Business Management Student Manual V5_1.0_FINAL

8/17/2019 Business Management Student Manual V5_1.0_FINAL

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Diploma of Business & Enterprise

MANAGEMENTWDB 1007

COLLEGE OF BUSINESS

6t E!ition "ul# $%'


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Acknowledgements

These learning resources were developed by Victoria University, Melbourne Australia.

Edition / Publication

Subject: Management

Subject code: !" #$$%&i'th (dition: )uly *$#+

Copyright © 2013 by Victoria University

All rights reserved. o part o' this wor- may be reproduced or used in any 'orm or by any means graphic, electronic, or mechanical, including photocopying, recording, taping, web distribution orin'ormation storage and retrieval systems without the written permission o' the publisher, VictoriaUniversity.

The publisher is cognisant o' intellectual property rights implied under international copyright legislation.(very e''ort has been made to trace and ac-nowledge copyright. /opyright is ac-nowledged in there'erence list o' sources at the end o' the publication. Should any in'ringement o' copyright haveoccurred through error or omission, the publisher will remedy the situation.

estrictionsThis publication is intended 'or use as an internal teaching and learning resource 'or Victoria Universityand its contracted partner institutions only. 0t remains the property o' Victoria University and is not to bedistributed or reproduced 'or any other purpose.

!isclaimer The material contained in this publication is 'or general in'ormation only and is not intended as advice onany o' the matters discussed herein. o person or persons should act or 'ail to act on the basis o' anymaterial contained herein. 1eaders and others should consult pro'essional advisers about mattersa''ecting them. The training provider, its o''icers and the authors e2pressly disclaim all and any liability toany person relying, or to any person or persons 'or the e''ects o' acts o' others relying, on any o' thein'ormation contained herein.This publication includes theoretical and 'actual in'ormation. Using this in'ormation 'or any purpose other than as an educational resource may have signi'icant legal implications. Use o' the in'ormation may notcomply with generally accepted business principles or other principles or standards. "e'ore using any o'this in'ormation 'or business purposes, you should consult with a lawyer. Victoria University and itspartner institutions and3or agents, are not responsible 'or any conse4uences stemming 'rom the use o'this publication.


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Contents i

Contents

"ntroduction i#hat $his %ub&ect "s About i

%ymbols 'sed in $his Publication i

%ub&ect (earning )b&ecti*es ii

"ntroduction ii

/hapter # hat is Management5ii/hapter * 0nternal and (2ternal (nvironments iii/hapter + Social 1esponsibility and (thics in Management iii/hapter 6 Managerial !ecision Ma-ing iv/hapter 7 8rganisational 9oals, lans and Strategies v

/hapter ; 8rganisation !esign and Structure v/hapter % 9roups and Teams vi/hapter < Motivation vi/hapter = >eadership vii/hapter #$ /ontrolling the 8rganisation vii/hapter ## Managing 8rganisations through /hange and /on'lict viii/hapter #* 0nternational Management i2

Chapter 1 + #hat is ,anagement-1

#hy study ,anagement- 1

Purpose o. ,anagement 1

&or?ro'it 8rganisations @"usinesses #

ot?&or?ro'it 8rganisations @0nstitutions # Adding Value *Management er'ormance*

unctions o. ,anagement

,anagement oles

Management S-ills ;(motional 0ntelligence @(0 %

,anagement Competence

/ompetency <9ood Managers <

,anagement obs4

Vertical !imension=BoriContal !imension =

$he E*olution o. ,anagement $heories 4

re?/lassical Management Movement ##/lassical Management Movement #+Scienti'ic Management Theorists #+9eneral Administrative Management Theorists #%Buman 1elations Movement *+"ehavioural Science Theorists *;Duantitative Management *%/ontingency Management *<

Contemporary ,anagement 25

Systems Approach*<$otal 6uality ,anagement 7$6,8 24

Version ; )uly *$#+ E /opyright Victoria University


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Contents iii

0nternational /ommunity ;+

!oes %ocial esponsibility Pay- ;

Promoting "nno*ation> $he (eading


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Contents iv

!i..erences in !ecision,aking %ituations 52

rogrammed !ecisions $he Creati*ity actor in !ecision ,aking 101

"asic 0ngredients #$#!omain?1elevant S-ills #$*

/reativity?1elevant S-ills #$*Tas- Motivation #$*Stages o' /reativity #$*Techni4ues 'or (nhancing 9roup /reativity #$+

Chapter + )rganisational 9oals Plans and %trategies10;

$he )*erall Planning Process 10;

Main /omponents o' lanning #$;8rganisational Mission #$;urpose o' a Mission Statement #$;/omponents o' a Mission Statement: #$%

$he Bature o. )rganisational 9oals 10

"ene'its o' goals #$%>evels o' 9oals #$%



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Contents v

Dow 9oals Delp or acilitate Per.ormance 104

/hallenging #$= Attainable #$=Speci'ic and Measurable #$=Time?limited #$=1elevant #$=

actors "n.luencing 9oal Commitment 110

Supervisory Authority ##$eer and 9roup ressure ##$ublic !isplay ##$(2pectations o' Success ##$0ncentives and 1ewards ##$articipation ###Steps in setting goals ##*or- "ehaviour ##*!irection ##*(''ort ##*ersistence ##*

lanning ##*8ther process components ##*otential problems with goals ##+

(inking 9oals and Plans 113

>evels o' lans ##+lans According to (2tent o' 1ecurring Use##6Time BoriCons o' 9oals and lans ##7romoting 0nnovation: The 1ole o' the lanning rocess ##;otential 8bstacles to lanning ##;8vercoming 8bstacles to lanning ##;

,anagement by )b&ecti*es 7,


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Contents vi

,anaging di*ersity> Alternati*e work schedules 133

&le2itime #++)ob sharing #+6

$ypes o. !epartmentalisation 13

unctional structure 13

Common .unctions 13!i*isional structure 13

&orms o' divisional structure #+;roduct !ivisions #+;9eographic divisions #+;/ustomer3Mar-et !ivisions#+;Bybrid structure #+<Matri2 structure #6$

