)
1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990

Labor World War I World War II Protest movements IBM PC AT&T

Shortage (1914-1918) (1941-1945) (1960s to early introduced divestiture
1970s) (1981) takes effect
(Jan. 1,
1984)
SCIENTIFIC MANAGEMENT SCHOOL CLASSICAL ORGANIZATIONAL THEORY
SCHOOL
THE BEHAVIORAL SCHOOL

MANAGEMENT SCIENCE

THE SYSTEMS APPROACH

THE CONTINGENCY
APPROACH

DYNAMIC ENGAGEMENT APPROACH

Evolution of Management
Thought

Classical Human
Human
Classical
Approach Resources
Resources
Approach
Approach
Approach

Quantitati
Quantitati Contingen
Contingen
ve
ve cy
cy
Approach
Approach Approach
Approach
 SCIENTIFIC MANAGEMENT
SCHOOL

Scientific Management Theory

A management approach, formulated by

Frederick W. Taylor (1856-1915) and others
between 1890 and 1930, that sought to
determine scientifically the best methods
for performing any task, and for selecting,
training, and motivating workers.
 SCIENTIFIC MANAGEMENT SCHOOL
(Contd.)

Four basic principles of Frederick W.

Taylor’s philosophy
1. The development of a true science of
management, so that the best method for
performing each task could be
determined.
2. The scientific selection of workers, so
that each worker would be given
responsibility for the task for which he or
she was best suited.
3. The scientific education and development
of the worker.
4. Intimate, friendly cooperation between
management and labor.
 SCIENTIFIC MANAGEMENT SCHOOL
(Contd.)

Henry L. Gantt (1861-1919)

Introduced motivation linked to targets:

 Every worker who finished a day’s assigned
work load would win a 50-cent bonus.

 The supervisor would earn a bonus for each

worker who reached the daily standard,
plus an extra bonus if all the workers
reached it.

He originated a charting system for

production scheduling - the “Gantt chart”,
still in use today.
 SCIENTIFIC MANAGEMENT SCHOOL
(Contd.)

The Gilbreths
 Husband and wife team of Frank B. and
Lillian M. Gilbreth (1868-1924 and 1878-
1972)
 Collaborated on fatigue and motion
studies and focused on ways of promoting
the individual worker’s welfare.
 Used motion picture cameras to find the
most economical motions for each task, to
reduce fatigue
 CLASSICAL ORGANIZATION
SCHOOL

Scientific management was concerned with

increasing the productivity of the shop and
the individual worker. Classical organization
theory grew out of the need to find
guidelines for managing such complex
organizations as factories.

Classical Organization Theory was an early

attempt, pioneered by Henri Fayol, to
identify the principles and skills that underlie
effective management.
 CLASSICAL ORGANIZATION SCHOOL
(Contd.)

Max Weber (1864-1920)

 Developed a theory of bureaucratic
management that stressed the need for a
strictly defined hierarchy governed by
clearly defined regulations and lines of
authority.
 Considered the ideal organization to be a
bureaucracy whose activities and
objectives were rationally thought out
and whose divisions of labor were
explicitly spelled out.
 Believed that technical competence
should be emphasized and that
performance evaluations should be made
 CLASSICAL ORGANIZATION SCHOOL
(Contd.)

Mary Parker Follett (1868-1933)

 Introduced many new elements especially
in the area of human relations and
organizational structure.
 Was a great believer in the power of the
group, where individuals could combine
their diverse talents into something
bigger.
 Follett’s “holistic” model of control took
into account not just individuals and
groups, but the effects of such
environmental factors as politics,
economics, and biology.
 CLASSICAL ORGANIZATION SCHOOL
(Contd.)

Chester I. Barnard (1886-1961)

 Stated that an enterprise can operate
efficiently and survive only when the
organization’s goals are kept in balance with
the aims and needs of the individuals
working for it.
 Recognized the importance and universality
of the “informal organization”
 Believed that individual & organizational
purposes could be kept in balance if
managers understood an employee’s zone of
indifference - that is, what the employee
would do without questioning the manager’s
authority. More activities that fell within an
employee’s zone of indifference, smoother
and more cooperative an organization would
 BEHAVIORAL SCHOOL

A group of management scholars trained in

sociology, psychology, and related fields,
who use their diverse knowledge to propose
more effective ways to manage people in
organizations.

Human Relations
How managers interact with other
employees or recruits.
 BEHAVIORAL SCHOOL (Contd.)

