Download File - SCSC Year 12 Business Management

2016 Year 12 Business Management
Welcome to the 2016 Year 12 Business Management subject review
Hopefully this presentation can REFRESSH your memory of the past
year and the content we covered.
This is aimed to, refresh your memory and get you started on your
revision process towards the exam.
The way Lecture will run:
Look at some Learning Outcome Exam Questions
Review the Learning Outcome Power Point
Moving through the 5 outcomes
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Chapter 1 – Large Scale Organisations
Key Knowledge
Students will learn the following about large-scale organizations:
– the context that contributes to the unique nature of large-scale organizations
– the characteristics of large-scale organizations
– variations in types of large-scale organizations
– objectives of large-scale organizations and related business strategies
– typical management functions in large-scale organizations, including
operations, finance, human resources, marketing, and research and
development
– the contributions – both positive and negative – of large-scale
organizations to the economy.
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Chapter 1 – Large Scale Organisations
What is an Organisation?
Where two or more people who work together in a structured way to
achieve a specific goal or set of goals.
What do Organisation have in common?
- A distinct purpose (set objectives or goals to acheieve)
- They comprise two or more people
- They have a deliberate form structure (formal or informal)
Purpose
People
Structure
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Chapter 1 – Large Scale Organisations
SCSC Year 12 Business Management . Weebly . com
Chapter 1 – Large Scale Organisations
What are the characteristics of a LARGE SCALE ORGANISATION
(LSO)? (page 3-4)
There are no formal definitions for a large Scale organsiation, however the
general classification can include:
- Employee Base (200 plus employees)
- Total Assets (LSO own substantial assets)
- Total Revenue (LSO earn substantial income or earnings)
- Profit (LSO has substantial Gross or Net Profit
- Market Share (it commands a large percentage of the marketplace)
- Size (can use multiple of single factories, branches or stores)
- Number of business Locations (can be local, regional, national
or global)
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Chapter 1 – Large Scale Organisations
What are the characteristics of a LARGE SCALE ORGANISATION
(LSO)?
Other characteristics of LSO (page 5-6)
1. Strategic objectives are formulated
2. Strategic planning is undertaken
3. Formalised policies, procedures and rules are adopted and
documented
4. An organisational structure is devised
5. A chain of command and hierarchical management structure
are established
6. A coordinated and decentralised approach to decision
making is adopted
7. Specialisation of activites into departments or within
departments occurs
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Chapter 1 – Large Scale Organisations
LSO in Australia
READ page 6 & 7
Australia is proud of its tradition of operating as an open market economy
and of its organisa- tions taking their place in the global marketplace.
Organisations that are owned and based solely in one country are referred to
as being domestic or national in their operations. Many businesses choose to
expand their business operations beyond their national or domestic borders
and become international or global in their business focus. Organisations that
are owned and based in one country while having branches or subsidiar- ies
in other countries are referred to as multi- national/transnational
corporations. Some examples of Australian multinational companies are
Amcor, BHP Billiton, Lend Lease, Qantas and National Australia Bank.
(continue reading the book)
SCSC Year 12 Business Management . Weebly . com
Chapter 1 – Large Scale Organisations
LSO in Australia
After reading page 6 & 7
providing definitions of the following:
Open market economy
Multi-national/transnational corporations
Joint Venture
Takeovers
Mergers
Demerger
Diversification
Dual listed company
Dividend
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Chapter 1 – Large Scale Organisations
Different Sector Types of LSO
Public or Private Sector
Australia is a mixed or market economy, where ownership of resources,
property and the means of production differ. Where the resources, property
and production are owned by the government (federal, state or local), these
are deemed to be in the public sector. If the resources, property and means
of production are held privately or corporately, they are in the private sector.
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Chapter 1 – Large Scale Organisations
Different Types of Companies
Public or Private Companies
Public company
• Shares are listed on the Australian Securities Exchange
• Shares can be bought and sold by any person or company
• Must have at least 50 shareholders with unlimited upper number of
shareholders to be listed on the Australian Securities Exchange
• Must have the word ‘Limited’ at the end of the company name
Private company
• Small number of shareholders (two to 50)
• Shares bought and sold privately with consent of other shareholders
• Often run as family businesses
• Must have the words ‘Proprietary Limited’ at the end of the company name
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Chapter 1 – Large Scale Organisations
Different Types of LSO
Orientation or Focus
Organisations can also be categorised according to their orientation or focus.
Profit
The focus of ‘for-profit’ organisations is profit attainment, market share and
growth. This classification makes up the majority of enterprises in Australia;
for example, Amcor, ANZ Bank, Commonwealth Bank, National Australia
Bank, Westpac, Wesfarmers and Toll Holdings are for- profit organisations.
Not for profit
The focus of ‘not-for-profit’ (NFP) organisations is on providing a specific
service to the community.
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Chapter 1 – Large Scale Organisations
Different Types of LSO
Types of Business Activity
Australian businesses are categorised by the Australian Bureau of Statistics
(ABS) into 496 individual industries. These individual industries are further
grouped into 17 industry categories (see page 12 table 1.4).
table 1.4 Chart of 17 main industry categories
• Accommodation, cafés and restaurants
• Agriculture, forestry and fishing
• Communication services
• Construction
• Cultural and recreation services • Education
• Electricity, gas and water supply • Finance and insurance
• Government administration and Defence • Health and community services •
Manufacturing
• Mining
• Personal and other services
• Property and business services •
Retail trade
• Transport and storage
• Wholesale trade
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Chapter 1 – Large Scale Organisations
Different Types of LSO
Types of Business Activity
The three main industry sectors: primary, secondary and tertiary (with subsectors
of quaternary and quinary)
Level of sector
type of business/service
Primary
Mining, agriculture, fishing and forestry – those industries
concerned with land or sea
Secondary
Manufacturing, processing, construction and fabrication of
final product
Tertiary
Wholesaling, retailing and transport
a Quaternary
Information processing, finance and insurance, property
and business services and education
b Quinary
Hospitality, health and social assistance, personal and
other services
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Chapter 1 – Large Scale Organisations
Organisational Objectives and Strategies
All organisations must establish aims or objectives, and then determine
strategies or actions to achieve these aims. Objectives are statements of
desired achievement that provide direction for actions. Organisations, no
matter what their size or ownership, must do this to succeed.
When establishing the objectives, the following characteristics must be
addressed:
• The objectives being set are specific
• The objectives and their outcomes are measurable
• The objectives, while difficult, are achievable/attainable
(A).
• The objectives are understood and accepted by the organisation as
relevant
• The objectives are time-bound
(S).
(M).
(R).
(T).
This is known as adopting the SMART principle and its application ensures
clarity of the objectives being set.
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Chapter 1 – Large Scale Organisations
Organisational Objectives and Strategies
Hierarchy of Objectives
The first task for every organisation, whether for-profit or not-for-profit, is to establish its
overall purpose or reason for existence.
1 A mission statement expresses the purpose
or reason for an organisation’s existence
2 Corporate objectives establish the strategic objectives required by the organisation as a
whole to reach its overall purpose. Senior management determines these long-term (two to
five years) objectives and must be certain they are specific, achievable and measurable.
3 Department objectives are the tactical objectives or medium-term (one to two years)
objectives needed to achieve the specific targets set for a department of division. They must
be consistent with the corporate objectives and sufficient resources must be allocated to
allow for the achievement of these objectives.
4 Operational objectives are the next level of objectives established. They are precise,
measurable and establish the short-term (daily, weekly, half-yearly, annual) objectives.
5 Individual department member’s objectives and tasks performed. An employee is set
individual objectives or tasks that they are required to perform. The setting of these tasks and
objectives form the basis of a process called Management by Objectives (MBO). This
process underpins the method by which the employee will be appraised.
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Chapter 1 – Large Scale Organisations
Organisational Objectives and Strategies
Types of Objectives
There are also different types of objectives that a large-scale organisation can
set. These are detailed below.
Financial Objectives
Service Objectives
Ethical and Social Responsibility Objectives
Environmental Objectives
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Chapter 1 – Large Scale Organisations
Typical Management Functions
Traditional 3 levels of Management
1 Senior (executive) managers spend a large proportion of their time planning
and setting objectives. They are in charge of managers subordinate to them
(middle managers).
2 Middle managers translate these objectives into specific projects for their
subordinates (front-line managers) and monitor the progress of these
projects.
3 Front-line managers (supervisors) are the lowest level of management.
The majority of their time is spent leading, supervising and controlling their
subordinates (workers) who are working on specific projects.
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Chapter 1 – Large Scale Organisations
Typical Management Functions
Here is a brief summary of what are commonly referred to as the
basic roles of management:
Planning, Organising, Leading & Controlling (POLC):
Planning involves establishing the general direction and objectives of the organisation.
Senior management will be responsible for setting the overall strategic (long-term)
objectives for the entire organisation. These objectives will then be broken down into
tactical objectives for achieving over a medium time frame. On a more immediate level,
operational plans will be put into place to achieve targets that have been set. Managers
at all levels are involved in the planning needed to put these objectives into effect.
Organising relates to developing a systematic approach to coordinate the human,
material, financial and informational resources of the organisation in order to achieve
organisational objectives. It can cover areas such as setting up work groups or teams,
establishing a chain of command, channels of communication, outlining an
organisational or departmental structure to establish a division of tasks and allocating
jobs or tasks.
SCSC Year 12 Business Management . Weebly . com
Chapter 1 – Large Scale Organisations
Typical Management Functions
Here is a brief summary of what are commonly referred to as the
basic roles of management:
Planning, Organising, Leading & Controlling (POLC):
Leading refers to how a manager, by their behavior and style, directs,
influences and motivates their subordinates to work towards achieving
organisational objectives. It is important that managers establish an
atmosphere where their subordinates want to work and are able to excel.
Controlling involves the necessary monitoring and evaluation to ensure that
organisational objectives are being met. Standards will need to be
established, and checks carried out to assess performance against forecast
or budget, and if required, corrective action will need to be taken.
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Chapter 1 – Large Scale Organisations
Typical Management Functional Areas
Managers at all levels (senior, middle and front- line) perform these roles in
the different functional areas of the organisation, which include:
Operations – where the focus is on creating the organisation’s final output
(product or service)
Finance – where the focus is on planning, maintaining and reporting on the
financial aspects of the organisation’s performance
Human resources – where the focus is on managing the overall relationship
the organisation has with its employees
Marketing – where the focus is on developing strategies to create an ongoing
relationship between the organisation and its customers
Research and development – where the focus is on studying and
developing new and improved products for the organisation.
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Chapter 1 – Large Scale Organisations
Contribution (+/-) of LSO to the Economy
The actual number of large-scale organisations in Australia is small in
comparison with the number of small and medium-sized businesses in
operation. However, the group’s overall contribution to the Australian
economy is significant, particularly in the following five areas.
Gross Domestic Product
Gross domestic product (GDP) is the total monetary value of all goods and
services produced in Australia in a one-year period. It is estimated, by
research carried out by IBIS- World on behalf of Business Review Weekly,
that approximately 51.3 per cent of all revenue generated in Australia comes
from BRW 1000 enterprises.
Employment
Large-scale organisations, by the very nature of their size, employ a large
percentage of our total workforce. By providing this employment the economy
benefits, as it provides income for workers who may then spend the money on
consumer items. The government also benefits through receiving taxation
revenue from personal income tax, goods and services tax (GST) and payroll
tax
SCSC Year 12 Business Management . Weebly . com
Chapter 1 – Large Scale Organisations
Contribution (+/-) of LSO to the Economy
The actual number of large-scale organisations in Australia is small in
comparison with the number of small and medium-sized businesses in
operation. However, the group’s overall contribution to the Australian
economy is significant, particularly in the following five areas.
Balance of Payments
Balance of payments is an annual record of Australia’s trade and financial
transactions (exports and imports) with the rest of the world. Large-scale
organisations, through their desire to trade in the global marketplace, assist in
earning export income, which improves Austra- lia’s balance of payments
performance, while organisations importing goods negatively affect the
balance of payments.
Research and Development
A large outlay of capital expenditure is required to carry out research and
development (commonly referred to as ‘R & D’). It is a high-risk decision that
provides no certainty of recouping expenditure. In a bid to encourage
organisations to make this commitment, government policy often extends to
providing financial incentives in the form of grants or taxation rebates.
SCSC Year 12 Business Management . Weebly . com
Chapter 1 – Large Scale Organisations
Contribution (+/-) of LSO to the Economy
The actual number of large-scale organisations in Australia is small in
comparison with the number of small and medium-sized businesses in
operation. However, the group’s overall contribution to the Australian
economy is significant, particularly in the following five areas.
Infrastructure Growth
The majority of infrastructure is provided either by government business
enterprises or recently privatised, former GBEs. Infrastructure can take the
form of roads/highways/freeways, transport systems (rail, bus and train),
utilities (gas, electricity, and water), communication, health and education. It is
seen as the role of government to act as a social and economic developer of
the country. In this way it is supporting all levels of business and the broader
community.
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Chapter 2 – Environments of Business
Key Knowledge
Students will learn the following about large-scale organisations:
– internal and external (macro and operating) environments of large- scale
organisations
– identification and characteristics of stakeholders of large-scale
organisations – their interest, possible conflicts and related ethical and
socially responsible considerations.
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Chapter 2 – Environments of Business
Stakeholders in Large Scale Organsiations
At each level of the environment of a business, there are
stakeholders or pressures that impact directly on the organisation. A
stakeholder can either affect or be affected by the operations of an
organisation.
Ideally, all stakeholders should want an organisation to achieve its
aims or objectives. In reality, this does not occur as various
stakeholders – a competitor, for example – would have conflicting
interests.
Stakeholder:
An individual or group that has a direct or vested interest in the
activities of an organisation.
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Chapter 2 – Environments of Business
Stakeholders in Large Scale Organsiations
Stakeholder:
An individual or group that has a direct or vested interest in the activities of an
organisation.
Potential Stakeholders for any organisation:
- Shareholders
- Directors
- Management
- Employees
- Trade Union
- Customers
- Suppliers
- Creditors/banks - Community
- Government
- Competitors
Refer to page 28-29 of textbook for detailed explanation about each
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Chapter 2 – Environments of Business
Three levels of the Organisational Environment
All businesses, whether small, medium or large, must operate in a complex
and rapidly changing business environment. For any business to be
successful, no matter what its size, it must be able to respond quickly to
changes or pressures that may come from the internal, operating and macro
environments.
The three levels of Business Environment include:
• Internal Environment
• Operating Environment (External)
• Macro Environment (External)
SCSC Year 12 Business Management . Weebly . com
Chapter 2 – Environments of Business
Three levels of the Organisational Environment
• Internal Environment
It is important for organisations to take account of and respond to the
pressures and forces from within their organisation. When making decisions
in relation to these factors, management has a fair degree of certainty and
control. Potential Stakeholders within the Internal Business Environment
include:
•
•
•
•
•
Owners / Shareholders
Board of Directors & Management
Employees
Organisational Structure
Corporate Culture
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Chapter 2 – Environments of Business
Three levels of the Organisational Environment
• Operating Environment (External)
Organisations face different pressures and uncertainties from their operating
environment. The factors within this environment directly interact with the
business and its operations. They can provide both opportunities and threats
to a business relating to its success and ability to be competitive. Potential
Stakeholders in the Operating Environment include:
•
•
•
•
•
•
•
Customers
Competitors
Suppliers
Trade Unions
Lobby / Pressure Groups
Financial Institutions
Regulatory bodies
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Chapter 2 – Environments of Business
Three levels of the Organisational Environment
• Macro Environment (External)
Macro environment refers to the range of factors that can influence the
operation and performance of an organisation, over which the organisation
has no control. Following is a description of the factors that can occur in the
macro environment.
Economic Forces –
Government Forces
Legal Forces
Technological developmental forces
Globalisation Forces
Political Forces
Social and Cultural Froces
Environmental Forces
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Chapter 3 – Evaluation of Performance
Key Knowledge
Students will learn about the performance indicators used to evaluate the
performance of large-scale organisations.
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Chapter 3 – Evaluation of Performance
The Concept of Efficiency and Effectiveness
Part of a manager’s role is to analyse the efficiency of all activities in the
organisation, including the production processes, service delivery, and
effectiveness of staff and procedures. The effectiveness of such processes
and activities needs to be measured against the predetermined objectives of
the organisation and against how efficiently resources have been distributed
and used. A number of different measures or performance indicators can be
used to evaluate both resource efficiency and objective effectiveness.
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Chapter 3 – Evaluation of Performance
The Concept of Efficiency and Effectiveness
Efficiency
The management process requires the efficient and effective combination of
resources to produce goods or to successfully deliver a service. These
resources can include:
• Financial resources such as cash and loans
• Material resources such as raw materials and components or parts
• Human resources such as skills and contribution of the employees
• information resources such as knowledge about a product or market.
