principles of management all chapters ppt

7/31/2019 Principles of Management All Chapters PPT

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Chapter 1

Management: Science, Theory, & Practice


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Definition of Management: ItsNature and Purpose

Management is the process of designing andmaintaining an environment in which individuals,working together in groups, efficiently accomplishselected aims.


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Functions of Management

Planning

Organizing

Staffing

Leading

Controlling


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Managerial Functions atDifferent Organizational Levels

All managers carry out managerial functions, butthe time spent for each function may differ.


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Time Spent in Carrying OutManagerial Functions


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Managerial Skills and the OrganizationalHierarchy

The four skills required of administrators:

Technical skills

Human skills

Conceptual And Design skills


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Skills and ManagementLevels


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The Goals of All Managers andOrganizations

The aim of all managers should be to create asurplus. Thus, managers must establish anenvironment in which people can accomplishgroup goals with the least amount of time, money,

materials, and personal dissatisfaction.


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Characteristics of Excellent &Most Admired Companies

Oriented toward action

Learned about the needs of their customers

Promoted managerial autonomy and

entrepreneurship Achieved productivity by paying close attention to

the needs of their people

Driven by a company philosophy often based on

the values of their leaders Focused on the business they knew best

Had a simple organization structure with a leanstaff

Centralized as well as decentralized, depending on


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Trends

Technology

Globalization

Entrepreneurship


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Productivity

Productivity implies effectiveness and efficiency inindividual and organizational performance.

Productivity= Input

Output Increasing outputs with the same inputs

Decreasing inputs but maintaining the sameoutputs

Increasing the outputs and decreasing the inputsto change the ratio favorably


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Definitions of Effectivenessand Efficiency

Effectiveness is the achievement of objectives.

Efficiency is the achievement of the ends with theleast amount of resources (time, money, etc.).


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Managing: Science or Art

Managing as practice is an art; the organizedknowledge underlying the practice is a science.


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Management &Administration

Administration Management

Traditional & bureaucratic More modern & dynamic

Refers to decision making &determination of what is to be

done & how

Refers to execution &implementation of agreed

goalsNormative by nature Problem solving by nature

Stress on process, &elaborate rule governedprocedure

Stress on output by often nottrying to minimize something,but optimizing the opposing

forces.Focus on ideology Focus on skills

Importance of uniformity &standards

Importance of variance &context

Priority is governance Priority is performance


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The Evolution of ManagementThought

Scientific management

Frederick Taylor, Henry Gantt, Frank & Lillian Gilbreth

Modern operational management theory

Henry Fayol

Behavioural sciences

Hugo Munsterberg, Walter Dill Scott, Max Weber,Vilfredo Pareto, Elton Mayo & F J Roethilisberger

Systems theory

Chester Bernard

Modern management thought

Peter F Drucker, W Edwards Deming, Laurence Peter,


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Frederick Taylor & ScientificManagement

Fundamental principles that Taylor saw underlyingscientific management:

Replacing rules of thumb with science (organizedknowledge)

Obtaining harmony, rather than discord, in groupaction

Achieving cooperation of human beings, rather thanrestricted output

Developing all workers to the fullest extent possiblefor their own and their companys highest prosperity.


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Henri Fayols 14 Principles ofManagement

Division of labour

Authority

Discipline

Unity of Command Unity of Direction

Subordination of Individual Interest to Common Good

Remuneration

Centralization The Hierarchy

Order

Equity

Stability of staff


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Elton Mayo & F JRoethlisberger

The Hawthorne studies


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Patterns of ManagementAnalysis

The Managerial Roles Approach

Interpersonal roles

Informational roles

Decision roles

The Management Process or Operational Approach

Draws together the pertinent knowledge of

management by relating it to the managerial job.


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The Systems Approach to theManagement Process

Inputs and claimants

The managerial transformation process

The communication system

External variables

Outputs

Reenergizing the system


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The Functions of Managers

Planning

Selecting missions and objectives as well as the actionsto achieve them, which requires decision making

Organizing

Establishing an intentional structure of roles for peopleto fill in an organization

Staffing

Filling and keeping filled, the positions in the

organization structure Leading

Influencing people so that they will contribute toorganizational and group roles

Controlling

Measurin and correctin individual and or anizational


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Chapter 2

Management and Society: The External

Environment, Social Responsibility, and Ethics


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The Organization and ItsExternal Environment


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Operating in a PluralisticSociety

Managers operate in apluralistic society, in whichmany organized groups represent variousinterests.

Each group has an impact on other groups, but noone group exerts an inordinate amount of power.Many groups exert some power over business.


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The TechnologicalEnvironment

Technology is the sum total of the knowledge wehave of ways to do things.


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The Ecological Environment

Ecology pertains to the relationship of people andother living things with their environment, such assoil, water, and air.

Land may be polluted by industrial waste such as

packaging. Water pollution may be caused, for example, by

hazardous waste and sewage.

Air pollution can be caused by acid rain, vehicle

exhaust fumes, carcinogens from manufacturingprocesses, and other sources.


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The Social Responsibility ofManagers

Corporate social responsibility is seriouslyconsidering the impact of the company's actionson society.

Social responsiveness is "the ability of acorporation to relate its operations and policies tothe social environment in ways that are mutuallybeneficial to the company and to society.


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Arguments for SocialInvolvement

Public expectations

Long-run profits

Ethical obligation

Public image

Better environment

Discouragement of further governmental

regulation Balance of responsibility & power

Stockholder interests

Possession of resources


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Arguments against SocialInvolvement

Violation of profit maximization

Dilution of purpose

Costs

Too much power

Lack of skills

Lack of accountability


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Ethics in Managing

Ethics is the discipline dealing with what is goodand bad and with moral duty and obligation.

Business ethics is concerned with truth and justice.


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Four levels of ethical questionsin business

Societal

Stakeholder

Internal policy

Personal


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Ethical Theories

The utilitarian theory suggests that plans andactions should be evaluated by theirconsequences.

The theory based on rights holds that all peoplehave basic rights.

The theory of justice demands that decisionmakers be guided by fairness and equity, as wellas impartiality.


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The tools of ethics

Values

Rights & duties

Moral rules

Human relationships Common morality

Promise keeping

Non malevolence Mutual aid

Respect for others

Respect for persons

Respect for property


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Institutionalizing Ethics

A code is a statement of policies, principles, orrules that guide behavior.


