Chapter 07
Management
and
Leadership
McGraw-Hill/Irwin
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter Seven
LEARNING GOALS
1. Describe the changes occurring today in the
management function.
2. Describe the four functions of management.
3. Relate the planning process and decision making
to the accomplishment of company goals.
7-2
Chapter Seven
LEARNING GOALS
4. Describe the organizing function of management.
5. Explain the differences between leaders and
managers, and describe the various leadership
styles.
6. Summarize the five steps of the control function of
management.
7-3
Profile
JOHN MACKEY
Whole Foods Market
• Worked at a vegetarian co-op
after attending the University of
Texas.
• Opened SaferWay Natural
Foods with his girlfriend before
merging with a competitor to
create Whole Foods.
• Now there are over 300 stores
in the U.S. and U.K.
7-4
Chapter Seven
NAME that COMPANY
Like many companies today, this company uses
social media to communicate with customers.
In one case, a customer complained on Twitter
when the company sent a Blackberry to replace
an iPhone that failed. The company responded
quickly with a replacement iPhone. The
customer then tweeted about the company’s
great customer service.
Name that company!
7-5
Four Functions
of Management
WHAT IS MANAGEMENT?
LG1
• Management -- The process used to accomplish
organizational goals through planning, organizing,
leading and controlling people and other
organizational resources.
7-6
Managers’ Roles
Are Evolving
TODAY’S MANAGERS
LG1
• Younger and more
progressive.
- Growing numbers of women.
- Fewer from elite universities.
• Emphasis is on teams and
team building.
• Managers need to be skilled
communicators and team
players.
7-7
Managers’ Roles
Are Evolving
RESPECT and HOW to GET IT
LG1
30%
25%
20%
15%
10%
5%
0%
Strong
Sound
Management Business
Strategy
Ethical
Practices
Competitive
Product
Edge
Innovation
7-8
Managers’ Roles
Are Evolving
LG1
EDUCATION MATTERS
Examples of Alma Maters of CEOs
Rank
US School
# of
CEOs
Who?
1
Harvard College, MA
31
Bill Gates – Microsoft (Did Not Graduate)
2
Cornell University, NY
7
Carl Bass - Autodesk; Mark T. Bertolini - Aetna
3
University of Pennsylvania
11
Louis D'Ambrosio - Sears Holdings Corp.
4
Massachusetts Institute of
Technology
11
Drew Houston - Dropbox
5
Northwestern University, IL
11
Lisa Caputo - Citigroup
6
Stanford University, CA
11
Steve Ballmer - Microsoft
7
Yale University, CT
10
William Howard Taft – US President; James
McNerney - Boeing
8
Columbia University, NY
8
Theodore Roosevelt - US President; Ursula
Burns - Xerox
9
Princeton University, NJ
8
Andrea Jung - Avon Products
10
Southern Methodist University, TX
8
C. David Crush – Virgin America
7-9
Four Functions
of Management
LG2
FOUR FUNCTIONS of
MANAGEMENT
1. Planning
2. Organizing
3. Leading
4. Controlling
7-10
Progress
Assessment
PROGRESS ASSESSMENT
• What are some of the changes happening in
management today?
• What’s the definition of management used in this
chapter?
• What are the four functions of management?
7-11
Planning &
Decision Making
SHARING the VISION
LG3
Vision
More than a goal, it’s a
broad explanation of why
the organization exists and
where it’s trying to go.
7-12
Planning &
Decision Making
DEFINING THE MISSION
LG3
Mission Statement
Outlines the organization’s fundamental purposes.
It includes:
-
The organization’s self–concept
Its philosophy
Long–term survival needs
Customer needs
Social responsibility
Nature of the product or service
7-13
Planning &
Decision Making
LG3
SETTING
GOALS and OBJECTIVES
Goals
The broad, long-term
accomplishments an
organization wishes to attain.
Objectives
Specific, short-term
statements detailing how to
achieve the organization’s
goals.
7-14
Planning &
Decision Making
LG3
PLANNING ANSWERS
FUNDAMENTAL QUESTIONS
What is the situation now?
