Management & Accounting
Lecture 1
Management involves four basic activities: Planning and decision making, organizing,
leading and controlling. Although there is a basic logic for describing these activities in this
sequence (as indicated by the arrows) most managers engage in more than one activity at a
time and often move back and forth between the activities in unpredictable ways in
accordance to ongoing priorities.
Planning: Nature, types and steps of planning. Strategic and long-term planning, vision,
mission strategies. Operational and tactical planning, goal setting decision making, managing
risks and uncertainties.
Organizing: Organizational design and types of organisation delegating: line and staff
concepts, power and authority. Staffing and resource planning and budgeting human factors.
Leading: Ingredients of leadership, styles and functions of leadership motivate and reward
individual teams.
Controlling: definition, process, standard setting, techniques systems budgeting, forecasting,
reporting.
Lecture 2
According to Frederick Taylor, scientific management is an art of knowing exactly what you
want your men to do and seeing that they do it in the best and cheapest way. In Taylor’s view
if a work is analyzed scientifically, it will be possible to find one best way to do it.
Process: A set of ongoing and interrelated activities
Effectiveness: Doing the right things - completing work activities so that organizational goals
are attained.
Efficiency: DDoing things right -Getting the most output from the least amount of inputs.
Fayol is known as the “father of modern management”. He believed managers should interact
with personnel in five basic ways to control plan production:
Planning: Managers must plan and schedule every part of the industrial process.
Organizing: Management must ensure that all the necessary resources, such as raw materials
and personnel, come together at the appropriate time of production.
Commanding: Management must encourage and direct workers’ activity.
Coordinating: Management must ensure that workers collaborate.
Controlling: Managers evaluate and ensure that personnel follow management’s commands.
Management is a process consisting of planning, organizing, actuating and controlling,
performed to determine and accomplish the objectives by the use of people and resources.
George R. Terry - 1953
Today all known definitions of management emphasise the achievement of goals (OUTPUT)
through the maximum use (effectiveness) of the organization's four types of resources
(INPUT) - with minimum waste - (efficiency) by running four major processes.
Physical resources: The tangible assets that the organization uses to create value offering
and value proposition to its customers. They may include the equipment, buildings, inventory,
the manufacturing sites, the distribution etc.
Human Resources: Employees are key for the functioning of any organisation without
which the activities of an organization will not be possible especially in the industries which
provide services. When human resources are coupled with technology and physical resources
the organisation turns out to be more productive and better performing.
Types of Resources:
Financial Resources: the funds at the disposal of the organization and intended for the
management of the operations, for the fulfilment of financial obligations and economic
incentives for employees, for the development of non-operational activities such as marketing
and promotional costs, reserve funds, etc.
Information (Intellectual/intangible resources)
These resources are the brands, patents, copyrights, partnerships, customer databases,
technologies, information systems, etc.
Planning: the function of management that involves setting objectives and determining a
course of action for achieving those objectives.
Organizing: the function of management that involves developing an organizational structure
and allocating human resources to ensure the accomplishment of objectives.
Leading: involves the social and informal sources of influence that you use to inspire action
taken by others.
Controlling: involves ensuring that performance does not deviate from standards.
Mintzberg: to meet the many demands of performing their functions, managers assume
multiple roles. A role is an organized set of behaviours, he identified 10 roles common to the
work of all managers divided into 3 groups: Interpersonal, informational and decisional.
Monitor role: managers should ask for information inside and outside the workplace. This
helps them to evaluate progress, discover related problems, not address them in due time.
Disseminator Role: it means conveying important and relevant information inside the
organisation and delegating when its appropriate.
Spokesperson: this role ought to transmit information outside the workplace taking the role
of a brand ambassador towards relevant stakeholders.
Mintzberg's Managerial roles:
Entrepreneur: behaving as an entrepreneur, managers should encourage change and creativity
by leading the implementation of new ideas.
Disturbance-handler role: Managers are responsible for avoiding any disruptions that can
prevent achieving needed outcomes.
Resource-allocator: It means assigning and administering a variety of financial,
technological and human resources activities.
Negotiator: A Manager is responsible to carry out important negotiations within his
department, the organization and outside if required.
Levels of Management:
Top managers, middle managers and first-line managers. Regardless of level, managers are
also usually associated with a specific area within the organisation, such as marketing,
finance, operations, human resources, administration.
Top level: Consists of board of directors, chief executive or managing director.
Middle Level: consists of managers and departmental managers.
Low level: consists of supervisors, foreman, section officers, superintendent.
The amount of time managers spend on each activity is not constant and changes with the
manager’s level.
Robert L. Karz identifies 3 leadership skills called technical skills, human or interpersonal
skills and conceptual skills as the basic personal skills essential for leadership. Leaders must
possess these 3 skills that assist in optimizing a leader’s performance.
Technical skills are necessary to accomplish or understand the specific kind of work done in
an organisation. Technical skills are especially important for first-line managers as they spend
much of their time training their subordinates and answering questions about work related
problems. To be effective managers, first line managers must know how to perform the tasks
assigned to the employees they supervise.
Human or interpersonal skills: Managers spend considerable time interacting with people
both inside and outside the organization.
●​ It means that managers need interpersonal skills – the ability to communicate with,
understand, and motivate both individuals and groups.
●​ A manager must be able to get along with subordinates, peers and employees at all
levels of the organisation
●​ Of course managers must also be able to work with supplies, customers, investors,
and others outside the organization.
Conceptual skills depend on the manager’s ability to think in the abstract. Managers need the
mental capacity to understand the overall workings of the organization and its environment,
to grasp how all the parts of the organisation fit. This ability allows managers to think
strategically, to see the “Big picture”
The skills needed by managers vary according to level. Top managers need strong conceptual
skills, while those at mid-levels need good interpersonal skills and those at mid-levels need
good interpersonal skills and those at lower levels need technical skills. All managers need
strong communication, decision-making and time management skills.
By viewing an organisation as a system, we can identify four basic elements: inputs,
transformation processes, outputs and feedback. Open systems means that organisations are
influenced by and interact within their environment. Managers need to govern all parts of the
system to achieve established goals.
Inputs from the environment: material inputs, human inputs, financial inputs, and
information inputs.
Transformation Process: technology, operating systems, administrative systems, and control
systems.
Outputs into the environment: products/services, profits/losses, employee behaviours, and
information outputs.
In any situation, the principles and practices of management should be rather contingent upon
the existing circumstances or the situations.
Systems view: everything is made up of systems with common characteristics.
Contingency view: Relationships between management techniques and situations can be
categorized.
Purely situational view: Every situation is totally unique.
●​ “Management is an art of knowing what to do and seeing that it is done in the best
possible manner.” F.W. Taylor
●​ “Management is to forecast, to plan, to organise, to command, to co-ordinate and
control activities of others.” Henri Fayol
●​ “Management is a distinct process consisting of activities planning, organising,
actuating and controlling, performed to determine and accomplish stated objectives
with the use of human beings and other resources.” Terry and Franklin
●​ “Management consists of getting things done through others. A manager is one who
accomplishes the objectives by directing the efforts of others.” George Terry
Lecture 3
The Managers as a Decision Maker
Managers and all humans make decisions every day as they plan, organize, lead and control.
Some have immediate consequences. Others are much more long-term in nature. Decisions
are routine and nonroutine, minor and major. It is the overall quality of those decisions that
determines an organisation’s success or failure.
Decision making is the act of choosing one alternative (the best) from among a set of
alternatives. It is a process that includes recognising and defining the nature of a decision
situation, identifying alternatives, choosing the “best alternative, and putting it into practice.
Decision making may also include inaction.
Good decisions should be judged by the process used and the result achieved. A good
decision may sometimes result in an undesirable outcome but using the right process
increases the probability of getting the desired result.
Making effective decisions is key for organisational success; recognising when a bad
decision has been made and quickly responding to it is also key.
Researchers say that we make around 35,000 decisions every day from the simplest to
the most difficult. We use empirical rules, based on experience, for the simple ones but for
the difficult ones we use decision-making processes that involve more people, with specific
skills and knowledge, supported by tools that facilitate decisions
Our brain is naturally inclined to prefer being in its comfort zone, in situations where it can
control everything; it also has the tendency to simplify reality based on its mindsets, to refuse
alternatives and underestimate risks. It means that our decisions:
●​ Are often based on intuition and irrelevant, non-reliable or inadequate information
●​ Rely on advocacy culture and presume that we reached a quality deal, excluding other
alternatives a priori
●​ Many times address the problem in a wrong way (urgency)
●​ Don’t look for the greatest realizable value, because we are used to the “good
enough” syndrome and stop at the first, or the second, option we are provided
●​ Are sabotaged by biases, emotions, and false hypothesis that subvert rational thinking
Some research helps us understand the importance of making good decisions.
Decision-making drives 95% of the business performance (Source: Bain & Company)
According to Fingertip:
●​ 59% of employees find decision making #1 problem at work
●​ 51% of decisions are not aligned with the organizational strategy
●​ 33% of work time is spent on waiting decisions to be made It turns out that making
quality decisions can make a difference in a highly volatile and uncertain world
PROCESS: a series of actions that produce something or that lead to a particular result
We may not realize it, but processes are everywhere, including every aspect of leisure and
work. Processes can be found in various areas of life such as cooking, cleaning, travelling and
of business such as writing a document, repairing a product, selecting a candidate etc...
The decision-making PROCESS of a manager can be broken down into seven steps.
Although each step can be examined at length, managers often run through all of the steps
quickly when making decisions. Understanding the process of managerial decision-making
can improve decisionmaking effectiveness.
1.​ Identifying the decision. Clearly defining the nature of the decision to be made is
very important and allows to determine specifically the objective and the expected
result of a decision. Possibly identify also a specific goal from the decision and make
it measurable and timely
2.​ Collecting relevant information. Collect some pertinent information before making
a decision: what information is needed, the best sources of information, and how to
get it. This step involves both internal and external “work.”
3.​ Identifying alternatives. By collecting information and data most probably allows us
to identify a number of possible paths of action, or alternatives. Creativity,
imagination can support this step with different views and angles to explore all
possible and desirable alternatives.
4.​ Weigh the evidence Evaluate whether the need identified in Step 1 would be met or
resolved through the use of each alternative. By going through this difficult internal
process certain alternatives will start to emerge: those that seem to have a higher
potential for reaching your goal. Finally, place the alternatives in a priority order.
5.​ Select among alternatives. Choose among alternatives Once all the evidence is
weighted and the decision to be made is identified and clear, select the alternative that
seems to be the best one. Sometimes it might be a combination of alternatives.
6.​ Implement Choice. Take action Take some positive action by defining a plan to
implement the alternative selected and then drive efforts and resources to reach the
desidered goal.
7.​ Review and assessment. Review your decision & its consequences In this final step,
consider the results of the decision made and evaluate whether or not it has resolved
the need identified in Step 1. If the decision has not met the identified need, repeat
certain steps of the process to make a new decision. Gather more detailed or
somewhat different information or explore additional alternatives. Take note of what
has worked for future reference and learn from possible mistakes
Types and Levels of Decisions
The types of decisions that a manager has to make are broadly categorized based on two
parameters: the levels of management that drive the type of decisions and the nature of the
decisions.
●​ Structured decisions are those for which a set of rules and procedures or sometimes
policies for the decision-making process can be determined and utilized in subsequent
decision situations. This means having a process in place to handle a situation. These
decisions are repetitive and routine.
●​ Many structured decisions can be made by systems and applications that are more and
more «intelligent»
Unstructured decisions require judgment, evaluation, and insight to solve the problem.
Unstructured means “decision processes that have not been encountered in quite the same
form and for which no predetermined and explicit set of ordered responses exists in the
organization”.
Semi structured decisions fall somewhere between structured decisions that follow routines
and are repetitive, and unstructured decisions, which are unique and non-repetitive. A
semi-structured decision is one that is partially programmable but still requires human
judgement For Example: Selecting a college or university is a semi-structured decision. Some
parts of this decision rely on facts and figures, such as tuition fees; other parts rely on
intuition and preference.
Programmed decisions are those that are based on criteria that are well understood,
while nonprogrammed decisions are novel and lack clear guidelines for reaching a
solution. Managers can establish rules and guidelines for programmed decisions based on
known facts, which enables them to reach decisions quickly. Nonprogrammed decisions
require more time to resolve; the decision maker may need to conduct research, collect
additional information, gather opinions and ideas from other people, and so on.
Rational decision making: A logical, multi-step model for choosing between alternatives
that follows an orderly path from problem identification through solution.
●​ Rational decision making favors objective data and a formal process of analysis over
subjectivity and intuition
●​ The model of rational decision making assumes that the decision maker has full or
perfect information about alternatives; it also assumes they have the time, cognitive
ability, and resources to evaluate each choice against the others
●​ This model assumes that people will make choices that will maximize benefits for
themselves and minimize any cost.
Semi structured decisions fall somewhere between structured decisions that follow routines
and are repetitive, and unstructured decisions, which are unique and non-repetitive. A
semi-structured decision is one that is partially programmable but still requires human
judgement For Example: Selecting a college or university is a semi-structured decision. Some
parts of this decision rely on facts and figures, such as tuition fees; other parts rely on
intuition and preference.
Programmed decisions are those that are based on criteria that are well understood,
while nonprogrammed decisions are novel and lack clear guidelines for reaching a
solution. Managers can establish rules and guidelines for programmed decisions based on
known fact, which enables them to reach decisions quickly. Nonprogrammed decisions
require more time to resolve; the decision maker may need to conduct research, collect
additional information, gather opinions and ideas from other people, and so on.
●​ Rational decision making: A logical, multi-step model for choosing between
alternatives that follows an orderly path from problem identification through
solution.
●​ Rational decision making favors objective data and a formal process of analysis
over subjectivity and intuition.
●​ The model of rational decision making assumes that the decision maker has full or
perfect information about alternatives; it also assumes they have the time, cognitive
ability, and resources to evaluate each choice against the others • This model assumes
that people will make choices that will maximize benefits for themselves and
minimize any cost.
