managing chapter 01 copyright © 2011 by the mcgraw-hill companies, inc. all rights reserved....

ManagingManaging

Chapter 01Chapter 01

Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

GlobalizationGlobalization

Today’s enterprises are global, with offices and production facilities in countries all over the world

Means that a company’s talent can come from anywhere

Internet makes globalization inevitable

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Technological Change: The InternetTechnological Change: The Internet

Marketplace Means for manufacturing goods and services Distribution channel An information service

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Technological Change: The InternetTechnological Change: The Internet

Drives down costs and speeds up globalization.

Improves efficiency of decision making. Facilitates design of new products, from

pharmaceuticals to financial services

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Knowledge ManagementKnowledge Management

Knowledge management Practices aimed at

discovering and harnessing an organization’s intellectual resources

Knowledge workers

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Collaboration across “Boundaries”Collaboration across “Boundaries”

Requires productive communications among different departments, divisions, or other subunits of the organization

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Collaboration across “Boundaries”Collaboration across “Boundaries”

Companies today must motivate and capitalize on the ideas of people outside the organization e.g. its consultants, ad agencies, and suppliers

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Managing for Competitive AdvantageManaging for Competitive Advantage

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Managing for Competitive AdvantageManaging for Competitive Advantage

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Innovation the introduction of new goods and services often the most important innovation is not the

product itself, but how it is delivered

Managing for Competitive AdvantageManaging for Competitive Advantage

Quality The excellence of your product (goods or services) Historically, quality referred to attractiveness, lack

of defects, reliability, and long-term dependability

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Managing for Competitive AdvantageManaging for Competitive Advantage

Today quality is about preventing defects and having continuous improvement in how the firm operates

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Managing for Competitive AdvantageManaging for Competitive Advantage

Service The speed and dependability with which an

organization delivers what customers want

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Managing for Competitive AdvantageManaging for Competitive Advantage

Speed Fast and timely execution, response, and delivery

of results.

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Managing for Competitive AdvantageManaging for Competitive Advantage

Cost competitiveness Keeping costs low to

achieve profits and be able to offer prices that are attractive to consumers.

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The Functions of ManagementThe Functions of Management

Management The process of working with people and resources

to accomplish organizational goals Efficient, effective

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The Functions of ManagementThe Functions of Management

Planning Systematically making decisions about the goals

and activities that an individual, a group, a work unit, or the overall organization will pursue

analyzing current situations, anticipating the future, determining objectives, deciding in what types of activities the company will engage

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The Functions of ManagementThe Functions of Management

Organizing assembling and coordinating the human, financial,

physical, informational, and other resources needed to achieve goals

specifying job responsibilities, grouping jobs into work units, marshaling and allocating resources,

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The Functions of ManagementThe Functions of Management

Leading stimulating people to be high performers

Controlling monitoring performance and making needed

changes.

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Management Levels and SkillsManagement Levels and Skills

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Management Levels and SkillsManagement Levels and Skills

Top-level managers Senior executives responsible for the overall

management and effectiveness of the organization.

Middle-level managers Managers located in the middle layers of the

organizational hierarchy, reporting to top-level executives.

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Management Levels and SkillsManagement Levels and Skills

Frontline managers Lower-level

managers who supervise the operational activities of the organization

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Transformation of Management Transformation of Management Roles and ActivitiesRoles and Activities

1-22Table 1.1

Managerial Roles: WhatManagerial Roles: WhatManagers DoManagers Do

1-23Table 1.2

Management SkillsManagement Skills

Technical skill The ability to

perform a specialized task involving a particular method or process

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Management SkillsManagement Skills

Conceptual and decision skills Skills pertaining to the ability to identify and

resolve problems for the benefit of the organization and its members.

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Management SkillsManagement Skills

Interpersonal and communication skills People skills; the ability to lead, motivate, and

communicate effectively with others.

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You and Your CareerYou and Your Career

Emotional intelligence The skills of

understanding yourself, managing yourself, and dealing effectively with others.

Social capital Goodwill stemming

from your social relationships

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You and Your CareerYou and Your Career

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Keys to Career ManagementKeys to Career Management

1-29Table 1.3

Common Practices of Successful ExecutivesCommon Practices of Successful Executives

They ask “What needs to be done?” rather than “What do I want to do?”

They write an action plan. They don’t just think, they do, based on a sound, ethical plan.

They take responsibility for decisions. They focus on opportunities rather than problems.

