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What is Management ???

Is the process of using what you have

{ RESOURCES }, to do what you want to do . {GOALS}

What Is Management ?
The process of getting things done,

effectively and efficiently, through and with other people

Objective - attain organizational goals Efficiency - doing things right Effectiveness - doing the right thing !

Introductory Concepts: What Are Managerial Competencies?

Competency a combination of knowledge, skills, behaviors, and attitudes that contribute to personal effectiveness

Managerial Competencies sets of knowledge, skill, behaviors, and attitudes that a person needs to be effective in a wide range of positions and various types of organizations

Why are Managerial Competencies Important?

You need to use your strengths to do your best You need to know your weaknesses You need developmental experiences at work to become successful leaders and address your weakness You probably like to be challenged with new learning opportunities Organizations do not want to waste human resources Globalization deregulation, restructuring, and new competitors add to the complexity of running a business

A Model of Managerial Competencies

Communication Competency Planning and Administration Competency

Teamwork Competency

Managerial Effectiveness

Global Awareness Competency

Self-Management Competency

Strategic Action Competency

7 categories of resources: People Money Time Work Procedures Energy Materials Equipment

Management A science or an Art?

We can call a discipline scientific if its
1. methods of inquiry are systematic & empirical; 2. information can be ordered and specified; and 3. results are cumulative and communicable.

The word science is used to denote two types of systematic knowledge

1. Natural or exact 2.Behavioural or inexact

We place management in the category of Behavioral Science.

Management A science or an Art? contd..

Art is concerned with the understanding of HOW a

particular work has been done.\

A theoretical body of lessons and principles which a

manager has learnt in a classroom will not secure for him/her the aimed results unless he/ she has also the skill( or art) of applying such principles and body of knowledge to his/ her special problem.


In this sense management is an art like the art of a musician or the art of a painter who seeks to achieve the desired effect with the help of his/her own skills.


Management A professsion?
Mcfarland gives following characteristics of a profession:

1. Existence of an organized and systematic knowledge. 2. Formalized methods of acquiring training and experience. 3.Existence of an association with professionalisation as its goal. 4. Existence of an ethical code to regulate the behaviour. 5. Charging the fees base on service.


No greater damage could be done to our economy or to our society than to attempt to professionalize management by licensing managers, for instance. Or by limiting access to management to people with a special academic degree.


Professional management Vs family management contd Kikkoman Corporation of Japan- the worlds leading supplier of soya sauce, descendants of the founders still control and run the firm after 17 generations since its birth, more than 300 years ago. The phenomenal progress of Ford Motors , Exxon, IBM, DU Pont etc bears testimony to the quality of leadership, and vision of respective families of Ford, Rockefeller, Watson and Du Pont. In the words of K. K. Birla,
If people like Sir Jamshetji Tata or Rai Bahadur Gujarmal Modi were to start their business career again, I would any day put my rupee on them than on th ebest of the professionals.


The Evolution of Management Thought

The Evolution of Management Theory

F.W. Taylor and Scientific Management Scientific Management

The systematic study of the relationships between people and tasks for the purpose of redesigning the work process to increase efficiency.


Four Principles of Scientific Management workers perform their tasks, 1) Study the way
gather all the informal job knowledge that workers possess and experiment with ways of improving how tasks are performed Time-and-motion study

Four Principles of Scientific Management

2) Codify the new methods of performing tasks into written rules and standard operating procedures

Four Principles of Scientific Management

3) Carefully select workers who possess

skills and abilities that match the needs of the task, and train them to perform the task according to the established rules and procedures

Four Principles of Scientific Management

4) Establish a fair or acceptable level of

performance for a task, and then develop a pay system that provides a reward for performance above the acceptable level

Administrative Management Theory Max Weber

Developed the principles of bureaucracy as a formal

system of organization and administration designed to ensure efficiency and effectiveness.

Webers Principles of Bureaucracy

Webers Principles of Bureaucracy

1) 2)

A managers formal authority derives from the position he holds in the organization. People should occupy positions because of their performance, not because of their social standing or personal contacts.

