100
80
Where?
How? When?
What?
Why?
2015
60
East
West
North
40
20
0
1st Qtr
2nd Qtr 3rd Qtr 4th Qtr
Who?
Management
Stefan Markowski
The nature and role of
organisational management
Seeking competitive advantage
Topic 1: The nature and role of organisational
management
Roles and tasks of organisational managers
Topic Contents
1.1
Definitions
1.2
Manager’s roles
1.3
Levels of
management
1.4
1.5
1.6
1.7
Managerial
selection and
remuneration
1.8
Principal-agent
framework
Challenges of
contemporary
business world
1.9
Managerial skills
and competences
Management
functions
1.10
Further reading
Public sector
management
1.1 Definitions
• Organisational management is defined, after
Combe (2014), as the direction/coordination of
the activities of a business or some other formal
organisational setting in order to achieve defined
aims and objectives
• Peter Drucker (2001), one of contemporary gurus
of management, provided this list of
management tasks, it:
– makes people’s strengths effective and their
weaknesses irrelevant
– enhances their ability to contribute
– Integrates people in the common venture by thinking
through, setting and exemplifying the organisational
objectives, values and goals
1.1 Definitions
– enables the organisation, such as a business firm, and
its members to grow and develop through training and
learning
– ensures every member of the organisation knows what
needs to be accomplished, what to expect of
managers, and what is expected of them
• Another management guru, Henry Mintzberg
(1989) defined organisational management as a
service needed to:
– ensure the efficient operation of the organisation
– design and maintain the stability of organisational
operations
– adapt the organisation, in a controlled way, to the
changing environment
1.1 Definitions
– ensure the organisation serves the ends of people who
control it
– serve as the key information link between the
organisation and its environment
– operate the organisation's status system
• While Drucker’s definition puts more emphasis
on the coordination of organisational (business)
activities, Mintzberg’s definition stresses
facilitation and direction
• The jury is out to determine the extent to which
organisational management is a social science,
thus paving the way to scientific management,
or an art or a craft based on less articulated
hunches and instincts
1.2 Manager’s roles
• Mintzberg (1989) describes an organisational
role as a set of specific tasks a person performs
linked to their position in the organisation
• In his description, roles are directed inside the
organisation or outside it
• In his typology roles form three clusters of
attributes:
– interpersonal
– informational
– decisional
1.2 Manager’s roles
• Interpersonal role (three functions)
– figurehead
– leader
– liaison
• Informational role
– monitor
– analyst
– disseminator
– spokesperson
• Decisional role
– entrepreneur
1.2 Manager’s roles
– disturbance handler
– conflict resolver
– resource allocator
– negotiator/go-between
• However, we can also associate with high
management such functions as
– ability to project organisational vision
– determine organisation mission
– perceive external threats
– manage change
– Champion/lobby for the organisation’s interests in its
external environment
1.3 Levels of management
• Top management
– Board (possibly tiers of board management)
– Chief executive
• Middle management
– Functional management (e.g., finance, operations)
– Branch management
– Project managment
• Operational management
– Line management
– Team leadership
1.4 Principal-agent framework
• The ultimate organisational principal are the
key organisational stakeholders (e.g., owners,
shareholders, employees, financiers/banks)
• Managers are agents whose role is to serve the
interests of the principal. Hence the principalagent framework
• But in complex organisations with many
stakeholder groups there is a cascading
principal-agent structure with lower tiers of
management serving as agents of higher tiers
• In public organisations the ultimate principal is
the public (i.e., taxpayers, ratepayers,
community)
1.5 Managerial skills and
competences
• Inter-personal (peoples) skills – people are the
key organisational resource
• Technical competences to manage production
organisational business/sales/finance/input
sourcing
• Conceptual abilities to analyse and diagnose
organisational activities, identify problems,
their causes, effects/impacts, manage risks and
propose solutions
• Cultural awareness – human skills across
cultural divides and ability to navigate around
institutions in global business environment
1.6 Public sector management
• In a capitalist economy, the purpose of public
sector is to produce public goods such as law
and order, defence, elements of health or
education
• These goods and services are non-rival and nonexcludable in consumption hence it is difficult
for a private sector to produce them profitably.