Making “Good Enough” Decisions (Bounded Rationality) means that decisions are
meant to "satisfice" rather than optimize. This model is used to make decisions in
COMPLEX SITUATIONS. The bounded rationality model of decision making recognizes
the limitations of our decision-making processes. It means lacking perfect information.
The intuitive decisionmaking model refers to arriving at decisions without conscious
reasoning. It recognizes that managers often need to make decisions under challenging
circumstances with time pressures, constraints, a great deal of uncertainty, highly visible and
high-stakes outcomes, and within changing conditions. This means that they would not have
the time to formally work through all the steps of the rational decision making model
Making Creative Decisions.
Creativity is the generation of new, imaginative ideas and it is the first step in the innovation
process. It allows us to explore a wider range of options and possibilities to form a decision.
Creative decision-making utilizes a five-steps process. Many factors affect the ability to be
creative: Courage, willingness to change, work environment, experience and time.
Four key elements indicate the level of creativity in the decision-making process.
Fluency: The ability to produce a large number of ideas or alternate solutions to problems.
Elaboration: The ability to build upon existing ideas by providing more details.
Flexibility: The ability to see things in different ways or from different angles.
Originality: the ability to come up with completely unique ideas.
Design thinking is a systemic, intuitive, customer-focused decision-making and
problem-solving approach that organizations can use to respond to rapidly changing
environments. It is a methodology used to solve complex problems and make complex
decisions by using systemic reasoning and intuition to explore ideal future states.
Rational: information on alternatives can be gathered and quantified- the decision is
important. You are trying to maximize your outcome.
Bounded Rationality: the minimum criteria are clear. You do not have or you are not willing
to invest much time making the decision. You are not trying to maximize your outcome.
Intuitive: goals are unclear. There is time pressure and analysis paralysis would be costly.
You have experience with the problem.
Creative: solutions to the problem are not clear. New solutions need to be generated. You
have time to immerse yourself in the issues.
Artificial intelligence is rapidly taking space in many management processes. With regards to
decision making the question is: does AI make better decisions than humans?
While the human brain excels in contextual understanding and emotional intelligence, AI
offers unparalleled speed and precision in processing vast amounts of data. AI has a clear
advantage when it comes to predictive modelling and data analysis.
Common Decision-making Errors:
Decision-making biases refer to cognitive shortcuts deployed in quick, efficient
decision-making that lead to irrational choices due to reliance on experience. Our brain
processes information received to provide a solution or decision and it tries searching for any
past similar situation and decisions it made or others made to escape it. Individuals take the
quickest and best available decisions that are not based on rationality.
●​ Confirmation bias: It is the inbuilt ability of the human brain to act to confirm the
existing faith and belief.
●​ Anchoring bias: It is the weakness of the brain to act on a situation on the first piece
of information available to it.
●​ Availability bias: It gives more importance to readily available information or easily
recalled from memory, often due to recent exposure or emotional impact.
●​ Selective perception bias: It makes humans decide on any activity, choice, or
situation using their perceptions and emotions rather than their rational thinking and
information.
●​ Overconfidence Bias: This bias overestimates one’s abilities, knowledge, or the
accuracy of one’s beliefs and predictions. Hence, this can lead to taking on excessive
risks.
●​ Loss aversion: It is the weakness of a person to avoid losses only instead of seeking
out gains. Halo effect: The human brain can prepare a complete impression of a
person’s personality based on any trait of a person
Decision timing can vary widely. Too little time means that the decision is made without
knowledge that could have enabled a more informed choice, generally reducing risk. Too
much time instead means that the benefits from the alternative solutions are delayed, or
in the case of a problem, losses or pain continue to increase. The optimal point for making a
decision occurs at the balance point between taking sufficient time to obtain the required
knowledge to choose effectively and avoiding the loss in benefit (or increase in pain) due to
delaying the choice.
Lecture 5
Types of Environment
With a business environment we refer to the various internal and external components
that affect a business. It encompasses all factors that impact how a company operates,
including employees, resources, customers, markets, competitors, and regulatory bodies.
They are grouped in 4 macro categories:
●​ The organisation's environments
●​ The ethical and social environment of management
●​ The international environment of management
●​ The organisation’s culture
The organization environment is composed of forces or institutions surrounding an
organisation that affect performance, operations, and resources. It includes all of the elements
that exist both inside and outside the organization’s boundaries and have the potential to
affect a portion or all of the organisation.
1.​ The External Environment
The external environment is everything outside an organisation’s boundaries that might
affect it. There are two separate external environments: the general environment and the task
environment.
1.​ The internal Environment
The internal business environment comprises of factors within the company which impacts
the success and approach of operations. Unlike the external environment, the company has
control over these factors.
The internal business environment comprises factors within the company which impact the
success and approach of operations. Unlike the external environment, the company has
control over these factors.
2. The Ethical and Social Environment
Over the years, growing attention has been paid to the ethical, environmental and social
dimensions of business, most often under the corporate social responsibility (CSR) Heading.
The social environment plays a crucial role in business ethics as it encompasses the values,
beliefs, and norms of society that influence an organisation’s decision-making process. It
helps determine what is considered ethical or unethical in business and guides companies in
aligning their practices with societal expectations.
2. Ethics - What does it mean?
Ethics is having a sense of what is right and wrong, evaluating situations and making smart
decisions based upon your personal and/or professional values. The same set of ethics can
be applied to both personal and professional situations and environments, but do not need to
be. You can, for example, have a different set of beliefs for your personal life than you do as
an employee, manager or owner.
●​ Satisfy the expectations of the organization’s stakeholders
●​ Maintain high integrity in an organization
●​ Practice the concept of full disclosure and transparency
●​ Engage with local communities
●​ Maintain a work environment where everyone will feel safe
●​ Make sure that a company is offering equal opportunity to all its employees
●​ Create a workplace environment that will align with the core values
●​ Safeguard against unethical practices
●​ Guard against competitors and their unhandy practices
●​ Protect the reputation of the organization
●​ Build trust with everyone relevant to the company.
2. Ethical Leadership
Ethical leadership is when business leaders demonstrate appropriate conduct - in accordance
with recognized principles and values - both inside and outside of the workplace. It means:
●​ Being a leader who prioritizes ethics in decision-making
●​ Respecting others, being fair and just, loyal and honest
●​ putting people in positions of authority and responsibility who will promote and
demonstrate ethical conduct.
2. Corporate Governance and Ethics
Ethical Corporate Governance refers to the processes and policies that a company has
in place to deal with issues concerning how it is administered and conducts day to day
business
●​ Code of Conduct – Code of Ethics
●​ Nomination and Remuneration Committee
●​ Risk and Control Committee
●​ Internal Audit
●​ Open door policies
●​ Whistleblowing tools
●​ Advisory Boards
●​ Diversity and Inclusion Committee
●​ Sustainability Committee
2. Corporate Social Responsibility
It is the business or the organization's intention, beyond its legal and economic obligations
and goals, to do the right things and act in ways that are good for the society.
TYPICAL INITIATIVES COMPANIES UNDERTAKE IN CSR
Corporate Philanthropy: The investments and activities a company voluntarily undertakes
to responsibly manage and account for its impact on society. Corporate Volunteerism:
Companies encourage their employees to volunteer as an individual or through an
organization-wide effort.
Environmental Leadership: Businesses take steps to reduce their carbon footprints and
support environmental causes.
Ethical Labor Practices: Corporations treat employees fairly and ethically – domestic and
internationally. Promote an environment that fosters inclusion and diversity
Economic Responsibility: Organizations invest back into their local communities and offer
competitive wages for employees.
2. Environmental, Social, Governance
ESG has become key for every organisation. It aims at creating sustained outcomes that drive
value and fuel growth, whilst strengthening the environment and societies.
Environmental: How a company acts towards the planet
Social: How a company treats its employees, customers, suppliers and local communities.
Governance: How a company is run, including audits and shareholders rights
Environmental includes a company’s energy use, waste, pollution, natural resource
conservation, and treatment of animals and how it manages the risks it might face while
running its business and related operations.
Social means how the company’s business relationships are managed. It should address
the following questions:
●​ Does it work with suppliers that hold the same values as it claims to hold?
●​ Does the company donate a percentage of its profits to the local community or
encourage employees to perform volunteer work there?
●​ Do the company’s working conditions show high regard for its employees’ health
and safety?
●​ Are other stakeholders’ interests taken into account?
●​ Does the company support LGBT rights and encourages diversity and inclusion?
Governance is about a company that uses accurate and transparent accounting methods
and that stockholders are allowed to vote on important issues. It means assuring that
companies avoid conflict of interests in their choice of board members, don't use political
contributions to obtain unduly favorable treatment and, of course, don't engage in illegal
practices --> ETHICS
3. The International Environment
Global business - or international business – refers to the production and sale of goods and
services between countries. The term can also encompass the nuances, politics, and dynamics
of doing business in a global economy.
There are three ways companies can be considered international:
●​ Produce goods domestically and sell domestically and internationally
●​ Produce goods in a different country but sell domestically
●​ Produce goods in a different country and sell domestically and internationally
How Organisations go global?
Stage I - Exporting to foreign countries or importing from foreign countries
Stage II - Hiring foreign representation or contacting with foreign manufacturers
Stage III - Foreign subsidiary, joint ventures, Strategic alliances, Licensing/Franchising
4. The organisation's culture
Organizational culture is the set of values, beliefs, behaviors, customs, and attitudes that
helps the organization’s members understand what it stands for, how it does things, and what
it considers important.
Organizational culture consists of three interrelated levels (Schein, 1992). At the deepest
level, below our awareness, lie basic assumptions These assumptions are taken for granted
and reflect beliefs about human nature and reality At the second level, values exist. Values
are shared principles, standards, and goals Finally, at the surface, we have artifacts, or
visible, tangible aspects of organizational culture. (BEHAVIORS)
4. BEHAVIOURS SHOW WHAT VALUES AND BELIEFS LIE IN INDIVIDUALS
Artifacts and behaviors are the visible aspects of organizational culture that can be easily
observed and measured. They include the physical environment, dress code, symbols, rituals,
and communication styles but also decision making processes and approaches to problem
solving Behaviors signal the presence of values and beliefs as they shape as they (the valeus
and beliefs) shape them (the behaviors). Behaviors can be influenced through codes of
conducts, ethics, policies etc. as well as by using reward/punishment systems
Dimensions of organisational culture.
Signs of Organisational culture. Organizational cultures are created by a variety of factors,
including founders’ values and preferences, industry demands, and early values, goals, and
assumptions. Culture is maintained by employees, leaders, and organizational reward
systems. Signs of a company’s culture include the organization’s mission statement, stories,
physical layout, rules and policies, and rituals.
Managerial decisions affected by culture
PLANNING: The degree of risk that plans should contain; Whether plans should be
developed by individuals or teams; The degree of environmental scanning in which
management will engage
ORGANIZING: How much autonomy should be designed into employees' jobs; Whether
tasks should be done by individuals or teams; The degree to which department managers
interact with each other.
LEADING: The degree to which managers are concerned with increasing job satisfaction;
What leadership styles are appropriate; Whether all disagreements; even constructive ones –
should be eliminated.
CONTROLLING: whether to impose external controls or to allow employees to control
their own actions; what criteria should be emphasised in employee performance evaluations;
What repercussions will occur from budget and standards deviations.
Current issues and attentions to Organizational Culture
●​ Customer intimacy > to lead to higher levels of satisfaction and loyalty
●​ Innovation > Product, services, people can all benefits from superior innovation
approaches
●​ Sustainability > Should be more and more embedded in culture and in practises
●​ Ethics > Alignment between organizational and individual culture ensures optimal
performance
●​ Learning > Allow employees to keep pace with changing environments and business
requirements
Lecture 6
Planning (short and long term) Goal Setting
Difference:
Long term plan, you have a three year plan when you enter university.
Short term plan, get through a course and overcome the exam.
Planning means to assess the future and make provision for it. It requires identifying
overarching company goals and forming a plan to achieve them. Fayol describes four
components of planning:
Four pillars of the fundamentals of principles of management, planning, organising,
leading and controlling.
Planning, mission and vision used in business. One starting point and ending point, in
between here are goals, objectives and strategies, the way we go through these steps in order
to get to the final stage. The vision typically answers the question why?
Strategy and the goals are typically connected to the question what?
We make trade-offs, alternatives, this is our strategy --working best to achieve our goal.
Leading and controlling, result is the part of controlling. Closure of the circle, when we plan
for something we have an expected result.
KPI - tells us how good we’re doing, throughout the course of actions.
Long term planning: vision and mission - very common words used in business.
●​ The vision is an aspirational description of what an organisation would like to achieve
or accomplish in the mid-long term future; it is intended to serve as a clear guide for
choosing current and future courses of action.
●​ The mission statement indicates how an organisation plans on reaching the goals and
objective set.
●​ A mission statement defines the company’s business. Its objectives and its approach
to reach those objectives. A mission statement describes the defined future positions
of the company. Elements of mission and vision statements are often combined and
sometimes they are used interchangeably.
Example: Car companies, their mission is to produce cars. (etc)
It states who we are, reason for living.
The goal vision is to achieve something, Vision is important for everyone, other than
organisations. We have a vision of someday achieving a specific goal. Vision Examples:
Harley Davidson: “To fulfil dreams through the experiences of motorcycling.”
Stanford university In the 1940s: “To be the harvard of the west coast”
Pay-pal: “The web’s most convenient, secure and cost-effective payments solution.”
Ferrari: “Italian excellence that makes the world dream.”
McDonald’s: “To be the world's best quick service restaurant experience.”
JFK 1961: WI believe that this nation should commit itself to achieving the goal before this
decade is out, of landing a man on the moon and returning safely to the earth,”
A Vision statement identifies where the organisation wants or intends to be in future or
where it should be to best meet the needs of the stakeholders, it describes dreams and
aspirations for the future. Visions that aren't realistic get the opposite result, they create
dissatisfaction and dismotivation.
Mission is who we are, where we start from, what is our business, what do we do, What are
we good at? Examples:
Google: “To organise a world's information and make it universally accessible.”
US. Army: “Duty, honor, country”
IKEA: To create a better everyday life for many people.”
