Ch.1-Managers and Management
Managers and Operatives?
We can categorize organizational members in two ways. Operatives work
directly on a job or task and have no responsibility for overseeing the work of others. Managers direct the activities of other people in the organization. Usually classified as top, middle, or first-line, managers supervise both operative and lower-level managers.
First-line managers supervise the day-to-day activities of operative employees. Middle managers represent the level of management between first-line
managers and top management. These managers translate the goals of top management into specific details that lower-level managers can perform. Top
managers make decisions about the direction of the organization and set policies that affect all organizational members.
How do we define management??
The term management refers to the process of getting things done, through other people, in an efficient and effective manner. Process refers to the primary functions that managers perform. Referring to inputs and outputs, doing the task right is being efficient. Doing the right task is being effective. So, managers are concerned not only
with attaining goals (effectiveness) but also attaining them efficiently.
The Process of Management?
Most experts on the subject of management endorse the concept of four basic interdependent management functions. Planning consists of several elements:
defining an organization’s goals, establishing a strategy to achieve them, and developing a structure to coordinate goal achievement activities. Organizing includes
determining what tasks will be done, who will do them, how the tasks will be grouped, who will report to whom, and where decisions will be made. Leading involves
motivating employees, directing the activities of others, selecting effective communication channels, and resolving conflicts. Controlling includes monitoring the
organization’s performance, comparing it with previously set goals, and correcting deviations to keep the organization on course.
CH.2 - Managing in a Contemporary World
The world has become a global village, a world without boundaries in which managers must adapt to a variety of cultures, systems, and techniques. By the mid-1960s, multinational corporations (MNCs ) were common. Even though this
type of corporation maintained significant operations in two or more countries simultaneously, decision making was controlled by the home office. Now,
transnational corporations (TNCs) also maintain significant operations in more two or more countries, but decision making is decentralized.
Many large companies are breaking down internal arrangements that impose artificial geographic barriers, thereby forming a new type of organization—the borderless
organization. They are moving to borderless management in order to increase efficiency and effectiveness in a competitive global marketplace.
Geert Hofstede surveyed over 116, 000 IBM employees in forty countries. By analyzing various dimensions of a country’s culture, he was able to provide a
framework for understanding the role of management in the global village. His data indicated that national culture has a major impact on work-related values and attitudes, and he classified those values and attitudes into the following four dimensions of national culture:
Individualism refers to a loosely knit social framework in which people are supposed to look after their own interests and those of their immediate family. Collectivism is
characterized by a tight social framework in which people expect others in their group to look after them and protect them.
Power distance is a measure of the extent to which a society accepts the unequal distribution of power in organizations and institutions. A high power distance society accepts wide differences in organizational power, so titles and rank carry a lot of weight.
A society that is high in uncertainty avoidance is characterized by a high level of
anxiety among its people. Because the people feel threatened by ambiguity and uncertainty, they create mechanisms to provide security and reduce risk. Some cultures emphasize the quantity of life and value assertiveness and the
acquisition of money and material goods. Some cultures stress the quality of life and
value relationships and promote the welfare of others.
CH.3 - Foundations of Planning
Potential benefits of planning?
Planning is defining organizational goals, establishing a strategy for reaching those goals, and developing a comprehensive hierarchy of plans to integrate and coordinate activities. It can be either formal or informal, depending on the time frame and amount of documentation. Managers should plan for four reasons. First, planning
coordinates effort by giving direction to managers and non-managers. Second, planning reduces uncertainty by forcing managers to look ahead, anticipate change, and develop appropriate responses. Third, planning reduces redundancy. Fourth, planning sets standards or objectives that facilitate control over the process of achieving goals.
; Set Control Standard
; Provide Direction
; Minimize Waste or Redundancy
; Reduce the Impact of Change
The Time Frame of Planning?
The short-term covers less than one year, the intermediate-term covers one to five years, and the long-term is five years or more. The commitment concept is relevant to classifying plans because the more current plans affect future commitments, the longer the time frame for which managers must plan. The length of the planning horizon increases up the management hierarchy and decisions of top management imply greater commitments of resources than decisions of lower managers. With respect to the degree of variability, the greater the uncertainty, the more plans should be of the short-term variety. This is so because shorter-term plans allow for better accommodation of change by providing more flexibility.
Management by objectives (MBO) emphasizes participation to set goals that are
tangible, verifiable, and measurable. MBO’s appeal lies in its emphasis on
converting overall organizational objectives into specific objectives for units and members of the organization.
As the figure above shows, the organization’s overall objectives are translated into
specific objectives for each succeeding level (divisional, departmental, or individual) in the organization. But because lower-unit managers jointly participate in setting their own goals, MBO works from the “bottom-up” as well as from the “top
down.” The result is a hierarchy of objectives that links objectives at one level to
those at the next level. And for the individual worker, MBO provides specific personal performance objectives. So each person has an identified specific contribution to make to his or her unit’s performance. If all individuals achieve their goals, then their unit’s goals will be attained and the overall objectives of the organization will become a reality.