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Factors that May Raise EthicalStandards (a study)

Public disclosure and publicity

The increased concern of a well informed public

Government regulations

Education to raise the professionalism of businessmanagers


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Guidelines for InternationalBusiness Ethics Focus China

International Business Ethics

Labor Conditions

Areas of Justice

Toward Virtue Ethics

fi i i f hi l


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Definition of Whistle-Blowing

Whistle-blowing is making known to outsideagencies what are considered unethical companypractices.


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Trust as the Basis for ChangeManagement

Traditionally, the concept of trust is equated withintegrity, loyalty, caring, and keeping promises inthe relationships between and among individuals.

Belardo points out that trust should go beyondindividual relationships and extend to theorganization by creating a culture of trust thattranscends individual leadership.


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Chapter 3

Essentials of Planning andManaging by Objectives


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Definition of Planning

Planning involves selecting missions and objectives andthe actions to achieve them; it requires decision making,that is, choosing from among alternative future courses ofaction.


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Close Relationship of Planningand Controlling


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Types of Plans

Plans can be classified as:

1. Missions or purposes

2. Objectives or goals

3. Strategies

4. Policies

5. Procedures

6. Rules

7. Programs

8. Budgets


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Types of Plans

The mission, or purpose, identifies the basic purpose orfunction or tasks of an enterprise or agency or any part ofit.

Objectives, or goals, are the ends toward which activity isaimed.

Strategy is the determination of the basic long termobjectives of an enterprise and the adoption of courses ofaction and allocation of resources necessary to achievethese goals.

Policies are general statements or understandings thatguide or channel thinking in decision making.


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Types of Plans cont.

Procedures are plans that establish a required method ofhandling future activities.

Rules spell out specific required actions or nonactions,allowing no discretion.

Programs are a complex of goals, policies, procedures,rules, task assignments, steps to be taken, resources to beemployed, and other elements necessary to carry out agiven course of action.

A budget is a statement of expected results expressed innumerical terms.


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Steps in Planning

1. Being aware of opportunities

2. Establishing objectives or goals

3. Developing premises

4: Determining alternative courses5. Evaluating alternative courses

6. Selecting a course

7. Formulating derivative plans

8. Quantifying plans by budgeting


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Steps in Planning


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Verifiable Objectives

Objectives are the important ends toward whichorganizational and individual activities are directed.

An objective is verifiable when at the end of the periodone can determine whether or not the objective has beenachieved.


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The Nature of Objectives

Hierarchy of objectives

Key Results Areas: Areas in which performance is essential forsuccess

Setting objectives and the organizational hierarchy

Multiplicity of objectives

R l ti hi f Obj ti d


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Relationship of Objectives andthe Organizational Hierarchy


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How to Set Objectives

Compare nonverifiable with verifiable objectives

Guidelines for setting objectives


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Evolving Concepts in MBO

MBO as used in this book

Management by objectives is a comprehensivemanagerial system that integrates many key managerialactivities in a systematic manner and is consciouslydirected toward the effective and efficient achievement oforganizational and individual objectives.


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Systems Approach to MBO

B fit f M t b


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Benefits of Management byObjectives

Clear Goals:

Motivate.

Improve managing through results-oriented planning.

Clarify organizational roles, structures, and the delegationof authority.

Encourage commitment to their personal andorganizational goals.

Facilitate effective controlling, measuring of results, and

implementation of corrective actions.

Fail res of Management b


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Failures of Management byObjectives

List some failures and limitations of MBO.

What would you do to overcome the failures?


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Chapter 4

Strategies, Policies, and PlanningPremises

Definition of Strategy and


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Definition of Strategy andPolicies

Strategy is the determination of the mission (or thefundamental purpose) and the basic long-term objectives ofan enterprise, and the adoption of courses of action andallocation of resources necessary to achieve these aims.

Policies are general statements or understandings thatguide managers' thinking in decision making.

The Strategic Planning


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The Strategic PlanningProcess

The Strategic Planning


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The Strategic PlanningProcess

Inputs to the organization

Industry analysis

Enterprise profile

Orientation, values, and vision Mission (purpose), major objectives, and strategic

intent

Present and future external environment

Internal environment

The Strategic Planning Process


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The Strategic Planning Process cont.

Development of alternative strategies

Evaluation and choice of strategies

Medium- and short-range planning

Implementation through reengineering, staffing,leadership, and control

Consistency testing and contingency planning

Mission Objectives and


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Mission, Objectives, andStrategic Intent

Mission relates to the kind of business.

Objectives are the end points for activities.

Strategic intent is the commitment to win in the

competitive environment.

Definition of the TOWS


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Definition of the TOWSMatrix

The TOWS Matrix is a conceptual framework for asystematic analysis that facilitates matching the externalthreats and opportunities with the internal weaknessesand strengths of the organization.

TOWS Matrix for Strategy


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TOWS Matrix for StrategyFormulation

TOWS Matrix: 4 Alternative


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TOWS Matrix: 4 AlternativeStrategies

SO strategy: MaxiMaxi

WO strategy: MiniMaxi

ST strategy: MaxiMini

WT strategy: MiniMini

Dynamics of the TOWS


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Dynamics of the TOWSMatrix

Application of the TOWS Matrix for


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ppMergers, Acquisitions, Joint Ventures,

and Alliances

Develop a TOWS Matrix for both companies before themerger, etc.

Develop a TOWS Matrix of the joint company after the

merger, etc.

See Illustration of DaimlerChrysler merger in theclosing section of Part 2

Blue Ocean Strategy by Kim &


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gy yMauborgne and TOWS Matrix by

Weihrich

Explore opportunities in uncontested markets(Opportunities in the TOWS Matrix) Example:Southwest Airline

Be aware of competition in red ocean markets (bloodycompetition). Example, todays personal computers

Value innovation: total company commitment tocreate value for the customer

Blue ocean strategy and the TOWS Matrix (SO or WOstrategies in uncontested markets)


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Business Portfolio Matrix


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Two dimensions

Relative competitive position (market share)

Business growth rate

Four positions

Question marks

Stars

Cash cows

Dogs

Business Portfolio Matrix

Major Kinds of Strategies and


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Major Kinds of Strategies andPolicies

Products or Services What is our business?

