E. W. Stein
Penn State U.
Lecture Notes:
What is Management?
1
I. What is
Management?
2
Management Activities
• Decision-making
• Organizing
• "Set of activities directed at an
organization's resources in order to
achieve organizational goals."
• Leading
• Controlling
3
Organizational Resources
• Human
4
Management Goals
• What are goals?
• Desired outcomes
• Financial
• Levels of goals?
• Physical
• Ideals
• Information
• Objectives
+
+
+
• Goals
E. W. Stein
Penn State U.
Lecture Notes:
What is Management?
5
Measuring Goal Attainment
6
Managerial Roles (Mintzberg)
• Effectiveness vs. Efficiency
• Interpersonal roles
• Effectiveness -doing the right thing
• Information roles
• Efficiency -doing the thing right (e.g., ratio
of inputs to outputs)
• Decisional roles
7
Interpersonal Roles
8
Informational Roles
• Figurehead -attend functions
• Monitor -environmental scanning
• Leader -motivate employees
• Disseminator -"informate" the
organization
• Liaison -coordinate activities
• Spokesperson -explain initiatives
E. W. Stein
Penn State U.
Lecture Notes:
What is Management?
9
Summary of Management
Defined
Decisional Roles
• Entrepreneur -new ideas
Management is a process
• Disturbance Handler -resolve conflict
Managers achieve goals using resources
• Resource allocator -review budgets
Managers play many roles and engage in organizing,
making decisions, leading, and controlling
• Negotiator -reach agreement
Outcomes measured as efficient and/or effective
11
Part 2: Nature of
Organizations and
Environments
12
Organizational Environments
• Contextual environment
• Transactional environment
• Value Chain environment
• Internal environment
E. W. Stein
Penn State U.
Lecture Notes:
What is Management?
The Organization's
Contextual Environment
13
14
The Organization's
Stakeholders
• Economic dimension
• Transactional stakeholders
• Political-legal dimension
• Value chain stakeholders
• Technological dimension
• Internal organization stakeholders
• International dimension
• Sociocultural dimension
15
16
TRANSACTIONAL ENVIRONMENT
Stakeholders
Strategic Allies
Stakeholder Diagram
VALUE CHAIN
• A stakeholder is anyone who is
affected by and can affect the
performance of the organization
Owners
Suppliers
V1
Internal
Organization
Distributors
V3
V2
• Different levels of stakeholders
Unions
CONTEXTUAL ENVIRONMENT
Regulators
Customers
E. W. Stein
Penn State U.
Lecture Notes:
What is Management?
17
Role of Culture
• What is culture?
Environmental Change,
Complexity & Uncertainty
Least
Uncertainty
• Degree of change
Moderate
Uncertainty
• Degree of homogeneity (complexity)
19
20
Responding to Change
• Information management
• Strategic response
• Mergers and acquisitions
Complex
Moderate
Uncertainty
Stable
18
• Dimensions?
• How does culture affect the internal
environment?
Simple
Organization-Environment
Relationships
Most
Uncertainty
Dynamic
• Organizational design
• Influencing the environment
E. W. Stein
Penn State U.
Lecture Notes:
What is Management?
22
Summary: Organizational
Environments
Part 3: Management
Theory
An organization's environment is multidimensional
Organizational must manage relationships with different
stakeholders
Environments create varying degrees of uncertainty
Organizations may respond to environmental uncertainty in
a variety of ways
23
What is a theory?
• Simplification of reality
24
Range of Theories
Prescriptive
Descriptive
Predictive
• Identifies variables and the
relationships between variables
• May describe, prescribe, predict or
control
Management Theory
Physics/Engineering
Controlling
E. W. Stein
Penn State U.
Lecture Notes:
What is Management?
25
Perspectives on Management
26
Early Management Theorists
• Early Ideas
• Robert Owen (1771-1858)
• Classical Perspective
• Importance of human resources; QWL
• Scientific Management
• Charles Babbage (1792-1871)
• Administrative Management
• Efficiencies of production; div. of labor
• Behavioral Perspective
• Quantitative Perspective
• Management Science
• Operations Management
27
Scientific Management
• Frederick Taylor (1856-1915)
• Midvale Steel (Phila)
Scientific Management
(cont1)
• Frank and Lillian Gilbreth (1861-1915;
1878-1972)
• Determined optimal production time
• Redesigned tasks for simplification
• Paid workers more who came close to
optimal (piecework pay)
• Applications of industrial psychology in
workplace
• What was wrong with this method?
• Henry Gantt (1861-1919)
• Work scheduling
28
E. W. Stein
Penn State U.