McDonald’s: “To be our customers’ favorite place and way to eat and drink.”
Walmart: “We save people’s money . .
Strategies, Goals & KPI’s
The strategy is a method or plan to reach a desired future as defined by the vision and/or the
mission. It is the science of planning and marshalling resources for their most efficient and
effective use.
A Goal is an observable and measurable end result having one or more objectives to be
achieved with a more or less fixed timeframe.
KPI’s are key business statistics to measure a firm’s performance in critical areas. KPI’s
show the progress (or lack of it towards realizing a firm's objectives or strategic plans by
monitoring activities which if not properly performed) would likely cause severe losses or
outcomes. The indicator that tells us if we are doing exactly as we expected.
The word strategy is derived from the Greek word “Stratogos”. “Stratus “ means army and
“Ago” means leading.
Strategy is an action taken to attain one or more of the organisation’s goals. Strategy can also
be defined as "A general direction set for the company and its various components.”
Vision - Top of the mountain
Mission - Who you are
Goal has a more long term definition, objective is more a short term achievement.
A goal is described as a broad, overarching destination. “We want to achieve a 30% market
share in two years.”
An objective is a specific, measurable activity you will take to work towards a broader goal.
As part of our goal to achieve a 30% market share in two years, we will introduce a new
product in each market segment every six months.
●​ Strategic Goals are long-term: are set by and for an organisation’s top management.
They focus on broad, general issues.
●​ Tactical goals: Are set by and for middle managers. Their focus is on how to organise
actions necessary to achieve the strategic goals. Operational/specific goals are set by
and for lower-level managers. Their concern is with short-term issues associated with
the tactical goals.
●​ Organisational goals – organisational strategies – departmental strategies & goals –
team performance objectives/standards – individual performance objectives/standards
– monitoring/evaluation.
Key elements of Management: Management is organised in a pyramid.
First level managers below, operational.
Strategic: You get strategic goals, big picture, long-term, ⅔ years typically.
Tactical level, short-term: Between 3 months and one year.
Operational:
Management by Objectives:
MBO is a systematic and organised approach that allows management to focus on achievable
goals and to attain the best possible results from available resources so that they know what
they are supposed to do.
MBO aims to increase organisational performance by aligning the employees objectives
throughout the organization with the overall goals that management has set. Ideally, every
employee gets clear input to identify their objectives, timelines for completion and so on and
both managers and employees easily align on what needs to be done.
MBO includes ongoing tracking and feedback in the process to reach objectives.
Six step process of the MBO’s practice.
1.​ Setting company wide goals derived from overall corporate/group/division/entity)
2.​ Determining Team and department-level goals.
3.​ Collaboratively setting individual level goals that are aligned with team and
department ones
4.​ Developing action plans and monitoring progress.
5.​ Periodically reviewing performances and revising goals.
6.​ Provide feedback and appraise achievement.
MBO - SMART Goals
Objectives which are written down and are verifiable can be far more useful if they are
SMART in nature. This allowed the MBO process to be more rational and less emotional as
Peter Drucker stated in his book. SMART- Specific, Measurable, Achievable, Relevant,
Time-bound.
Lesson 7
Organising, Structuring and Designing organisations
Today organisations need to adapt to rapid, changing environments. How things were
organised 5 years ago, may not be useful anymore to achieve the purpose you have as a
company/organisation. Whatever happens you have to have an organisation.
With quantum theory, we need to reinvent our relationship with reality. Even arithmetics and
mathematics are not 100% right to define reality. Relativity.
This applies to the world & organisations.
The P.O.L.C: Planning, Organizing, leading & controlling.
●​ Why do we do things? Vision, Mission & Strategy
●​ How we do things? Organisation - how we achieve the vision, mission, purpose &
strategy of our organisation. There is dependency from the how that goes up to the
why and then what we want to achieve.
●​ Who we do things? Employees &etc
Depending on why and what, the people gathered around – this guides how things will be
organised.
Establishing, Giving the right structure, roles & responsibilities, capacities and capabilities of
achieving a certain goal, certain purpose.
Organisation: collection of resources that are working together to achieve a common
purpose, usually referring to a group of people. An organisation’s structure determines the
placement and movement of power and authority (...) it depends on the company's purpose.
The term Organisation structure and design refers to the overall set of elements that can be
used to configure an organisation which are:
-Job specialisation
-Departmentalization
-Authority and responsibility
-Span of control
-Centralisation vs decentralisation
-Formalisation and coordination.
The organisation has very ancient origins going back to primitive men. In fact it was the
only way to achieve a common goal (not achievable individually) by sharing and dividing the
power. It was a competitive advantage for men’s evolution.
-Hunting (60.000 B.C. Cave Painting)
-Building (2.100 B.C. Ziggurat of Ur)
Origins of organisation, War - the next step in organisation story.
To make war - The Roman art of war.
The first complex organisations were designed and implemented to conquer, administer and
keep control of land and people. Sharing and dividing power and authority in an organised
way.
-State
-Church
-Military
In the modern world organisation has become important to drive efficiency and
effectiveness to reach the common goal and success. Organisation should be divided in
order to take care of the environment, social aspects, and politics. A lot of people are
comparing the AI moment to the industrial revolution moment. When humans were
replaced by machines. How AI could replace humans like machines did before.
-Industrial revolution
-Fordism
-Post-Fordism
-Post World War II
-Social, Technical, Environmental and Political forces.
-Contemporaneity
Organisation Design:
Translating the business strategy into an optimal structure with clear roles and
responsibilities. It should determine structures, processes to allow optimal work through
effectiveness and efficiency,
Organisational design is also the process of keeping aligned while executing the
organizational and position structures with the strategic mission and objectives of the
organization especially if changes occur.
Star Model of J. Galbraith: developed a framework for organisational design called the STAR
MODEL. It consists of 5 Interrelated elements that shape the behaviour of an organisation:
strategy, structure, processes, rewards and people.
Strategy: Consist of what we want to achieve. Specifies the goals, objectives to achieve and
the goals and values that are to be pursued. It sets out the basic direction of the company.
Structure: Determines the placement of power and authority taking into account four
elements: specialization, shape distribution of power, departmentalization.
Processes: the ones that link those elements together.. The information that you have and
decisions, the way you decide. It defines who we work together with, how. Linking the
interaction of the different parts of the organisation. They could be vertical such as planning
and budgeting or horizontal such as product development supply chain.
People: This is the area that governs the human resources policies of recruitment, selection,
training and development, career management, etc. human resource policies, in the
appropriate combinations, produce the talent required by the strategy and the structure of the
organisation.
Rewards: aligns the goals and individual teams with the goals of the organisation. It provides
motivation for the people. Provides motivation not because we are motivated to do what we
do because we got the reward. Align the goals of individuals with the goals of the
organisation (business strategy). It provides motivation and incentive for the completion of
the strategic direction by achieving the goals set (both monetary and non-monetary). The
reward system defines the policies regulating salaries, promotions, welfare and benefits
options in order to recognise employees through many different tools. T must also ensure
internal equity and competitiveness toward the external labor market.
Reward for the motivation – promise for the future.
We need to watch what the competition does in terms of rewards.
Authority and responsibility.
Management has the authority to give orders to the employees, with this authority comes
responsibility. In order to get things done in an organisation management has the authority to
give orders to the employees. Of course with this authority comes responsibility,
Authority. Power to make decisions and responsibility means obligation to carry out an
assigned job.
-There should be a balance between authority and responsibility
Granting authority without giving responsibility will create chances of misuse of power
whereas assigning responsibility without providing authority will not enable employees to
perform thor duty properly.
DELEGATION: The degree to which the overall task of the organisation is broken down
and divided into smaller component parts.
There are two different ways to express Authority:
Line authority: Entitled to direct the work of others
Staff authority: Support, assist, advise those holding line authority. Normally is for
functions that go across the organisation.
Centralisation: The process of systematically retaining power and authority in the hands of
higher-level managers.
Decentralisation: The process of systematically delegating power and authority throughout
the organisation to middle and lower level managers.
The nature of the organisation: The purpose of the organisation. For example: do we need
to make quick decisions or can we think about that?
Taking quick decisions means going to the lowest possible level, because it's the one that has
the information in real time. The bigger the organisation, the more decentralised it should be.
If authority is delegated, the pace will be slow.
Nature of the task: what are we going to perform? By delegation ability, it's not just the
ability of the manager to delegate but the readiness of the people to take the authority they
have been given.
Delegation should be given and also accepted. A good manager needs to understand if the
delegation he or she gives is accepted or not. If it's not accepted, he needs to do something. If
you give delegation and the person does not accept the delegation – you lose control, the task
will not be done – worst case scenario.
Employee efficiency: employees motivation, but also their competencies. Understanding
employee’s capabilities and motivations, before delegating. Training them.
Job Specialisation
The degree to which the overall task of the org is broken down and divided into smaller
component parts.
-Job Rotation: It involves systematically moving employees from one job to another.
-Job enlargement: It means to increase the total number of tasks that workers perform
-Job enrichment: It attempts to increase both the number of tasks a worker does and the
control the worker has over the job.
Coordination means linking the activities of the various departments of the
organization. Many aspects impact this element. Formal & Informal Organization.
-Formal policies and procedures and rules (little discretion)
-Ad hoc structures (task forces, committees, teams)
-Systems and applications
-Processes and guidelines
-Bureaucracy (WEBER Theory)
-Communication and information flows
-Informality
-Company culture and behaviour
Informal organisations: Where things happen in reality, where things get done, who has the
competences to do things.
Span of Control: The number of employees a manager can efficiently and effectively
supervise many factors influence the span of control. In any organisation we should
determine what is the span of control that is useful for our organization.
Functional organisation: Is a type of organisational structure that uses the principle of
specialisation based on function or role. Used originally when companies developed on a
single product or service strategy and consequently organized themselves around functions.
Multi product organisation: Starting from the 1920s started diversifying into multiple
product lines which implied the creation of multiple divisions Business units or division)
held by a holding company with shared supporting functions. The board of directors decide
where to put the money, what are the policies, etc. The authority is given to the person to
perform all the tasks. When another phase happened, the multi geographical / international
expansion companies had to invent a different way to be organized - Matrix organisation.
On one hand we have the dimension of the functions, on the other hand we have the
dimension of the products, product lines, the third dimension is the geography.
When companies started to expand internationally, the addition of the dimension to be
closer to the markets and customers led to the creation of multifaceted /matrix
organizations.
What are KPI’s, reward systems?
Matrix Organisation: Today the importance of customer and its power has become much
more relevant and therefore the companies had to add customer segments, customer
solutions, often creating complex networks and matrices.
There are four factors that affect organisational structures: strategy, size, technology
and environment.
Two models developed by Burns and Stalker. Two management models that represent
two extremes of organisational forms.
Mechanistic Approach: Appropriate for stable conditions. High specialisation,
departmentalization in a rigid way, there is a chain of command, strict, narrow span of
control. Therefore a lot of layers. It is centralized and highly formalised.
Organic approach: Appropriate for changing conditions. It is described more in
cross-functional things, cross-hierarchical, free floating environments. The quicker the
information goes the better it is. It's not very organised in terms of processes.
Lean and delayering:
Lean is the trend for companies to reduce costs, streamline processes and to reduce waste.
Lean can also be achieved through delayering, which means removing layers of hierarchy
(typically layers of middle management and supervision).
Downsizing/rightsizing: reduction of the labour force due to economic downturn (cyclical),
business changes that can be temporary or permanent and technology
Outsourcing: it is the practice of moving part of the function to specialized external
companies. The aim of it is to gain flexibility and to focus on the core business.
Smart working: The possibility driven by the evolution of technology to perform certain
jobs or activities outside the normal working environment, typically at home or in shared
offices (it is not working remotely as it has been the case during the pandemic crisis).
Project/ Team based organizations:
They are organisations that, while maintaining a light functional structure, constantly
re-configure themselves pulling the best resources . . . !
Virtual Organisation: one that has little to no formal structure. It is a flexible network of
entities (even independent) that are linked by computing technologies to share knowledge and
skills. It goes beyond organizational and geographical boundaries in which vertical and
horizontal barriers are removed. The core company becomes slim, then they glue together
other companies to perform the virtual organisation.
Learning organisation: one that works to facilitate the lifelong learning and personal
development of all its employees while continually transforming itself to respond to changing
demands and needs. They work to integrate continuous improvement with conscious
employee learning and development.
The younger people that mentor the more senior people in the organisation like technology.
When the vision is coming from a smaller number of people, those methodologies allow
everyone to not only accept the vision but also build the vision together and the solution and
skills, by the people who were at the bottom of the pyramid.
A circular movement that needs a different mindset, the flow of info can be more free.
The motivation should also be boosted to a certain extent. The more autonomy we give
to people, the quicker we give an answer to the customers.
Lecture 8.
Organizing the Human Factor
The organizational structure determines how the roles, power and responsibilities are
assigned, controlled and coordinated, and how information flows between the different
levels of management. It is usually represented and synthetized by a Functional Chart
The role (or the job) is a position in an organization that comes with a special set of
responsibilities, duties, and expectations. It defines the tasks and the activities to be
performed or expected behavior associated with a particular position or status in an
organization. It includes the responsibility that is a duty or obligation to satisfactorily
perform or complete a task that one must fulfill, and which has a consequent penalty for
failure.
Job or position vs Job holder or incumbent.
Organizational chart: it represents both the role or function and who is filling the role
or holding the job.
Job: exists independently of incumbents. They are determined by business needs and remain
stable when incumbents move or leave.
Incumbent: Incumbents are placed in jobs to fulfill business requirements. When incumbents
leave, jobs become vacant and they tend to remain the same unless business requirements
change.
ORGANISING - Role —> Job Description
A job description is a formal document that outlines the responsibilities, duties,
qualifications, and expectations for a specific role within an organization.
Job descriptions (3R) define:
• The scope of a ROLE
• The skills and qualifications REQUIRED (competencies)
• Performance expectations (RESULTS)
• Career growth opportunities It serves as a key reference point for hiring managers,
recruiters, and job seekers throughout the recruitment process and beyond.