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Evolution of Management

Throughout history most managers operated strictly on a trial-and-error basis

The management profession as we know it today is relatively new wide swings in management approaches over the

last 100 years parts of each approach have survived and been

incorporated into modern perspectives on management

BUREAUCRATIC MANAGMENT

Max Weber – late 19th century Germany

RULES – uniformity/stability IMPERSONALITY – fairness for clients and employees DIVISION OF LABOR – functional specialization HIERARCHICAL STRUCTURE – decentralization AUTHORITY STRUCTURE – rational-legal authority LIFELONG CAREER COMMITEMENT RATIONALITY – logical and scientific

BUREAUCRATIC MANAGEMENT

BENEFITS

Consistency Jobs clearly defined Expertise/specialization Continuity Efficient under

conditions of stability

COSTS

Rigid rules and red tape Protection of authority Slow decision making Incompatibility with

changing technology (Incompatibility with

worker values)

ASSESSING BUREAUCRATIC MANAGEMENT

MOST EFFECTIVE WHEN:

1. Standardized information/production requiring efficiency

2. Needs of customers known and not changing 3. Technology is routine and stable 4. Need to coordinate activities of large

numbers of employees

SCIENTIFIC MANAGEMENT

Frederick W. Taylor – early 20th century Methods engineering/time and motion studies Basic observations

Great loss through inefficiencies Remedy in systematic management Best management is a true science Standardization of job performance and uniformity of behavior Impersonalization and replaceability of workers is key to

efficiency Motivation through monetary incentive systems

SCIENTIFIC MANAGEMENT

STUDIES AT BETHLEHEM IRON WORKS IN 1898 REPORTED BY TAYLOR

Picked Schmidt (Nolls) as his subject Trotted to and from work (over a mile) Had purchased land and was building a house Had reputation of being “close with a dollar” Increased from 12 ½ to 47 tons Pay increased from $1.15 to $1.85 Earlier studies had failed because of social influences

SCIENTIFIC MANAGEMENT

Frank and Lillian Gilbreth Developed tools for scientific management –

time and motion studies Trained industrial engineers Popular subjects for newsreels in the 1920s “Cheaper by the Dozen” movie (not the new

one) Economic needs versus other needs

ADMINISTRATIVE MANAGEMENT

Henri Fayol – French industrialist – 14 principles 1. Division of labor – specialization 2. Authority and responsibility – delegation 3. Discipline – clear rules and consequences for violating 4. Unity of command – one boss for each employee 5. Unity of direction – similar activities under one manager 6. Subordination of individual interests to the common good 7. Remuneration – fair pay 8. Centralization – power and authority at the top

ADMINISTRATIVE MANAGEMENT

9. Scalar Chain – from the lowest employee to the top

10. Order – human and materials coordinated 11. Equity – managers should be fair with

subordinates 12. Stability and tenure of staff – avoid high

turnover 13. Initiative – free to take initiative 14. Esprit de corps – team spirit, sense of unity

BEHAVIORAL VIEWPOINT

Chester Barnard’s Acceptance Theory of Authority

Different from traditional view of authority that authority flows from top down

Effective authority requires willingness of employees to follow management’s orders

Zone of indifference

HAWTHORNE STUDIES

Lighting studies by industrial engineers Productivity continued to increase even when lighting was

reduced below starting levels Motivational factor Relay Assembly Test Room Studies

Five workers plus supervisor Error in text concerning financial incentives Group incentive plan Mayo (not a researcher in the study) concluded that the results

supported his theories concerning work groups replacing family

HAWTHORNE STUDIES

Five workers not randomly selected Two workers replaced because not cooperating Replacements wanted to be in the experiment because of

the financial incentives – one of these became the informal leader

Workers formed tightly knit, cohesive work group with high production goals operating under informal, participative leadership plus a strong informal leader within the group

If all of the results are considered, the behavioral approach has consistencies with the original scientific management studies

Quantitative Management

Teams of quantitative experts tackle complex issues facing large organizations

Helps management make a decision by developing formal mathematical models of the problem

Personalities military planners in World War II mathematics and u-boats –Bletchley Park

Quantitative Management (cont.)

Application of quantitative analysis to management decisions

Developed specific mathematical methods of problem analysisHelped managers select the best alternative among a set

Models neglect nonquantifiable factorsManagers not trained in these techniques may not trust or

understand the techniques’ outcomesNot suited for nonroutine or unpredictable management decisions

Key concepts

Limitations

Contributions

Systems Theory

Organization is viewed as a managed systemManagement must interact with the environmentOrganizational goals must address effectiveness and efficiencyOrganizations contain a series of subsystemsThere are many avenues to the same outcomeSynergies enable the whole to be more than the sum of the parts

Recognized the importance of the relationship between the organization and the environment

Does not provide specific guidance on the functions of managers

Key concepts

Limitations

Contributions

Contingency Perspective

Situational contingencies influence the strategies, structures, and processes that result in high performance

There is more than one way to reach a goalManagers may adapt their organizations to the situation

Identified major contingenciesArgued against universal principles of management

Not all important contingencies have been identifiedTheory may not be applicable to all managerial issues

Key concepts

Limitations

Contributions