SWOT Analysis
Analyzes the organization’s
Strengths, Weaknesses, Opportunities & Threats.
How can we get to our goal from here?
• Strategic planning
• Tactical planning
• Operational planning
• Contingency planning
7-15
Planning &
Decision Making
SWOT MATRIX
LG3
Potential Internal STRENGTHS
• Core competencies in key areas
• An acknowledged market leader
• Well-conceived functional area
strategies
• Proven management
• Cost advantages
• Better advertising campaigns
Potential Internal WEAKNESS
• No clear strategic direction
• Obsolete facilities
• Subpar profitability
• Lack of managerial depth and talent
• Weak market image
• Too narrow a product line
Potential External OPPORTUNITIES
• Ability to serve additional customer
groups
• Expand product lines
• Ability to transfer skills/technology
to new products
• Failing trade barriers in attractive
foreign markets
• Complacency among rival firms
• Ability to grow due to increases in
market demand
Potential External THREATS
• Entry of lower-cost foreign
competitors
• Rising sales of substitute products
• Slower market growth
• Costly regulatory requirements
• Vulnerability to recession and
business cycles
• Changing buyer needs and tastes
7-16
Planning &
Decision Making
PLANNING FUNCTIONS
FORMS OF PLANNING
LG3
STRTEGIC PLANNING
The setting of broad, longrange goals by top managers
CONTINGENCY PLANNING
Backup plans in case
primary plans fail
TACTICAL PLANNING
The identification of specific,
short-range objectives by
lower-level managers
OPERATIONAL PLANNING
The setting of work
standards and schedules
7-17
Planning &
Decision Making
LG3
STRATEGIC and TACTICAL
PLANNING
Strategic Planning
Done by top management and determines the
major goals of the organization and the policies,
procedures, strategies and resources it will need
to achieve them.
Tactical Planning
The process of developing detailed, short-term
statements about what is to be done, who is to do
it and how.
7-18
Planning &
Decision Making
LG3
OPERATIONAL and CONTINGENCY
PLANNING
Operational Planning
The process of setting work standards and schedules
necessary to implement the company’s tactical
objectives.
Contingency Planning
The process of preparing
alternative courses of action the
firm can use if its primary plans
don’t work out.
7-19
JAPANESE CRISIS, TERRORISM,
and AMERICAN BUSINESS
(Reaching Beyond Our Borders)
• Disasters point out the need for contingency and
disaster planning.
• Over 30 U.S. corporations get at least 15% of
sales from Japan. All were affected by the
earthquake.
• Man-made disasters, such as war and terrorism,
also disrupt the supply chain.
7-20
Decision Making:
Finding the Best
Alternative
DECISION MAKING
LG3
Choosing among two or more alternatives.
7-21
Decision Making:
Finding the Best
Alternative
WHAT MAKES a GREAT CEO
LG3
Decision Making Skills of Top CEOs
• Keep global business issues in mind and be a
citizen of the world.
• Identify and manage risks before they grow.
• Change strategies and models with the times.
• Skillfully manage relationships with governments
as government involvement rises.
Source: Fortune, June 13, 2011.
7-22
Decision Making:
Finding the Best
Alternative
LG3
RATIONAL DECISION-MAKING
MODEL
1. Define the situation.
2. Describe and collect needed information.
3. Develop alternatives.
4. Develop agreement among those involved.
5. Decide which alternative is best.
6. Do what is indicated.
7. Determine whether the decision was a good
one and follow up.
7-23
Decision Making:
Finding the Best
Alternative
PROBLEM SOLVING
LG3
The process of solving the everyday problems
that occur; less formal than decision making and
needs quicker action.
Problem-solving techniques include:
Brainstorming and PMI
Listing all the Pluses for a solution in one column, all the
Minuses in another and the Implications in a third.
7-24
Progress
Assessment
PROGRESS ASSESSMENT
• What’s the difference between goals and
objectives?
• What does a company analyze when it does a
SWOT analysis?
• What are the differences between strategic,
tactical and operational planning?
• What are the seven Ds in decision making?
