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B. Sc. In Business Management Special Degree

The Management ProcessStudent’s Course Material

Module Lecturer:

Mr. Kolitha Ranawaka B. Sc. (Hons.), MIM (SL), ADCP, MBA

[email protected]

National School of Business Management

1 Introduction to

the Study of

Management andthe Fundamentals

of Management



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What Is an Organization?• A group of people working together in a structured

and coordinated fashion to achieve a set of goals.

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How Do Managers Combine andCoordinate the Various Kinds of

Resources?



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What Is Management?

• A set of activities(including planning anddecision making,organizing, leading, andcontrolling) directed at anorganization’s resources(human, financial,physical, andinformational) with theaim of achieving

organizational goals in anefficient and effectivemanner.

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The Manager’s Job Is To:

PLAN:

– A manager cannot operate effectively unless he or

she has long range plans.

A plan for each day’s work:

–What is to be done, and why do it?

– When is it to be done, and how will it be done?

– Who is to do the job?

– Where should it be done?



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The Manager Must Organize

• When there is more than one employee

needed to carry out a plan.

• Then organization is needed.

• A team must be formed.

• Each job must be carefully defined in terms of

what is to be done.

• Establish delegation of responsibility.

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The Manager Must Control

Control means?

• A method of checking

up to find what has

been done and what

must be done.

• A manager must knowhow well employees

are performing.



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The Management ProcessPlanning and Decision Making

– Setting the organization’s goalsand deciding how best toachieve them.

Organizing

– Determining how best to groupactivities and resources.

Leading

– Motivating members of theorganization

Controlling – Monitoring and correcting

activities

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The Managerial Process

•The manager’s

primary

responsibility is to

carry out the

management

process.

•This figure

illustrates the basicdefinitions and

interrelationships of

the basic managerial

functions:



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Kinds of Managers

Managing at DifferentLevels of the organization:

Top Managers

• Small group of executives

who manage the overall

organization, the strategic

level.

Middle Managers

• A large group thatimplement the strategies

developed at the top.

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Kinds of Managers

First-Line Managers

– Supervise and

coordinate the

activities of operating

employees.



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Kinds of Managers by

Level and Area

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Managing in DifferentAreas of the Organization

• Marketing Managers

• Financial Managers

• Operations Managers

• Human ResourceManagers

• AdministrativeManagers

• SpecializedManagement



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Basic Managerial Roles and Skills

Regardless of level orarea within anorganization, allmanagers must playcertain roles and exhibitcertain skills in order tobe successful, such as:

– Do certain things.

– Meet certain needs.

– Have certainresponsibilities.

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The Three Interpersonal Roles

• Figurehead

• Leader

• Liaison, Coordinator



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The Three Informational Roles

• Monitor

• Disseminator

• Spokesperson

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The Four DECISIONAL ROLES

• Entrepreneur

• Disturbance Handler

• Resource Allocator

• Negotiator



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Managerial Skills

• In addition to fulfilling

roles, managers alsoneed a number of specific skills.

• The most fundamentalmanagement skillsare: – Technical

– Interpersonal

– Conceptual

–

Diagnostic – Communication

– Decision-making

– Time-management

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Technical Skills

• Necessary to

accomplish or

understand the

specific kind of work

being done.

• These skills areespecially important

for first line managers.



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Interpersonal Skills

• The ability tocommunicate with,understand, andmotivate bothindividuals and groups.

• Be able to get alongwith:

– Subordinates

– Peers

– Those at higherlevels

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Conceptual Skills

• A manager’s ability to

think in the abstract.

• The mental capacity to:

– Understand

organizational goals and

its environment. – How the organization is

structured.

– Viewing the

organization as system.



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Diagnostic Skills

• Skills that enable a

manager to visualize

the most appropriate

response to a

situation.

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Communication Skills

• A manager’s abilities

both to effectively

convey ideas and

information to others

and to effectively

receive ideas andinformation from

others.



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Decision-Making Skills

• A manager’s ability tocorrectly recognizeand define problemsand opportunities andto then select anappropriate course of action to solveproblems andcapitalize on

opportunities.

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Time-Management Skills

• The manager’s ability

to prioritize work, to

work efficiently, and

to delegate

appropriately.



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The Nature of Management

The manager’s job is

fraught with:

– Uncertainty

– Change

– Interruption

– Fragmented activities

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A Manager Must be a Leader of Employees

• It means overseeing the

team by influencing the

employees to get the job

done.

• Motivating employees.

• Creating an environmentthat makes employees

work efficiently.

• Managers get employees

to put forth their best

effort.



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2 Traditional and

Contemporary

Issues and

Challenges in

Management

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Traditional and Contemporary Issuesand Challenges

The role of theory and history in management:

– Theory is a conceptual framework for organizing

knowledge and providing a blueprint for action.

– History: Understanding the historical context of

management provides a sense of heritage and can

help managers avoid the mistakes of others.



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The Practice of Management Can Be

Traced Back Thousands of Years

• The Egyptians used management functions of

planning, organizing, and controlling when

they constructed the pyramids.

• Observe the next slide, it will illustrate a few

of the most important management

breakthroughs and practices over the last

4000 years:

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A Timeline of the development of Management



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The Three Traditional Management

Perspectives

The Classical Management

Perspective:

– Ideas of the early 20th century

theorists and managers converged

with the emergence and evolution

of large-scale business and

management practice.

–

This perspective actually includestwo different viewpoints: scientific

management and administrative

management.

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Scientific Management

• Concerned withimproving theperformance of individual workers.

• Frederick Taylordeveloped thissystem, which hebelieved would lead toa more efficient andproductive work force.



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Steps in Scientific Management

1. Develop a science for each element of the job.

2. Scientifically select employees and then train them

to do the job.

3. Supervise employees to make sure they follow

prescribed methods.

Continue to plan the work, but use workers to get

the work done.

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Steps in Scientific Management



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Administrative Management

•

Whereas scientific managementdeals with the jobs of individualemployees, administrativemanagement focuses on managingthe total organization.

• Administrative management laidthe foundation for laterdevelopment in managementtheory.

