Slide 1
Management Functions and
Skills
Chapter 12
12-1
©2007 Prentice Hall
Chapter 12: Management Functions and Skills
Slide 2
Chapter 12 Objectives
After studying this chapter, you will be able to:
• Define the four basic management functions
• Outline the strategic planning process
• Explain the purpose of a mission statement
• Discuss the benefits of SWOT analysis
• Explain the importance of setting long-term
goals and objectives
12-2
©2007 Prentice Hall
Chapter 12 Objectives
After studying this chapter, you will be able to:
Define the four basic management functions
Outline the strategic planning process
Explain the purpose of a mission statement
Discuss the benefits of SWOT analysis
Explain the importance of setting long-term goals and objectives
Slide 3
Chapter 12 Objectives, cont.
• Cite three common leadership styles and explain
why no one style is best
• Identify and explain four important types of
managerial skills
• Summarize the six steps involved in the
decision-making process
12-3
©2007 Prentice Hall
Chapter 12 Objectives, cont.
Cite three common leadership styles and explain why no one style is best
Identify and explain four important types of managerial skills
Summarize the six steps involved in the decision-making process
Slide 4
Managerial Functions
Planning
Organizing
Leading
Controlling
12-4
©2007 Prentice Hall
In this chapter we explore the four basic functions that management entails:
planning, organizing, leading, and controlling resources. And we highlight the
skills required of effective managers.
Some managers, especially those in smaller organizations, perform all four
managerial functions. Although these functions tend to occur in a somewhat
progressive order, sometimes they occur simultaneously, and often the process
is ongoing.
Slide 5
Managerial Roles
Interpersonal
Interpersonal
Informational
Informational
Decisional
Decisional
12-5
©2007 Prentice Hall
Decisional roles. From deciding how to respond to a customer complaint to
deciding whether to acquire another company or develop a new product line,
managers up and down the organizational ladder face an endless stream of
decisions.
Informational roles. Managers spend a fair amount of time gathering
information from sources both inside and outside the organization. They also
distribute information to employees, other managers, and other stakeholders.
Interpersonal roles. Management is largely a question of getting work
accomplished through the efforts of other people, so managers must play a
number of interpersonal roles, including providing leadership to employees,
building relationships, and acting as a liaison between groups and individuals
both inside and outside the company (such as suppliers, competitors,
government agencies, consumers, special-interest groups, and interrelated work
groups).
This slide includes a picture of a man wearing a suit and using his glasses to
point to a piece of paper while he talks with a woman in a business suit sitting at
her desk.
Slide 6
Planning
Develop
Develop Strategies
Strategies
For
For Success
Success
Set
Set Goals
Goals and
and
Objectives
Objectives
Develop
Develop Action
Action
Plans
Plans
12-6
©2007 Prentice Hall
Managers engage in planning when they develop strategies for success,
establish goals and objectives for the organization, and translate their strategies
and goals into action plans.
This slide includes a picture of a woman wearing a business suit standing in the
middle of a ladder and looking through a pair of binoculars.
Slide 7
Strategic Plans
Market
MarketStanding
Standing
Physical
PhysicalResources
Resources
Innovation
Innovation
Productivity
Productivity
Human
HumanResources
Resources
Social
SocialResponsibility
Responsibility
Financial
FinancialResources
Resources
Financial
FinancialPerformance
Performance
12-7
©2007 Prentice Hall
Strategic plans outline the firm’s long-range (two to five years) organizational
goals and set a course of action the firm will pursue to reach its goals. These
long-term goals encompass eight major areas of concern: market standing,
innovation, human resources, financial resources, physical resources,
productivity, social responsibility, and financial performance.
Slide 8
Strategic Planning Process
12-8
©2007 Prentice Hall
Managers set a firm’s long-term course of direction during a process called
strategic planning, which consists of six steps: developing a clear vision, creating
a mission statement, developing forecasts, analyzing the competition,
establishing goals and objectives, and developing action plans.
Slide 9
Develop a Clear Vision
12-9
©2007 Prentice Hall
Most organizations are formed in order to realize a vision, a realistic attainable
view of the future that grows out of and improves on the present. Developing a
clear vision is a critical task in the strategic planning process. But having a vision
alone is no guarantee of success; it must also be communicated to others,
executed, and modified as conditions change.
