principies of managment.docx

8/12/2019 Principies of managment.docx

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Introduction to Management

Organizationa group of two or more people working together to attain a set of goals (for

example profit, discovery of knowledge, national defense social satisfaction)

Organization use four basic kinds of inputs or resources from environment

1. Human2. Financial(capital of ongoing and long term operations)3. Physical(raw materials, office and production facilities and equipment)4. Informationresources (usable data needed to make effective decisions)

The managers job involves combining and coordinating these various resources to achieve the

organizations goals

Management

Knowing exactly what you want to do, and do it in the best way.

A process of influencing behavior in organization such that common purposes are identified

worked toward and achieved.

A process of planning and decision making, organizing, leading, and controlling an

organizations human financial, physical and information resources to achieve organization

goals in an efficient and effective manner.

Manager- is someone whose primary activities are a part of the management process.

In particularsomeone who plans and makes decisions, organizes, leads, and control human,financial, physical, information resources.

Functions of management

1. Planning2. Organizing3. Leading4. Controlling

Planning and decision-makingdetermining courses of action.

Planning means determining an organizations goals and deciding how best achieve them.

Decision-making is a part of the planning process, involves selecting a course of action from a

set of alternatives.

Organizingcoordination activities and resources

Basic elements of organizing are:


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1. Work specialization,2. Departmentalization,3. Authority relationships,4. Spans of control,5. Line and staff roles

Leadingmotivating and managing employees

Leading is the set of processes used to get members of the organization to work together to

further the interest of the organization.

The leading function consists of different activities:

Motivating employees to expend effort (giving employees opportunity to attainindividual goals and rewards),

Leadershipwhich focuses on what the manager does to encourage organizationalperformance, dealing with groups and communication.

Controllingmonitoring and evaluating activities

We have to make sure the organization is performing in a good way and in the right time.

Controlling helps ensure the effectiveness and efficiency needed for successful management.

Managers

According to level

Top managers Middle level First line

Managers at different levels can work in various areas whitin the same organization. They may

be marketing, financial, operations, personnel, administrative and other kinds of managers at

all the levels.

Top managersrelatively small group of executives who control the organization (president,

vice president, chief executive officer, CEO) they establishes th organizations goals, overallstrategy and operating policies, also officially represent the organization.

Middle level managersthe largest group of managers in most organization (plant manager,

operation manager, division head) are responsible for implementing the policies and plans

developed by top managers, to supervise and coordinate the activities of third levelthe first

line of managers.


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First line managerssupervise and coordinate the activities of operating employees (foreman,

supervisor, office manager) they spend a lot of time supervising the work of subordinates.

Henry Mintzbergs categories of managerial roles

1. Interpersonal roles2. Informational roles3. Decisional roles

Interpersonal roles:

Figureheadrepresenting the organization or unit in ceremonial and symbolicactivities: all managers are required to perform duties that are ceremonial and symbolic

in nature, example: factory supervisor gives a group of students a tour of the plan, takes

visitors to dinner.

Leaderguiding and motivating employee performance: this role includes training,motivating and disciplining employees

Liaisonlinking the organization or unit whit others: contacting individuals or groupsoutside the managers unit

Informational roles:

Monitorseeks information that may be value by reading magazines, talking withothers: scanning the environment for information that can enhance organization or unit

performance.

Disseminatortransmitting relevant back to others in the work place: providinginformation to subordinates.