• It is more appropriate for stableand simple organizations than fortoday’s dynamic and complexorganizations.

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The Behavioral Management Perspective

• Unlike the classicalmanagement perspective,the behavioralmanagement perspectiveplaced more emphasis onindividual attitudes andbehaviors and on groupprocesses and recognizedthe importance of behavioral processes in

the work place.

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The Human Relations Movement

• Proposed that workers

respond primarily to

the social context of

the workplace,

including social

conditioning, groupnorms, and

interpersonal

dynamics.



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Another Theory on How Employees

Behave

Theory Y Assumptions: – Employees are willing to

work.

– Employees are self directed.

– They acceptresponsibility.

– Employees are creative.

– They are self-controlled.

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The Quantitative ManagementPerspective

Management Science vs. Quantitative

Management:

– Management Science focuses specifically on the

development of mathematical models.

–

Quantitative Management applies quantitativetechniques to management.



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The Systems Perspectiveof Organizations

Inputs from the

environment:

material inputs,

human inputs,

financial inputs, and

information inputs.

Transformation

Process:

technology,

operating systems,

administrative

systems, and

control systems

Outputs into

the environment:

products/services,

profits/losses,

employee behaviors,

and information

outputs

Feedback



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Concepts• Synergy: two or more

subsystems workingtogether may often be

more successful then

working alone.

• Entropy: a normal process

leading to system decline.

• Universal perspective:

tempting to identify one

best way.

• Contingency perspective:

depending on elements in

that situation.

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An Integrative Framework of Management Perspectives

Effective and efficient management

ClassicalManagementPerspectives:

Methods for enhancingefficiency and

facilitating planning,organizing, and

controlling

BehavioralManagementPerspectives:

Insights for motivatingperformance and

understanding individualbehavior, groups andteams, and leadership

QuantitativeManagementPerspective:Techniques for

improving decisionmaking, resource

allocation, andoperations

Contingency Perspective Systems Approach

Recognition of the situationalnature of management.Response to particular

characteristics of situation.

Recognition of internalinterdependencies.

Recognition of environmentalinfluences.



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Understanding a System

System: an interrelated set of elementsfunctioning as a whole.

Types of Systems:

– Open System: an organizational system thatinteracts with its environment.

– Closed System: an organizational system that does

not interact with its environment. – Subsystem: a system within a broader system.

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Operations Management

• Operations

management

techniques are

generally concerned

with helping the

organization produceproducts or services

more efficiently.



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Integrating Perspectives for Managers

• A complete understanding of management

requires an appreciation of, classical,

behavioral, and quantitative approaches.

• The systems and contingency perspectives can

help managers integrate the three approaches

and enlarge understanding of all three.

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The Emergence of ModernManagement Perspectives



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3 The Environment

and Culture of

Organizations

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The Organization’s Environments

• External environment:everything outside anorganization’s boundaries

that might affect it. Theuncontrollableenvironment.

• Internal environment: theconditions and forceswithin an organization.The controllableenvironment.



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The

Organization

and Its

Environments

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The General Environment

• Economic dimensions: the overall healthand vitality of the economic system inwhich the organization operates.

• Technical dimensions: the methodsavailable for converting resources intoproducts or services.

• Socio-cultural dimensions: the customs,mores, values, and demographics of thesociety in which the organization functions.



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Additional Dimensions

• Political-Legal dimension:the government regulationof business and the generalrelationship betweenbusiness and government.

• International dimension: theextent to which anorganization is involved in oraffected by business inother countries.

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McDonald’s

General

Environment



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Public pressure

groupsSuppliers Customers

Government Labor unions

Competitors

The Organizational Environment

The

Organization

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The Task Environment

• Competitors: an organizationthat competes with otherorganizations.

• Customer: whoever paysmoney to acquire anorganization’s products orservices.

•Supplier: an organization thatprovides resources for otherorganizations.

• Regulator: a unit that has thepotential to control, legislate, orinfluence an organization’spolicies and practices.



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Task Environments Continued

• Interest group: agroup organized by itsmembers to attemptto influenceorganizations.

• Strategic partner: anorganization workingtogether with one ormore organizations ina joint venture orother partnership.

Copyright © Houghton Mifflin

Company. All rights reserved.3 - 62

Figure 3.3:

McDonald’s

Task

Environment



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The Internal Environment

• Owner: someone who has legal property rights to a

business.

• Board of directors: governing body elected by a

corporation’s stockholders and charged with

overseeing the general management of the firm.

• Employees: those employed by the organization.

• Physical work environment: the firm’s facilities.

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Environmental Change, Complexity,and Uncertainty



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Organizational Culture

• The set of values, beliefs, behaviors, customs,and attitudes that helps the members of theorganization understand what it stands for,how it does things, and what it considersimportant.

• Organizational culture is important for itdetermines the “feel” of the organization.

• Its starting point is often the founder.

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Managing Organizational Culture

• The manager must understand the current

culture and then decide if it should be

maintained or changed.

• Managers must walk a fine line between

maintaining a culture that still workseffectively versus changing a culture that has

become dysfunctional.



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Organizational Environment

Relationships

• Uncertainty: a driving force that influences

many organizational decisions.

• Competitive forces:

– Threat of new competitive entrants.

– Competitive rivalry.

– Threat of substitute products.

–The power of buyers.

– The power of suppliers.

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Environmental Turbulence

• Terrorist attacks.

• Workplace violence.

• Computer viruses.

•

Such crises affectorganizations in

different ways.



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How Organizations Respond to Their Environments:

Information

management

Social

responsibility

Strategic

responses

The

Organization

Direct

influence

Organizationdesign and

flexibility

Task environment

General environment

Mergers,

takeovers

acquisitions,alliances

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How Organizations Adapt to TheirEnvironments

Each organization must asses its own unique

situation then adapt according to the wisdom

of senior management, for example:

– Information systems.

–Strategic responses.

– Mergers, acquisitions, and alliances.

– Organizational design and flexibility.

– Direct influence of the environment.



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The Environment and Organizational

Effectiveness

• How well the organization understands, reacts to, and

influences its environment.