,ethods o. @ertical Coordination 13

ormalisation 13

%pan o. management> $he trend to downsi=ing 13

&actors in'luencing span o' management #6+>evels in the hierarchy #6;

!ownsi=ing 1

Centralisation *ersus decentralisation 15

hy do companies decentralise their organisation5#6=

!elegation 14

(ine and sta.. positions 10

,ethods o. Dori=ontal Coordination 11

%lack resources 12

"n.ormation systems 12

(ateral relations 12!irect contact 13

(iaison roles 13

$ask .orces and teams 13

,anagerial integrators 1

)rganisational Communication Channels 1

Vertical communication #77!ownward communication #77Upward communication #7;BoriContal communication #7%0n'ormal communication: The grapevine #7<

#eighing Contingency actors in )rganisational !esign 14Strategy #;$Technology #;#Technological comple2ity #;#Technological interdependence #;+SiCe #;6(nvironment #;6Mechanistic an organic characteristics #;7!i''erentiation and integration #;%

Promoting "nno*ation 'sing %tructural ,eans to Enhance Prospects 1;

Vital roles #;<1eservations #;<

!i''erentiation arado2 #;=Trans'er process #;=



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Contents vii

Chapter + 9roups and $eams 11

oundations o. #ork 9roups 11

hat is a 9roup5 #%#Types o' or- 9roups #%*Bow 0n'ormal 9roups !evelop #%6

Bow or- 9roups 8perate #%7or-?9roup 0nputs #%; Attraction to the group #%;Member roles #%%9roup SiCe #%=SiCe and group interactions #%=SiCe and per'ormance #


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Contents viii

&i2ed interval *$<&i2ed ratio*$=Variable interval *$=Variable ratio *$=

'sing rein.orcement theory 204

%ocial (earning $heory 204

Major components *$=Symbolic processes *#$Vicarious learning *#$Sel'?control *#$Using social learning theory *#$

,oti*ation and %trategic Duman esource ,anagement 211

$he Duman esource ,anagement ramework 211

(stablishing the employment relationship *##Maintaining the employment relationship *#*B10S, internet, intranets and e2tranets *#+The 'uture o' wor- *#6

Terminating the employment relationship *#6/orporate responsibility *#7

Chapter 4 + (eadership 21

Dow (eaders "n.luence )thers 21

Sources o' leader power *#%(''ective use o' leader power *#<(mpowerment *#<

%earching .or (eadership $raits 214

"denti.ying (eadership eadership 9rid ***

!e*eloping %ituational $heories223&iedlerHs contingency model **6

,atching leadership style and situation 22;

ormative leadership model **%

%ituational leadership theory 224

Pathgoal theory 230

>eader behaviours*+#Situational 'actors *+#/hoosing leader behaviours *+*

Promoting "nno*ation> $rans.ormational (eadership 233

Are (eaders Becessary- 23

Substitutes 'or leadership *+6>eadership and the organisational li'e?cycle *+7Using /ommunication to (nhance >eadership *+;Bow managers communicate *+;Managerial communication pre'erences *+%Using electronic media to 'acilitate communication *+<

Chapter 10 + Controlling the )rganisation 20

Control as a ,anagement unction 20

Signi'icance o' the control process *6#1ole o' controls *6*/oping with uncertainty *6*!etecting irregularities *6+0denti'ying opportunities *6+



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Contents i2

Bandling comple2 situations *6+!ecentralising authority *6+>evels o' control *66

$he Control Process 2

!eciding what to control> A closer look20

our conditions to control 21Alternati*es to control 22

$ypes o. Controls 22

Major control types by timing *7*&eed 'orward control *7+/oncurrent control *7+&eedbac- control *76Multiple controls *76/ybernetic and non?cybernetic control *77

,anagerial Approaches to "mplementing Controls 2;

"ureaucratic control *7;/lan control *7;

Mar-et control *7%romoting innovation: /ontrolling while nurturing innovation*7<&our levers 'or strategic control: A balancing act *7<0ncrementalist approach *7=

Accessing Control %ystems 2;0

otential dys'unctional aspects o' control systems *;$"ehavioural displacement *;$9ame playing *;$8perating delays *;$egative attitudes *;#8vercontrol versus undercontrol *;#

Characteristics o. an e..ecti*e control system 2;1

&uture oriented *;#Multidimensional *;#/ost?e''ective *;# Accurate *;*1ealistic *;*Timely *;*Monitorable *;* Acceptable to organisation members *;*&le2ible *;*

Chapter 11 + ,anaging )rganisations through Change and Con.lict 2;

$he Bature o. Change in "nno*ation 2;

hat is /hange5 *;6hat is 0nnovation5 *;6&orces 'or change and innovation *;7

$he Change ,anagement and "nno*ation Process 2;;

1eactive and planned change *;;

)rganisational !e*elopment 2;

hat are change agents responsible 'or5 *;<!iagnosis *;<0ntervention *;=

,anaging Change20

!iagnosing the need 'or change *%$

The change cycle *%*,anaging esistance to Change 23



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Contents 2

hy individuals resist change *%+8vercoming resistance to change *%+&orce?'ield analysis *%6

,anaging Con.lict2

/on'licts between individuals and organisations *%%/auses o' con'lict *%="ene'its o' ositive con'lict and /onse4uences o' egative con'lict *%=/onse4uences o' egative /on'lict *


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Pre.ace i

INT(ODUCTION

0nteresting stu'' in here about the subject and the development o' the theory andapplication o' these theories into the current "usiness (nvironment including9lobalisation and the need 'or organisations to be immediately reactive to mar-et,global, environmental and technological 'orces.

)at Tis Su*+e,t Is A*out

The purpose o' this Subject is to provide the student with the -nowledge and s-ills toapply theoretical techni4ues to a variety o' business applications and decisions,including practical -nowledge o' all aspects o' 8rganisational Management.

These materials are to be used, in a classroom environment, both o''?shore and on?

shore, as a wor-boo- and study guide to assist participants in gaining the s-ills and-nowledge necessary to demonstrate their competence in Management.