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Chapter 3 – Evaluation of Performance
The Concept of Efficiency and Effectiveness
Components
processed parts purchased from another producer
Efficiency
the way the organisation uses its available resources to achieve its objectives;
‘doing things right’
Productivity
a measure of the functioning and efficiency of a production system; the level
of output obtained from a set level of input
Quantitative Measures
measures that are based on the use of numerical data
Effectiveness
The degree to which an organisation achieves its stated objectives; ‘doing the
right things’
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Chapter 3 – Evaluation of Performance
The Concept of Efficiency and Effectiveness
Effectiveness.
is the ability of the organisation to achieve its previously determined
objectives. These objectives are developed at the strategic level of the
organisation and are written in line with the overall mission and vision
statements and strategy of the organisation.
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Chapter 3 – Evaluation of Performance
Measuring Organisational Efficiency and Effectiveness
It is important for an organisation to measure both efficiency and effectiveness in
terms of its strategic objectives. These concepts can be measured through the
use of performance indicators (PIs).
Performance indicators
A performance indicator is a tool used to measure progress towards the
achievement of organisational objectives. The PIs used will be determined by the
specific objectives of the organisation. When a number of PIs are used together,
they can provide an overview of the organisation’s performance.
Performance Indicators can either be qualitative or quantitative:
Qualitative measures rate the quality of performance and may include the level of
job satisfaction and customer service levels.
Quantitative measures are usually measured as a number or figure and include
indicators such as profit margins and debt level.
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Chapter 3 – Evaluation of Performance
Measuring Organisational Efficiency and Effectiveness
Measuring Performance
Performance measurement is a complex issue and there are a number of
considerations that need to be taken into account, including whether the
measure should be qualitative or quantitative, and whether the impact is
immediate or delayed.
Any performance measure must be:
• relevant – does it provide the information required by users?
• valid – as the information or data been collected correctly?
• reliable – what is the source of the data? Has it been based on
measurable data or is it anecdotal?
• delivering valuable information – will the PI provide useful information
that will assist users to make decisions?
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Chapter 3 – Evaluation of Performance
Measuring Organisational Efficiency and Effectiveness
Measuring Performance
All Performance Indicators should be comparative and may be compared to:
• Changes in PIs over time – for example, did the rate or amount increase or
decrease over the past year? Did sales increase by 10 per cent over the
period?
• Other organisations or benchmarks in the industry sector – does the
organisation meet or exceed benchmarks set by the best organ- isations in
the industry?
• Budgets, estimates or targets set by the organisation – did the figures or
perfor- mance match or exceed what was expected or budgeted for?
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Chapter 3 – Evaluation of Performance
Performance indicators used to evaluate the performance of LSO
- Number of Sales
- Percentage of Market Share
- Net Profit Figures
- Productivity and the growth rate
- Level of Staff turnover
- Level of job Satisfaction
- Customer satisfaction levels
- Number of workplace accidents
- Level of waste
- Number of customer complaints
- Return on investment
- Debt to equity
- Debtors turnover
- Staff absences
See page 52-53 of textbook for detailed examples of Performance Indicators
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Chapter 3 – Evaluation of Performance
Growing importance of other measures of organisational performance
Many organisations are primarily focused on financial performance indicators to
measure success, such as sustaining reduced costs and increased market share.
The measurements should be broad and cover areas such as progress towards
objectives, employees’ performance levels, customer satisfaction levels, and
other indicators such as quality, efficiency, creativity and innovation.
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Chapter 3 – Evaluation of Performance
Growing importance of other measures of organisational performance
The Balanced Scorecard Measurement
The balanced scorecard approach is a method of determining organisational
performance that allows managers to look at performance in an organisation from
four perspectives:
1 Customer perspective (How do customers see us?)
2 Internal capabilities perspective (At what must we excel?)
3 Innovation and learning perspective (Can we continue to improve and create
value?)
4 Financial perspective (How do our owners/ shareholders see us?)
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Chapter 3 – Evaluation of Performance
Growing importance of other measures of organisational performance
The Balanced Scorecard Measurement
Characteristics of a Balanced Scorecard:
• Regular emphasis on the strategic intent and direction of the business by
highlighting strategic goals
• Broad focus of management to include sustainable long-term performance
• Improved communication within the organisation regarding performance and
appraisals
• a focus for business process improvement
• management’s attention focused on capabilities needed for strategic goals.
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Chapter 3 – Evaluation of Performance
Growing importance of other measures of organisational performance
Stakeholder Approach
The stakeholder approach focuses on how the organisation meets the needs of its
stakeholders. There are a number of different stakeholders in an organisation who all
have a vested interest in its performance:
1 Customers are interested in quality products and customer satisfaction.
2 Suppliers want to be paid promptly.
3 Governments want the organisation to comply with legal requirements.
4 Employees want a safe working environment, opportunities for skill development
and a flexible workplace.
5 Competitors will often benchmark against the organisation.
6 The community wants organisations to take on social responsibility, behave ethically
and to have a commitment to charity.
7 Shareholders want a satisfactory rate of return in terms of dividends from the
organisation and also an increased share price.
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Chapter 3 – Evaluation of Performance
Social responsibility and evaluation of performance
While the majority of large-scale organisations will focus on profit and
financial performance, many stakeholders and the community now expect
social responsibility and other non- financial measures to be equally
important.
All organisations must ensure that social responsibility is incorporated
into their measurement of performance. PIs such as the level of waste
may reflect waste minimisation and the positive impact of the
organisation on the environment.
Staff turnover, absenteeism and the level of workplace accidents will
often indicate whether an organisation has the interests of the employees
as an important goal. Non-traditional indicators and measurements
incorporating the ‘triple bottom line’ are now seen as important and
necessary.
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Chapter 4 – Internal Environment
Key Knowledge
Students will learn the following about the internal environment of large- scale
organisations:
– management structures
– corporate culture and its future development
– the need for, and process of, policy development and its application.
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Chapter 4 - Internal Environment
Management Structure
1. Senior or Executive Management
High level responsibility,
High level decision making
2. Middle Managers
In charge of designated departments
Store managers etc
3. Front Line Managers
Responsible for day to day operations
Supervisors / team leaders
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Chapter 4 - Internal Environment
Division of Labour
Refers to the segmentation and coordination of
activities
Traditionally
Hierarchical structures - many levels of
specialisation with workers becoming
experts
Changing to:
Flatter structure – employees are
becoming multi skilled, increasing
motivation and productivity
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Chapter 4 - Internal Environment
Organisational Departments or Divisions
Divisions are key to organisational structure and can be broken into:
- Function – operations, finance, human resources
- Geographic – based on location of employees for example manufacturing
in various locations
- - Product based – a sporting manufacturer may separate clothing &
footwear, or AFL & NRL
- Customer based – separate customers who require different services, Retail
& Wholesale
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Chapter 4 - Internal Environment
Chain of command
Authority
- the legal or moral right to control something or
someone
Span of control
- is the term that refers to the number of people a
manger has direct responsibility
The larger the number of people the manager is responsible
for the flatter the structure (horizontal structure)
Narrow span of control will see a hierarchical structure in
place
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Chapter 4 - Internal Environment
Pattern of decision making
Hierarchical structure
Have a centralised decision making pattern
Flatter structure
Have a more decentralised decision making pattern
Organisational Chart
(page 67)
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Chapter 4 - Internal Environment
Hierarchical Management (Organisational) Structure
2 Types of Structures
1 Bureaucratic Structure
2 Flatter structure
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Chapter 4 - Internal Environment
Hierarchical Management (Organisational) Structure
1. Traditional Structure – Bureaucratic model (vertical)
Features: (Page 68)
- Employees arranged into layers
Levels, powers responsibilities.
- Rigid lines of communication
downward pattern, orders, instruction
- Clearly identifiable positions
roles responsibilities and accountablility
- Clearly defined command of control
- Centralised Decision Making
- The Principle of unity of Command
Each employee is responsible to one
manager
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Chapter 4 - Internal Environment
Hierarchical Management (Organisational) Structure
The Term Bureaucratic literally means to
‘Rule from the Desk’
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Chapter 4 - Internal Environment
Hierarchical Management (Organisational) Structure
1. Flatter Structure
Features: (Page 68)
- More flexibility
- Provides employee creativity
- Responsive to change
Effects of Flatter Structure:
- Fewer level between staff
- Employees actively involved in decision making
- Better use of employee knowledge, skills experience
- Greater flexibility
- Reduction in management costs (fewer managers)
- Increased training and multiskilling
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Chapter 4 - Internal Environment
Forms of Hierarchical Organisation Structure
Functional Structure
Diagram (page 69)
Geographical Structure
Diagram (page 70)
Product Based Structure
Diagram (page 70)
Customer Based Structure
Diagram (page 71)
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Chapter 4 - Internal Environment
Other forms of Organisational Structures
Matrix Structures
- Best used when an organisation undertakes a
project of assignment
- Employees under this structure remain as part
of their functional department but also have a
responsibility to respond to the project team leader
ADVANTAGES
- improve communication channels
- reduces interdepartmental rivalries
- greater level of cross-pollination of ideas
SCSC Year 12 Business Management . Weebly . com
Chapter 4 - Internal Environment
Other forms of Organisational Structures
Network Structures
this structure sees organisations outsource most of
the work to other organisations creating its products in cooperation with others.
The administrative control is done by the core business and
ownerships of the product is also held by them.
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Chapter 4 - Internal Environment
Corporate Culture is:
- A pattern of basic assumptions shared within organisation
- Developed and shared by a group
- Represents things that have worked well in past
- Taught to newcomers as the correct way of thinking, feeling
& doing
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Chapter 4 - Internal Environment
To Recognise Corporate Culture look at:
- Formally written company policy or objective
- Physical environment
- Organisational structure
- Organisational Processes
- Rituals, symbols or whats celebrated
- How people address each other
- The language used
- Official company documentation
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Chapter 4 - Internal Environment
Corporate Culture
The Differences in Corporate Culture:
- Degree to which people are encouraged to become risk takers
and innovators
- Attention to detail
- People orientation
- Task or Process orientation
- Team orientation
- Level of competitiveness
- Degree of emphasis on ethical and Social Responsibility
- Diversity among employees
- Age of the organisation
SCSC Year 12 Business Management . Weebly . com
Chapter 4 - Internal Environment
Corporate Culture
How does a new employee learn the culture?
- Stories / narratives
- Rituals
- Mateial symbols
- Behaviour management
- Communication
- Specialist language
- Training
- Written documentation
-
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Chapter 4 - Internal Environment
Corporate Culture
Pressure to change Corporate Culture
The following are positive benefits of a positive Corporate Culture:
- Increased productivity
- Greater employee work ethic
- Reduced staff absenteeism & turnover
- Reduced cost of recruitment & Training
- Greater profitability
- Positive public perception
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Chapter 4 - Internal Environment
Corporate Culture
Ways to change corporate culture:
1 determine type of culture it should adapt
2 Establish what aspects of organisational culture need to
go/stay
3 Plan the proposed change development
4 use leadership skills to bring about cultural change
5 set objectives and work to achieve them
6 monitor the level of acceptance and practice of the culture
7 Evaluate the outcome of the change and compare with the
desired behaviours
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Chapter 4 - Internal Environment
Policy Development
Policy Development and its application
Policy is:
a written statement detailing processes, procedures,
rules and regulations that must be observed in a given situation.
SCSC Year 12 Business Management . Weebly . com
Chapter 4 - Internal Environment
Policy Development
Policy that are based on an organisation’s mission and
goals will:
- - A conststant interpretation of the intentions of senior
management
- - Include procedures
- - Offer guiding principles for action
- - Reflect the mission and objectives
- - Assist with compliance and acceptance of desired
behaviours
- - Recognise the rights and obligations of people within the
organisation
- - Identify means and procedures for resolution of conflict
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Chapter 4 - Internal Environment
Policy Development
Effective Policies are:
- Clearly expressed
- Clearly communicated
- Often introduced at employee training
SCSC Year 12 Business Management . Weebly . com
Chapter 4 - Internal Environment
Policy Development
Pressure on policy development:
External
- Legal / Legislative
- Social responsibility
- Changing markets & other international pressures
- Changes in Technology
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Chapter 4 - Internal Environment
Policy Development
Pressure on policy development:
Operating Environment:
- Lobby Groups
- Trade Unions
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Chapter 4 - Internal Environment
Policy Development
Pressure on policy development:
Internal Environment
- Owners / Shareholders
- Management / Employees
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Chapter 4 - Internal Environment
Policy Development
Policy Development Process
7 Step Process
1 Issue Identification
‘This is wrong we need to fix it’
2 Research and analysis
‘what exactly needs to change and what are the
possibilities for the exact form of change’
3 Stakeholder Input
‘What do those affected by a new policy think?’
4 Policy development
‘Preparation of a proposed policy’
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Chapter 4 - Internal Environment
Policy Development
Policy Development Process
5 Draft policy is posted
‘This is what is being proposed’
6 Policy Approval
‘This is what the policy is going to be’
7 Evaluation
‘Did the new policy help achieve organisational
objectives?’
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Key Knowledge
Students will learn the following about the internal environment of large- scale
organisations:
– key management roles
– planning (long-, medium-, and short-term)
– organising (resource and task allocation techniques)
– leading (importance of leadership qualities, including interpersonal,
informational and decision making)
– controlling (financial and non-financial processes and control systems)
– different styles of management (autocratic, persuasive, consultative,
participative and laissez-faire) and their appropriate application to
various situations
– key management skills as appropriate to the process of effective
management
– the relationship between management styles and skills.
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Key roles of Management:
Management is responsible for:
- Determining corporate objectives in line
mission statement
with
- proactively planning for the future
- predicting and making plans for changes as a
result of pressure
- integrating all resources available
- administering and controlling the activities of
the organisations
- accounting for the organisations operations and
outcomes
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Key roles of Management:
POLC
1. Planning
2. Organising
3. Leading
4. Controlling
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Key roles of Management:
1. Planning
Planning is the formalised process to produce a result in
the form of integrated systems of decisions.
5 Stages of Planning
1. Establishing an objective – i.e. What do we want?
2. Identification of present situation and forecasting the
future situation. (SWOT analysis for strategic planning)
3. Developing and evaluating planning alternatives.
4. Selecting and implementing the plan.
5. Monitoring and reviewing the results.
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Key roles of Management:
1. Planning
Levels of Planning:
- Strategic Planning
- Tactical Planning
- Operational Planning
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Chapter 5 – Effective Management
Key roles of Management:
Levels of Planning:
- Strategic Planning (2 – 5 Years)
can be define as a formal long term (2-5 yrs)
planning process undertaken by senior management
to define its strategic direction and objectives
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Key roles of Management:
Levels of Planning:
Strategic planning includes the following:
- respond to trends, events, challenges
- provide direction towards objectives &
targets
- plan for the future
- concentrate on an idea or vision
- create a framework to achieve advantage
- guide management of resources
Tools used in strategic planning include:
S.W.O.T. analysis
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Key roles of Management:
Levels of Planning:
Tactical planning:
- Formal medium term (1-2yrs) planning
- Undertaken by middle management
- Responding to changes internally / externally
- The allocation of resources
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Chapter 5 – Effective Management
Key roles of Management:
Levels of Planning:
Operational Planning is:
- The planning of operations for daily, weekly,
monthly or yearly basis
- A detailed level of planning that implements
strategies to ultimately achieve specific objectives
set by the higher level managers
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Key roles of Management:
2. Organising
- Is the role of management where they are responsible
for coordinating the organisations human and material
resources to ensure objectives are achieved
Organising is a multi step process which involves:
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Key roles of Management:
2. Organising
Organising is a multi step process which involves:
- determining all the work that must be done
- dividing the total workload into activities that
can be performed by individuals or groups
- combining tasks in logical or efficient manner
- setting up departments to coordinate the work
- monitoring the effectiveness of the organsiation
and making adjustments to it structure when
required
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Key roles of Management:
2. Organising
as part of planning an authority system must be set up
This system can include:
- Line authority
ability to make organisational decisions,
issue directions and expect compliance
- Staff Authority
is advisory authority able to provide
advice or recommendations
- Functional authority
the right to direct and control special
activities that are under the control span
of another manager
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Key roles of Management:
3. Leading
leading involves influencing others towards the
attainment of organsational objectives
Leaders must:
- Motivate others
- be good communicators
- act as a role model
- use power effectively
To be effective leaders need to:
- be understanding of those they lead
- their personalities
- their values
- their attitudes and
- their emotions
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Key roles of Management:
3. Leading
What makes a good leader?