• The systems resources approach: extent to which the

organization can acquire needed resources.

• The internal processes approach: internal mechanisms of the

organization and forces on minimizing strain.

• The goal approach: how well the firm obtains goals.

• Strategic constituencies: groups who have a stake in the

organization.

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A Model of OrganizationalEffectiveness



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4 Foundations of

Planning and

Decision Making



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Organizational Goals

• Goals are critical toorganizationaleffectiveness and serve anumber of purposes.

• Purposes of goals:

– Provide guidance.

– Promote goodplanning.

– Serve as sources of

motivation. – Mechanism for

evaluation and control.

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Identification Integration

Adaptation RevitalizationCollaboration

Organizations Have a Purpose— That Is Why They Need Goals

Organizational

purpose for

goals



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Kinds of Goals

• Goals vary by level, area, and time frame.

• Mission: a statement of an organization’s

fundamental purpose.

• Strategic goal: a goal set by and for top management

of the organization.

• Tactical goal: set by and for middle managers of the

organization.

• Operational goal: set by and for lower managers of the organization.

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Other Goals

• Area: organizations

also set goals for

different areas.

• Time frame:

organizations also set

goals across differenttime frames.



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Responsibilities for Setting Goals

Who sets goals?

– All managers should be

involved in the goal

setting process.

– Each manager has

responsibilities for

setting goals that

correspond to their

level.

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Managing Multiple Goals

• When setting goals

organizations sometimes

experience conflicts or

contradictions among goals.

• Conflicts are addressed

through the use of the

Optimizing concept:

–Optimizing: balancing and

reconciling possible

conflicts among goals.



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The planningfunction

consists of:

What is to beaccomplished?

How is it to beaccomplished?

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Planninghas four (04)

elements:

1. Objectives 2. Actions

4. Resources 3. Implementation



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Why Is Planning Important?

A task can not beaccomplished if the

manager is notaware of:

How isit to bedone

Whathas to

be done

When isit to bedone

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Organizational Planning

Kinds of organizational

plans:

– Strategic plan: a general

plan outlining decisions

of allocation, priorities,

and action steps

necessary to reach

strategic goals.



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Tactical Plans

• A plan aimed atachieving tactical anddeveloped toimplement specificparts of a strategicplan.

• Operational plan: aplan that focuses oncarrying out tacticalplans to achieveoperational goals.

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Time Frames for Plans

• Long-range plan: covers many years, perhaps

even decades; common long-range plans are

for five years or more.

• Intermediate plan: usually covers periods from

one to five years.• Short-range plan: generally covers a span of

one year or less.



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More Types of Plans

• Action plan: used toput into operation any

other kind of plan.

• Reaction plan:

designed to allow the

company to react to

an unforeseen

circumstance.

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Responsibilities for Planning

• Planning staff: some large organizations

develop a professional planning staff.

• Planning task force: often comprised of line

managers with special interest in the relevant

area of planning.• Board of directors: establish the corporate

mission and strategy, and in some companies

take part in the planning process.



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Contingency Planning

• The determination of alternative courses of

action to be taken if

an intended plan of

action is unexpectedly

disrupted or rendered

inappropriate.

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Crisis Management

• The set of procedures the

organization uses in the

event of a disaster or

other unexpected

calamity.

• A related concept is the

set of procedures theorganization uses in the

event of a disaster or

other unexpected

calamity.



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Tactical Planning

The development and executing of tactical

plans:

– Tactical plans are used to accomplish specific parts

of a strategic plan. Each strategic plan is generally

implemented through several tactical plans.

Effective tactical planning involves both

development and execution.

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Tactical PlanDevelopment and Execution

Development:

– Recognize and understand

overarching strategic

plans and tactical goals.

– Specify relevant resource

and time issues.

– Identify and articulate

human resource

commitments.

Execution:

– Evaluate each course of

action in light of its goals.

– Obtain and distribute

information and resources.

–

Monitor horizontal andvertical communication

and integration of

activities.

– Monitor ongoing activities

for goal achievement.



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Types of Operational Planning

• Single-use plan: developed to carry out a

course of action not likely to be repeated in

the future.

• For a program, a plan for a large set of

activities.

• For a project, a plan of less scope and

complexity than a program.

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Standing Plan

• Developed for activities that recur regularlyover a period of time: – For a policy, a standing plan specifying the

organization’s general response to a designatedproblem or situation.

– Standard operating procedure: a standing planoutlining steps to be followed in particularcircumstances.

– Rules and regulations: standing plans describingexactly how specific activities are to be carriedout.



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Barriers to

Goal Setting and Planning

Major Barriers

– Inappropriate goals.

– Improper reward system.

– Dynamic and complex

environment.

– Reluctance to establish

goals.

– Resistance to change.

– Constraints.

Overcoming Barriers

– Understanding the

purposes of goals and

planning.

– Communication and

participation.

– Consistency, revision, and

updating.

– Effective reward system.

5 ManagingDecision Making

and ProblemSolving



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The Nature of Decision Making

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 it intopractice.

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Types of Decisions

Programmed decision:

– A decision that is fairly

structured or recurs with

some frequency (or both).

Non-programmed decision:

–

A decision that is relativelyunstructured and occurs

much less often than a

PROGRAMMED DECISION.



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A View of Decision-Making Conditions

Certainty Risk Uncertainty

Level of ambiguity and chances of making a bad decision

Lower Moderate Higher

The decisionmaker faces

conditions of:

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Decision-Making Conditions

State of certainty:

– A condition in which the decisionmaker knows with reasonablecertainty what the alternativesare and what conditions areassociated with each alternative.

State of risk:

– A condition in which theavailability of each alternativeand its potential payoffs andcosts are all associated withprobability estimates.



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State of Uncertainty

• A condition in whichthe decision maker

does not know all the

alternatives, the risks

associated with each,

or the likely

consequences of each

alternative.

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Obtain complete andperfect information.

Eliminate uncertainty.Evaluate everything

rationally and logically…

The Classical Model of DecisionMaking

When faced with adecision situation,

managersshould…

…and end up with a decision that best

serves the interestsof the organization.