S#m*ols Use! in Tis -u*li,ation

)*er*iew

The 'ollowing Symbols are used in this publication

"con !escription "con !escription

9roup Activity Multi?media Activity

Fey oint otes

eb "ased Activity or-boo- Activity



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%ub&ect (earning )b&ecti*es ii

SUB"ECT LEA(NINGOB"ECTI.ES

Intro!u,tion

The 'ollowing >earning 8bjectives are applicable 'or each o' the /hapters in thisStudent Manual

Capter / )at is Mana0ement1

Learnin0 O*+e,ti2es3

A'ter studying this chapter, you should be able to:

(2plain 'our 'unctions o' management and other major elements in themanagement process.

!escribe three common wor- methods managers use and their #$

major roles.

!elineate three major managerial s-ill types.

!istinguish between e''ectiveness and e''iciency in regard to

organisational per'ormance.

(2plain how managers at di''erent hierarchical levels can use the

entrepreneurial role to 'oster innovation.

!escribe how management education and e2perience preparemanagers.

0denti'y several early innovative management practices and e2plain

the evolution o' basic management theory.

Trace preclassical contributions to the 'ield o' management.

(2plain major approaches within the classical viewpoint o'management.

!escribe major developments contributing to establishing the

behavioural viewpoint.

(2plain major approaches within the 4uantitative managementviewpoint.

!iscuss the relevance o' systems theory and contingency theory to

the 'ield o' management.

(2plain how management in )apan in'luenced the Theory I

management viewpoint.

0denti'y three signi'icant twenty?'irst century management trends



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%ub&ect (earning )b&ecti*es iii

Capter $ / Internal an! E4ternal En2ironments



(2plain the concept o' mega?environment and outline its major

elements.

!istinguish between the concepts o' tas- environment and mega?

environment and describe major tas-?environment elements.

/ontrast population ecology and resource dependence views o' the

organisation?environment inter'ace.

(nvironmental uncertainty and bounty impact on organisations.

!escribe the major methods organisations use to manage theirenvironments.

(2plain the nature o' organisational culture and its major

mani'estations.

/ontrast entrepreneurial and administrative cultures as means o'

promoting innovation.

(2plain how organisational cultures can be changed

Capter ' / So,ial (esponsi*ilit# an! Eti,s in Mana0ement



(2plain three major perspectives on corporate social responsibility and

identi'y major sta-eholder groups o'ten mentioned in conjunction withsocial responsibility.

Assess the e2tent to which organisational social responsibility pays.

(2plain the characteristics o' vanguard companies.

8utline approaches used to monitor social demands and e2pectations.

!escribe internal social response mechanisms available toorganisations.

/ontrast three major types o' managerial ethics.

8utline ethical guidelines 'or managers and e2plain actions they can

ta-e to handle ethical situations and avoid ethical con'licts.

!escribe situational 'actors in'luencing ethical behaviour and outline

mechanisms 'or ethical management.



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%ub&ect (earning )b&ecti*es iv

Capter 5 / Mana0erial De,ision Main0



!escribe variations between programmed and non?programmed

decisions.

/ontrast rational and non?rational models o' managers as decision

ma-ers.

!escribe the steps in an e''ective decision?ma-ing process.

(2plain how to overcome b barriers associated with accepting a

problem challenge and searching 'or su''icient alternatives.

!escribe how to recognise common decision?ma-ing biases and avoidthe decision?escalation phenomenon.

Assess the advantages and disadvantages o' group decision ma-ing.

(2plain three basic ingredients and 'our stages o' creativity.

!escribe major techni4ues 'or enhancing group creativity.

Speci'y 'our 'actors needed to lin- innovation and competitive

advantage.

!escribe common characteristics o' entrepreneurs and 'actors that

induce them to pursue new ideas in established organisations



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%ub&ect (earning )b&ecti*es v

Capter 7 / Or0anisational Goals8 -lans an! Strate0ies

(earning )b&ecti*es>


!escribe the major components in the overall planning process.

(2plain the concept o' organisational mission and the purposes o' a

mission statement.

8utline the major bene'its o' goals and e2plain how they di''er

according to organisational level.

(2plain how plans di''er by organisational level and e2tent o' recurring

use.

(2plain the concept o' strategic management and identi'y three main

levels o' strategy.

!escribe orterHs competitive strategies 'or the business level.

(2plain the role o' strategies at the 'unctional level.

8utline the process o' strategy implementation

Capter 6 / Or0anisation Desi0n an! Stru,ture



!escribe the 'our elements ma-ing up organisation structure.

(2plain the importance o' organisation charts and the chain?o'?

command concept.

8utline the main approaches to job design, including the principal

alternatives to traditional wor- schedules.

(2plain the 'unctional divisional, hybrid, matri2 and emerging types o'

departmentalisation, list the advantages and disadvantages o' each typeo' departmentalisation and discuss the circumstances in which each is

li-ely to be e''ective.

(2plain the 'ive major methods o' vertical coordination, including

'ormalisation, span o' management, and centralisation versusdecentralisation, delegation, and line and sta'' positions.

(2plain how slac- resources, in'ormation systems and lateral relations

can be used to coordinate horiContally.

!istinguish between organisation communication channels and

e2plain their role in managing e''ectively.

Assess how contingency 'actors, such as strategy, technology, siCe

and environment, impact on organisation structure. 0ndicate how structure can enhance innovation



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%ub&ect (earning )b&ecti*es vi

Capter 9 / Groups an! Teams



!i''erentiate between di''erent wor-place group types and e2plain how

in'ormal groups develop.

Use a systems approach to describe 'actors in'luencing the way

groups operate.

!escribe major wor-?group inputs, including group composition,

member roles and group siCe, and e2plain how they a''ect teamwor-.

(2plain the signi'icance o' group process 'actors, such as group

norms, group cohesiveness and group development.

!escribe the basic components o' the communication process andtheir importance 'or group relations.

(2plain how perceptual and attribution processes, semantics, cultural

conte2t and communication s-ills in'luence interpersonal communication.

!iscuss how tas- 'orces and teams can be used to promote

innovation

Capter : / Moti2ation



!e'ine motivation and outline the motivation process.