Elton Mayo (1880-1949)

Hawthorne Effect
The possibility that workers who receive
special attention will perform better simply
because they received that attention - one
interpretation of studies by Elton Mayo and
his colleagues.
 BEHAVIORAL SCHOOL (Contd.)

Douglas McGregor

Theory X: A traditional view of motivation

that holds that work is distasteful to
employees, who must be motivated by
force, money, or praise.
Theory Y: The assumption that people are
inherently motivated to work and do a good
job.
(Theory Z) The Japanese emphasis on the
importance of relationship
 MANAGEMENT SCIENCE
SCHOOL

Management Science School

Approaching management problems through
the use of mathematical techniques for their
modeling, analysis, and solution.

Operations Research
Mathematical techniques for the modeling,
analysis, and solution of management
problems. Also called Management Science.
 SYSTEMS APPROACH

View of the organization as a unified,

directed system of interrelated parts.

Subsystems: Those parts making up the

whole system.

Synergy: The situation in which the whole is

greater than its parts. In organizational
terms, synergy means that departments
that interact co-operatively are more
productive than they would be if they
operated in isolation.
 SYSTEMS APPROACH (Contd.)

Open System: A system that interacts with

its environment.

Closed System: A system that does not

interact with its environment.

System Boundary: The boundary that

separates each system from its
environment. It is rigid in a closed system,
flexible in an open system.
 SYSTEMS APPROACH (Contd.)

Flows
Components such as information, material,
and energy that enter and leave a system.

Feedback
The part of system control in which the
results of actions are returned to the
individual, allowing work procedures to be
analyzed and corrected.
 CONTINGENCY APPROACH

The view that the management technique

that best contributes to the attainment of
organizational goals might vary in different
types of situations or circumstances; also
called the situational approach.
 MANAGERIAL ROLES
APPROACH
The ten Managerial Roles identified by
Mintzberg
Interpersonal roles
1. The figurehead role
2. The leader role
3. The liaison role
Informational roles
1. The recipient role
2. The disseminator role
3. The spokesperson role
Decision roles
1. The entrepreneurial role
2. The disturbance-handler role
3. The resource-allocator role
4. The negotiator role
Four Managerial Functions &
17 Managerial Roles
Planning Controlling
Strategic Planner Monitor
Operational Planner Disturbance Handler

Organizing & Staffing Leading

Organizer Figurehead
Liaison Spokesperson
Staffing coordinator Negotiator
Resource allocator Coach
Task delegator Team builder & player
Technical problem solver
Entrepreneur
MCKINSEY’S 7-S FRAMEWORK
Strategy: Systematic action and allocation of
resources to achieve company aims.
Structure: Organization structure and authority/
responsibility relationships.
Systems: Procedures and processes such as
information systems, manufacturing processes,
budgeting and control processes.
Style: The way management behaves and
collectively spends its time to achieve
organizational goals.
Staff: The people in the enterprise and their
socialization into the organizational culture.
Shared Values (super ordinate goals): The
values shared by the members of an
organization.
Skills: Distinctive capabilities of an enterprise. `
 ERA OF DYNAMIC
ENGAGEMENT

The view that time and human relationships

are forcing management to rethink
traditional approaches in the face of
constant, rapid change.
NEW ORGANIZATIONAL ENVIRONMENTS
An organization’s environment is not some
set of fixed, impersonal forces. Rather, it is
a complex, dynamic web of people
interacting with each other. As a result,
managers must not only pay attention to
their own concerns, but also understand
what is important to other managers both
within their organizations and at other
organizations.
ETHICS AND SOCIAL RESPONSIBILITY

Managers using a dynamic engagement

approach pay close attention to the values
that guide people in their organizations, the
corporate culture that embodies those
values, and the values held by people
outside the organization.
Philosophical Principles of Business
Ethics
Consequences - If no one
gets hurt, the decision is
ethical.
When attempting
to decide what is Duties, obligations, and
right and wrong, principles - If a decision
violates a universal
managers can principle, it is unethical.
focus on:
Integrity - If the person in
question has good
character, he/she is
behaving ethically.
Ethical Temptations & Violations
Stealing
from
employers & Misuse of
Corporate customers corporate
espionage
resources

Misuse of Treating
corporate people
resources unfairly

Divulging
Poor
confidential
cyberethics
information
Conflict of
interest
 The Stakeholder’s of Social
Responsibility
Stakeholder

Owners
Internal

Stockholders
s

Employees The
Board of Directors Organizatio
n
Customers
Suppliers
Creditors
Stakeholder
External

