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Unit 1 Notes

Unit 1 – Notes
Foundations of Management
The Management Process
The ultimate “bottom line” in every manager’s job is to succeed in helping an
organization achieve high performance by well utilizing all of its human and material
resources. If productivity in the form of high levels of performance effectiveness and
efficiency is a measure of organizational success, managers are responsible for ensuring
its achievement. It is their job to successfully mobilize technology and talent by creating
work environments within which others work and perform to the best of their abilities.
Functions of Management
All mangers in daily events must have the capabilities to recognize performance
problems and opportunities, make good decisions, and take appropriate action. They do
this through the process of management:
Setting performance
objectives and deciding
how to achieve them
Measuring performance
and taking action to
ensure desired results
Inspiring people to work
hard to achieve high
Arranging tasks, people,
and other resources to
accomplish the work
Leadership Power
An essential part of leadership or management is to influence the people you manage so
that they do what you want them to do. The influence of a leader will depend on a variety
of factors including their personality and of those around them. For the purposes of this
article we will refer to the people that the leader is managing or leading as followers. The
influence of a leader over his followers is often referred to as power. Below we will
explore the different types of power a leader may have.
Reward Power
This type of influence is created when the leader is able to offer a reward to his followers
for completing tasks/behaving in a certain manner. Rewards in the workplace can take a
variety of forms from chocolates, gift vouchers and holidays to promotions, commission
and pay rises.
Coercive Power
This is the opposite of reward power because this power is based on the leader having
control over what happens if followers do not act as required. If followers do not
undertake the action required, the leader will impose a penalty. Penalties take a variety of
forms including withdrawal of privileges, job losses, verbal abuse, and delayed or loss of
In all cases the leader will need to choose the penalty carefully to prevent breaking the
law or being the subject of an employment tribunal.
Legitimate Power
This is the power that a leader has when the followers believe that the leader has “a right”
to instruct them and that they have an obligation to follow instructions. Sometimes
legitimacy power is created by the leader’s job title (such as captain, doctor, or area
manager), combined with the follower’s belief that the job title gives the leader the right
to give them orders.
Referent Power
Referent power is individual power based on a high level of identification with,
admiration of, or respect for the powerholder. Nationalism, patriotism, celebrities and
well-respected people are examples of referent power in effect.
Expert Power
As the title suggests a leader has expert power when the followers believe that the leader
has “expert” knowledge or skills that are relevant to the job or tasks they have to
complete. Often an experienced member of the team or staff in an organization can have
expert power even though they are not a supervisor or manager.
As can be seen each of the powers is created by the followers belief, if the follower does
not hold the requisite belief than then the leader is not able to influence them.
Issues of Ethics and Social Responsibility
Ethics in Organizations
Ethics are an individual’s personal beliefs regarding right and wrong
Ethical behaviour conforms to generally accepted social norms
Unethical behaviour does not conform to generally accepted social norms
Much of business is based on factual and practical manners, but there are
times when managers have to deal with more abstract concerns.
Rather than asking how a manager performs a job we have to ask ourselves
the following questions:
o Should this be done?
o Is it good or bad?
o Is it right or wrong?
Formation of Personal Ethics
Family Influences – Individuals start to form their ethics as children
Peer Influences – Your friends influence your ethics
Personal Values and Morals - the items that people value and the morals by
which they live
Life Experiences – experiences also shapes lives and, ultimately, ethics.
Situational Factors –factors that arise, often unexpectedly, may influence a
person’s ethics.
Managerial Ethics
How Employees Treat the Organization
o The ethical standards of an individual may conflict with the
organization’s policies
How the Organization Treats Other Economic Agents
o Managers also must have ethical standards when dealing with others.
It is important to supply truthful communications with others in order
to behave ethically
Ethics in an Organizational Context
Unethical behaviour by mgmt and other employees sometimes occurs because
the firm appears to support such behaviour.
Employees, who work for firms that support and encourage unethical acts,
may find themselves in a conflict-of-interest situation.
Managing Ethical Behaviour
Top managers are responsible for setting the ethical standards for an
o Committees can be set up to investigate unethical activities
o A code of ethics is a formal written statement of the values and
standards that guide the firm
Organizational Constituents
These include customers, employees, the local community, and creditors, just
to name a few
Any firm that ignores one of its constituents is asking for trouble
Social Responsibility & Organizations
The Natural Environment
o laws regulate what a company can go with respect to the environment.
Previously, companies dumped sewage, and waste products anywhere
they could.
General Social Welfare
o Organizations also can promote the social welfare by contributing to
The Government & Social Responsibility
Direct Regulation
o the establishment of laws that dictate what businesses can and cannot
Indirect Regulation
o Finding ways to influences firms to act in a responsible way without
o One way is to change the tax structure to make them act in a way that
the government thinks is socially acceptable
Does a Business have a Social Responsibility?
In the eyes of the law a corporation
is an artificial person and therefore
has certain responsibilities
It uses air, water and land, therefore
it must use the resources in a
careful manner
If business accepts it
responsibilities then the gov’t will
keep rules to a min.
Some firms, (GM, IBM) are bigger
than many nations and with that
comes responsibility
A business is an economic institution &
not a social one & its primary
responsibility to the shareholder
It should focus on maximizing profits
Social obligations are discharged
through taxes
Money spent on social goods takes
away from profits & puts you at a
Politicians have a mandate to decide on
what social projects are desirable not
Managing Social Responsibility
Organization Leadership & Culture
o The leadership practices of an organization can define the social
responsibility adopted by an organization
Whistle Blowing
o Occurs when an employee discloses illegal conduct by others within the
Ethics in the Workplace
Cultural Relativism
Ethical Imperialism
No culture’s ethics are superior.
The values and practices of the local setting
determine what is right or wrong
Certain absolute truths apply everywhere.
Universal values transcend cultures in
determining what is right or wrong.
“When in Rome, do as Romans do.”
“Don’t do anything you wouldn’t do at
How to make tough Ethical Calls
The Mirror Test
o Ask yourself “What kind of person do I want to see when I shave… or put
lipstick on in the morning.”
The Sleep Test
o How well do you sleep at night?
Can you answer the following questions?
o Is it legal?
o If someone else did it to you would you think that it is fair?
o Would you be content if it appeared on the front-page of the Ottawa
o Would you like your mother to see you do it?
If you can answer ‘yes’ to all 4 of these questions then whatever you are about to
do is probably ethical.