Webers Principles of Bureaucracy 3) The extent of each positions formal authority and

task responsibilities and its relationship to other positions should be clearly specified. Authority can be exercised effectively when positions are arranged hierarchically, so employees know whom to report to and who reports to them.

Webers Principles of Bureaucracy


Managers must create a well-defined system of rules, standard operating procedures, and norms so they can effectively control behavior .

Fayols Principles of Management Division of Labor: allows for job specialization.

jobs can have too much specialization leading to poor

quality and worker dissatisfaction. Authority and Responsibility both formal and informal authority resulting from special expertise. Unity of Command Employees should have only one boss.

Fayols Principles of Management

Equity - The provision of justice and the fair and

impartial treatment of all employees. Order - The arrangement of employees where they will be of the most value to the organization and to provide career opportunities. Initiative - The fostering of creativity and innovation by encouraging employees to act on their own.

Fayols Principles of Management

Obedient, applied, respectful employees are

necessary for the organization to function.

Remuneration of Personnel
An equitable uniform payment system that

motivates contributes to organizational success.

Fayols Principles of Management

Stability of Tenure of Personnel
Long-term employment is important for the

development of skills that improve the organizations performance.

Subordination of Individual Interest to the Common Interest

The interest of the organization takes precedence over

that of the individual employee.

Fayols Principles of Management Esprit de corps

Comradeship, shared enthusiasm foster

devotion to the common cause (organization).

Discussion Question?important aspect Which of the following is the most

of Fayols principles of management?

A. Division of Labor B. Unity of Command

C. Remuneration of Personnel
D. Esprit de corps

Behavioral Management Theory Behavioral Management

The study of how managers should personally behave

to motivate employees and encourage them to perform at high levels and be committed to the achievement of organizational goals.

Behavioral Management Mary Parker Follett

Concerned that Taylor ignored the

human side of the organization Suggested workers help in analyzing their jobs If workers have relevant knowledge of the task, then they should control the task

The Hawthorne Studies setting Studies of how characteristics of the work

affected worker fatigue and performance at the Hawthorne Works of the Western Electric Company from 1924-1932.

The Hawthorne Studies

Worker productivity was measured at

various levels of light illumination. Researchers found that regardless of whether the light levels were raised or lowered, worker productivity increased.

The Hawthorne Studies Human Relations Implications

Hawthorne effect workers attitudes toward their

managers affect the level of workers performance

The Hawthorne Studies that Human relations movement advocates

supervisors be behaviorally trained to manage subordinates in ways that elicit their cooperation and increase their productivity

The Hawthorne Studies Implications

Behavior of managers and workers in the work

setting is as important in explaining the level of performance as the technical aspects of the task Demonstrated the importance of understanding how the feelings, thoughts, and behavior of workgroup members and managers affect performance

TheoryMcGregor proposed the two different sets X and Theory Y Douglas

of assumptions about workers.
Theory X assumes the average worker is lazy, dislikes

work and will do as little as possible.

Workers have little ambition and wish to avoid responsibility Managers must closely supervise and control through reward and punishment.

Theory X vs. Theory Y

Management Science Theory

Contemporary approach to management that

focuses on the use of rigorous quantitative techniques to help managers make maximum use of organizational resources to produce goods and services.

Quantitative management utilizes

linear and nonlinear programming, modeling, simulation, queuing theory and chaos theory. Operations management techniques used to analyze any aspect of the organizations production system.

Management Science Theory

Total Quality Management (TQM)

focuses on analyzing input, conversion, and output activities to increase product quality. Management Information Systems (MIS) provides information vital for effective decision making.

Organizational Environment Theory

Organizational Environment The set of forces and conditions that operate beyond an organizations boundaries but affect a managers ability to acquire and utilize resources

Business and Society

The collection of private, commercially oriented organizations A broad group of people and other organizations, interest groups, a community, a nation.


Business and society interrelate in a macroenvironment as stakeholders.