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Rational Perspectives on Decision Making

Classical model: – A prescriptive approach to

decision making that tells

managers how they should

make decisions. It assumes

that managers are logical

and rational and that they

make decisions that are in

the best interests of the

organization.

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Steps in Rational Decision Making

STEP

– Recognize and define

situation.

– Identify alternatives.

– Evaluate alternatives.

– Select alternative. – Implement alternative.

– Follow up and evaluate

results.

DETAIL

– Stimulus may be positive

or negative.

– Alternatives must be

generated.

–Feasibility check.

– Choose best fit alternative.

– Implementation.

– Does it work?



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Identifying Alternatives

• When the decision situation has been

recognized and defined, the second step is to

identify alternative courses.

• The third step in the decision-making process

is evaluating each alternative.• See next slide Figure 9.3 for an illustration of a

decision tree.



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Evaluating Alternatives in the

Decision-Making Process

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Behavioral Aspects of Decision Making

The Administrative Model:

–A decision making model

showing that managers:

1. Have incomplete and

imperfect information.2. Are constrained by bounded

rationality.

3. Tend to “satisfice” when

making decisions.



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...and end up with adecision that may ormay not serve the

interests of theorganization.

The Administrative Model of Decision

Making

Use incomplete andimperfect Information.

Are constrained bybounded rationality.Tend to satisfice…

When faced with a

decision situationmanagersactually…

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Bounded Rationality

• A concept suggesting that decision makers are

limited by their values and unconscious:

A. Values.

B. Unconscious reflexes.

C. Skills.D. Habits.



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Satisficing

• The tendency to

search for alternatives

only until one is found

that meets some

minimum standard of

sufficiency.

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Political Forces in Decision Making

Coalition:

– An informal alliance of

groups formed to achieve

a common goal.



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Intuition and Escalation of Commitment

Intuition:

– An innate belief about

something without

conscious consideration.

Escalation of

commitment:

– A decision maker’s

staying with a decision

even when it appears tobe wrong.

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Risk Propensity and Decision Making

Risk propensity:

– The extent to which a

decision maker is willing

to gamble when makinga decision.



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Group and Team Decision Making in

Organizations

Forms of Group and Team Decision Making:

– Interacting group or team:

• A decision making group or team in which membersopenly discuss, argue about, and agree on the bestalternative.

– Delphi group:

• A form of group decision making in which a group solicitsinput from a panel of experts who contribute

individually; their opinions are combined and, in effect,averaged.

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Nominal Groups

• Unlike the Delphi method where group

members do not see one another, this group is

brought together.

• A structured technique used most often to

generate: – Creativity.

– Innovative alternatives.

– Ideas.



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Advantages and Disadvantages of

Group and Team Decision Making

ADVANTAGES

– More information andknowledge available.

– More alternativesgenerated.

– More acceptance.

– Enhancedcommunication.

– Better discussions.

DISADVANTAGES

– The process takes

longer.

– Compromised

decisions result from

indecisiveness.

– One person may

dominate. – Groupthink may occur.

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Groupthink

• A situation that occurs

when a group or

team’s desire for

consensus and

cohesiveness

overwhelms the goalof reaching the best

possible decision.



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6 Basic Elements of

Organizing



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What Is Organizing?

• Deciding how best togroup organizational

activities and resources.

• What are the building

blocks of organizing?

– Organization Structure:

• The set of elements that

can be used to

configure an

organization.

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Why Do You Have to Organize anOrganization?

• Because all the

structural elements of

the company and how

those elements work

together are used tomanage the total

organization.



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The Importance of Organizing

• Clarifies

• Divides

• Provides

• Establishes

• Develops

• Relates

• Establishes authority

11 - 124

Organizing Leads to Decision Making

• Decision making is

part of planning that

involves selecting a

course of action.

• When the manager is

organized activitiesare coordinated.



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Organizational Structure

• The building blocks used to form an

organization.

• One of the manager’s jobs is to know how to

put the building blocks together.

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Designing Jobs

• What is one of the

building blocks?

– Job Design:

• The determination of an

individual’s work-

related responsibilities.



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Overall Tasks Are Broken Down By?

• Job Specialization:

– The degree to which

the overall task of the

organization is broken

down and divided into

smaller component

parts.

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The Five Alternatives to JobSpecialization:

Job Rotation: – Involves systematically moving employees from

one job to another.

Job Enlargement: – Involves increasing the total number of tasks

worker performs.Job Enrichment:

– Involves increasing both the number of tasks theworker does and the control the worker has overthe job.



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Alternatives Continued

Job CharacteristicsApproach:

– Suggests that jobsshould be diagnosed andimproved along five coredimensions, taking intoaccount both the worksystem and employeepreferences.

Work Teams:

– Allows an entire group todesign the work systemit will use to perform aninterrelated set of tasks.

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Job Characteristics Approach

• This is an alternative to job specialization. The job

characteristics approach suggests that jobs should be

diagnosed and improved along five core dimensions:

– Skill variety

– Task identity

– Task significance

– Autonomy

– Feedback



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The Job

Characteristics

Approach

11 - 132

Grouping Jobs: Departmentalization

What is it?

– The process of grouping jobs according to somelogical arrangement.

Functional Departmentalization:

– Grouping jobs involving the same or similar

activities.

Product Departmentalization:

– Grouping activities around products or productgroups.



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Bases for Departmentalization:

11 - 134

Other Forms of Departmentalization:

• Some organizations

group certain

activities by:

–

Time. – Sequence.



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Other Considerations

• Sometimes

departments are

called something

different, such as:

– Division.

– Units.

– Section.

– Bureaus.

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Establishing Reporting Relationships

• What needs to beclarified?

– Chain of Command:

• Clear and distinct linesof authority among allpositions in an

organization. – Span of Management:

What is it?

• The number of peoplewho report to eachmanager.



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Tall Versus Flat Organizations

• What is the difference?

– Flat organizational structure

leads to higher levels of

employee morale and

productivity.

– Tall organizational structures

usually tend to be more

expensive requiring more

managers.