/ompare and contrast major need theories o' motivation.

!escribe three major cognitive theories o' motivation and e2plain how

they 'acilitate the motivation process.

(2plain rein'orcement theory o' motivation and discuss how it can help

managers.

!iscuss the social learning theory o' motivation.

!escribe the business 'ramewor- within which human resource

management is conducted.

(2plain the three phases o' the employment relationship @ac4uisition,

maintenance and termination and their importance in achievingorganisation objectives

(2plain the lin-ages between socially responsible organisations and

human resource policies and practices



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%ub&ect (earning )b&ecti*es vii

Capter ; / Lea!ersip



8utline the major sources o' leader power and e2plain how leaders

can use power to encourage subordinate commitment.

!escribe the general status o' e''orts to identi'y leadership traits.

(2plain the di''erent 'indings o' lowa, Michigan and 8hio State studies

o' leader behaviours and discuss their implications.

!escribe the >eadership 9rid approach to leadership.

!elineate &iedlerHs contingency theory o' leadership.

/ontrast the 'ollowing situational approaches to leadership: normativeleadership model, situational leadership theory and path?goal theory.

!escribe trans'ormational leadership and e2plain its lin- to innovation.

(valuate the e2tent to which leaders are needed in organisations.

(2plore the major types o' managerial communication and discuss

managerial communication pre'erences.

8utline the basic components o' the communication process

!iscuss the growing potential o' electronics with regard to

organisational communication channels

Capter % / Controllin0 te Or0anisation



(2plain the major control roles in organisations.

!escribe how control responsibilities change with management levels.

8utline the general process applicable to most control situations.

!elineate the principal conditions managers need to consider in

deciding what to control.

(2plain the major control types based on timing and the use o'

multiple controls.

!i''erentiate between cybernetic and non?cybernetic control.

!escribe basic managerial approaches to implementing controls.

8utline the potential dys'unctional aspects o' control systems and

e2plain the implications o' over control and under control

!elineate the major characteristics o' e''ective control systems



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%ub&ect (earning )b&ecti*es viii

Capter / Mana0in0 Or0anisations trou0 Can0e an!Con


(2plain the relationship between change and innovation.

0denti'y internal and e2ternal 'actors leading to a need 'or change or

innovation.

(2plain the meaning o' organisational development and techni4ues

used in interventions.

0ndicate why employees resist change and e2plain how to overcome

resistance to change, including the use o' 'orce?'ield analysis.

(2plain the causes o' con'lict and how to reduce, resolve andstimulate con'lict.

!iscriminate between di''erent styles o' con'lict management and

describe circumstances where each may be appropriate

(2plain how both 'unctional and dys'unctional con'lict impact on group

behaviour.



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%ub&ect (earning )b&ecti*es i2

Capter $ / International Mana0ement



(2plain the concept o' a multinational corporation and describe 'our

major orientations to international Jmanagement.

!elineate several elements important in assessing the international

environment.

(2plain the concept o' competitive advantage o' nations and its lin- to

innovation.

8utline the major methods o' entry into international business.

/ontrast 'our major strategies 'or multinational businesses.

(numerate the main structural alternatives 'or conducting international

business.

(2plain the principal issues related to assignment policies and

recruitment, selection, training and repatriation o' managerial personnel.

!escribe adjustments in leadership style entailed by cultural

di''erences

!elineate the major social responsibility and ethics issues related to

international management



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Capter

Management

E *$#+

School of Business ServicesFaculty of Workforce Development


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CHAPTER ! WHAT "S #A$A%E#E$T&

C=A-TE( / )=AT ISMANAGEMENT1

)# stu!# Mana0ement1

Today, more students are studying Management in diploma and degree coursesthan in the past. This trend re'lects an increasing interest in management as apro'ession and the need 'or managerial competencies @-nowledge, s-ills andvalues to cope with the changing nature o' wor- and people throughout theworld.

Most o' us will spend our wor-ing lives in organiCations where we will bemanaged by others or we will manage others. 0n all, understanding managementis relevant to everyone and studying management is a way o' increasing ourpreparedness 'or employment as well as 'or li'e.

)at is Mana0ement1

>> -urpose of Mana0ement

The purpose o' organisations @businesses and institutions is to create wealth.

0' the basic purpose o' the business or institution is to create wealth, then theprimary role o' the manager is to add value to this wealth?creating process.

>> For?-ro@t Or0anisations Businesses

Since businesses tend to develop their employees @human assets in the pursuito' 'inancial goals @pro'it, they bene'it society by creating both material andhuman wealth.

Material wealth is usually in the 'orm o' 'inancial pro'it and human wealth throughthe pro'essional development o' their employees.

>>$ Not?For?-ro@t Or0anisations Institutions

ot?'or?pro'it businesses create both material and human wealth, but pro'its are

used 'or charitable purposes. Typically, institutions such as charities, providephysical and emotional support 'or the disadvantaged and less 'ortunatemembers o' society, by helping them manage their problems, creating learningopportunities, helping children grow and develop, healing the sic-, providingstability and a sense o' belonging. @re'er to slide < >ittle 1ed Scar'

>>' A!!in0 .alue

Managers may add value to the wealth?creating process o' the business orinstitution by:

/hanging a part o' the companyHs strategy,

&inding a more e''ective way o' mar-eting a product,

0nitiating the redesign o' a manu'acturing process,


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!eveloping and implementing a more e''ective approach to

customer service,

0mplementing a new organisation structure 'or the organisationand leading employees through the change process,

Selecting and developing the most competent employees as part

o' a succession planning strategy, and so 'orth.

0deally, e''ective managers should add value to every activity that they engage ini.e. through every conversation they have, day?to?day decisions and activities.0ne''ective managers add cost rather than value.

Managers are usually not neutral, they either add value or they add cost to thewealth?creating process o' the business or institution.

>$> Mana0ement -erforman,e

Management is the process o' getting things done by coordinating the activitieso' people throughout an organisation.

The objective o' management practice is to get things done e''iciency ande''ectively.