Spokespersondistributing information to people outside organization or unit,spokesperson represents the organization to outsiders

Decisional roles

Entrepreneurvoluntary initiator of change, initiate new projects that may improve theorganizations performance

Disturbance handletakes corrective action in response to unforeseen problem:adapting the organization or unit to changing conditions

Resource allocatordistributing resources within the organization or unit: responsiblefor distributing human, physical and monetary resources

Negotiatordiscuss and bargain with other groups and individuals.Managerial skills

Technical Interpersonal


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Conceptual Diagnostic Analytic

Management theories

Classical approach:

1. Scientific managementFrederick Taylor2. Bureaucratic management - Max Weber3. Administrative managementHenry Fayol

Behaviors approach

1. Human relations movementElton Mayo2. Theories X and YDouglas McGregor3. Motivation theoriesAbraham Maslow

Systems approach

1. System theory2. Contingency theory

Quantitative management

1. Management science2. Operations management3.

Management information system

Contemporary management

1. Theory ZWilliam Ouchi2. Excellence in management

Scientific Management

Focuses on increasing the efficiency of production processes in order to enhance

organizational profitability (emphasis on reducing the costs of production activities)

Principles of Scientific Management by Frederick Taylor (1856-1915)

Assign at all responsibility for the organization of work to managers rather than workers Use scientific methods to determine the one best way of performing each task. Select the person most suited to each job to perform that job. Train the worker to perform the job correctly Monitor work. Performance to ensure that specified work procedures are followed

correctly and that appropriate results are achieved


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Provide further support by planning work assignments and eliminating interruptionsTaylor s contribution:

job analysts, time and motion studies, standardization of processes efficiency techniques, and

productivity measurements. He also introduced the idea of training for both managers and

employees, he developed safer work methods. Abolished traditional random job assignments

and unrelenting hours of work.

Other contributors

Frank Gilbreth (1868-1924)- his motion studies (procedure in which jobs are reduced to their

most basic movements) led to more productive ways to accomplish tasks

Lilian Gilbreth (1878-1972)- was concerned with individuals and their performance at work

under stressful conditions; she advocated standard workdays, scheduled breaks, normal lunch

periods, child labor laws, regulations for protecting workers from unsafe conditions

Henry Gantt (1861-1919)- focused on control systems for production scheduling. Developed atask-and-bonus wage plan that paid workers a bonus besides their regular wages if they

completed their work in an assigned amount of time. Each supervisor's bonus, was determined

by the number f subordinates who met deadlines. He also invented the Gantt chart - a bar

chart used by managers to compare actual with planned performance (identifies stages of

work and operational deadlines)

Bureaucratic Management

Bureaucracy - an idealized model of an efficient organization based on clearly definedpositions, formal authority, formal record keeping, and a regulated environment that includes

well- documented rules, policies and procedures.

Max Weber (1864-1920)- developed the bureaucratic model as a rational method of

structuring complex organizations.

Weber's Ideal Bureaucracy

1) Division of labor. Jobs are broken down into simple, routine and well-definedtasks

2) Authority hierarchy.Offices or positions are organized in a hierarchy, each lowerone being controlled and supervised by a higher one.

3) Formal selection.All organizational members are to be selected on the basis ortechnical qualifications.

4) Formal rules and regulations.To ensure uniformity and to regulate the actions oremployees, managers must depend heavily on formal organizational rules.


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5) Impersonality.Rules and controls are applied uniformly, avoiding involvementwith personalities and personal preferences of employees.

6) Career orientation.Managers are professional officials rather than owners of theunits they manage They work for fixed salaries and pursue their careers within the

organization

Administrative Management.

Focuses on increasing the efficiency of administrative procedures

Seeks to establish universal principles of management

Henri Fayol (1841-1926) was the first to identify the four functions of management, and

first one to propose a list of administrative management principles - to help administrators

perform their jobs

Fayol's 14 Principles of management:

1. Division of work2. Authority and responsibility3. Discipline4. Unity of command5. Unity of Direction6. Subordination of individual interest to general interest7. Remuneration of personnel8. Centralization9. Scalar chain10.Order11.Equity12.Stability of personnel13.Initiative14.Esprit de corps

Behavioral Approach

An approach that explains how managers influence others to achieve organizational objectivesthrough human relations and motivation

Emerged from research run by behavioral scientists who sought ways of improving

organization effectiveness by modifying individual and group behavior

Human relations movement

Presents how human relations affected productivity


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Emphasizes increasing employee growth, development and satisfaction

Focused on individuals working in group environments

Managers were encouraged to be more cooperative with workers, to improve social

environment at work and to reinforce Individual employees self-images

Human relations theory contributor

Elton Mayo (1860-1949)- together with Harvard University research team conducted a series

of experiments (Hawthorne Studies) at the Western Electric Company's Hawthorne plant In

Illinois.

