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Chapter 1
Management
Why Do We Have Organizations?
1.
To Accomplish Something = Goal
2.
It Takes More Than 1 Person
CEO
Masterbatches
Functional
Chemicals
Fine
Chemicals
Europe
Soaps
Electric
Materials
Asia/
Pacific
Process
Chemicals
Specialty
What Is An Organization?
An organization is a group of individuals
who work together toward common goals.
MANAGEMENT
The process of administering and
coordinating resources effectively
and efficiently in an effort to
achieve the goals of the
organization.
MANAGEMENT
EFFECTIVENESS
Long term measure of how well an organization achieves
its objectives
EFFICIENCY
Short term measure of how well an organization uses it
resources
GOAL
A desired future states that contributes to the fulfillment of
the organization's mission
MISSION = Reason for existence
Effectiveness & Efficiency
Effectiveness is achieved when the
organization pursues appropriate
goals. This means “doing the right
thing.”
Efficiency is achieved by using fewer
inputs (e.g., people, money) to
generate a given output. This means
“doing things right.”
determines how
The Four Functions
of Management
the firm’s human,
financial, physical,
informational, and
technical resources
Planning are arranged and Organizing
Assessing the coordinated to
management perform tasks to
achieve
desired
Organizational
environment to set
future objectivesgoals. goals
and map out
activities necessarymeasures performance, compares
it to objectives,
to achieve
those energizes
Leading
people toControlling
contribute
objectives.
implements
necessaryand
changes,
their
best individually
in
cooperation
with
other people.
and monitors
progress.
Managers
Managers are the people who plan,
organize, lead, and control the
activities of the organization so that its
goals can be achieved.
Levels of Management
Top-level
Managers
Strategic
Middle Managers
Tactical
First-line Managers
Operational Employees
Operational
Management Levels in the
Organizational Hierarchy
CEO
Corp
Head
Top Managers
VP
Admin
Business Unit Head
Gen. Mgr.
Administrator
Middle Managers
Dept. Manager
Info Srvcs Mgr
Product Line Mgr
Functional Head
Production Supervisor
MIS Supervisor
Nonmanagerial Employees
LineHarcourt
Jobs Brace & Company.
Staff Jobs
First-Line
Managers
Management as a set of skills: (continued)
• Four major categories of skills will help you
become a good manager:
– Strategizing Skills
– Task-Related Skills
– People-Related Skills
– Self-Awareness Skills
Skills for Managerial Success
•
•
•
•
•
Strategic Skills
Environmental
assessment scanning
Strategy formulation
Mapping strategic
intent and defining
mission
Strategy
implementation
Human resource
congruency
•
•
•
•
•
•
•
Task Skills
Setting and prioritizing
objectives
Developing plan of action
and implementation
Responding in a flexible
manner
Creating value
Working through the
organizational structure
Allocating human
resources
Managing time efficiently
Skills for Managerial Success
People Skills
•
•
•
•
•
•
•
Delegating
Influencing
Motivating
Handling conflict
Win-win negotiating
Networking
Communicating
– Verbal --Nonverbal
• Listening
• Cross-cultural
management
• Heterogeneous
teamwork
(continued)
Self-Awareness Skills
• Personal adaptability
• Understanding personal
biases
• Internal locus of control
Evolution of Management Thought
The Evolution of Management Thought
Early
Management
Thought
Classical
Perspective
Contemporary
Management
Perspectives
Behavioral
Perspective
Early Management Thought
• Early ideas about management strategy
– Sun Tzu, The Art of War
• Early ideas about leadership
– Nicolò Machiavelli, The Prince
• Early ideas about the design and
organization of work
– Adam Smith, The Wealth of Nations
• division of labor
Classical Perspective
The oldest formal viewpoints of management, it
includes the following approaches:
Scientific
Management
Administrative
Management
Bureaucratic
Management
Focuses on the
productivity of
the individual
worker
Focuses on the
functions of
management
Focuses on the
overall
organizational
system
Frederick W. Taylor
Henri Fayol
Max Weber
Scientific Management
• Frederick W. Taylor (1865-1915)
– Father of “Scientific Management.
– Taylor was convinced that there was “one best
way” to perform every task.
– Taylor attempted to define “the one best way”
to perform every task through systematic study
and other scientific methods.
Taylor’s Four Principles of Scientific Management
1.
2.
3.
4.
Scientifically study each part of a task and develop the
best method of performing the task.
Carefully select workers and train them to perform the
task by using the scientifically developed method.
Cooperate fully with workers to ensure that they use
the proper method.
Divide work and responsibility so that management is
responsible for planning work methods using scientific
principles and workers are responsible for executing
the work accordingly.
Scientific Management
• Frank Gilbreth
– Specialized in time and motion studies to
determine the most efficient way to perform
tasks.
– Used the new medium of motion pictures to
examine the work of bricklayers.
– Identified 17 work elements (such as lifting and
grasping) and called them therbligs.
Scientific Management
• Lillian Gilbreth
– Was a strong proponent of better working
conditions as a means of improving efficiency
and productivity.
– Wrote an entertaining book about raising her
family entitled “Cheaper by the Dozen.”
Administrative Management
• Focuses on the managers and the functions
they perform
– This approach to management is most closely
identified with Henri Fayol (1841-1925).
– Fayol was the first to recognize that successful
managers had to understand the basic
managerial functions.
Administrative Management
• Henri Fayol
– Developed a set of 14 general principles of
management.
– His managerial functions of planning, leading,
organizing, and controlling are routinely used
in modern organizations.