Society as the Macroenvironment

Social Economic




Segments of the Macroenvironment Segment



Demographics, lifestyles, social values Nature and direction of the economy in which business operates
Processes for passing of laws and election of officials. Interactions between firms, politics, and government Changes in technological advancements taking place in society




A Pluralistic Society
Prevents concentration of

Pursuit of self-interest Proliferates organizations and

Maximizes freedom of

expression and action

Disperses individual allegiances

groups with overlapping goals Forces conflicts to center stage Promotes inefficiency

Creates diversified set of

Provides checks and balances


Business and Stakeholder Relationships

Figure 1-2

Special-Interest Society Special Interests groups

make life more complex for business and government number in the tens of thousands pursue their own focused agenda

are more active, intense, diverse and focused

attract a significant following often work at cross purposes, with no unified set of goals


Social Environment, Business Criticism, and Corporate Response

Affluence Education Awareness

Factors in the Social Environment Rising Expectations Rights Movement Victimization Philosophy

Entitlement Mentality
Business Criticism

Increased Concern for the Societal Environment

Figure 1-3

A Changed Social Contract


Companies Under the Magnifying Glass

Adelphia Comm. Arthur Andersen Bristol-Meyers Computer Associates Dynegy Enron Global Crossing


ImClone Systems Merrill Lynch

Qwest Comm.
Tyco Intl. WorldCom Xerox

What does fraud cost?

Cost to corporations: > $400 billion a year

Organizations lose $9/day/employee

Median loss caused by males: $185,000 Median loss caused by females: $48,000

Fraud Group Warns of Theft, Boston Sunday Globe, 2/3/2002.


Eliminating Business Ethics...

A business cant have ethics any more than a building

can have ethics. I dont believe the university is a place for thatfamily & elementary & secondary schools are.
Milton Friedman, Nobel Laureate


Teaching Idealism or Management Issues...

A business ethics course is not serving its mission

in the curriculum if it just deals with ideological stuff; its got to deal with the stuff of leadership & management.
Kenneth Goodpaster, University of St. Thomas


Developing Trust & Confidence in Business... alone did not cause our Individuals
current crisis Many stakeholders were involved in supporting deception, fraud & destruction Board members Regulators
Top management Attorneys Politicians Mass media

Accounting firms
Securities analysts

Colleges of business


How does ethical decision making occur in organizations?

The #1 influencer of ethical/unethical behavior is

the influence of significant others & the corporate culture Business ethics in an organization relates to a corporate culture of values, programs, enforcement & leadership Stakeholders must support organizational ethics initiativesits good business
Stop focusing on the short term!!!


Corporate Social Responsibility (CSR)

Preliminary definitions of CSR
The impact of a companys actions on society Requires a manager to consider his acts in terms of a

whole social system, and holds him responsible for the effects of his acts anywhere in that system

Corporate Social Responsibility (CSR)

Corporate Citizenship Concepts Corporate social responsibility emphasizes obligation and accountability to society Corporate social responsiveness emphasizes action, activity Corporate social performance emphasizes outcomes, results

Corporate Social Responsibility (CSR)

Business Criticism/ Social Response Cycle

Factors in the Societal Environment Criticism of Business Increased concern for the Social Environment A Changed Social Contract

Business Assumption of Corporate Social Responsibility Social Responsiveness, Social Performance, Corporate Citizenship

A More Satisfied Society

Fewer Factors Leading to Business Criticism Increased Expectations Leading to More Criticism

Corporate Social Responsibility (CSR)

Historical Perspective
Economic model the invisible hand of the

marketplace protected societal interest Legal model laws protected societal interests

Corporate Social Responsibility (CSR)

Historical Perspective
Modified the economic model Philanthropy Community obligations Paternalism

Corporate Social Responsibility (CSR)

Historical Perspective
What was the main motivation? To keep government at arms length

Corporate Social Responsibility (CSR)

Historical Perspective From the 1950s to the present the concept of CSR has gained considerable acceptance and the meaning has been broadened to include additional components

Corporate Social Responsibility (CSR)

