*Chapter

Seven

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Management and Leadership

McGraw-Hill/Irwin

Copyright 2010 by the McGraw-Hill Companies, Inc. All rights reserved.

Learning Outcomes
Describe the changes occurring today in the management function. Describe the four functions of management. Relate the planning process and decision making to the accomplishment of company goals. Describe the organizing function of management. 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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INDRA KRISHNAMURTHY NOOYI
Pepsi
Profile

Started at Pepsi after earning masters degrees from the Indian School of Management and Yale. Goal was to increase sales overseas, introduce good-foryou products and place more emphasis on food. She is a top manager using a boss-centered leadership style while still being a team player.
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WHAT IS MANAGEMENT?
Four Functions of Management

LG2

Management -- The process used to accomplish

organizational goals through planning, organizing, leading and controlling people and other organizational resources.

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TODAYS MANAGERS
Younger and more progressive. (sociocultural)
- Growing numbers of women. - Fewer from elite universities.

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Managers Roles Are Evolving

LG1

Emphasis is on teams and team building. Managers need to be skilled communicators and team players.
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TODAYS MANAGERS
As the demographic make-up of this country changes the typical manager is changing. Today more managers are women and less are from elite universities. Managers today act more like facilitators than supervisors.

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RESPECT and HOW to GET IT
Managers Roles Are Evolving

LG1

Source: Entrepreneur, www.entrepreneur.com, March 2009.

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The BEST MANAGERS
Name David Axelrod Frank Blake Jamie Dimon Larry Ellison Takeo Fukui Mark Hurd Satoru Iwata Peter Loscher Irene Rosenfeld
Source: BusinessWeek, www.businessweek.com, January 19, 2009.

Managers Roles Are Evolving

LG1

Age 53 59 52 64 64 53 49 51 55

Organization Obama Campaign Home Depot JPMorgan Oracle Honda Hewlett-Packard Nintendo Siemens Kraft Foods

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Managers role
guide, train, support, motivate, and coach employees

FOUR FUNCTIONS of MANAGEMENT

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Four Functions of Management

LG2

1. Planning 2. Organizing 3. Leading 4. Controlling

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SHARING the VISION
Planning & Decision Making

LG3

Vision -- More than a

goal, its a broad explanation of why the organization exists and where its trying to go.
Creating vision for the company is not merely setting a goal but rather creating a sense of purpose for the organization.

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DEFINING THE MISSION
Planning & Decision Making

LG3

Mission Statement -- Outlines the organizations

fundamental purposes. The mission statement is the foundation for setting specific goals and objectives within the organization. It includes: The organizations selfconcept. Its philosophy. Longterm survival needs. Customer needs. Social responsibility. Nature of the product or service.

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SETTING GOALS and OBJECTIVES

Goals -- The broad, long-term
accomplishments an organization wishes to attain.

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Planning & Decision Making

LG3

Objectives -- Specific, shortterm statements detailing how to achieve the organizations goals.

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PLANNING ANSWERS FUNDAMENTAL QUESTIONS

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Planning & Decision Making

LG3

What is the situation now? SWOT Analysis -- Analyzes the organizations

Strengths, Weaknesses, Opportunities and Threats.

How can we get to our goal from here?

Strategic planning Tactical planning Operational planning Contingency planning
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SWOT
SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. As part of the internal analysis, the organization identifies the potential strengths that it can capitalize upon and potential weaknesses that it should improve upon. An organization, as part of an external environmental analysis, identifies the opportunities (factors that an organization can take advantage of) and threats (factors that an organization should avoid or minimize the impact of).

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SWOT MATRIX
Planning & Decision Making

LG3

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STRATEGIC and TACTICAL PLANNING

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Planning & Decision Making

LG3

Strategic Planning -- Done by top management

and determines the major goals of the organization and the policies, procedures, strategies and resources it will need to achieve them.

Tactical Planning -- The process of developing

detailed, short-term statements about what is to be done, who is to do it and how.