Bureaucratic Management
• Focuses on the overall organizational
system and is based upon firm rules,
policies, and procedures; a fixed hierarchy;
and a clear division of labor
– Max Weber (1864-1920), a German sociologist
and historian, is most closely associated with
bureaucratic management.
Bureaucratic Management
• Max Weber
– Envisioned a system of management that would
be based upon impersonal and rational
behavior.
– Conceptualized the approach to management
referred to as bureaucracy.
•
•
•
•
•
Division of labor
Hierarchy of authority
Rules and procedures
Impersonality
Employee selection and promotion
Behavioral Perspective
• Behavioral Perspective
– Followed the classical perspective
– Acknowledged the importance of human
behavior in shaping management style
– Associated with the following scholars:
•
•
•
•
Mary Parker Follett
Elton Mayo
Douglas McGregor
Chester Barnard
Behavioral Perspective
• Mary Parker Follett
– Concluded that a key to effective management
was coordination.
– Felt that managers needed to coordinate and
harmonize group effort rather than force and
coerce people.
– Believed that management is a continuous,
dynamic process.
– Felt that the best decisions would be made by
people who were closest to the situation.
Behavioral Perspective
• Elton Mayo
– Conducted the famous Hawthorne Experiments.
– Concluded that productivity increased because
someone was “paying attention” to the workers.
– Mayo’s work represents the transition from
scientific management to the early human
relations movement.
Behavioral Perspective
• Douglas McGregor
– Proposed the Theory X and Theory Y styles of
management.
– Theory X managers perceive that their
subordinates have an inherent dislike of work
and will avoid it if at all possible.
– Theory Y managers perceive that their
subordinates enjoy work and that they will gain
satisfaction from performing their jobs.
Maslow’s Hierarchy of
Needs
Self-Actualization
Need for Self Esteem
Need for Social Relations
Need for Security
Physical Needs
Contemporary Management Perspectives
• Systems Theory
• Contingency Theory
• Total Quality Management
• The Learning Organization
The Basic Elements of a
System
Environment
Inputs
Transformation
Process
Feedback
Outputs
SIMPLE SYSTEM
Closed
System
wires
(communication
network)
Battery
Open
System
BASIC COMPONENTS OF ANY
SYSTEM
System has an objective which can be
accomplished by interaction of the system
sub-units
An energy source to “drive” system
An energy conversion process to “produce”
the objective Transformation
Process
A communication network between system
units
Contingency Perspective
• A view that proposes that there is no one
best approach to management for all
situations.
• Asserts that managers are responsible for
determining which managerial approach is
likely to be most effective in a given
situation.
• This requires managers to identify the key
contingencies in a given situation.
The Contemporary Manager
Slide 1 of 2
• The New Manager Profile
– Managers will no longer think of themselves as
“the boss,” but will view themselves as
sponsors, team leaders, or internal consultants.
What a Difference a Century Can Make
Contrasting views of the corporation:
CHARACTERISTIC
20TH CENTURY
ORGANIZATION
FOCUS
STYLE
SOURCE OF STRENGHT
STRUCTURE
RESOUCES
OPERATIONS
PRODUCTS
REACH
The Pyramid
The Web or Network
Internal
External
Structured
Flexible
Stability
Change
Self-sufficiency
Interdependencies
Atoms-physical assetsBits-information
Vertical integration Virtual integration
Mass production
Mass customization
Domestic
Global
DATA: BUSINESS WEEK
21ST CENTURY
What a Difference a Century Can Make
Contrasting views of the corporation:
CHARACTERISTIC
20TH CENTURY
21ST CENTURY
FININCIALS
INVENTORIES
STRATEGY
LEADERSHIP
WORKERS
JOB EXPECTIONS
MOTIVATION
IMPROVEMENTS
QYALITY
Quarterly
Months
Top-down
Dogmatic
Employees
Security
To compete
Incremental
Affordable best
Real time
Hours
Bottom-up
Inspirational
Employees/free agents
Personal growth
To build
Revolutionary
No compromise
DATA: BUSINESS WEEK
The Contemporary Manager
• Competencies of Tomorrow’s Managers
–
–
–
–
–
–
–
The great communicator
The team player
The technology master
The problem solver
The foreign ambassador
The change maker
The 21st-century leader
Chapter 3
Social Responsibility and Ethics
Ethics
• Ethics
– The established customs, morals, and
fundamental human relationships that exist
throughout the world.
• Ethical Behavior
– Behavior that is morally accepted as good or
right as opposed to bad or wrong.
Three Domains of Human Action
Domain of
Codified Law
(Legal Standard)
Domain of
Ethics
Domain of
Free Choice
(Social Standard) (Personal Standard)
Amount of
Explicit Control
High
Low
Ethics
• Lies between the domains of codified law
and free choice
• No specific laws
• Based on shared principles and values
• Obedience is to unenforceable norms and
standards
• Disagreements and dilemmas about proper
behavior often occur.
Business Ethics
The application of the general ethical rules
to business behavior.
Approaches for Ethical Dilemmas
• Individual Approach
– Acts are moral when they promote the
individual's best long-term interests.
• Utility Approach
– A situation in which decisions are
based on an evaluation of the overall
amount of good that will result.
Approaches for Ethical Dilemmas
• Human Rights Approach
– A situation in which decisions are made in
light of the moral entitlements of human beings.
• Justice Approach
– A situation in which decisions are
based on an equitable, fair, and
impartial distribution of benefits and
costs among individuals and groups.
Corporate Social Responsibility
The interaction between business and the
social environment in which it exists.
What does Business owe society?
Stakeholders
Stakeholders are all those who are affected
by or can affect the activities of the firm.
Primary and Secondary Stakeholders
• Primary Stakeholders
– Those who have a formal, official, or
contractual relationship with the organization.