Labor Unions
Competitors
s

Special Interest Groups

Customer Groups
Government Agencies
Financial Institutions
 Environment
al
Managemen
t
Compassion
Work/Life
ate
Programs
Downsizing Social
Responsibili
ty Initiatives
Acceptanc
Social
e of
Leaves of
Whistle
Absence
Blowers
Community
Redevelopme
nt Projects
GLOBALIZATION AND MANAGEMENT

The dynamic engagement approach

recognizes that the world is at the
manager’s doorstep in the 1990s. With
world financial markets running 24 hours a
day, and even the remotest corners of the
planet only a telephone call away, managers
facing the twenty-first century must think of
themselves as global citizens.
INVENTING AND REINVENTING
ORGANIZATIONS
Managers who practice dynamic
engagement continually search for ways to
unleash the creative potential of their
employees and themselves.

REENGINEERING
This occurs when an organization conducts a
significant reassessment of what it is all
about.
CULTURES AND MULTICULTURALISM
Managers who embrace the dynamic
engagement approach recognize that the
various perspectives and values that people
of different cultural backgrounds bring to
their organizations are not only a fact of life
but a significant source of contributions.
QUALITY
All managers should be thinking about how
every organizational process can be
conducted to provide products and services
that are responsible to tougher and tougher
customer and competitive standards.
Impact of the Internet
on Customers and External Relationships
The Marketing Side of E-
Commerce

The Purchasing Side of E-

Commerce

Changing of Intermediaries

The Enhancement of
Globalization
Integrating the New
Economy with the Old
Economy
Living with Increased
Visibility
 EMERGENCE OF MANAGEMENT
THOUGHT
Name and year of major work Major contribution to management
Scientific Management
Frederick W. Taylor Acknowledged as “the father of scientific management”.
His
Shop Management (1903) primary concern was to increase productivity through
greater
Principles of Scientific efficiency in production & increased pay for workers,
through
Management (1911) the application of the scientific method. His principles
empha-
Testimony before the Special sized using science, creating group harmony and
cooperation,
House Committee (1912) achieving maximum output, and developing workers.

Henry L. Gantt (1901) Called for scientific selection of workers and

“harmonious
cooperation” between labor and management.
Developed the
Gantt chart. Stressed the need for training.

Frank and Lillian Gilbreth(1900) Frank is known primarily for his time and motion
studies.
Lillian, an industrial psychologist, focused on the human
aspects
of work and the understanding of workers’ personalities
and
needs.
 EMERGENCE OF MANAGEMENT THOUGHT
(Contd.)

Name and year of major work Major contribution to management

Behavioral Science
Hugo Munsterberg (1912) Application of psychology to industry and management.
Walter Dill Scott (1911) Application of psychology to advertising, marketing, &
personnel
Max Weber (translations Theory of bureaucracy.
1946, 1947)
Vilfredo Pareto (books Referred to as “the father of the social systems
approach” to
1896 - 1917) organization and management.
Elton Mayo and Famous studies at the Hawthorne plant of the Western
Electric
F.J. Roethlisberger (1933) Company. Influence of social attitudes and relationships
of work
groups on performance.
Systems theory
Chester Barnard The task of managers is to maintain a system of
cooperative
The Functions of the effort in a formal organization. He suggested a
comprehensive
Executive (1938) cial, financial, security, accounting, and managerial.
Recognized
 EMERGENCE OF MANAGEMENT THOUGHT
(Contd.)

Name and year of major work Major contribution to management

Emergence of modern management thought and recent contributors to management

Many authors are discussed. Major contributors include Chris Argyris, Robert R. Blake,
C. West Churchman, Ernest Dale, Keith Davis, Mary Parker Follett, Frederick Herzberg,
G.C. Homans, Harold Koontz, Rensis Likert, Douglas McGregor, Abraham H. Maslow,
Lyman W. Porter, Herbert Simon, George A. Steiner, Lyndall Urwick, Norbert Wiener,
and Joan Woodward.

