session-1 april 11 2016

By Dr Anju Chawla 1

FUNDAMENTALS OF ECONOMICS &

MANAGEMENT

(FEM) FOUNDATION PAPER 1SESSION-1

BY DR ANJU CHAWLA

By Dr Anju Chawla 2

CONTENT PLAN 1. Management Process

1. Introduction & Functions2. Evolution of management Theory

1. Taylor2. Fayol3. Weber4. Organizational Theory

3. Concept of Power

3By Dr Anju Chawla

WHY STUDY MANAGEMENT?We all have a vested interest in improving the way organizations are managed.

• Better organizations are, in part, the result of good management.

You will eventually either manage or be managed.• Gaining an understanding of the management process

provides the foundation for developing management skills and insight into the behavior of individuals and the organizations.

By Dr Anju Chawla 4

HOW DO WE DEFINE MANAGEMENT?Management

• The process of getting things done, effectively and efficiently, through and with other people

• Efficiency• Means doing the thing correctly; refers to the relationship

between inputs and outputs; seeks to minimize resource costs• Effectiveness

• Means doing the right things; goal attainment

By Dr Anju Chawla 5

HOW DO WE DEFINE PROCESSSequence of interdependent and linked procedures which,

at every stage, consume one or

more resources (employee time, energy, machines, money)

to convert inputs (data, material, parts, etc.) into outputs.

These outputs then serve as inputs for the next stage until a known goal or end result is reached.

By Dr Anju Chawla 6

By Dr Anju Chawla 7

MANAGEMENT PROCESSESPlanning

• Includes defining goals, establishing strategy, and developing plans to coordinate activities

Organizing• Includes determining what tasks

to be done, who is to do them, how the tasks are to be grouped, who reports to whom, and where decisions are to be made

By Dr Anju Chawla 1–8

MANAGEMENT PROCESSES (CONT’D)Staffing

• Hiring right skilled people for the right job at the right time.Leading

• Includes motivating employees, directing the activities of others, selecting the most effective communication channel, and resolving conflicts

Controlling• The process of monitoring performance,

comparing it with goals, and correcting any significant deviations

By Dr Anju Chawla 9

THE PROCESS OF MANAGEMENT

Manager Goals

HumanResources

FinancialResources

PhysicalResources

InformationResources

Planning Organizing& Staffing Leading Controlling

Managerial Functions

By Dr Anju Chawla 10

MANAGEMENT PROCESS- IN NUTSHELL

Management process is a process of

setting goals,

planning and/or

controlling

the organizing and leading the execution of any type of activity, such as: a project (project management process)


ABC-COACHING INSTITUTEBackground of task: Recruiting new faculty with cost cutting

Planning(WHAT TO DO)

-Goal- To hire 45 experienced faculty members

-Strategy- Contractual hiring with per hour payment

-Plan- hire interns from various B-schools for hiring team

Organizing(HOW To DO)

- arranging for phones, database of faculty, computers to write mails.

- How many teams required to co-ordinate for which zone etc.


…CONTD EXAMPLEStaffing (WHO WILL DO IT)

-Where to hire interns-Who will train them- Job Analysis

Directing ( Giving directions) Top to bottom approach.

Controlling ( Fill in the gaps)It is a continuous process.


Ekart News to explain functions of management-Session1.docx


Top-Level Mgrs.

Middle-Level Mgrs.

First-Level Mgrs.

Individual Contributors (Operatives and Specialists)

MANAGERIAL LEVELS

Chairman of the Board, CEO, president, executive vice president, vice president, group team leader, chancellor

Director, branch manager, department chairperson, chief of surgery, team leader

Supervisor, office manager, crew chief

Tool-and-die maker, cook, word processing technician, assembler


TIME SPENT ON MONITORING THE BUSINESS ENVIRONMENT *

34

20

13

0

70

Perc

enta

ge

First-LineSupervisor

MiddleManager

Executive

Monitoring the Business Environment

Source: Allen I. Kraut et al., “The Role of the Manager: What’s Really Important in Different Management Jobs,” The Academy of Management Executive (November 1989): p. 288.

* Numbers refer to % of managers who said task was of “the utmost” or “considerable” importance.


FOUR MANAGERIAL FUNCTIONS &17 MANAGERIAL ROLES

PlanningStrategic PlannerOperational Planner

Organizing & StaffingOrganizerLiaisonStaffing coordinatorResource allocatorTask delegator

LeadingFigureheadSpokespersonNegotiatorCoachTeam builder & playerTechnical problem solverEntrepreneur

ControllingMonitorDisturbance Handler

1.6


PERIPHERAL FUNCTIONSForecasting- Demand, Supply of Resources

Decision-Making- Choosing the best possible options in time amongst more than one available.Communication- What to tell , how much to tell, whom to tell, when to tell and how to tell.Co-ordination- Not just giving directions but acting as a bridge for any thing falling out of alignment


DECISION-MAKINGDecision-making process

• A set of eight steps that includes identifying a problem, selecting a solution, and evaluating the effectiveness of the solution(much like buying process)

Problem• A discrepancy between an existing and a desired state of

affairsDecision criteria

• Factors that are relevant in a decision


DECISION-MAKING (CONT’D)Decision implementation

• Putting a decision into action; includes conveying the decision to the persons who will be affected by it and getting their commitment to it.