His results showed that human relations and behavior were far more crucial considerations for

management. First, recognition and attention to individual workers motivated them to work

harder. Second, group dynamics influenced work Substantially. Third and perhaps more

important ivfVdi1tl6rt by researchers created a perception byworkers real or not that they

were doing something of value The act of intervention and its impact is now called theHawthorne Effect

After Hawthorne Studies organizations were viewed as social systems with both formal and

informal patterns of authority and communications. Mayo was the first to suggest that

managers needed interpersonal skills for counseling employees, diagnosing personal and

group needs and balancing technical needs for productivity with human needs for job

satisfaction.

Theories X and Y

Douglas McGregor (1906-1964)-brought fresh perspective to management and challenged

leaders to think of subordinate as responsible, capable and creative. He felt that leaders used

to treat subordinates as Irresponsible and lazy He called this approach to management theory

X and Y

Theory X assumptions

The average human being dislike work and will avoid it if possible

Most people must be coerced, controlled, directed, or threatened with punishmentbefore they win put effort toward the achievement of organizational objectives

The average human being prefers to be directed, wishes to avoid responsibility, hasrelatively little ambition, and wants security above all

Theory Y assumptions:

Expending physical and mental effort at work is as natural as play and rest.


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Extant control and the threat f punishment are not the only means to direct efforttoward organizational objectives People wilt exorcise self-direction and self-control in

the service of objectives to which they feat committed

Commitment to objectives Is a function of rewards. The most significant rewardsassociated with achievement of organizational objectives are satisfaction and self-

actualization.

Avoidance of responsibility, tack of ambition. and emphasis on security are not Inherenthuman characteristics-people teams not only to accept but to seek responsibility.

Imagination, creativity. Ingenuity are widely distributed among peopleMotivation theories

Focused on employees' personal needs and how they influenced performance.

Contributions to motivation theory by several important scholars immediately after World

War 2 inspired greater efforts to understanding individual behavior in work environments -

this focus led to a field of study called organizational behavior

Abraham Maslow (1908-1870) - based his theory of human behavior on the Idea that

individuals work to satisfy unfulfilled needs.

Maslows Hierarchy of needs:

1. Self - actualization (self-fulfillment, growth, creativity, innovation)2. Esteem (respect, prestige, recognition, esteem)3. Social (love, affection, sense of belonging, friendship)4. Safety (security, personal and economic protection)5. Physiological (biological needs, food, water, sleeping)

Systems theory- characterizes every organization as a system that is open to the influence of

the surrounding environment

System - is a collective association of interrelated and Interdependent parts; organizations are

systems of divisions, departments and specialized activities. It is not the machines and facilitie

we work with that define our systems but the relationships among human beings

The systems approach provides a frame of reference for managers who must make decisions

in a constantly changing environment.

The emergence of systems concepts during the late 1940s created new fields such as

management information systems (MIS)

Systems theory contributors


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Daniel Katz and Robert Kahn - Identified essential to organizational growth and survival

process with the sequence of events INPUTS importing from environment (raw materials,

production equipment, human resources),

THROUGHPUT - production processes, administrative processes, OUTPUTS - goods or services

exporting to environment.

Organizations continue to grow only as long as they Import more material and energy inputsfrom the environment than they expend in producing the outputs information inputs that

signal how the environment and organizations are functioning can help determine whether

the organization will continue to survive, negative feedback indicates potential failure and the

need of change.