- intelligence and knowledge
- social maturity
- internal motivation and achievement
- self confidence
- good communicator
- interpersonal qualities
- take responsibility
- make fair and just decisions
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Key roles of Management:
3. Leading
Sources of leadership:
Power and influence are a focal point
1. Legitimate power
Is power that has been confirmed by the position in the
hierarchical structure and accepted
2. Expert Power
Employs skills, knowledge and information which a person has to
influence others with
3. Reward Power
involves the ability to reward a person in order to gain
compliance to a certain way of thinking
4. Coercive Power
involves the ability to punish others when they do not engage in
desired behaviour
5. Referent Power
Means the leader is liked and respected by subordinate, peers
and supervisors and gains power this this
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Key roles of Management:
4. Controlling
is directly relates to planning. The controlling process ensures
that plans are being implemented appropriately and alerts managers to
any deviations from the plans
4 steps to controlling:
1. Setting a standard, target or objective
For example absent days
Behaviour
Standard to work
2. Measuring performance
is done through
observation,
establishing quantitative and qualitative measures
Beanchmarks
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Key roles of Management:
4. Controlling
is directly relates to planning. The controlling process
ensures that plans are being implemented appropriately and alerts
managers to any deviations from the plans
4 steps to controlling:
3. Identifying and investigating any variations
positive or negative
4. Making changes where necessary
to ensure the objectives established are achieved
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Key roles of Management:
4. Controlling
Types of controls
Financial Controls
budgeting
Establishing performance standards
set during planning process
Time Controls
relate to deadlines or time constraints
Cost Controls
employee performance, absences, OH&S issues, wastage
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
Is the manner and approach of providing direction,
implementing plans and motivating people.
There are distinct differences in management styles.
Examples:
- ways managers interact with employees
- the degree of task or employee orientation
- manner of communication
Most managers will use a range of styles based on:
- the situation
- their personality
- the characteristics of their subordinates
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
The 5 manage styles
1. Autocratic Management Style
2. Persuasive Management Style
3. Consultative Management Style
4. Participative Management Style
5. Laissez-faire Management Style
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
1. Autocratic Management Style
Is often refered to as the CLASSICAL
Management Style
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
1. Autocratic Management Style
Characteristics include:
- Managers have a desire to be in control
- they place great importance on achieving
goals & objectives through policy and procedures
- the believe money is the main motivator
- Decision making is centralised and controlled
by management
- they place little importance on employee input
or contribution
- communication is centralised and downwards
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
1. Autocratic Management Style
Advantages include:
Decision making is quick
Decisions are made by experienced managers
Communication is direct
Employees roles are define and monitored
Importance on Production and Efficiency
Suits high risk / difficult decisions
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
1. Autocratic Management Style
Disadvantages include:
A quick decision is not always the best
discourages teamwork and employee opinions
Does not allow feedback or open
communication
Low motivation and job satisfaction of staff
resulting in high staff turnover
Very task focused, little regard for workers as
people
Creates feeling of unease and being kept in the
dark.
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
The 5 manage styles
2. Persuasive Management Style
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
2. Persuasive Management Style
A persuasive management style is that of a manager
who uses their ability to interpret a situation, people’s
actions and dialogue, and then strongly urges or
convinces them to do a task or achieve objectives the
manager’s way.
It is similar to the autocratic style but there are some
differences.
The main difference is that once a persuasive manager
makes a decision, then they try to convince a
subordinate that what was decided by the manager is in
the subordinates best interest.
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
2. Persuasive Management Style
For example, a marketing department manager who
has an idea for increasing sales targets will try to
convince the rest of the team that only this idea will
improve the sales targets.
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
2. Persuasive Management Style
The characteristics of persuasive management style
are:
- It has a centralised system of control and authority.
- Policies and procedures are maintained in detail and
enforced by frequent checks.
- Communication is centralised, with a strict top-down or
hierarchal chain of command approach to management.
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
2. Persuasive Management Style
Advantages:
- Decision making is quick an still made by one person.
- Suits high-risk decisions, e.g. closure of factory,
redundancy.
- Employees have a clear idea about what they have to
achieve.
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
2. Persuasive Management Style
Disadvantages:
- No input from workers into decision making process;
undervalues benefit of teamwork.
- Workers can still feel alienated, as their opinions are
not sought.
- Opportunities for employee initiative and commitment
overlooked, leading to low levels of motivation and job
satisfaction.
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
3. Consultative Management Style
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
3. Consultative Management Style
Management consults with employees when discussing
an issue however the manager ultimately makes the
decision
It takes into account the opinions of team members
before making a decision.
This style is purely task centered to now taking the
people/employees more into account.
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
3. Consultative Management Style
Control and Authority, while centralised is more employee-based
and less centralised then the autocratic and persuasive styles.
Task achievement is still a driving factor but is now being
balanced with an understanding of the importance of the people
factor.
Decision making while centralised with the manager, occurs after
consultation with employees.
Places value on the importance of the employees contribution to
the organisation.
Communication is two way being top/down by management to
subordinates and upwards from the subordinates to management
when there opinion and feedback is sought.
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
3. Consultative Management Style
Advantages:
- Gain a variety of ideas from the suggestions of employees,
which will lead to a better decision making outcome
- Reasonable level of employee involvement
- Act to motivate and increase an employees level of job
satisfaction.
Disadvantages:
- Employees may not understand the complexity of the problem
- Time consuming if many stakeholders are consulted.
- Employees may still not feel valued if they have provided their
ideas but these are overlooked.
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
4. Participative Management Style
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
4. Participative Management Style
Decision making is performed as a team with
management and staff working together
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
4. Participative Management Style
Participative management style has become very
popular because it focuses on the interaction between
management and employees.
This style keeps employees informed about issues that
affect their work, with management and employees
sharing decision-making and problem solving task
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
4. Participative Management Style
- Control and authority is decentralised. Coperate
objectives, while determined by senior management are
followed by the setting of departmental team and
individual objectives so allowing for group ownership of
the corparate direction.
- Orientation or focus is towards people. If the
employees are satisfied and productive, this will result
in an increase in activity.
- There is a belief that motivated of employee relates to
an understanding of how to satisfy the employee broad
range of needs.
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
4. Participative Management Style
Advantages:
- OPEN COMMUNCATION WITHIN THE
ORGANISATION
- CREATES GOOD EMPLOYEE RELATIONS
- MANAGER DEMONSTRATES TRUST AND FAITH IN
THE ABILITY OF EMPLOYEES
- SHARED VISION AND DIRECTION BETWEEN
MANAGEMENT AND EMPLOYEES TOWARDS
ACHIEVEMENT OF THE ORGANISATION
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
4. Participative Management Style
Disadvantages:
- CAN GIVE RISE TO CONFLICT BETWEEN
EMPLOYEES WHO QUESTION THE ABILITY OF
THEIR CO-WORKERS
- IT CAN BE TIME-COMSUMING SEEKING THE
INVOLVEMENT OF GROUPS OR TEAMS WHEN
MAKING DECISION
- CONFLICT MAY ARISE WHEN THERE ARE
VARYING VIEWPOINTS
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
5. Laissez-faire Management Style
.
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
The 5 manage styles
5. Laissez-faire Management Style
The laissez-fair management style is a style that leaves
the majority of decisions making and running of the
business operation to the employees.
The laissez-fair management style can also be called
‘free-rein’ or ‘hands free’ style. It is a style in witch
management provides little direction to employees.
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
5. Laissez-faire Management Style
Advantages:
- High employee control
- Employees can set own tasks with little involvement from
management.
- Strong motivation, empowerment and job satisfaction for
employees.
- Good environment for encouraging creativity and
innovation.
- Conductive to team work.
- It’s a flatter structure that encouragers good
communication.
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Styles
5. Laissez-faire Management Style
Disadvantages:
- Lack of guidance can cause some employees to have
a sense of loss of direction.
- Some employees may feel unsettled by the freedom or
of this style.
- Does not suet employees who are unskilled or need
structure and routine tasks.
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Situational or Contingency Management Approaches
Using this approach Managers must take into account all
aspects of the internal and external situations and act on
those aspects that are important.
Managers using this approach demonstrate “Flexibility” in
handling situations.
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Situational or Contingency Management Approaches
This approach works by adopting the most appropriate
management style for the given situation.
The following variables are considered:
- the managers personality, characteristics or
qualities, values or skills
- the subordinates characteristics, level of
knowledge, skills or experience
- the tasks that need to be completed
- The constraints, such as time, money, resources
- the corporate culture of the organisation and
relationships between management staff
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Situational or Contingency Management Approaches
This approach works by adopting the most appropriate
management style for the given situation.
The following variables are considered:
- the managers personality, characteristics or
qualities, values or skills
- the subordinates characteristics, level of
knowledge, skills or experience
- the tasks that need to be completed
- The constraints, such as time, money, resources
- the corporate culture of the organisation and
relationships between management staff
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Skills
Skills refer to the ability to do something well, gained through
training and experience in order to achieve the required work
A close relationship exists between manager styles and
their skills
An effective participative style manager may have:
good communication skills
good interpersonal skills
good problem solving skills
be a good decision maker
be able to delegate and negotiate.
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Skills
No matter what style or level of manager they are, all
managers will need to possess a range of skills such as:
-
Communication
Delegation
Decision making and problem solving
Negotiation
Team leadership
Time management
Stress management
Analytical
Technical
Emotional intelligence
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Skills
-
Communication
A process of creating and exchanging information between people
that produces the required response
-
Communication skills are essential, as managers must be able to
clarfiy with employees the tasks that are required to be completed
-
2 kinds of communication
-
Interpersonal communication
Organisational Communication
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Skills
-
Communication
-
Forms of communication
-
Reading
-
Verbal written – expressing ideas, thoughts on a document
-
Verbal oral – verbally expressing and talking to people
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Skills
-
Delegation
Is the process where formal authority is passed down an
organisational hierarchy.
-
5 steps in delegation
-
Analysis
Appointment
Breifing
Control
Appraisal
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Skills
-
Delegation
-
Benefits of delegation:
Assists with a smooth flow of production and work processes.
-
It acts as a time saver, freeing management to be involved in
other activities
-
It provides an opportunity for skills training personal development
and job satisfaction.
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Skills
-
Decision making and problem solving
-
A multistep approach where by a selection is made between a
range of different alternatives
-
Systematic Approach
Steps
1. Identify the problem and define the objectives
2. Gather the necessary information to establish the cause of
the problem
3.
4.
5.
6.
Develop alternative solutions
Analyse the alternatives
Choose an alternative and implement it
Evaluate the implementation.
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Skills
-
Negotiation
The process by which one party seeks to obtain something it
wants from another party, eg an employee seeking a pay rise from
employer
-
Core skills in negotiation
1.
2.
3.
4.
5.
Define a range of objectives
Explore the possibilities
Prepare well
Listen and question
Prioritise clearly
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Skills
-
Negotiation
-
Steps to successful negotiation:
1.
2.
3.
4.
5.
6.
Preparation
Establish a positive working atmosphere
Make a proposal
Responding to the proposal
Establishing positions
Record information and confirm understanding
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Skills
-
Team leadership
-
It is important team leadership skills are exhibited by the
team leader to ensure the success of the team in achieving
their objectives
-
Team leadership skills include:
-
Work as a coach or mentor to team members
To encourage
To build a cohesive and trusting group
To facilitate resolution to problems
To manage team dynamics and relationships
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Skills
-
Time management
-
Involves the process of managing the things we do in the
time we have available
-
3 types of work time
1.
2.
3.
Boss determined
Organisation determined
Self determined
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Skills
-
Time management
-
Systematic approach to time management
1.
2.
3.
4.
5.
Make a list of objectives
Rank the objectives
List activities needed to achieve the objectives
Assign priorities to each activity
Schedule activities according to priorities
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Skills
-
Stress management
-
-
Skills required by a manager to reduce the level of stress in
both themselves and the subordinates
Major factors that contribute to stress:
-
Workload
Coping with change
Interpersonal conflict
Poor management practices
Shift work and fatigue
Lack of communication
Bullying etc
Technology
Lack of training
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Skills
-
Analytical Skills
A manager needs to have analytical skills to be able to identify
and solve complex problems, make sense of them and make
decisions to correct any issues.
-
Requires:
Logical thinking
Draw on expertise
Investigation
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Skills
-
Technical Skills
Include the knowledge of and proficiency in a certain specific
field.
-
The higher a manager progresses up the hierarchical ladder the
less important the daily technical skills become
-
However senior management use their technical skills when
conceptualising and analysing key organisational plans and
decisions.
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Management Skills
-
Emotional intelligence
-
Refers to an individuals possession of personal qualities and
attributes of self-awareness, self regulation, motivation, empathy
and social skills.
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Effective Management
Areas of assessment of a manager’s effectiveness
Area
Explanation
Outcomes/results
Have these been achieved in an
based on objectives
ethical manner?
Is the manager observing social
responsibility to stakeholders?
External/internal environment Was the correct (appropriate) management
style adopted to manage the given situation?
Communication
Were the forms chosen appropriate and
effective in communicating with all
stakeholders, e.g. employees (subordinates),
shareholders, customers, suppliers?
Motivation
Were the workers (subordinates) in the
business area motivated to achieve? Were the
correct motivational strategies implemented?
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Effective Management
how do we know if it is occurring?
Job satisfaction and
employee relations
Were the manager’s subordinates satisfied
with their jobs and motivated to work? Was
the relationship between manager and
subordinates good?
Teamwork
Was this apparent and encouraged? What level
of decentralised decision making has occurred?
Staff absenteeism
How did the level of staff absenteeism compare
with other business units within the organisation
and industry (in general)?
Staff turnover
How did the level of staff turnover compare with
other business units within the organisation and
industry (in general)?
Training and development
Did the manager make available and oversee
these areas for their subordinates to help them
to develop?
Performance appraisal
Was a performance appraisal system in place to
highlight the strengths and weaknesses of the
manager and subordinates?
SCSC Year 12 Business Management . Weebly . com
Chapter 5 – Effective Management
Effective Management
how do we know if it is occurring?
‘The most effective measure of leadership is the performance of the
team in your absence.’
anonymous
Some text found on this presentation has come from:
www.cambridge.edu.au/GO
SCSC Year 12 Business Management . Weebly . com
Chapter 6 – Operations Management Function
Key Knowledge
Students will learn the following about the operations management
function:
– operations function and its relationship to business objectives
and business strategy
– characteristics of operations management within large-scale
manufacturing and service organisations
– key elements of an operations system (inputs, processes and
outputs) in different types of large-scale organisations
– the reasons why productivity and business competitiveness are
important and their impact on the operations system.
SCSC Year 12 Business Management . Weebly . com
Chapter 6 – Operations Management Function
Operations Management Function
The management of resources to achieve efficient output of goods
and services
Operations and business objectives:
All organisations and departments within these organisations will be
aiming to improve the competitiveness within the market.
SCSC Year 12 Business Management . Weebly . com
Chapter 6 – Operations Management Function
Operation Department:
Will aim to maximise the levels of productivity and quality through
the operations process.
Human Resource Department:
Will support the operations department by ensuring sufficient
workers are available to meet operational needs and be trained and
motivated as necessary.
Information Technology Department:
Will provide support and advice relating to the technology issue to
the operations department.
SCSC Year 12 Business Management . Weebly . com
Chapter 6 – Operations Management Function
The Role of the Operations Manager:
This includes:
-
Ensuring operations systems meet strategies and objectives
-
Making strategic decisions relating to planning and designing
operational systems
-
Operating systems, including establishing plans, processes and
methods of production control, in relation to:
-
Inventory management
Manufacturing
Quality
Maintenance/engineering
SCSC Year 12 Business Management . Weebly . com
Chapter 6 – Operations Management Function
The Operations System:
This refers to the series of procedures and processes in place to create
outputs of finished goods through the transformation of the inputs from
raw materials, capital, labour, knowledge and technology.
Production process:
Is the process of transforming resource inputs into finished goods and
services
SCSC Year 12 Business Management . Weebly . com
Chapter 6 – Operations Management Function
The Operations System:
Difference between goods and services: (see Table 6.2 Page 136)
Goods
Tangible
services
Intangible. Quality levels are therefore
more difficult to measure
Production and consumption
occur separately, e.g. manufacture
soft drink, then distribute to retailer,
customer purchases and consumers
drink
Can be stored as inventory
Production and consumption often
occurs concurrently/simultaneously
e.g. patient goes to see a doctor
who performs the service
Difficult to store; however, record of service
is maintained, e.g. medical history, legal
advice on file
Can be standardised/consistent
quality, e.g. Mars bars, cars, clothing
Often specifically provided/tailored to meet
individual client/customer requirements,
e.g. tax advice
Minimal customer contact, e.g.
manufacturer will deal with wholesaler/
distributor – not generally with final
Consumer
Higher degree of customer contact established
Produced
Performed
SCSC Year 12 Business Management . Weebly . com
Chapter 6 – Operations Management Function
Key Elements of Operations Systems
Process includes 3 stages: (see table 6.3 page 136)
1. Inputs – ingredients required to produce the desired outcome
2. Transformation – those inputs are put through a series of procedures in
order to transform them into finished goods/services
3. Output – the final product
SCSC Year 12 Business Management . Weebly . com
Chapter 6 – Operations Management Function
Inputs:
Inputs are like the ingredients, that when mixed/put together using a
process will produce a finished good.