SETTING ORGANIZATIONAL GOALSß

ESTABLISHING PERFORMANCE CRITERIAß

CLASSIFYING AND DEFINING THE PROBLEMß

DEVELOPING CRITERIA FOR A SUCCESSFUL SOLUTIONß

GENERATING ALTERNATIVESß

COMPARING ALTERNATIVES TO CRITERIAß

CHOOSING AN ALTERNATIVEß

IMPLEMENTING THE DECISIONß

MONITORING THE DECISION AND GETTING FEEDBACK

The process of decision making


HOW DO PROBLEMS DIFFER?Well-structured problems

• Straightforward, familiar, easily defined problems

Ill-structured problems• New problems in which information is ambiguous or incomplete

Programmed decision• A repetitive decision that can be handled by a routine approach

Nonprogrammed decisions• Decisions that must be custom-made to solve unique and

nonrecurring problems


DECISION MAKING: STYLESDirective style

• Characterizes the low tolerance for ambiguity and a rational way of thinking of individuals who are logical and efficient and typically make fast decisions that focus on the short term.

Analytic style• Characterizes the high tolerance for ambiguity combined with

a rational way of thinking of individuals who prefer to have complete information before making a decision.


GROUP DECISION MAKINGAdvantages

• Make more accurate decisions• Provides more complete information• Offers a greater diversity of experiences and perspectives• Generates more alternatives• Increases acceptance of a solution• Increases the legitimacy of a decision.

Disadvantages• Is more time-consuming and less efficient• Minority domination can influence decision process• Increased pressures to conform to the group’s mindset

(groupthink)• Ambiguous responsibility for the outcomes of decisions


WHEN ARE GROUPS MOST EFFECTIVE?Creativity

• Groups tend to be more creative than individuals.Acceptance of the final solution

• Groups help increase the acceptance of decisions.Effectiveness of group decision making

• Groups of five to seven members are optimal for decision process speed and quality.

1–25

WHO ARE MANAGERS AND WHERE DO THEY WORK?Organization

• A systematic arrangement of people brought together to accomplish some specific purpose; applies to all organizations—for-profit as well as not-for-profit organizations.

• Where managers work (manage).Common characteristics

• Goals• Structure• People

By Dr Anju Chawla


IDENTIFYING MANAGERSFirst-line managers

• Supervisors responsible for directing the day-to-day activities of operative employees

Middle managers• Individuals at levels of management between the first-line

manager and top managementTop managers

• Individuals who are responsible for making decisions about the direction of the organization and establishing policies that affect all organizational members


IS THE MANAGER’S JOB UNIVERSAL?Level in the organization

• Do managers manage differently based on where they are in the organization?

Profit versus not-for-profit• Is managing in a commercial enterprise different than

managing in a non-commercial organization?Size of organization

• Does the size of an organization affect how managers function in the organization?


IS THE MANAGER’S JOB UNIVERSAL? (CONT’D)Management concepts and national borders

• Is management the same in all economic, cultural, social and political systems?

Making decisions and dealing with change.• Do managers all make decisions and deal with change in the

same ways?


GENERAL SKILLS FOR MANAGERSConceptual skills

• A manager’s mental ability to coordinate all of the organization’s interests and activities

Interpersonal skills• A manager’s ability to work with, understand, mentor, and motivate

others, both individually and in groups

Technical skills• A manager’s ability to use the tools, procedures, and techniques of

a specialized field

Political skills• A manager’s ability to build a power base and establish the right

connections

30By Dr Anju Chawla

EVOLUTION OF MANAGEMENT

THEORY

END OF MANAGEMENT PROCESS


CLASSICAL CONTRIBUTIONS

Classical approach• The term used to describe the hypotheses of the scientific

management theorists and the general administrative theorists.

• Scientific management theorists• Fredrick W. Taylor, Frank and Lillian Gilbreth, and

Henry Gantt• General administrative theorists

• Henri Fayol and Max Weber


SCIENTIFIC MANAGEMENTFrederick W. Taylor

• The Principles of Scientific Management (1911)• Advocated the use of the scientific method to define the

“one best way” for a job to be done• Believed that increased efficiency could be achieved

by selecting the right people for the job and training them to do it precisely in the one best way.

• To motivate workers, he favored incentive wage plans.

