Chapter 1 Management Why Do We Have Organizations? 1. To Accomplish Something = Goal 2. It Takes More Than 1 Person CEO Masterbatches Functional Chemicals Fine Chemicals Europe Soaps Electric Materials Asia/ Pacific Process Chemicals Specialty What Is An Organization? An organization is a group of individuals who work together toward common goals. MANAGEMENT The process of administering and coordinating resources effectively and efficiently in an effort to achieve the goals of the organization. MANAGEMENT EFFECTIVENESS Long term measure of how well an organization achieves its objectives EFFICIENCY Short term measure of how well an organization uses it resources GOAL A desired future states that contributes to the fulfillment of the organization's mission MISSION = Reason for existence Effectiveness & Efficiency Effectiveness is achieved when the organization pursues appropriate goals. This means “doing the right thing.” Efficiency is achieved by using fewer inputs (e.g., people, money) to generate a given output. This means “doing things right.” The Four Functions of Management Planning Organizing determines how Assessing the the firm’s human, management financial, physical, environment to set Organizational informational, and goals future objectives technical resources and map out are arranged and compares activities necessarymeasures performance, coordinated to it to objectives, to achieve those energizes perform tasks to Leading people toControlling contribute achieve and desired objectives. implements necessary changes, their best individually in goals. cooperation with other people. and monitors progress. Levels of Management Top-level Managers Strategic Middle Managers Tactical First-line Managers Operational Employees Operational Management Levels in the Organizational Hierarchy CEO Corp Head Top Managers VP Admin Business Unit Head Gen. Mgr. Administrator Middle Managers Dept. Manager Info Srvcs Mgr Product Line Mgr Functional Head Production Supervisor MIS Supervisor Nonmanagerial Employees LineHarcourt Jobs Brace & Company. Staff Jobs First-Line Managers Management as a set of skills: (continued) • Four major categories of skills will help you become a good manager: – Strategizing Skills – Task-Related Skills – People-Related Skills – Self-Awareness Skills Skills for Managerial Success Task Skills Strategic Skills • Environmental assessment scanning • Strategy formulation • Mapping strategic intent and defining mission • Strategy implementation • Human resource congruency • Setting and prioritizing objectives • Developing plan of action and implementation • Responding in a flexible manner • Creating value • Working through the organizational structure • Allocating human resources • Managing time efficiently Skills for Managerial Success People Skills • • • • • • • Delegating Influencing Motivating Handling conflict Win-win negotiating Networking Communicating – Verbal --Nonverbal • Listening • Cross-cultural management • Heterogeneous teamwork (continued) Self-Awareness Skills • Personal adaptability • Understanding personal biases • Internal locus of control Evolution of Management Thought The Evolution of Management Thought Early Management Thought Classical Perspective Contemporary Management Perspectives Behavioral Perspective Classical Perspective The oldest formal viewpoints of management, it includes the following approaches: Scientific Management Administrative Management Bureaucratic Management Focuses on the productivity of the individual worker Focuses on the functions of management Focuses on the overall organizational system Frederick W. Taylor Henri Fayol Max Weber Scientific Management • Frederick W. Taylor (1865-1915) – Father of “Scientific Management. – Taylor was convinced that there was “one best way” to perform every task. – Taylor attempted to define “the one best way” to perform every task through systematic study and other scientific methods. Taylor’s Four Principles of Scientific Management 1. 2. 3. 4. Scientifically study each part of a task and develop the best method of performing the task. Carefully select workers and train them to perform the task by using the scientifically developed method. Cooperate fully with workers to ensure that they use the proper method. Divide work and responsibility so that management is responsible for planning work methods using scientific principles and workers are responsible for executing the work accordingly. Scientific Management • Frank Gilbreth – Specialized in time and motion studies to determine the most efficient way to perform tasks. – Used the new medium of motion pictures to examine the work of bricklayers. – Identified 17 work elements (such as lifting and grasping) and called them therbligs. Scientific Management • Lillian Gilbreth – Was a strong proponent of better working conditions as a means of improving efficiency and productivity. – Wrote an entertaining book about raising her family entitled “Cheaper by the Dozen.” Administrative Management • Focuses on the managers and the functions they perform – This approach to management is most closely identified with Henri Fayol (1841-1925). – Fayol was the first to recognize that successful managers had to understand the basic managerial functions. Administrative Management • Henri Fayol – Developed a set of 14 general principles of management. – His managerial functions of planning, leading, organizing, and controlling are routinely used in modern organizations. Bureaucratic Management • Focuses on the overall organizational system and is based upon firm rules, policies, and procedures; a fixed hierarchy; and a clear division of labor – Max Weber (1864-1920), a German sociologist and historian, is most closely associated with bureaucratic management. Bureaucratic Management • Max Weber – Envisioned a system of management that would be based upon impersonal