Raw materials & Components:
Unprocessed inputs sources from primary producers
Examples - Raw Materials: minerals, water, farm produce
- Components: processed parts used to complete a product
Human Resources:
Labour or human effort exerted in the production process.
SCSC Year 12 Business Management . Weebly . com
Chapter 6 – Operations Management Function
Inputs:
Technology:
Includes computerisation and new developments, including automation,
robotics, e-commerce.
Capital, plant & Equipment:
Refers to human made objects, tools or machines that assist the production
process.
Capital - Cash
Plant - Building and large non-movable items
Equipment - Machinery tools, cars, computers, phones, furniture
SCSC Year 12 Business Management . Weebly . com
Chapter 6 – Operations Management Function
Inputs:
Information and knowledge:
This refers to the specialised knowledge required in order to enact the
production/operations system and o produce the specific good/service.
Examples: knowledge of computers, special machinery, special subject
area
This item is generally intangible and can be overlooked because it is not a
physical item.
Time:
Time is a non-renewable resource that if wasted will add to production
costs.
SCSC Year 12 Business Management . Weebly . com
Chapter 6 – Operations Management Function
The Transformation Process:
This process involves the transformation of the inputs into finished outputs.
The Operations manager plans the transformation process and then
organises for its implementation.
This process may vary according to:
- Type of good being produced
- Size of the organisation
- Number, quantity and available resources
SCSC Year 12 Business Management . Weebly . com
Chapter 6 – Operations Management Function
Outputs:
Outputs are the final products and the result of the operations process.
Outputs are divided into 2 categories:
1. Goods - tangible (an object, something physical)
2. Services - intangible (involves someone doing something)
Figure 6.9, page 139
Displays what the operation system of a hospital might look like.
SCSC Year 12 Business Management . Weebly . com
Chapter 6 – Operations Management Function
Consider the difference between
a goods (manufacturing) business
&
a service business
Consider the difference in:
input
Transformation Processes
Outputs
SCSC Year 12 Business Management . Weebly . com
Chapter 6 – Operations Management Function
How Operations Management relates to business objectives
and strategy
Operations management is vital to any organisation because the decisions
made by the operations managers have a direct impact on the level of
competitiveness of that organisation and the attainment of the corporate
objectives.
The operation system will determine the cost of production and the quality
of the finished products. It will directly impact the revenue, costs, quality of
output and ultimately the profits.
SCSC Year 12 Business Management . Weebly . com
Chapter 6 – Operations Management Function
How Operations Management relates to business objectives
and strategy
The following features contribute to the organisations operating systems in
order to enhance its business competitiveness.
- Optimal efficiency, reliable supply chain, minimal wastage and defects,
use of technology and an appropriate facility design and layout
-
SCSC Year 12 Business Management . Weebly . com
Chapter 6 – Operations Management Function
The Productivity Objective
The primary aim of the operations manager is to enhance
operational efficiency and productivity
Output (O) (units of Production)
Productivity (P) = _____________________________________
Inputs (I) (units of raw materials, capital, labor.
Examples of productivity measures include
- Units of production produced per employee
- Crop tonnage per hectare planted
- Number of clients attended to per hour or per unit of wage cost
- Number of units produced per unit of money
SCSC Year 12 Business Management . Weebly . com
Chapter 6 – Operations Management Function
Factors determining organisational productivity
These can include:
- Technology levels
- Research and Development
- Equipment and facilities
- Task and processes
- Layout of facilities
- Communications processes
- Workplace safety
SCSC Year 12 Business Management . Weebly . com
Chapter 7 – Optimising Operations
Key Knowledge
Students will learn about the following strategies to
optimise operations:
– facilities design and layout
– materials management
– management of quality
– extent of the use of technology.
SCSC Year 12 Business Management . Weebly . com
Chapter 7 – Optimising Operations
Facilities design and layout (floor Plan)
STRATEGY
The physical layout of the plant has a significant impact on the efficiency of
the opganisations operations.
There are a number of critical factors that influence location and design
including:
• Product / service being produced or supplied
• Volume of output required
• The amount of physical space required
• The process to be undertaken
• Appropriate type of layout.
SCSC Year 12 Business Management . Weebly . com
Chapter 7 – Optimising Operations
Facilities design and layout (floor Plan)
STRATEGIES
Optimising the use of physical space
Adequate workspace must be provided to all areas. Insufficient workspace
will often result in bottlenecks and subsequent blockages in workflows. The
workspace, however, must not be too large, as it may hinder productivity if
workers have to move around or walk long distances during completion of
tasks.
Optimising the use of equipment
Extracting maximum productivity from equipment is a key to operational
optimisation. Equipment must be easily accessible, reliable and operational
to maximise its throughput. It is vital that each piece is located so that it is
easily accessible to those who require it.
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Chapter 7 – Optimising Operations
Facilities design and layout (floor Plan)
Regular maintenance program
A regular maintenance program is essential to keeping equipment and
facilities operational. Easy accessibility to these for maintenance is crucial
in order to minimise downtime. Multi- skilling of workers is necessary to
ensure maximum utilisation of equipment. While regular maintenance will
be a cost in time, labour and component parts, it will avert costly downtime.
Any piece of equipment lying idle results in lost output and thus, lost
revenue.
Location of raw materials stocks and finished products
The location of raw materials stocks and finished products is another
determinant of operational efficiency and effectiveness. These must be
readily accessible during the production process. Time wasted in locating
and moving required inputs must be minimised in order to optimise
productivity.
SCSC Year 12 Business Management . Weebly . com
Chapter 7 – Optimising Operations
Facilities design and layout (floor Plan)
Layout of plant and equipment
The layout of plant and equipment must allow for an efficient flow of
production. This involves linking the processes and the different stages of
production so that production needs are met.
SCSC Year 12 Business Management . Weebly . com
Chapter 7 – Optimising Operations
Facilities design and layout (floor Plan)
Types of layout
The facility layout must be planned with a view to streamlining the
production process. The best layout to adopt depends on the type of
organisation and the nature of its activities.
fixed position layout
the product remains in a fixed position with the required
resources taken to the product
process layout (batch production)
production layout where pieces of equipment with like function are
grouped together
functional layout (batch production)
pieces of equipment with like function are grouped together;
the
product being produced is taken to each piece of equipment
product layout (mass production)
equipment is used for a single purpose along a production
flow line; the product progresses along the line in a
continuous
flow; suitable for mass production
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Chapter 7 – Optimising Operations
Facilities design and layout (floor Plan)
Potential Define words
Other associated words to the factory layout include:
Assembly line - used in manufacturing organisations when machines pass a product
past workers who perform a small specialised task
Customisation - made or altered to meet an individual order
Mass customisation - large-scale production of customised products
Cell production - the production line is split into a number of self-contained cells or units;
each cell produces the whole of one unit or a significant subassembly of a unit
Lean manufacturing - efficient management of the production process with the aim of
achieving minimum use of resources (streamlined production)
Closed factory - model of production where all production is carried out within the four
walls of a factory site
Virtual factory - the decentralisation of productive activities so that production does not
occur at one worksite; also referred to as decentralisation
SCSC Year 12 Business Management . Weebly . com
Chapter 7 – Optimising Operations
Improving operations through technology
The introduction of new technology as it becomes available to
organisational operations can offer significant efficiency savings as well as
improvements in the quality of product. Organisations that fail to keep pace
with the latest technological advancements tend to rapidly lose
competitiveness. Following are several examples of the technological
innovations developed in recent years that have added significantly to
operational productivity. All are examples of automation.
Automation
the techniques and equipment used to achieve automatic, as opposed to
human, operation or control of a process, equipment or a system
SCSC Year 12 Business Management . Weebly . com
Chapter 7 – Optimising Operations
Improving operations through technology
STRATEGIES
Computer Numerical Control
Computer Numerical Control (CNC), also referred to as Computer Aided
Manufacturing (CAM), involves the control of machinery, tools and
equipment through a computer.
Computer aided Design (CaD) - a computer program that facilitates
the creation and modification of product design
Computer Integrated Manufacturing - Computer Integrated
Manufacturing (CIM) is the combination of CAD and CNC. CIM is a
computer program that controls and directs production from start to finish.
Robotics - the use of computer- controlled robots
to perform manual tasks, especially on an assembly line, replacing
functions previously performed by human labour
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Chapter 7 – Optimising Operations
Improving operations through technology
Flexible Manufacturing Systems (FMS)
This is a complete system involving total computer control of the operations system using
CNC-based equipment and automated transport systems that deliver component parts and
raw materials in the correct quantities just as they are required. FMS creates total
computer control of all aspects of the operations system involving the integration of CAD,
engineering and manufacturing.
Service industries
In recent years, service industries have had access to considerable productivity
improvements via technological development. Specific examples of these include the
following:
- E-commerce allows business transactions to occur using the internet.
-
Computerisation has reduced operating costs and made significant time economies.
-
The development of mobile phone technology through the 3G network has opened up
many possibilities for businesses.
-
The ability to communicate via the internet has enabled significant cost savings.
SCSC Year 12 Business Management . Weebly . com
Chapter 7 – Optimising Operations
Materials and Supply chain management
Supply chain management is the process of integrating and planning,
implementing and controlling the system of organisations, people,
technology, activities, information and resources that transforms inputs into
finished outputs. Aspects of supply chain management include:
- Inventory management,
- The procurement of supplies, and
- Distribution of finished products to customers (logistics).
SCSC Year 12 Business Management . Weebly . com
Chapter 7 – Optimising Operations
Materials and Supply chain management
STRATEGIES
In recent years, the Just In Time (JIT) system of inventory management
from Japan has been growing in popularity with Australian businesses. This
system involves the reduction/ minimisation of inventory levels in the supply
chain, thereby reducing inventory costs. Inherent to JIT is the availability of
products in the required amounts at the right time at every stage in the
production process, while at the same time minimising the use of materials,
equipment, labour and space.
Just in time (Jit)
An inventory management system that aims to avoid holding any stocks
(either as inputs
or finished goods); supplies arrive just as needed for production, and
finished products are immediately dispatched or sold to customers
SCSC Year 12 Business Management . Weebly . com
Chapter 7 – Optimising Operations
Materials and Supply chain management
Inventory management,
Inventory is the storage of:
• raw materials and component parts
• unfinished production
• finished goods ready for distribution.
The inventory of a business takes up storage space and is therefore a cost.
The aim of inventory management is to ensure that the right in what
quantities. The key to success is to maintain a level of inventory that allows
production to continue without any delays, while avoiding the cost of excess
stock.
A system of inventory control that deter- mines how and when to store
items, and is capable of tracking the movement of raw materials,
components and partly completed units while protecting against loss due to
theft or damage.
SCSC Year 12 Business Management . Weebly . com
Chapter 7 – Optimising Operations
Materials and Supply chain management
Procurement of inputs / Supplies
Locating and acquiring a regular and reliable supply of high-quality inputs is
a vital aspect of efficient operations management. Contracts need to be
established with reliable suppliers of high-quality inputs.
• Supplier lead-in time must also be taken into account. Some suppliers will require
prior warning of requirements.
• Planning must occur in order to ascertain the exact amounts of materials that will
be required. This may give the opportunity to purchase in bulk and therefore obtain
an input at a lower cost per unit.
• The operations manager must also factor in an attempt to anticipate the possibility
of future price rises or falls caused by seasonal variations, world market conditions,
changes in the value of the Australian dollar or potential industrial action at a
supplier’s production facility.
• A system must also be established, such as JIT, to keep inventory at the required
levels to avert theft and loss of materials while in storage.
SCSC Year 12 Business Management . Weebly . com
Chapter 7 – Optimising Operations
Materials and Supply chain management
Distribution of finished products to customers (logistics).
An efficient system of transporting finished products to the customer must
also be developed. This may involve contracts with transport specialists
such as couriers. The frequency of deliveries must be established, as must
the routes taken.
SCSC Year 12 Business Management . Weebly . com
Chapter 7 – Optimising Operations
Management of Quality
Quality describes the degree of excellence in a product or service and its
ability to satisfy client/customer needs and wants. Consumers generally
base their purchasing decisions on the quality and price of a product as
they look for the best possible quality at the lowest price.
Quality management in a large-scale organisation may take one or a
combination of:
quality control,
quality assurance and
Total Quality Management (TQM), as discussed later.
Quality management programs aim to:
minimise waste and defect rates in production, thereby maximising
operational efficiency and productivity obtain consistently high standards of
product and service at every stage of production achieve set quality
standards or benchmarks.
SCSC Year 12 Business Management . Weebly . com
Chapter 7 – Optimising Operations
Management of Quality
STRATEGIES
Quality control
Quality control involves the use of a series of physical checks at different
stages of the production process to ensure that products and services meet
designated standards and errors are eliminated post-production. Defective
products are usually rejected and may be sold as ‘seconds’.
Quality control is reactive and aims to detect defects after they have
occurred. Once detected, operations management will decide whether
production needs to be halted to fix the cause of the problem or that this
was a one-off case. In some instances, a product recall becomes
necessary to rectify problems on units already sold.
SCSC Year 12 Business Management . Weebly . com
Chapter 7 – Optimising Operations
Management of Quality
Quality assurance
A quality assurance system aims to build quality into work processes, thereby
avoiding errors before they occur. It is a proactive process that may involve the
use of an external organisation called a ‘certification body’, which audits against
published national or international standards.
Achievement of certification entitles an organisation to display certification
marks. SAI Global is the best-known Australian certification body that issues
certification against published International Organization for Standardization
(ISO) standards.
While different quality standards apply to different types of organisations,
standards usually cover aspects such as:
• specific processes to be adopted in regard to customer satisfaction,
continuous improvement, the production process
• training of staff
• documentation of processes • controls
• corrective action
• auditing of processes.
SCSC Year 12 Business Management . Weebly . com
Chapter 7 – Optimising Operations
Management of Quality
Quality assurance
While different quality standards apply to different types of organisations,
standards usually cover aspects such as:
• specific processes to be adopted in regard to customer satisfaction,
continuous improvement, the production process
• training of staff
• documentation of processes • controls
• corrective action
• auditing of processes.
Quality certification is growing at a rapid rate among Australian
organisations as globalisation increases international competition and the
quality expectations of Australian consumers.
SCSC Year 12 Business Management . Weebly . com
Chapter 7 – Optimising Operations
Management of Quality
Total Quality Management (TQM)
TQM is a holistic approach to quality where all members of an organisation
aim to participate in ongoing improvement of organisational culture and
production processes. All organisational members are required to have a
commitment to ongoing, incremental quality improvements in everything
they do. Employees are placed into a work group known as a quality circle
and are required to work together to achieve quality improvements on an
ongoing basis.
SCSC Year 12 Business Management . Weebly . com
Chapter 7 – Optimising Operations
Management of Quality
Core TQM concepts
1 continuous process improvement – everyone is always looking for
improvement
2 customer focus –
Everyone has a customer:
External customer – the person who purchases the product or service.
Internal customer – those who use what another group in the workplace
provides.
Every work group must think about providing value to the people who use their
product.
3 defect prevention - TQM tries to prevent defects in products or services
before they arise rather than relying on inspection to find them after they occur.
4 universal responsibility - With TQM, quality is not just the responsibility of
the inspection department: it is everybody’s responsibility.
SCSC Year 12 Business Management . Weebly . com
Chapter 7 – Optimising Operations
Ethical and Socially responsible management of operations
Social responsibility requires an organisation to do what is right to reduce
economic, social and environmental impacts on the wider community and
ecosystem. Social responsibility is a commitment to giving back to the
community and its development, and looking out for the interests of all
stakeholders.
Social responsibility considerations for planning and running an operations
system include the following:
- waste minimisation schemes, such as - recycling
- reduction of carbon emissions
- provision of enhanced quality of life for employees through provision of safe
working
- environments that respect employee rights
- taking responsibility for the environmental, social and economic impact of the
organisations Activities
SCSC Year 12 Business Management . Weebly . com
Chapter 8 – Human Resource Management
Key Knowledge
Students will learn about the factors involved in
managing human resources, including the relationship of
the human resource function to business objectives and
strategy.