• Separated managerial work from operative work.


GENERAL ADMINISTRATIVE THEORYGeneral administrative theorists

• Writers who developed general theories of what managers do and what constitutes good management practice

• Henri Fayol (France)• Fourteen Principles of Management: Fundamental or

universal principles of management practice• Max Weber (Germany)

• Bureaucracy: Ideal type of organization characterized by division of labor, a clearly defined hierarchy, detailed rules and regulations, and impersonal relationships


…CONTDEsprit de corps contributes to the development of the culture and creates an atmosphere of mutual trust and understanding.

In conclusion on the 14 Principles of management:The 14 principles of management can be used to manage organizations and are useful tools for forecasting, planning, process management, organization management, decision-making, coordination and control.

Although they are obvious, many of these matters are still used based on common sense in current management practices in organizations. It remains a practical list with focus areas that are based on Henri Fayol ’s research which still applies today due to a number of logical principles.


HAWTHORNE STUDIESA series of studies done during the 1920s and 1930s that provided new insights into group norms and behaviors

• Hawthorne effect• Social norms or standards of the group are the key

determinants of individual work behavior.Changed the prevalent view of the time that people were no different than machines.


WHAT IS THE PROCESS APPROACH?Management theory jungle (Harold Koontz)

• The diversity of approaches to the study of management—functions, quantitative emphasis, human relations approaches—each offer something to management theory, but many are only managerial tools.

Process approach(The one explained)• Planning, leading, and controlling activities are

circular and continuous functions of management.


THE SYSTEMS APPROACHDefines a system as a set of interrelated and interdependent parts arranged in a manner that produces a unified whole

• Closed system : a system that is not influenced by and does not interact with its environment

• Open system: a system that dynamically interacts with its environment

• Stakeholders: any group that is affected by organizational decisions and policies

43By Dr Anju Chawla

POWER

END OF MANAGEMENT THEORY


Spark Time:

• What is power?• How do managers acquire the power needed for leadership?• What is empowerment, and how can managers empower

others?• What is organizational politics?


On many levels, power is extremely important in terms of providing direction and assisting in the management process. When examining it from the top down elements, power and authority can help to give structure to an organization, assist employees in performing better, and allow short and long term goals to be articulated and reached. The charting of an organization's success can be largely dependent on top down directives. On another level, power coming from the bottom up can also be important. Such a conception of power can help to give voice to workers and those whose voice might be marginalized. Individuals who can collectivize from the bottom up can advocate for rights and articulate a responsive vision that organizations must appropriate in the process of striving for success and sustainability.


WHAT IS POWER?Power is the ability to …

• Get someone to do something you want done.• Make things happen in the way you want.

Influence is …• What you have when you exercise power.• Expressed by others’ behavioral response to your exercise of

power.


WHAT IS POWER?Position power.

• Derives from organizational sources.• Types of position power.

• Reward power.• Coercive power.• Legitimate power.• Process power.• Information power.• Representative power.


WHAT IS POWER?Reward power.

• The extent to which a manager can use extrinsic and intrinsic rewards to control other people.

• Success in accessing and utilizing rewards depends on manager’s skills.


WHAT IS POWER?Coercive power.

• The extent to which a manager can deny desired rewards or

administer punishments to control other people.

• Availability varies from one organization and manager to

another.


WHAT IS POWER?Legitimate power.

• Also known as formal hierarchical authority.• The extent to which a manager can use subordinates’

internalized values or beliefs that the “boss” has a “right of command” to control their behavior.

• If legitimacy is lost, authority will not be accepted by subordinates.


REWARD POWER

COERCIVE POWER

EXPERT POWER

CHARISMATIC POWER

ÝUPWARD

ÝÜ Ü Ü HORIZONTAL Þ Þ Þ

ßDOWNWARD

ß

Organization-based power

Communication in the organization


WHAT IS POWER?Process power.

• The control over methods of production and analysis.• Places an individual in the position of:

• Influencing how inputs are transformed into outputs.• Controlling the analytical process used to make choices.


WHAT IS POWER?Information power.

• The access to and/or control of information.• May complement legitimate hierarchical power.• May be granted to specialists and managers in the middle of

the information system.• People may “protect” information in order to increase their

power.


WHAT IS POWER?Representative power.

• The formal right conferred by the firm to speak as a representative for a potentially important group composed of individuals across departments or outside the firm.

• Helps complex organizations deal with a variety of constituencies.


WHAT IS POWER?Personal power.

• Derives from individual sources.

• Types of personal power.

• Expert power.

• Rational persuasion.

• Referent power.


WHAT IS POWER?Expert power.

• The ability to control another person’s behavior through the possession of knowledge, experience, or judgment that the other person needs but does not have.

• Is relative, not absolute.


WHAT IS POWER?Rational persuasion.