Job holders – People first
An organizational structure should enable people’s potential and promote individuals and
teams contribution.
Jobs are designed to fulfill business requirements but organizations are moving away from
job-based to skills-based architecture which is a great driver of a people-centricity strategy
and agility. Consequently people are no longer ’locked‘ into jobs.
It means that the most important resource in any economy or organization is its human
capital—that is, the collective knowledge, attributes, skills, experience, and health of the
workforce.
This is why "People-first" cultures have gained significant recognition and importance in
modern workplaces, as organizations realize the benefits they elicit from individual
employees.
The People Centric Strategy
People-centricity refers to creating a cultural, technological, and physical environment where
the organization focuses on placing employees right at the heart of their business
strategies by designing policies and practices based on the expectations, interests,
perceptions and needs of their employees. A people-centric organization empowers,
engages, and enables its workforce with the aim of creating a positive employee
experience, which impacts the customers and ultimately the business success of the
organization.
People Centricity: The Employee Life Cycle
The employee life cycle describes the key stages that a person progresses through when
engaging with an organisation as an employee. The cycle starts from a person becoming
aware of the company, continues through her/his employment, and ends after she/he leaves
the organisation.
Attraction
In this stage, the company is all about preparing to recruit people to hold specific
positions. It means designing and implementing a strategy (Employer Branding) aimed at
attracting the best talents. Relationships with potential employees start the very second they
are first exposed to the company, brand, culture.
Recruitment
It is the process that goes from branding and attracting the best talents to search and find the
best fit candidates. It is all about finding the right person to fit into a position. Mistakes
need not be made, else it will affect the company negatively.
Onboarding
This stage is about immersing the newly recruited employees into the company. It is not
just giving them office space, tools to work with, policies and procedures to follow. It is a
stage where the employees are made to know what is expected of them as workers in the
company.
Performance
This is the process of setting expected individual or team performance and contribution
level (MBO) to contribute to the company's success while supporting individual expectations
on growth opportunities and skills enhancement.
Development & Retention
It means having the goal of engaging employees on long term commitment minimizing
employees' turnover. It includes addressing issues such as rewarding and recognizing
people, making sure they know what to do to help achieve their goals, as well as assessing
their ambitions, progress and success.
Separation
Opposite to onboarding is the process of transitioning employees either externally or
internally. Employees or the company may decide to move on externally (offboarding or
separation) or to take a new opportunity inside (mobility).
The role of the Manager
Being a manager means driving and supporting each individual professional life through the
various stages of the employee lifecycle while playing the most appropriate role in each of
the six stages. Ambassador, Expert, Facilitator, Coach, Leader, Communicator.
Metrics to evaluate people strategies
Organizations develop human capital management metrics. These metrics are essential
indicators that provide valuable insights into how effectively an organization manages its
human capital.
Structure + Human capital = Performance
Organisational structure: Role and responsibilities, operating model
Organizational culture: Values, norms, rules, policies
People management: Right people with right skills in the right roles.
Individual performance and behaviours: What people do and how they do
Organisation / company performance: Collective achievement and individual realization.
Stability vs. Change
If you want Engaged employees, offer them stability (PAST ASSOMA)​
Today’s business environment is driving change at an unprecedented level. The pace of
technological change, in particular, is accelerating, requiring businesses to oversee transitions
to new processes and procedures on a regular basis.
Organization Change
Organization change: Any substantive modification to some part of the organization
Planned change: change that is designed and implemented in an orderly and timely fashion in
anticipation of future events Reactive change: A piecemeal response to circumstances as they
develop
Organization change can affect any part, area, or component of an organization. Most change,
however, fits into one of three general areas: Organization structure and design,
technology and operations, and people.
Managing organisation change
Change management refers to the structures approach that helps guide individuals, teams
and organisations from their current state to a desired future state.
The goal is to ensure that transitions happen smoothly, minimising resistance and
improving the chances of success. Whether introducing new processes, technology, or
organizational changes, change management is essential in managing the human side of
these transformations.
Organization Change - Process
The change management process is a structured way that organizations use to handle and
navigate through process changes. It includes specific steps and strategies to smooth
transitions and reduce resistance to the proposed change.
1.​ Define the change: Clarify the need for the change; Define the benefits; identify the
goals
2.​ Prepare the change: Identify the impacts; communicate the change; anticipate and
mitigate the risks
3.​ Implement the change: Develop release plan; prepare sources and resources; rollout
changes.
4.​ Support the change: Reinforce the change; evaluate and monitor the change;
communicate the change results.
Change Transition Curve:
Shock Sudden Awareness – Numbness – Denial – Panic, Dread ,Blaming self, others –
Depression, Insecurity – Acceptance Acknowledgement – Testing, Experimentation –
Discovery Learning, feeling optimism, hope, renewed energy – Feelings of satisfaction,
integration & new meaning.
Organisation Change- Resistance to change
Uncertainty: In the face of impending change, people may become anxious and nervous.
They may worry about their ability to meet new job demands, they may think that their job
security is threatened, or they may simply dislike ambiguity
Threatened Self-Interests: Changes may threaten the self-interests of some managers within
the organization. A change might diminish their power or influence within the company, so
they fight it
Different Perceptions: Manager may make decisions and recommend changes on the basis
of her own assessment of a situation while others in the organization may resist the change
because they do not agree with the manager’s assessment or perceive the situation differently
Feelings of Loss: Many changes involve altering work arrangements and relationships or
threatening intangibles such as power, status, security, familiarity with existing procedures,
and self-confidence.
Organization Change - Multi-factors impact
Many different forces influence the need for change and sometimes they are not desirable but
inevitable. They can be technological, economic, political, social, legal, international and
labor market environments. These factors are both internal and external and all of them affect
organisational functioning. Any change in these factors necessitates consequent changes in an
organization.
Organisational Innovation
Innovation: The managed effort of an organization to develop new products or services or
new uses for existing products or services.
The Innovation process:
Development: Organisation evaluates, modifies, and improves on a creative idea
Application: organisation uses developed idea in design, manufacturing, or delivery of new
products, services, or processes
Launch: Organization introduces new products or services to the marketplace.
Decline: Demand for an innovation decreases and substitutes innovations.
Maturity: Most competing organizations have access to the ideas.
Growth: Demand for new products or services grows.
AI LECTURE 10
26 March
AI is pervading all organisational functions.
●​ AI is transforming management by increasing the demand for leaders who can blend
technical fluency with human-centric skills, essential competencies such as
overseeing human-AI collaboration, ethical decision-making, and leveraging AI for
strategic data driven decisions will be key in future as well as interpreting AI insights,
fostering creativity, managing AI drive change and using tools like gemini or
microsoft autopilot
Culture
Culture is something that in an organisation, business, company is there. Changing and
moving it from point to another is extremely difficult
AI and digital transformation create a comprehensive approach to the workforce, beyond
automation, with improved business agility, more comprehensive and effective use of smart
services, and leveraging and empowering a more diverse workforce.
The new work culture is driven by the shift from cloud to mobile, the explosion of data
analytics and artificial intelligence, and the emergence of recruiting via social media videos.
Humans are expected to continue playing the most critical role in future organisations but
being aware that there will be a need to draw a line between business strategies and human
contribution and participation.
Generative AI, AI Agents and the Future of Work.
From language models to systems that can reason, act and transform work.
Artificial intelligence is not just the next industrial and technological revolution. It is a full
transformation and how we work, think, decide and live.
Our lives are largely impacted by AI, it’s something more than recent evolution.
Multi-national companies focus on development, technologies, and are largely impacted by
AI.
We need to understand how Artificial intelligence is thinking. If we understand how AI is
thinking, we can deal with it in a better and serious way.
The speed of artificial intelligence, the speed of the evolution of AI is unprecedented.
What are the strategies to adopt in this changing world?
AI began decades ago.
Test which is designed to understand whether you’re talking to a computer or human.
In 1950, the possibility of a computer becoming intelligent. For a long time, AI remained
confined in large tech companies and laboratories. Only in 2022 with the launch of chatGPT
it became used by everyone.
Generative AI is a modern form of artificial intelligence that can create (generate) original
content, such as text, images, video, audio, and code, using models trained on vast amounts
of data. It does not simply retrieve information. It generates new outputs.
1.​ Model AI - digital brain, a neural network. Computing model inspired by the human
brain. It consists of interconnected artificial neurons that learn from data by adjusting
the strength of their connections over time.
2.​ A learning phase: Training on very large datasets. Teaches the model not only what
to predict but also how to generalise beyond the specific examples it has seen
3.​ The operational phase.
Large language models
Google Gemini AI, chatGPT, etc combine advanced neutral network architectures, large scale
training, and real-time interference.
Training: How LLM’s become intelligent.
Supervised learning. You have a neural network, we have images, labels which explain
things. Several stages of training:
1. Pre-training: the goal is to store information and knowledge in the brain. Instead of being
supervised, learn where someone is telling you the answer. They have their own learning
objectives. The goal is to build a broad internal model of language, knowledge and
relationships. The model is exposed to vast amounts of human knowledge. Self supervised
learning
●​ Next taken prediction
●​ Masking
2. Fine tuning: The goal is to specialise the model to specific tasks domains or behaviours.
Trained on task, specific examples, where the inputs are paired with predefined outputs, the
model is shows what the correct answer look like and AI gradually learns how to perform and
particular job
3. Optimisation: the goal is the alignment in teaching AI how to behave well, improve
usefulness and safety, multiple responses to the same prompt reinforcement learning by
human feedback. crucial approach in the reward system
Enforcement learning is the most modern way of teaching AI how to work.
Training: Two important points.
1.​ Behind every AI system there are still human decisions: what to teach, which data to
use, how to evaluate it, what behaviours to reward or discourage.
2.​ If the data is biased, misleading, or intentionally distorted, the AI will reflect those
distortions as well.
Training: Distillation
Distillation is a training technique where a new model (student) learns to imitate the outputs
and reasoning patterns of a larger and more capable model (teacher)
AI teaches AI – exponential learning curve, and may become uncontrollable.
From token prediction (COW) to chain of thought (COT)
Most mainstream GenAI models still rely primarily on next-token prediction.
●​ In simple terms; the model predicts the most likely next word/token in a sequence
●​ Chain of thought asks the model to generate intermediate reasoning steps before the
final answer.
●​ This improves performance on complex tasks by enabling structured, multi-step
reasoning and more reliable outputs.
●​ It is the bridge between answering and acting.
AI agents and Robot: From reasoning to action
AI agents are systems that can use browsers, apps, files and other digital tools to
perform tasks on our behalf.
●​ They do not just answer questions, they execute tasks and workflows.
●​ When reasoning
Why does this matter?
We are moving from systems that only answer .. to systems that can think, act and
increasingly operate in the physical world.
Reasoning — Action -– Embodiment
The combination of reasoning-based AI models, which can understand needs and intentions,
with the ability to act
That raises a question: What is the future of work?
We need to understand how to behave in the world. We have AI, robotics, chain of thought
and people who are able to perform much more efficiently and effectively as well as us.
What the Major Institutions are telling us?
AI and big Tech Workforce Reshaping
The young people are the most impacted by this. A study done by a university. A part of the
cut from jobs, new people are not finding jobs. The senior people are in a better situation
compared.
Most interesting Case: Accenture - one of the top 4 consultancy companies in the world.
“If you can't be reskilled for AI, you no long
AI fluency is now tied to promotion, productivity and retention
●​ And they walked the talk: In 2025, over 550,000 Accenture employees have
completed training or generative AI fundamentals.
●​ In 2025, accenture announced a six month restructuring plan worth 865 million
dollars, more than 11, 00 people
●​ Layoffs didn't only hit people who had never used AI, several were the ones already
trained
●​ The lesson learning ai matters but turning it into a business value matters even more.
It is not just about learning AI- There is a real divide between those who adapt to
change… and those who get left behind
The people who adapt ask a different question - “What becomes possible now that ai is
handling the tasks we used to do?”
●​ AI will eliminate a significant share of knowledge work.
●​ AI will improve a lot over time. We will never beat Ai on speed or efficiency,
●​ The future is about learning how to work with AI.
5 Strategies for the AI Era
1.​ Be AI first – Become an augmented human.
2.​ Learning how to learn. Facts change, skills become obsolete and tools evolve.
3.​ Build Visibility. Build strategic digital visibility. In the AI era, visibility is not vanity,
it is leverage.
4.​ Explore new roles. The titles may evolve, but the capabilities behind them are real and
increasingly valuable.
5.​ Learn to automate tasks. Pick one repetitive task and redesign the workflow around it.
Your biggest advantage is not perfection, it is momentum.
Human skills become Strategic Skills.
“Former soft skills will become the hard skills of the future.”
Critical thinking, empathy, communication, collaboration and judgement.
Strengthen the skills AI cannot easily replace:
●​ Critical thinking
●​ Hybrid capabilities
●​ Curiosity
●​ Embrace a new vision
Work is increasingly becoming a collaboration between people and intelligent systems.
Lesson 11, April 9
The objective of this lesson is to analyze the human behaviour in the workplace and the basic
nature of the relationship between individuals and organization. The key aspects we look at
are:
●​ Psychological contract → contribution and inducement
●​ Job fit
●​ Personality
●​ Performance
●​ Learning
Psychological contract:
The overall set of expectations, beliefs, ambitions and obligations held by an individual with
respect to what she or he will contribute to the organization and what the organization will
provide in return. It is how the organization and what the organization will provide in return.
It is how the employment relationship is perceived by each party and it's different from an
unemployed contract which is written, physical and formalised.
Contribution: what the individual provides to the organization
Inducement: what the organization provides to the individual.
The psychological contract describes how the parties themselves understand their
relationship, their own views of commitment and what they can expect to receive in return.
The challenge for both parties is then to ensure that those mutually agreed contracts are
adhered to. There are many dimensions to the common responsibilities between the worker
and the organization.
The formal contract: is typically set through a formal written document between the two
parties and it usually contains:
The role description (job title)
●​ The location where the role is based
●​ The starting date
●​ The duration (indefinite, temp…)
●​ The compensation
●​ The trial period if foreseen
●​ Any additional (to the compensation) welfare (benefits) Provided by the employer
such as medical insurance, smart working, mobile phone…)
The psychological contract is a dynamic concept that can be applied to understand varying
employer-worker relationships. For many years, the traditional psychological contract
focused on the promise of job security. Now it focuses much more on learning and
development for long-term employability, and more individualized ways of working.