Evolving Viewpoints
CSR considers the impact of the companys actions on

society (Bauer) CSR requires decision makers to take actions that protect and improve the welfare of society as a whole along with their own interests (Davis and Blomstrom)

Corporate Social Responsibility (CSR)

Evolving Viewpoints
CSR mandates that the corporation has not only

economic and legal obligations, but also certain responsibilities to society that extend beyond these obligations (McGuire)

Corporate Social Responsibility (CSR)

Evolving Viewpoints CSR relates primarily to achieving outcomes from organizational decisions concerning specific issues or problems, which by some normative standard have beneficial rather than adverse effects upon pertinent corporate stakeholders. The normative correctness of the products of corporate action have been the main focus of CSR (Epstein)

Corporate Social Responsibility (CSR)

Carrolls Four Part Definition CSR encompasses the economic, legal, ethical and discretionary (philanthropic) expectations that society has of organizations at a given point in time

Corporate Social Responsibility (CSR)

Carrolls Four Part Definition Understanding the Four Components

Responsibility Economic Legal Ethical

Societal Examples Expectation Required Be profitable. Maximize sales, minimize costs, etc. Required Obey laws and regulations. Expected Do what is right, fair and just. Be a good corporate citizen.

Discretionary Desired/ (Philanthropic) Expected

Pyramid of CSR

Corporate Social Responsibility (CSR)

Stakeholder View
Stakeholder Group Addressed and Affected

CSR Component
Economic Legal Ethical Philanthropic

Owners Con- Employees Community sumers 1 4 2 3

3 4 3 2 1 4 1 2 2 4 3 1

5 5 5 5

Corporate Social Responsibility (CSR) Arguments Against

Restricts the free

market goal of profit power maximization Limits the ability to Business is not compete in a global equipped to handle marketplace social activities Dilutes the primary aim of business

Increase business

Corporate Social Responsibility (CSR) Arguments For

Addresses social issues

Limits future government

business caused and allows business to be part of the solution Protects business selfinterest

intervention Addresses issues by using business resources and expertise Addresses issues by being proactive

Corporate Social Responsibility (CSR) Business Responsibilities in the 21st Century

Demonstrate a commitment to societys values and contribute to societys social, environmental, and economic goals through action. Insulate society from the negative impacts of company operations, products and services. Share benefits of company activities with key stakeholders as well as with shareholders. Demonstrate that the company can make more money by doing the right thing.

Corporate Social Responsiveness

Evolving Viewpoints Ackerman and Bauers action view Sethis three stage schema Fredericks CSR1, CSR2, and CSR3 Epsteins process view

Corporate Social Performance

Carrolls CSP model integrates economic concerns into a social performance framework

Corporate Social Performance

Extensions and Reformulations
Wartick and Cochrans extensions Woods reformulations

Swansons Reorientation

Corporate Social Performance

Corporate Social Performance Nonacademic Research

Fortune's ranking of most and least admired

corporations Council on Economic Priorities Corporate Conscience Awards Business Ethics Magazine Awards WalkerInformations Research on the impact of social responsibility

Corporate Citizenship
Corporate citizenship embraces all the facets of corporate social responsibility, responsiveness and performance

Socialand FinancialPerformance
Perspective 1: CSP Drives the Relationship
Good Corporate Social Performance Good Corporate Financial Performance Good Corporate Reputation

Perspective 2: CFP Drives the Relationship

Good Corporate Financial Performance Good Corporate Social Performance Good Corporate Reputation

Perspective 3: Interactive Relationship Among CSP, CFP, and CR

Good Corporate Social Performance Good Corporate Financial Performance Good Corporate Reputation

Social and Financial Performance

A Multiple Bottom-Line Perspective

Socially Conscious or Ethical Investing

Social screening is a technique used to screen firms for investment purposes

Ethics and Social Responsibility

The study of morality and standards of


Corporate Social Responsibility (CSR)

Those actions taken by a firm that are intended

to benefit society beyond the requirements of the law and the direct interests of the firm