SCSC Year 12 Business Management . Weebly . com
Chapter 8 – Human Resource Management
The importance of Human Resource
Management to Business Success
- Human Resource Management
- The management of a wide range of responsibilities
relating to the human (employees) function within a
business, in order to increase both the employees’
and organisational efficiency
SCSC Year 12 Business Management . Weebly . com
Chapter 8 – Human Resource Management
The importance of Human Resource
Management to Business Success
- Creating effective relationships
- Policies and Procedures linked to organisational
strategies, objectives, planning and decision making
- Responsible for managing a business’s most valuable
assets (Employees)
SCSC Year 12 Business Management . Weebly . com
Chapter 8 – Human Resource Management
The role of a Human Resource Manager
Role includes:
- Develop a strategic, client centred, market-driven approach
-
Translate business strategy into action
-
Develop & Implement human resource strategies
-
Assist in creating policies linked to corporate level strategic planning
-
Involvement in long term decision making relating to employees
SCSC Year 12 Business Management . Weebly . com
Chapter 8 – Human Resource Management
The role of a Human Resource Manager
Role includes:
- Overall management of the employment cycle
-
Creating innovative strategies to reward employee work
-
Advocate employee negotiations
-
Design and implement strategies to increase employee motivation
satisfaction and productivity
-
Act as a change agent for areas of the business
-
Educate and support supervisors and team leaders about
implementing policies and practices
SCSC Year 12 Business Management . Weebly . com
Chapter 8 – Human Resource Management
Environmental pressures on HR Management
External Environment
-
Legal
Political
Environmental
Technology
Demographic
Social/cultural
Competition
Economic
Industrial relations
SCSC Year 12 Business Management . Weebly . com
Chapter 8 – Human Resource Management
Environmental pressures on HR Management
Internal Environment
-
Corporate culture
Organisational structure
Employees
SCSC Year 12 Business Management . Weebly . com
Chapter 8 – Human Resource Management
Relationship b/w HR and Business Objectives
The objectives of the HR department will fit within the overall
business direction and corporate culture.
To achieve this strategies need to be determined and activities
undertaken.
Such activities will relate to the acquisition, training, reward and
motivation, maintenance, development and termination of
employees.
SCSC Year 12 Business Management . Weebly . com
Chapter 8 – Human Resource Management
Measuring HRM Effectiveness
Possible Performance indicators of the Human Resource
Department include:
- Employee Turnover
- Absenteeism rate
- Pay levels
- Revenue & Expenses per employee
- Male – Female employee ratios
- Health and safety statistics
SCSC Year 12 Business Management . Weebly . com
Chapter 8 – Human Resource Management
Measuring HRM Effectiveness
Things to consider when judging the effectiveness of HRM:
Commitment
Competence
Cost Effectiveness
Congruence
Adaptability
Performance
Job Satisfaction
Employee Motivation
SCSC Year 12 Business Management . Weebly . com
Chapter 8 – Human Resource Management
Measuring HRM Effectiveness
Things to consider when judging the effectiveness of HRM:
Commitment –
a high level of commitment will result in:
- greater loyalty,
- increased team work,
- Reduced labour turnover
- Increase employee self worth
- A feeling of belonging to the organisation
SCSC Year 12 Business Management . Weebly . com
Chapter 8 – Human Resource Management
Measuring HRM Effectiveness
Things to consider when judging the effectiveness of HRM:
Competence
- To what extent does the policies achieve the organisation’s
strategic objectives
SCSC Year 12 Business Management . Weebly . com
Chapter 8 – Human Resource Management
Measuring HRM Effectiveness
Things to consider when judging the effectiveness of HRM:
Cost Effectiveness
- How have the personnel related costs been reduced
- Have the HR Department assisted to:
- Correctly size the organisation
- Reduce compensation expenses
- Reduce employee turnover rate
- Improve employee OHS
- Improve employee productivity
SCSC Year 12 Business Management . Weebly . com
Chapter 8 – Human Resource Management
Measuring HRM Effectiveness
Things to consider when judging the effectiveness of HRM:
Congruence
 Has the HR department assisted to develop strong relationships
between:
 Employees and management
 Different employee groups
 Employees and community groups
SCSC Year 12 Business Management . Weebly . com
Chapter 8 – Human Resource Management
Measuring HRM Effectiveness
Things to consider when judging the effectiveness of HRM:
Adaptability
 Is the HR Dept adaptive to change.
 Does the HR Dept welcome and encourage innovation and
change
SCSC Year 12 Business Management . Weebly . com
Chapter 8 – Human Resource Management
Measuring HRM Effectiveness
Things to consider when judging the effectiveness of HRM:
Performance
 Is the HR Dept contributing to the increased performance and
productivity of the employees
 Is the organisation more successful and profitable
SCSC Year 12 Business Management . Weebly . com
Chapter 8 – Human Resource Management
Measuring HRM Effectiveness
Things to consider when judging the effectiveness of HRM:
Job Satisfaction
 Is the HR Dept contributing to the increased motivation,
satisfaction and attitude level of the employees
 Is the HR Dept using it’s resources of pay, promotions, job
conditions, supervision, communications, and job security to help
increase the organisations success
SCSC Year 12 Business Management . Weebly . com
Chapter 8 – Human Resource Management
Measuring HRM Effectiveness
Things to consider when judging the effectiveness of HRM:
Employee Motivation
 Is the employee stimulated to achieve the designated goal?
 Highly motivated employees work hard, long hours and
contribute that little bit more to achieve the Businesses goals and
objectives
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
Key Knowledge
Students will learn the following about employees and the
human resource management function:
– employee expectations, including conditions of
employment, occupational health and safety (OH&S), job
security and work–life balance
– the key principles of theories of motivation:
– Maslow
– Herzberg
– Locke.
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
EMPLOYEE EXPECTATIONS
It is important for employers to understand what employees want in the
workplace. Employees now are valuing working for a respected and
successful organisation, they want personal development opportunities
and to feel like they are contributing to not only the business but also
the community.
Review table 9.1: Employee - Employer Expectations
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
EMPLOYEE EXPECTATIONS
1. General Expectations
2. Conditions of Employment and the work-life balance
3. Job Security
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
EMPLOYEE EXPECTATIONS
1. General Expectations
3 Generations with a workplace
1. Baby Boomers (born b/w 1946 – 1964)
2. Generation X (born b/w 1965 – 1979)
3. Generation Y (born b/w 1980 – 1994)
This provides additional challenges for a employer as expectation vary
between each generation.
It can also prove to be an advantage by using the different strengths of
each to advance the business
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
EMPLOYEE EXPECTATIONS
1. General Expectations
1. Baby Boomers (born b/w 1946 – 1964)
Driven less by financial reward and more by stimulation gained
from their job
A larger number of workers over 65 are continuing to work, however
are not interested in the management position, and wishing to work
part-time.
They are valuable to an organisation as they have significant skills that
can be utilised by a business.
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
EMPLOYEE EXPECTATIONS
1. General Expectations
3. Generation Y (born b/w 1980 – 1994)
The expectations are very different to the baby boomers
-
More focused on career advancement
Likely to ask for pay rise
They demand better office amenities
Ask for time off to study
And request training and mentoring
- They are however more tech savvy and have a huge amount of
drive and enthusiasm.
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
EMPLOYEE EXPECTATIONS
1. General Expectations
2. Generation X (born b/w 1965 – 1979)
The generation X is somewhere in between to 2 other generation.
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
EMPLOYEE EXPECTATIONS
2. Conditions of Employment and the work-life balance
National Employement Standards (NES)
Created by Fair work Australia to provide a minimum
standards framework for employers
Employees increasing asking for:
- More flexible work practices (to allow time for family)
- Changes to working hours, patterns, and location
- Increased “Work-Life Balance”
- Family/Parental Leave (paid or unpaid)
- School holiday programs
- Job share opportunities
- Opportunity to work from home
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
EMPLOYEE EXPECTATIONS
2. Conditions of Employment and the work-life balance
Benefits of providing what employees are asking for:
-
Reduce cost of recruitment costs (reduced staff turnover)
Retain valued employees
Promote diversity and fairness throughout business
Positive effects on employee well being
Higher staff morale
Increased productivity of employees
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
EMPLOYEE EXPECTATIONS
2. Conditions of Employment and the work-life balance
Occupational Health & Safety
Occupational Health & Safety Act 2004
is the legislation design to improve OH&S in Victoria
An employer must provide a safe and healthy working environment to
its employees, including adequate facilities, instruction, training and
signage.
Employees are also expected to comply with the OH&S policies and
procedures an organisation puts in place.
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
EMPLOYEE EXPECTATIONS
3. Job Security
Employees like to feel assured that they have gainful employment for
as long as they determine.
In recent times there has been an increase in:
Casual staffing
Contractor staffing
And reduced
Permanent Full-time & Part-time positions
A Lack of job security can effect Staff Motivation, Loyalty and
Productivity
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
MOTIVIATION (page 192)
‘Is the desire or drive to work well; process of ensuring that there is
continuing commitment to a common set of goals or a single goal’
For a manager to achieve the best work performance from their
subordinates, they must know what motivates them.
The HR dept helps with this process of:
- Ensuring work is correctly designed
- A system of rewards is put in place
- The appropriate management style is used
- A positive corporate culture exists
- A process is in place for employees to work at their
potential.
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
THEORIES OF MOTIVATION
If a manager can show subordinates that by working to achieve
organisational objectives they are in fact helping to achieve their own
personal goals, then a very powerful motivating force has been found.
3 Theories are those of:
KNOW THESE for EXAM
1. ABRAHAM MASLOW
2. FREDERICK HERZBERG
3. EDWIN LOCKE
(Hierarchy of needs)
(Herzberg two factor theory of work motivation)
(Goal-setting theory)
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
THEORIES OF MOTIVATION
1. ABRAHAM MASLOW
(Hierarchy of needs)
Maslow (1908 – 70) developed a 5 stage hierarchy of needs
He believed that within all individuals exists a hierarchy of five needs, which can be
arranged based on importance of the needs.
An employee’s level of needs must be substantially satisfied before moving to the next level,
which is then activated as a motivator.
Once a level has been met/satisfied it is no longer an effective motivating factor.
Refer to table 9.2
1. The lower order needs are likely to be satisfied externally – eg. Physiological needs and
safety needs
2. The higher order needs are like to be satisfied internally – eg. Social, self-esteem and
self actualisation.
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
THEORIES OF MOTIVATION
1.
ABRAHAM MASLOW (Hierarchy of needs)
Refer to table 9.2
Maslow’s needs can be seperated into 2 levels
1. The lower order needs are likely to be satisfied externally – eg.
Physiological needs and safety needs
1. Physiological needs
1. Basic needs such as food, water, air, shelter and other physical
requirements
1. A Job / Remuneration
2. Safety Needs
1. Security and protection from physical and emotional harm
1. Job Security, Benefits, Safe and Health conditions
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
THEORIES OF MOTIVATION
1.
ABRAHAM MASLOW
2. The
(Hierarchy of needs)
higher order needs are like to be satisfied internally – eg. Social, self-
esteem and self actualisation.
self-
own
1. Social needs
- Affection, affiliation, acceptance and friendship in peer groups
- Friendly workers, Organised employee activities
2. Esteem needs
- External needs of status, recognition and attention Internal needs of
respect, autonomy and achievement
- Job title, performance rating, merit rewards, promotion,
pay links
3. Self actualisation
- Ultimate need
- Personal growth, achieving own potential, self-fulfilment, and using
creative talent
- Challenging work, Participation in decision making,
opportunity for personal growth
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
THEORIES OF MOTIVATION
2. FREDERICK HERZBERG
Herzberg’s two factor theory of work motivation
Similar to Maslow’s lower and higher order needs.
Lower order needs as hygiene factors and,
Higher order needs as motivators
MOTIVATORS
Are linked to job satisfaction and performance
Examples
recognition
Challenging work
responsibility
Achievement
advancement
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
THEORIES OF MOTIVATION
2. FREDERICK HERZBERG
Herzberg’s two factor theory of work motivation
MOTIVATORS (Higher level needs)
Are linked to job satisfaction and performance
Examples
recognition
Challenging work
responsibility
Achievement
advancement
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
THEORIES OF MOTIVATION
2. FREDERICK HERZBERG
Herzberg’s two factor theory of work motivation
HYGIENE FACTORS (lower level needs)
Often seen as preventing motivation.
The absence of these can often result in job dissatisfaction.
These are usually extrinsic motivations
Examples
Salary
Working conditions
Company policy
Administration
Personal Life
Job Security
Status
Quality of supervision
Relationships with supervisors and peers
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
THEORIES OF MOTIVATION
2. FREDERICK HERZBERG
Herzberg’s two factor theory of work motivation
To apply Herzberg’s Theory a 2 stage process must be implemented.
Firstly – the hygiene factors causing dissatisfaction must be eliminated
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
THEORIES OF MOTIVATION
2. FREDERICK HERZBERG
Herzberg’s two factor theory of work motivation
To apply Herzberg’s Theory a 2 stage process must be implemented.
Secondly – Help employees find satisfaction
- create positive actions to overcome the hygiene factors including:
- Remove restrictive company policies
- Ensure wages are
competitive
- Build job status in roles
- Provide job security.
- create satisfaction by introducing motivating factors associated with work
- provide opportunities for advancement
- recognise achievements
- provide greater responsibilities
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
THEORIES OF MOTIVATION
3. EDWIN LOCKE
Goal-Setting Theory
Goal setting leads to
- increased effort
- Task focus
- persistence
= improved performance for
- Individual
- organisation
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
THEORIES OF MOTIVATION
3. EDWIN LOCKE
Goal-Setting Theory
When establishing goals the following must be addressed:
• The goals must be SPECIFIC
• The goals & their outcomes are MEASURABLE
M
• The goals, while difficult, are ACHIEVABLE/ATTAINABLE A
• The goals are understood and accepted and RELEVANT R
• The goals are TIME-BOUND
S
T
Known as the SMART Principles its adoption ensures clarity of goals being set.
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE
EXPECTATION AND JOB SATISFACTION
THEORIES OF MOTIVATION
3. EDWIN LOCKE
Goal-Setting Theory
Step 2. Once the goals are set it is important for managers to provide feedback
on the progress towards achieving the goals.
Step 3. Application of goals setting involves participation from both Managers
and Employees at every organisational level.
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE EXPECTATION AND JOB SATISFACTION
MOTIVATIONAL THEORIES FOR JOB
SATISFACTION & PERFORMANCE
It is good management practice that lead to more motivated staff, by:
• Recognising individuals differences
• Matching people to jobs
• Goals setting
• Creating an individual and equitable reward system
• Linking rewards to performance, and
• Realising that money is an important performance incentive
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE EXPECTATION AND JOB SATISFACTION
MOTIVATIONAL THEORIES FOR JOB
SATISFACTION & PERFORMANCE
The following are Management Strategies that are used to motivate
employees:
1. Implementing a reward and recognition system
2. The design of a job
3. The degree of flexibility built into work practices
4. The organisational environment and corporate culture
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE EXPECTATION AND JOB SATISFACTION
MOTIVATIONAL THEORIES FOR JOB
SATISFACTION & PERFORMANCE
The following are Management Strategies that are used to motivate
employees:
1. Implementing a reward and recognition system
Financial reward must be seen to be a significant motivator. The
financial reward must be sufficient to ensure long term motivation or other
forms of motivation must be considered.
Whatever reward system that is put in place it must be sufficiently flexible
to accommodate all individual employees.
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE EXPECTATION AND JOB SATISFACTION
MOTIVATIONAL THEORIES FOR JOB
SATISFACTION & PERFORMANCE
The following are Management Strategies that are used to motivate
employees:
2. The design of a job
It is important when designing a job to ensure that tasks required
contain a degree of variety and challenge to the employee.
The position could also include:
- Job enlargement – making the job bigger by combining various
operations
- Job enrichment – involves vertically expanding the job to increase its
depth of content and degree of control.
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE EXPECTATION AND JOB SATISFACTION
MOTIVATIONAL THEORIES FOR JOB
SATISFACTION & PERFORMANCE
The following are Management Strategies that are used to motivate
employees:
2. The design of a job
It is important when designing a job to ensure that tasks required
contain a degree of variety and challenge to the employee.
The position could also include:
- Job Rotation – reduces boredom and increases employees skills and
makes them more workplace flexible, it is not necessarily a motivating
strategy
- Quality Circles – are groups of employees who meet regularly to
discuss work-related problems and issues. Giving emplyees a voice
will empower them and take ownership of their work space
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE EXPECTATION AND JOB SATISFACTION
MOTIVATIONAL THEORIES FOR JOB
SATISFACTION & PERFORMANCE
The following are Management Strategies that are used to motivate
employees:
3. The degree of flexibility built into work practices
It is important to recognise peoples difference life situations. Whether
it family, study or age related, it is important for employers to recognise these
situations and attempt to cater for them.