Changes affecting the expectations of workers include:
●​ Uncertain economic conditions (for example, the impact of the COVID-19)
●​ Technological changes automating production processes and shaping skill demands.
●​ The rise in atypical contracts
●​ More employees expecting to work flexibly
●​ Organizations downsizing and delayering, putting more pressure on remaining
employees.
●​ Collective bargaining is declining, with employers and individuals negotiating the
relationship directly.
●​ Human capital being increasingly recognised as a source of competitive advantage.
●​ Traditional organizational structures are becoming more fluid.
JOB-FIT
The extent to which the contributions made by the individual match the inducements
offered by the organization
●​ Very difficult to achieve
●​ Skills level required vs. available
●​ Performance level
●​ Procedures, rules, norms may not match mutual expectations
Job description: Role, purpose, responsibilities, requirements, expected results, cultural
adherence
Individual profile: skills, competencies, experience, past performance, responsibilities,
requirements and PERSONALITY.
Many factors influence job fit, or job suitability. For most jobs, suitability/behavioural factors
are about 50% of the reason people succeed or fail at jobs. Two key components:
-Person-job fit: this focuses on matching an individual’s skills, knowledge, and abilities to
specific job tasks and responsibilities
-Person-organization fit: this considers how well an individual’s values, beliefs, and work
style align with the organization’s culture and goals.
Personality traits can have a major effect on how happy an individual will be in a particular
position. Extroverted individuals may be dissatisfied working in a role that involves
minimal human interaction. Personality tests can be used to assess a wide range of
personality traits associated with job fit. Person-jobs may change overtime.
Personality: the relatively stable set of psychological and behavioural attributes that
distinguish one person from another.
Contemporary personality psychologists believe there are five basic dimensions of
personality, often referred to as the “Big 5” personality traits described by the theory are
extraversion, agreeableness, openness, conscientiousness, neuroticism.
How to measure personality:
An interesting approach to understanding personalities in organization is the Myers-Briggs
framework. This framework, based on the classic work of Carl Jung, differentiated people in
terms of four general dimensions.
According to MBTI, individuals fall on a continuum between each of these dichotomies, but
they have a dominant preference in each of the four categories, which results in one of the
sixteen possible personality types.
Do personality factors affect work performance?
Job performance is affected by situational factors, which may be coworkers or characteristics
of the job and dispositional factors such as personality characteristics, needs and
motives. The dispositional factors lead to a tendency to react to situations in a predetermined
manner.
Personality traits are not the sole predictors of work performance and career success, but
they play a significant role in how people approach their work, interact with colleagues, and
navigate their career paths.
Personality factors affecting work – The big 5
●​ Openness to Experience: This dimension is associated with how open an individual
is to new ideas and experiences. People demonstrating high levels of openness are
often receptive to new ideas and experiences, while those with lower levels are often
perceived as close-minded
●​ Conscientiousness: This trait reflects an individual’s tendency toward personal
responsibility. Those who are conscientious are good at impulse control and working
toward both personal and professional goals and objectives.
●​ Extroversion: This personality trait is commonly characterized by one’s level of
sociability and assertiveness. Extroverts are said to draw energy from being around or
interacting with other people
●​ Agreeableness: This dimension is an indicator of someone’s propensity toward
politeness, empathy and overall cooperation with others. People demonstrating higher
levels of agreeableness demonstrate more trust and affection; they’re also willing to
help those in need.
●​ Neuroticism: This trait is often defined by one’s tendency toward anxiety, depression,
self-doubt and other negative feelings. Those with higher levels of neuroticism are
said to be less emotionally stable.
AUTHORITARIANISM: The extent to which an individual believes that power and status
differences are appropriate within hierarchical social systems like organizations •
MACHIAVELLIANISM: Behavior directed at gaining power and controlling the behavior
of others
SELF-ESTEEM: The extent to which a person believes that he or she is a worthwhile and
deserving individual
RISK PROPENSITY: The degree to which an individual is willing to take chances and
make risky decisions
STEREOTYPING: The process of categorizing or labeling people on the basis of a single
attribute
STRESS: An individual’s response to a strong stimulus, which is called a stressor • JOB
SATISFACTION OR DISSATISFACTION: An attitude that reflects the extent to which an
individual is gratified by or fulfilled in his or her work.
Performance management Process - Key steps
Plan: performance planning- performance agreement:
●​ Role definition
●​ Objectives
●​ Competencies
●​ Performance improvement
●​ Personal development
Act: Performance activities
●​ Carry out role
●​ Implement performance improvement plan
●​ Implement personal development plan
Monitor, Manage performance throughout year:
●​ Monitor performance
●​ Provide continuous feedback
●​ Provide coaching
●​ Deal with under performers
Review: Joint analysis of performance
●​ Dialogue and feedback
●​ Performance assessment
●​ Agree strengths
●​ Build on strengths
●​ Agree areas for improvement
Evolution of performance management:
Current performance management trends indicate a focus on creating a feedback loop, an
on-going conversation, talent identification, coaching and skill development. Performance
management is evolving; the goal now is to make performance, coaching and skill
development a continuous, collaborative process between managers and employees—a far
more motivating and engaging process with better outcomes than it used to be.
Performance Management – Benefits:
Organization’s benefits: improved organizational performance, employee retention and
loyalty, improved productivity, clear accountabilities
Manager’s benefits: saves time and reduce conflicts, ensures efficiency and consistency in
performance
Employee’s benefits: clarifies expectations of the employees, clearly defines career paths,
promotes job satisfaction.
Performance management – Appraisal:
A performance appraisal is a structured conversation between an employee and their line
manager, aimed at reviewing the employee's job performance and overall contribution to
the organisation. This process is a key component of the broader performance management
cycle Performance appraisals serve multiple purposes:
- To provide employees with feedback on their performance, highlight areas for
improvement and recognise achievements - To discuss potential changes such as
promotions, career advancements etc.
- To plan for training and development needs and activities to support employees'
development.
Training and Learning:
●​ Training is the activity that enables and facilitates the learning of what is required
to perform the current job (skills/competencies)
●​ Training is one specific and common form of employee development together with
other forms such as coaching, mentoring, informal learning, self-directed learning,
experiential learning.
●​ Development means learning with a focus on long-term
●​ It goes beyond the worker’s current job
●​ It prepares employees to keep pace with organization evolutions as it changes and
grows.
Methods of Learning:
●​ off -the-job methods/Education and training courses:
-​ Instructor-led
-​ E-learning
-​ Case study
-​ Role playing
-​ Gamification
-​ In basket training
●​ On the job learning
-​ Coaching
-​ Mentoring
-​ Peer relationship
-​ Self development
-​ Internships
How learning takes place in organizations: impact, development is an ongoing process driven
largely by on-the-job experiences.
10% formal training: learning from instruction
20% feedback and coaching: learning from others
70% on the job experiences/development in role: learning from experience.
Performance management coaching:
●​ Coaching aims to enhance employees performance, helping them to learn rather than
to teach them
●​ Coaching involves providing direction, feedback and support on specific tasks and/or
situations
●​ Coaching is essentially a conversation, collaborative and solution-focused, within a
result-oriented context.
Unlocking a person’s potential to maximise his/her own performance .
Lesson 12: Strategic Alignment and the Human Factor (April 9, 2026)
The foundational concept of this lesson is that traditional competitive advantages—such as a
specific business strategy, a charismatic leader, unique resources, or standard human resource
policies—are no longer sufficient on their own because they can be easily imitated by
competitors. Instead, long-term organizational success is dependent on "Strategic
Alignment," which is the holistic integration of business strategy, organizational values, the
company’s cultural heritage or "DNA," and the human resources policies that directly impact
the workforce. This alignment requires that every single element of the organization be made
explicit, shared, and constantly communicated to ensure that all employees are not just
informed, but are deeply involved and engaged in the company’s mission. A critical
component of this process is the role of the manager, who is required to "Walk the Talk." This
means that leadership must act in ways that are perfectly consistent with the stated values of
the organization; any disconnect between what is said and what is done by management will
inevitably destroy the alignment and undermine the company’s sustainable advantage.
When analyzing a strategically aligned enterprise, one must view the organization as a value
chain where the strength of the entire system is only as strong as its weakest link. This chain
begins with the "Enterprise Purpose," which defines why the organization exists, followed by
the "Business Strategy," which must effectively fulfill that purpose. To execute the strategy,
the organization must develop specific "Organizational Capabilities"—the collective skills
and processes that set it apart. These capabilities are supported by a "Resource Architecture,"
which includes the people, technology, and capital necessary to build those skills. Finally,
"Management Systems" are implemented to drive the performance of these resources. If the
management systems, for instance, reward behaviors that contradict the business strategy, the
chain breaks. The SEMCO case study, led by Ricardo Semler, serves as the primary
real-world example of this theory. SEMCO’s strategy incorporated both business and human
factors by utilizing a radical, circular organizational structure and principles like profit
sharing and total transparency, proving that a "bottom-up" approach can create a uniquely
resilient and un-imitable competitive advantage.
Lesson 13: Leading, Motivating, and Rewarding Employees (April 13, 2026)
Leadership in the modern era has shifted significantly from its traditional roots, moving from
a command-and-control style to a process of social influence. While the traditional definition
of leading focused on guiding work efforts and building commitment to achieve specific
goals, the modern definition emphasizes the ability to inspire others, visionary thinking, and
the creation of meaningful relationships. A modern leader is expected to take full
responsibility for outcomes while focusing on creating change and setting a direction that
resonates with the workforce. The distinction between a "boss" and a "leader" is central to
this lesson: a boss simply tells people what to do, whereas a leader inspires and motivates
individuals and teams to perform at their best. This involves projecting a strong sense of
purpose when communicating new processes, products, or internal policies, ensuring that the
human element is at the forefront of every organizational move.
Shutterstock
Motivation is defined as the internal and external drive that encourages an individual to take
action and persist in their efforts toward a goal. It is crucial for the exam to distinguish
motivation from rewards: motivation is the "push" that happens before an action, while
rewards are the "recognition" that happens after the action has been completed. To understand
how to trigger this drive, managers rely on several key theories. Maslow’s Hierarchy of
Needs suggests that employees move through levels of needs from basic survival to
self-actualization. Herzberg’s Two-Factor Theory clarifies that "hygiene factors" (like salary
and status) only prevent dissatisfaction, while true motivation comes from "motivators" like
achievement, responsibility, and growth. Other essential frameworks include Goal-Setting
Theory, which requires SMART goals and constant feedback, and Equity Theory, which
states that employees are motivated by their perception of fairness. Expectancy Theory
further suggests that people are motivated when they believe their effort will lead to a
performance that results in a reward they personally value.
To sustain high levels of performance, organizations must implement a "Total Reward"
system that combines both extrinsic rewards—tangible benefits like base salary, short-term
variable pay (bonuses), long-term variable pay, and welfare benefits—and intrinsic rewards,
such as the emotional satisfaction of a job well done. The ultimate goal of these systems is to
foster "Employee Engagement," a state where an employee feels a deep connection to their
work and naturally wants to go "above and beyond" for the company. This engagement is a
key part of the "Employee Experience," which describes the entire journey an employee takes
through the organization, from their first interaction to their last. Modern managers face the
ongoing challenge of maintaining this engagement in a world characterized by economic
instability, cultural diversity, and flexible work arrangements like telecommuting. Success in
this area requires a commitment to equity, fairness, and the use of technology and social
media to create effective recognition programs that keep motivation high even in difficult
business environments.
LESSON 13 — Motivating and Rewarding Employees
Lesson 13 focuses on the role of motivation and reward systems within the broader function
of leading. Leading is understood as the process of inspiring and motivating individuals
and teams to perform at their best, requiring not only direction but also the ability to
communicate purpose and engage people effectively. As highlighted in the lecture, the
distinction between a boss and a leader lies in the capacity to motivate: while a boss simply
gives instructions, a leader encourages individuals to contribute in meaningful ways. This
makes motivation a central component of leadership, as it directly influences employee
behavior, commitment, and performance.
Motivation is defined as the process of stimulating individuals to act in order to achieve
specific goals, and it originates from internal factors such as needs, desires, and drives. It
represents one of the most important managerial functions because it explains why
individuals behave in certain ways within organizations. Motivation is inherently
future-oriented, as it reflects the willingness and commitment to achieve desired outcomes.
Employees are motivated when they perceive that their efforts will lead to the satisfaction of
their needs, often through some form of reward. In this sense, motivation links individual
aspirations with organizational objectives, making it a key mechanism for achieving
performance.
A crucial distinction is made between motivation and reward, which represent two different
stages of the behavioral process. Motivation occurs before action and drives individuals to
engage in specific behaviors, while reward occurs after action and serves to recognize and
reinforce performance. Rewards are therefore backward-looking, as they evaluate what has
already been achieved, but they also influence future behavior by encouraging continued
effort. When employees feel that their past contributions are valued, they are more likely to
remain committed and motivated to perform in the future.
Reward systems play a fundamental role in aligning individual and organizational goals. The
primary purpose of a reward system is to ensure that employees’ efforts are directed
toward achieving the organization’s strategic objectives. This is accomplished by
providing incentives that encourage desired behaviors and performance outcomes. Reward
systems include policies related to salaries, promotions, welfare, and benefits, and must
ensure both internal equity and external competitiveness in the labor market. As shown in the
lecture framework, rewards are an integral part of organizational design, linking strategy,
structure, and people management into a coherent system.
Rewards can take different forms, broadly categorized into extrinsic and intrinsic rewards.
Extrinsic rewards are tangible and provided by external sources, such as financial bonuses,
company benefits, or material incentives. Intrinsic rewards, on the other hand, are
psychological and arise from the individual’s internal satisfaction, such as a sense of
achievement, recognition, or personal growth. Both types are essential for sustaining
motivation, as extrinsic rewards address material needs while intrinsic rewards fulfill
higher-level psychological needs.