Figure 1.1 - The Objective of Management Practice

E..iciently @in the least time and at the least cost usually

measured as output divided by inputsK both inputs and output may be

measured in units o' 4uantity, money or time. E..ecti*ely @doing the right things to a re4uired standard o'

4uality.

The competent manager evaluates any completed or planned course o'management action by as-ing the 'ollowing 4uestions:

Bas it or will it increased e''iciency and e''ectiveness5

Bas it or will it added value5

Ultimately, the 4uality o' management is re'lected in measurable @4uantitativeterms such as:


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ell?managed, 'or?pro'it organisations improve or maintain their

share price,

ell?managed, not?'or?pro'it organisations improve or maintaintheir membership,

ell?managed governments are re?elected by voters,

ell?managed countries e2perience improved living standards.

Bowever, it needs to be noted that an improvement in either e''iciency ore''ectiveness does not automatically lead to an improvement in the other.

&or e2ample a car repair shop might reduce the time spent on repairing items buti' the repairs are not done properly and the repairer gets a reputation 'or poor4uality, the shop may 4uic-ly lose customers.

Similarly, a car manu'acturer may be producing cars e''iciently @at the right price,

however i' rising petrol prices cause consumers to want di''erent types o' cars,e''iciency alone may not be enough 'or the manu'acturer to remain pro'itable i' itsproducts @cars are no longer seen to be e''ective in the eyes o' consumers.

Acti*ity 11

Thin- about how you have been managed by your mother and 'ather. Bow haveyour parentsH added value to you and the household in this process5 Bow haveyou been managed e''iciently and e''ectively5

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$>%> Fun,tions of Mana0ement

Figure 1.2 - Management Functions

There are 'our main management 'unctions that managers per'orm ? planning,organiCing, leading and controlling all are crucial to the success o' anymanager. Managers do the same types o' tas-s in all businesses whether theymanage a hair salon or a 'actory. lanning, organiCing, leading and controllingare interrelated serving an important part in achieving managementHs vision.

$>> -lannin0

lanning involves de'ining the organiCations goals, setting objectives 'or the goaland deciding on plans, actions and strategies to achieve these goals are twocritical components o' the planning 'unction. &or e2ample, a manager o' a newlocal restaurant will need to have a mar-eting plan, a hiring plan and a salesplan.

$>$> Or0aniin0

8rganiCing involves allocating and arranging resources, both human and non?human so plans can be success'ully implemented. 8rganising allows managersto determine tas-s to be done, how to combine them into speci'ic jobs and how jobs can be grouped into units to 'orm the organisations structure. The managero' the new restaurant must -now how many employees are needed 'or particularshi'ts. rovide the necessary resources to complete their jobs group employeesinto -itchen sta'' and 'ront?end sta'' to provide an organisational structure toserve customers arriving to dine in the restaurant.

$>'> Lea!in0

A manager manages employees ma-ing sure that tas-s are completed on time

and policies are 'ollowed. >eading involves outlining a vision o' what can be

achieved, 'ocusing on interpersonal relations by communicating with each

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employee, and motivating and inspiring people to per'orm better. "y creating a

positive wor-ing environment a leader can e''ectively help improve the

employeesH job per'ormance and hence their morale and achieve re4uired levels

o' change and innovation. &or e2ample, i' the company has a goal o' increasing

sales by 7 over the ne2t two months, the manager may chec- the progress

toward the goal at the end o' month one. An e''ective manager will share this

in'ormation with his or her employees. This builds trust and a 'eeling o'

involvement 'or the employees.

$>5> Controllin0

/ontrolling involves regulating organisational activities to ensure that actual

per'ormance con'orms to the standards and goals e2pected. To regulate,

managers monitor ongoing activities, establish standards, compare results with

established standards or progress towards goals and ta-e necessary correctiveaction to change wor- processes and practises.

&or e2ample customer service standards re4uire evaluating employees job

per'ormance and product standards involve evaluating product 'reshness,

processing and presentation. The restaurantHs per'ormance can be assessed by

monitoring costs versus pro'itability o' the restaurant. Sometimes the strategies

and plans that were developed and implemented may not wor- out as initially

planned due to certain e2ternal 'actors e.g. competition. /ontrolling and

evaluating helps a restaurant manager recogniCe these 'ailures and 4uic-ly

implement corrective measures to bring the sta'' bac- on trac-.

"eing a manager o' a new restaurant involves many di''erent tas-s. lanning,

organiCing, leading and controlling are 'our o' the main 'unctions that must be

considered in any management position. Management is a balancing act o' many

di''erent components and a good manager will be able to maintain the balance

and -eep employees motivated. Managers at all levels in an organisation may be

involved in all 'our management 'unctions but the balance o' activities varies at

di''erent levels in an organisation.

8'ten incompetent managers concentrate on the organising and controlling

'unctions and 'orget the other two 'unctions planning and leading. (''ectivemanagers are li-ely to use all 'our 'unctions in a systematic way.

Managers cannot be success'ul without being good leaders. /ompetence inpersonal, interpersonal and group s-ills is critical 'or success in management.Success'ul managers must be able to wor- e''ectively with people.


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Activity 1.2 - Refer to the document above ‘Four functions of management’

Briefly describe how the management at ‘KFC’ apply the four management

functions to create its products and services efficiently and effectively.

lanning








!eading








"rganising








Controlling







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hat do Managers !o5

'>%> Te Mana0ement -ro,ess

Figure 1.3 - Management Process


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"nputs )utputsesources Per.ormance

Duman

inancial

,aterials

$echnology

"n.ormation

Achie*e goals

Products

%er*ice

E..iciency

E..ecti*eness

&eedbac- 'romthe environmenti.e. customers N

competitors

The 'our main management 'unctions @the trans'ormation process, together withthe resources @inputs and per'ormance outcomes @outputs are inter?related andwor- together as a process with the business environment.

&or a business:#. 0nputs include raw materials, human resources, capital, technology and

in'ormation.

$. The trans'ormation process turns these inputs into 'inished products orservices through employeesO wor- activities, management activities, andthe organisationOs technology and operations methods.

%. 8utputs include products and services, 'inancial results @pro'its, brea-?even or losses in'ormation, and human results such as employeesO levelso' job satis'action and productivity.