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Tall Versus Flat Organizations



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Factors Influencing the Span of

Management

• Competence of supervisor andsubordinates.

• Dispersion of subordinates.

• Extent of non-supervisorywork.

• Degree of requiredsupervision.

• Extent of standard procedures.

• Similarity of tasks.

• Frequency of new problems.• Preferences of supervision.

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Distributing Authority: An ImportantBuilding Block

• Authority:

– Power that has been

legitimized by the

organization.

• Delegation:

–The process by whichmanagers assign a

portion of their total

workload to others.



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Steps in the Delegation Process

Copyright © Houghton Mifflin

Company. All rights reserved.11 - 142

Decentralization and Centralization

What are the differences?

– Decentralization:

• The process of systematically delegating power and

authority throughout the organization to middle- and

lower-level managers.

– Centralization:

• The process of systematically retaining power and

authority in the hands of upper-level managers.



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Coordinating Activities

• What is coordination?

– The process of linking

the activities of the

various departments


• Why coordinate?

– Systems must be put

into place to keep the

activities of each

department focused

on organizational goal

attainment.

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Three Major Forms of Interdependence

Pooled Interdependence:

– When units operate with

little interaction; their

output is simply pooled at

the organizational level.

Sequential Interdependence:

– When the output of a unit

comes becomes then input

for another unit.

Reciprocal Interdependence:

– When activities flow both

ways.



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Structural Coordination Techniques

• Managerial hierarchy.

• Rules and procedures.

• Liaison roles.

• Task force.

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What Is the Difference Between Line andStaff?

Line Position:

– A position in the direct

chain of command that is

responsible for the

achievement of an

organization’s goals.

Staff Position:

– A position intended to

provide expertise, advise,

and support for the line

position.



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7 Managing

Organizational

Design

12 - 148

The Nature of Organizational Design

• What is organizational design?

–The overall set of structural elements and

relationships among those elements used to

manage the total organization.

•

Organization design can be traced back to twouniversal perspectives:

1. Bureaucratic model.

2. Behavioral model.



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Why Are There Different Types of

Organizations?

• Depending on what the product or service is,

the management has to structure the

organization to met the customer’s needs.

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Bureaucracy: Based on a Legitimateand Formal System of Authority

• The organization should adopt a distinct division of

labor.

• Develop a consistent set of rules.

• Establish a hierarchy of positions.

•

Managers should conduct business impersonally tomaintain social distance.

• Employment and promotion should be based on

technical expertise, and employees should be

protected from arbitrary dismissal.



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Copyright © Houghton Mifflin Company. All

rights reserved.12 - 151

Behavioral Model

• A model of organization design

consistent with the

human relations

movement and

stressing attention to

developing work

groups and concern

about interpersonalprocess.

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System 1 Design

• Leadership process includes no perceived confidenceand trust.

• Motivational process taps only physical, security, andeconomic motives.

• Communication process is such that informationflows downward.

• Interaction process is closed.• Decisions occur at the top.

• Goal setting occurs at top.

• Control is centralized.

• Performance goals are low.



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System 4 Organization

• Leadership process includes perceived confidenceand trust.

• Motivational process taps a full range of motivesthrough participatory methods.

• Communication flows freely.

• Interaction process is open.

• Decisions occur at all levels.

• Goal setting encourages group participation.

•

Control process is dispersed.• Performance goals are high.

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Situational Influences on

Organizational Design

• What is it?

• Optimal design depends on a set of relevant

situational factors.

• Situational factors play a role in determining

the best organization design for any particular

circumstance.

• There are four basic situational factors.

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Figure 12.2: Conglomerate (H-Form)Design at Pearson PLC



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The Basic Situational Factors

• Technology:

– Conversion processes used to transform inputs

into outputs.

• Environment:

– Organizations in stable environments tend to have

different kind of design from organizations in

unstable environments.

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Two Designs Emerged from Stableand Unstable Environments

• Can you name them?

– Mechanistic organization:

• Similar to the bureaucratic or system 1 model; most

frequently found in stable environments.

– Organic organization:

• Very flexible and informal model of organization design;

most often found in unstable and unpredictable

environments.



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Organizations Characterized by

Two Primary Factors:

• Differentiation:

– The extent to which

the organization is

broken down into

subunits.

• Integration:

– The degree to which

the various subunits

must work together ina coordinated fashion.

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Organizational Size

• What does organizational size mean?

– The total number of full-time or full-time

equivalent employees.

• What is organizational life cycle?

–Progression through which organizations evolve asthey grow and mature.

• What are the life cycle stages?

– Birth YouthMidlifeMaturity.



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Strategy and Organization Designs

• What is corporate levelstrategy?

• Organizations can adopt a

variety of corporate level

strategies, such as:

– Single-product strategy.

– Portfolio approach.

• The chosen strategy affects

the organizational design.

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Business Level Strategy

• These strategies can affect the design of

individual businesses within the organization

as well the overall organization itself.

• What are the possible outcomes?

– An organization can be centralized ordecentralized.



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Organizational Functions

• Aggressive marketing strategy calls for

separate departments such as advertising,

direct sales, and sales promotion.

• A production strategy can call for

manufacturing in diverse locations.

• Human resource strategy may call for a lesser

degree of decentralization.

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Basic Forms of Organizational Design

• U-Form or Functional design:

– An organizational arrangement based on the

functional approach to departmentalization.

• H-Form or Conglomerate design:

–An arrangement used by an organization made upof a set of unrelated businesses.



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Functional or U-Form Design for a

Small Manufacturing Company

12 - 166

M-Form or Divisional Design

• An organizational arrangement based onmultiple businesses in related areas operatingwithin a larger organizational framework.

• Matrix design:

– An organizational design based on twooverlapping bases of departmentalization.

• Hybrid design:

– The use of two or more common forms of organizational design.



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Multidivisional (M-Form) Design at

The Limited, Inc.

12 - 168

A Matrix Organization



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Emerging Issues in Organizational

Design

• Team organization:

– Relies almost exclusively on product type teams,

with little or no underlying functional hierarchy.

• Virtual organization:

– Has little or no formal structure.