The study of motivation has been shaped by several foundational theories developed to
understand what drives human behavior in the workplace. One of the most influential is
Maslow’s hierarchy of needs, which proposes that human needs are structured in a hierarchy
ranging from basic physiological needs to higher-level needs such as self-actualization.
According to this model, individuals are motivated to satisfy lower-level needs before
progressing to higher-level ones. In organizational contexts, this translates into different
forms of incentives, from basic salary and job security to opportunities for recognition and
personal development.
Another key framework is Herzberg’s two-factor theory, which distinguishes between
hygiene factors and motivation factors. Hygiene factors, such as salary, working conditions,
and job security, do not create long-term satisfaction but are necessary to prevent
dissatisfaction. Motivation factors, such as achievement, recognition, and responsibility, are
the true drivers of satisfaction and performance. This distinction highlights that simply
improving working conditions is not sufficient to motivate employees; organizations must
also provide opportunities for meaningful work and personal growth.
In addition to these classical theories, several contemporary approaches further explain
motivation. The goal-setting theory emphasizes that behavior is driven by conscious goals
and intentions, suggesting that clear and specific goals improve performance. The equity
theory focuses on perceptions of fairness, arguing that individuals are motivated when they
believe they are treated equitably compared to others. The reinforcement theory explains
behavior as a function of its consequences, indicating that positive outcomes encourage
repetition of behavior, while negative outcomes discourage it. Finally, the expectancy theory
proposes that individuals are motivated when they believe that their effort will lead to
performance and that performance will lead to valued rewards.
A comprehensive understanding of rewards is captured in the concept of total reward, which
includes both monetary and non-monetary elements. Total reward encompasses
compensation, benefits, career development opportunities, and work-life balance initiatives.
Monetary rewards include base salary and performance-related incentives, while
non-monetary rewards include flexible working arrangements, training opportunities, and
recognition. This holistic approach reflects the evolving nature of employee expectations,
recognizing that motivation is influenced by a wide range of factors beyond financial
compensation.
Compensation itself is a key component of the reward system and refers to the remuneration
employees receive in exchange for their work. It includes base salary, which reflects the
role and required competencies, as well as short-term and long-term incentives linked to
performance. Benefits, such as healthcare or retirement plans, complement compensation by
addressing specific employee needs and fostering commitment. Effective compensation
systems must balance fairness, competitiveness, and alignment with organizational goals.
Benefits programs play a significant role in supporting employee wellbeing and
organizational effectiveness. They are designed to address various aspects of employees’
lives, including health, security, and work-life balance. By providing such benefits,
organizations aim to attract talent, retain employees, and enhance morale and productivity.
Benefits contribute not only to employee satisfaction but also to long-term organizational
performance by fostering loyalty and engagement.
The lecture also emphasizes the importance of career development and learning as
components of motivation. Career development can be understood from both an objective
perspective, defined by formal roles and progression within the organization, and a subjective
perspective, reflecting an individual’s personal perception of growth and achievement.
Development focuses on long-term skill acquisition and prepares employees for future
opportunities, while learning involves improving competencies required for current roles
through training, coaching, and experiential methods.
Work-life balance is another critical factor influencing motivation and wellbeing. It refers to
the ability of individuals to effectively manage the demands of their professional and
personal lives, achieving a state of balance that supports overall satisfaction. Organizations
increasingly recognize the importance of providing flexible working arrangements and
promoting wellbeing, as these factors contribute to sustained motivation and performance.
Finally, the lecture highlights the shift from traditional measures of employee satisfaction to
the concept of employee engagement. While satisfaction reflects how employees feel about
their job, engagement captures the extent to which they are emotionally committed and
willing to go beyond minimum requirements. A related concept is employee experience,
which encompasses the entire journey of an employee within an organization, including all
interactions and perceptions. A positive employee experience, characterized by trust, fairness,
and respect, leads to higher engagement and better organizational outcomes.
In conclusion, Lesson 13 demonstrates that motivation and reward systems are central to
effective leadership and organizational success. By aligning individual needs with
organizational goals, providing meaningful rewards, and fostering a supportive work
environment, organizations can enhance employee commitment and performance. Ultimately,
motivation is not only about incentives but also about creating conditions in which
individuals are empowered to contribute fully and achieve their potential.
LESSON 14 — Understanding Leadership
Leadership can be defined as a social process of influence through which individuals guide
others toward the achievement of shared goals. In its traditional interpretation, leading
involved directing the work efforts of others and ensuring that tasks were completed
effectively. However, contemporary perspectives have significantly broadened this definition,
emphasizing not only direction but also inspiration, motivation, and the creation of
meaningful purpose. Leadership today involves visionary thinking, the ability to build strong
interpersonal relationships, and the capacity to foster change within organizations. It is
therefore not limited to authority or hierarchy, but rather reflects a dynamic interaction
between leaders and followers aimed at achieving collective outcomes.
A fundamental distinction exists between leadership and management, although the two
concepts are often used interchangeably. Management primarily concerns the planning,
organizing, and controlling of resources in order to achieve predetermined objectives
efficiently. Leadership, by contrast, focuses on creating direction, inspiring people, and
driving change. While managers ensure that systems function correctly and that tasks are
executed as planned, leaders are responsible for shaping the future by developing a vision and
aligning people with that vision. In this sense, leadership introduces transformation and
innovation, whereas management emphasizes stability and execution.
The differences between leadership and management can be further understood through three
key dimensions. First, leadership is inherently vision-oriented, as it involves imagining and
guiding future change, whereas management is more closely tied to execution and operational
efficiency. Second, leaders focus on aligning individuals and building commitment, while
managers concentrate on organizing structures and coordinating processes. Third, leadership
is not simply a formal position but a quality rooted in influence, emotional intelligence,
and interpersonal effectiveness. This means that not all managers are necessarily leaders,
and leadership can emerge independently of hierarchical roles.
Effective leadership is strongly associated with a set of personal traits and competencies that
enable individuals to influence and inspire others. These include qualities such as
self-awareness, integrity, resilience, communication skills, and the ability to articulate a
clear vision. Leaders are expected to understand both themselves and others, to foster trust,
and to create an environment where individuals can perform at their best. Importantly,
leadership also involves supporting the growth and development of others, thereby
contributing not only to organizational performance but also to individual fulfillment.
A critical component of leadership effectiveness lies in the balance between hard skills and
soft skills. While hard skills refer to technical and measurable abilities, such as analytical or
professional expertise, soft skills encompass interpersonal and relational capabilities,
including communication, teamwork, adaptability, and emotional intelligence. In modern
organizations, soft skills have become increasingly important, as leadership success depends
largely on the ability to manage relationships, motivate employees, and navigate complex
social dynamics.
Leadership is not a static attribute but rather a developmental process that evolves over
time. Individuals typically progress through different stages, from entry-level management
roles to senior and executive leadership positions, gaining experience and competencies along
the way. This progression requires continuous learning, adaptability, and the ability to handle
increasing levels of complexity and responsibility. Leadership development is therefore a
long-term journey that involves both personal growth and professional experience.
The study of leadership has produced a variety of theoretical perspectives aimed at explaining
how leaders emerge and operate. Early theories focused primarily on identifying the traits
that distinguish leaders from non-leaders, while later approaches shifted attention to
behaviors and situational factors. Contemporary theories recognize that effective leadership
depends on context, suggesting that different situations may require different leadership
styles and approaches.
Among the most influential contemporary frameworks is Goleman’s model of leadership
styles, which identifies six distinct approaches: visionary, directive, affiliative, democratic,
pacesetting, and coaching. Each style has specific strengths and limitations and affects
employees in different ways. For instance, visionary leadership is particularly effective in
providing direction and inspiring commitment, while affiliative leadership strengthens
relationships and team cohesion. Directive leadership can be useful in crisis situations,
whereas democratic leadership promotes participation and engagement. Pacesetting
leadership emphasizes high performance standards, and coaching leadership focuses on
individual development. Importantly, effective leaders do not rely on a single style but instead
adapt their approach according to the situation and the needs of their team.
Modern leadership research has also introduced several advanced approaches that reflect the
increasing complexity of organizational environments. The Leader-Member Exchange
(LMX) theory emphasizes the importance of the quality of relationships between leaders and
followers, showing that high-quality interactions lead to greater commitment and
performance. Charismatic leadership highlights the role of personal appeal and vision in
inspiring others, while transformational leadership focuses on motivating individuals to
exceed expectations and embrace change. Additionally, newer perspectives such as strategic
leadership, ethical leadership, and cross-cultural leadership address the challenges of
globalization, diversity, and organizational alignment in dynamic environments.
Trust represents a central element of effective leadership. Leaders are responsible for creating
environments in which individuals feel respected, valued, and secure. High levels of trust are
associated with greater productivity, stronger engagement, higher job satisfaction, and
lower stress levels, making trust a critical determinant of organizational success. Building
trust requires consistency, fairness, transparency, and ethical behavior.
Finally, leadership in contemporary organizations is characterized by significant challenges.
Leaders must operate in environments marked by rapid change, uncertainty, and increasing
complexity. They are required to balance conflicting demands, such as efficiency and
innovation, or global integration and local responsiveness. Moreover, the pace of
decision-making has accelerated, placing additional pressure on leaders to act quickly while
maintaining strategic coherence. As a result, modern leadership requires flexibility,
resilience, and the ability to manage paradoxes, making it more demanding than ever
before.
LESSON — 20 April Guest Lecture (Amelia Corti)
The guest lecture delivered on April 20 provides a practical perspective on leadership and
career development through the professional journey of Amelia Corti. Her career progression,
moving from technical roles such as process engineer to top executive positions including
Chief Executive Officer and Managing Director, illustrates that leadership is not an innate
trait but rather a progressive process shaped by experience, learning, and adaptability.
This trajectory highlights the importance of embracing diverse roles and challenges as
opportunities for growth, demonstrating that leadership capabilities develop over time
through continuous engagement with complex professional environments.
A central theme of the lecture is the importance of defining a clear personal vision.
Individuals are encouraged to reflect on their future roles, both in the medium term and the
long term, in order to guide their career decisions. This forward-looking perspective
emphasizes that career development is not accidental but requires intentional planning,
self-awareness, and the ability to align personal aspirations with professional opportunities.
By setting clear goals, individuals can better navigate uncertainty and make informed choices
that support their long-term development.
The lecture also emphasizes the concept of individual uniqueness, highlighting that each
person possesses distinct characteristics, abilities, and perspectives that contribute to
organizational success. Rather than viewing differences as obstacles, the lecture frames
diversity as a valuable resource that enhances creativity, problem-solving, and innovation.
This perspective reinforces the idea that organizations benefit from recognizing and
leveraging the unique contributions of each individual.
Closely related to this is the importance of teamwork and collective intelligence. A team is
described as a combination of diverse cognitive abilities, where each member brings a
different perspective and skill set. Effective teamwork requires not only technical competence
but also the ability to listen, respect, and integrate different viewpoints. By valuing diversity
within teams, organizations can improve decision-making processes and achieve more
innovative outcomes.
Another key message concerns the role of diversity and inclusion as drivers of change. The
lecture highlights the importance of promoting equal opportunities and recognizing the value
of different backgrounds, including gender diversity. Diversity is not only a matter of fairness
but also a strategic asset that enables organizations to adapt to changing environments and
address complex challenges more effectively.
The concept of change is further explored through the idea of “being the change.” This
notion emphasizes personal responsibility in driving transformation, suggesting that
individuals must actively engage in their own development rather than passively waiting for
opportunities. Change begins with self-awareness, understanding one’s current position, and
making deliberate efforts to improve and grow. This proactive approach is essential in
dynamic environments where adaptability is a key determinant of success.
Finally, the lecture underscores the critical importance of developing soft skills. While
technical expertise is necessary, it is not sufficient for long-term success. Skills such as
communication, empathy, emotional intelligence, and leadership must be continuously
cultivated through training, coaching, and practical experience. These competencies enable
individuals to interact effectively with others, build strong relationships, and navigate the
complexities of organizational life.
In conclusion, the guest lecture provides a holistic view of career and leadership
development, emphasizing that success depends on a combination of self-awareness,
continuous learning, adaptability, and the ability to work effectively with others. It
reinforces the idea that leadership is not merely about achieving organizational goals, but also
about personal growth, collaboration, and the capacity to create value in a constantly
evolving environment.
Lecture 16: Case study on leadership and trust
Leadership theories seek to explain how and why certain people become leaders. Such
theories often focus on the characteristics of leaders, but some attempt to identify the
behaviours that people can adopt to improve their own leadership abilities in different
situations. Early leadership theories focused on what qualities distinguish leaders from
followers, while subsequent theories looked at other variables such as situational factors and
skill levels.
The Four Framework Approach, Lee Bolman and Terrence Deal (1991) suggest that leaders
display leadership behaviors in one of four types of frameworks (or perspectives): Structural,
Human Resource, Political, or Symbolic. It suggests that leaders operate in one of these four
categories and there are times when one approach is more appropriate and times when it
would not be.
LEADERSHIP AND TRUST:
One of a leader’s most critical responsibilities is fostering an environment of trust. In "The
Neuroscience of Trust" article appeared on Harvard Business Review, Professor Paul Zak
wrote that: Compared with people at low-trust companies, people at high-trust companies
report: 74% less stress, 106% more energy at work, 50% higher productivity, 13% fewer sick
days, 76% more engagement, 29% more satisfaction with their lives, 40% less burnout.
HOW THE BEST LEADERS BUILD TRUST:
When trust is low, in a company or in a relationship, it places a hidden “tax” on every
transaction: every communication, every interaction, every strategy, every decision is taxed,
bringing speed down and sending costs up.
The true transformation starts with building credibility at the personal level. A person’s
reputation is a direct reflection of their credibility, and it precedes them in any interactions or
negotiations they might have. When a leader’s credibility and reputation are high, it enables
them to establish trust fast.
The job of a leader is to go first, to extend trust first. The best leaders recognize that trust
impacts us 24/7, 365 days a year. It undergrids and affects the quality of every relationship,
every communication, every work project, every business venture, every effort in which we
are engaged.