Task/Industry Environment
customers, suppliers, employers, owners
• Secondary Stakeholders
– Other societal groups that are affected
by the activities of the firm.
General/Societal Environment
community, special interest groups,
media, etc.
The Premises of the Social
Responsibility Debate
• Social contract
– An implied set of rights and obligations that are
inherent in social policy and assumed by
business.
• Moral agent
– The obligation of a business to act honorably
and to reflect and enforce values that are
consistent with those of society.
Three Perspectives of Social
Responsibility
• Economic Perspective
– The responsibility of business is to make a
profit within the “rules of the game.”
– Organizations cannot be moral agents. Only
individuals can serve as moral agents.
• Public Responsibility
– Businesses should act in a way that is consistent
with society’s view of responsible behavior, as
well as with established laws and policies.
Three Perspectives of Social
Responsibility
• Social Responsiveness
– Business should proactively seek to contribute
to society in a positive way.
– Organizations should develop an internal
environment that encourages and supports
ethical behavior at an individual level.
Social Responsibility Strategies
Slide 1 of 3
Continuum of strategies based on the
organization’s tendency to be socially
responsible or responsive.
Reaction
Do Nothing
Defense
Accommodation
Proaction
Do Much
Social Responsibility Strategies
• Reaction
– An organization that assumes a reaction stance
simply fails to act in a socially responsible
manner.
• Defense
– Organizations that pursue a defense strategy
respond to social challenges only when it is
necessary to defend their current position.
Social Responsibility Strategies
• Accommodation
– Corporations with an accommodation strategy
readily adapt behaviors to comply with public
policy and regulation where necessary and,
more importantly, attempt to be responsive to
public expectations.
• Proaction
– Organizations that assume a proaction strategy
subscribe to the notion of social responsiveness.
Active
Chapter 6
Effective Managerial Decision Making
Managerial Decision Making
Decision
Decision
Making
Choice from
available alternatives
The process through which
managers identify and resolve
problems and capitalize on
opportunities.
Types of Decisions
Programmed
Decisions
Involve situations that
have occurred often and
decision rules can be
developed and applied
Managers formulate
decision rules so
subordinates can make
decisions freeing
managers for other tasks.
Nonprogrammed
Decisions
Decisions required for
unique and complex
management problems.
Poorly defined
Largely unstructured
Important consequences
Uncertainty is great
Routine decision rules for
solving the problem do not
exist.
Certainty, Risk Uncertainty
and Ambiguity
All the information
Low
Organizational
Problem
Know Objectives
Don’t Know Probabilities
Possibility of Failure
Certainty
Risk
Uncertainty Ambiguity
Programmed
Decisions
Clear-cut objectives
Know the probabilities
High
Nonprogrammed
Decisions
Problem Solution
Objectives Unclear
Outcomes Unclear
Steps in the Decision-Making Process
Recognize
Ignore
Identifying problems
and opportunities
Diagnosis and fact gathering
Symptoms Change
Establishing specific
goals and objectives and
SUG
Consistency
Specific, Measurable, Attainable
WHO
Revise
Revise
Generating Alternatives
Revise
Evaluation of
alternative solutions
Quantity BrainstormingDon’t evaluate
Establish criteria
Revise
Solution selection
Revise
Choosing
Implementation strategy
Goals
Action Plan
Revise
Monitoring &
Evaluating
Did It Work?
Follow up Plan
Who
What
Where
When
Verify
Decision
Process
Models of Decision Making
• Rational-Economic Model
A prescriptive framework of how a decision
should be made that assumes managers have
completely accurate information.
• Behavioral Decision Model
Unlike the rational-economic model, the
behavioral decision-making model acknowledges
human limitations that make rational decisions
difficult to achieve.
Rational-Economic Model
• Concentrates on how decisions should be
made, not on how they actually are made
• The model is based on the following
assumptions:
– Managers have “perfect information.”
– Managers attempt to accomplish objectives that
are known and agreed upon and have an
extensive list of alternatives from which to
choose.
Rational-Economic Model
• Assumptions of Rational-Economic Model
(continued)
– Managers are rational, systematic, and logical
in assessing alternatives and their associated
probabilities.
– Managers work in the best interests of their
organizations.
– Ethical decisions do not arise in the decisionmaking process.
Rational-Economic Model
• Conclusion
– As these assumptions suggest, the rationaleconomic model does not address the
influences that affect decision environments or
describe how managers actually make
decisions.
– As a consequence, in practice the model may
not always be a realistic depiction of
managerial behavior.
Behavioral Decision Model
• Unlike the rational-economic model, the
behavioral decision model acknowledges
human limitations.
• The behavioral decision model suggests that
a person’s cognitive ability to process
information is limited.
Behavioral Influence on Decision
Making
• Perception: A person's view of the world
– Stereotyping - projecting characteristics of a small number of
people as characteristics of the entire group
– Halo Effect - one characteristic overshadows all other
characteristics or aspects of the decision
• Subjective Rationality - Thinking logically but within one's
own framework
• Bounded Rationality - personal, environmental, time, and
organizational constraints which place
limits on decisions
Behavioral Influence on Decision
Making
• Recency - tendency to ascribe more importance to
things that happened most recently
• Satisficing - tendency to accept "adequate" decision
instead of the best
• Values
• Personality
• Propensity For Risk
• Escalation of Commitment
Refers to an increasing commitment to a previous
decision when a “rational” decision maker would
withdraw.
What Makes a Quality Decision?
Vigilance can make a good decision more
likely. Vigilance means being concerned for
and attentive to the correct decision-making
procedures.