• Learning organization:

– Works to facilitate the lifelong learning and

personal development of all its employees while

transforming itself to respond to changes and

demands.

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International Organizational Design

• International markets

create an organization

design that fits unique

circumstances:

– Separate international

divisions.

– Extension of product

departmentalization.

– Extension of the

multidivisional

structure.



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Common Organization Designs for

International Organizations, A

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Common Organization Designs forInternational Organizations, B



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Common Organization Designs for

International Organizations, C

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Common Organization Designs forInternational Organizations, D



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8 Managing

Employee

Motivation and

Performance

16 - 176

The Nature of Motivation

• If an employee chooses to

work hard one day, and work

just hard enough to avoid

reprimand, or as little as

possible on another day,

what then is “Motivation?”

– Motivation is the set of

forces that causes people

to behave in certain ways.



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The Motivational Framework

Need or

deficiency

Search for ways

to satisfy needs

Choice of

behavior to

satisfy need

Determination of

future needs and

search/choice for

satisfaction

Evaluation of

need satisfaction

16 - 178

The Importance of Motivation in theWorkplace

• What are the three

factors that determine

individual

performance?

– Motivation: The desire

to do the job. – Ability: The capability

to do the job.

– Work environment:

The resources needed

to do the job.



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Content Perspectives on Motivation

• Content perspectives are?

– Approaches to motivation that try to answer the

question, ”What factors in the workplace motivate

people?”

• Maslow’s hierarchy of needs is?

– Physiological Security Belongingness Esteem

Self-actualization

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Maslow’s Hierarchy of Needs



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What Is the ERG Theory?

• Suggests that people’s needs are grouped into

three possibly overlapping categories.

• What are they?

– Existence.

– Relatedness.

– Growth.

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What Is the Two-Factor Theory?

• Suggests that people’s satisfaction and

dissatisfaction are influenced by two

independent set of factors.

• Can you name them?

– Motivation factors. – Hygiene factors.

• The following is a micro view of the Two-

Factor theory:



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The Two-Factor Theory of Motivation

16 - 184

What Are the Individual HumanNeeds?

• Need for achievement:

– The desire to accomplish a goal or task moreeffectively than in the past.

• Need for affiliation:

– The desire for human companionship and

acceptance.

• Need for power:

– The desire to be influential in a group and tocontrol one’s environment.



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Process Perspectives on Motivation Is?

• How does motivation occur?

– Process perspectives:

• Approaches to motivation

that focus on why people

choose certain behavioral

options to satisfy their

needs and how they

evaluate their satisfaction

after they have attainedthese goals.

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What Is the Expectancy Theory?

• Suggests that

motivation depends

on two factors.

• What are the two

factors?

– How much we want

something.

– How likely we think we

are to get it.



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The Expectancy Model of Motivation

16 - 188

The Equity Theory

• What is it?

– Suggests that people aremotivated to seek social equityin the rewards they receive forperformance.

• Porter-Lawler Extension theory:

– Suggests that if performance

results in equitable rewards,people will be more satisfied.Thus, performance can lead tosatisfaction.



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Goal-Setting Theory

• Goal difficulty:

– The extent to which a

goal is challenging and

requires effort.

• Goal specificity:

– The clarity and

precision of the goal.

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The Expanded Goal-Setting Theory of Motivation



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Elements of Reinforcement Theory

• Arrangement of the

reinforcement

contingencies:

– Positive reinforcement.

– Avoidance.

– Punishment.

– Extinction.

• Schedules for applying

reinforcement:

– Fixed interval.

– Variable interval.

– Fixed ratio.

– Variable ratio.

16 - 192



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Popular Motivational Strategies

• Empowerment:

– The process of enabling workers to set their own

work goals, make decisions, and solve problems

within their sphere of responsibility and authority.

• Participation:

– The process of giving employees a voice in making

decisions about their own work.

16 - 194

New Forms of Working Arrangements

• Flexible work

schedules.

• Job sharing.

• Compressed work

schedules.• Telecommuting.



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Reward Systems

• Reward system: – The formal and informal mechanism by

which employee performance isdefined, evaluated, and rewarded.

• Merit system:

– A reward system whereby people getdifferent pay raises at the end of theyear depending on their overall jobperformance.

•

Incentive system: – A reward system whereby people get

different pay amounts at each payperiod in proportion to what they do.

9 Managing

Leadership and

InfluenceProcesses



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The Nature of Leadership

• What does leadership mean?

– A process, the use of non-coercive

influence to shape the group’s or

organization’s goals, and:

• Motivate behavior.

• Define group or organizational

culture.

• What are the characteristics of those who

are perceived to be leaders?

17 - 198

Who Are Leaders?

• People who:

– Can influence the

behaviors of others.

– Are able to influence

without having to rely

on force.

– Are accepted by others

as leaders.



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Leadership Versus Management

• MANAGEMENT:

– Planning and budgeting.

– Organizing and staffing.

– Controlling and problem

solving.

– Producing a degree of

predictability.

• LEADERSHIP:

– Establishing direction.

– Aligning people.

– Motivating and inspiring.

– Producing change, often

to a dramatic degree.

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Power and Leadership

• What is power?

– The ability to affect the

behavior of others.

• Legitimate power:

– Power granted through the

organizational structure, it is

the power accorded people

occupying particular

positions as defined by the

organization.



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Reward Power Defined

• Reward power:

– The power to give or

withhold rewards,

such as:

• Salary increases.

• Bonuses.

• Promotion.

• Recommendation

17 - 202

Types of Power

• Coercive power:

– The power to force

compliance by means of

psychological, emotional,

or physical threat.

•

Referent power: – The personal power that

accrues to someone

based on identification,

imitation, loyalty, or

charisma.



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What Is Expert Power?

• The personal power

that accrues to

someone based on

the information or

expertise that they

possess.

17 - 204

The Leadership Grid

• A method of evaluating leadership styles to train

managers using OD techniques so that they are

simultaneously more concerned for both people and

production.

• Concern for production:

– Deals with the job aspects of leader behavior.

• Concern for people:

– Deals with the people aspects of leader behavior.