Contingency perspective

Claims that no single theory procedure or set of rules is useful in every situation

An approach to management that suggests leadership behavior should be adapted toaccommodate different situations or alternatively leaders should be assigned to situation that

best fit their leadership styles

Rather to suggest "one best way" to manage, contingency management implies that there are

many effective ways to behave as managers, each depending on the circumstances of the

work environment

Quantitative management

An approach to management based on decision theory use of statistical techniques forproblem solving and application of mathematical models to organizational processes

Management science

An approach to management also called the quantitative school that relies on models and

mathematical analysis to improve decision making alternatively called operations research

Most applications of management science are reserved for complex situations requiring highly

specialized knowledge

Two important reasons for the use of mathematical models are: the ability to focus on

important details of a problem and the ability to use a computer to handle calculations.

Operations Management

the application of quantitative techniques in production and operations control using

analytical models to Improve organisation activities


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Quantitative methods are not necessarily mathematically complex; most of them use simple

statistics and are easily understood. In this area of applied management, some of the more

useful techniques are inventory control models, material-handling procedures, purchasing

systems, production-scheduling systems and cost control processes.

The applications of operations management are in production environment but also service

operations (for example banks)

As a result of applications of operations management techniques productivity has improved

because managers are better informed about operational effectiveness - they can stimulate

operations, monitor results, reduce errors more effectively and make better decisions.

Management Information Systems

MIS are integrated networks of information that support management decision making often

through computer applications and data base systems.

It includes the vertical Integration of management functions from top level executives to firstline supervisors as wall as horizontal Integration of activities among functional areas such as

production, marketing, personnel end finance.

One of the main roles of MIS Is to recognize information as the resource and then use that

resource effectively to better achieve organizational objectives Using information resources

effectively requires MIS managers to consider how best to collect, store, process and transmit

data.

An MIS system includes people, hardware, software, data and processes. The ultimate aim of

generating management information systems In not to overwhelm managers with information

but to create systems that provide sufficient and accurate information in a timely fashion

Contemporary management

Interest in management theory has heightened in years, managers continued to strive toward

a better understanding of how they can better compete and lead their organizations toward

improved effectiveness

Management approaches have focused on national trends in productivity and howorganizations can improve their performance.

William Ouchi introduced Theory Z - an attempt to integrate common business practices from

the United States and Japan into one middle-ground framework.

Theory Z

William Ouchi Inlroduced Theory Z In 1861 to describe American adaptations of Japanese

organizational behavior.


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Z type company endorsee collective responsibility, concern for employees and a commitment

to participative decision making.

These organizations recognize Individual end group needs, but simultaneously develop

exceptional quality control techniques end scientific work methods.

This style of management Incorporates classical principles, behavioral tenets.

end human relations concepts to emphasize quality and productivity.

American - Type A

Mobile employees Personal decision making Individual responsibility Rapid advancement Specialization In careers Explicit control mechanism s Focused concern on employees

Japanese- Type J

Lifetime employment Collective decision making Group responsibilities Slow and systematic Advancement General career perspective Implicit control system Holistic concern for employees.

Excellence in management theory

Originally presented by Thomas J. Peters and Robert H. Waterman, suggests that certain

"excellent" companies, or those with a long-term history of success, do things in a systematic

fashion that sets them apart from other firms

The basic set of characteristics that presumably lead to excellence Include;

getting things done on time staying close to the customer promoting autonomy and entrepreneurship maximizing productivity through people doing what the company knows best maintaining a simple, lean organizational structure promoting both centralization and decentralization simultaneously


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Planning

Organization plans

Strategic plana general plan outlining decisions of resource allocation, priorities and action

steps necessary to reach strategic goals.

These plans are set by the board of directors and top management, generally have an

extended time horizon and address questions of scope, resource deployment, competitive

advantage.

Kinds of organizational plans

Tactical plana plan aimed at achieving tactical goals and developed to implement parts of

strategic plan.

Tactical plans involve upper and middle management and compared with strategic plans have

shorter time horizon and more specific and concrete focus. They are concerned more whit

actually getting things done than with deciding what to do.