Peter F. Drucker (1974) Very prolific writer on many general management topics.
W. Edwards Deming Introduced quality control in Japan.
(after World War II)
Laurence Peter (1969) Observed that eventually people get promoted to a level
where
they are incompetent.
William Ouchi (1981) Discussed selected Japanese managerial practices
adapted in the
U.S. environment.
Thomas Peters and Identified characteristics of companies they considered
Robert Waterman (1982) excellent.
 PLANNING

Planning involves selecting missions and

objectives and the actions to achieve
them; it requires decision making, that is,
choosing from among alternative future
courses of action. Plans thus provide a
rational approach to achieving pre-
selected objectives.
Types of Planning
Strategic Plan - Master
plan that shapes the firm’s
Plan
C destiny
Plan B
Tactical Plan - Specific
Plan A
goals and plans most
relevant to a particular
organizational unit

Operational Plan -
Specific procedures and
actions required at lower
organizational levels
 TYPES OF PLANS
Purposes or Missions
The mission, or purpose identifies the basic
function or task of an enterprise or agency
or any part of it.
Objectives or Goals
Objectives, or goals are the ends toward
which activity is aimed.
Strategies
Strategy is defined as the determination of
the basic long-term objectives of an
enterprise and the adoption of courses of
action and allocation of resources necessary
to achieve these goals.
Policies
Policies also are plans in that they are
general statements or understandings that
guide or channel thinking in decision
making.
Procedures
Procedures are plans that establish a
required method of handling future
activities. They are chronological sequences
of required actions. They are guides to
action, rather than to thinking, and they
detail the exact manner in which certain
activities must be accomplished.
Rules
Rules spell out specific required actions or
nonactions, allowing no discretion. They are
usually the simplest type of plan.

Programs
Programs are a complex of goals, policies,
procedures, rules, task assignments, steps
to be taken, resources to be employed, and
other elements necessary to carry out a
given course of action; they are ordinarily
supported by budgets.
Budgets
A budget is a statement of expected results
expressed in numerical terms. It may be
referred to as a “numberized” program.
 A Framework for Planning
1. Define the present situation
Evaluation and Feedback

2. Establish goals & objectives

3. Forecast aids and barriers to goals &

objectives

4. Develop action plans to reach goals &

objectives

5. Develop budgets

6. Implement the plans

7. Control the plans

 Programmed and Nonprogrammed
Decisions: A Comparison
Programmed
Decisions
Repetitive, routine,
Types of frequent; decisions
problems made according to
specific procedures
Depend on policies and
Proce- rules
dures
Nonprogrammed
Decisions
Novel, complex,
difficult, infrequent;
decisions require
original thinking
Require creativity,
intuition, tolerance for
ambiguity

Business firm: Periodic Business firm:

reorders of inventory Diversification into new
Health care: Procedure products and markets
Example for admitting patients Health care: Purchase
s University: Necessary of experimental
GPA for good academic equipment
standing University:
Construction of new
classrooms
 Steps in Problem Solving
and Decision Making
Identify and Evaluate the
Develop creative
diagnose the alternative
alternatives
problem solutions
“Some of these
“What really, “Let’s dream up
ideas are good;
really is our some great
others are
problem?” ideas.”
wacko.”

Evaluate and Implement the Choose one

control decision alternative solution

“How really good “Now let’s take “This alternative

was that idea?” action.” is a winner!”
 Factors Influencing Decision Making
“I like risks
and I’m
really
bright.”
“Let’s wait
before Personality and “I’m great
deciding.” cognitive at
intelligence hunches.”

Procrastination Intuition
“I’ve got “I can
integrity. read
” people
Emotional great and
Values intelligence control
my
“Our backs
emotions.
are to the Decision ”
wall, and we Quality of
disagree.” Maker information
Crisis and “The IS
conflict Political group is
Degree of consideration feeding me
uncertainty s great stuff.”
“What does
“Looks like a my boss want
sure thing.” me to
decide?”
RATIONAL DECISION-MAKING

A decision-making model that describes how

individuals should behave in order to
maximize some outcome.

Steps in the Rational Decision-Making Model

1. Define the problem
2. Identify the decision criteria
3. Allocate weights to the criteria
4. Develop the alternatives
5. Evaluate the alternatives
6. Select the best alternative
ASSUMPTIONS OF THE MODEL

1. Problem clarity
2. Known options
3. Clear preferences
4. Constant preferences
5. No time or cost constraints
6. Maximum payoff
 How Decisions are made in
Organizations?

Most significant decisions are made by

judgement, rather than by a defined
prescriptive model.
Bounded Rationality
Individuals make decisions by constructing
simplified models that extract the essential
features from problems without capturing
all their complexity.
The satisficing decision maker settles for
the first solution that is “good enough”.
Intuitive Decision-Making

An unconscious process created out of

distilled experience.