To plan strategy, managers must complete steps three, four, and five by assessing the organization’s strengths, weaknesses, opportunities, and threats within its operating environment. To do so, they conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) which compares the organization’s resources against
opportunities in the environment.
Environmental scanning reveals opportunities (positive external factors) for the
organization to exploit and threats (negative external factors) that the organization
must face. How an organization defines opportunities or threats depends on its resources.
Management analyzes the internal resources of the organization, such as capital, skills of workers, or patents. These resources are the strengths of the organization. The
strengths that represent unique skills or resources are called the organization's distinctive competence. In contrast, weaknesses are resources that are lacking in the organization.
Four Grand Strategies?
In the seventh step, management must set strategies for all organizational levels. Four grand strategies are available: growth, stability, retrenchment, and combination.
The Growth Strategy. Organizations can grow through direct expansion, merger, and acquisition. A direct expansion strategy involves increasing a company’s size,
revenues, operation, or workforce. A merger occurs when two companies (of similar size) combine resources to form a new company. An acquisition occurs when a larger company“buys”a smaller one and absorbs its operations.
The Stability Strategy. Characterized by an absence of change, this
strategy is appropriate if several conditions exist: a stable and unchanging environment, satisfactory organizational performance, absence of valuable strengths and critical weaknesses, and nonsignificant opportunities and threats.
The Retrenchment Strategy. Characteristic of an organization that is downsizing, this strategy is used in an environment of decline.
The Combination Strategy. This strategy is the simultaneous pursuit of two or more strategies.
The six sigma philosophy was developed in the 1980s at Motorola. Its premise is to “design, measure, analyze, and control the input side of a production process.”
Rather than measuring the quality of a product after it is produced, six sigma uses statistical models, specific quality tools, high levels of rigor, and process improvement “know how” to design in quality as the product is being made.
Accordingly, six sigma is designed to decrease defects to fewer than four per million items produced.
(A philosophy and measurement process that attempt to design in quality as a product is being made. A document that explains the business founders vision and describes the strategy and operations of that business.)
CH4 - Foundations of Decision Making
Decision making is a process rather than a simple act of choosing among alternatives. The decision-making process consists of eight steps which starts with identifying the problem, moves through selecting an alternative that can alleviate the problem, and concludes with evaluating the decision's effectiveness.
The decision-making process begins when a problem is identified (step 1). Problem
identification can be challenging. Most problems do not come with neon identification signs. Furthermore, the manager who identifies and solves the wrong problem is no better than the manager who identifies a problem and does nothing. Making a comparison between their current state of affairs and some standard, such as past performance or previously set goals, helps managers identify problems in the workplace.
After identifying a problem, the manager should select appropriate decision criteria
(step 2). These criteria reflect the factors which the manager thinks are relevant in a decision.
Because all criteria are not equally important, the manager must prioritize each one by
allocating weights to the decision criteria (step 3): that is, indicating the relative importance of the relevant criteria by assigning a weight to each.
Common Errors in Decision Making?
To cope with information overload, we rely on two heuristics, or judgmental shortcuts, when we make decisions: availability and representativeness. Both types create biases in a decision maker's judgment. Another bias is the tendency to escalate commitment to a failing course of action.
Availability Heuristic. Using the availability heuristic, people tend to base their judgments on information that is readily available.
Representative Heuristic. People often assess the likelihood of an occurrence by
drawing analogies and seeing identical situations where they do not exist. Escalation of Commitment. In spite of negative feedback, some managers escalate
commitment to a failing enterprise,“throw good money after bad,” if they believe
that they are responsible for the failure. They do so to avoid admitting they made a poor decision and to appear behaviorally consistent. In contrast, effective managers differentiate between situations where persistence will or will not pay off.
When confronted by a complex problem, most people will reduce the problem to its simplest level and satisfice by seeking solutions that are satisfactory and sufficient. Eschewing full rationality, they operate within bounded rationality and construct
simplified models to extract the essential features of the problem and then behave rationally within the limits of the simple model. Here is how the bounded rationality typically operates.
Once a problem is identified, the search for criteria and alternatives begins. But the list of criteria is likely to be far from exhaustive. The decision maker will identify a limited list made up of choices that are easy to find or highly visible. In most cases, they will represent familiar criteria and tried-and-true solutions. One this limited set of alternatives is identified, the decision maker will begin reviewing them. But the review will not be comprehensive--not all alternatives will be evaluated carefully. Instead, the decision maker will begin with alternatives that differ only to a small degree from the choice currently in effect. Following along familiar and well-worn paths, the decision maker will review alternatives only until one that is “good
enough” (that meets acceptable levels of performance) can be found. The first alternative that meets the “good enough” criterion ends the search. So the final
solution represents a satisficing choice rather than an optimizing one.
Rational Decision Making?
The model contains seven assumptions.
; Problem clarity means the problem is clear and unambiguous.