MNCs and Ethics

Challenges for MNCs Widespread perception that MNCs are untrustworthy and corrupt
Increased capacity of NGOs to mobilize public pressure in

response to perceived ethical lapses

Expectation that MNCs will adhere to higher standards

MNC responses Adopting internal codes of conduct to establish minimal social and environmental standards
Building alliances with NGOs Committing international standards such as the UN

Global Compact, SA8000 and ISO14000

Implications for Managers

Need for lifelong learning
The most valuable asset is the ability to learn how to learn

(Thomas Friedman, The World is Flat)

Being alert for changes and quick to respond

Knowing how to work with others Being comfortable with uncertainty and ambiguity

Having a global perspective

Seeing the big picture (global economy/whole organization)

Developing local knowledge

Understanding the details of operating at the local level

PLANNING How To Best Meet Your Mission We must plan for the future, because people who stay in the present will remain in the past.
Abraham Lincoln

What is Planning?
Planning is a search problem that requires to find an efficient sequence of actions that transform a system from a given starting state to the goal state Planning is the starting point of the management process Predetermines what the business proposes to accomplish and how it intends realizing its goals

Proper planning accomplishes the following

1. Managing Uncertainty 2. Better Focus 3. Improves Coordination

4. Basis for Control

5. Improves Effectiveness

Planning is Pervasive
Corporation Level Strategic Business Unit (SBU) Level Functional or Department Level Team or work group level Individual level

Organizational Mission
The Mission states the organizations values,

aspirations, and reason for existence. The Mission Statement is the basis for all following goals and plans. Without a clear mission, goals and plans may be developed haphazardly causing the organization to fail.

Goals and Plans

Goals: specify future ends. Desired future state. Plans: specify the means to future ends. The blueprint for goal achievement specifies the necessary resource allocations, schedules, tasks

Strategic Goals and Plans

Strategic Goals pertain to the entire organization (not

specific divisions and departments). Strategic Plans define the action steps the company will use to attain strategic goals.

Tactical Goals and Plans

Tactical Goals apply to middle management and

describe what major subunits must do to to enable the organization to meet its strategic goals. Tactical Plans:
Help execute major Strategic Plans. Cover a shorter period of time.

Operational Goals and Plans

Operational Goals: the specific results expected of

small units, workgroups, and individuals. Operational Plans: developed at the lower levels of an organization to specify actions required to achieve operational goals and to support tactical plans.

Goal Characteristics
Be specific and measurable Quantitive Terms Cover key result areas Contribute most to company performance Be challenging but realistic
Be for a defined time period. Be linked to rewards.

Types of Plans
Single-use plans are developed to achieve

objectives that are not likely to be repeated in the future. Single-use plans include programs, budgets and projects.
Standing plans are used to provide guidance for tasks performed repeatedly within the organization. The primary standing plans are

organizational policies, rules, and procedures

The Planning Process

GOAL SETTING Identification and formulation of objectives

Reactive Planning
Revision of goals and plans

DEVELOPING PLANS Choices between alternative plans

IMPLEMENTATION Execution of the plan

Successful Planning Process

Everyone participates Board and staff educated about planning Board and staff explore new ideas Board takes advantages of opportunities Necessary resources available

Making Planning Effective

Linked to Long term objectives Consistency Everyone participates Feasible Flexible Simple Top Management Support

Setting Objectives
The purpose is to convert

the mission into Specific Performance Targets

Yardsticks for tracking

company progress and performance.

Should be set at levels

that require stretch and disciplined effort.

Management By Objectives (MBO)

A method whereby managers and employees define objectives for every department, project, and person and use them to monitor subsequent



MBO is concerned with goal setting and planning for individual managers and their units. The essence of MBO is a process of joint goal setting between a supervisor and a subordinate. Managers work with their subordinates to establish performance goals that are consistent with higher organizational objectives. MBO helps clarify the hierarchy of objectives as a series of well-defined means-ends chains.