This slide includes an image of a man in a business suit with a briefcase. He is
wearing a hat and appears to be looking to the “future”. He is standing in a
cloud, and has a city skyline in his background.
Slide 10
Vision to Mission Statement
Objectives
Goals
Philosophies
Product
or Service
Primary
Market
Survival, Growth,
Profitability
Managerial
Philosophy
Level of
Quality
Social
Responsibility
12-10
©2007 Prentice Hall
To transform vision into reality, managers must define specific organizational
goals, objectives, and philosophies. A starting point is to write a company
mission statement, a brief document that defines why the organization exists,
what it seeks to accomplish, and the principles that the company will adhere to
as it tries to reach its goals.
Typical components of a mission statement include the company’s product or
service; primary market; fundamental concern for survival, growth, and
profitability; managerial philosophy; and commitment to quality and social
responsibility.
Slide 11
SWOT
Strengths
Weaknesses
Opportunities
Threats
12-11
©2007 Prentice Hall
Strengths are positive internal factors that contribute to a company’s success,
which can be anything from a team of expert employees to financial resources to
unique technologies. For instance, brand loyalty and a comprehensive global
infrastructure are among Coca-Cola’s strengths. Weaknesses are negative
internal factors that inhibit the company’s success, such as obsolete facilities,
inadequate financial resources to fund the company’s growth, or lack of
managerial depth and talent. Identifying a firm’s internal strengths and
weaknesses helps management understand its current abilities so it can set
proper goals.
Opportunities are positive external situations that represent the possibility of
generating new revenue. Shrewd managers and entrepreneurs recognize
opportunities before others do and then promptly act on their ideas (see Exhibit
12.4).
Threats are negative forces that could inhibit a firm’s ability to achieve its
objectives. Most threats are external and include new competitors, new
government regulations, economic recession, changes in interest rates,
disruptions in supply, technological advances that render products obsolete, theft
of intellectual property, product liability lawsuits, and even the weather.
Datamonitor, “Coca-Cola Company SWOT Analysis” [accessed 8 August 2007]
www.ebsco.com.
Slide 12
Forecasts
Qualitative
Forecasting
Intuitive
Judgments
Quantitative
Forecasting
Consumer
Research
Historical
Data
Statistical
Computations
12-12
©2007 Prentice Hall
To develop forecasts, managers must make a number of educated assumptions
about future trends and events and modify those assumptions once new
information becomes available.
Managerial forecasts fall under two broad categories: quantitative forecasts,
which are typically based on historical data or tests and which involve complex
statistical computations; and qualitative forecasts, which are based on intuitive
judgments or consumer research. Statistically analyzing the cycles of economic
growth and recession over several decades to predict when the economy will
take a downward turn is an example of quantitative forecasting. Making
predictions about sales of a new product on the basis of experience and
consumer responses to a survey is an example of qualitative forecasting. Neither
method is foolproof, but both are valuable tools, enabling managers to fill in the
unknown variables that inevitably crop up in the planning process.
Slide 13
Competitive Analysis
Differentiation
Differentiation
Cost
Cost Leadership
Leadership
Focus
Focus
12-13
©2007 Prentice Hall
Differentiation. A company using differentiation develops a level of service, a
product image, unique product features (including quality), or new technologies
that distinguish its product from competitors’ products.
Cost leadership. Businesses that pursue this strategy aim to become the lowcost leader in an industry by producing or selling products more efficiently and
economically than competitors. Cost leaders have a competitive advantage by
reaching buyers whose primary purchase criterion is price.
Focus. When using a focus strategy, companies concentrate on a specific
segment of the market, seeking to develop a better understanding of those
customers and to tailor products specifically to their needs.
This slide includes an image of a man in a suit who is bending over looking at a
large arrow through a magnifying glass.
Slide 14
Company Goals / Objectives
Goals
Objectives
Objectives
Broad,
-Range
Long
Broad,LongLong-Range
Target
Targetor
orAim
Aim
Specific,
-Range
Short
Specific,ShortShort-Range
Target
Targetor
orAim
Aim
Sets Standards
Guides Activity
Boosts Motivation
Clarifies Expectations
12-14
©2007 Prentice Hall
As mentioned earlier, establishing goals and objectives is the key task in the
planning process. Although these terms are often used interchangeably, a goal
is a broad, long-range accomplishment that the organization wishes to attain in
typically five or more years, whereas an objective is a specific, short-range
target designed to help reach that goal.