Developing and executing tactical plans

Developing tactical plans

Recognize and understand overarching strategic plans and tactical goals Specify relevant resource and time issues Recognize and identify human resource commitments

Executing tactical plans

Evaluate each course of action in light of its goal Obtain and distribute information and resources Monitor horizontal and vertical communication and integration of activities Monitor ongoing activities for goal achievement

Kind of organizational plans

Operational plansfocuses on carrying out tactical plans to achieve operational goals.

Developed by middle and lower level managers, have short-term focus and are relatively

narrow in scope. Each one deals with a fairly small set of activities.

Types of operational plans

Single use plandeveloped for nonrecurring situations, developed to carry out a course of

action that is not likely to be repeated in the future. Forms of single use plans are programs

(singe use plan for a large set of activities like opening a new facility) and projects( single use

plan of less scope and complexity than a program; may be a part of a broader program)


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Standing plandeveloped for activities that recur regularly over a period of time; standing

plans can greatly enhance efficiency by routinizing decision making. Kinds of standing plans are

policies ( standing plan specifying the organizations general response to a designated problem

or situation).Standard operating procedures (standing plan outlining steps to be followed in

particular circumstances so it is more specific than a policy) and rules and regulations (

standing plans describing exactly how specific activities are be carried out).

Time frames for planning

Long range plan - a plan that covers many years perhaps even decades; common longrange plans are for five years or more (10 20 years)

Intermediate plans- a plan that generally covers from one year to five years. They areespecially important for middle and first tine mangers

Short range plan- has a time frame of one year or less. They greatly affect themanagers day-to-day activities. There are two basic kinds of short range plans: an

action plan- used to operationalize any other kind of plan, a reaction plan- developedto allow the company to react to an unforeseen circumstance (the firms reacting to a

condition created by its environment)

Contingency planning

the determination of alternative courses of action to be taken if an intended plan is

unexpectedly disrupted or rendered inappropriate (it means that we have to prepare at least

two alternative plans for example optimistic and pessimistic one - high development rate or

recession in the economy).

Contingency planning is important especially for organizations operating in complex or

dynamic environment. It is a useful technique for helping mangers cope with uncertainty and

change.

Barriers to goal setting and planning

inappropriate goals improper reward system dynamic and complex environment reluctance to establish goals (because of lack of confidence, fear of failure) resistance to change constraints (lack of resources, government restrictions, strong competition, lack of time

- I will do it tomorrow)

Overcoming the barriers

understanding the purposes of goals and planning


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communication and participation consistency, revision and updating (goals should be consistent horizontally - across the

organization, from one department to next, and vertically - consistent up and down the

organization - strategic, tactical and operational goals must agree with one another)

effective reward systemsManagement by Objectives MBO- a widely used method for managing the goal setting andplanning processes concurrently to ensure that both are done effectively.

MBOis the process of collaborative goal setting by a manager and subordinate; theextent to which goats are accomplished is a major factor in evaluating and rewarding

the subordinates performance

The purpose of MBO its to give subordinates a voice in the goal setting and planningprocesses and to clarify for them exactly what they are expected to accomplish in a

given time span. Thus, MBO is concerned with goal setting and planning for individual

mangers and their units or workgroups.

Management by Objectives MBO

Identify an employee's key job tasks Establish specific and challenging goals for each key task Specify the deadline for each goal Have the employee actively participate Prioritize goals Rate goals for difficulty and importance Build in feedback mechanism to assess goal progress Link rewards to goal attainment

A strategy-comprehensive plan for accomplishing an organizations goals

Strategic management-a way of approaching business opportunities and challenges, a

comprehensive and ongoing management process aimed at formulating and implementing

effective strategies

DECISION MAKING- the act of choosing one alternative from among a set of alternatives

Decision making process- recognizing and defining the nature of a decision situation,

identifying alternatives, choosing the best alternative, and putting into practice

Types of decisions

Programmed decision- a decision that in fairly structured and/or recurs with somefrequency

Nonprogrammed decision- a decision that is relatively unstructured; occurs much lessoften. Managers faced with such decisions must treat each one as unique, Investing


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enormous amounts of time, energy and resources into exploring the situation from all

perspectives. Intuition and experience are major factors in nonprogrammed decisions.