Essential Steps for MBO


Goals The most difficult step. Concrete Specific target and timeframe Assign responsibility


Action Plan Course of action For both workgroups and individuals


Progress Periodicity? Course corrections


Overall Performance. How are we doing? Do we need to restate our goals?

Managers tell their subordinates what organizational and unit goals and plans top management has established.
Managers meet with their subordinates on a one-to-one basis to arrive at a set of goals for each subordinate that both develop and to which both are committed. Goals are refined to be as verifiable as possible
and achievable within a specified period of time.

Generic Strategies

Porters Generic Strategies

1. Differentiation strategy
An organization seeks to distinguish itself from competitors through the quality of its products or services. Developing an image perceived as unique

2. Overall cost leadership strategy

An organization attempts to gain competitive advantage by reducing its costs below the costs of competing firms.
An organization concentrates on a specific regional market, product line, or group of buyers.

3. Focus strategy

What is Strategic Planning?

Strategic planning is a systematic process through which an organization agrees on and builds commitment among key stakeholders to priorities that are essential to its mission and are responsive to the environment. Strategic Planning guides the acquisition and allocation of resources to achieve these priorities.

Strategic Planning vs. Operational Planning

Strategic Planning
formulation What, where ends vision effectiveness risk

Operational Planning
implementation how means plans efficiency control

Three Big Strategic Questions

Where Are We Now? Where Do we Want to Go? How Will We Get There?

Strategic Planning Process

Developing a Vision and a Mission
Assessment Setting Objectives

Crafting a Strategy
Implementing and Executing Strategy Evaluating Performance, Reviewing the Situation and

Initiating Corrective Action

Strategic Planning

The Vision
Communicating to all staff where the organisation is going and where it intends to be in the future

Aims and Objectives:

Aims long term target Objectives the way in which you are going to achieve the aim

Types of Strategy

Market Dominance Achieved through: Internal growth Acquisitions mergers and takeovers New product development: to keep ahead of rivals and set the pace

Contraction/Expansion focus on what you are good at (core competencies) or seek to expand into a range of markets?
Global seeking to expand Global operations

Strategy Implementation
Technology Human Resource

Reward System
Decision Process

Characteristic of the Good Strategy Implementation

An ongoing exercise
Proper Communication Contingency Plan

Emphasis on Organisation Culture

Regular Review Importance of Planning


What is Decision-Making?
Decision making
The process of choosing a course of action

for dealing with a problem or opportunity.

Types of Decisions
Programmed decisions.
Involve routine problems that arise regularly and can be

addressed through standard responses.

Nonprogrammed decisions.
Involve nonroutine problems that require solutions specifically

tailored to the situation at hand

Problem is clear and unambiguous. Single goal. All alternatives are known. Clear and constant preferences. Maximum payoff. The decision is in the best interest of the organizationnot the manager.

Group Decision-Making

Forms of Group Decision Making

Interacting groups
Delphi Methods Nominal groups

Lack of organization is a major

contributor to crisis. A well-organized and efficient unit is one in which:

Lines of authority and responsibility are

clearly drawnand observed. Jobs, procedures, and standards are clearly definedand followed. People know what to do and how to do itand they do it. Standards of quality, quantity, and performance are clearly setand met.

Organizing for Success

Organizing: setting things up to run

efficiently Step 1:Clarify how you an your job fit into the organization Step 2: Investigate possible sources of problems

Chain of command Job content and procedures Evaluation and controls Standing plans

Step 3: Evaluate the situation Step 4: Plan for improvement

Management Skills
Conceptual Skills : cognitive ability to see the organization as a whole and the relationship among its parts Human Skills : ability to work with and through other people and to work effectively as a group member Technical Skills : understanding of and proficiency in the performance of specific tasks.

Why Have a Structure?

All businesses have to organise what they do A clear structure makes it easier to see which part of the business does what There are many ways to structure a business

Ways to Structure a Business

By function: arranging the business according to what each section or department does
By product or activity: organising according to the different products made

By area: geographical or regional structure

Ways to Structure a Business

By customer: where different customer groups have different needs
By process: where products have to go through stages as they are made What are the advantages/disadvantages of

different types of business structure?