Intuition isn’t independent of rational

analysis. The two complement each each
other.
 When do People use
Intuitive Decision Making?

1. When a high level of uncertainty exists

2. When there is little precedent to draw on
3. When variables are less scientifically
predictable
4. When “facts” are limited
5. When facts don’t clearly point the way to
go
6. When analytical data are of little use
7. When there are several plausible
alternative solutions to choose from, with
good arguments for each
8. When time is limited and there is
pressure to come up with the right
 Making Choices Through
Heuristics
HEURISTICS: Judgmental shortcuts in
decision making.
AVAILABILITY HEURISTICS: Tendency to base
judgements on information that is readily
available.
REPRESENTATIVE HEURISTICS: Assessing
likelihood of an occurrence by drawing
analogies and seeing identical situations
where they don’t exist.
ESCALATION OF COMMITMENT: Increased
commitment to a previous decision despite
negative information.
 ALTERNATIVE COURSES OF
ACTION

Experimentation

How to select
Reliance on Choice
from among
the past made
alternatives?

Research
and
analysis
 ORGANISING
 The identification and classification of
required activities
 The grouping of activities necessary to
achieve objectives
 The assigning of each grouping to a
manager with the authority to supervise
it
 Provision for horizontal and vertical
coordination

Organisation implies a formalised structure

of roles or positions
 ORGANISING (contd)
FORMAL ORGANISATION: The intentional
structure of roles in a formally organized
enterprise.

INFORMAL ORGANISATION: A network of

personal and social relationships not
established or required by the formal
organization but arising spontaneously as
people associate with one another

DEPARTMENTATION: A distinct area, division

or branch of organization over which a
manager has authority for performance of
specified activities
ORGANISATION LEVELS AND SPAN
SPAN:
Number of Persons a manager can supervise
effectively

LIMIT ON SPAN:
The number of subordinates a manager can
supervise effectively

LEVEL:
The number of vertical reporting
relationships
 SPAN (contd)
NARROW WIDE
Advantage Close Supervision
Delegation
Close Control Policies Stated
Fast Communication Trained
Juniors

Disadvant. Superiors too

Overloaded
involved
supervisors
Many levels Loss of
control
High Costs Exceptional
FACTORS INFLUENCING SPAN

Training
Delegation
Repetitiveness of Operations
Clear Objectives
Environmental dynamism
Communication Techniques
Specialization
Quality of Manager
Complexity of Task
Subordinates’ willingness to take
risks
 PROCESS OF ORGANIZING
Feasibility Studies and Feedback

1. Enterprise
objectives

6. Horizontal 7.
2. Supporting 3. Identifica- 4. Grouping and Staffing
objectives, tion and of vertical
classifica- activities 5. coordina-
policies,
tion of in light of Delegation tion of
and plans
required resources of authority
activities and authority &
situations informatio
n
relationshi
p 8.
Leading

9.
Controllin
g
Part 2 Part 3 Part 4,5,6
Planning Organizin Other
g Functions
DEPARTMENTATION - FUNCTIONAL
DEPARTMENTATION - FUNCTIONAL

ADVANTAGES
DISADVANTAGES

Logical specialization Local Objectives

emphasis
Simplifies Training Not multi-skilled
Tight Control Functional Silos
Maintains power/prestige Slow response to
change
Limits development of
General Managers
DEPARTMENTATION - GEOGRAPHIC
DEPARTMENTATION - GEOGRAPHIC

ADVANTAGES
DISADVANTAGES

Emphasizes local markets More persons

with GM
Regional Coordination skills needed
Local economies Central Services
Better face-to-face with made
difficult
customers Problems of control
Training ground for GMs and
coordination
DEPARTMENTATION – CUSTOMER
GROUP
 DEPARTMENTATION – CUSTOMER
GROUP

ADVANTAGES
DISADVANTAGES

Customer needs focus Coordinating

clashing
Develops expertise in demands
customer area Experts in
Customer’s
business
No clear definition
of
customer
group
 DEPARTMENTATION – PROCESS

PRESIDENT

Engineering Production Marketing Finance Personnel

Punch presses Welding Electroplating

DEPARTMENTATION – PROCESS

ADVANTAGES
DISADVANTAGES

Economic Advantage Coordination

Specialized technology Unsuitable to
develop
Special Skills GMs
Simplified training
DEPARTMENTATION – PRODUCT
DEPARTMENTATION – PRODUCT