Decision making conditions

State of certainty- a condition in which the decision maker knows withreasonable certainty what the alternatives are and what conditions are associated

with each alternative State of risk- a condition in which the availability of each alternative and its

potential payoffs and costs are all associated with probability estimates

State of uncertainty- a condition in which the decision maker does not know allthe alternatives, the risk associated with each or the consequences each

alternative is likely to have. Intuition, judgment and experience play major roles in

the decision-making process under conditions of uncertainty

Rational perspectives on decision making

Classical model of decision-making- a prescriptive approach to decision making that tells

managers how they should make decisions. It assumes that managers are logical and rational

and that their decisions will be in the best interests of the organization

Classical model of decision making

When faced with a decision situation, Manager should...

Obtain complete and perfect information (about situation arid possible alternatives)

Eliminate uncertainly (to achieve a decision condition of certainty) Evaluate everything (all aspects of the decision situation) rationally and logically

... and end up with a decision that best serves the interests of the organization

Steps in rational decision making ()

Behavioral aspects of decision making

The administrative modelof decision-making - a model that argues that decision makers have

incomplete and imperfect information, are constrained by bounded rationality and tend to

satisfice when making decisions

Bounded rationality - a concept suggesting that decision makers are limited by their values and

unconscious reflexes, skills and habits

Satisficing - the tendency to search for alternatives only until one is found that meets some

minimum standard of sufficiency

The administrative model of decision making


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When faced with a decision situation, managers actually...

Use incomplete and imperfect information Are constrained by bounded rationality Tend to satisfice

...and end up with a decision that may or may not serve the interests of the organization

Behavioral nature of decision making

Political forces- a coalition - an informal alliance of individuals or groups formed to achieve a

common goal. This common goal is often a preferred decision alternative.

Intuition- an innate belief about something without conscious consideration

Escalation of commitment- a decision makers staying with a decision even when it appears

to be wrong

Group decision making in organizations

Interacting groups- a decision making group in which members openly discuss, argue about

and agree on the best alternatives. The most common form of decision-making group. An

advantage of this method is that the interaction between people often sparks new ideas and

promotes understanding.

Delphi groups- a form of group decision making in which a group is used to achieve consensus

of expert opinion

Nominal groups- a structured technique used to generate creative and Innovative alternativeor ideas

Advantages of group decision-making

More information and knowledge are available More alternatives are likely to be generated More acceptance of the final decision is likely Enhanced communication of the decision may result Better decisions generally emerge

Disadvantages of group decision-making

The process takes longer so it is costlier Compromise decisions resulting from indecisiveness may emerge One person may dominate the group Groupthink may occur

The components of strategy


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Distinctive competence- is something that organization does exceptionally well; anorganizational strength possessed by only a small number of competing firms

Scope- when applied to strategy, it specifies the range of markets in which anorganization will compete.

Resource deployment- how an organization distributes its resources across the areas inwhich it competes

Types of strategic alternatives

Business level strategy- the set of strategic alternatives that an organization chooses from as

it conducts business in a particular industry or market. Such alternatives help the organization

focus its competitive efforts for each industry or market in a targeted and focused manner.

Corporate level strategy- the set of strategic alternatives that an organization chooses from

as it manages its operations simultaneously across several industries and several markets.

Most large companies today compete in a variety of industries and markets. Thus, although

they develop business-level strategies for each industry or market they also develop an overall

strategy that helps define the mix of industries and markets that are of interest to the firm.

Strategy formulation and Implementation

Strategy formulation- the set of processes involved in creating or determining the strategies

of the organization; it focuses on the content of strategies

Strategy implementation- the methods by which strategies are operationalized or executed

within the organization; it focuses on the processes through which strategies are achieved

Using SWOT analysis to formulate strategy

Evaluating an organizations strengths and weaknesses Evaluating an organizations opportunities and threats

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