Lecture 16: Controlling (First Part)
Definition, Process Supports and Information Systems
While planning and controlling are two separate functions of management, they are
managed in closed relationship. Without the basis of planning, controlling activities become
baseless and without controlling, planning becomes a meaningless exercise.
In absense of controlling, no purpose
can be served by ..
Planning: Goals, objectives, strategies, Plans
Organizing: structure, human resources, management
Controlling: Standards, measurements, comparisons, action
Leading: motivation, leadership, communication, individual na dgroup behaviour
Controlling is the management function that defines and implement monitoring activities to
ensure that company goals are being accomplished as planned and correcting any
significant deviations. Managers at all levels engage in the managerial function of
controlling to some degree.
Controlling is sometimes intended to be limited just to organization’s financial state. It should
instead span across all areas like operations, compliance with company policies and other
regulatory policies, including many other activities within the organization.
There are two traditional control techniques:
budget and performance audits(random).
Managing Budget ensures the business to be constantly aware about where the organization
is with respect to financial plans and expected results by reporting on an ongoing basis
conformity to budget; performance audits usually aim to determine whether the figures
reported reflect actual Performance. An Audit involves a physical examination and
verification of the organization’s records and supporting documents.
Reporting (continuos) and performance audits (random). Managing Budget ensures the
business to be constantly aware about where the organization is with respect to financial
plans and expected results by reporting on an ongoing basis conformity to budget;
performance audits usually aim to determine whether the figures reported reflect actual
performance.
Levels of controlling:
Strategic control: focuses on how effectively the organization’s strategies are succeeding in
helping the organization meet its goals. Structural control: concerned with how the elements
of the organization’s structure are serving their intended purpose.
Operations control: focuses on the processes that the organization uses to transform
resources into products or services.
Financial control: looks after costs and expenses to control them in relation to budgeted
amounts (assets, sales, or profitability)
Controllership: a function in organizations that helps line managers with their control
activities for coordinating the orgnaization’s overall control system, and for gathering and
assimilating relevant information.
Five step controlling cycle.
Establish a controlling proces means guaranteeing that activities in an organization proceed
according to the plan.
1.​ Setting performance standards
2.​ Measuring the performance itself
3.​ Comparing actual performance with standards
4.​ Analyszing possible deviations
5.​ Taking corrective actions
Establishment of standards. To set standards is to specify criteria by which results are to be
measured and evaluates. Setting performance standards defines the expected outcome
explicitly.
Standards can be:
Measurable and tangible, even if is necessary to set some non-meausrable more intangible
goals. Those standards which can be measured and expressed are called as measurable
standards. They are typically established in the form of how many (number of units), how
good (quality, acceptance), how well (user acceptance), and how soon (timing) can be in form
of cost, output, expenditure, time, profit, etc.
Non-measurable is more related to how we do things. For instance when we measure the
performance of a manager, understanding the attitude and motivation, what is the climate.
When we learn that if we are performing well but are so stretched in the organization people
arre burned out, the consequence we can achieve will jeopardize the long term business. We
have to have a feeling of what is going on in our organization. Otherwise people will leave.
Its significant to set up more measurable intangible, the power of our brand.
Brand power is what we need to measure, when setting up a business. It starts from brand
awareness, do the people know about out brand and then we go more in depth. Marketing:
how to make people love your brand.
Motivation: surveys are important with key questions.
Reinforcing the brand: Nutella in space
Establishment of standards: to set standards is to specify criteria by which results are to be
measured and evaluated. Setting performance standards defined the expected outcome
explicitly. Standards can be:
Measurable or tangible- those standards which can be measured and expressed are called
measurable standards. They are typically established in the form of how many (number of
units), how good (quality, acceptance), how well (iser acceptance) and how soon (timing) can
be in form of cost, output, expenditure, time, profit, etc.
Non-measurable or intangible - There are standards which cannot be measured monetarily.
For example - performance of a manager, deviation of workers, their attitude towards a
concern. These are called as intangible standards.
There are two differente of fields of measuring. The two have to go together.
1.​ Measuring the output of the organization, sales, logistics.
2.​ Measuring how the organization works, measuring the internal figures.
Comparison of actual and standard performance. Compare actual performance with
the planned targets is very important. Deviation can be defined as the gap between
actual performance and the planned targets. Extent of deviation means to find out whether
the deviation is positive or negative ow whether the actual performance is in conformity with
the planned performance. Management has to find out those deviations which are critical and
important for business nd focus on major deviations.
Once the deviation is identified, management needs to identify the various cause which has
led to deviation such as erroneous planning, loose coordination, defective implementation,
ineffective communication, etc.
Important: “If a manager controls everything, he ends up controlling nothing.”
Process of Controlling
Taking remedial actions. Once the causes and extent of deviations are known, management
has to detect those errors and take remedial measures for it. There are two alternatives:
Taking corrective measure for deviations which have occurred or after taking the corrective
measure, if the actual performance is not in conformity with plans, revise the targets. It is
here the controlling process comes to an end. Follow up is an important step because it is
only through taking corrective measures that management can exercise controlling.
(Is the gap manageable, can i fix it - if i cant fix it, for instance the raw material price has
gone to the roof and there’s nothing i can do and i cant influence hte price of oil. Therefore i
have to revise my targets. The corrective actions are different than the one that triggered the
deviation.)
What gets typically controlled?
Actions taken by management, board other parties, increase the percentage of achievement of
your goals. Are supported by controlling, the control should provide the discipline and the
structure to achieve the right goals.
As actions taken by management, the board and other parties to manage risk and increase the
likelihood that established objective goals are achieved
Fixed dates in their calendars, you have to provide this data etc. Discipline is important
because data changes everyday, its a snapshot of the situation. Discipline and structure are the
key elements. A actions taken by management, the board and other paties to manage risk, and
increase.
●​ Management’s philosophy and operating style
●​ Financials of the company
●​ Integrity and ethical values
●​ Organizational structure
●​ Effectiveness and efficiency of operations
●​ Assignment and efficiency of operations
●​ Assignment of authority and responsibility
●​ Human resources policies and procedures
The key charactersitics of controlling:
●​ Controlling is a continuous process. Managers have to continuously keep track of
the organization’s performance and the work done. Its something that should be done
everyday.
●​ Controlling is a pervasive function, every manager at every level of the organization
has to deal with that. Every manager at different level needs to exercise control
measures,.
●​ Controlling is forward looking. Effective controlling is not possible without past
being controlled but controlling always look to future so that follow-up can be made
whenever required.
●​ Controlling is a dynamic and flexible process. Since controlling requires taking
reviewal methods, changes have to be made whenever possible.
●​ Controlling aims to correct if required. When deviations are found managers have
to take tactful corrective actions to bring plans back on track.
The way we show our figures is very importance
AUDIT - Internal Control
Organizations set internal controls function that have the objective to minimize risks and
protect assets, ensure accuracy of records, promote operational efficiency, and encourage
adherence to policies, rules, regulations, and laws. It is of primary importance for
organizations that business is run correctly and ethically fulfilling all external requirements.
Internal controls are typically set to help safeguard an organization and further its objectives.
Internal control is a kind of protection of the business from mismatch in the behaviours.
AUDIT reports directly to the board, not the CEO its sort of the third party that analyzes parts
of the business and defined if they are in line with legal practices, right behaviours or if
corrective actions need to be put in place.
The internal control is the one who has the responsibility to minimixe the risk related to how
managers handle companies or sources. Its very important, bevcause nobody wants to invest
in a company that doesnt fulfill the rules and regulation – unethical – higher risk. Its not just
neural it goes with higher risk.
It helps safeguard an organizationa nd further its objectives.
AUFIT- External Control
You not only have internal control but there are also an external audience, control. Third
parties outside of the organization. Typically they look at the financial aspect, balance sheet
that has to be approved evry year and all the pratices the company does. They are
independent partoies and look at the value chain of the company. The company is considered
responsible for what is before and after. Responsible for my supplier’s action, i have to have
control mechanisms that goes back to my suppliers. Or logistics. If the logistic suppliers do
not respect the law, im responsible. Therefore I have to control what they do. What they do is
impartial reporting, done evry year or when the board of directors ask. There are a few
companies that do that, mostly done by the big four, corprotaions.
●​ KPMMG
●​ DELOITTE
●​ ERNST & YOUNG
●​ PWC
External audits are reviewed (mostly centered on financial aspects) that are conducted by
independent parties not associated with the company.
As external duaits take place within a defined set of rules or laws that are quite aligned at a
global lebel through country differences are present.
An External audit results in impartial reporting that can be udes by investors, government
agencies, the general public or the company itself. Typically annual financial reports are
subject to external auditing activities.
The Role of Controllers
Within organizations controllers are essentially responsible for the financial and regulatory
compliance of the company and producing timely and accurate financial statements. They
must provide valuable insights that help drive financial operational performance, reduce risk,
manage costs and maintain financiaò integrity. They also work closely with internal and
external auditors to explain financials and provide records of transactions etc.
From Controllership to Financial Planning & Analysis
In modern organizations the term “financial planning and analysis” or “FP&A” has
overcome the traditional controllership one. It encompasses a series of activities – including
planning, forecasting, budgeting and analysis – that help a company make essential
business decisions and maintain its overall financial health.
The corporate FP&A system allowd for consolidating financial, operational, and external fata
(such as market trends) into a single location for the finance teams.
Finance can analyze everything, allowing for the discovery of in-depth insights necessary for
future planning and guiding more profitable decision-making.
FP&A indicated better that this process is a never-ending cycle of gathering new data and
analyzing the old one. The process becomes more challenging to manage during market
volatility and rapid change, as well as when business grow and expand into new markets.
Importance of Information systems:
When in a global scenario, goods and services move through multiple chains involving very
many agents including transporters, forarders, customs distribution centers, distribution and
lastly the retail outlets, availability of data, documentation and information becomes the
lifeline for the organition to be able to take decisions and ensure seamless processes and
control the supply chain.
All businesses today are supported by Information Systems that are capable to manage all
aspects of abcompany business. ERP-Enterprise Resource Planning is the most used suite
which provides the organizations with tools to manage all the functions including
procurement, production, sales, and finance management in seamless and integrated manner.
ERP suites have enabled companies to manage their business processes
In single or multi-product lines, in different geographies and markets under one common
platform that provides real time information and data, standardization when required and, of
course, control. IT systems facilitate and support many functional processes and ensure
consistency and transparency.
When in a global scenario, goods and services move through multiple chains involving very
many agents including transporters, forwarders, customs, distribution centers, distributors and
lastly the retail outlets, availability of data, documentation and information becomes the
lifeline for the organization to be able to take decisions and ensure seamless processes
and control the supply chain.
Lecture 17:
Management and communication, why communication is key for someone responsible for
others has a management job to do.
Most of management’s activities such as doing desk work, attending scheduled settings,
placing and receiving phone calls, reading and answering correspondence (both print and
electronic) attending unsncheduled meetings, making tours, etc. Involve communication. In
fact managers usually spend over half their time on some form of communication. So what is
ocmmunciation?
Communication is the process of transmitting information fom one person to another.
Leadership and communication are inextricably linked. Effective leadership is not possible
unless you are able to convey important information in a compelling way. Strong
communication skills allow leaders to clearly transfer their visions in a way that inspires and
empowers the people around them, whether politically, peronally or profesionally. Effective
communication is vital to efficacy in leadership because it helps generate rapport, build trust,
and encourage collaboration towards a common goal.
Effective communication: communication needs to serve a purpose, something that is usable
and useful – serve a purpose. Persuasive communication is important.
The best leaders are able to help people to see he future and make that future concrete.
In business communication is always connected to effectiveness. Effective
communication is the process of sending a message in such a wa that the message received
is as close in meaning as possible to the message sent.
The communication process
The process of communication begins when one person wants to transmit a fact, an idea, a
opinion or other information to someone else (the receiver).
The first step is to encode the meaning into a form appropriate to the situation. The encoding
might take the form of words, facial expressions, gestures, or even artistic expressions and
physical actions. Then it is transmitted through the appropriate channel or medium. Common
channels in organizations include meetings, e-mails, memos, letters, reports and phone calls.
After the message is received, it is decoded back into a form that has meaning to the
receiver. Feedback ensures consistently between what is sent vs. what is received.
The Human Communciation
1.​ It is impossible not to communicate (all behaviour is a form of communication in and
of itself even when we do nothing, verbally or non-verbally, we are transmitting
something)
2.​ Communication has a content level (meaning) and a relational level
metacommunication)
3.​ Punctuation shapes the meaning according to the person (It means that each one of us
creates our own version of what we observe and experience.)
4.​ There are two types of communication: Digital is what you say with words, which
was . . .
5.​ . . .
Data And Information
A key element in effective communication is differentiating between data and information.
●​ Data are raw figures and facts reflecting a single aspect of reality.
●​ Information is data presented in a way or form that has meaning.
Data are very clean, objective when you add information they start to become subjective.
They become interpretive, allowing other people to better understand. Very important to see
the difference.
Characteristics of Information
When you send something it has to be very much accurate, has to have inside all the
information required. It has to be complete.
Empathy: you put yourself in the shoes of the person who is receiving the message. Ask
yourself, how do I write it? What type of accuracy do I need to include, what kind of
completeness.
Accuracy: provides a valkid and reliable reflection of reality
Timeliness: Available in time for appropriate managerial actions
Relevancy: Information . .
...
Management effective communication
It is the ability of a manager or of a leader to communicate clearly and effectively with
employees, within teams, and across the organization.
In today’s complex and quickly evolving business environment, with hundreds of different
communication tools, fully or partially remote teams, and even multicultural teams spanning
multiple time zones, effective communication has never been more important – or more
challenging.
It might be a manager’s most critical skill. Key traits:
●​ Clarity and concision
●​ Upfront preparation: Doing preparation, upfront, preparing slides, case studies,
testimonials (as a professor)
●​ Mindfulness
●​ Active listening
●​ Emotional connection
●​ Positiveness
Forms of Communciation
Several kinds of communication are common in organizations today. These include
interpersonal communication, communication in networks and work teams, organizational
communication and electronic communication. Interpersonal communication generally takes
one or twp forms: oral and written.