ADVANTAGES
DISADVANTAGES

Focus on product line More persons with

Specialised capital/ skills GM
skills
Product growth/ diversity Central Services
Coordination of Functional difficult
Activities Difficult top
mgt
Training for GMs control
 MATRIX ORGANISATION
Matrix organization normally is the combining of
functional and project or product patterns of
departmentation in the same organization
structure.
EFFECTIVE MATRIX ORGANISATION
1) Define project objective
2) Clear roles, authority and responsibilities
3) Influence in project to be knowledge, not
rank, based
4) Balance power between project &
functional mgrs
5) Select experienced leader of project
6) Install appropriate controls
7) Undertake organisation/ team
development
8) Reward fairly
 SBU ORGANISATION

SBUs: Distinct businesses set up as part of

larger companies to ensure that the
product line is promoted and handled as
an independent business

1) Have mission distinct from other SBUs

but within the boundary set by the
parent
2) Definable markets, competitors
3) Prepare own integrative plans
4) Manage own resources in key areas
 The Bureaucratic Form of
High
OrganizationFew

Top-
Level
Manager Number of
Power s Employee
and
Middle- s
Authority
Level
Managers

First-Level
Managers

Operative Employees

Low Many
 Matrix
Matrix
Organization
Organization

Flat
Flat
Structures
Structures
Team Nonbureaucratic ,,
Team Downsizin
Structure Forms of Downsizin
Structure g, and
and
Organization g,
Outsourcin
Outsourcin
gg

Organization
Organization by
by
Process
Process
(Instead
(Instead of
of Task)
Task)
 AUTHORITY AND POWER

AUTHORITY: The right in a position, and that

of the person occupying it, to exercise
discretion in making decisions that affect
others.
POWER: Ability to induce or influence
beliefs or actions of other person/s.
BASES OF POWER:
1) Legitimate Power
2) Power based on Expertise
3) Referent Power
4) Reward Power
5) Coercive Power
 Reward
Power Coercive
Legitimate
Power
Power

Types
of
Power

Subordinat Expert
Referent Power
e Power
Power
 AUTHORITY AND POWER

AUTHORITY:

1) Line: Where a superior exercises direct

supervision over a subordinate

2) Staff: Advisory role

3) Functional: To control specified activities

undertaken by persons in other
departments
 DECENTRALISATION AND
DELEGATION

DECENTRALISATION:
The tendency to disperse decision-making
authority in an organized structure

DELEGATION:
Discretion given by a superior to a
subordinate to make decisions – not a right
by structure
 Factors Determining
Decentralisation
1) Cost of Decision
2) Desire for Uniformity of Policy
3) Size
4) Culture and History
5) Management Philosophy
6) Desire for Independence
7) Availability of Managers
8) Controls
9) Environmental Influences
 STAFFING
It involves filling, and keeping filled, the
positions in the organization structure.

SYSTEMS APPROACH TO STAFFING

Organization Staffing
Model Awareness of
Legal Aspects
of Staffing
Human
Performance
Resources
Evaluation
Planning

RETENTION
RETENTION
Compensation Recruitment

Orientation,
Training, and Selection
Development
Getting Hired:
A Model for Selection
Preliminar Completion Psychologic
Applicant
y of al and
is
Screening Application Personnel
Recruited
Interview Form Testing

Physical
Reference Job
Examinatio
Checking Interview
n

Adapted from Exhibit

10.5
Recruitment Purposes and Sources

Purposes Sources
Include . . Include . .
. .

◆ Finding employees ◆ Present employees

who fit well into ◆ Referrals by
the culture of the present employees
company ◆ External sources,
such as
◆ Selling the
advertising and
company to
placement offices
quality candidates
◆ Online recruiting
 Characteristics and Consequences
of an Enriched Job
Characteristics
Direct feedback Consequences

Client relationships

New learning
Control over Increased
scheduling job
satisfaction
Unique experience
Higher
Control over quality of
resources work life
Direct Increased
communication productivity
authority
Personal
Three Approaches to Job Enrichment

Job Involvement Degree to which individuals identify

psychologically with their work

Job Enlargement Increasing the number and variety of

tasks within a job
10
6 tasks
tasks
Job Rotation Temporary switching of job assignments

Job 1 Job 2 Job 3 Job 4

 Modified Work Schedules
Flexible
Working
Hours

Sharing Office
Compressed What Space and
Workweek advantages
are there to
Hoteling
each modified
schedule?
Part Time
Disadvantage
Telecommutin s? and
g Temporary
Work