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The

Leadership

Grid

17 - 206

Related Perspectives on Leadership

• Substitutes for leadership:

– Identifies situations in which leader behaviors are

neutralized or replaced by characteristics of subordinates,

the task, and the organization.

• Charismatic leadership:

– Assumes that charisma in an individual characteristic of the leader.

• Charisma:

– A form of interpersonal attraction that inspires support

and acceptance.



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Copyright © Houghton Mifflin Company. All

rights reserved.17 - 207

Transformational Leadership

• Leadership that goesbeyond ordinary

expectations by

transmitting a sense

of mission, stimulating

learning experiences,

and inspiring new

ways of thinking.

17 - 208

Political Behavior in Organizations

• Political behavior:

– Activities carried out forthe specific purpose of acquiring, developing, andusing power and otherresources to obtain one’s

preferred outcomes.

• Impression management:

– A direct and intentionaleffort by someone toenhance his/her image inthe eyes of others.



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1

10Managing

Interpersonal

Relations and

Communications

18 - 210

What Is the Definition of Communication?

• The process of

transmitting information

from one person to

another.

• What is effective

communication?

– The process of sendinga message in such a

way that the message

received is as close in

meaning as possible to

the message intended.



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1

18 - 211

What Are the Basic Functions of

Management That Communication

Relates to?

• Planning

• Organizing

• Leading

• Controlling

18 - 212

The Communication Process

Sender Receiver

Receiver Sender

6

Encoding

7

Transmission

through channels

8

Decoding

Start Noise

Noise

Noise

2

Encoding

1

Meaning

3

Transmission

through Channels

4

Decoding

5

Meaning



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1

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Forms of Communication in Organizations

• What is oralcommunication?

– Face to face

conversations

– Group discussions

– Telephone calls

– Other situations in

which the spoken word

is used to expressmeaning

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Formal Communication inOrganizations



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1

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What Is Vertical Communication?

• It flows up and down theorganization.

• How does it flow?

– Usually along formal

lines.

• Where does it take place?

– Between managers

and their subordinates

and may involveseveral different levels


18 - 216

What Is Horizontal Communication?

• Flows laterally within

the organization.

• Who is involved?

– Colleagues and peers

at the same level of

the organization andmay involve individuals

from several different

organizational units.



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Informal Communication in

Organizations

• The grapevine?

– An informal communication network that can

permeate an entire organization.

• Management by wandering around?

– An approach to communication that involves the

manager literally wandering around and having

spontaneous conversations with others who are

involved with the company in some way.

18 - 218

Informal Communication in Organizations



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1

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What Is Nonverbal Communication?

• Any communication

exchange that does

not use words or that

uses words to carry

more meaning than

the strict definition of

the words themselves.

18 - 220

Barriers to Communication

• Individual Barriers:

– Conflicting or

inconsistent cues.

– Credibility about the

subject.

–Reluctance tocommunicate.

– Poor listening skills.

– Predispositions about

the subject.

• Organizational Barriers:

– Semantics.

– Status or power

differences.

– Different perceptions.

– Noise. – Overload.



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More and Less Effective Listening

Skills

Stays active, focused

Pays attention

Asks questions

Keeps an open mind

Assimilates information

Is passive, laid back

Is easily distracted

Asks no questions

Has preconceptions

Disregards information

More Effective Listening Less Effective Listening

11 Managing Work

Groups and Teams



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1

19 - 223

How Would You Define a Group?

• Two or more peoplewho interact regularly

to accomplish a

common purpose or

goal.

• Groups are a

ubiquitous part of

organizational life.

19 - 224

Types of

Groups in

Organizations



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1

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What Are the Types of Groups?

• Functional Group: – A permanent group created

by the organization toaccomplish a number of organizational purposes withan indefinite time horizon.

• Informal or Interest Group:

– Created by its own membersfor purposes that may or maynot be relevant toorganizational goals.

19 - 226

Other Types of Teams• Problem-solving team:

– Comprises knowledge workers who gather to solve aspecific problem.

• Management team:

– Consists mainly of managers from various functions.

• Work team:

–Responsible for the daily work.

• Virtual team:

– New form of team that interacts by computer.

• Quality circle:

– Declining in popularity.



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1

19 - 227

19 - 228

Why Do Organizations Create TaskGroups?

• To accomplish a

relatively narrow

range of purposes

within a stated orimplied time horizon.



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1

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What Does a Team Consist of?

• A group of workerswho function as a

unit.

• They function with

little or no supervision

to carry out work-

related:

– Tasks

– Functions

– Activities

19 - 230

How Do People Join Groups?

• They join functionalgroups simply by workingfor an organization.

• When an employee isassigned a job theybecome members of afunctional group.

• Then employeesvolunteer to serve on:committees, task forces,and teams.

• They also join informalinterest groups.



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The Stages of Group Formation

• FORMING:

– Members get

acquainted, test

interpersonal behaviors.

• STORMING:

– Members develop group

structure and patterns of

interaction.

• NORMING:

– Members share

acceptance of roles,

sense of unity.

• PERFORMING:

– Members enact roles,

direct effort toward goal

attainment and

performance.

19 - 232

Stages of Group Development

Forming:

Members get

acquainted, test

interpersonal

behaviors

Slow evolution

to next stage Storming:

Members develop

group structure and

patterns of

interaction

Norming:

Members share

acceptance of roles,

sense of unity

Burst of activity to

next stage

Slow evolutionto next stage

Performing:

Members enact roles, direct

effort toward goal attainment

and performance



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Characteristics of Groups and Teams

• What is a role?

– The part an individual

plays in helping the

group reach its goal.

• What does role structure

accomplish?

– The set of defining roles

and interrelationships

among those roles that

the group or teammembers define and

accept.

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The Development of a Role



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Types of Roles

•

Role ambiguity: – When the sent role is unclear

and the individual does notknow what is expected of them.

• Role conflict:

– When the messages and cuescomprising the sent role areclear but contradictory ormutually exclusive.

• Role overload: – When expectations for the

role exceed the individual’s

capabilities.