Written communication: memos, letter, reports, notes and other circumstances in which the
written word is used to transmit meaning.
Oral Communication: face-to-face conversation, group discussiongs, telephone calls, ad
other circumstances in which the spoken word is used to transmit meaning.
Although communication among team members in an organisation is clearly interpersonal in
nature, other forms on how people in networks and work teams communicate with one
another are important. A communication network is the pattern through which the members
of a group or teams communicate. Several typical networks in groups and teams can be used
.
An increasingly important form of organizational communication relies on digital
communication technology.
●​ Information technology (IT) consists of the resources used by an organization to
manage information that it needs to carry out its mission.
●​ Transaction-processinf systems (TSPs) are applications of information processing for
basic day-to-day business transactions.
●​ Management information systems (MISs) support an organization’s managers by
providing daily reports, schedules, plans and budgets
●​ Decision support systems (DSSs) are interactive systems that locate and present
information needed to support the decisio-making process.
Vertical vs. Horizontal Communciation.
Other forms of communication in organizations ar those that flow among and between
organizational units or groups.
Vertical Communication: communication that flows upa nd down the organization, usually
along formal reprotin lines; it may involve several different levels of the organisations.
Horizontal communication: flows laterally within the organization; involves colleagues and
peers at the same lebel of the organization . . .
Communication Barriers: Number of problems you may come across while
communciating.
Filtering is the distortion ow withholding of information to manage a person’s reactions.
Selective Perception: refers to filtering what we see and hear to suit out own needs. This
process is often uncnscious.
Information overload: can be defines as the “occuring” when the information processing
demands on an individual’s time to perform interactions and internal calculations excess the
supply or capacity of time available for such processing.
Emotional Disconnect: when the sender or the receiver is upset, whether about the subject at
hand or about some unrelated incident that may have happened earleir.
Semantics: The study of meaning in communication. Words can mean …
Gender differences: Different styles of communication can sometimes work against mean
and women.
Differences in meaning: often exist between the sender and receiver, different words mean
different things to different people. Age, education, adn cultural background are all factors
that influence how a person interprets words.
Biased language: can offend or stereotypes others on the basos of their personal
Lack of source of familiarity or credibility: . . .
Non-verbal communication refers to any communication exchange that does not use words
or uses words to carry more meaning than the strict definitions of the words themselves.
●​ Appearance, Gestures, Facial Expression, Postures, Eye Contact, Para-linguistics.
Listening
Listening is the process by which you gain an understanding ot the needs, demands and
preferences of your stakeholders through direct interaction. A stakeholder could be anyone
form your boss, client, customer co-worker, subordinate, upper management, board emmber,
interviewer, or job candidate. Listening takes practice, skill, and concentration.
When the message is difficult, controversial, something you may find disagreiing, there is
very important to listen.
Active listening can be defined as by giving full attention to what other people are saying,
taking time to understand the pont being made, asking questions as appropriate, and not
interrupting at inappropriate times. It aims at creating a real-time relationship between the
sender and the Receiver by acknowledging the consent and receipt of a message.
Networked and mobile communication application improve the way employees work,
communicate, collaborate and share information. How communication technology needs to
be evry well used.
A social network can be characterized as a patterned set of relationships between two or
more people – or, as theta re called in the social science literature, actors. The term actors is
broader, as it includes all possible types of information, knowledge processing entities: the
individuals, groups, organisations, or supraorganizations that constitute the network.
Lecture 18: Controlling Second Part
Finance Department – A big family
●​ Administration: bookkeeping, financial statements, fiscal and administrative,
compliance
●​ FP&A: Planning processes, KPI settings, performance and gab analysis, Managerial
reporting.
●​ Treasure: bank and finance, Hot money, Fx and risks, Cash management.
(Fx is for exahnage and is related to different rates, country by country. This is very
important for international companies, if you trade with countries who do not have
euro.)
(Gap analysis: we try to understand the reasons for the gap. Supporting the company
to recover, which are the actions.)
●​ Consolidated Financial Statements: Big Organization / Groups, Multi standards
(gaps). This is linked to the administrative administration. There is the big reportint
og the big gorup which has to follow many rules. Different rules accordingly to the
typology of income statements that the company is doing.
●​ Controlling: Specific for functionis, performance and gap analysis, close to busines
function. Linked with the FP&A. live together in the finance family and are separated
in international company level. In smaller quantities these two functions are together.
(Example: Controlling can be specific for function, in case of the pharmaucetucal
department, if we have plans produce medicine, there will be dedicated for every
single thing. Dedicated controller for purchases. According to the connectivity of the
company there will be a dedicated controlling department.) international company:
controllership focus on the sales, margins - following the planning. The focus on
controllership will be on sales, cost of products. Another part to control is the
marketing expenses, very important.)
●​ Specific Functions: Legal, Tax/ International Tax, M&A, Corporate Finance
(M&A: mergers and acquisitions) There is a lot of study how can a company
contribute to the group, which are negative parts to think about, the area where
you wil have double people.
Timing is different in the functions, its importance is different.
Hw time differentiated focus on finance departments activities.
●​ Administration: ACTUAL and PAST, they produce their income statement of the
previous year.
Consolidated financial statements: PAST
●​ FP&A: works for sure on actual numbers, past numbers, previous year performances
as the reference for comparing actual numbers. But they are more focused and
interested in the future. The future than can be close like 1 year or more: big future ⅗
years. If the company decided to do the 5 year planning. They work on all present,
past and future. However hte real contribution is checking and moving forwards for
the future of the company.
-Budget setting (near future); Mid Term Planning (Future
●​ Treasury: Looking at the effects, if paying today will be more convenient for the
company than paying tomorrow. Focus on Daily management.
Controlling: focus on actual performance
Planning (FP&A​
●​ Strategy in a Plan
●​ Set processes
●​ Set goals (KPI’s)- they are the result of in the years to put a strategy in complete.
Wanting to be a leader of the EU market in 5 years – i need to know the market im
working in, planning what my competitors will do. Where we start, where we need to
be, my target, objective. In need to be profitable, containing my costs. KPI’s are a lot,
which are the main KPI’s which will support me in reaching my plan. On one side we
fix attention on the important part, important rows of my plan where i should put my
attention, sticking with the target needed to be reached. If they are reached I’m going
in the right direction. If they aren’t reached then I ask questions: Does it depend on
me? The competition? Planning? How I should move forward to recover the problem.
Controlling:
●​ Plan into action
●​ Measure performance. They see the plan into the action. Meaning that they check that
every single part, KPI is following every path. They monitor the results and advise in
case of gaps and propose corrective actions.
●​ Propose correctives.
Pyramid/Triangle:
1.​ BoD
2.​ Top Management
3.​ Midde Management
Systems for chief, the board of the company people defining the strategy, who can place a
high level strategy for every single function.
Managing people fo the company, people in power to drive the company to their targets:
CEO: Creator Executive Chief, CFO: Chief Financial Officer, CNO: Chief Marketing
Officer. COO: Chief operations Officer. CTO: Technologies /IT.
How this strategy is deployed to the people in production, workers: there are two layers
of management, top and middle. Both planning and controlling work, cooperate. Support the
business, production in measuring the performances and understanding where there are the
problems.
Planning and controlling as similar to normal everyday lives.
Fixed income.
KPI’s are important to motivate people.
The link between planning and controlling, there is reason we do these various levels
inside the company. We have an overall broader view, high level for planning and controlling
the performance of the whole company. As you go down the levels, you do this for evey
level. Planning the year ahead, costs, performance and rewards, recognzie whatever’s
required to close the cycle. Have to build a relationship with the whole company strategies
and goals.
Finance Department - FP&A and Controlling
Strategy: should represent the fine long-term goals, where I want to be in ym near future.
Normally set by the board of directors and level of top management: Becoming the EU
leader in the sector in three years.
Processes: definition, how we reach the goal, long-term plan 3-years. Strong interaction with
C level and directors. Normally takes 2-3 months work to define <<how to>>. Yearly update
(based on actual and new internal/external causes.)
KPI’s: Preferably using SMART approach. Agreed with top management adn with
responsible. Normally related to financial items by year.KPI’s can be with number or with
projects. They are set for all the companies
i.e. Turnover set to 200M euro in 2026; profitability (EBITDA = 12% in 2026); cash
generation of 20M euro within 2026; market share gain of 20% in Europe in 2026.
●​ Cash generation affects the financial department and sales. Affects finances, treasury,
sales.
●​ Market share is related to sales and marketing. It can be measured its not a volatile
KPI’s there are companies. This data can be purchased and checked it you’re there or
not.
Plan: First year of the strategic Plan become the budget. Yealy budget has normally monthly
granularity. Strong interaction with all functions, the KPI’s cannot be in competition within
he functions of the company. Normally takes 2-3 months to work to define how to. Yealy plan
is approved bt the BoD and represent the company yearly strategyand normally disclosed to
stakeholders (ie.e financial institutions, business partners, insurance ocmpanies, etc.)
Measure Performances: Monthly tracking of performance through reporting, Gap analysis
and remediation plans, A forecast rolling process may be triggered (3 months) to redefine
budget goals and main parameters (budget does not change)
(During the year we do the forecast of the closing but the gap the written number on the
stone, budget does not change) my KPI’s are set and dedicated on the budget. But id we know
already that we wont be there we need to understand where we will land. )
KPI’s: Preferably using SMART approach. Normally used for MBO setting (variable salary
part). Normally related to financial items (tangibles), by year. I.e. products cost shall reduce
2% year on year, Turnover shall reach €100M in June and €120M by December; logistic cost
incidence shall not be higher than 6% vs procudt cost; personnel costs shall not be higher
than 3& versus product margins etc.
●​ The gears of controlling are strictly connected and integrated.
●​ Is a company workout not only a finance job
●​ Reporting dimensions are normally: time and ecnonomic/financial iems represenitng
company business,
Economic: profit & loss ​
Patrimonial: balance sheet ​ ​
Financial: cash flow & NFP
​
​
●​ Three gears are moving with different speed (time)
●​ Dedicated SW verticals ar highly recommended (tons of datas, need of comparison,
structured reportin needs)
Strategic Planning: 3-5 years; Budget: Year; Forecast: Months
Are all numbers known by all employees of a company?
It depends but generally NO. 95% of people won’t know the profit of the company.
●​ Company strategy for results communication
●​ Knowledge of a perimeter of numbers
●​ Confidential information → Past
●​ Confidential information → Present
●​ Confidenial information → Future
NUMBERS ARE CONFIDENTIAL: first rules of the planning and controlling department.
Companies might also decide to ifnormt he employees of the performances, highlight the best
performances but probably you will not see the actual rpfiota, you might see the part of the
profitability. The managerial reporting which differs sometimes, in these numbers its written
how the company is doing. Its not nice to share, once you share you dont know where these
details will go. Some companies deide to inform elpyes once or twice a year, others won’t.
You can know the perimeters of the company, concerning yor performance site. For instance
if you’re working in spain. The financial department knows all the numbers.
Numbers are sometimes hidden in companies, because if im a salesman, I will now the target
of the group. I won’t know other vcoutnries have to do, I just know my parameter. If im a
production sit emanager, I will know how much it will cost. The numbers and full
representation of the numbers is something not disclosed. Even in a small company numbers
arent disclosed.
FP&A and controlling – Classical TImeline
Q - Quarter, Third of a year
A year of planning a process : Q1; Q2; Q3; Q4.
Forecasting: 9 months, 6 months, 3 months. The company monitors actual results, rpoposs
corrections in acase of gaps. Controlling is also looking into the future, getting the best
estimation of the year like sales and costs. You do a plan and check if you are following.
The budget is at the end of the year, 6-7 months for the actual result. You have worked and
understood enough to do the next year budget plan. Strategic plan geenrally delivers the dirst
year of the budget, its not aht i did the strategic plan i wont do the budget. I will check the
consistency with my strategic plan and do corrections even before starting.
SMART GOALS GUIDE:
Specific: what needs to be accomplished, why and how we want to accomplish this goal
Measurable: how we willknow we are succeeding, how much change needs to occur,
attainable: do we have the resources to achieve the goal, is the goal a reasonable stretch. Is
the goal likely to bring success. ​
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Relevant: Is this worth my goal, would it be meaningful to the management and team
Time-bound: what is the deadline for reaching the goal and when will we be taking the
action.
KPI Dimensions: A real example at a glance: ECONOMICS
Variable and fixed costs: having the same amount every month. Fixed costs is something
that is not switched off. If you dont sell for 1 month you still have to pay salaries, rent,
insurance and etc. its something not related to the sales. It cannot be as big as the first margin,
if its big its a problem – it will be negative.
(It increases if the turnover increase, because its a fixed amount.)
The Financial Part: Not profitable if i do not cover my financial expenses. Because it can be
that i dont have so much cash, i have to take money from parties that will make me pay.
Company KPI: EBITDA (Cash from business)
Sales Team KPI: marignality of the sales, showing the kPIS linked ot the various deèartmens
which we saw. Net turnover and/or marginalisty of the sales
Operations: Warehouse capex industrial companies.
Incidents of Cost of Goods, Incidence or Transport costs vs. Turnover,
Back Office Teams: Incidence of own costs (structure+ other costs) vs turnover
TIMING Dimension: normally annual.measurable in Quarters, used also in average
The Balance sheet
Last row: the money that every month the company is able to produce, my business with my
costs, produces money or absorbs money.
KPI: net cash flow, for the sales. When companies sell they dont have th emony the day of
the invoice, they have to wait 60-90 days. Moving this timing, making this smaller means
more money in terms of goods.
Reporting from ERP to Business Intelligence
The dimensions you can select and some KPI’s and information. I can choose the period I
want, company I want, product I want and also if I want to see a specific division.
When making presentation the visuals are simple for showing data, etc.
AI in finance: Controlling department works a lot in excel. Gave data to AI and it produced
25 pages of powerpoint. These examples tell us for sure AI is and will be a big support in
data managing and data processing, saving time. You can use your time to explain the data or
in some cases they are already explained. This is coming and we’ll need to use in a proper
way.