Functional Structure
Advantages Specialisation each department focuses on its own work Accountability someone is responsible for the section Clarity know your and others roles

Disadvantages Closed communication could lead to lack of focus Departments can become resistant to change Coordination may take too long Gap between top and bottom

The Elements of Structure

Work specialization Chain of command Span of control Authority and responsibility Centralization versus decentralization Departmentalization

Work Specialization
Definition: Work specialization is a component of organization structure that involves having each discrete step of a job done by a different individual rather than having one individual do the whole job.


Executive Vice President


Executive Vice President

Vice Vice Vice Vice Vice President President President President President Region 1 District A District B Region 2 District C Region 3 District D Region 4 District E Region 5 District F District G

Chain of Command

Span of Control
It is the number of subordinates a manager can direct efficiently and effectively.

Contingency Variables
The level in the organization The quality of employees Similarity of employee tasks The complexity of tasks The physical proximity of employees The degree of standardization of work procedures The strength of the organizations value system The sophistication of the organizations MIS The preferred managing style of managers


It is the rights inherent in a managerial position to give orders and expect subordinates to be obeyed.

It is an obligation to perform assigned activities.


It is an individuals capacity to influence decisions.

Line Authority and Staff Authority

Line authority entitles a manger to direct the work of an employee.
A manager with line authority has the right to direct the work of employees and to make certain decisions without consulting anyone

Staff authority is used to support, assist, and advise the holders of line authority.

Whether a managers function is classified as line or staff depends on the organizations objectives.

Line authority Staff authority

Executive Director Assistant to the Executive Director

Director of Human Resources Unit 1 Manager

Director of Operations

Director of Purchasing

Other directors

Unit 2 Manager


Human Operations Purchasing resources


Human Operations Purchasing resources

Line Versus Staff Authority

The Types of Power

Coercive power: power on fear.
Reward power: power based on the ability to distribute something that others value. Legitimate power: power based on ones position in the formal hierarchy. Expert power: power based on ones expertise, special skills, or knowledge. Reference power: power based on identification with a person who has desirable resources or personal traits.

Centralization Versus Decentralization

Centralization is a function of how much decisionmaking authority is pushed down to lower levels in an organization; the more centralized an organization is, the higher is the level at which decisions are made.
Decentralization refers to the pushing down of decision-making authority to lowest levels of an organization. Centralization-decentralization is not an either-or concept. Its a degree phenomenon.







BY PROCESS (Sequential)


WITHIN A SINGLE COMPANY, SEVERAL DIFFERENT APPROACHES TO DEPARTMENTALIZATION MAY CO-EXISTFOR EXAMPLE: Accounting is functionally organized, Marketing is by customer within territory, Manufacturing is by process, and Research & Development is by product.


If departments and work groups are interdependent; the greater

the need for coordinationespecially if the departments are decentralized.

Pooled interdependence
When units operate with little interaction; their output is simply

pooled at the organizational level.

Sequential interdependence
When the output of one unit becomes the input of another unit in

sequential fashion.

Reciprocal interdependence
When activities flow both ways between units.


Can we rely on the hierarchy, rules and procedures, and an occasional committee meeting to coordinate across these boundaries?


The Managerial Hierarchy
Going up the hierarchy (chain of command) to find a manager with

the authority to make the decisions that affect the interdependent units.

Rules and Procedures

Coordinating routine activities via rules and procedures that set

priorities and guidelines for actions.

Liaison Roles
Designating a specific manager who will facilitate the flow of

information to the interdependent units by acting as a common point of contact.

Task Forces (Temporary problem-solving groups)

Used with multiple units when coordination is complex requiring

more than one individual and the need for coordination is acute. Committees disbanded when the need for coordination has been met.

Integrating Departments (Permanent structures)

Permanent organizational units that maintain internal integration and

coordination on an ongoing basis. May have authority and budgetary controls.