Job Sharing
APPRAISAL PROCESS
 360 o Feedback Performance
Appraisal Other
Managers

feedback
Your
Evaluation
Peers or
of Yourself feedback feedback
You Team Members

feedback

Your
Customers
 MANAGER DEVELOPMENT

ON-THE-JOB TRAINING:

 Planned Progression
 Job Rotation
 “Assistant-to”
 Temporary Promotions (Acting Managers)
 Committees
 Coaching and mentorship
 MANAGER DEVELOPMENT

INTERNAL AND EXTERNAL TRAINING

 T-Groups
 Conferences
 University management Programs
 Simulation, Experiential Exercises
 Special Training
 Designing the “Right” Package of
Benefits
Usually Mandatory
◆ Social security ◆ Group life insurance
◆ Workers’ compensation ◆ Retirement pensions
◆ Unemployment compensation◆ Paid vacations

Optional but Frequently Offered

◆ Disability insurance ◆ Employee assistance program
◆ Paid sick leave ◆ Paid rest breaks
◆ Health insurance ◆ Tuition assistance

Optional but Less Frequently Offered

◆ Wellness programs ◆ Vision-care plans
◆ Credit unions ◆ Parental leave
◆ Funeral leave ◆ Retirement counseling

Adapted from Exhibit

10.10
 LEADERSHIP
The art or process of influencing people so
that they will strive willingly and
enthusiastically towards the achievement
of group goals

INGREDIENTS OF LEADERSHIP:
 Ability to use power effectively and
responsibly
 Ability to comprehend different
motivation forces at different times in
different situations
 Ability to inspire
 Ability to evoke response and arouse
motivations
 Leaders Versus Managers
A Leader is . . . A Manager is . . .
 Visionary  Rational
 Passionate  Consulting
 Creative
 Persistent
 Problem-solving
 Flexible
 Tough-minded
 Inspiring
 Analytical
 Innovative  Structured
 Courageous  Deliberative
 Imaginative  Authoritative
 Experimental  Stabilizing
 Independent  One who centralizes
 One who shares knowledge knowledge
Characteristics of Effective
Leaders
1. Driven, high achievers, passionate

2. Possess a strong desire to control others

3. Self-confident

4. Trustworthy and honest

5. Smart, knowledgeable, technically competent

6. Sensitive to people’s needs and feelings

7. Sense of humor

8. Emotionally intelligent
Behaviors of Effective Leaders
Adapt to the situation

Provide stable performance

Demand high standards of performance

Provide emotional support

Give frequent feedback

Have a strong customer orientation

Recover quickly from setbacks

Play the role of servant leader

Qualities of Transformational
and Charismatic Leaders
Masterful
Possess
communicato
a vision
rs

Help group Energy

Inspire members and action
trust feel orientatio
capable n

Intellectually Provide
stimulating inspiration
Ability to inspire confidence and support
amongst people required to achieve Orgn.
Goals on a path of Mission and Vision
Person Action
G

O Productivit


y
 Path
 
A
Quality
 L
Satisfaction
S

Situation
/Context
 PERSON - TRAITS

Universal Theory of Leadership

Certain traits are universally
important and apply to all situations.

PERSONALITY TRAITS
Observable both inside and outside
work context
 AUTOCRATIC - FREE REIN
CONTINUUM

AMOUNT OF AUTHORITY HELD BY THE

LEADER

Autocratic Style Participative Style Free-Rein

Style

Consultative Consensus
Democratic

AMOUNT OF AUTHORITY HELD BY GROUP

MEMBERS
 LIKERT’S 4 SYSTEMS
SYSTEM 1 : EXPLOITATIVE-AUTHORITATIVE
Autocratic, little trust, motivate through
fear, occasional rewards, downward
communication
SYSTEM 2: BENEVOLENT-AUTHORITATIVE
Patronising confidence and trust, rewards +
fear, some upward communication, some
delegation
SYSTEM 3: CONSULTATIVE
Substantial trust, participation, rewards, up
and down communication, delegation.
SYSTEM 4: PARTICIPATIVE
Complete Trust, total involvement, decision
making at all levels, open communication
 High

9 1, 9 9, 9
Country Club Team Management
Management Work accomplishment is
8
THE Thougtful attention to need
of people for satisfying
from committed people;
interdepen- dence through
LEADERSHI 7 relation-ships leads to a
comfortable friendly
a “common stake”
organization purpose leads
in

P organization atmos- phere

and work tempo.
to relationships of trust and
respect.
GRID 6
5, 5
Concern for People

Middle of the Road

5 Management
Adequate organization
performance is possible through
balancing the necessity to get out
4 work with maintaining morale of
people at satisfactory level.