Probable Relationship Between Quality
of Decision and Method Utilized
Quality
of
Decision
More
Less
Individual
Average
individual
Minority
control
Majority
control
Consensus
Group Considerations in Decision
Making
Group decision making is becoming more
common as organizations focus on
improving customer service and push
decision making to lower levels.
Impact of Group Size on
Participation in Decision Making
• In general, as group size increases, the
following changes in the decision-making
process are likely to be observed:
– The leader becomes more psychologically
distant from the other members.
– The group’s tolerance of direction from the
leader is greater, and the team’s decision
making becomes more centralized.
– The atmosphere is less friendly.
– Rules and procedures become more formalized.
Advantages of Group Decision
Making
• Experience and expertise of several
individuals available.
• More information, data, and facts
accumulated.
• Problems viewed from several perspectives.
• Higher member satisfaction.
• Greater acceptance and commitment to
decisions.
Disadvantages of Group Decision
Making
•
•
•
•
Greater time requirement
Minority domination
Compromise
Concern for individual rather than group
goals
• Social pressure to conform
• Groupthink
Groupthink
An agreement-at-any-cost
mentality that results in
ineffective group decision making.
Groupthink
• Characteristics of Groupthink
–
–
–
–
–
–
Illusions of invulnerability
Collective rationalization
Belief in the morality of group decisions
Self-censorship
Illusion of unanimity in decision making
Pressure on members who express arguments
Techniques for Quality in Group
Decision Making
•
•
•
•
•
Brainstorming
Nominal Group Technique
Delphi Technique
Devil’s Advocacy Approach
Dialectical Inquiry
Brainstorming
• A technique used to enhance creativity that
encourages group members to generate as
many novel ideas as possible on a given
topic without evaluating them.
Rules of Brainstorming
• Freewheeling is encouraged.
• Group members will not criticize ideas as
they are being generated.
• Quality is encouraged.
• The wilder the ideas the better.
• Piggyback on previously stated ideas.
• No ideas are evaluated until after all
alternatives are generated.
Nominal Group Technique (NGT)
• A structured process designed to stimulate
creative group decision making where
agreement is lacking or the members have
incomplete knowledge concerning the
nature of the problem.
Delphi Technique
• Uses experts to make predictions and
forecasts about future events without
meeting face-to-face.
Devil’s Advocacy & Dialectical
Inquiry
• Devil’s Advocacy
– An individual or subgroup appointed to critique
a proposed course of action and identify
problems to consider before the decision is
final.
• Dialectical Inquiry
– Approaches a decision from two opposite
points and structures a debate between
conflicting views.
Guidelines for Decision Making
• Be committed to the decision-making
process; use it, and let data, not emotions,
drive decisions.
• Seek employees’ input before you make key
decisions.
• Believe in, foster, and support group
decision making in the organization.
Guidelines for Decision Making
• Believe that the best way to improve the
quality of decisions is to ask and listen to
employees who are doing the work.
• Seek and use high-quality information.
• Avoid “top-down” power-oriented decision
making wherever possible.
Guidelines for Decision Making
• Encourage decision-making creativity
through risk taking, and be tolerant of
honest mistakes.
• Develop an open atmosphere that
encourages organizational members to offer
and accept feedback.
Chapter 7
Decision-Making Tools and
Techniques
Chapter 4
Planning in the Contemporary
Organization
Planning Defined
The process of outlining the activities that
are necessary to achieve the goals of the
organization.
how are we
going to get
there
Where to we
want to go
Planning as a Linking Mechanism
Goals
Plans
Control
Goal
A desired future state the organization
attempts to realize.
Plan
Blueprint for specifying resource allocations,
schedules and other actions necessary to
obtain goals
Objective
Specific, short term target for which
measurable results can be obtained
Criteria for Effective Goals
Be specific and measurable
Cover key result areas
Be challenging but realistic
Be for a defined time period
Be linked to rewards.
The Importance of Goals and Plans
Legitimacy to external audiences such as:
Investors, Customers, Suppliers
A source of motivation and commitment
Help employees identify with the organization
Reduce uncertainty and clarify what employees should
accomplish. Guides to action
Guides to action
Rationale for decisions
Standard of performance
Benefits of Planning
• Better Coordination
– Planning provides a foundation for the
coordination of a broad range of organizational
activities.
– A plan helps to define the responsibilities of
individuals and work groups and helps
coordinate their activities.
Gives people direction
on what they are
supposed to do
Benefits of Planning
• Focus on Forward Thinking
– The planning function forces managers to think
ahead and consider resource needs and potential
opportunities or threats that the organization
may face in the future.
Benefits of Planning
• Participatory Work Environment
– Successful planning requires the participation
of a wide range of organizational members.
Broad base of
knowledge,
experience and
ideas
More likely to
“buy-in” to plan
they helped to
develop
Benefits of Planning
• More Effective Control System
– Foundation for control.
– The mechanism for ensuring that the
organization is moving in the right direction
toward achieving its goals.
Costs of Planning
• Managerial Time
– Done properly, the planning process requires a
substantial amount of managerial time and
energy.
• Delay in Decision Making
– Planning can result in delays in
decision making, which must be
weighed against the importance of
speed in response time.
Weighing the Benefits Against the
Costs of Planning
In the final analysis, managers plan because
planning leads to higher performance.
Planning also helps managers cope with the
many complex situations they face.
Where Does Planning Start?
• Top-Down Planning
– Begins with the Board of Directors and top
executives
– Top managers generally more, knowledgeable
about the firm as a whole.
• Bottom-Up Planning
– Initiated at the lowest level of the organization
– People closest to the operating system, customers,
and suppliers.
