Foundations of Management Thought
“The Art of Getting Things Done Through People”
Management: a process designed to achieve an
organization’s objectives by using its
resources effectively and efficiently in a
changing environment
Foundations of Business Thought
The Management Process
Resources
• Human
• Financial
• Information
• Products
Functions
Results
• Planning
• Organizing
Meeting Goals
• Directing
And Objectives
• Controlling
• Geographical
Foundations of Business Thought
Functions of Management
• Planning - process of determining an organization’s
objectives and deciding how to accomplish them.
• Organizing - structuring of resources and activities to
accomplish objectives in an effective and efficient manner.
• Directing - motivating and leading employees to achieve
organizational objectives.
• Controlling - process of evaluating and correcting
activities to keep organization on course (toward
accomplishing objectives).
• Staffing - hiring of people to carry out the work of the
organization.
Foundations of Business Thought
The Executive Functions
I. The Maintenance of Organization Communication
A. The Scheme of Organization (Organizing)
B. Personnel (Controlling)
C. Informal Executive Organizations
II. The Securing of Essential Services from Individuals
A. Bringing of Persons into Cooperative Relationship
with the Organization
B. The Eliciting of Services After Such Persons Have Been
Brought Into That Relationship
III. The Formulation of Purpose and Objectives
A. Formulate and Define Purposes, Objectives, Ends of the
Organization (Planning)
B. The Delegation of Objective Authority (Directing)
Chester Barnard’s, The Functions of the Executive (1920 )
Foundations of Business Thought
“An industry, when all is said, is, in its essence, nothing
more mysterious than a body of men associated, in various
degrees of competition and co-operation, to win their living
by providing the community with some service which it
requires. Organize it as you will, let it be a group of
craftsmen laboring with hammer and chisel, or peasants
plowing their own fields, or armies of mechanics of a
hundred different trades constructing ships which are
miracles of complexity with machines which are the
climax of centuries of invention, its function is service, its
method is association. Because its function is service, an
industry as a whole has rights and duties towards the
community, the abrogation of which involves privilege.
Because its method is association, the different parties
within it have rights and duties towards each other; and the
neglect or perversion of these involves oppression.”
R.H. Tawney, The Acquisitive Society (
Foundations of Business Thought
)
Leadership
The ability to inspire others to exceptional performance.
The ability to influence others to direct their best
efforts toward organizational goals.
Managers
vs
Leaders
Do things right
Do the right things
Command & Control
Inspire & empower
Seek stability and
predictability
Seek flexibility and
change
Focus internally
Focus externally
Foundations of Business Thought
Effective Leadership
Leaders should:
1. Have a vision
2. Establish company values
3. Emphasize company ethics
4. Embrace change
Foundations of Business Thought
The Aging of America
0.35
0.3
By 2020, almost one third of the U.S.
population is expected to be at least age 55.
0.25
85+
0.2
75-84
65-74
0.15
55-64
0.1
0.05
0
1980
1990
2000
2010
Source: Census Bureau
Foundations of Business Thought
2020
Dual-Income Households
70
By the year 2000, over 66%
of married couples will be in
dual-income households.
Percent of households
60
50
40
30
20
10
1960
1970
1980
Source: Department of Labor
Foundations of Business Thought
1992
2000
Labor Force Participation
100
% age in Labor Force
80
60
40
Men
Women
20
0
1960
1970
1980
Source: Census Bureau
Foundations of Business Thought
1990
Utah Working Women with Children
100
% in Labor Force
1970
1980
80
1990
60
40
20
0
Children under 6
Children 6 - 17
Source: Census Bureau
Foundations of Business Thought
Gaps between Men & Women in Earnings (1990)
Women’s
Earnings
Percent of Men’s
Earnings
Sales
$16,986
57%
Management
$25,861
64%
Transportation
$16,003
65%
Assemblers & Inspectors
$14,655
66%
Service Workers
$12,136
66%
All Occupations
$19,816
71%
Gap Areas
Source: Census Bureau 1990
Foundations of Business Thought
Poverty Status of Utahns by Sex & Age
% Below Poverty
20
15
10
5
0
<5
5
6 - 11
12 - 17
18 - 64
Men
Women
Source: Prepared by Utah Issues from the 1990 Census
Foundations of Business Thought
65 - 74
75 +
Poverty Status - Utah and United States
25
% Below Poverty
Utah
U.S.