Who are our customers?

What do our customers want?

How much will our customers buy and at what price?

Do we wish to be a product leader?

What is our competitive advantage?

Do we wish to develop our new products?

What advantages do we have in serving customer needs?

How should we respond to existing & potentialcompetition?

How far can we go in serving customer needs?

Major Kinds of Strategies and


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Major Kinds of Strategies andPolicies (contd..)

Marketing

Where are our customers & why do they buy?

How do our customers buy?

How is it best for us to sell?

Do we have something to offer that competitors do not?

Do we wish to take legal steps to discourage competition?

Do we need, and can we supply, supporting services?

What are the best pricing strategy & policy for our operation? How can we best serve our customers?

Hierarchy of Company


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Hierarchy of CompanyStrategies

The corporate-level strategy. Executives craft the overallstrategy for a diversified company.

Business strategies are developed usually by the generalmanager of a business unit.

Functional strategies. The aim is to support the businessand corporate strategies.

Five Forces in Industry Analysis


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Five Forces in Industry Analysis(Michael Porter)

Competitive

rivalry

Potentialentrants

Buyers

Substitutes

Suppliers

Five Forces in Industry Analysis


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Five Forces in Industry Analysis(Michael Porter) contd..

The competition among companies

The threat of new companies entering the market

The possibility of using substitute products or services

The bargaining power of suppliers

The bargaining power of the buyers or customers

i i


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Porters Generic Strategies

Overall Cost Leadership Strategy

Differentiation Strategy

Focused Strategy (low cost or differentiation)

i i d i


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Premising and Forecasting

Planning premises are the anticipated environments inwhich plans are expected to operate.

Environmental Forecasting

Values and areas of forecasting

Forecasting with the Delphi technique

Forecasting with Delphi


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Forecasting with DelphiTechnique

A panel of experts on a particular area are selected fromboth within & outside the organization.

The experts are asked to make a forecast (anonymously).

Answers are compiled & composite results fed back to the

panel members. Further estimates of future are made with this result.

Process may be repeated several times.

When convergence of opinion begins to evolve, the results

are then used as an acceptable forecast.

Ch t 5


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Chapter 5

Decision Making

D i i M ki


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Decision Making

Decision making is the selection ofa course of action from amongalternatives.

D i i M ki P


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Decision - Making Process

1. Premising

2. Identifying alternatives

3. Evaluating alternatives in terms ofthe goal sought

4. Choosing an alternative, that is,

making a decision

Limited, or Bounded,


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Limited, or Bounded,Rationality

Limitations of information, time, andcertainty limit rationality, eventhough a manager tries earnestly to

be completely rational. Satisficing is picking a course of

action that is satisfactory or good

enough under the circumstances.

Development of Alternatives


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Development of Alternativesand the Limiting Factor

A limiting factor is something thatstands in the way of accomplishing adesired objective.

The principle of the limitingfactor: By recognizing andovercoming those factors that stand

critically in the way of a goal, thebest alternative course of action canbe selected.

Quantitative and Qualitative


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Quantitative and QualitativeFactors

Quantitative factors are factorsthat can be measured in numericalterms.

Qualitative, or intangible, factorsare those that are difficult tomeasure numerically.

M i l A l i


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Marginal Analysis

Marginal analysis is to comparethe additional revenue and theadditional cost arising from

increasing output.

C t Eff ti A l i


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Cost-Effectiveness Analysis

Cost-effectiveness analysis seeksthe best ratio of benefit and cost.

Selecting an Alternative: Three


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Selecting an Alternative: ThreeApproaches

When selecting from amongalternatives, managers can use:

1. Experience.

2. Experimentation.

3. Research and analysis.

Bases for Selecting FromA Alt ti C f


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Among Alternative Courses ofAction

Programmed and Non-


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og a ed a d oprogrammed Decisions

Programmed decisions are usedfor structured or routine work.

Non-programmed decisions are

used for unstructured, novel, and ill-defined situations of a nonrecurringnature.

Nature of Problems andDecision Making in the


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Decision Making in theOrganization

Creativity and Innovation


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Creativity and Innovation

Creativity refers to the ability andpower to develop new ideas.

Innovation means the use of new

ideas.

The Creative Process


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The Creative Process

The creative process is seldomsimple and linear.

It generally consists of four

overlapping and interacting phases:

1. Unconscious scanning

2. Intuition3. Insight

4. Logical formulation or

verification

Rules for Brainstorming


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Rules for Brainstorming

1. No ideas are criticized.

2. The more radical the ideas are, thebetter.

3. The quantity of idea production isstressed.

4.

The improvement of ideas by othersis encouraged.

Chapter 6


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Chapter 6

The Nature of Organizing,

Entrepreneuring,and Reengineering

Organizational Roles


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Organizational Roles

For an organizational roleto exist and bemeaningful, it must incorporate:

1. Verifiable objectives, which are a major part ofplanning.

2. A clear idea of the major duties or activitiesinvolved.

3. An understood area of discretion or authority so

that the person filling the role knows what he or shecan do to accomplish goals.

Organizing involves:


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Organizing involves:

1. The identification and classification of requiredactivities.

2. The grouping of activities necessary to attainobjectives.

3. The assignment of each grouping to a managerwith the authority (delegation) necessary tosupervise it.

4. The provision for coordination horizontally (on thesame or a similar organizational level) and vertically(for example, corporate headquarters, division, anddepartment) in the organization structure.

Definition of Organization


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Definition of Organization

Organization implies a formalized intentionalstructure of roles or positions.

Formal and Informal Organization


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Formal organization pertains to the intentionalstructure of roles in a formally-organizedenterprise.

The informal organization is a network of

interpersonal relationships that arise when peopleassociate with each other.

Organization Chart


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Organization Chart

A graphical representation of an organization.

Conveys four kinds of information:

Includes different units of organization

Work performed by different personnel

Reporting relationships indicated by connecting lines

Number of hierarchy levels.

What is a Department?


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What is a Department?

The department designates a distinct area,division, or branch of an organization over which amanager has authority for the performance ofspecified activities.

Organization with Narrow Spans


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Organization with Narrow Spans

Organization with Wide


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Spans

What is the Principle of the Span of


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Management?

