Lecture Notes

on

Basic Concepts of Management

by

Chandra P. Rijal, PhD in Leadership

Vivek Dhakal, MBANepal College of Management

Nepal

March 11, 2015 1

Perspectives of Management

This session will help you to --understand the management terms like managers, employees, efficiency and effectiveness, and management,

learn management process, managerial roles and essential skills, understand the various evolutionary concepts of management as a discipline, and

learn essentials of high performing managers.

March 11, 2015 2

ORGANIZATION The term ‘organization’ may be referred to as a

systematic arrangement of resources brought together to accomplish some specific purpose of an institution.

These resources are people dominant in an organizational process climate.

In addition to people arrangement, efficient and effective allocation of other resources is also equally important in management of an institution.March 11, 2015 3

An institution is distinct by its …

* Vision

* Mission

* Objectives

* Goals

* Strategy, and

* Tactics

March 11, 2015 4

An institution may have its

goalstructure

andpeople

Operatives

• People who work directly on a job or task and have no responsibility for overseeing the work of others.

• Known as employees.

• Operatives in a university college?

March 11, 2015 5

Managers …

Individuals in an organization, who direct the activities of others (operatives)

Questions for discussion:

1. How are managers different from operatives at

schools?

2. How operatives and managers contribute for the betterment of the institution as a social entity?

March 11, 2015 6

MANAGERS Vs. ENTREPRENEURS

¤ Entrepreneurs are the people who pursue business opportunities, fulfilling needs and wants through innovation.

¤ Entrepreneurs are the innovative people who give birth to the new businesses regardless small or big in size. They are the creators.

¤ All entrepreneurs are managers but all managers may not be entrepreneurs.

¤ Can you identify five successful entrepreneurs of Nepal?

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Manager CharacteristicsAdministersMakes a copy or imitatesMaintainsFocuses on systems and structuresRelies on controlsShort-range viewAsks how and whenEyes on the bottom lineAccepts the status quoClassic good soldierDoes things right

March 11, 2015 8

Manager Vs. LeaderManager Vs. Leader

Leader CharacteristicsInnovatesCreates original or innovatesDevelopsFocuses on peopleInspires trustLong-range perspectiveAsks what and whyEyes on the horizonChallenges the status quoOwn personDoes the right things

Warren G. Bennis, Managing the dream: leadership in 21st century, journal of

Organizational Change Management, vol. 2, No. 1, 1989, p. 7

Leadership

Influencing people by providing the purpose,

direction, and motivation while operating to

accomplish the mission and improving the

organization.

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ORGANIZATIONAL LEVELS & MANAGERS

March 11, 2015 10

Top ManagersChair, President,

MD, GMMiddle Managers

HODs, Sr. Managers

First-Line ManagersSupervisors

OperativesLine staff

What do these people

do?

How can yourelate these

levels in an institution?

MANAGEMENT

The process of getting things done - effectively and efficiently - through and with other people.

Efficiency: doing something rightly.

Effectiveness: doing something right.

Management: getting done right thing in a right way.

March 11, 2015 11

Example?

Efficiency vs. Effectiveness

Means Ends

Efficiency Effectiveness

Goals

Low High

wastage attainment

March 11, 2015 12

ResourceUsage Goal

Attainment

Efficiency Vs. Effectiveness

March 11, 2015 131

Optim

al utilization of resources2

Control over cost of production3

Control over defective production4

Minim

ized level of idle time or tim

e lags5

Continuous system standardization

6Continuous process im

provement

7Ethical and environm

ent friendly operations

Management of means of operation Attainment of ends or results of operation

1 Low

er c

ost o

f pro

duct

ion

2 Hig

her l

evel

of o

pera

tiona

l pro

duct

ivity

3 Sat

isfie

d em

ploy

ees

and

stak

ehol

ders

4 Inc

reas

ed e

mpl

oyee

rete

ntio

n5 R

educ

ed e

mpl

oyee

abs

ente

eism

6 Im

prov

ed q

ualit

y of

wor

k lif

e7 E

nhan

ced

inst

itutio

nal c

itize

nshi

p

Reduction of wastage Increment of outputs

Features of an Effective Management System

March 11, 2015 14

1. Goal attainment and maximization

2. Development of resourcefulness

4. Stakeholder satisfaction

3. Process improvement

Bases of measuring

management effectiveness

MANAGEMENT PROCESS

The processes aimed at the achievement of the organization’s stated objectives.