and rational behavior. – Conceptualized the approach to management referred to as bureaucracy. • • • • • Division of labor Hierarchy of authority Rules and procedures Impersonality Employee selection and promotion Behavioral Perspective • Behavioral Perspective – Followed the classical perspective – Acknowledged the importance of human behavior in shaping management style – Associated with the following scholars: • • • • Mary Parker Follett Elton Mayo Douglas McGregor Chester Barnard Behavioral Perspective • Mary Parker Follett – Concluded that a key to effective management was coordination. – Felt that managers needed to coordinate and harmonize group effort rather than force and coerce people. – Believed that management is a continuous, dynamic process. – Felt that the best decisions would be made by people who were closest to the situation. Behavioral Perspective • Elton Mayo – Conducted the famous Hawthorne Experiments. – Concluded that productivity increased because someone was “paying attention” to the workers. – Mayo’s work represents the transition from scientific management to the early human relations movement. Behavioral Perspective • Douglas McGregor – Proposed the Theory X and Theory Y styles of management. – Theory X managers perceive that their subordinates have an inherent dislike of work and will avoid it if at all possible. – Theory Y managers perceive that their subordinates enjoy work and that they will gain satisfaction from performing their jobs. Contemporary Management Perspectives • Systems Theory • Contingency Theory • Total Quality Management • The Learning Organization Systems Theory • Views the organization as a system of interrelated parts that function in a holistic way to achieve a common purpose. • Systems theory concepts that affect management thinking: – – – – Open and closed systems Subsystems Synergy Equifinality The Basic Elements of a System Environment Inputs Transformation Process Feedback Outputs SIMPLE SYSTEM Closed System wires (communication network) Battery Open System BASIC COMPONENTS OF ANY SYSTEM System has an objective which can be accomplished by interaction of the system sub-units An energy source to “drive” system An energy conversion process to “produce” the objective Transformation Process A communication network between system units Contingency Perspective • A view that proposes that there is no one best approach to management for all situations. • Asserts that managers are responsible for determining which managerial approach is likely to be most effective in a given situation. • This requires managers to identify the key contingencies in a given situation. The Contemporary Manager Slide 1 of 2 • The New Manager Profile – Managers will no longer think of themselves as “the boss,” but will view themselves as sponsors, team leaders, or internal consultants. What a Difference a Century Can Make Contrasting views of the corporation: CHARACTERISTIC 20TH CENTURY ORGANIZATION FOCUS STYLE SOURCE OF STRENGHT STRUCTURE RESOUCES OPERATIONS PRODUCTS REACH The Pyramid The Web or Network Internal External Structured Flexible Stability Change Self-sufficiency Interdependencies Atoms-physical assetsBits-information Vertical integration Virtual integration Mass production Mass customization Domestic Global DATA: BUSINESS WEEK 21ST CENTURY What a Difference a Century Can Make Contrasting views of the corporation: CHARACTERISTIC 20TH CENTURY 21ST CENTURY FININCIALS INVENTORIES STRATEGY LEADERSHIP WORKERS JOB EXPECTIONS MOTIVATION IMPROVEMENTS QYALITY Quarterly Months Top-down Dogmatic Employees Security To compete Incremental Affordable best Real time Hours Bottom-up Inspirational Employees/free agents Personal growth To build Revolutionary No compromise DATA: BUSINESS WEEK The Contemporary Manager • Competencies of Tomorrow’s Managers – – – – – – – The great communicator The team player The technology master The problem solver The foreign ambassador The change maker The 21st-century leader That’s it for today Chapter 3 Social Responsibility and Ethics Ethics and social responsibility are concerns of all members of an oranization Ethics • Ethics – principles that explain what is right or wrong, good or bad, and what is appropriate or inappropriate in various settings • Ethical Behavior – Behavior that is morally accepted as good or right as opposed to bad or wrong. Three Domains of Human Action Domain of Codified Law (Legal Standard) Domain of Ethics Domain of Free Choice (Social Standard) (Personal Standard) Amount of Explicit Control High Low Ethics • Lies between the domains of codified law and free choice • No specific laws • Based on shared principles and values • Obedience is to unenforceable norms and standards • Disagreements and dilemmas about proper behavior often occur. Business Ethics The application of the general ethical rules to business behavior. Provide standards or guidelines for the conduct and decision making of employees and managers Ethics? • People operate under different ethical value systems depending on their: –Personal experiences –Religious background –Education –Family background Approaches for Ethical Dilemmas • Utilitarianism – A means of making decisions based on what is good for the greatest number of people. • Individualism – The degree to which a society values individual self-interest over group needs and goals. – Individual self-interest should be promoted as long as it does not harm others. Approaches for Ethical Dilemmas • Rights approach – A means of making decisions based on the belief that each person has fundamental human rights that should be respected and protected. • Justice approach – An approach to decision making based on treating all people fairly and consistently when making business decisions. Ethical Responsibilities Do What is Right • Not necessarily codified into law • May not serve the firm's direct