The principle of the span of managementstates that there is a limit to the number ofsubordinates a manager can effectively supervise,but the exact number will depend on the impact ofunderlying factors.

What Determines an Effective Span


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of management?

Types of Business


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OrganizationCriterion or basis Types of business organizations

Size SME, Large organizations

Ownership Sole proprietorship, partnership, Pvt. Ltd., PublicLtd., Co-operatives, Trusts & associations

Purpose For-profit, not for profit

Activity Manufacturing, trading & services

Origin Domestic & Multinational, transnational orglobal, joint ventures and alliances

Sector Public sector & Private sector

Style of managementTraditionally managed, managed as per thewestern models, using adapted or hybridmanagement models.

Reach of markets Local, regional, national, international or multi-national, global

Types of Business


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Organization (contd.)

Criterion or basis Types of business organizations

Decision making Centralized, decentralized

Product offering Standard and coordinated productoffering in different markets oruncoordinated product offering indifferent markets adapted to thelocal conditions & preferences

Sources of finance Ownership capital or debt-financed, domestic funds or

financed through FDIListing on the stock exchange Listed or unlisted

Difference between an Intrapreneur


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and an Entrepreneur

An intrapreneur is a person who focuses oninnovation and creativity and who transforms adream or an idea into a profitable venture byoperating within the organizational environment.

The entrepreneur is a person who does similarthings as the intrapreneur, but outside theorganizational setting.

Environment for Entrepreneurship


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Environment for Entrepreneurship

Steve Wozniak and Steve Jobs at Apple Computers Entrepreneurship programs

Situations for Innovations


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Situations for Innovations

An unexpected event, failure, or success An incongruity between what is assumed and what

really is

A process or task that needs improvement

Changes in the market or industry structure

Changes in demographics

Changes in meaning or in the way things areperceived

Newly acquired knowledge

Definition of Reengineering


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Definition of Reengineering

The fundamental rethinking and radical redesignof business processes to achieve dramaticimprovements in critical contemporary measuresof performance, such as cost, quality, service, andspeed.

The underlined words are considered key aspectsof reengineering by Hammer and Champy.

Key Aspects of


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Reengineering Fundamental rethinking of what the organization is

doing and why.

Radical redesign of the business processes.

(Note: Downsizing or rightsizing is not the

primary purpose of reengineering, although in manycases it does result in a need for fewer people.)

Aim for dramatic results

Careful analysis of business processes

Management by Processes


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Management by Processes

The Steps in the Organizing Process:


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1. Establishing enterprise objectives.2. Formulating supporting objectives, policies, andplans.

3. Identifying, analyzing, and classifying the

activities necessary to accomplish these objectives.4. Grouping these activities in light of the humanand material resources available and the best way,under the circumstances, of using them.

5. Delegating to the head of each group theauthority necessary to perform the activities.

6. Tying the groups together horizontally andvertically, through authority relationships andinformation flows.

The Organizing Process


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The Organizing Process

Basic Questions for EffectiveO i i


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Organizing

It is useful to analyze the managerial function oforganizing by raising and answering the followingquestions:

1. What determines the span of management andhence the levels of organization?

2. What determines the basic framework ofdepartmentation, and what are the strengths andweaknesses of the basic forms?

3. What kinds of authority relationships exist in

organizations?

4. How should authority be dispersed throughoutthe organization structure, and what determinesthe extent of this dispersion?

5. How should the manager make organization

Chapter 7


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Chapter 7

Organization Structure:

Departmentation

Departmentation byE t i F ti


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Enterprise Function

Most widely employed basis fororganizing activities and is presentin almost every enterprise at some

level in the organization structure. No generally accepted terminology

for functional departments: A

manufacturing enterprise employsthe terms production, sales,and finance; a wholesaler is

concerned with such activities as

Departmentation byEnterprise Function


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Enterprise Function

Departmentation byT it G h


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Territory or Geography

Rather common in enterprises thatoperate over wide geographicareas.

Departmentation byT it G h


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Territory or Geography

Departmentation byC t


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Customers

Departmentation by Product


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p y

Matrix Organization


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Matrix Organization

The combining of functional andproject or product patterns ofdepartmentation in the same

organization structure.

Matrix Organization (ini i )


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engineering)

u e nes or a ngMatrix Management


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gEffective

1. Define the objectives of theproject or task.

2. Clarify the roles, authority, and

responsibilities of managers andteam members.

3. Ensure that influence is based onknowledge and information, rather

than on rank.4. Balance the power of functional

and project managers.

5 Select an experienced manager

Strategic Business Units(SBUs)


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(SBUs) Distinct little businesses set up as

units in a larger company toensure that a certain product or

product line is promoted andhandled as though it were anindependent business.

Strategic Business Units


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g

rgan za on ruc uresfor the Global


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Environment Organization structures differ

greatly for enterprises operating inthe global environment.

The kind of structure depends on avariety of factors, such as thedegree of international orientation

and commitment.

The Virtual Organization


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g

A rather loose concept of a groupof independent firms or peoplethat are connected often through

information technology. These firms may be suppliers,

customers, and even competing

companies.

BoundarylessOrganization


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Organization Jack Welch, former CEO at GE

(General Electric), stated his visionfor the company as a boundaryless

company, an open, anti-parochialenvironment, friendly toward theseeking and sharing of new ideas,regardless of their origin.

The purpose was to remove barriersbetween the various departments aswell as between domestic and

Choosing the Pattern ofDepartmentation


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Departmentation

There is no one best way of departmentationthat is applicable to all organizations and allsituations.

Managers must determine what is best by

looking at the situation they face.

The jobs to be done and the way theyshould be done

The people involved and theirpersonalities

The technology employed in thedepartment

Chapter 8


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p

Line/Staff Authority, Empowerment, andDecentralization

Authority and Power


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y

Power is the ability of individualsor groups to induce or influencethe beliefs or actions of other

persons or groups. Authority is the right in a

position to exercise discretion in

making decisions affectingothers.

Different Bases of Power


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Legitimate power normally arisesfrom position and derives fromour cultural system of rights,

obligations, and duties whereby aposition is accepted by peopleas being legitimate.

Expert power is the power ofknowledge.

Referent power is influence that

people or groups may exercise

Different Bases of Power cont


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cont Reward power is the power to

grant or withhold rewards, suchas high grades given by a

university professor. Coercive power is closely related

to reward power and normally

arises from legitimate power; it isthe power to punish.