&. 0n addition, the systemOs ultimate success depends on e''ectiveinteractions with its environment: those groups or institutions upon whichit depends. These might include suppliers, labour unions, 'inancialinstitutions, government agencies and customers. &or a businessorganisation, the sale o' products and services generates revenue that

can be used to pay wages and ta2es, buy more inputs, repay loans andgenerate pro'its 'or the owners. 0' revenues are not enough to satis'yvarious environmental demands, the organisation downsiCes or dies.

Thin-, 'or e2ample, o' a day?shi't manager at a local Mc!onaldOs restaurant whoevery day must coordinate the wor- o' individuals ta-ing and 'illing customerorders at the 'ront counter and the drive?through windows, direct the delivery andunloading o' 'ood supplies, and address any customer concerns that arise. Themanager OmanagesO all the parts o' this restaurant so that the restaurantOs dailysales goals are met.

Managers at all levels in an organisation may be involved in managing the

organisation but the balance o' activities varies at di''erent levels in anorganisation.


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Acti*ity 13

Using the case study 'or Management 1oles below show how Terri atsosStanley navigates her way through the management process i.e. inputs,trans'ormation, outputs and 'eedbac-, to achieve "oston 1entalsH goals andobjectives. LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL













5>%> Mana0ement "o*s

Management jobs are divided into two di''erent dimensions.

@ertical !imension This dimension is comprised o' three levels o' management jobs: 'ront?line, middle and top management.

Dori=ontal !imension This dimension is comprised o' three main

managerial job types: 'unctional, general and project managers.

5>> .erti,al Dimension

rontline managers hold positions li-e o''ice manager, shi't

supervisor or department manager. They are the only managers whodonHt supervise other managers. They are closest to operationalemployees as they have daily contact with them and deal withcustomers on a day?to?day basis.

&ront line managers encourage, monitor and reward the per'ormanceo' their wor-ers and teach entry?level employees how to do their jobs.&ront?line managers also ma-e detailed schedules and operatingplans based on middle managements intermediate?range plans @si2 to#< months but that produce results within two wee-s. &ront?linemanagers tend to be more involved with leading and controlling.

,iddle managers hold positions li-e 'actory manager, regionalmanager or divisional manager. They are responsible 'or setting

objectives consistent with top managementHs goals and 'or planning


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and implementing subunit strategies 'or achieving these objectiveswithin a si2 to eighteen month time 'rame.

They coordinate and lin- groups, departments and divisions within thecompany and monitor an mange per'ormance o' subunits and

individual managers that report to them. &inally middle level managersare responsible 'or implementing changes and strategies designed bytop managers. Middle managers tend to spend more time on leadingand organising.

$op managers hold positions li-e chie' e2ecutive o''icer @/(8,

/hie' &inancial o''icer @/&8, and are responsible 'or the planning theoverall direction o' the company with two to 'ive year time 'rame. Theyare responsible 'or creating a conte2t 'or change. 8nce the vision andmission is set top managers are responsible 'or getting employeecommitment and agreement to implement the change. Top managers

are also responsible 'or creating a positive organisational throughcommunication and action both inside and outside the company.&inally top managers monitor their business environments, customerneeds, competitorsH strategies and long term business, economic andsocial trends. Top managers tend to spend more time on planning andorganising.

Acti*ity 1

Thin- about the managers in the university you are enrolled in. hat are themanagers in 'ront line, middle level and top level responsible 'or5 @!iscuss with

your teacher who is 'amiliar with these managers&ront?line managers







Middle managers LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL






Top managers



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LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL

5>$> =oriontal Dimension

unctional ,anagers are responsible 'or supervising a speci'ic

@'unctional part o' an organisation. Typical 'unctional areas includeKmanu'acturing, mar-eting, accounting, 4uality, engineering, B1, etc.

9eneral ,anagers are responsible 'or a whole or part o' anorganisation.

Pro&ect managers coordinate the wor- o' people or teams

engaged in a project.

Acti*ity 1

Thin- about the managers in the university you are enrolled in. hat do themanagers do5 @Gour teacher can help you with this activity

&unctional managers





9eneral managers





roject managers





7>%> Mana0ement (oles

Management 1oles are broader than 'unctions and re'er to more generalcategories to describe a managerHs behaviour in an organisation. Benry


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MintCberg @#=%+ published a now?classic boo- called The Nature of ManagerialWor . At the time it was assumed that a manager sat in his com'ortable o''icethin-ing about the companyOs 'uture direction and giving instructions to managersand employees.

MintCbergOs data, based on time diaries o' male e2ecutives, revealed that thispicture was not real. The e2ecutives actually spent very little time on planning orlong?range strategy instead they answered calls, solved problems, reacted tocrises, responded to people, and dealt with constant interruptions.

MintCberg said that managerial wor- was characteriCed by Pbrevity, variety, and'ragmentation.P Any attempt by managers to stic- to a tas- usually 'ailed becauseo' constant interruptions. Today, managerial wor- has, i' anything, become evenmore busy and stress'ul and more li-e a li'e managerOs never ending day. Thepace o' action, around?the?cloc- economy, the constant juggling o' projects,demands 'rom di''erent masters, rapid changes in technology, and 're4uent

career reinventions all challenge managers.

ro'essor Benry MintCberg, categorised managersH activities into ten roles theyper'orm over the course o' a managerial day.

Figure 1.! - Management "oles

"B$EPE%)BA(

• igurehead er'orms symbolic duties o' a legal or social nature.

• (eader "uilds relationships with subordinates and communicates with,motivates and coaches them.

• (iaison Maintains networ-s o' contacts outside the wor- unit whoprovide help and in'ormation.

"B),A$")BA(

• ,onitor See-s internal and e2ternal in'ormation about issues a''ectingthe organisation.


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• !isseminator Transmits in'ormation internally, obtained 'rom either internal ore2ternal sources.

• %pokesperson Transmits in'ormation about the organisation to outsiders.

!EC"%")BA(

• Entrepreneur Acts as an initiator, designer and encourager o' change andinnovation.