Where Does Planning Start?
Top-down planning works best when
– success is dependent upon the ability to make
high-level organizational changes in response to
general threats and pressures.
A bottom-up approach works best when
– success is dependent upon sensitivity to
customer needs and demands.
STRATEGY
Insight into
how to
create value
Strategic Planning
• Strategic Planning
– Is the process by which an organization makes
decisions and takes actions that affect its longrun performance.
– A strategic plan is the output of the strategic
planning process. Strategic plans define both
the markets in which the firm competes and the
ways in which it competes in those markets.
Levels of strategic planning
We will cover this more
in the next section
•Corporate
What business should we be in?
Broad Strategies
Board of Directors and top level executives
•Business
How will we compete?
Defines how each business unit will
operate in its market area
Levels of Goals/Plans
Reason for existence
Mission
Statement
Broad statements
Strategic Goals/Plans
describing where Senior Management
the organization(Organization as a whole)
wants to be in the future.
major divisions
Tactical/Functional Goals/Plans
Middle Management (Major and departments
divisions, functions)
Define specific Operational Goals/Plans
Lower Management
Harcourt Brace & Company.
results expected (Departments, individuals
departments,
work groups,
individuals.
Time frame for Goals/Plans
Reason for existence
Mission
Statement
Long-termStrategic Goals/Plans Up to five
Planning Senior Management years.
(Organization as a whole)
Intermediate- Tactical/Functional Goals/Plans
term Planning Middle Management (Major
divisions, functions)
Operational Goals/Plans
Short-term
Lower Management
Harcourt Brace & Company.
Planning
(Departments, individuals
One to two
years
One year
or less
Operational Planning
• Operational Planning
– Focuses on determining the day-to-day
activities that are necessary to achieve the
long-term goals of the organization.
– Operational plans
• Are more specific than strategic plans, address
shorter-term issues, and are formulated by the midand lower-level managers who are responsible for
the work groups in the organization.
• Operational plans can be categorized as standing or
single-use plans.
Standing Plans
• Standing Plans
– Are designed to deal with organizational issues
or problems that recur frequently.
– Standing plans include policies, procedures,
and rules:
• Policies - general guidelines that govern how certain
organizational situations will be addressed.
• Procedures - are more specific and are designed to
give explicit instructions on how to complete a
recurring task.
• Rules - provide detailed and specific guidelines for
action.
Single-Use Plans
• Single-Use Plans
– Are developed to address a specific organizational
situation.
– Single-use plans include:
• Programs - govern a relatively comprehensive set of
activities that are designed to accomplish a particular set
of goals.
• Projects - direct the efforts of individuals or work groups
toward the achievement of specific, well-defined
objectives.
• Budgets - specify how financial resources should be
allocated.
Management by Objectives
Preparation of next
period’s objectives
by employees
End-of-period
review by
employee and
supervisor
Intermittent
review of
ongoing
performance
as needed
Mutual setting
of objectives by
employee and
supervisor
Mutual agreement on
criteria for measuring
accomplishment of
objectives
Action planning
and job
performance by
employee
Management by Objectives
• Benefits of Management by Objectives:
Manager and employee efforts are focused
on activities that will lead to goal attainment
Performance can be improved at all
company levels
Employees are motivated
Departments and individual goals are
aligned with company goals.
Management by Objectives
• Disadvantages of Management by
Objectives:
– Requires time and commitment of top
management.
– May require excessive paperwork.
– May create a tendency to focus on short-term
vs. long-term planning.
– Can be difficult to establish and operationalize.
Contingency Planning
Contingency planning requires the
development of two or more plans, each of
which is based on a different set of strategic or
operating conditions that could occur.
Contingency Planning
• When is Contingency Planning Needed?
– Contingency planning is necessary in business
environments that change rapidly and in
unpredictable ways.
– Contingency planning is useful when a firm’s
effectiveness is dependent on a particular set of
business conditions.
Barriers to Effective Planning
• Demands on the Manager’s Time
• Ambiguous and Uncertain Operating
Environments
• Resistance to Change
Overcoming the Barriers to Planning
• Involve Employees in Decision Making
– Input from all levels of a firm is essential for
successful planning.
• Tolerate a Diversity of Views
– Diverse views lead to a broader assessment of
organizational problems and opportunities.
• Encourage Strategic Thinking
– Effective strategic thinking can be developed
through training and practice.
Strategic Management
BUSINESS
the art of making
irrevocable decisions
based on
insufficient knowledge
STRATEGY
Insight into
how to
create value
Strategy Formulation
Strategy Formulation
The process of developing long-range plans to
deal effectively with environmental
opportunities and threats in light of corporate
strengths and weaknesses
Composed of
Mission
Objectives
Strategies
Policies
Mission
Mission
The purpose or reason for the corporation’s
existence. It may be narrow or broad in
scope.
Narrow
Railroad
Insurance
Broad
Transportation
Financial Services
•Scan External
•Environment
Evaluate
Current:
•Mission
•Goals
•Strategies
Societal Environment
Task/Industry
Environment
The layer of the
Sociocultural
Economic
external
environmentShareholders
Suppliers
The
layer
of the external
that affects the
environment
that directly
Governments
organization
Internal
Employees/
Labor
Unions
influences
the
indirectly.
Environment
Special
Interest
Structureorganization’s operations
Groups
and performance.