; Single goal means that a single, well-defined goal is to be achieved. ; Known options mean that all relevant criteria and viable alternatives can be
; Clear preferences show that criteria and alternatives have been ranked and
; Constant preferences reflect constant criteria and stable weights over time. ; No time or cost constraints allow for full information about criteria and
; Maximum payoff means a decision maker will pick the alternative with the
CH.5 - Basic Organization Designs
(A component of organization structure that involves having each discrete step of a job done by a different individual rather than having one individual do the whole job)
Division of labor, or work specialization, describes the degree to which organizational
tasks are subdivided into separate jobs. An entire job is not done by one person. Instead, it is divided into discrete steps, each one completed by a different person. Early proponents believed that work specialization could lead to indefinitely increasing productivity. Since specialization was not widely practiced at the turn of the twentieth century, their belief was reasonable. By the late 1940s, work specialization enabled manufacturing firms to make the most effective use of their employees skills. So, managers believed that division of labor offered an unending source of increased productivity. By the 1960s, however, the human diseconomies resulting from work specialization began to offset the economic advantages. Managers today realize that while division of labor is appropriate for some jobs, productivity in other jobs can be increased through enlarging, not narrowing, job activities.
The Span of Control?
(The number of subordinates a manager can direct efficiently and effectively)
How many employees can a manager efficiently and effectively direct? Some advocate small spans of control because they help managers maintain close control; but, there are several drawbacks: they require more managers and are more costly, they retard vertical communication, and they foster tight controls and limited employee autonomy. In contrast, wide spans of control reduce costs, cut overhead, expedite decision making, increase flexibility, empower employees, and promote customer contact. All things being equal, the broader the span of control, the more efficient the organization. The following variables influence how a company will determine an appropriate span of control: similarity and complexity of employee tasks, the proximity of employees, the presence of standardized procedures, the capabilities of the information management system, the strength of the firm's value system, and the preferred style of management.
Differences between authority and power??
Unlike authority (two-dimensional), power is a three-dimensional concept: that is, it includes not only the functional and hierarchical dimensions, but also a third dimension called centrality or one’s distance from the center, the core of power. The
cone analogy above acknowledges two facts: (1) the higher one moves in an organization, the closer he or she is to the power core; and (2) even those without authority can wield power because one can move horizontally inward toward the power core without moving up. This analogy asserts that power can be based on five sources: coercive, reward, legitimate, expert, and referent. These five sources are presented in the next slide.
The term organization culture refers to a system of meaning that members share and
that distinguishes the organization from others. This system strongly influences how employees will behave while they are at work. The culture of an organization can be analyzed based on how it rates on ten characteristics, which are relatively stable and
predictable over time.
Five Ways to Departmentalize?
Specialists are placed in a department under the direction of a manager. The department is based on work functions, the product or service, the target customer or client, the geographic territory, or the production process.
Activities can be grouped according to function to pursue economies of scale by
placing employees with shared skills and knowledge into work-groups. Tasks can also be grouped according to a specific product, thus placing all activities related to the
product under one manager. Jobs may be grouped according to the type of customer served by the organization. If an organization’s customers are geographically
dispersed, it can group jobs based on geography. Since each process requires different
skills, process departmentalization allows homogenous activities to be categorized. How does the contemporary view of departmentalization differ from the historical view? While most large organizations still use most of the traditional departmental groupings, rigid departmentalization is being complemented by the use of interdepartmental teams. Intense competition has refocused the attention of managers on monitoring the needs of customers and responding to them.
Centralization and Decentralization??
The term centralization refers to the degree to which decision making is concentrated at a single point in the organization. The term decentralization means that significant input is provided by lower-level personnel. Traditional organizations were structured in a pyramid, with power and authority centralized at the top. In order to respond to the dynamics of the contemporary marketplace, organizations today are more decentralized to solve problems more quickly and to obtain increased employee input and commitment to organizational goals. But, while many production decisions are pushed down to lower levels in the organization, or even outside to some suppliers, financial and product distribution decisions still remain in the hands of senior management.
Structure based on strategy
The structure that an organization selects to achieve its objectives is based on strategy. After studying nearly 100 large companies, Alfred Chandler concluded that changes in corporate strategy foster changes in an organization’s structure. Specifically, he
found that organizations usually begin with a single product or line. The simplicity of the strategy requires only a simple form of structure. As organizations grow, their strategies become more elaborate and ambitious. To exemplify this structure-strategy relationship, consider that organizations pursuing a differentiation strategy must innovate to survive; so, because it is flexible and adaptable, an organic structure complements this strategy. A cost-leadership strategy, on the other hand, seeks stability and efficiency. A mechanistic structure would be best for this type of strategy.
CH.6-Staffing and Human Resource Management
Human resource management?
Human resource management (HRM) is the management function that is concerned
with getting, training, motivating, and keeping competent employees. While some large organizations have Human Resources Departments, not only small-business managers but also many managers who work for large companies must make human resource decisions: recruiting candidates, reviewing application forms, interviewing applicants, inducting new employees, appraising employee performance, and providing training.
To hire competent, high-performing employees who can sustain their performance over the long-term, an organization should follow an eight-step human resource management process (see the above slide). The first three steps represent employment planning, adding staff through recruitment and reducing staff by downsizing, and selecting competent employees. These new employees must be adapted to the organization (orientation) and their job skills must be kept current (training and