7-25
Organizing:
Creating a
Unified System
ORGANIZATIONAL CHARTS
LG4
Organization Chart
A visual device that shows
relationships among people,
divides the organization’s
work, and it shows who
reports to whom.
7-26
Organizing:
Creating a
Unified System
LEVELS of MANAGEMENT
LG4
TOP
MANAGE
MENT
President
Vice President
MIDDLE
MANAGEMENT
Plant Managers
Division Heads
Branch Managers
SUPERVISORY (FIRST-LINE)
MANAGEMENT
Supervisors, Foremen
Department Heads
Section Leaders
NON-SUPERVISORY
Employees
7-27
Organizing:
Creating a
Unified System
MANAGEMENT LEVELS
LG4
Top Management -- The highest level, consists of the
president, vice-president, and other key company
executives who develop strategic plans.
Middle Management -- Includes general managers,
division managers, and branch and plant managers,
who are responsible for tactical planning and
controlling.
Supervisory Management -- Those directly
responsible for supervising workers and evaluating daily
performance.
7-28
Organizing:
Creating a
Unified System
TOP MANAGEMENT
LG4
• Chief Executive Officer (CEO)
- Introduces change into an organization.
• Chief Operating Officer (COO)
- Implements CEO’s changes.
• Chief Financial Officer (CFO)
- Obtains funds, plans budgets, collects funds, etc.
• Chief Information Officer (CIO)
- Gets the right information to the right people so
decisions can be made.
• Chief Technology Officer (CTO)
- Gets the right science and technology information
to the right people so decisions can be made.
7-29
Organizing:
Creating a
Unified System
LG4
AMERICA’S MOST POWERFUL
FEMALE MANAGERS
Rank
Name
Organization
1
Ginni Rometty
IBM
2
Indra Nooyi
Pepsi Co.
3
Ellen Kullman
DuPont
4
Marillyn Hewson
Lockheed Martin
5
Sheryl Sandberg
Facebook
6
Rene Rosenfeld
Mondelez
7
Patricia Woertz
Archer Daniels Midland
8
Marissa Mayer
Yahoo!
9
Meg Whitman
HP
10
Abigail Johnson
Fidelity Investments
Money, CNN ©2013
7-30
Tasks and Skills
at Different Levels
of Management
LG4
MANAGERIAL SKILLS
Technical Skills
The ability to perform tasks in a specific discipline
or department.
Human Relations Skills
Skills that involve communication and motivation;
they enable managers to work through and with
people.
Conceptual Skills
Skills that involve the ability to picture the
organization as a whole and the relationship
among its various parts.
7-31
Tasks and Skills
at Different Levels
of Management
LG4
THANK YOU
The Most Basic Human Relations Skill
Saying “Thank You” has led to happier employees
and greater profits for companies.
Whom should a Manager thank?
Interns - Doing lots of work for little money, they are the
future of the company and industry.
Lawyers - Many do pro bono work, even for non-profit
companies.
The Everyday and Maintence people - Mailroom,
repair, and cleaning staff keep the office running day-to-day.
7-32
Tasks and Skills
at Different Levels
of Management
LG4
SKILLS NEEDED at VARIOUS
LEVELS of MANAGEMENT
Top Managers
Middle
Managers
First-Line
Managers
Technical
Skills
Human
Relations Skills
Technical Skills
Technical Skills
Conceptual Skills
Human
Relations
Relations Skills
Conceptual
Conceptual Skills
Skills
Human
Relations Skills
Conceptual
Skills
7-33
Staffing: Getting
and Keeping the
Right People
STAFFING
LG4
Staffing -- Recruiting, hiring, motivating and retaining
the best people available to accomplish the company’s
objectives.
• Recruiting good
employees is critical.
• Many people are not
willing to work at
companies unless they
are treated well with
fair pay.
7-34
Staffing: Getting
and Keeping the
Right People
STAFFING is TRICKY BUSINESS
LG4
Six Sins of Staffing
1. Don’t hire someone because someone else says so.
2. Don’t get caught up in applicants’ appearances.
3. Don’t give someone the wrong job.
4. Don’t forget about feedback.
5. Don’t give promotions just because it’s time.
6. Don’t cheat your employees.
7-35
Leading: Providing
Continuous Vision
and Values.