Competitors
Culture
Customers
Political-Legal
Resources
Trade Associations
Creditors
Communities
Technological
•Scan External
•Environment
Identify
Strategic
Factors:
•Opportunities
•Threats
Evaluate
Current:
•Mission
•Goals
•Strategies
Scan Internal
Environment
Identify
Strategic
Factors:
•Strengths
•Weaknesses
General & Task
Environment
SWOT
Analysis
Internal
Environment
Scan External
Environment
Evaluate
Current:
•Mission
•Goals
•Strategies
Scan Internal
Environment
Identify
Strategic
Factors:
•Opportunities
•Threats
Define New:
•Mission
•Goals
Identify
Strategic
Factors:
•Strengths
•Weaknesses
Formulate
Strategy:
•Corporate
•Business
•Functional
Implement
Strategy via
Changes in:
•Leadership
•Culture
•Human
Resources
•Information
and Control
Systems
Levels of Strategy
What business should we
Corporate
be
in?
Corporation’s overall direction and the
management of its businesses
Business How will we compete?
Emphasizes improving the competitive
position of a corporation’s products or
units
Formulating Corporate
Strategy
What Business Should We Be IN?
GENERIC CORPORATE
STRATEGIES
GROWTH
STABILITY
RETRENCHMENT
GENERIC CORPORATE
STRATEGIES
GROWTH
Vertical Integration
Geographic locations
Horizontal Integration Increasing
Range of products
Concentric Diversification
Related industries
Conglomerate Diversification
Unrelated
GENERIC CORPORATE
STRATEGIES
STABILITY
Pause/ Proceed with Caution
No Change
RETRENCHMENT
Turnaround
Divestment
Liquidation
Formulating Business
Strategy
How Will We Compete?
Porter's Competitive Strategies
Unique/different
• Differentiation
Components of
value chain
• Cost Leadership
• Focus
Competitive/market
segment
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Support
Activities
Primary Activities
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Inbound
Logistics
Support
Activities
Primary Activities
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Operations
Inbound
Logistics
Support
Activities
Primary Activities
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Primary Activities
Marketing
& Sales
Outbound
Logistics
Operations
Inbound
Logistics
Support
Activities
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Primary Activities
Service
Marketing
& Sales
Outbound
Logistics
Operations
Inbound
Logistics
Support
Activities
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Support
Activities
Primary Activities
Service
Marketing
& Sales
Outbound
Logistics
Operations
Inbound
Logistics
Procurement
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Technological Development
Primary Activities
Service
Marketing
& Sales
Outbound
Logistics
Operations
Procurement
Inbound
Logistics
Support
Activities
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Human Resource Management
Technological Development
Primary Activities
Service
Marketing
& Sales
Outbound
Logistics
Operations
Procurement
Inbound
Logistics
Support
Activities
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Firm Infrastructure
Human Resource Management
Technological Development
Primary Activities
Service
Marketing
& Sales
Outbound
Logistics
Operations
Procurement
Inbound
Logistics
Support
Activities
Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value
Firm Infrastructure
Human Resource Management
Technological Development
Primary Activities
Service
Marketing
& Sales
Outbound
Logistics
Operations
Procurement
Inbound
Logistics
Support
Activities
Outsourcing
Strategic Choice to Purchase Some Activities From Outside Suppliers
Firm Infrastructure
Human Resource Management
Technological Development
Primary Activities
Service
Marketing
& Sales
Outbound
Logistics
Operations
Procurement
Inbound
Logistics
Support
Activities
Chapter 8
Organizing for Quality, Productivity,
and Job Satisfaction
Pamela S. Lewis
Stephen H. Goodman
Patricia M. Fandt
Slides Prepared by
Bruce R. Barringer
University of Central Florida
©2001 South-Western College Publishing
Learning Objectives
Slide 1 of 3
1.Explain why organizing is an important
managerial function, describe the process of
organizing, and outline the primary stages
of the process.
2.Discuss the concept of job design and
identify the core job dimensions that define
a job.
3.Explain how and why job design theory has
evolved.
Learning Objectives
Slide 2 of 3
4.Describe the mechanistic, behavioral, and
participatory approaches to job design.
5.Understand both the vertical and horizontal
associations that exist between individuals
and work groups within the organization.
6.Define delegation and discuss why it is
important for managers to delegate.
Learning Objectives
Slide 3 of 3
7.Explain why managers often fail to delegate
and suggest methods for improving
delegation skills.
Fundamentals of Organizing






Organizing Defined
The process of determining the tasks to be
done, who will do them, and how those tasks
will be managed and coordinated.
The deployment of
organizational resources to
achieve strategic goals.
Coordination
Integration
Organization chart
CEO
VP Marketing
VP Production
VP Finance
Organizational Relationships
• The working relationships that exist within
an organization affect how its activities are
accomplished and coordinated.
• These Relationships are Defined By:
–
–
–
–
Chain of command
Span of control
Line and staff responsibilities
Delegation
Chain of Command
An unbroken line of authority that links all
persons in an organization and shows who
reports to whom.
CEO
VP Marketing
VP Production
VP Finance
Unity of Command
A principle that each employee in the Organization
is accountable to one, and only one, supervisor.
Span of Management
• Number of employees reporting
to a supervisor
• Tradition has recommended a
span of management of four to
seven subordinates.
Span of Control
Slide 2 of 2
Narrow Span of Control
Manager
Wide Span of Control
Manager
Line & Staff
• Line employees: directly involved
in fulfillment of the primary
mission of the organization operations
sales
• Staff employees: provide
specialized service to support
HR line
efforts
Delegation
• Process to transfer authority and
responsibility to positions
below
• Delegate authority to the lowest
possible level.
Delegation: Learning to Delegate
Effectively
Slide 7 of 7
• Principle 1:
– Match the employee to the task.
• Principle 2:
– Be organized and communicate clearly.
• Principle 3:
– Transfer authority and accountability with the
task.