economic interests • To be ethical organization decision makers should: Act with equity, fairness, and impartiality Respect the rights of individuals Treat individuals differently only when relevant to the organization's goals. Stakeholders Stakeholders are all those who are affected by or can affect the activities of the firm. The Stakeholder View of the Firm Environmental Group Local Community Group Secondary Stakeholders Primary Stakeholders Owners Organization Employees Media Suppliers Customers Consumer Group Other Special Interest Groups ACLU The Premises of the Social Responsibility Debate • Social contract – An implied set of rights and obligations that are inherent in social policy and assumed by business. • Moral agent – The obligation of a business to act honorably and to reflect and enforce values that are consistent with those of society. Three Perspectives of Social Responsibility • Economic Perspective – The responsibility of business is to make a profit within the “rules of the game.” – Organizations cannot be moral agents. Only individuals can serve as moral agents. • Public Responsibility – Businesses should act in a way that is consistent with society’s view of responsible behavior, as well as with established laws and policies. Three Perspectives of Social Responsibility • Social Responsiveness – Business should proactively seek to contribute to society in a positive way. – Organizations should develop an internal environment that encourages and supports ethical behavior at an individual level. Ways In Which Organizations Foster Business Ethics • Whistleblowing – A whistleblower is someone who exposes organizational misconduct or wrongdoing to the public. Task Chapter 4 Managing Organizational Culture and Change Organizational Culture specific to each firm A system of shared values, assumptions, beliefs, and norms that unite the members of an organization. “the way things are done around here.” affects how employees feel and act and the type of employee hired Organizational Culture and its Effects Effects everything Functions performed by organizational culture: • Employee Self-Management – Sense of shared identity – Generation of commitment • Stability – Sense of continuity – Satisfies need for predictability, security, and comfort Functions performed by organizational culture: (continued) • Socialization – Internalizing or taking organizational values as one’s own • Implementation Support of the Organization’s Strategy – If strategy and culture reinforce each other, employees find it natural to be committed to the strategy Levels of Corporate Culture Not readily observed What they say Visible Culture Espoused Values Core Values See, hear, feel Office layout Symbols dress Widely shared Perceived Operate unconsciously by how Basic assumptions: managers purpose of life explain actions human nature Creating and Sustaining Organizational Culture Cultural Symbols Rituals and Ceremonies Company Heroes Stories Policies and Decisions Leadership Language Characteristics of Culture at Walt Disney Disney uniforms Shared Things Good Mickey Shared Sayings Disney culture Smiling Shared Behavior Pride Shared Feelings Baseball Team Culture • High-risk decision making & fast feedback • Talent, innovation, performance valued and rewarded • Movie production, advertising, and software development. Club Culture • Loyalty, commitment, and fitting in • Values age & experience. Rewards seniority • Members start young and stay • Promote from within, progress slowly • Individuals tend to be generalists and may have vast experience • Commercial banks and the military. Academy Culture • Specific track & gain high expertise • Employees rarely cross divisions • Hires young recruits • Long, slow, steady climb in organization • Universities and large corporations. Fortress Culture • In an environmental survival situation • Textile firms and savings and loans • Offers little job security or opportunity for professional growth as companies restructure and downsize to fit the new environment. Organizational Change The Challenge of Organizational Change • Organizational Change –Any alteration of activities in an organization. • Alterations can involve the structure of the organization; the transfer of work tasks; the introduction of new products, systems, or technologies; or behavior among members. Competing Values Framework • Based on two dimensions: focus and control Focus--whether the primary attention of the organization is directed toward internal dynamics or directed outward toward the external environment Control--the extent to which the organization is flexible or fixed in how it coordinates and controls activities McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. Types of Change • Planned Change--change that is anticipated and allows for advanced preparation • Dynamic Change--change that is ongoing or happens so quickly that the impact on the organization cannot be anticipated and specific preparations cannot be made McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. Forces for Change External Internal • Customers • Competitors • Technology • Economic • International. • Management • Employees • Labor unions • Production inefficiencies. Resistance to Change Self-Interest Cultures that Value Tradition Different Perspectives/ Goals Lack of Trust and Understanding Uncertainty Models of Organizational Change: The Star Model • The Star Model: Five Points Types of changeevolutionary or transformational Structure Reward system Processes People McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. Two Types of Planned Change Incremental Change based on efforts to improve basic work and organizational processes. Transformational Change involves redesign and renewal of the total organization. Continuous progression Paradigm-breaking burst Affect organizational part Transform entire organization