Taking into account these situations and catering for employees will see a
more loyal, committed and productive employee.
Study leave has recently been an important topic for many younger ambitious
employees, rewarding them paid time to study for wanting to achieve best will
transfer into greater job satisfaction and better work performance
SCSC Year 12 Business Management . Weebly . com
Chapter 9 – MOTIVATION, EMPLOYEE EXPECTATION AND JOB SATISFACTION
MOTIVATIONAL THEORIES FOR JOB
SATISFACTION & PERFORMANCE
The following are Management Strategies that are used to motivate
employees:
4. The organisational environment and corporate culture
Factors that strongly effect motivational levels include:
- Respect
- Independence
- Training & recognition
- Toxic work cultures
- Low levels of feedback
- Tolerance of errors – core to a culture of learning and development
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
Key Knowledge
Students will learn the following about management practices and processes
associated with the key phases of the employment cycle:
– Establishment phase
–
–
–
–
human resource planning related to business strategy
job analysis and job design
types of recruitment methods and selection processes
employment arrangements and remuneration
– Maintenance phase
–
–
–
–
induction
training and development
recognition and reward
performance management
– Termination phase
– Termination management, including entitlement and transition
issues.
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The Role of Human Resource Management:
Is to ensure that business strategy is followed when developing
and implementing human resource process and practices.
It involves long term decisions relating to forecasting demand
and supply of labour, succession planning and the overall management
of the three phases of the employment cycle:
1. Establishment
2. Maintenance
3. Termination
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
Key Words
Human Resource Planning - planning for future personnel needs, taking into
account both internal activities and factors in the external environment.
Downsizing – a reduction in a company’s workforce through elimination of jobs,
generally made to improve an organisations profits
Redundant – an employee is redundant when there is no longer sufficient work for that
worker to perform
Retrenchment – the expression used to describe what occurs to an employee whose
employment is terminated by reason of his or her job becoming redundant
Job – a group of tasks performed by an employee
Job analysis – systematic process of gathering information relating to a job being
performed
Job description – a written description of a jobs title, duties and responsibilities,
including its location on the organisations chart
Job specifications – detailed listing of the personal skills and characteristics required to
perform a particular job
Job design – grouping together of tasks for a particular job, which should incorporate
variety and challenge for the job holder.
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
Key Words
Recruitment – the process of finding the best qualified pool of applicants
Employment Contract – a formal written agreement between and employer and
employee setting out the legal obligations of each party, an informal or oral agreement
may also be entered into.
Award – an agreement that sets out minimum terms and conditions of employment
relating to an industry
Employee Collective Agreement – a written collective agreement made between an
employer and the employees, setting out terms and conditions of employment
Union Collective Agreement – a written agreement made between an employer and a
union that sets out the terms and conditions of employment, an agreement may cover
businesses run by more than one employer
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
1. Establishment
2. Maintenance
3. Termination
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
1. Establishment Phase:
- HR Planning
- Job analysis and design
- Recruitment
- Selection
- Employment arrangements
- Remuneration
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
1. Establishment Phase:
HR Planning
Is the process undertaken by managers to ensure an adequate supply of
competent and motivated people are available to perform the duties and
tasks required to meet the organisations goals and objectives
Factors effecting HR Planning:
Structural changes in the labour market
work patterns are changing
length of working life
Change in skills and education expectations
Labour shortage within next decade
increase demand for work-life balance
Generational change
Change in the strategic direction of the organisation
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
1. Establishment Phase:
Job analysis and design
Is the systematic process of looking at a particular job to find out exactly what it
entails and what kind of skills and experience people should have to do this
job. A Job description and job specification documents can be prepared from a
job analysis
Methods used to conduct job analysis include:
Interviewing the present job holder
Questionnaires
Observations
Supervisory reports
Log book and daily work diaries
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
1. Establishment Phase:
- Recruitment
Involves identifying, locating and attracting a pool of qualified
applicants. Recruitment is a 2 way process, it involves information
being given by the organisation and received from the applicant.
The recruitment process begins with:
- identifying the human resource requirements
- determining where the qualified pool of applicant will be found
(recruitment source)
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
1. Establishment Phase:
- Recruitment
- identifying the human resource requirements
an organisation must establish a policy to provide a
approach to recruitment
SCSC Year 12 Business Management . Weebly . com
consistant
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
1. Establishment Phase:
- Recruitment
- determining where the qualified pool of applicant will be found
(recruitment source)
Internal / External recruitment
Internal – this process can often be undertaken first, positions are advertised
internal, which provides opportunity for career advancement to employees already
within the organisation.
(Table 10.1 Page 209)
External – a variety of methods can be used to recruit an external person to an
organisation including:
(Table 10.2 page 210)
Advertising
Electronic recruitment
Government employment agencies
Personnel & Management recruitment consultants
Outplacement firms
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
1. Establishment Phase:
- Selection of Applications
1. Reciept of applications
2. Screen and short list
3. Interviews
4. Testing
5. Reference checking
6. Offer job to best applicant
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
1. Establishment Phase:
- Employment arrangements
An Employer and Empolyee will enter into a legally Binding employee contract.
The contract may engage the employee in the following ways:
1. Permanent Full Time
2. Permanent Part Time
3. Casual Basis
4. Fixed Term Basis
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
1. Establishment Phase:
- Employment arrangements
An Employer and Empolyee will enter into a legally Binding employee contract.
The contract may relate to one of the following arrangement with regards to
pay and working conditions:
1. Award – an agreement that sets out minimum terms and conditions of
employment relating to an industry
2. Employee Collective Agreement – a written collective agreement made
between an employer and the employees, setting out terms and conditions
of employment
3. Union Collective Agreement – a written agreement made between an
employer and a union that sets out the terms and conditions of
employment, an agreement may cover businesses run by more than one
employer
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
1. Establishment Phase:
- Employment arrangements
An Employer and Empolyee will enter into a legally Binding employee contract.
Table 10.4 – page 220 – National Employment Standards
Table 10.5 – Page 221 – Criteria for measuring the success of the
collective enterprise bargaining process
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
1. Establishment Phase:
Remuneration
Is the money paid in return for the work performed by the employee.
Remuneration may be simple as Money (wages/Salaries) paid to the employee
or could also include other less tangible benefits including:
1. Wages – worked out on an hourly basis for the working week
2. Salary – an annual figure usually paid on a monthly, fortnightly or weekly basis
3. Salary Packages – includes a salary, performance base pay (bonuses),
superannuation, company car, company share entitlements & other benefits
4. Benefits – could possibly include: family/child care, paid paternity/Maternity
leave, Alternative working arrangements (flexitime, job share, school holidays,
school hours) also additional superannuation contributions, insurances (health,
life, travel)
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
2. Maintenance Phase
Induction
Training and Development
Recognition and Reward
Performance Management
Performance Appraisal and Outcomes
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
2. Maintenance Phase
Induction
Involves all activities undertaken by the organisation to introduce a new
employee to the organisation and the department which they work.
Table 10.6 – Page 222 – Simple Induction Checklist
Main reasons for an induction:
- commence the socialisation process
- communicate the organisations values, beliefs and expectations
- provide information about the job tasks and performance expectations
- create a favourable impression about the organisation
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
2. Maintenance Phase
Training and Development
Training - Is the process of providing an employee with the knowledge or
specific skills needed to do a job.
Development – is the process designed to develop skills necessary for future
work activities and responsibilities.
Employees should invest in training and development for their
employees, to do this they should carry out training needs analysis to
find out what skills and knowledge is needed for the future of the
organisation. They can do this by:
Organisational analysis –
Task analysis –
Person analysis –
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
2. Maintenance Phase
Recognition and rewards
Individuals like to be recognised and gain feedback for acts that they have
done. This can be done through having supportive management and being
treated as a worthwhile employee, establishing a recognition and reward
program relates directly to motivation of employees and can be treated as an
outcome of a successful performance appraisal.
Table 10.7 Page 225 – Examples of financial and non financial rewards
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
2. Maintenance Phase
Performance Management
Is the system used to improve organisational, functional and individual
performance through linking the objectives of each, it assesses all phases of
the employment cycle.
Is vital for organisations to conduct a continuous process of evaluating how
effectively employees are fulfilling their responsibilities and contributing to the
attainment of the organisations objectives
What do performance appraisals report:
- Have the organisation selection devices been effective
- It gauges whether current training & development programs have been effective
- Shows where training, development & motivational programs are required
- Provides a basis for decisions relating to remuneration, reward, promotion or dismissal
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
2. Maintenance Phase
Performance Management
The 3 steps in the appraisal process:
1. Identify and establish performance appraisal objectives
2. Evaluate or appraise the employees performance through a combination of
observatiuons and analysis
3. Review the performance and provide feedback to the employee. Strengths
must be recognised and rewarded, weaknesses overcome with assistance.
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
2. Maintenance Phase
Performance Management
The 4 common appraisal methods:
1. Management by Objectives – involves setting specific, measurable
objectives with an employee and then periodically reviewing the employees
performance.
2. Comparative Standards – performance appraisal where one employees
performance is compared to or ranked against the performance of another
employee.
3. Absolute Standards – a method of performance appraisal involving the
independent evaluation of an employees performance by their manager.
4. Critical Incidents – involves the appraiser/manager recording observations
or events of good or poor employee performance.
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
2. Maintenance Phase
Performance appraisal outcomes
A successful appraisal can result in financial and other rewards, an
unsuccessful appraisal may result indicate that the employee needs support
Some outcomes from appraisal may include: (page 228-229)
1- Remuneration and rewards –
2- Training and Development –
3- Counselling –
4- Job Promotion –
5- Job rotation/transfer –
6- Termination –
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
3. Termination Phase
Voluntary Termination Methods
Involuntary Termination Methods
Termination Management
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
3. Termination Phase
Voluntary Termination Methods
Resignation – occurs when an employee voluntarily decides to leave the
organisation, generally to take a position with another organisation.
Retirement – occurs when an employee decides to leave the paid workforce.
This is not only associated with older employees, it can also be younger
employees who no longer wish or need to work.
Effects of employees voluntarily leaving an organisation include:
- Loss of talent
- Cost of replacement
- Decline in morale
- Breakdown of effective teams
- Productivity could increase or decrease
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
3. Termination Phase
Involuntary Termination Methods
Retrenchment – is usually linked to redundancy. Redundancies can arise
when:
- an employer is closing part or all of their business
- an internal organisational restructure occurs
- new technology is introduced
- a business is relocating
- duties of one employee are reallocated to another employee
- the business merges with or acquired by another business
Dismissal – is often referred to as being fired, given the sack or ‘the flick’. The
main reasons for dismissal are unsatisfactory work performance and/or illegal
behaviour
SCSC Year 12 Business Management . Weebly . com
Chapter 10 – Management of the Employment
Cycle
The three phases of the employment cycle:
3. Termination Phase
Termination Management
Human resource management must ensure all phases of the employment
cycle are conducted in an ethical manner. There are 2 main areas where
organisations can demonstrate their high level of ethical behaviour towards
their employees:
1. Outplacement Services – these are services for employees who
have been retrenched to gain new work and to cope with one of the top five
most stressful event that can occur in a persons life.
2. Transaition Services – this service is provided to employees who
are retiring and need assistance to organise their finances, lifestyle planning
and volunteering activities.
SCSC Year 12 Business Management . Weebly . com
Chapter 11 – EMPLOYEE RELATIONS
Key Knowledge:
Students will learn about the following management practices and processes
associated with employee relations:
– the relationship to business objectives and business strategy
– the similarities and differences between centralised and decentralised
approaches
– industry-wide awards, collective agreements within an individual
organisation and individual contracts
– the role of human resource managers in employee relations, under a
decentralised approach
– management styles and skills in employee relations, including their
application to the resolution of conflict.
SCSC Year 12 Business Management . Weebly . com
Chapter 11 – EMPLOYEE RELATIONS
EMPLOYEE RELATIONS:
The overseeing of employee relations is a key responsibility of a
human resources department. Human resource specialists are in charge of
overseeing and implementing organisational employee relations policy. In
Australia, state and federal governments regulate the Australian system of
employee relations.
Employee relations – the relationship between employees (or their
representitives) and employers (or their representitives) encompassing all
aspects of their working lives, including wages and conditions of employment
based on optimum working relationships
Disputes – a form of industrial disagreement between employees and
employers
Deregulated labour market – where aspects of the employee-employer
relationship are not subject to government control of regulations
Industrial relations – as per employee relations
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Chapter 11 – EMPLOYEE RELATIONS
Relationship of employee relations to business objectives and
strategy.
The aim of employee relations is to achieve an optimum working
relationship between the employees of an organisation and
management.
SCSC Year 12 Business Management . Weebly . com
Chapter 11 – EMPLOYEE RELATIONS
Participants in Australian employee relations
In order to gain an understanding of employee relations, it Is important
to be aware of the current key participant (stakeholders) and the roles they play
Employees and Trade Unions – a trade union is a group of employees,
usually from the same or similar industries, combining to protect their interests
in all matters relating to their employment.
Beginning in the 19th century they arose a a result of poor working conditions
experienced by workers at that time.
If employees chose to join a union they pay an annual subscription fee. The
union then:
- represents workers, negotiates and bargains on their behalf
during collective bargaining process
- Argues the employees case during hearings that determine awards
- Provides support and advice to local union shop stewards
- Provides assistance and support to individual workers
- Offers services & facilities to members(credit unions, health ins)
- Provide information to members on relevant matters in
workplace
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Chapter 11 – EMPLOYEE RELATIONS
Participants in Australian employee relations
Employees and Trade Unions
In victoria there are 2 key union organisations
ACTU – The Australian Council of Trade Unions
is the national peak body of the Australian union movement (page
242)
VTHC – The Victorian Trades Hall Council
is responsible for implementing ACTU policy within Victoria
RESEARCH OTHER UNIONS in Victoria & Australia
this will be useful when answering questions on this topic
SCSC Year 12 Business Management . Weebly . com
Chapter 11 – EMPLOYEE RELATIONS
Participants in Australian employee relations
Employers and Employers Associations
are groups of employers who unite to promote their common interest
in employee relations as well as to share information and offer mutual support.
3 Types of Employer associations:
1. Industry Associations – made up of employers from the same industry
2. Professional Associations – made up of members of professions (AMA)
Australian Medical Assoc.
3. Peak Bodies – comprise large numbers of employers from varied industry
types
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Chapter 11 – EMPLOYEE RELATIONS
Participants in Australian employee relations
Employers and Employers Associations
are groups of employers who unite to promote their common interest
in employee relations as well as to share information and offer mutual support.
The role of employer associations is to:
- Represent employers in Industrial Relations Commission Cases
- Represent Employers during collective bargaining over wages and conditions
- Advise employer of their rights and obligations
- Act as a spokesman for members of their organisations as a bloc
SCSC Year 12 Business Management . Weebly . com
Chapter 11 – EMPLOYEE RELATIONS
Participants in Australian employee relations
Government
The governments has an enormous influence on Australian employee relations
by
implementing legislation that controls and influences the conduct of
employee relations
The Government employees 30% of the Australian workforce
Governments strong connection is due to:
- Their large workforce, and
- Employee relations can heavily impact on the Australian economy
and general public so they act to ensure relationships are good
between Employees and Employers
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Chapter 11 – EMPLOYEE RELATIONS
Participants in Australian employee relations
Fair Work Australia (FWA):
was established by the Fair work Act 2009 to be a one stop shop for
information, advice and assistance on workplace issues.
Office of the Fair Work Ombudsman:
Promotes legislation complicane while also educating and providing
information and assistance to Employers, Employees, and Organisations that
must comply with National Employment Standards (NES) awards and
agreements
Fair Work Divisions of the Federal Court and Federal Magistrates Court:
exists to hear matters arising under the new workplace relations laws,
the court has the power to make orders considered appropriate to remedy a
contravention.
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Chapter 11 – EMPLOYEE RELATIONS
Centralised Approach to Employee Relations
Australian workplace relations Pre 1991 was a CENTRALISED system with
setting of wages and conditions occurring outside the individual workplace.
the main emphasis was on conflict resolution using conciliation
(negotiation) and arbitration to fix problems after they had occurred.