What is Empowerment?


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p

Employees, managers, or teamsat all levels in the organizationhave the power to make

decisions without asking theirsuperiors for permission.

Power should be equal to

responsibility (P=R) If power is greater than

responsibility (P>R), then this

could result in autocratic

THE BASIS OF FORMAL AUTHORITY: TWOVIEWS


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VIEWS

A Classical View: Authority originatesat some very high level, and then islawfully passed down form level to

level. At the top of this hierarchy maybe God, King, Elected President, orthe collective will of the people.

According to the classical view offormal authority in organizations,management has a right to givelawful orders and employees have an

THE BASIS OF FORMAL AUTHORITY: TWOVIEWS (CONT.)


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The Acceptance View: The basis ofauthority lies with the influenceerather than the influencer.

This view starts with the observationthat not all legitimate laws orcommands are obeyed in all

circumstances. The key point is that the receiver

decides whether or not to comply.

VIEWS (CONT.)

ACCEPTANCE VIEW


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Chester Barnard, a strong proponentof the acceptance view, has definedthe conditions under which a person

will comply with higher authority:1. He can understand the

communication

2. At the time of decision he believesthat it is consistent with the purposeof the organization

3. At the time of decision he believes it

Scalar Principle inOrganization


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Organization The clearer the line of authority

from the ultimate managementposition in an enterprise to every

subordinate position, the clearerwill be the responsibility fordecision making and the moreeffective will be organizational

communication.


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LINE & STAFF AUTHORITY


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Advantages:

Everything kept Simple

Authority relationship

graphically illustrated byhierarchy

Close to employees sodecisions can be made quickly

Disadvantages:

Neglects advisers

Too many decisions to make inshort time period

Requires very skilledmanagers

Advantages:

Uses the best experts

Frees line managers for day-

to-day activities Can be used as screening and

training for future linemanagers

Disadvantages:

Confusing to some employees

Creates line-staff conflicts

Places staff in submissive role

Line Authority Staff Authority

Decentralization ofAuthority


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Authority Decentralization is the

tendency to dispersedecision making authority in an

organized structure.

en ra za ondecentralization as


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tendencies

Authority not delegated

Authority delegated

Complete centralization(no organizationstructure)

Completedecentralization(no organizationstructure)

Different Kinds ofCentralization


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Centralization

1. Centralization of performancepertains to geographicconcentration; it characterizes, for

example, a company operating in asingle location.

2 Departmental centralization

refers to concentration ofspecialized activities, generally inone department. For example,maintenance for a whole plant may

DELEGATION


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Delegation: The act of assigningformal authority and responsibilityfor completion of specific activities to

a subordinate.

The process ofdelegation involves:


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delegation involves: Determining the results expected

from a position.

Assigning tasks to the position.

Delegating authority foraccomplishing these tasks.

Holding the person in that

position responsible for theaccomplishment of the tasks.

Personal Attitudes TowardDelegation


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Delegation Receptiveness Willingness to let go

Willingness to allow mistakes bysubordinates

Willingness to trust subordinates

Willingness to establish and usebroad controls

Overcoming WeakDelegation


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Delegation1. Define assignments and

delegate authority in light ofresults expected.

2. Select the person in light of thejob to be done.

3. Maintain open lines of

communication.4. Establish proper controls.

5. Reward effective delegationand successful assumption of

RECENTRALIZATION OF AUTHORITY AND BALANCE ASTHE KEY TO DECENTRALIZATION


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Recentralization Centralization of authority that

was once decentralized; normally

not a complete reversal ofdecentralization, as the authoritydelegated is not wholly

withdrawn.

ADVANTAGES & LIMITATIONS OFDECENTRALIZATION


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Advantages Relieves top management of some burden of decision

making.

Encourages decision making & assumption of authority.

Gives manager more freedom in decision making.

Promotes establishment & use of broad controls.

Makes comparison of performance of differentorganizational units possible.

Facilitates setting up profit centers.

Facilitates product diversification.

Promotes development of general managers.

Aids in adaptation to fast-changing environment

ADVANTAGES & LIMITATIONS OFDECENTRALIZATION (CONT)


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Disadvantages Makes it more difficult to have a uniform policy

Increases complexity of co-ordination of decentralizedorganizational units.

May result in loss of some control by upper levelmanagers.

May be limited by inadequate control techniques.

May be constrained by inadequate planning & control

systems. Can be limited by the lack of qualified managers.

Involves considerable expenses for training managers.

May be limited by external forces.

centralization


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The extent to which importantdecisions that can affect theperformance and decisions of

others are retained in the handsof one or a few persons indicatedcentralization of authority in anorganization.

Advantages: appropriatedelegation


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delegation

The task/job goes to the rightperson.

Speeding up of decision, task

performance & response to thedemands of the changingbusiness environment.

The skill and competence of thestaff to whom the responsibility isdelegated improves.

When the person to whom tasks

Limitations: inadequate /inappropriate delegation


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inappropriate delegation

The person accepting responsibilityneeds to have the required ability &willingness to perform.

Success of delegation also requiresco-ordination among otherperforming staff & otherorganizational arrangements.

Even if the staff is skilled, if the trustbetween the superior and thesubordinate is missing, then there

Chapter 9


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Human Resource Management& Selection

Definition of Staffing


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Staffingis filling, and keeping filled,positions in the organizationstructure.

The Systems Approach to HumanResource Management: An Overview of

the Staffing Function


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the Staffing Function

Manager Inventory ChartSatisfactory, but not

promotable oo


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promotable = oo

Personnel Actions


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Situational Factors AffectingStaffing


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g

External factors include the level ofeducation, the prevailing attitudes in

society (such as the attitude towardwork), the many laws and regulationsthat directly affect staffing, the

economic conditions, and the supplyof and demand for managers outsidethe enterprise.

Situational Factors AffectingStaffing cont.


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g

Internal factors include, for example,organizational goals, tasks,

technology, organization structure,the kinds of people employed by theenterprise, the demand for and the

supply of managers within theenterprise, the reward system, andvarious kinds of policies.

Definition of ManagerialSelection


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Selection is the process of choosingfrom among candidates, from within

the organization or from the outside,the most suitable person for thecurrent or future positions.