The French industrialist Henri Fayol wrote that all managers perform FIVE management activities; planning, organizing, commanding, coordinating, and controlling.

In the 1950s, two professors at UCLA recognized FIVE terms planning, organizing, staffing, directing and controlling as the framework of management.

Now condensed to FOUR; Planning, organizing, leading and controlling.

March 11, 2015 15

Management Process Activities

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1. Planning1. Planning1. Define goals2. Establish strategy3. Develop tactics/subplans

3. Leading3. Leading1. Direct the people2. Motivate the people3. Resolve the conflicts

2. Organizing2. OrganizingDetermine:1. What to be done2. How to be done3. Who is to do

4. Controlling4. ControllingMotivate activitiesto ensure that theyare accomplishedas planned.

Achieving theorganization’sstated purpose

Mintzberg’s Managerial Roles

Source: Robbins, S. P., Judge, T. A., & Sanghi, S. (2009). Organizational Behavior (13th ed.). PHI.

Managerial Roles

1. InterpersonalFigureheadLeaderLiaison

2. InformationalMonitorDisseminatorSpokesperson

3. DecisionalEntrepreneurDisturbance handlerResource allocatorNegotiator

March 11, 2015 17

MANAGERIAL SKILLS COMPETENCIES

A. General Skills

1. Conceptual skills 2. Human skills3. Technical skills a. Interpersonal skills

b. Political skills

B. Specific Skills

1. Controlling the organization’s environment and resources

2. Organizing and coordinating

3. Handling information

4. Providing for growth and development

5. Motivating employees and handling conflicts

6. Strategic problem solving

CATZ’s Skills

March 11, 2015 18

Management as an Integrated Function

March 11, 2015 19

Management

Human Resources Management

R&D and ProductionsManagement

Financial Management

Marketing Management

WHY STUDY MANAGEMENT?

General Reason

1. Gain conceptual insights in general management of any institution

Specific Reasons

1. To improve organization’s overall management

2. To develop career

March 11, 2015 20

Universality of Management

Management is a universal discipline.

Application of management may be modified as per the contexts and environments but the main essence of management principles remains same worldwide.

For example, employee motivation is a universal tool of productivity but the factors considered for motivation may be different from country to country and context to context.

March 11, 2015 21

Universality of management should be studied in the following basis

1. Levels in the organizationLevels in the organization: lower, upper, middle

2. Organizational objectivesOrganizational objectives: profit or not-for-profit

3. SizeSize: big or small

4. National bordersNational borders: similar management concepts

5. Decision makingDecision making: synonymous to management

6. Dealing with changeDealing with change: main challenge worldwide

7. Competencies and skillsCompetencies and skills: required worldwide

March 11, 2015 22

Evolution of Management as a Discipline Evolution of Management as a Discipline

March 11, 2015 23

Such a study should be distinctively grouped into two sections:

1.Historical background

2.Evolution of different approaches to the evolution of management as a discipline

Historical BackgroundHistorical BackgroundAdam Smith Adam Smith published ‘the wealth of nations’ in 1776 where he argued the economic advantages that the organizations and society would gain from implementing the idea of division of labor or job specialization (breakdown of jobs into narrow and repetitive tasks)

For example, the way the different people work in a tailoring shop, or the way different people work in a building construction site.

March 11, 2015 24

Historical Background …Historical Background … Industrial revolutionIndustrial revolution started in late eighteenth

century when machine power overtook the human power and proved to be became more economical to manufacture goods in factories than at homes as a result of system standardization and mass production.

Such a revolution took place in absence of any Such a revolution took place in absence of any universally accepted management principles.universally accepted management principles.

Only after early 1900s, the initial steps were taken towards developing management theories.

March 11, 2015 25

2. Evolution of Management Approaches2. Evolution of Management Approaches

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The scholars happen to agree on as many as four four distinctive approaches to assess the evolution of management as a universal discipline.