Setting appropriate goals has many benefits: It increases employee motivation,
establishes standards for measuring individual and group performance, guides
employee activity, and clarifies management’s expectations. By establishing
organizational goals, managers set the stage for the actions needed to achieve
those goals. If actions aren’t planned, the chances of reaching company goals
are slim.
Slide 15
Action Plans
Tactical
Tactical
Operational
Operational
12-15
©2007 Prentice Hall
Tactical plans lay out the actions and the allocation of resources necessary to
achieve specific, short-term objectives that support the company’s broader
strategic plan. Tactical plans typically focus on departmental goals and cover a
period of one to three years. Their limited scope permits them to be changed
more easily than strategic plans. Operational plans designate the actions and
resources required to achieve the objectives of tactical plans.
This slide includes a picture of a man wearing a shirt and tie. He is holding a
pencil in one hand and a pair of glasses in the other. He is reviewing some
business documents.
Slide 16
Crisis Planning
Operational
Breakdowns
Product
Failures
Environmental
Accidents
Contingency
Plans
Open
Communication
Corporate
Power Struggles
12-16
©2007 Prentice Hall
No matter how well a company plans for its future, any number of problems can
arise to threaten its existence. An ugly fight for control of a company, a product
failure, a breakdown in routine operations, or an environmental accident could
develop into a serious and crippling crisis. Managers can help a company survive
these setbacks through crisis management, a plan for handling such unusual
and serious problems.
The goal of crisis management is to keep the company functioning smoothly both
during and after a crisis. Crisis management requires comprehensive
contingency plans in addition to speedy, open communication with all who are
affected by the crisis.
Slide 17
Organizing
Employee Activities
Facilities and Equipment
Decision Making
Supervision
Resource Distribution
12-17
©2007 Prentice Hall
Organizing, the process of arranging resources to carry out the organization’s
plans, is the second major function of managers. During the organizing stage,
managers think through all the activities that employees carry out (from
programming the organization’s computers to mailing its letters), as well as all
the facilities and equipment employees need in order to complete those activities.
They also give people the ability to work toward organizational goals by
determining who will have the authority to make decisions, to perform or
supervise activities, and to distribute resources.
This slide includes an image of four business people sitting around a table
looking at papers and discussion topics of great importance.
Slide 18
The Management Pyramid
Top
Managers
Middle Managers
FirstFirst-line Managers
12-18
©2007 Prentice Hall
The organizing function will be discussed in detail in Chapter 13. In this chapter,
however, we will discuss the three levels of a corporate hierarchy--top, middle, bottom-commonly known as the management pyramid.
In general, top managers are the upper-level managers who have the most power and
who take overall responsibility for the organization. An example is the chief executive
officer (CEO). Top managers establish the structure for the organization as a whole, and
they select the people who fill the upper-level positions. Top managers also make longrange plans, establish major policies, and represent the company to the outside world at
official functions and fund-raisers.
Middle managers have similar responsibilities, but usually for just one division or unit.
They develop plans for implementing the broad goals set by top managers, and they
coordinate the work of first-line managers. In traditional organizations, managers at the
middle level are plant managers, division managers, branch managers, and other similar
positions. But in more innovative management structures, middle managers often
function as team leaders who are expected to supervise and lead small groups of
employees in a variety of job functions. Similar to consultants, they must understand
every department’s function, not just their own area of expertise. Furthermore, they are
granted decision-making authority previously reserved for only high-ranking executives.
At the bottom of the management pyramid are first-line managers (or supervisory
managers). They oversee the work of operating employees, and they put into action the
plans developed at higher levels. Positions at this level include supervisor, department
head, and office manager.
Slide 19
Leading
Influencing
Influencing
Motivating
Motivating
Obtaining
Obtaining
Corporate
Corporate Goals
Goals
12-19
©2007 Prentice Hall
Leading—the process of influencing and motivating people to work effectively
and willingly toward company goals—is the third basic function of management.