Through normal structure and management processes Create new structure and management Technology improvements Breakthrough technology Product improvement New products, new markets Models of Organizational Change: The Star Model • The Star Model: Five Points Types of changeevolutionary or transformational Structure Reward system Processes People McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. Three Distinct Steps for Achieving Behavioral and Attitudinal Change • • • • • • Unfreezing: diagnosis stage participants are made aware of problems in order to increase their willingness to change their behavior Changing: intervention stage individuals experiment with new workplace behavior Re-freezing: reinforcement stage individuals acquire a desired new skill or attitude and are rewarded for it by the organization Unlearning Relearning Force Field Analysis DR I V I NG FORCES Kurt Lewin E Q U I L I B R I U M RESTRAINING FORCES Using Force Field Analysis to Change from Traditional to JIT Inventory System Change agents should take the following steps to obtain a successful change outcome: 1. Establish a sense of 5. Empower others to urgency. 2. Form a powerful coalition of supporters of change. 3. Create a vision of change. 4. Communicate the vision of change. act on the vision. 6. Plan and create short-term wins. 7. Consolidate improvements and produce still more change. 8. Institutionalize new approaches. Tactics for Introducing Change Communication and Education Employee Involvement Negotiation Management Support Coercion Chapter 5 Managing the Planning Process Planning Defined The management function that assesses the management environment to set future objectives and map out activities necessary to achieve those objectives Where to we want to go how are we going to get there Plan Blueprint for specifying resource allocations, schedules and other actions necessary to obtain goals Goal A desired future state the organization attempts to realize. Objective Specific, short term target for which measurable results can be obtained Key Elements to a Plan: Objectives Actions Resources Implementation Key Elements to a Plan: Be specific and Objectives measurable Cover key result Actions areas Be challenging but realistic Resources Be for a defined time period Implementation Be linked to rewards Key Elements to a Plan: Objectives Actions Resources Implementation Specific steps to be taken to accomplish objectives Key Elements to a Plan: Objectives Actions Resources Implementation Determines where the resources will come from and how they will be deployed Key Elements to a Plan: Objectives Actions Resources Implementation Includes: •guidelines on how •dividing up tasks, • assigning responsibility • timelines Key Elements to a Plan: Objectives Actions Resources Implementation Benefits of formal planning: • Assessment of external forces. • Identification of factors likely to affect the organization. • Understanding circumstances contributing to past success or failure. • Coordination of efforts. • Establishment of priorities. Benefits of formal planning: • Ensuring the availability of adequate resources. • Establishing performance standards. • Management development. The pitfalls of planning: • Poor assessment of future conditions. • Fostering hierarchical reporting relationships. • Planning as a self-contained activity. • Extensive bureaucratization. • Inflexible adherence to objectives and processes. Approaches to successful planning: • Involving different organizational levels. • Using both numerical and judgmental methods. • Viewing planning as continuous and capable of adapting to change. • Avoiding paralysis of the analysis. • Concentrating planning on a manageable set of issues. Levels of Goals/Plans Reason for existence Mission Statement Broad statements Strategic Goals/Plans describing where Senior Management the organization(Organization as a whole) wants to be in the future. major divisions Tactical/Functional Goals/Plans Middle Management (Major and departments divisions, functions) Define specific Operational Goals/Plans Lower Management Harcourt Brace & Company. results expected (Departments, individuals departments, work groups, individuals. Time frame for Goals/Plans Reason for existence Mission Statement Long-termStrategic Goals/Plans Up to five Planning Senior Management years. (Organization as a whole) Intermediate- Tactical/Functional Goals/Plans term Planning Middle Management (Major divisions, functions) Operational Goals/Plans Short-term Lower Management Harcourt Brace & Company. Planning (Departments, individuals One to two years One year or less Formal Planning versus Opportunistic Planning • Formal planning systems are designed to: – Deliberately identify objectives; and to – Structure the major tasks of the organization to accomplish them. • Opportunistic planning involves: – Programmatic actions triggered by unforeseen circumstances. – It can coexist and can help the formal plan function smoothly Applications: Management is Everyone’s Business—For the Manager • Managers are expected to collaborate with employees to: Define objectives for their unit. Clearly communicate the relative importance of those objectives. • Managers need to develop a plan to accomplish the objectives and lay out the implementation steps. • A good planning process: Smoothes the way change is conducted. Gives employees a sense of continuity. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. Applications: Management is Everyone’s Business—For Individuals • Efficient time allocation requires setting personal objectives and determining the best way to accomplish them. • It is important to: periodically reassess objectives, redefining or changing them as needed, and adjusting implementation plans accordingly. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. GOOD LUCK GETTING READY FOR THE TEST