20
15
10
5
0
1959
1969
1975
1979
Source: 1990 Census
Foundations of Business Thought
1985
1989
Corporations
Advantages
Disadvantages
Limited liability
Tax burden (double taxation)
Simple transfer of
ownership
Cost of formation
Ease of raising capital
Government restrictions
(regulation)
Professional
management
Trouble of formation
Perpetual life
Foundations of Business Thought
Partnerships
Advantages
Disadvantages
Ease of formation
Unlimited liability
Expanded financial
resources
Interpersonal conflicts
Complementary
business skills
Sharing profits
Lower taxes
Complex termination
Longer business life
Foundations of Business Thought
Sole Proprietorships
Advantages
Ease of formation
Retention of all
profits
Disadvantages
Unlimited liability
Difficulty borrowing money
Direct control
Limited management expertise
Ease of dissolution
Long hours
No special taxes
Non-continuous business life
Being your own
boss
Foundations of Business Thought
New Incorporations
Incorporations
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
1950
1960
1970
1980
Source: Dunn & Bradstreet Corp.
Foundations of Business Thought
1990
Organizing a Business
• What is an organization?
A group of people working together to accomplish a
common goal.
• How do they work together?
Structure is the arrangement or relationship of positions
within an organization.
Foundations of Business Thought
Forms of Organizational Structure
Line - direct line of authority; top to bottom
Functional - authority delegated by function
Line & Staff - like line but with specialized staff
managers to assist line managers
Multidivisional - delegation of authority by
divisions (groups of departments)
Matrix - teams from different departments
creating intersecting lines of authority
Foundations of Business Thought
Multidivisional Organizational Structures
Organized by:
1. Function
2. Product
3. Geographical / territorial
4. Customer groups / types
5. Brand
Foundations of Business Thought
Multidivisional Structure: The Walt Disney Company
CEO
Michael Eisner
Walt Disney
Attractions
Walt Disney
World
Magic
Kingdom
Magic
Kingdom
Epcot
Center
Walt Disney
Studios
Motion
Pictures
TV
Tokyo
Disneyland
EuroDisney
Disney
Stores
Licensing
Disney
MGM
Consumer
Products
Animation
Disney
Channel
Publishing
Disney
Music
Software/
Education
Catalog
Marketing
Source: The Walt Disney Annual Report
Foundations of Business Thought
Managerial Spans of Control
Narrow span of control
President
Vice President
Operating
Manager
Operating
Manager
Wide span of control
Vice President
Vice President
Operating
Manager
Operating
Manager
Operating
Manager
Operating
Manager
President
Vice President
Foundations of Business Thought
Vice President
How Managers Spend Their Time
100%
90%
80%
70%
60%
50%
Staffing
40%
Organizing
30%
Directing
20%
Controlling
Planning
10%
0%
Executive-level
Mid-level
First-line level
Foundations of Business Thought
Key Management Skills
Problem Solving & Decision Making
• Identify problems and potential solutions
• Evaluate alternatives
• Select optimal solutions
• Delegate
Communication Skills
• Listen
• Clear and concise writing
• Good computer skills
• Effective speaker
Interpersonal Skills
• Ethical behavior
• Resolves conflict
• Good leader
• Shows empathy
Goal-setting Skills
• Sets priorities & meaningful objectives
• Evaluates success
• Establishes reward systems
Foundations of Business Thought
Traditional Managerial Hierarchy
Executive-level:
President, Partner, CEO
Mid-level:
Manager, Project Director,
Regional Manager
First-line:
Supervisor, Product manager
Foundations of Business Thought
Managerial Role Profile
Sales Manager Midwest Region,
Sportswear International, Inc.