• Principle 4:
– Choose the level of delegation carefully.
Delegation
The Delegation Triangle
Responsibility
Justify outcomes
to those above in
the chain of
command.
Accountability
Justify outcomes to
Formal
andin the
those
above
legitimate
right
chain
of command.
of a manager to
make decisions,
issue orders, and
allocate resources
Authority
Work Specialization
• Degree to which organizational tasks are
subdivided into separate jobs
•Production is efficient because employee perform
small, well-defined tasks
•Employees can acquire expertise.
•Employees selected by ability and attitude.
•Specialization is carried to an extreme, workers tend
to become bored and alienated
•Many companies are moving away from this
principle.
Tall Versus Flat Structure
• Tall structure has an overall narrow span
of management and more levels in the
hierarchy
• Flat structure has a wide span, is
horizontally dispersed, and has fewer
hierarchical levels
• The trend is toward larger spans of
management
Centralization/Decentralization
Centralization
Decentralization
Decision authority
located near the top
Decision authority
located lower
organizational levels
Job Design
• The set of tasks and activities that are
grouped together to define a particular job.
– Job descriptions - detail the responsibilities and
tasks associated with a given job.
Core Job Dimensions
Slide 1 of 4
•
•
•
•
•
Skill Variety
Task Identity
Task Significance
Autonomy
Feedback
Core Job Dimensions
Slide 2 of 4
The Core Dimensions of a Job
Core Job Dimension
Effect of Dimension
Skill Variety
Task Identity
Meaningfulness of the work
Task Significance
Autonomy
Feedback
Responsibility for outcomes of the work
Knowledge of the results of the work
activities
Core Job Dimensions
Slide 3 of 4
• Skill Variety
– The degree to which a job challenges the job
holder to use various skills and abilities.
• Task Identity
– The degree to which a job requires the
completion of an identifiable piece of work.
• Task Significance
– The degree to which a job contributes to the
overall efforts of the organization.
Core Job Dimensions
Slide 4 of 4
• Autonomy
– The degree to which job holders have freedom,
independence, and decision-making authority.
• Feedback
– The information provided to job holders
regarding the effectiveness of their efforts.
Behavioral Approaches
Slide 1 of 3
• Job Enlargement
– Programs designed to broaden job scope.
– Job scope:
• The number of different activities required in
a job and the frequency with which each
activity is performed.
Behavioral Approaches
Slide 2 of 3
• Job Enrichment
– Programs designed to increase job depth.
– Job depth:
• The degree of control given to a job holder
to perform their job.
Behavioral Approaches
Slide 3 of 3
• Job Rotation
– Assigning individuals to a variety of job
positions.
– Employees rotate through a number of job
positions that are at approximately the same
level and have similar skill requirements.
Participatory Approaches: Focus on
Quality
Slide 3 of 3
• Self-Managed Teams
– Groups of employees who design their jobs and
work responsibilities to achieve the selfdetermined goals and objectives of the team.
Chapter 9
Designing the Contemporary
Organization






Organizational Design Defined
The way in which the activities of an
organization are arranged and coordinated so
that its mission can be fulfilled and its goals
achieved.
Components of Organizational
Design
Overall organizational design is
defined by three primary
components:
Organizational Structure
Integrating Mechanisms
Locus of Decision Making
Organizational Structure
• Organizational Structure
– Defines the primary reporting relationships that
exist within an organization.
– The chain of command and hierarchy of
responsibility, authority, and accountability are
established through organizational structure.
– Common forms of organizational structure:
• Functional structure, division structure,
matrix structure, and network structure.
Mechanistic and Organic
Organizations
Horizontal structure
Organic
Vertical structure
1. Shared tasks
2. Relaxed hierarchy, authority by
expertise, few rules
3. Horizontal communications
4. Many teams, task forces,
5. Informal, decentralized decision
making
1. Specialized tasks
2. Strict hierarchy of authority, many rules
3. Vertical communication and reporting systems
4. Few teams, task forces, or integrators
5. Centralized decision making
Stable
Mechanistic
Unchanging
Degree of change
uncertainty
Chaotic
Dynamic
Departmentation
The fundamental principle by
which individuals are grouped
into departments and
departments into the
organization
Functional
Departments based
on similar skills
and resource use.
President
CEO
Human Resources
Manufacturing
Lack of
communication
Deep expertise
Efficiency
Accounting
Lack of
innovation
Divisional
Encourages
decentralization
Division 1
HR
Man
Acct
President
CEO
Product
Program
Geography
Redundancy
Self
contained
Focus
Division 2
HR
Man
Acct
One employee
reports to 2 bosses
at same time
Matrix
Cross functional
Teams
Human Resources
Product 1
President
CEO
Manufacturing
Innovative
Creative
Accounting
Employee caught
in Middle
Product 2
Time
Conflicting demands
Team
interacting closely
shared commitment
Cross
functional
Creativity
True team = mutual
accountability
Faster
response to
change
High Maintenance
Time
Subcontracts
many functions to
other companies
Network
Designer
Best of the
Breed
Human
Resources
Virtual
organization
Hub
Give up
control
Manufacturing
Changed
quickly
Marketing
Coordination
low
high
INTERDEPENDENCE
Pooled
Sequential
(product delivery)
(product manufacture)
Reciprocal
(new product development)
COORDINATION
Standardization
Rules
Standardization
Planning
Rules
Schedules
Standardization
Rules
Schedules
Mutual adjustment
Locus of Decision Making
• Locus of Decision Making
– The degree to which decision making is
centralized versus decentralized.
– Centralized decision making
• Advantage
– Gives top-level management maximum
control.