1.1.Classical approachesClassical approaches

2.2.Quantitative approachesQuantitative approaches

3.3.Behavioral approachesBehavioral approaches

4.4.Contemporary approachesContemporary approaches

March 11, 2015 27

1. Mr Vivek, follow the same pattern and revise the remaining slides accordingly and email me ASAP.

2. I am sorry to tell you that I am not convinced to consider it to circulate among the graduates at this level of purity. Please make it good enough, ok. And I am sure you can do it…

3. Please make sure the content does not only look impressive in presentation, but also has good scope for the students to learn from it.

4.4. While talking about the approaches, discuss the While talking about the approaches, discuss the contributor, key emphasis, merits and demerits contributor, key emphasis, merits and demerits of each approach and also talk with example the of each approach and also talk with example the present day relevance of such approaches. present day relevance of such approaches.

1. Classical approach

The first studies of management, which emphasized rationality and making organizations and workers as efficient as possible

A. Scientific management• Born in 1911 when Frederick Winslow

Taylor’s ‘Principles of Scientific Management’ was published

March 11, 2015 28

Contd…

• FW Taylor was the father of scientific management

• Its contents were widely embraced by managers around the world

• book described theory of scientific management: use of scientific methods to define “one best way for a job to be done”

March 11, 2015 29

B. General Administrative Theory (GAT)• An approach to management that focuses on

describing what managers do and what constitutes good management practice

• Two most prominent individuals behind GAT: Henri Fayol and Max Weber

• Henri Fayol: first identified five managerial functions: planning, organizing, commanding, coordinating and controlling

March 11, 2015 30

Contd…

• Max Weber: A German sociologist, developed a theory of authority structures and relations based on an ideal type of organization he called a bureaucracy

• Bureaucracy: a form of organization characterized by division of labor, a clearly defined hierarchy, detailed rules and regulations and impersonal relationships, see exhibit 2-4, page nu. 29, basic text book

March 11, 2015 31

2. Quantitative approach (QA)

• QA or management science is the use of quantitative techniques to improve decision making

• evolved from mathematical and statistical solutions developed for military problems during World War II

• After the war was over many of these techniques used for military problems were applied to business

March 11, 2015 32

Contd…• one group of military officers, nick named the

Whiz Kids, joined Ford Motor Company in mid 1940s and immediately began using statistical methods and quantitative models to improve decision making

• QA???

- Involves applying statistics, optimization models, information models, computer simulations and other quantitative techniques to management activities

March 11, 2015 33

3. Behavioral Approach

A. EARLY ADVOCATES OF ORGANIZATIONAL BEHAVIOR (OB)

B. HAWTHRONE STUDIES

C. ORGANIZATIONAL BEHAVIOR

March 11, 2015 34

A. EARLY ADVOCATES OF ORGANIZATIONAL BEHAVIOR

• OB: field of study that researches the actions (behavior) of people at work

• Four stand out as early advocates of the OB approach: Robert Owen, Hugo Munsterberg, Mary Parker Follett and Chester Barnard

• Though their contributions were varied and distinct, all believed that people were the most important asset of the organization and should be managed accordingly

March 11, 2015 35

B.HAWTHRONE STUDIES

• Most important question to the field of OB came out of the Hawthorne studies

• It is a series of studies conducted at the Western Electric Company, Cicero, Illinois

• These studies, started in 1924, were initially designed by Western Electric industrial engineers as a scientific management experiment

March 11, 2015 36

Contd…• wanted to examine the effect of various

lighting levels on worker productivity• experimental group (exposed to various

lighting intensities) and control group ( under a constant intensity)

• individual output in the experimental group would be directly related to the intensity of light……….

• read about its final conclusion and Elton Mayo’s work

March 11, 2015 37

4. Contemporary approach

• Two contemporary management perspectives- systems and contingency

Systems Theory• A basic theory in physical science but never

been applied to organized human efforts• A system is a set of interrelated and

interdependent parts arranged in a manner that produces a unified whole

March 11, 2015 38

• Two basic types: Closed and open systems • Closed: systems that are not influenced by

and do not interact with their environment• Open: systems that interact with their

environment• Today when we describe organizations as

systems, we mean open systems, see exhibit 2-7, page nu. 36, basic text book (organization as an open system)

March 11, 2015 39

Contd…

Contingency approach: or situational approach which says that organizations are different, face different situations (contingencies), and require different ways of managing

• a good way to describe contingency is “ if……then………..”

• This approach is intuitively logical because organizations and even units within the same organization differ

March 11, 2015 40