• The ability to control another person’s behavior by convincing the other person of the desirability of a goal and a reasonable way of achieving it.

• Much of a supervisor’s daily activity involves rational persuasion.


WHAT IS POWER?Referent power.

• The ability to control another’s behavior because the person wants to identify with the power source.

• Can be enhanced by linking to morality and ethics and long-term vision.


HOW DO MANAGERS ACQUIRE THEPOWER NEEDED FOR LEADERSHIP?

Acquiring and using power and influence.

• A considerable portion of any manager’s time is directed toward power-oriented behavior.

• Power-oriented behavior is action directed at developing or using relationships in which other people are willing to defer wholly or partially to one’s wishes.



Acquiring and using power and influence.• Three dimensions of managerial power and influence.

• Downward.• Upward.• Lateral.

• Effective managers build and maintain position power and personal power to exercise downward, upward, and lateral influence.



Building position power by:• Increasing centrality and criticality in the organization.• Increasing task relevance of own activities and work unit’s

activities.• Attempting to define tasks so they are difficult to evaluate.



Building personal power by:• Building expertise.

• Advanced training and education, participation in professional associations, and project involvement.

• Learning political savvy.• Learning ways to negotiate, persuade, and understand

goals and means that others accept.• Enhancing likeability.

• Pleasant personality characteristics, agreeable behavior patterns, and attractive personal appearance.



Managers increase the visibility of their job performance by:

• Expanding contacts with senior people.• Making oral presentations of written work.• Participating in problem-solving task forces.• Sending out notices of accomplishment.• Seeking opportunities to increase name recognition.



Additional tactics for acquiring and using power and influence.

• Using coalitions and networks to alter the flow of information and the analytical context.

• Controlling, or at least influencing, decision premises.• Making one’s own goals and needs clear.• Bargaining effectively regarding one’s preferred goals and

needs.



Common strategies for turning power into relational influence.

• Reason.• Friendliness.• Coalition.• Bargaining.• Assertiveness.• Higher authority.• Sanctions.



Power, formal authority, and obedience.• The Milgram experiments.

• Designed to determine the extent to which people obey the commands of an authority figure, even under the belief of life-threatening conditions.

• The results indicated that the majority of the experimental subjects would obey the commands of the authority figure.

• Raised concerns about compliance and obedience.



Obedience and the acceptance of authority.

• Chester Barnard argued that:• Authority derives from the “consent of the governed.”

• Subordinates accept or follow a directive only under special circumstances.


HOW DO MANAGERS ACQUIRE THEPOWER NEEDED FOR LEADERSHIP?Obedience and the acceptance of authority — cont.

• For a directive to be accepted as authoritative, the subordinate:

• Can and must understand it.• Must feel mentally and physically capable of carrying it out.• Must believe that it is consistent with the organization’s

purpose.• Must believe that it is consistent with his or her personal

interests.



Obedience and the acceptance of authority — cont.• Directives that meet the four criteria will be accepted as

authoritative since they fall within the “zone of indifference.”• Directives falling within the zone are obeyed.• Directives falling outside the zone are not obeyed.• The zone is not fixed over time.


WHAT IS EMPOWERMENT, AND HOW CAN MANAGERS EMPOWER OTHERS?

Empowerment.• The process by which managers help others to

acquire and use the power needed to make decisions affecting themselves and their work.

• Considers power to be something that can be shared by everyone working in flatter and more collegial organizations.

• Provides the foundation for self-managing work teams and other employee involvement groups.



The power keys to empowerment.

• Traditional view.• Power is relational in terms of individuals.

• Empowerment view.• Emphasis is on the ability to make things happen.• Power is relational in terms of problems and opportunities, not

individuals.



The power keys to empowerment.

• Ways to empower others.

• Changing position power.

• Expanding the zone of indifference.



Power as an expanding pie.

• With empowerment, employees must be trained to expand their power and their new influence potential.

• Empowerment changes the dynamics between supervisors and subordinates.



Ways to expand power.• Clearly define roles and responsibilities.• Provide opportunities for creative problem solving

coupled with the discretion to act.• Emphasize different ways of exercising influence.• Provide support to individuals so they become

comfortable with developing their power.• Expand inducements for thinking and acting, not

just obeying.


WHAT ROLE DOES POWER PLAY IN LEADERSHIP? FURTHERMORE WHAT ROLE DOES POWER PLAY IN ENTREPRENEURSHIP?

And how can people use power while in a leadership position or in entrepreneurial state of mind? In 1959 two sociologists named John French and Bertram Raven defined the bases of power in a study which divided power into conceptual forms which can be applied in practice. Observation of any leader for a period of time will result in observer coming to an understanding that leadership and power are often closely related, intertwined, and influenced by each other as people tend to follow leaders with power.


END OF SESSION 1

session-1 april 11 2016

Documents