Systems Approach toSelection


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Position Requirements andJob Design


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J g

Selecting a manager effectivelyrequires a clear understanding of thenature and purpose of the positionthat is to be filled.

An objective analysis of positionrequirements must be made, and the

job must be designed to meetorganizational and individual needs. Positions must be evaluated and

compared so that the incumbents can

s ersonaCharacteristics needed inmanagers


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managers

Analytical & problem solving abilitites Personal Characteristics

Desire to manage

Communication skills & empathy

Integrity & honesty

Past performance as mangers

Intragroup and IntergroupCommunication


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Intragroup communication iscommunication with people in the

same organizational unit. Intergroup communication is

communication not only with other

departments but also with groupsoutside the enterprise.

Selection, Placement, andPromotion


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In the selection approach, applicantsare sought to fill a position with

rather specific requirements. In the placement approach, the

strengths and weaknesses of theindividual are evaluated, and asuitable position is found or evendesigned.

Promotion is a move within the

The Peter Principle


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Managers tend to be promoted to thelevel of their incompetence.

Specifically, if a manager succeeds ina position, this very success maylead to a promotion to a higher

position, often one requiring skillsthat the person does not possess.

Selection process,techniques & instruments


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q

Validity is the degree to which thedata predicts the candidate's success

as a manager. Reliability refers to the accuracy and

consistency of the measurement.

Steps in Selection Process


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1.

Completed Job Application: Requests only informationthat predicts the success in the job

2. Initial screening Interview: Provides quick evaluation ofapplicant's suitability. Asks Questions on experience,background, salary expectation, willingness to relocate,

etc.

3. Testing: Measures applicants job skills and the ability tolearn on the job. May include computer testing software,handwriting analysis, listening skills test, Team skills test,Sales ability test, etc.

Steps in Selection Process(contd.)


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4. Background Investigation: Checks truthfulness of theapplicants resume or application form. Calls the applicantsprevious supervisor (with permission) and confirmsinformation from applicant.

5. In-Depth Interview: Finds out more about the applicant asan individual. Conducted by manager to whom the applicantwill report.

6. Physical Examinations: Ensures effective performance byapplicant; protects other employees against diseases;establishes health record; protects the firm against unjustworkers compensation claims.

7. Job Offer: Fills a job vacancy or position. Offers a salaryplus benefit package.

Interviews


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Every manger hired is interviewed by one or morepeople.

Every interviewer should be trained so that they knowwhat they are looking for.

Interviewers should be prepared to ask right questions To improve selection, conduct multiple interviews using

different interviewers

It should be supplemented by data from application

form, results of tests & information obtained fromreferences.

Commonly-used Tests onManagerial Candidates


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Intelligence tests

Test mental capacity & memory, speed of thought,ability to see relationships in complex situations.

Proficiency and aptitude tests

Discover interests, existing skills, potential for acquiringskills.

Vocational tests Indicate a candidates most suitable occupation or the

areas in which the candidates interests match

Personality tests

What is an AssessmentCenter?


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The assessment center is atechnique for selecting and

promoting managers. Intended to measure how a potential

manger will act in a typical

managerial situations. Candidates take part in a series of

exercises.

Orientation of NewEmployees


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Orientation involves the introductionof new employees to the enterprise

its functions, tasks, and people. Organization

Benefits

Requirements of confidentiality &secrecy

Organizational Socialization


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A global view includes three aspects:

Acquisition of work skills and abilities

Adoption of appropriate role behaviors

Adjustment to the norms and values ofthe work group

Managing Human ResourcesWhile Moving Toward 2020


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The Economist Intelligence Unit Survey

Managing knowledge

Providing services & support forcustomers

Improving operation & productionprocesses

Developing businesses & strategies

Managing marketing & sales

Managing human resources & training

Chapter 10


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Human Resource Development

The Importance of HumanResource Management (HRM)


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As a significant source of competitive advantage

People-oriented HR creates superior shareholder value.

As an important strategic tool

Achieve competitive success through people by treatingemployees as partners.

To improve organizational performance

High performance work practices lead to both highindividual and high organizational performance.

The HRM Process


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The HRM process is an ongoing procedure thattries to keep the organization supplied withthe right people in the right positions, whenthey are needed.

The HRM Process: TraditionalView


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Includes seven basic activities

Human resource planning

Recruitment

Selection

Socialization

Training and development

Performance appraisal Promotions, transfers, demotions and separations

The HRM Process:Traditional View


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Training &Development

Recruitment SelectionHuman

ResourcePlanning

Socialization

PerformanceAppraisal

Promotions, Transfers,Demotions & Separations

Managing HumanResources


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ResourcesHuman Resource (HR) Planning

Planning for the future personnel needs of an organization,taking into account both internal activities and factors inexternal environment.

Basic aspects in HR planning:Planning for future needs

Planning for future balance

Planning for recruiting or laying off employees

Planning for the development of employees


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Recruitment Selection

Socialization

Training and Development


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Training programs are directed toward maintaining andimproving current job performance while developmentprograms seek to develop skills for future jobs.

Employee Training

Types of training

Training Method

Training Methods


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On-the-job TrainingMethods

Coaching

Job rotation

Training positions Planned work activities

Off-the-job TrainingMethods

Vestibule training

Behaviorally experienced

training Role play

Computer assistedinstruction

Management developmentprogrammes

Employee PerformanceManagement


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Performance Management System

A process of establishing performance standards andappraising employee performance.

van ages anDisadvantages ofPerformance Appraisal


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MethodsMethod Advantage DisadvantageWritten essays Simple to use More a measure of evaluators writing

ability than of employees actualperformance

Critical

incidents

Rich examples; behaviorally

based

Time-consuming; lack quantification

Graphic rating

scales

Provide quantitative data; less

time-consuming than others

Do not provide depth of job behavior

assessed

BARS Focus on specific andmeasurable job behaviors

Time-consuming; difficult to develop

Multipersoncomparisons Compares employees with oneanother Unwieldy with large number ofemployees; legal concerns

MBO Focuses on end goals; resultsoriented

Time-consuming

360-degree

appraisals

Thorough Time-consuming

Promotions, transfers,demotions, & separation


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Reflect an employees value to the organization. High performers may be promoted or transferred

to help them develop their skills.