*Arbitration
*Conciliation
*Close shop
*Centralised System
* Industrial Awards
SCSC Year 12 Business Management . Weebly . com
Chapter 11 – EMPLOYEE RELATIONS
Centralised Approach to Employee Relations
Advantages
- Provides certainty of pay and working conditions for employees working in the same
industry but with different employers
-
Government has tighter control over wages outcomes through a centralised wage
determination body
-
Employees have greater opportunities for taking industrial action. Potential for more control
for trade unions
-
Employer can refer to a government-determined document to find out pay and working
conditions, so saving time and effort
Disadvantages
- Reduces potential for employer and employee to create flexibility relating to both pay and
working conditions for employees at their work
-
Does not recognise an individual organsiations circumstances, as the wage outcomes are
imposed with no trade off for increased productivity
-
Provides opportunity for unions to mount harmful industrial action
-
As the pay and working conditions are not negotiated at the workplace, it lessens the
importance of the participative management approach
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Chapter 11 – EMPLOYEE RELATIONS
Decentralised Approach to Employee Relations
Where employers and employees at each workplace determine their
pay and working conditions and work through their differences without outside
interference.
Post 1991 saw the freedom to negotiate wages and condition to suit individual
circumstances
*Federal Industrial Relations Reform Act 1993
Saw movement towards decentralisation
*Workplace Relations Act 1996
- Further decentralised workplace relations encouraging employers
and employees to negotiate contracts directly
- Only 20 allowable matters could be negotiated
- Collective / certified Agreements
- Collective Bargaining
- Australian Workplace Agreements (AWAs)
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Chapter 11 – EMPLOYEE RELATIONS
Decentralised Approach to Employee Relations
*Workplace Relations Amendment (Workchoices) Act 2005
- further decentralised workplace relations
*Fair Work Act 2009
- aimed to restore the balance of power in the relationship between
the employers and employees in 3 main areas:
1. strengthening the safety net of minimum wages and conditions
2. Abolishing Australian Workplace Agreements (AWAs) and
restoring collective bargaining
3. Restoring to all employees protection against unfair dismissal
Refer to page 250 Table 11.3
Characteristics of modern award, collective agreement and individual
contract.
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Chapter 11 – EMPLOYEE RELATIONS
Decentralised Approach to Employee Relations
Industry-wide awards, Collective agreements and individual contracts
Over the past 20 years, the Australian system of employee relations has moved
from a centralised system where legally binding awards applied across an entire
industry were established by a special tribunal known as the Industrial Relations
Commission to a decentralised system where individual employers negotiated
wages and conditions with their own workforce (collective bargaining). Following
the enactment of the Fair Work Act 2009, the vast majority of employees’ wages
and working conditions are to be embedded in collective agreements. While the
majority of Australian employees will be covered by an award or an enterprise
agreement, the senior managers in organisatios are generally employed under
individually negotiated contracts.
Refer to page 250 Table 11.3
Characteristics of modern award, collective agreement and individual contract.
SCSC Year 12 Business Management . Weebly . com
Chapter 11 – EMPLOYEE RELATIONS
Decentralised Approach to Employee Relations
Advantages:
- Allows org’s and employees to negotiate pay and conditions
relevant to the individual workplace
- Provides opportunity for employer to negotiate for productivity
gains while meeting needs of employees for increased
flexibility in their working arrangements
- Creates a more inclusive working environment, where both
parties are
working together to achieve agreement
Disadvantages:
- Reduces the level of control of the government in wage determination
- More time consuming for employers to undertake negotiations.
May
feel that some of the employees demands are unrealistic
- Reduces the influence of unions as representitives of the workers. Mat
make some workers feel more vulnerable.
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Chapter 11 – EMPLOYEE RELATIONS
Conflict in the Workplace and Dispute Resolution
This can arise about a number of matters in the workplace, such as,
calculation of pay, working hours or personality conflicts
Grievance procedure
a formal, systematic process that permits employees to complain
about matters that affect them and their work.
Grievance Procedure Steps
Refer to page 252 Figure 11.12
SCSC Year 12 Business Management . Weebly . com
Chapter 11 – EMPLOYEE RELATIONS
Conflict in the Workplace and Dispute Resolution
**Forms of Industrial Action**
Employee & Employer
Refer to Page 252-3 Table 11.4
EMPLOYEE
Passive Resistance - General lack of cooperation by employees to complete
tasks, taking days off (absenteeism)
Work to Rule - Workers refuse to do anything more than the bare minimum
required and follow every rule to the letter
Boycott - Employees refuse to do something or deal specifically with someone
(e.g. refusal to deal with a specific supplier)
Stop-work-meeting - Employees hold a meeting during normal working hours to
discuss an issue. Production ceases during the period of the meeting
Picket Line - Employees physically demonstrate outside the premises of their
employer. It is aimed at stopping production by deterring other employees and
suppliers from crossing the picket line
Strike - Employees withdraw their labour and production ceases
EMPLOYER
Lockout – Employer - Employer/management not allowing workers to enter a
plant or building to perform their work
SCSC Year 12 Business Management . Weebly . com
Chapter 11 – EMPLOYEE RELATIONS
Employee relations and HRM under a decentralised approach
Employee relations specialists in HR liase closely with other
departments to create a harmonious and productive workplace staffed
by motivated, skilled and fulfilled employees. Employers are now days
encouraged to think of themselves as part of a team working with
management in order to advance the whole organisaion as a
competitive player in a globalised market.
The role of the HRM Department is to:
- Negotiate with employees and/or their representitives on
employement relations issues, such as the establishment of
collective agreements
- Act as an intermediatary between employees/unions and senior
management
SCSC Year 12 Business Management . Weebly . com
Chapter 11 – EMPLOYEE RELATIONS
What does good employee relations require of management?
Management should aim to facilitate positive, productive
relationships with its employees. This will in turn create improved
productivity and employee commitment to a organisation as employees
feel valued.
The following factors will allow for optimal workplace relations:
- Commitment from both management and employees to achieve the
organisational goals and objectives
- Allowing employees to feel their contributions is valued and part of
the decision making process conveys a sense of ownership
- Treating employees and their complaints seriously
- Promote the concept that workplace change is both inevitable and
essential for organisational survivial
SCSC Year 12 Business Management . Weebly . com
Chapter 11 – EMPLOYEE RELATIONS
What does good employee relations require of management?
The following factors will allow for optimal workplace relations:
(continued):
- Effective communication skills and methods will aliviate and avert
many industrial disputes
- Provision of fair pay and working conditions and recognition of
employee achievement
- Maintenance of good working relationships between management
and union officials
- Establishment of fair and accessible grievance procedures to be
taken in the resolution of workplace disputes
- Participative and open management styles will always improve
relationships within a workplace
SCSC Year 12 Business Management . Weebly . com
Chapter 11 – EMPLOYEE RELATIONS
Assessment of workplace relations
Workplace relations audits are performed to measure the atste of health of
workplace relations in specific workplaces. The following indicators are used:
-
Levels of employee participation in decision making
-
The degree of consultation in a workplace demonstrates worker
empowerment levels
-
The quality of communication channels within a workplace
-
The values within an organisation indicates the attitudes of employers and
employees
-
Productivity levels
-
Staff morale
-
Incidences of strikes and other industrial action
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
KEY KNOWLEDGE
Students will learn the following about the management of change:
– the concept of organisational change
– the dynamic nature of the internal and external (macro and operating)
environments as sources of change
– driving and restraining forces for change in large-scale organisations,
including management, employees, time, competitors, low
productivity, organisational inertia, legislation and cost
– the key principles of the Kotter theory of change management
– a range of strategies for effective change management, including lowrisk practices and high-risk practices
– the process of effective change management in the context of a
significant issue
– the role of leadership in change management
– the possible impact of change on the internal environment of largescale organisations, including the functional areas of operations and human resources.
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
The Management of Change
It is argued that, while people accept that change is inevitable, most
prefer change to be continuous, predictable and comfortable.
for a modern organisation, the process of change is characterised by
discontinuity and unpredictability.
The Concept of Organisational Change
Taking an existing organisation, altering it and establishing a new or altered
form.
Changes occur due to pressures from:
- Structure
- Activities
- Policies
- Behaviours
- Processes
- Culture
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
The Concept of Organisational Change
For Change to be successful the following components must be
present and occur smoothly:
- Vision
- Values
- Strategy
- Resources
- Capability
- Motivation
- Feedback
There are a number of emotional stages of change for employees and the more an
organisation accepts and understands this, the easier the change process will be. The
four (4) stages of change for employees are:
1. Negotiation – employees deny the change, ignore it or panic
2. Self-justification – employees give reason for resisting or oppose the change
3. Exploration – this may involve a SWOT analysis or some type of cost benefit
analysis
4. Resolution – This is when an employee focuses on the future and are positive
about opportunities.
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
The Dynamic nature of the internal and external (Macro &
Operating) environment as Sources of Change
In order to understand and manage change, organisations need to examine and
understand the pressures for change. There are a number of layers of the environment in
which an organisation operates. The internal environment is one that is unique to the
organisation itself. Each enterprise will have a mix of internal pressures that includes
corporate culture, employees, policies and management styles and roles.
External pressures for change can be examined in terms of the operating and macro
external environments. These can include pressures on an organisation or an industry.
External pressures include: the economic environment, social and demographic
changes, environmental pressures, technological advancements, suppliers, competitors,
creditors and trade unions. (The internal and external environments are discussed in
more detail in chapter 2.)
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
The dynamic nature of the internal and external environments as
sources of change.
Internal Pressures as a source of change.
Management of change is difficult but essential on Large Scale
Organisations. However there can be no progress without it, so management
must be committed to the change to ensure the organisations success and
future, and maintain the confidence of employees,
Corporate Culture
Policies
Management
Employees
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
The dynamic nature of the internal and external environments as
sources of change.
Internal Pressures as a source of change.
Corporate Culture
If the culture is seen to be inappropriate or negative, management must decide
how it can be changed. This may include training and retraining of employees,
changes in the way promotion and performance appraisals are completed, and
how new employees and managers may be recruited externally in an effort to
bring in new ideas, values and attitudes.
Policies
A change in legislation or the introduction of a new law may require an
organisation to comply with these requirements. For example changes to or the
intro of new health and safety laws or anti-discrimination legislation will require
organisations to review and amend their policies and formulate new ones if
necessary.
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
The dynamic nature of the internal and external environments as
sources of change.
Internal Pressures as a source of change.
Management
Recent management literature argues that the style of manager, particularly at
the top levels within the organisational structure will have a far reaching impact.
Some CEOs have started to get out amoung the employees to talk with them,
and to delegate many tasks to senior management. It is found that the most
effective managers are masters of delegation and have excellent time
management skills
Employees
Employees are an integral part of an organisation and therefore can have an
influence on its performance as well as being able to exert pressure on the
organisation for changes to areas such as training, performance appraisals and
policies.
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
The dynamic nature of the internal and external environments as
sources of change.
Operating Environment as a Source of Change
LSO must respond to forces for change that can arise from customers
behaviours, suppliers availability, competitors, work place unions and
legislation and other pressures beyond its control if it is to be successful.
- Customers
- Suppliers
- Competitors
- Creditors
- Unions
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
The dynamic nature of the internal and external environments as
sources of change.
Operating Environment as a Source of Change
- Customers
Customers are crucial to the existence and success of an organisation. Any
organisation that is not customer-focused will find that its customers will not
return, whereas those that value customers and deliver quality service will find
that customers stay with them.
Changing customer preferences have a direct impact on the organisation.
Successful organisations make sure they are in tune with the tastes and
requirements of customers (both existing and potential).
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
The dynamic nature of the internal and external environments as
sources of change.
Operating Environment as a Source of Change
- Suppliers
Organisations can be affected by their suppliers as they are a key stakeholder.
Suppliers provide the organisation with the inputs necessary to produce a
product or service. If there is a problem with a supplier, the organisation cannot
produce its products as inputs are not available. Having a preferred supplier or
a good relationship with a supplier may mean the organisation has assured
supply of inputs. Some industry sectors, such as the car industry, can have
their business activities affected by industrial disputes within the suppliers’
organisations.
An industrial dispute at a windscreen company, for example, can mean the car
manufacturers, who usually operate on minimal inventory levels, have their
production halted by an issue outside their control.
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
The dynamic nature of the internal and external environments as
sources of change.
Operating Environment as a Source of Change
- Competitors
Most organisations in Australia face competition. A business, therefore, has to
ensure that it can out-perform its competitors. It also means that an
organisation cannot rest on its reputation and must focus on product quality,
innovation and customer service. Changes may be required if competitors
change their business practices, while an organisation wanting to be
successful will also have to be proactive and introduce changes to stay ahead
of the competition.
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
The dynamic nature of the internal and external environments as
sources of change.
Operating Environment as a Source of Change
- Creditors
When a supplier allows an organisation to take goods and delay payment for a
period of time, usually a month, it provides a business with a line of credit and
allows it to manage its cash flow. The development of secure lines of credit
enables a business to operate more efficiently.
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
The dynamic nature of the internal and external environments as
sources of change.
Operating Environment as a Source of Change
- Unions
Trade unions represent employees in the workplace. Trade unions may exert
pressure for change in an organisation, particularly in terms of a collective
agreement (see chapters 10 and 11), which can affect the wages and working
conditions within the business.
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
The dynamic nature of the internal and external environments as
sources of change.
The Macro Environment as a Source of Change
LSO have little to no control over the macro environment. The
complexities of this environment must be dealt with in a proactive manner by
the organisation.
- Economic pressures
- Political pressures
- Social and demographic pressures
- Technological pressures
- International pressures
- Geographic pressures
- Environmental pressures
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
The dynamic nature of the internal and external environments as
sources of change.
The Macro Environment as a Source of Change
LSO have little to no control over the macro environment. The
complexities of this environment must be dealt with in a proactive manner by the
organisation.
- Economic pressures
Economic factors such as the level of business activity, inflation and interest
rates, economic growth, unemployment rates and the value of the Australian
dollar are all factors that may impact on the organisation.
- Political pressures
Political pressures can cause changes within an organisation. There are
three levels of govern- ment in Australia: federal, state and local. Policies and
laws made by governments can influence the organisation. Some changes to
laws that may impact on the operation of the organisation include health and
safety laws and regulations, trade practices, taxation requirements, employee
and workplace relations, equal opportunity, anti-harassment and antidiscrimination legisla- tion, zoning and planning requirements and deregulation
of markets and industries.
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
The dynamic nature of the internal and external environments as
sources of change.
- Social and demographic pressures
Social pressures for change include changes in attitudes, values and
lifestyles. Social change has gone ahead at a rapid rate in Australia. Changes
in the demographic make-up of the population have impacted on society. The
ageing of the workforce and general popula- tion has led to changes such as
the increased demand for health services, lifestyle changes such as
‘downsizing’ houses and the increased need for investment advice, and has led
to the growth of new industries.
- Technological pressures
The rate of change in technology has been rapid and this has impacted
on all organisations regardless of their size. The increased use of
computers, the growth of e-commerce and the use of the internet have all
influenced the way business is conducted. These changes have also had a
significant effect on people’s jobs, their tasks and the skills needed.
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
The dynamic nature of the internal and external environments as
sources of change.
International pressures
The development of a global economy has had an effect on all
organisations. Australia is part of the world economy; consequently, changes
in world economic conditions will have an impact on Australian
organisations. This was evident in the global financial crisis in 2008 and
2009. This started in America and had repercussions for the whole world.
The aftermath was still evident three years later.
Geographic pressures
In geographic terms, the Asia–Pacific region has become an increasingly
important area for Australian exports, with over 70 per cent of Australian
organisations exporting to this region. New markets have also been
established in South Africa, the Middle East and South America.
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
The dynamic nature of the internal and external environments as
sources of change.
- Environmental pressures
There has been an increasing awareness among people of the effects that
economic activity can have on the natural environment. Organisations can
affect the environment in a number of ways, including air, noise and water
pollution, destruction of the natural landscape through mining and logging of
areas and by adding to soil erosion, land degradation and increased salinity.
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
Forces for Change in Large Scale Organisations
Organisations are affected by change in many ways. To successfully
manage or cope with change, organisations must try to become more proactive
and look at the driving forces behind change, rather than waiting for the change
and then reacting to manage its effects.
Driving and Restraining Forces for Change
In 1969 Kurt Lewin, a management theorist, developed the concept of
force field analysis based in the physical sciences. He developed his theory
as a tool to understand problems and effects of change within organisations.
He described a problem situation as one where there is a difference between
the way things are and the way they are desired to be.
Force field analysis - looks at forces that are either driving movement towards
a goal or change (helping forces) or blocking movement towards a goal or
change (hindering forces)
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
Forces for Change in Large Scale Organisations
Driving and Restraining Forces for Change
Driving Forces
are those forces affecting a situation that are pushing in a particular direction
and are supporting the goal or proposed change. They tend to initiate a change
and keep it going. If a proposed change relates to improving productivity in a
work group, the driving forces may be from a supervisor, incentive earnings
and competition.
Restraining Forces
are forces acting to restrain or decrease the driving forces. These may include
apathy, hostility, and poor maintenance of equipment.