Leading becomes even more challenging in today’s business environment,
where individuals who have different backgrounds and unique interests,
ambitions, and personal goals are melded into a productive work team.
This slide includes an image of a man wearing a suit with his arm around another
man and the first man is pointing and appears to be leading the man toward
success.
Slide 20
Are You a Leader?
•
•
•
•
Can you listen?
Can you communicate?
Can you lead by example?
Are you dedicated to the organization’s
success above your own?
• Do you know what makes other people
tick?
• Do you manage yourself well?
12-20
©2007 Prentice Hall
Can you listen? Can you truly listen to what people mean to say, not just what
they actually say or what you want to hear?
Can you communicate? If you find yourself frequently being misunderstood, for
whatever reason, consider this a warning that you need to improve your
communication skills.
Can you lead by example? Are you a living, breathing example of what you
want the organization to be?
Are you dedicated to the organization’s success above your own? Leaders
who put personal power or wealth ahead of the organization’s success may shine
brightly, but they usually shine briefly.
Do you know what makes other people tick? Knowing what motivates the
diverse people around you is crucial to leading them all in the same direction.
Do you manage yourself well? If you can’t get your own work done, whether
it’s meeting deadlines or developing the skills that you lack, your shortcomings
will be amplified throughout the organization.
Slide 21
Are You a Leader?
• Are you willing to accept responsibility?
• Can you face reality?
• Can you solve problems but stay focused
on opportunities?
• Are you willing to trust your employees?
12-21
©2007 Prentice Hall
Can you face reality? Whether they’re blinded by their own egos or just simple
optimism, leaders who refuse to see the world the way it really exists usually set
their companies up for failure.
Can you solve problems but stay focused on opportunities? Leaders who
get mired in problems miss opportunities; those who look only at opportunities
can get bitten by problems that they should’ve solved.
Are you willing to trust your employees? If you can’t delegate responsibility,
you’ll swamp yourself with too much work and hinder the growth of your
employees.
Slide 22
Self-Awareness
Self-Regulation
Leadership
Skills
Motivation
Empathy
Emotional
Quotient (EQ)
Social Skills
12-22
©2007 Prentice Hall
Research has shown that leaders who have specific traits, such as decisiveness
and self-confidence, are likely to be more effective. Managers with strong
interpersonal skills and high emotional quotients (EQs) tend to be more effective
leaders. The characteristics of a high EQ include:
Self-awareness. Self-aware managers have the ability to recognize their own
feelings and how they, their job performance, and other people are affected by
those feelings. Moreover, managers who are highly self-aware know where they
are headed and why.
Self-regulation. Self-regulated managers have the ability to control or reduce
disruptive impulses and moods. They can suspend judgment and think before
acting. Moreover, they know how to utilize the appropriate emotion at the right
time and in the right amount.
Motivation. Motivated managers are driven to achieve beyond expectations—
their own and everyone else’s.
Empathy. Empathetic managers thoughtfully consider employees’ feelings, along
with other factors, in the process of making intelligent decisions.
Social skill. Socially skilled managers tend to have a wide circle of
acquaintances, and they have a knack for finding common ground with people of
all kinds. They assume that nothing important gets done by one person alone
and have a network in place when the time for action comes.
This slide includes an image of two businessmen shaking hands. Both men are
wearing suits and are carrying briefcases.
Slide 23
Leadership Styles
Autocratic
Democratic
Laissez-faire
Contingency
12-23
©2007 Prentice Hall
Autocratic leaders make decisions without consulting others. “My way or the
highway” summarizes this style, which tends to go with traditional, hierarchical
organizational structures. In contrast, democratic leaders delegate authority and
involve employees in decision making. Even though their approach can lead to
slower decisions, soliciting input from people familiar with particular situations or
issues may result in better decisions. As more companies adopt the principles of
teamwork, democratic leadership continues to gain popularity.
Laissez-faire leaders take the role of consultants, encouraging employees’
ideas and offering insights or opinions when asked. The laissez-faire style may
fail if workers pursue goals that do not match the organization’s.
More and more businesses are adopting democratic and laissez-faire leadership
as they reduce the number of management layers in their corporate hierarchies
and increase the use of teamwork. However, experienced managers know that
no one leadership style works every time. In fact, new research shows that
leaders with the best results do not rely on only one leadership style; instead they
adapt their approach to match the requirements of the particular situation.