Low performers may be demoted, transferred to

less important positions or even separated.

Compensation andBenefits


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Benefits of a Fair, Effective and AppropriateCompensation System Helps attract and retain high-performance employees.

Impacts the strategic performance of the firm.

Types of Compensation Base wage or salary

Wage and salary add-ons

Incentive payments

Skill-based pay

Variable pay

Factors That InfluenceCompensation and Benefits


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Tips for Managing Downsizing


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Communicate openly and honestly:

v Inform those being let go as soon as possible.

v Tell surviving employees the new goals and expectations.

v Explain impact of layoffs.

Follow any laws regulating severance pay or benefits.

Provide support/counseling for surviving employees.

Reassign roles according to individuals talents andbackgrounds.

Focus on boosting morale:

Offer individualized reassurance.

Continue to communicate, especially one-on-one.

Remain involved and available.

Current Issues in HRM(cont.)


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( )Work-Life BalanceEmployees have personal lives that they dont leave behind

when they come to work.Organizations have become more attuned to their

employees by offering family-friendly benefits:

On-site child careSummer day campsFlextimeJob sharingLeave for personal mattersFlexible job hours

Chapter 11


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Human Factors & Motivation

Leading and Managing


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Leading is the process of influencing people sothat they will contribute to organizational andgroup goals.

Managing requires the creation andmaintenance of an environment in whichindividuals work together in groups toward theaccomplishment of common objectives.

Harmonizing Objectives: Individuals havepersonal goals that may be distinct from thegoals of an organization. One of the importantduties of the modern manager is to get things

d th h th i h th t th

Human Factors:


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Multiplicity of Roles No average person

Importance of Personal Dignity

Consideration of the Whole Person

What is Motivation?


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Motivation is a general termapplying to the entire class of drives,desires, needs, wishes, and similarforces.

Motivational Theories


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McGregors Theory X & Theory Y

Need Theories

Maslows Hierarchy of Needs Theory

Alderfers ERG Theory

McClellands Needs Theory of Motivation

Herzbergs Motivation-Hygiene Theory: Two

Factor TheoryExpectancy Theory of Motivation

Equity Theory

McGregors Theory X andTheory Y


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Theory X and Theory Y are two sets ofassumptions about the nature of people.

Example of Theory X

Average human beings have an inherentdislike of work and will avoid it if theycan.

Example of Theory Y The expenditure of physical and mental

effort in work is as natural as play or rest.

Clarification of Theory X andY


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They are assumptions that need to betested against reality

They are intuitive deductions

They are not on a continuous scale, not a

matter of degree Theory Y is not consensus management

nor an argument against use of authority

Variety of tasks & situations require

different approaches

Maslows Hierarchy ofNeeds Theory


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Maslow saw human needs in a form of ahierarchy, ascending from the lowest tothe highest

He concluded that when one set of needs

is satisfied, this kind of need ceases to bea motivator.

Maslows Hierarchy ofNeeds


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Alderfer's ERG Theory


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ERG theory has three categories:existence needs, relatedness needs, andgrowth needs.

Alderfer stressed that when peopleexperience frustration on one level, theymay focus on the needs at a lower levelneed category.

McClelland's Needs Theoryof Motivation

McClellands types of motivating needs are


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McClellands types of motivating needs are:

Need for power (nPow): Degree of Control a persondesires over his situation. This need can be relatedto how people deal with the fear of failure or losingsuccess

Need for affiliation (nAff): The desire for friendlyand close interpersonal relationships. Reason whytelecommuting has not become as popular aspredicted

Need for achievement (nAch): The drive to excel,to achieve in relation to a set of standards, tostrive to succeed. High Achievement, sets moredifficult goals, take calculated risks and value

HerzbergsMotivation Hygiene Theory


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Dissatisfiers are not motivators. They arealso called maintenance, hygiene factors.This includes salary, company policy andworking conditions.

Satisfiers are motivators and are related tojob content. This includes achievement,recognition, responsibility, andadvancement.

Comparison of Maslows andHerzbergs Theories of

Motivation


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The Expectancy Theory ofMotivation


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Vroom holds that people will be motivatedto do things to reach a goal if they believein the worth of that goal and if they cansee that what they do will help them in

achieving it. Force = Valence x Expectancy

Components of ExpectancyTheory:


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Force is the strength of a persons motivation Valence is the strength of an individuals

preference for an outcome

Expectancy is the probability that a particularaction will lead to a desired outcome

The force exerted to do something willdepend on both valence and expectancy.

Expectancy Theory Cont


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Think of these three components as threequestions:

1. If I do this, what will be the outcome?

2. Is the outcome worth the effort to me?

3. What are my chances of achieving anoutcome that will be worthwhile for me?

Expectancy theory is more complicated as

Expectancy Theory Cont


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Expectancy theory is more complicated asperformance-outcome, valence and effort-performance expectancy are linked in amultiplicative chain.

E.g. You are working on a project for which theoutcome of your performance is clear, you knowfrom experience the amount of effort required,but the outcome isnt worth very much to you.

The valence is low.

In such a situation, your behaviour might be toprocrastinate until the last minute. E.g. Filingyour Tax Returns, Submission of Assignments

Porter and LawlersExpectancy Theory


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An employee must want to perform; thedesire of the employee to do the assignedjobs

A person must have the necessary abilities

and skills A person must have an accurate

knowledge of the requirements of the job if

he is expected to devote his energies fullyon the assigned tasks

Porter and Lawlers MotivationModel


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11

6

4

3

2

5

8

9

7b

7a

Equity Theory


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Equity theory refers to an individualssubjective judgment about the fairness of thereward he or she gets, relative to the inputs,in comparison with the rewards of others.

Outcomes by a person Outcomes by anotherperson

---------------------------- = ----------------------------

Inputs by a person Inputs by anotherperson

Equity Theory


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Studies have shown that an individuals

Equity Theory Cont


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Studies have shown that an individual sreaction to an inequity is dependent on thatpersons history of inequity

Richard Cosier & Dan Dalton point out that work

relationships are not static and that inequitiesare not usually isolated or one-time events

They suggest that there is a threshold up towhich an individual will tolerate a series of

unfair events, but that too many incidents canpush him or her over the edge

People use different methods to reduce inequity.