LEADERSHIP
LG5
Leaders must:
• Communicate a vision
and rally others around
that vision.
• Establish corporate
values.
• Promote corporate
ethics.
• Embrace change.
• Stress accountability and
responsibility.
7-36
To SHARE or NOT to SHARE
(Making Ethical Decisions)
As a first-line manager, you have new information
your department head has not seen yet. The
findings of the report indicate your manager’s
plans should fail. If they do fail, you could be
promoted.
Will you give your department head the report?
What is the ethical thing to do?
What might be the consequences?
7-37
Leading: Providing
Continuous Vision
and Values.
LG5
ACCOUNTABILITY through
TRANSPARENCY
Transparency
The presentation of the
company’s facts and
figures in a way that is
clear and apparent to all
allowing you to be
accountable.
7-38
Leadership
Styles
LEADERSHIP STYLES
LG5
Autocratic Leadership -- Making
managerial decisions without consulting
others.
Participative or Democratic
Leadership -- Managers and
employees work together to make
decisions.
Free-Rein Leadership -- Managers
set objectives and employees are free
to do whatever is appropriate to
accomplish those objectives.
7-39
Leadership
Styles
VARIOUS LEADERSHIP STYLES
LG5
7-40
Leadership
Styles
NATURAL BORN LEADERS?
Four Types of Executives
LG5
Rationalists
Humanists
Politicists
Culturists
Source: CIO Magazine, www.cio.com.
7-41
USING SOCIAL MEDIA to
BUILD CUSTOMER SUPPORT
(Social Media in Business)
Many companies use sites like Twitter and
Facebook to proactively and reactively
communicate with their customers.
Best Buy has 2,500 employees who read and
respond to consumer complaints on Twitter.
Many companies still are not implementing these
programs. This has led to many more complaints
via social media than positive support.
7-42
Empowering
Workers
EMPOWERMENT
LG5
Progressive leaders give employees the
authority to make decisions on their own without
consulting a manager.
Customer needs are handled quickly.
Manager’s role becomes less of a boss and
more of a coach.
Enabling -- Giving workers the education and tools
they need to make decisions.
7-43
Empowering
Workers
LG5
WORK SMARTER
How to Ease Pressure on Workers
Manage output instead of hours.
Train workers to be ready for a more
complex corporate structure.
Allow lower-level managers to make
decisions.
Use new technology to foster teamwork.
Shift hiring emphasis to collaboration.
Source: Bloomberg BusinessWeek, www.businessweek.com.
7-44
Managing
Knowledge
MANAGING KNOWLEDGE
LG5
• Knowledge Management -Finding the right information,
keeping the information in a
readily accessible place and
making the information known
to everyone in the firm.
• Tries to keep people from
reinventing the wheel.
7-45
Controlling:
Making Sure it
Works
FIVE STEPS of CONTROLLING
LG6
1.
Establish
Clear
Standards
2.
Monitor &
Record
Performance
3.
Compare
Results
Against
Standards
4.
Communica
te Results
5.
If Needed,
Take
Corrective
Action
Are
Standards
Realistic?
7-46
Controlling:
Making Sure it
Works
ARE YOU a MICROMANAGER?
LG6
• Do you have strategic initiatives that you have
not addressed?
• Do you often check on employees for quality
control?
• Do you often check on subordinates throughout
the day?
• Do you rarely take vacations?
• Is there a lot of turnover?
Source: CFO Magazine, www.cfo.com.
7-47
A Key Criterion
for Measurement:
Customer
Satisfaction
MEASURING SUCCESS
LG6
• Traditional forms of measuring success are
financial.
• Pleasing employees, stakeholders and customers
is important.
• External Customers -- Dealers, who buy products
to sell to others, and ultimate customers (or end
users), who buy products for their own use.
• Internal Customers -- Individuals and units within
the firm that receive services from other individuals or
units.
7-48
Progress
Assessment
PROGRESS ASSESSMENT
• How does enabling help achieve empowerment?
• What are the five steps in the control process?
• What’s the difference between internal and
external customers?
7-49