Adapting leadership style to current business circumstances is called
contingency leadership.
Slide 24
Types of Leaders
Transactional
Transformational
Meeting Established Goals
Inspiring Employees
Clarifying Organizational Roles
Finding Creative Solutions
Securing Correct Resources
Promoting Success
12-24
©2007 Prentice Hall
Aside from these styles, leaders also differ in the degree to which they try (or
need) to reshape their organizations. Transactional leaders tend to focus on
meeting established goals, making sure employees understand their roles in the
organization, making sure the correct resources are in place, and so on. In
contrast, some leaders can "take it up a notch," inspiring their employees to
perform above and beyond the everyday, expected responsibilities of their jobs.
These transformational leaders can reshape the destinies of their organizations
by inspiring employees to see the world in new ways, to find creative solutions to
business challenges, to rise above self-interest and create new levels of success
for the company as a whole.
Slide 25
Leadership Functions
Coaching
Mentoring
Meeting with employees
Guiding employees
Discussing problems
Explaining office politics
Offering suggestions
Serving as role models
Encouraging solutions
Providing valuable advice
12-25
©2007 Prentice Hall
Coaching involves taking the time to meet with employees, discussing any
problems that may hinder their ability to work effectively, and offering
suggestions and encouragement to help them find their own solutions to workrelated challenges. This process requires keen powers of observation, sensible
judgment, and both a willingness and an ability to take appropriate action.
Acting as a mentor is similar to coaching, but mentoring also emphasizes helping
employees understand how the organization works. A mentor is usually an
experienced manager or employee who can help guide other employees through
the corporate maze. Mentors can explain office politics, serve as role models for
appropriate business behavior, and provide valuable advice about how to
succeed within the organization.
Slide 26
Managing Change
Present
Situation
Identify What
Needs to Change
Process
of Change
Identify Forces
For and Against
Change
Select the Best
Approach
New
Situation
Reinforce and
Monitor Behavior
12-26
©2007 Prentice Hall
Another important function of leaders is managing the process of change. The
stimulus for change can come from any direction, both inside and outside the
organization. Change presents a major leadership challenge for one simple
reason: most people don't like it. To improve the chances of success when the
organization needs to change, managers can follow these steps:
Identify what needs to change. Changes can involve the structure of the
organization, technologies and systems, or people's attitudes, beliefs, skills, or
behaviors.
Identify the forces acting for and against the change. By understanding these
forces, managers can work to amplify the forces that will facilitate the change and
remove or diminish the negative forces.
Choose the approach, or combination of approaches, best suited to the situation.
Managers can institute change through a variety of techniques, including
communication, education, participation in the decision-making, negotiation with
groups opposed to the change, visible support from top managers or other
opinion leaders, or coercive use of authority (usually recommended only for crisis
situations). Helping people understand the need for change is often called
unfreezing existing behaviors.
Reinforce changed behavior and monitor continued progress. Once the change
has been made, managers need to reinforce new behaviors and make sure old
behaviors don't creep back in. This effort is commonly called refreezing new
behaviors.
This slide includes an image of three puzzles. The outside puzzles are put
together in order. The middle puzzle is jumbled.
Slide 27
Organizational Culture
Attitudes
Attitudes
About
AboutWork
Work
Employee
Employee
Interactions
Interactions
Appropriate
Appropriate
Attire
Attire
Communication
Communication
Patterns
Patterns
Business
Business
Conduct
Conduct
12-27
©2007 Prentice Hall
Strong leadership is a key element in establishing a productive organizational
culture—the set of underlying values, norms, and practices shared by members
of an organization. When you visit an organization, observe how the employees
work, dress, communicate, address each other, and conduct business. Each
organization has a special way of doing things. In corporations, this force is often
referred to as corporate culture.
A company’s culture influences the way people treat and react to each other. It
shapes the way employees feel about the company and the work they do; the
way they interpret and perceive the actions taken by others; the expectations
they have regarding changes in their work or in the business; and their ability to
lead, be productive, and choose the best course of action.
Positive cultures create an environment that encourages employees to make
ethical decisions for the good of the company and its customers.