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OPERATIONAL and CONTINGENCY PLANNING
Planning & Decision Making

LG3

Operational Planning -- The process of setting

work standards and schedules necessary to implement the companys tactical objectives.

Contingency Planning -The process of preparing alternative courses of action the firm can use if its primary plans dont work out.

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PLANNING FUNCTIONS
Planning & Decision Making

LG3

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Planning
More effort put into planning, will result in greater achievement. All planning should be in writing with an estimation of time and cost. Gantt charts are often used to compare planned results with actual accomplishments. Even the best prepared plans sometimes miss the unexpected problems. Managers should always be prepared to act in the event a plan fails. Poor contingency planning may result in significant

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DECISION MAKING

Decision Making: Finding the Best Alternative

LG3

Decision Making -- Choosing among two or more

alternatives.

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RATIONAL DECISION-MAKING MODEL

1. Define the situation.

Decision Making: Finding the Best Alternative

LG3

2. Describe and collect needed information.

3. Develop alternatives.
4. Develop agreement among those involved. 5. Decide which alternative is best. 6. Do what is indicated. 7. Determine whether the decision was a good one and follow up.
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Decision making skill

Managers dont always go through this seven step process. However, they must always make sound decisions. It is easier said than done.

Decision making skill

Organizing
The Organizing Process
Arranging resources and activities in a coherent structure
Prepare organizational charts to help everyone understand roles and reporting relationships

Organizing
Organizational charts can be shaped like a pyramid, with one CEO at the top, a number of vice presidents reporting to the CEO or President, and then different functional areas reporting to the vice presidents. Organizational charts can also be horizontal in nature, with many dotted line relationships between teams or divisions.

ORGANIZATIONAL CHARTS

*Organizing:
Creating a Unified System LG4

Organization Chart -A visual device that shows relationships among people and divides the organizations work; it shows who reports to whom.

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PROBLEM SOLVING

Decision Making: Finding the Best Alternative

LG3

Problem Solving -- The process of solving the

everyday problems that occur; less formal than decision making and needs quicker action.

Problem-solving techniques include brainstorming and PMI -- Listing all the pluses for a
solution in one column, all the minuses in another and the implications in a third.

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LEVELS of MANAGEMENT

*Organizing:
Creating a Unified System LG4

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LEVELS of MANAGEMENT
A Top-Level Manager needs good conceptual skills, and to be able to effectively communicate goals to the entire corporation. Middle managers require good analytical skills and the ability to communicate. First-line managers are responsible for execution of business plans. Technical skills and good communications skills are necessary.

MANAGEMENT LEVELS

*Organizing:
Creating a Unified System LG4

Top Management -- The highest level, consists

of the president and other key company executives who develop strategic plans.

Middle Management -- Includes general

managers, division managers, and branch and plant managers who are responsible for tactical planning and controlling.

Supervisory Management -- Those directly

responsible for supervising workers and evaluating daily performance.
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TOP MANAGEMENT
Chief Executive Officer (CEO)
- Introduces change into an organization.

*Organizing:
Creating a Unified System LG4

Chief Operating Officer (COO)

- Implements CEOs changes.

Chief Financial Officer (CFO)

- Obtains funds, plans budgets, collects funds, etc.

Chief Information Officer (CIO)

- Gets the right information to the right people so decisions can be made.
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MANAGERIAL SKILLS

Tasks and Skills at Different Levels of Management

LG4

Technical Skills -- The ability to perform tasks in a

specific discipline or department.

Human Relations Skills -- Skills

that involve communication and motivation (leader & member); they enable managers to work through and with people.

Conceptual Skills -- Skills that

involve the ability to picture the organization as a whole and the relationship among its various parts. (estimate future trends)

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Technical Skills
Are the skills needed to perform specific tasks. (how the work is done) These skills are develop through a combination of education and experiences. Technical skills are especially important for first line managers who spend most of their time with the day-to-day operation of the production system. Equally important for top and middle managers also.