• !isturbance handler Ta-es corrective action when organisation 'aces important,une2pected di''iculties.

• esource allocator !istributes resources o' all types including time, 'unds,e4uipment and human resources.

• Begotiator 1epresents the organisation in major negotiations a''ecting themanagerHs area o' responsibility.

Case Study – Boston Short-Term Rentals

http:33www.sublet.com3ancy Felleher, @#==7, QShort?Term 1entals 0s all "oo-ed UpH, #oston $eral%& )anuary #%, g.*;.

$he ,anager and Der CompanyTerri atsos Stanley, the manager o' a small short?term rental business, has used0T to help her better per'orm many o' these roles. atsos Stanley pioneered theconcept o' providing business travellers with high?4uality apartments as analternative to staying in more e2pensive and o'ten less convenient hotels in the"oston area. Ber company, "oston Short?Term 1entals, grew rapidly because o'

her drive to -eep costs down and customers happy. To achieve these goals,atsos Stanley had to learn all the di''erent managerial roles @1uderman et.al,*$$*.

!ecisional oles

As the president o' a rapidly growing company, atsos Stanley is continuallyre4uired to ma-e decisions. 0n the role o' entre'reneur& she searched 'oropportunities to increase revenues by increasing the number o' apartments thatshe manages. 8ne solution she adopted was to use the 0nternet and develop astrong presence on the orld ide eb to attract customers. As a %isturbancehan%ler& she deals with une2pected problems such as plumbing brea-downs in

the middle o' the nightK there'ore, all sta'' members are connected by electronic

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paging and personal messaging devices to speed response to customerproblems.

As a resource allocator& she decides how much money to spend to re'urbish andupgrade the apartments to maintain their lu2ury appeal. She maintains closecontact with the apartment owners through the 0nternet?she sends digital imageso' the apartments over the eb, 'or e2ample. As a negotiator& she contracts withother organiCations such as cleaning or painting services to obtain the mosteconomical services her business re4uires?once again, the in'ormation availablethrough the 0nternet ma-es this more e''icient.

"n.ormational oles

ith more than *$$ apartments to oversee, "oston Short?Term 1entalsOin'ormation management is a vital activity, and atsos StanleyOs role as monitor isimportant. The sophisticated computer system she developed allows her to

evaluate the per'ormance o' her business by occupancy rates, customercomplaints, and other indicators o' the 4uality o' her service. The system'acilitates her ability to respond 4uic-ly to problems as they arise. 0n her ongoingrole as %isseminator& she uses 0T to update her sta'' with in'ormation aboutchanges in visitor arrivals and departures, but as a s'oes'erson she is alwayson the phone to persuade visitors who may be somewhat hesitant about stayingin an apartment that they -now nothing about as opposed to staying with a hotelchain that has a well?recogniCed name.

"nterpersonal oles

0n 'act, atsos Stanley learned the importance o' an e2tremely hands?on

approach to managing her company. She and her employees personally greetthe new arrivals and per'orm the activities that porters, the concierge, and 'rontdes- sta'' do in the typical hotel. 0n interpersonal terms, atsos Stanley is thefigurehea% who provides the personal touch her guests e2pectK she is the personthey can contact i' problems arise. ith her small sta'' o' carpenters, electricians,interior decorators, and maintenance wor-ers, she acts as a lea%er& energiCingthem to provide the 4uic- service that guests e2pect. She is also a liaison& able tolin- her guests to organiCations that provide services they may need, such as drycleaning, catering, or hairdressing.

atsos Stanley enjoys the variety o' her wor- and relishes the pleasure o'meeting the senior managers, actors, and overseas visitors who stay in the

apartments.

Acti*ity 1;&or each o' the roles below provide e2amples 'rom the case study Q"oston1entalsH

"B$EPE%)BA(

• igurehead er'orms symbolic duties o' a legal or social nature.

• (eader "uilds relationships with subordinates and communicates with,


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motivates and coaches them.

• (iaison Maintains networ-s o' contacts outside the wor- unit who

provide help and in'ormation.

"B),A$")BA(

• ,onitor See-s internal and e2ternal in'ormation about issues a''ectingthe organisation.

• !isseminator Transmits in'ormation internally, obtained 'rom either internal ore2ternal sources.

• %pokesperson Transmits in'ormation about the organisation to outsiders.

!EC"%")BA(

• Entrepreneur Acts as an initiator, designer and encourager o' change andinnovation.

• !isturbance handler Ta-es corrective action when organisation 'aces important,une2pected di''iculties.

• esource allocator !istributes resources o' all types including time, 'unds,e4uipment and human resources.

• Begotiator 1epresents the organisation in major negotiations a''ecting the

managerHs area o' responsibility.


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)at !o Companies loo for in Mana0ers1

6>%> Mana0ement Sills

/ompanies loo-ing 'or employees who could be good managers 'ocus onindividuals who have technical s-ills, human s-ills, conceptual s-ills and themotivation to manage @FatC, #=%6. The ability to adopt a speci'ic set o'behaviours that lead to a desired outcome is called a s-ill. Managers need the'ollowing -ey s-ills to carry out their jobs e''ectively.

To per'orm management 'unctions and assume multiple roles, managers must bes-illed. 1obert FatC @#=%+ identi'ied three managerial s-ills essential tosuccess'ul management: technical, human, and conceptual. Technical s-ill dealswith things, human s-ill concerns 'eo'le, and conceptual s-ill has to do withi%eas.

6>> Te,ni,al sills

Technical s-ill involves process or techni4ue -nowledge and pro'iciencynecessary to carry out a speci'ic tas-. Managers use the processes, techni4uesand tools o' a speci'ic area e.g. a heart surgeon, a pilot, an engineer, a builder, writing computer programs, completing accounting statements, analysing

mar-eting statistics, writing legal documents, or dra'ting a design 'or wings andbody on an aeroplane.

Technical s-ills are usually obtained through training programs that anorganiCation may o''er its managers or employees or may be obtained byway o' a college degree.