Authority
•Set objectives and sales goals
•Establish budgets
•Hire/fire employees
•Supervise 8 sales representatives
Authority
•Set objectives and sales goals
•Establish budgets
•Hire/fire employees
•Supervise 8 sales representatives
Accountability
• Must meet responsibilities or
be replaced
Foundations of Business Thought
Delegation of Authority
Centralization of Authority
Decentralization
Foundations of Business Thought
Theory X
•People want direction
•People dislike work
•People will avoid work
•Manager motivates
employees with punishment
Foundations of Business Thought
Theory Y
•People want responsibility
•People enjoy problem
solving
•People like work
•People will work depending
on the rewards offered them
•Manager motivates
employees with rewards
Foundations of Business Thought
Theory Z
•Team-oriented
•People can be trusted
•People take individual
responsibility
•Slow evaluation and
promotion
•Fewer levels of management
Foundations of Business Thought
Jack Welch’s Six Rules for Managers
•
•
•
•
•
•
Face reality as it is, not as it was or as you wish it to be.
Be candid with everyone.
Don’t manage, lead.
Change before you have to.
If you don’t have a competitive advantage, don’t complete.
Control your own destiny, or someone else will.
Source: Joe McNally, “The Mind of Jack Welch,” Fortune, March 27, 1989, pp. 39-50.
Foundations of Business Thought
Motivating the Workforce
Motivation: an inner drive that directs a
person’s behavior toward goals
Foundations of Business Thought
PEOPLE
Foundations of Business Thought
The Motivation Process
Need
Goal Directed Behavior
Need Satisfaction
Foundations of Business Thought
Rewards
Extrinsic Rewards
(outside the person)
Intrinsic Rewards
(within the person)
•Pride
•Feeling good about a job
well done
•Personal achievement
•Promotion
•Gifts
•Salary increase
•Praise
•Status
Foundations of Business Thought
Maslow’s Hierarchy of Needs
Self-actualization
Needs
Self development & realization
Esteem Needs
Self esteem, recognition, status
Social Needs
Sense of belonging, love
Safety Needs
Security, protection
Physiological Needs
Hunger, thirst
Foundations of Business Thought
Maslow’s Hierarchy of Needs & Job Satisfiers
Needs
Self-actualization
Job Satisfiers
Creativity, work you prefer
Esteem
Status, recognition, decision making
Social
Teamwork, interaction
Safety
Insurance, pensions, seniority
Physiological
Compensation, work conditions
Foundations of Business Thought
Federick Hertzberg
Job Factors
Worker
dissatisfaction
with the job
Motivators
Hygienes
Neutral about
the job
Satisfaction
with the job
Little or no
satisfaction with
motivators
Satisfaction
“I’m not being
challenged by my
job.”
“My job is really
challenging me.”
Dissatisfaction
with the hygiene
factors
Little or no
dissatisfaction
“I am dissatisfied
with my working
conditions.”
“My job is OK, I
guess.”
Foundations of Business Thought
Maslow / Hertzberg Comparison
Factors
Needs Hierarchy
Work Motivation Model
Motivational
Self-realization
Achievement
Growth
Responsibility
Esteem
Advancement
Recognition
Social
Relationships
Status
Safety
Job security
Working conditions
Hygiene
Physiological
Foundations of Business Thought
Salary
Successful Motivation
Takes the whole pie!
Accept only
good
performance
Personalized
positive
reinforcement
Outline
objectives
Interpersonal
relationships
Empathy
Foundations of Business Thought
What Motivates You?
Question
Agree
Agree
5
4
3
2
1
5
4
3
2
1
3. Being happy is more
important to me than
making money.
5
4
3
2
1
4. I need a lot of time by
myself.
5
4
3
2
1
5. My first priority is
high income and job
security.
5
4
3
2
1
6. I don't believe people
should waste their
time pursuing
dreams.
5
4
3
2
1
7. I feel disgusted if
someone else gets
credit for my
accomplishments.
5
4
3
2
1
8. I'm more concerned
with whether or not I
enjoy my work than
what I get paid for
doing it.
5
4
3
2
1
1. I value friendship
more than almost
anything else.
2. Just knowing I've
done something well
gives me satisfaction;
I don't need praise
from others.
Neither Disagree Disagree
Foundations of Business Thought