Human Relations Skills

Absolutely necessary for managerial success, human relations skills are skills in understanding and getting along with other people. Manager with poor human relations skills may have trouble getting along with subordinateswhich will lead valuable employees to resign or transfer, poor morale. Good communication skill.

Conceptual Skills
Especially prevalent among top managers, conceptual skills involve the ability to diagnose and analyze different situations and to see beyond the present situation. Help managers recognize new market opportunities and threats.-example analysis external environment Top managers depend most on conceptual skills.

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STAFFING
Staffing -- Recruiting, hiring, motivating and

Staffing: Getting and Keeping the Right People

LG4

retaining the best people available to accomplish the companys objectives.

Recruiting good employees is critical. Many people are not willing to work at companies unless they are treated well with fair pay.

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SKILLS NEEDED at VARIOUS LEVELS of MANAGEMENT

Tasks and Skills at Different Levels of Management

LG4

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LAYOFF LEADERS
Largest Layoff Announcements, 1993 to 2008
Company IBM Citigroup Sears Roebuck U.S. Air Force Ford Kmart Boeing U.S. Postal Service Boeing DaimlerChrysler Employees 60,000 53,000 50,000 40,000 35,000 35,000 31,000 29,870 28,000 26,000 Date

Staffing: Getting and Keeping the Right People

LG4

July 1993 November 2008 January 1993 December 2005 January 2002 January 2003 September 2001 January 2002 December 1998 January 2001

Source: Businessweek, www.businessweek.com, December 1, 2008.

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Question
1.What causes companies to have to lay people off? How does a company determine who stays and who goes? Answer: economic crisis, cut cost, management changes, Skills workers, low salary, local employees

LEADERSHIP
Leaders must:

Leading: Providing Continuous Vision and Values.

LG5

- Communicate a vision and rally others around that vision. - Establish corporate values. - Promote corporate ethics. - Embrace change. - Stress accountability and responsibility

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ACCOUNTABILITY through TRANSPARENCY

Leading: Providing Continuous Vision and Values.

LG5

Transparency -- The presentation of the companys

facts and figures in a way that is clear and apparent to all stakeholders.

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LEADERSHIP STYLES
Autocratic Leadership -Making managerial decisions without consulting others.

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Leadership Styles
LG5

Participative or Democratic Leadership -- Managers and

employees work together to make decisions.

Free-Rein Leadership -Managers set objectives and employees are free to do whatever is appropriate to accomplish those objectives.
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LEADERSHIP STYLES
Research tells us which leadership style is best depends on what the goals and values of the firm are, whos being led, and in what situations

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VARIOUS LEADERSHIP STYLES
Leadership Styles
LG5

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NATURAL BORN LEADERS?
Four Types of Executives
Leadership Styles
LG5

Rationalists

Humanists

Politicists

Culturists

Source: CIO Magazine, www.cio.com.

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Four leadership styles

1. Williams and Deal, authors of When Opposites Dance: Balancing the Manager and Leader Within, identify four types of managers: Rationalists, who value sound thinking and work through organizational structure to accomplish tasks. Politicists, who view group dynamics from a power perspective and are adept at politics. Humanists, who are attuned to organizational moods and regard people as a companys top asset. Culturists, who consider culture the preeminent force in an organization and communicate through stories, ceremonies and rituals.

Four leadership styles

Williams and Deal conclude that while people are predisposed to think and act in certain ways, the best executives combine different personality attributes

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EMPOWERMENT
Empowering Workers
LG5

Progressive leaders give employees the authority to make decisions on their own without consulting a manager. Customer needs are handled quickly.
Managers role becomes less of a boss and more of a coach. (less order, but guide and train)

Enabling -- Giving workers the education and tools

they need to make decisions.
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WORK SMARTER
How to Ease Pressure on Workers
Empowering Workers
LG5

Manage output instead of hours.