Public sector can recover the cost of provision
through taxation
• In democracies the composition of public goods
to produce and the form of cost recovery are
decided through elected multi-level government
1.6 Public sector management
• This creates problems with levels of provision
(which level of government to provide which
good or service, complex packages of goods
voted for, infrequent voting, forms of cost
recovery and often perverse division of labour
between politicians and civil servants) – thus
the principal-agent relationships are inherently
different in the public sector than in the private
sector
• Incentives for and the conduct of public sector
managers should reflect these differences (e.g.,
no big salaries as no big private risks,
transparency and accountability)
1.6 Public sector management
• This is often denied by the New Public
Management – the 1980s-1990s philosophy of
management that views public managers as
functionally similar to their private sector
equivalents
• This has meant that many areas of public
activity have been privatised needlessly and
many mismanaged by people seeking big
private payouts through privatised profits but
socialised risks and costs
• This brings into focus the mechanics of
managerial selection and remuneration
1.7 Managerial selection and
remuneration
• In general, there should be a relationship
between the level of responsibility vested in
management, personal risks taken and
competencies requiring personal investment in
human capital and rewards/remuneration
• In reality, this is often distorted when the
principal is disinterested or too diffused to be
effective and managers as agents can capture
the decision making process
• This often happens in large public corporations
or in the public sector, less so in smaller,
privately owned firms
1.7 Managerial selection and
remuneration
• However, size is not all - there are some
fundamental differences between public and
private sectors
• In the private sectors, small shareholders in
large corporations can sell their shares and this
could eventually lead to a change in
management
• In the public sector, this can only be achieved
through elections which raise problems
highlighted earlier
• On balance, the private sector tends to be more
responsive and in the long run is likely to be
more efficient
1.8 Challenges of contemporary
business world
• After Combe (2014) these challenges are:
– inclusive management of people-oriented organisations (e.g.,
flatter, less hierarchical, professional, mobile resources,
highly productive and well remunerated)
– management the knowledge-intensive, learning
organisations (e.g., retaining knowledge in resource-mobile
world, incentives to form knowledge, blurred organisational
boundaries)
– management through communications – power through
knowledge and influence, market reach and agility of
response, blurred organisational boundaries as business
activities can be dispersed in space
– change management – the ever changing organisational
environment and business competition
– virtual organisation – tendency to devolve and divest
functions to other businesses retaining only the core
coordinating function
1.8 Challenges of contemporary
business world
Two firms
1.9 Management functions
What management is all about?
• Projecting, forecasting and planning – forward
perspective
• Organising – defining organisational boundaries
and internal division of labour/roles
• Leading, directing and commanding – through
force or charisma
• Coordinating – orchestrating organisational
effort
• Monitoring and controlling – feedback and
correction if off course
1.8 Detailed course schedule
The following table provides a list of lecture topics for each day of the course
Day no
Topic
Textbook ch.
1 (24 Nov; 2
hrs)
1. The nature and role of organisational
management. Roles and tasks of
organisational managers
Chs. 1-2
2 (25 Nov; 2
hrs)
2. Organisation and its environment
Chs. 3-5
3 (26 Nov; 2
hrs)
3. The process of organisational decision
making
Chs. 7, 9-10
4 (27 Nov; 2
hrs)
4. Organisational planning
Chs. 7-8
5 (28 Nov; 2
hrs)
5. Organising
Chs. 14-16
6 (1 Dec; 2
hrs)
6. Leadership
Chs. 17-20
7 (2 Dec; 2
hrs)
7. Monitoring and control
Chs. 11-13
8 (3 Dec; 1 hr)
8. Revision
9 (8 Dec; 2
hrs)
Examination
1.10 Further reading
Griffin (2013): chs. 1-2
Combe (2014): ch. 1
Drucker, P. (2001) The Essential Drucker, New
York: Harper Business
Mintzberg, H. (2011) Managing, San Francisco:
Berrett-Koehler
Mintzberg, H. (1989) Mintzberg on Management,
New York: Free Press
Last but not least, a crash course
in finance
• The actors
– Financial Planner - a guy who actually remembers his
wallet when he runs to the shops for beer and fags
– Broker - poorer than you were a year ago (you can go
up the seniority ladder, eg. become More Broker)
– Stock Analyst - the idiot who recommended that you
buy shares in InstantWealth.com for long term capital
growth
– Institutional Investor - a former investor who is now
locked up in a nut house
Crash course in finance
• The market
– Bull Market - random market movements causing
investors to mistake themselves for financial
geniuses
– Bear Market - a period of time when investors try to
persuade their bank managers that you are still the
financial geniuses they used to be
– Market Correction - the day after you buy your stock
– P/E Ratio - the proportion of investors who wet their
underwear when the market crushes
Crash course in finance
• The essential vocabulary
– Cash Flow - the movement your money makes as it
disappears down the drain
– Momentum Investing - the art of buying high and
selling low
– Value Investing - the art buying low and selling lower
– Call Option - something people used to be able to do
with their phone before e-mail
Crash course in finance
• The essential vocabulary
– Stock Split - when your ex-partner and her/his lawyer
split all your assets equally between themselves
– Yahoo - what you yell after selling your shares in
InstantWealth.com
– Windows - what the person who bought your shares in
InstantWealth.com should jump out of
– Standard & Poor - your life, if you fail this crash course