3 9, 1
1, 1 Authority-Compliance
Impoverished Efficiency in operations
2 Management results from arranging
Exertion of minimum effort conditions of work in such a
to get required work done way that human elements
1 is appropriate to sustain interfere to a minimum
Low organi-zation membership. degree.
1 2 3 4 5 6 7 8 9
Low Concern for High
 PERSON - STYLES
Boss-Centered V/s Employee-Centered
Boss-Centered Subordinate-
Leadership Centered
Leadership

Use of Authority
by the Manager

Area of
Freedom for
Subordinates

Manage Manage Manager Manager Manager Manager Manager

r makes r “sells” presents presents presents defines permits
decision decision ideas tentative problem, limits; subordinat
and . and decision gets asks es to
announ- invites subject suggesti group to function
ces it. question to ons, make within
s change. makes decision. limits
decision. defined by
superior.
 CONTEXT -
FIEDLER’S CONTINGENCY THEORY
“Best leadership style depends on the
Situation”
(Where leader can exercise
Task oriented more control)

Socioindependent Favourable for high control

Favourable for moderate

Relationship control
oriented
Favourable for low control

(Defined using (Defined using three

Least Preferred dimensions)
Coworker (LPC)
rating) - Leader-member relations
- Task structure
- Position power

Scales : Good - Poor

High - Low
Strong - Weak
 LEADER-MATCH CONCEPT FOR
FIEDLER’S THEORY
SITUATIONAL CHARACTERISTICS
Situation i ii iii iv v vi vii viii
Leader- Good Good Good Good Poor Poor Poor Poor
Member
Relations

Task High High Low Low High High Low Low

Structure

Position Strong Weak Strong Weak Strong Weak Strong Weak

Power

Task-Motivated
(Low-PC) Task-
Preferred Relationship-Motivated Moti-
Leadershi (High-LPC) vate
p Styles Socioindependent
(Medium-LPC) d

High Moderate
Low
 PATH - GOAL APPROACH
Characteristics
of
subordinates

Functions Leader Motivated Effective

of the subordi- organi-
behavior
leader nates zation

Work
environment
 CONTROLLING
Measurement and Correction of
Performance in order to make sure that
Enterprise Objectives and plans to attain
them are accomplished

BASIC CONTROL PROCESS:

 Establish Standards
 Measure performance
 Correct variations
 The Links Between Controlling and
the Other Management Functions

Organizin Controllin
Planning Leading
g g

Control
 FEEDBACK LOOP OF MANAGEMENT
CONTROL

Measure- Comparison
ment of of actual
Desired Actual
actual performanc
performanc performanc
performanc e against
e e
e standards

Implemen- Program of Analysis of Identifica-

tation of corrective causes of tion of
corrections action deviations deviations
EFFECTIVE CONTROL REQUIREMENTS
1) Tailoring Controls to Plans and Positions
2) Tailoring Controls to Individual Managers
3) Making sure Controls point up Exceptions at
Critical Points
4) Objectivity of Controls
5) Flexibility of Controls
6) Fitting Control System to Organisational
Culture
7) Economy of Controls
8) Establishing Controls that lead to Corrective
Actions
 Qualitative Control Techniques
Technique Definition
Examination of activities or records to verify their
Audit accuracy or effectiveness
External Verification of financial records by external
audit agency or individual
Internal Verification of financial records by an internal
audit group of personnel
Use of auditing techniques to evaluate the overall
Management effectiveness of management
audit
Personal Manager’s first-hand observation of how well
observation plans are carried out
Performance Formal method or system of measuring,
appraisal evaluating, and reviewing employee performance
General guideline to follow in making decisions
Policy and taking action
 Quantitative Control Techniques
Technique Definition

Chart depicting planned and actual progress of

Gantt chart work on a project

Method of scheduling activities and events using

CPM/PERT time estimates

Break-even
Ratio of fixed costs to price minus variable costs
analysis
Economic-
Inventory level that minimizes ordering and
order carrying costs
quantity
Method of assigning value to inventory; A items
ABC analysis are worth more than B or C items

Variance
Major control device in manufacturing
analysis
 Master
budget
Capital-
Cash
expenditure
budget budget
Types of
Budgets
Revenue-
Human and-
resources expense
budget budget

Materials
Production
purchase
budget budget