Train workers to be ready for a more complex corporate structure. (Managing in todays complex environment is about leading not supervising. 1 people handle 2 jobs.)Allow lower-level managers to make decisions.
Use new technology to foster teamwork.

Shift hiring emphasis to collaboration.

Source: BusinessWeek, www.businessweek.com.

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Question
What are the benefits of empowering employees to work smarter? Answer: Employees who are empowered should be more motivated and able to handle more complex tasks.

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MANAGING KNOWLEDGE
Managing Knowledge
LG5

Knowledge Management -Finding the right information, keeping the information in a readily accessible place and making the information known to every one in the firm.

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FIVE STEPS of CONTROLLING

Controlling: Making Sure it Works

LG6

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Controlling
The control function completes the management function loop that starts with planning. Accounting and Finance are often the foundations for control systems, because they provide the numbers management needs to evaluate progress.

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ARE YOU a MICROMANAGER?

Controlling: Making Sure it Works

LG6

Do you have strategic initiatives that you have not addressed? Do you often check on employees for quality control? Do you often check on subordinates throughout the day? Do you rarely take vacations? Is there a lot of turnover?
Source: CFO Magazine, www.cfo.com.

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Answer
If you answer yes to any of these five questions, you are a micromanager. Managers can ask a trusted employee for honest feedback.

Extra Question of ARE YOU a MICROMANAGER?

if they want something done right, they must do it themselves or constantly check on others work in a team situation?

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MEASURING SUCCESS

A Key Criterion for Measurement: Customer Satisfaction

Traditional forms of measuring success are financial.

LG6

Pleasing employees, stakeholders and customers (both internal and external) are important. External Customers -- Dealers, who buy products
to sell to others, and ultimate customers (or end users), who buy products for their own use.

Internal Customers -- Individuals and units within

the firm that receive services from other individuals or units.
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PROGRESS ASSESSMENT
Whats the difference between goals and objectives?

Progress Assessment

What does a company analyze when it does a SWOT analysis?

What are the differences between strategic, tactical and operational planning? What are the seven Ds in decision making?
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PROGRESS ASSESSMENT

Progress Assessment

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How does enabling help achieve empowerment? What are the five steps in the control process? Whats the difference between internal and external customers?

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Answer
1. Whats the difference between goals and objectives?
Goals are broad, long-term accomplishments an organization wishes to attain. Objectives are specific, short-term statements detailing how the organization will achieve the organizations goals.

2. What does a company analyze when it does a SWOT analysis? In todays rapidly changing business environment, managers must think of planning as a continuous process. The SWOT analysis is an important part of the planning process as it evaluates an organizations strengths, weaknesses, opportunities and threats.

Answer
3. What are the differences between strategic, tactical and operational planning? Strategic planning is the process top management uses to determine the major goals of the organization, and the policies, procedures, strategies, and resources the organization will need to achieve them. Tactical planning is the process of developing detailed, short-term statements about what is to be done, who is to do it, and how. This type of planning is typically completed by managers at lower levels of the organization whereas strategic planning is done by the top managers. The final type of planning is operational. Operational planning is the process of setting work schedules and standards necessary to complete the organizations tactical objectives. This type of planning is the department managers tool for daily and weekly operations.

Answer
1. How does enabling help achieve empowerment? Enabling is the key to successfully empowering employees. Enabling means giving workers the education and the tools they need to make decisions.

2. What are the five steps in the control process? Controlling incorporates: (1) setting clear standards, (2) monitoring and recording performance, (3) comparing performance with plans and standards, (4) communicating results and deviations to employees, and (5) providing positive feedback for a job well done and taking corrective action necessary.

Answer
3. Whats the difference between internal an external customers? Not all customers come from outside the organization. Internal customers are defined as individuals and business units within the firm that receive services from other individuals or units. For example, the field salespeople are the internal customers of the marketing research units that prepare market reports for them. External customers are more traditional and includedealers, who buy products and sell to others, and ultimately customers who buy products for their own personal use.