Eg. Sour Grapes

Lockes Goal Setting Theory


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According to Edwin Locke, the natural humaninclination to set and strive for goals is usefulonly if the individual both understands andaccepts a particular goal

For objectives to be meaningful, they must beclear, attainable and verifiable.

Furthermore, workers will not be motivated ifthey do not possess and know they do not

possess-the skills needed to achieve a goal

Research show that when goals are specific andchallenging, they function more effectively asmotivating factors in both individual and group

Objective Setting forMotivation


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Skinners ReinforcementTheory

Positive reinforcement or behaviour modification:


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Positive reinforcement or behaviour modification:

Individuals can be motivated by proper design of theirwork environment and by praise for their performanceand that punishment for poor performance producesnegative results.


This theory shows how the consequences of


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This theory shows how the consequences ofpast behaviour affect future actions in a cyclicallearning process.

This process may be expressed as follows:

Stimulus Response ConsequencesFuture Response

The individuals own voluntary behaviour(response) to a situation or event (stimulus) isthe cause of specific consequences.

If these consequences are unpleasant, theindividual will tend to change his or herbehaviour in order to avoid them



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Behaviour Modification: Uses Reinforcementtheory change human behaviour.

Thus, a manager who wishes to change employeebehaviour must change the consequences of that

behaviour There are four common methods of behaviour

modification:

1. Positive Reinforcement: Desirable behaviour isencouraged

2. Avoidance Learning: Employees change behaviourto avoid unpleasant consequences like criticism orpoor evaluation

Special MotivationalTechniques


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Money whether in form of wages, bonus,stock options or any other form, is oftenthe most important factor. Money isoften more than monetary value. It can

also mean status or power, or otherthings.

Intrinsic rewards may include a feelingof accomplishment, or even self-actualization.

Extrinsic rewards include benefits,recognition, status symbols, and,


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Job Enrichment


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Job enrichment is an attempt to motivateemployees by giving them the opportunity touse the range of their abilities. It is an ideathat was developed by Frederick Herzberg in

the 1950s. It can be contrasted to job enlargement

which simply increases the number of tasksby adding similar tasks without enhancingthe responsibility.

Ways to Job enrichment


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Giving more freedom in deciding workmethods, sequence, etc.

Encouraging participation of subordinates

Giving workers a feeling of personalresponsibility

Make sure that workers can see how theirtasks contribute to the finished product

Feedback on their job performance

Involving workers in the analysis and changeof physical aspects of the work environment

Limitations of Jobenrichment

Technology: With specialized machinery and


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Technology: With specialized machinery andassembly line techniques it may not bepossible to make all the jobs meaningful

There is also a question as to whether or not

workers really want job enrichment Limitations mainly apply to low-skill jobs

Making Job EnrichmentEffective

Better understanding of people want


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Better understanding of people want

If productivity is the main goal of enrichment,the program must show how workers willbenefit

People like to be involved, to be consulted,and to be given an opportunity to offersuggestions

People like to feel their managers are trulyconcerned with their welfare


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Defining Leadership


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Leadership is the art or process ofinfluencing people so that they willstrive willingly and enthusiasticallytoward the achievement of group

goals.

230230

Ingredients of Leadership


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1. Power

1. A fundamental understanding ofpeople

2. The ability to inspire followers toapply their full capabilities

3.

The leaders style and thedevelopment of a conduciveorganizational climate

231231

Fundamental Principle ofLeadership


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Since people tend to follow those who,in their view, offer them a means ofsatisfying their personal goals, the moremanagers understand what motivatestheir subordinates and how thesemotivators operate, and the more theyreflect this understanding in carryingout their managerial actions, the moreeffective they are likely to be asleaders.

232232


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Leadership Styles Based onUse of Authority

The autocratic leader commands and


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expects compliance, is dogmatic andpositive, and leads by the ability towithhold or give rewards and punishment.

The democratic, or participative,leader consults with subordinates andencourages their participation.

The free-rein leader uses power very

little, if at all, giving subordinates a highdegree of independence.

234234

Flow of Influence with ThreeLeadership Styles


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The Managerial Grid


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The grid has twodimensions:

1. concern forpeople

2. concern forproduction.

236236

Leadership as a Continuum


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Leadership continuum conceptualizesleadership as involving a variety ofstyles, ranging from one that ishighly boss centered to one that is

highly subordinate centered.

237237

Continuum of Manager-NonmanagerBehavior


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Fiedler's ContingencyApproach to Leadership


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People become leaders not onlybecause of their personalityattributes but also because ofvarious situational factors and the

interactions between leaders andgroup members.

239239


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r ca mens ons o eLeadership Situation(Fiedler)


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Position power

Task structure

Leader member relations

241241

The Path Goal Approach toLeadership Effectiveness


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The main function of the leader isto clarify and set goals withsubordinates, help them find the

best path for achieving the goals,and remove obstacles.

242242

Approach to LeadershipEffectiveness


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Transactional andTransformational Leadership


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Transactional leaders identify whatsubordinates need to do to achieveobjectives, clarify organizational roles andtasks, set up an organization structure,

reward performance, and provide for thesocial needs of their followers.

Transformational leaders articulate avision and inspire followers. They have the

capacity to motivate, shape theorganization culture, and create a climatefavorable for organizational change.

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Chapter 13


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Communication

What is Communication?

C i i i h f f


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Communicationis the transfer ofinformation from a sender to areceiver, with the information beingunderstood by the receiver.

The Purpose ofCommunication


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Communication Process Model


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The communication model provides anoverview of the communication process,identifies the critical variables, and showstheir relationships.

The Communication Process

Sender of the message


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His/her thought gets encoded

Use of a channel to transmit the message

Receiver of the message

Reception, decoding, understanding

Noise hindering Communication

Anything that hinders communication

Feedback in communication

Situational & organizational factors

Noise HinderingCommunication

N i i thi h th i th d th


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Noise is anythingwhether in the sender, thetransmission, or the receiverthat hinderscommunication

For example:

Encoding may be faulty because of the use ofambiguous symbols.

Transmission may be interrupted by static inthe channel, such as may be experienced in a

poor telephone connection. Inaccurate reception may be caused by

inattention.

A noise or a confined environment may hinder

Feedback in communication

To check the effectiveness of


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communication, a person must havefeedback.

Sit

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