19 - 236

What Are Behavioral Norms?

• Norms are standardsof behavior that thegroup or teamaccepts for itsmembers.

• What do normsdefine?

– Boundaries betweenacceptable andunacceptablebehavior.



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Norm Conformity

• Some groups or teamsexert more pressure for

conformity.

• Initial stimulus that

prompts behavior can

affect conformity.

• Individual traits can

determine conformity.

• Situational factors such as

team size contribute to

conformity.

19 - 238

What Is Socialization?

• Generalized norm

conformity that occurs

as a person makes the

transition from being

an outsider to being

an insider in the

organization.



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What Are the Factors That Influence

Group Cohesiveness?

• Factors that increase

cohesiveness:

– Inter-group competition.

– Personal attraction.

– Favorable evaluation.

– Agreement on goals.

– Interaction.

• Factors that reduce

cohesiveness:

– Group size.

– Disagreement on goals.

– Intra-group competition.

– Domination.

– Unpleasant experiences.

19 - 240

Factors That Influence GroupCohesiveness

FACTORS THATINCREASE

COHESIVENESS

•Inter-group

competition•Personal attraction

•Favorable

evaluation

•Agreement on

goals

•Interaction

FACTORS THATREDUCE

COHESIVENESS

•Group size

•

Disagreement ongoals

•Intra-group

competition

•Domination

•Unpleasant

experiences



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The Interaction Between Cohesiveness

and Performance Norms

19 - 242

Formal and Informal Leadership• Formal leadership:

– One appointed by the

organization or chosen

or elected by members

of the group.

• Informal leader:

–

A person who engagesin leadership activities

but whose right to do

so has not been

formally recognized by

the organization or

group.



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The Nature of Conflict

• How would you define

conflict?

– A disagreement

between two or more:

• Individuals.

• Groups.

• Organizations.

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The Nature of Organizational Conflict



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Methods for Stimulating Conflict

• Stimulating conflict:

– Increase competition

– Hire outsiders

– Change established procedures

• Controlling conflict:

– Expand resource base

– Enhance coordination of interdependence

– Set supra-ordinate goals

– Match personalities and work

19 - 246

Resolving and Eliminating Conflict

• Avoid conflict

• Convince conflicting

parties to

compromise.

• Bring conflicting

parties together to

confront and

negotiate conflict.



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12 The Controlling

Process

20 - 248

Why Control?

• Control is an issue everymanager faces.

• How does control help themanager?

– Control is a process toregulate organizational

activities to make themconsistent withestablished:

• Plans

• Targets

• Standards



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What Is the Purpose of Control?

• It is one of the four basic

management functions

and has four basic

functions. What are the

functions?

– Adapts to change.

– Limits accumulation of

error.

– Helps coping with

complexity. – Helps minimize costs.

20 - 250

The Purpose of Control

Adapt toenvironmental change

Limit theaccumulation of error

Control helps the organization

Cope with organizationalcomplexity

Minimize costs



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Name the Levels of Control?

• Operational control:

– Focuses on the processes used to transform resources intoproducts or services.

• Financial control:

– Concerned with financial resources.

• Structural control:

– How the elements of structure are serving the intendedpurposes.

• Strategic control: – How effective are the functional strategies helping the

organization meet its goals.

20 - 252

Levels of Control



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Who Is Responsible for Control?

• Control rests with all

managers.

• Large corporations

have a controller.

• What does a

controller do?

– Helps line managers

with their controlactivities.

20 - 254

What Are the Steps in the ControlProcess?

• Establish standards.

• Measure performance.

• Compare performance against standards.

• Determine need for corrective action.

• The sub-steps: – Maintain status quo.

– Correct deviation.

– Change standards.



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Steps in the Control Process

20 - 256

What Does Preliminary ControlMonitor?

• It attempts to monitor quality and quantity of:

– Financial resources.

– Material resources.

– Human resources.

– Information resources.

• Why?

– Before they become part of the system.



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What Is the Purpose of Screening

Controls?

• They focus on howinputs are being

transformed into

outputs.

• They also rely heavily

on feedback processes

during the

transformation

process.

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What Do Postaction Controls Focus On?

• Focus is on outputs from the

organizational system.

• What do they monitor?

– They monitor the output

results of the organizationafter the transformation

process is complete.

– (see Figure 20.4 illustration)



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Figure 20.4: Forms of Operational

Control

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What Are the Reasons for FinancialControls?

• They control the financial resources as they

flow into the organization.

• Then they are held by the organization.

• Then they flow out of the organization.

• Businesses must manage their finances so thatrevenues are sufficient to cover expenses and

still return a profit.



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What Is a Budget?

• It is a plan expressed in numerical terms.

• What is the time frame for a budget?

– Usually a year, but sometimes broken down into

quarters and months.

• Budgets are quantitative in nature and provide

yardsticks for measuring performance and

facilitating comparisons.

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Developing Budgets in Organizations

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Financial Statement:A profile of

some aspect of anorganization’s financial

circumstances.

Balance Sheet: List of assetsand liabilities of an

organization at a specificpoint in time, usually the last

day of the fiscal year.

Income Statement: Asummary of financialperformance over a period of

time, usually one year.

Ratio Analysis: The

calculation of one or morefinancial ratios to assesssome aspect of the

organization’s financial

health.

Audit: An independent appraisal of an organization’s accounting, financial, and operational system.

Other Tools for Financial Control



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What Is Bureaucratic Control?

• A form of organizational

control characterized by

formal and mechanistic

structural arrangements.

• What is clan control?

– An approach to

organizational control

characterized by

informal and organic

structural

arrangements.

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Organizational Control



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What Is Meant by Strategic Control

• Control aimed atensuring that the

organization is

maintaining an effective

alignment with its

environment and moving

toward achieving its

strategic goals.

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Characteristics of Effective Control

• Integration with

planning

• Flexibility

• Accuracy

• Timeliness

• Objectivity



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What Influences Resistance to Control?

• Over-control

• Inappropriate focus

• Rewards for

inefficiency

• Too much

accountability

How Can Resistance to Control BeOvercome?

ugc management process

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