Corporate cultures are established and maintained through the countless actions
and decisions of leaders, year after year.
Slide 28
The Controlling Function
Monitoring Progress
Resetting The Course
Correcting Deviations
12-28
©2007 Prentice Hall
Controlling is the fourth basic managerial function. In management, controlling
means monitoring a firm’s progress toward meeting its organizational goals and
objectives, resetting the course if goals or objectives change in response to
shifting conditions, and correcting deviations if goals or objectives are not being
attained.
This slide includes an image of three business people staring at a computer. One
person is sitting at the computer while two other are looking over his shoulder.
Slide 29
The Control Cycle
Set
Set Strategic
Strategic
Goals
Goals
1.
1. Set
Set
Standards
Standards
2.
2. Measure
Measure
Performance
Performance
Reevaluate
Reevaluate
Standards
Standards
Correct
Correct
Performance
Performance
4.
4. Inadequate
Inadequate
Take
Take Action
Action
3.
3. Compare
Compare
To
To Standard
Standard
4.
4. Adequate
Adequate
No
No Action
Action
12-29
©2007 Prentice Hall
Managers strive to maintain a high level of quality--a measure of how closely
goods or services conform to set standards and customer expectations. Many
firms control for quality through a four-step cycle that involves all levels of
management and all employees.
In the first step, top managers set standards, or criteria for measuring the
performance of the organization as a whole. At the same time, middle and firstline managers set departmental quality standards so they can meet or exceed
company standards.
In the second step of the control cycle, managers assess performance, using
quantitative (specific, numerical) and qualitative (subjective) performance
measures.
In the third step, managers compare performance with the established standards
and search for the cause of any discrepancies.
If the performance falls short of standards, the fourth step is to take corrective
action, which may be done by either adjusting performance or reevaluating the
standards. If performance meets or exceeds standards, no corrective action is
taken.
Slide 30
TQM
Employee
Involvement
Customer
Focus
Benchmarking
Continuous
Improvement
12-30
©2007 Prentice Hall
Total quality management (TQM) is both a management philosophy and a
strategic management process that focuses on delivering the optimum level of
quality to customers by building quality into every organizational activity. The four
key elements are employee involvement, customer focus, benchmarking, and
continuous improvement.
Employee involvement. Total quality management involves every employee in
quality assurance. Workers are trained in quality methods and are empowered to
stop a work process if they feel that products or services are not meeting quality
standards. Managers also encourage employees to speak up when they think of
better ways of doing things. This approach exemplifies a participative
management style.
Customer focus. Focusing on the customer simply means finding out what
customers really want and then providing it. This approach requires casting aside
assumptions about customers and relying instead on accurate research.
Benchmarking. This element of TQM involves comparing your company’s
processes and products against the standards of the world’s best companies and
then working to match or exceed those standards.
Continuous improvement. This key feature of TQM requires an ongoing effort to
reduce defects, cut costs, slash production and delivery times, and offer
customers innovative products. Improvements are often small, incremental
changes that add up to greater competitiveness over the long run.
Slide 31
Management
Skills
Interpersonal
Technical
Administrative
Conceptual
DecisionDecision-Making
The Five Basics
12-31
©2007 Prentice Hall
Managers rely on a number of skills to perform their functions and maintain a
high level of quality in their organizations. These skills can be classified into five
basic categories: interpersonal, technical, administrative, conceptual, and
decision making.
The various skills required to communicate with other people, work effectively
with them, motivate them, and lead them are interpersonal skills. Because
managers mainly get things done through people at all levels of the organization,
they use good interpersonal skills in countless situations.
A person who knows how to operate a machine, prepare a financial statement,
program a computer, or pass a football has technical skills; that is, the
individual has the knowledge and ability to perform the mechanics of a particular
job.
Managers at all levels use administrative skills, which are the technical skills
necessary to manage an organization. Administrative skills include the abilities to
make schedules, gather information, analyze data, plan, and organize.
Managers need conceptual skills to see the organization as a whole, in the
context of its environment, and to understand how the various parts interrelate.
Decision-making skills involve the ability to define problems and select the best
course of action.
This slide includes an image of a businesswoman wearing a business suit. She is
smiling and holding a very large pencil to a tablet.