• Disadvantage
– Limits the organization’s ability to respond
quickly and effectively to changes in the
environment.
Locus of Decision Making
• Locus of Decision Making
– Decentralized decision making
• Advantage
– Organizations can respond to
environmental change more rapidly and
effectively because the decision makers
are the people closest to the situation.
• Disadvantage
– Top-level managers lose some control.
GOOD LUCK
GETTING READY
FOR
THE TEST
Chapter 10
Managing Human Resources
Pamela S. Lewis
Stephen H. Goodman
Patricia M. Fandt
Slides Prepared by
Bruce R. Barringer
University of Central Florida
©2001 South-Western College Publishing
Human Resource Management
Defined
Management of the organization’s employees;
consists of all the activities required to enhance
the effectiveness of an organization’s workforce
in achieving organizational goals and
objectives.
MAJOR RESPONSIBILITIES OF HUMAN RESOURCE MANAGEMENT
*
ATTRACTING HUMAN RESOURCES
*
DEVELOPING HUMAN RESOURCES
*
MAINTAINING HUMAN RESOURCES
ATTRACTING
DEVELOPING
MAINTAINING
Human Resource
Planning
Training
Compensation
Job Analysis
Development
Employee Relations
Recruitment
Performance
Appraisal
Health & Safety
Selection
Termination/
Outplacement
MAJOR RESPONSIBILITIES OF HUMAN RESOURCE MANAGEMENT
*
ATTRACTING HUMAN RESOURCES
Getting the right
person for the job
Helping them the
acquire the skills
need
*
MAINTAINING HUMAN RESOURCES
Seeing employees
are motivated,
healthy, etc.MAINTAINING
ATTRACTING
DEVELOPING
*
DEVELOPING HUMAN RESOURCES
Legal Environment of Human
Resource Management
• Equal Employment Opportunity Legislation
– The Civil Rights Act of 1964, the Civil Rights
Restoration Act of 1988, and the Civil Rights
Act of 1991 are equal employment opportunity
laws.
– Equal employment opportunity laws prohibit
the consideration of race, color, religion,
national origin, or gender in employment
decisions.
Legal Environment of Human
Resource Management
• Other Legislation
– Such as the Americans with Disabilities Act and
the Age Discrimination Act of 1967, prohibits
employment decisions based on biases against
qualified individuals with disabilities and the
elderly.
– In general, the purpose of EEO legislation is to
ensure that unemployment decisions are based
on job-related criteria only.
Legal Environment of Human
Resource Management
– Family and Medical Leave Act of 1993
• Allows individuals to take up to 12 weeks of unpaid
leave per year for the birth or adoption of a baby or
the illness of a family member.
Legal Environment of Human
Resource Management
• Affirmative Action
– The legal requirement that federal contractors,
some public employees, and private organizations
under court order for short-term remedies must
actively recruit, hire, and promote members of
minority groups and other protected classes if such
individuals are underrepresented in the
organization.
Legal Environment of Human
Resource Management
• Sexual Harassment
– Actions that are sexually directed, unwanted, and
subject the worker to adverse employment
conditions.
• Hostile Environment Harassment
– When the victim does not suffer any tangible
economic injury, but workplace conduct is
sufficiently severe to create an abusive work
environment.
MAJOR RESPONSIBILITIES OF HUMAN RESOURCE MANAGEMENT
*
ATTRACTING HUMAN RESOURCES
*
DEVELOPING HUMAN RESOURCES
*
MAINTAINING HUMAN RESOURCES
ATTRACTING
DEVELOPING
MAINTAINING
Human Resource
Planning
Training
Compensation
Job Analysis
Development
Employee Relations
Recruitment
Performance
Appraisal
Health & Safety
Selection
Termination/
Outplacement
Attracting
Dev
Determining future human
Human Resourceresource needs relative to
strategic plan and taking actions
Planning
necessary to meet those needs.
IT Systems
Forecasting - Demand & Supply
Job Analysis
Job Descriptions
Job Specifications
JOB ANALYSIS
Job Analysis is used to identify the tasks, duties and
responsibilities of a job; and the skills
and knowledge required to perform it.
JOB DESCRIPTION
Duties
Responsibilities
Relationship
Accountability
JOB SPECIFICATION
Education
Skills, Education, Equipment
Work Environment
Experience
used for:
Selection
Human Resource Planning
Employee Development
Performance Appraisal/Setting Job Standards
Developing Wage and Salary Classifications
Recruitment
Finding/attracting qualified candidates
Internal recruitment
External recruitment
Selection
The process of evaluating and choosing the best
qualified candidate from the pool of applicants.
Application Forms
Interviews
Employment Testing Measure
Importance of Reliability and Validity
Developing
Main
Training/Developing
A planned effort to assist employees in learning
job-related behaviors to improve performance.
Orientation
On-the-job training
Technical training
Management development programs
Performance Appraisal
A systematic process of evaluating employee job-related
achievements, strengths, weaknesses, as well as
determining ways to improve performance.
Performance Appraisal
Purposes of performance appraisal process:
Motivation
Personnel movement
Training
Feedback
Rating Performance
Behavior-oriented approaches to performance
appraisal
Focus on assessing employee behavior.
Results-oriented approaches to performance
appraisal
Use objective performance criteria.
Problems
Halo Effect
Occurs when a manager rates an employee high or low on
all items because of one characteristic.
Rater Patterns
Occurs when a rater develops a pattern in his or her ratings
of employees.
Contrast Error
Recency Error
Maintaining
Compensation
Wages
Incentives
Benefits
Labor Relations
The formal process through which employees and unions
negotiate terms and conditions of employment.
Health & Safety
Termination/Outplacement