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
Forces for Change in Large Scale Organisations
Typically, users of Lewin’s model take the following steps:
1 Define the target of change.
2 Identify which are driving forces and which are restraining forces.
3 Analyse the forces that can be changed.
4 Develop an action plan on what can be changed.
See Figure 13.5 force field analysis (page 296)
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
Forces for Change in Large Scale Organisations
Harnessing the Forces for Change
It can be argued that an organisation’s ability to successfully implement change
can be influenced by whether the change is being driven by restraining or
driving forces:
1 When driving forces are more dominant in an organisation, the change
is likely to be successful.
2 If the driving forces are met by restraining forces at a similar level, it is
likely that the change will not be successful.
3 If the restraining forces are more powerful than the driving forces, it is
unlikely that the change will be successfully introduced.
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
Forces for Change in Large Scale Organisations
Harnessing the Forces for Change
The change process must take into account all elements of the organisation.
The organisation can be thought of as an iceberg – that is, there is more to the
organisation than can be seen. The ‘above the water’ part represents the more
tangible aspects of the organisation, such as structures, plans, policies,
performance agreements and formal business processes. The ‘below the
water’ aspects are more difficult to manage and change. These hidden or
implicit aspects include people’s aspirations and the feelings of support or lack
thereof.
Table 13.2 – Examples of driving and restraining forces for change
Page 297
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
The Kotter Theory of Change Management
John Kotter is a well-known lecturer and author of books relating to change and
leadership in organisations.
He states in one of his books about change management:
“First, useful change tends to be associated with a multistep process that
creates power and motivation sufficient to overwhelm all the sources of inertia.
Second, this process is never employed effectively unless it is driven by highquality leadership, not just excellent management.“
In another of his books he says about change management:
“Our main finding, put simply, is that the central issue is never strategy,
structure, culture, or systems. But the core of the matter is always about
changing the behaviour of people, and behaviour change happens in highly
successful situations mostly by speaking to people’s feelings.”
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
The Kotter Theory of Change Management
Kotter developed the eight-stage model for understanding and managing change.
Each stage acknowledges a key principle he has identified relating to people’s
response and approach to change, in which people see, feel and then change. It
can be summarised as:
1 Establish a sense of urgency
2 Assemble a group of people
3 Create a vision for the organisation
4 Communicate the vision
5 Empower others
6 Plan to achieve short term gains
7 Consolidate all of the changes
8 Institutionalise new approaches
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
The Kotter Theory of Change Management
Kotter developed the eight-stage model for understanding and managing
change. Each stage acknowledges a key principle he has identified relating to
people’s response and approach to change, in which people see, feel and then
change. It can be summarised as:
1 Establish a sense of urgency
Inspire people to move, make objectives real and revelant
2 Assemble a group of people
who will lead the organisation through the changes. It is important
that an organisation gets the right people in place with the right
emotional commitment, and the right mix of skills and levels.
3 Create a vision for the organisation
It is necessary to get the team to establish a simple vision and
strategy and to focus on emotional and creative aspects necessary to
drive service and efficiency. This team also needs to clarify how the
organisation will be different from in the past.
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
The Kotter Theory of Change Management
4 Communicate the vision
to all within the organisation. It is important to involve as many people
as possible, communicate the essentials simply, and to appeal and
respond to people’s needs. It is also critical that as many people as
possible understand and accept the vision and strategy.
5 Empower others
to act on the vision and try to remove any obstacles that may
undermine the change process and the new vision. It is important to
create a situation that will enable constructive feedback and lots of
support from leaders. It is also important to reward and recognise
progress and achievements.
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
The Kotter Theory of Change Management
6 Plan to achieve short term gains
and wins rather than aim for large instant changes. It is also important
to finish current stages and celebrate this before moving on to the next
part of the plan and change.
7 Consolidate all of the changes
that have taken place and develop employees who can help the change.
This phase can simply be ‘don’t let up’ and press harder after the first
success.
8 Institutionalise new approaches
and create a new culture. Reinforce the connections between the new
behaviour and changes and organisational success. To ensure that
change is successful in the long term, it is also important to reinforce
the value of successful change via recruitment, promotion, and
appointment of new change leaders.
SCSC Year 12 Business Management . Weebly . com
Chapter 13 – Management of Change
Strategies for Effective Change Management
The majority of people do not like change. While some see change as exciting and welcome a
challenge, most people become comfortable with routine and tend to stay in their comfort zone.
The uncertainty of change, and of the future, means that it becomes a stressful experience.
If organisational change is to be successful, it is necessary to carefully plan and implement
appropriate strategies. When people are confronted with the need or opportunity to change,
especially when they feel it is ‘enforced’ by the organisation, they can become emotional and
so can the managers who try to manage the change. If the change process can diffuse the
emotional feelings and objectivity is used by those involved, this will provide the climate for the
change to be managed correctly.
Strong resistance to change is often based on the history and traditions of the organisation. A
change to the way something has always been done in an organisation may be enough for
people to see this change in routine as a threat. In these situations, patience and tolerance are
required to help people to see things differently. Managers must be mindful of people’s
strengths and weaknesses. Before taking action, managers must make time to understand the
people they are dealing with, and how and why they feel the way they do.
One study by Sabre Corporate Development found that ‘people resistance’ was cited in 76 per
cent of organisations as the greatest cause of failure in major organisational change projects.
Somers. G, Cain. J, Jeffrey. M.,2011 3rd edition, Essential VCE Business Management Units 3 and 4
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Chapter 13 – Management of Change
Strategies for Effective Change Management
Low risk Practices and high risk practices for change
When implementing change, organisations should try to use low-risk
practices. Low-risk
-
practices include:
Two-way communication between manage- ment and employees
Empowerment of employees to make decisions
Establishment of work teams to implement changes
Support for those going through the change. This support may include time
and counsel- ling if required.
Low risk practices –
Participative approach to implementation of change, use of communication,
empowerment, work groups and support for those who are impacted
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Chapter 13 – Management of Change
Strategies for Effective Change Management
Low risk Practices and high risk practices for change
On the other hand, some organisations may decide to use high-risk
practices. Such practices can include:
- Coercion and threats to employees who do not agree with the change
- Manipulation of the situation – for example, information distorted or details
left out
- Use of autocratic management styles where employees are told what to do
and there is little or no opportunity for discussion.
High risk practices –
Autocratic approach to implementing change, involving use of force, threats
and manipulation of situations.
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Chapter 13 – Management of Change
Strategies for Effective Change Management
Table 13.3 – Practices to successfully implement change in an organisation
This model builds on the ideas of Kotter
1 Educate leaders to ensure that they understand what the change is.
2 Use a ‘systems’ approach to ensure that all aspects of the organisation are
considered when planning and implementing change.
3 Use a team approach and involve stakeholders in the change process.
4 Empower managers and employees to make decisions and implement changes.
5 Develop plans, but also allow for flexibility so that they can be changed if required.
6 Acknowledge that there is tension between establishing readiness for change and the
need to get people implementing new approaches quickly.
7 Provide training and staff development for those involved.
8 Choose innovative practices that are research based and supported by data.
9 Change can only happen through people. Understanding emotional effects and
reasons for resistance is vital.
10 Be prepared for an ‘implementation dip ’things often get worse before improvement
appears.
11 Help employees understand the new practices.
12 Seek out ‘paradigm shifters’ and those who are interested in making substantial
changes.
13 Take along term view – change takes time.
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Chapter 13 – Management of Change
The Role of Leadership in Change Management
Managers and leaders of the organisation play a vital role in the successful
implementation of organisational change. Leadership is to managing
organisations through periods of change or crisis. There are three skills
necessary for effective leadership:
• diagnosing – being able to understand the situation as it is now and knowing
what could be expected in the future
• adapting – being able to adapt behaviour and other resources to help close
any performance gaps
• communicating – even if a leader knows what needs to be done, it is
important to communicate this to others.
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Chapter 13 – Management of Change
The Role of Leadership in Change Management
In the current period of great change and uncertainty for organisations, the role of the
leader is of utmost importance. Organisations capable of overcoming the obstacles to
change have been identified as having a number of shared characteristics, as listed in
table 13.4. (page 303).
The leader is a vital component of the change process. In the more ‘traditional’
approaches to change management, the role of the leader was overlooked. Senior
management simply announced a change when employees had already concluded that
something was going on. The focus and the mindset of the managers was on the long
term rather than on how change could be introduced in the short to medium term and
with little consultation, evaluation or review.
If leaders do not have the skills to articulate strategy, implement changes effectively and
keep all staff informed about decisions impacting on them, the introduction of a change
can lead to a situation where employees become cynical and begin to resist the change.
For change to be successful and sustained, leaders need to focus on building
relationships with employees and external stakeholders. By cultivating teamwork,
coaching, encouraging diversity, developing talent within the organisation and having
open communication, change is more likely to be successful.
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Chapter 13 – Management of Change
The Possible Impact of Change on the Internal Environment
There are many ways that macro, operating and internal pressures have
influenced the structure and activities of organisations. Changes will also occur
to the operations and human resource functions of the organisation.
Changes to internal environment
Structure
- Business may expand through joint ventures, mergers, takeovers and
acquisition
- Maybe horizontal or vertical integration of the organisation
- Unprofitable parts of the business maybe sold off
- Some departments maybe relocated interstate or overseas
- Flatter organisational structures with fewer levels of management are more
likely
- Non-core business activities maybe outsourced
- Business operations maybe diversified
- Some older plants maybe closed
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Chapter 13 – Management of Change
The Possible Impact of Change on the Internal Environment
Changes to internal environment
Corporate culture
- Changes to the size of the workforce may mean existing employees are negative about the
future
-
Changes in tasks and jobs may impact on culture
Policy
- New methods and structure may mean that the organisation develops policies and
procedures in areas such as recruitment and selection, training, codes and contracts with
suppliers
Management styles, skills and roles
- Effective change may mean the use of consultative and participative styles – use of twoway communication, group decision making and decentralised authority
-
Need for skills such as interpersonal/communicationskills, decisionmaking, delegation and
vision
-
Focus on roles of planning and leading through the change process
Need for controlling and organising – ensure that the change process has been
implemented and evaluated
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Chapter 13 – Management of Change
The Possible Impact of Change on the Internal Environment
Changes to the Operation Management Function
- Emphasis on work groups of teams
- New plant and equipment
- Introduction of programs such as Total Quality Management (TQM)
- Introduction of new value-added programs
- Pressure on organisations to use ‘green’technology to lessen the impact on
the environment
- New technology training and equipment
- New production methods
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Chapter 13 – Management of Change
The Possible Impact of Change on the Internal Environment
Changes to the Human Resource Function
- Down sizing may lead to a reduction in the number of staff
- Decentralisation of power, decision making and accountability with more
-
emphasis on employees
Changing jobs and tasks
Employees may become multiskilled
HR managers will need to recruit staff with the right skill set, and manage ways
to provide career paths and retain talented and skilled employees
New ways of performing tasks and training programs maybe introduced
Many job descriptions and tasks will change as a result of change with in the
organisation
Award restructuring and the introduction and extension of collective
agreements and industry awards
Legislative changes such as occupational health and safety, equal opportunity
and affirmative action
Appointment of new senior managers, new management styles and new
corporate culture
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Chapter 16 – Technological Development
Technological Development
Employees, managers and organisations, as well as the population in general,
take for granted the level and amount of technology available. Businesses
have developed systems to quickly analyse data, software programs allow for
customer databases into the millions, accounting software takes care of
financial functions and large amounts of data can be stored on hard drives and
backed up without taking up too much office space. Employees and managers
now use desktop and laptop computers, data show projectors, interactive
whiteboards, PDAs, mobile phones, electronic books, blogs and email as part
of their everyday lives at work and at home.
Technological, or information and communication technologies (ICT),
development has progressed enormously in the last decade and has had a
major impact on organisational efficiency and effectiveness in the key areas of
operations management, human resources and general productivity.
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Chapter 16 – Technological Development
Technological Development
Emerging information and communication technologies
Technology is a tool used to store and process vast amounts of information.
The successful implementation of ICT, however, also includes a great deal of
technological management; that is, organising data and information systems,
controlling large production processes, complex communication networks, and
allowing people and technology to work together.
In the last 20 years, businesses have been quick to adopt tools such as word
processing, email, websites, fax machines, PDAs and mobile phones because
of the benefits gained in increased efficiency, which ultimately
contributes to corporate profit.
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Chapter 16 – Technological Development
Technological Development
ICT has had a huge impact on the way businesses run, and the innovations
and changes to technology continue at a rate and type that is difficult for
people to grasp. While consumers are always ready to buy the latest
technology, organisations need to develop ways to innovate and introduce
these changes and developments
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Chapter 16 – Technological Development
Technological Development
Arguments for and against technological development
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Chapter 16 – Technological Development
Technological Development
Technological development as a pressure for change on
organisations
Technology can be a major change issue for organisations, regardless of their size
and industry. A number of pressures for change on organisations are discussed
below.
Management
Technology and its introduction and implementation introduce issues and pressures
for management. Managers need to have a skill set that allows them to manage the
demands of technology. Management skills should include:
- Creative-thinking skills to see the patterns and possibilities and be able to build
systems to convert these to advantage
- The ability to develop and manage effec- tive teams. The Commonwealth Bank,
for example, spent $1 billion on ICT over the past year. Money was spent on
maintenance, technical support and software.
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Chapter 16 – Technological Development
Technological Development
Technological development as a pressure for change
on organisations
Corporate culture
Corporate culture may change as a result of technological development.
Cultural shifts may occur when applicants are recruited for their technological
skills. The new employees and their perspectives may mean that their new
ideas and attitudes will influence the culture. Changes due to technology may
mean employees and managers become stressed or resist change if they are
unclear about the purpose or implications of the change.
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Chapter 16 – Technological Development
Technological Development
Technological development as a pressure for change on organisations
Employees
Employees, regardless of their job, will be using ICT in a number of ways. The use of
computers, email, the internet and mobile phones is now part of daily work life.
Customers
Customers now expect organisations to have up-to-date technology as part of their normal
business functions. Most consumers and potential customers will use the business’s website to
find out about the company and the products they sell. Websites also provide customers with
the opportunity to seek out further information and receive information by email. It is necessary
for organisations to keep their websites up to date as consumers will often visit the site
expecting to see new products and information. A well-managed website will impress
consumers, while a poor website creates doubts in their minds.
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Chapter 16 – Technological Development
Technological Development
The impact of technology on organisations
Technology has led to a number of changes within organisations. These
changes have been at all levels and within all sections of the organisational
structure. Changes have affected a number of areas, including those outlined
below.
Policy
Organisations have had to develop policies and procedures on the use of
technology. Policies and protocols on emails, codes of conduct on accept- able
ICT and internet use, cyber-bullying, and privacy have to be developed. Many
schools and organisations have established codes and policies on acceptable
use of the internet and emails.
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Chapter 16 – Technological Development
Technological Development
The impact of technology on organisations
Privacy issues
The advent of new technologies has also led to the need for legislation and
policies to protect the privacy of individuals. Laws regarding privacy are part of
a worldwide trend. The increased use of technologies such as the internet,
email and electronic scanning have given people access to a wider range of
data than ever before, which can be accessed more quickly. Community
concerns and recognition of the impact of these technologies has led
governments to introduce legislation at both state and federal levels. Victoria is
covered by three pieces of privacy legislation:
Information Privacy Act 2000 (Victoria)
Health Records Act 2001
Privacy Amendment (Private Sector) Act 2000.
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Chapter 16 – Technological Development
Technological Development
The impact of technology on the organisation
Technology can have an impact on the organisation in a number of ways.
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Chapter 16 – Technological Development
Technological Development
Technology and its impact on ethics and social responsibility
Technology and ICT has many implications for business ethics and social responsibility.
As discussed throughout this chapter, it is important for organisations to manage ICT to
ensure that it has a positive contribution to make.
Areas where ICT must be managed ethically and in a socially responsible manner
include:
- a code of conduct for internet and email use
- policies and procedures in place to deal with cyber-bullying and inappropriate
use of the internet and email
- privacy policies and practices to ensure that information and data is not
given out
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Chapter 16 – Technological Development
Technological Development
Technology and its impact on ethics and social responsibility
Technology and ICT has many implications for business ethics and social
responsibility. As discussed throughout this chapter, it is important for organisations
to manage ICT to ensure that it has a positive contribution to make.
Areas where ICT must be managed ethically and in a socially responsible manner
include:
- practices in place to ensure that viruses are stopped and data protected
- practices in place to try to ensure that technology is used to reduce
pollution and
emissions in the manufacturing and processing industries
- recycling of old hardware so that it does not end up in landfill
- use of ‘green’ technology to contribute in a positive manner to the
environment.
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