Lecture Notes:
What is Management?
Fayol's Principles
29
Administrative Management
• Henri Fayol (1841-1925)
• Formulated 14 principles that were
generalizations or management practice
(what kind of theory building is this?)
Fayol's Principles (cont)
Factor
Explanation
Centralization
Power and authority should be concentrated in
upper levels
Scalar chain
A chain of authority should extend from top to
bottom
Order
Resources should be coordinated
Equity
Managers should be fair with employees
Stability
High turnover should be avoided
Initiative
Subordinates should be encouraged to initiate
Esprit de corps
team spirit is fundamental to the organization's
health
Factor
Explanation
Division of Labor
Specialization leads to efficiency
Authority
Authority is needed to carry out
managerial responsibilities
Discipline
People must respect rules
Unity of Command
Each subordinate must report to one
(and only one) boss
Unity of Direction
Similar activities should be grouped
together
Subordination of goals
Individual interests subordinate to
organizational goals
Remuneration
Fair compensation to employees
31
Summary of Classical
Perspective
1890's to 1930's
Focussed on employees and firm productivity
Identified key management functions
Most appropriate for stable and simple organizations
Prescriptions had limited application
Many viewed employees as machines or tools
30
E. W. Stein
Penn State U.
Lecture Notes:
What is Management?
33
The Behavioral
Perspective
Behavioral Perspective
(cont1)
34
• Hawthorne Study 1: Illumination and
productivity (1927-1932)
• Hawthorne Studies
• Performed by Elton Mayo; Sponsored by GE
• Human Relations Movement
• Result: Increasing (or decreasing) lighting
in experimental group led to increased
production in both experimental and control
groups
• Why? (A: Both groups received attention)
Behavioral Perspective
(cont2)
• Hawthorne Study 2: Piecework
• Performance standards set for task
• Individuals showed allegiance to group
rather than organizational norms by
under-producing
35
Behavioral Perspective
(cont3)
• Maslow's hierarchy of needs
• McGregor's Theory X and Theory Y
• Theory X-employees do not like to work;
managers must direct and control; people
lack ambition
• Theory Y-employees like to work and are
motivated; need tools to achieve goals;
people seek responsibility and are
innovative
36
E. W. Stein
Penn State U.
Lecture Notes:
What is Management?
Summary of Behavioral
Perspective
Quantitative Perspective
• 1940's to present
• Mathematical models of management processes
and problems
1930's to 1940's
Focus on employee behavior and psychology
• Focused on production management
Insights into motivation, group dynamics
• Very useful for planning and control
Considered employees valuable resources
• Limitations: not applicable to human behavior;
models may be simplistic
Limitations: lacks prescriptive capability; not easily
implemented in workplace; hard for managers to
understand
Example of Quantitative
Model: Forecasting
Sales ($) = .567 Advertising ($) + .341
population (000) + 14559
40
39
Integrative
Perspectives
• Systems
• Contingency
• Theory Z
E. W. Stein
Penn State U.
Lecture Notes:
What is Management?
41
Systems approach
42
Contingency approach
feedback
• Argues that there are no universal
theories
Outputs
Inputs
• Theories have limited scope and
application
Organization
• Appropriateness is contingent on
context
Transformation Processes
43
Theory Z (Ouchi)
44
Theory Z (cont.)
• Integrates American (Type A) and
Japanese (Type J) management
practices
• Typical J
• Seven Dimensions
• Typical American
• (1) length of employment (2)
decision-making (3) location of
responsibility (4) speed of promotion (5)
control mechanisms (6) career
specialization (7) concern for employee
• Lifetime employment; collective decision
making
• Short-term employment; individual decision
making
E. W. Stein
Penn State U.
Lecture Notes:
What is Management?
45
Theory Z Described
• Best of both worlds
• One Type A characteristic
• Individual responsibility
• Three Type J characteristics
• Collective decision-making
• Long-term employment
Summary of Management
Perspectives
Many perspectives evolved over past century
Some favor organizational ends, while others favor needs
of individuals
Each of the perspectives is represented in today's
organizations
The key for management is to know how and when to
apply the results of each perspective
• Holistic concern
end...
Questions
• What is management?
• What are goals?
• Distinguish between
efficiency and
effectiveness.
• Describe and
organization's
environment.
• What is culture?
E. W. Stein
Penn State U.
Lecture Notes:
What is Management?
Questions (cont.)
• What is a theory
• Who was Frederick
Taylor?
• Who was Henri Fayol?
• Explain the Hawthorne
effect.
• Describe Theory Z