Types of Leaders
Leader by the position achieved
Leader by personality, charisma Leader by moral example

Leader by power held

Intellectual leader Leader because of ability to accomplish things

Managers Focus on things Do things right Plan Organize Direct Control Follows the rules

Managers vs. Leaders

Leaders Focus on people Do the right things Inspire Influence Motivate Build Shape entities


Leadership Styles
High task/high

Low relationship/ low

task Responsibility Willing employees

relationship Explain decisions Willing but unable

High relationship/

High Task/Low

low task Facilitate decisions Able but unwilling

relationship Provide instruction Closely supervise

Group Communication
Group: Three or more individuals who interact over time, depend on each other, and follow shared rules of conduct in order to reach a common goal. Ideal size: 4-7

Team: Special type of group characterized by different and complementary resources of members and a strong sense of collective identity.

Group Communication

Factors that affect Group Communication

1. 2. 3. 4. Cohesion Group Size Power Relationships Interaction Patterns Chain Wheel All-Channel

6. 7.

Group Norms: Rules v. Norms

Cultural Differences Leadership Styles: Democratic, Autocratic, Laissez Faire

Group Communication
Types of Group Communication

Procedural Climate Egocentric

Group Communication Types of Groups

Learning Group Growth Group
ProblemSolving Group

Social Group

Group Communication Decision Making in Groups

Consensus: Win-Win Voting: Win-Lose Compromise: Lose-Lose

Authority Rule/Group Ratification

Group Communication
Agenda for Decision Making Define the Problem Analyze the Problem Establish Criteria Generate Solutions

Select Best Solution Implement Decision Action Plan to Monitor and Fine-tune

Group Communication
Roles in Groups

Content and Relational


Initiator/Contributor Information Seeker Opinion Seeker Elaborator/Clarifier Coordinator Diagnostician Evaluator/Critic Supporter Tension Reliever Harmonizer Follower

Aggressor Deserter Dominator Recognition Seeker Joker Cynic

Controlling as a Management Function

Controlling A process of monitoring performance and taking action to ensure desired results. It sees to it that the right things happen, in the right ways, and at the right time.


Controlling as a Management Function

Controlling Done well, it ensures that the overall directions of individuals and groups are consistent with short and long range plans. It helps ensure that objectives and accomplishments are consistent with one another throughout an organization.


Controlling as a Management Function

Controlling It helps maintain compliance with essential organizational rules and policies.


The Control Process

Establish objectives and standards.
Measure actual performance. Compare results with objectives and standards.

Take necessary action.


Establish Objectives and Standards

The control process begins with planning and the

establishment of performance objectives. Performance objectives are defined and the standards for measuring them are set.


Comparing Results with Objectives and Standards

The comparison of actual performance with desired performance establishes the need for

action. Ways of making such comparisons include:

Historical / Relative / Engineering Benchmarking


Taking Corrective Action

Taking any action necessary to correct or improve things.

Management-by-Exception focuses managerial attention on substantial differences between actual and desired performance.


Taking Corrective Action

Management-by Exception can save the managers

time, energy, and other resources, and concentrates efforts on areas showing the greatest need. There are two types of exceptions:

Problems - below standard Opportunities - above standard


Organizational Control Systems

Management Processes Strategy and objectives Policies and procedures Selection and training Performance appraisal Job design and work structures Performance modeling, norms, and organization culture


Organizational Control Systems

Compensation and Benefits Attract talented people and retain them. Motivate people to exert maximum effort in their work. Recognize the value of their performance contributions.


Organizational Control Systems

Employee Discipline Discipline is defined as influencing behavior through reprimand. Progressive Discipline ties reprimand to the severity and frequency of the employees infractions. Positive Discipline tries to involve people more positively and directly in making decisions to improve their behavior.


The Hot Stove Rule

To be Effective Discipline Should be:
Immediate Informative

Focus on activity not

Occur in a supportive

personality Consistent

setting Support realistic rules


Operations Management and Control

Statistical Quality Control
Based on the establishment of upper and lower

control limits, that can be graphically and statistically monitored to ensure that products meet standards.


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