6>$> =uman Sills

Buman s-ills involve the ability to wor- with, motivate, and direct individuals orgroups in the organiCation whether they are subordinates, peers, or superiors.Buman s-ills, there'ore, relate to the individualOs e2pertise in interacting with

others in a way that will enhance the success'ul completion o' the tas- at hand.

http://en.wikipedia.org/wiki/Managementhttp://en.wikipedia.org/wiki/Management


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Some human s-ills that are o'ten necessary 'or managers to display are e''ectivecommunication @writing and spea-ing, creation o' a positive attitudetoward others and the wor- setting, development o' cooperation among

group members, and motivation o' subordinates.

6>'> Con,eptual sills

/onceptual s-ills involve the ability to see the organisation as a whole,understand how the di''erent parts a''ect each other and recogniCe how thecompany 'its into or is a''ected by its environment. /onceptual s-ill involves theunderstanding o' abstract relationships, and reducing comple2ity in order todevelop ideas, and solve problems creatively.

/onceptual S-ills allows managers to ta-e action using technology morecreatively using the organisations people and assets to establish acompetitive advantage. (2amples o' situations that re4uire conceptuals-ills include responding to a competitorOs change in mar-eting strategy,or releasing a new product that is di''icult to imitate.

6>5> Te,ni,al8 =uman an! ,on,eptual Sills at !ierentLe2els of mana0ement

A managerOs level in the organiCation determines the relative importance o'possessing technical, human, and conceptual s-ills.

• Top level managers need conceptual s-ills that let them view the

organiCation as a whole, and recogniCe how the company is a''ected bythe community, customers and the competition.

• Supervisors and team leaders need technical s-ills to manage employeeswho ma-e products and serve customers, train employees and helpemployees solve problems.

• All levels o' management need human s-ills so they can interact andcommunicate with other people success'ully.

Acti*ity 1

1e'erring to the /ase study Q/reativity 8ver'lowing e2plain management use o'the technical, human and conceptual s-ills using e2amples 'rom the case:

Technical S-ills








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Buman S-ills







/onceptual S-ills







CA%E %$'!G Creati*ity )*er.lowing

Michael Arndt, "loomberg "usinesswee-, May


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never paid much attention to innovation. !uring most o' its =7?year history, ite2celled at manu'acturing washers and dryers that were solid and long?lasting.&rom time to time, research and engineering @1N( technicians would twea-hirlpoolOs Fenmore, FitchenAid, and namesa-e appliances to lower costs orboost per'ormance ?? by better insulating a 'reeCer, say, or adding anotherwashing cycle. "ut thatOs about as e2citing as product development ever got.

A(P"BE E$EA$ 0t was clear that hirlpool needed to reinvent its corporate culture. To do so, ithad to 'igure out the answers to basic 4uestions that managers everywherestruggle with: Bow do you de'ine innovation5 Bow do you measure success5Bow do you teach people to be creative5 Pe -new 'rom a strategic point o' viewwhat we needed to do, but 'rom a practical point o' view we didnOt -now how todo it at all,P con'esses )e'' M. &ettig, 6=, a *7?year veteran who succeededhitwam as chairman and /(8 in mid?*$$6. "ut despite strong demand, theprices o' hirlpool appliances were 'alling at an average rate o' +.6 a year,

'orcing yet another job?eliminating restructuring.

So hitwam put out a broad call 'or help. "elieving that brilliant ideas wereburied in the corporate hierarchy, he invited each o' the companyOs ;#,$$$employees to unleash their creativity: (verybody everywhere, he said, 9o outand innovate

8'' in the 0talian Alps, a crew o' wor-ers got right at it. Bandpic-ed by managers'rom across the companyOs (uropean sta'', the *7 employees were 'reed 'romtheir regular jobs and pac-ed o'' to hirlpoolOs o''ice in /omerio, 0taly, with asingle purpose: to dream up products or services that would truly di''erentiatehirlpool 'rom rivals. A year later, they came bac- with their big brainstorm: an

0nternet business that would enable people to race one another over the eb onstationary bi-es. So much 'or that e2periment. 0t was obvious that et bi-eracing, which didnOt draw on any o' hirlpoolOs strengths, was a nonstarter.

hirlpool learned the hard way that real innovation re4uires a lot more thansimply urging thousands o' employees around the world to tap into their innerdesigner and then waiting 'or the great ideas to roll in. 0t re4uires hard wor-,structure, and discipline. A'ter its poor start, the company retreated 'rom the all?out e''ort to democratiCe innovation and moved to a more traditional centraliCedmodel o' product development. That did the tric-. Since *$$#, revenues 'romproducts that 'it the companyOs de'inition o' innovative have Coomed up 'rom #$million to %;$ million in *$$7, or 7 o' the "enton Barbor @Mich. companyOs

record #6.+ billion in total revenue. hirlpoolOs shares, at =*.;6 on Apr. *7,have almost doubled in price over the past 'ive years. ow, 'ollowing its *.;billion Maytag /orp. ta-eover, hirlpool will bring innovation to its onetimearchrival.

)'%"B9 $DE $))P%

So hitwam, now ;6, called in ancy T. Snyder, an organiCational behavioristwho had joined the company in #=


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0n early *$$$, management enlisted a group o' %7 employees to be trained ininnovation. Their teachers were #$ consultants 'rom Strategos, a managementconsultancy 'ounded by 9ary Bamel in Menlo ar-, /ali'., in #==7. The studentsrepresented almost every job classi'ication, 'rom corporate vice?president toengineer to 'actory hand. They were assembled by region in groups o' *7 incompany 'acilities in "enton Barbor, "raCil, and 0taly. &or up to a year, as otherstoo- over their previous jobs, these employees were trained li-e pupils at aspecialiCed graduate school.

The consultants spent wee-s teaching them how to PideateP by re?e2amining oldways o' developing new products that were blinding employees to opportunities.PThere are no barriers,P hitwam told students. P0 donOt care i' we get oneinnovative idea out o' the process.P

Be liberated the students to such a great e2tent, however, that most o' their ideas

turned out to be useless, impractical, and poorly suited to hirlpoolOs strengths.0n addition to 0nternet bi-e racing, employees proposed the Unattended "o2 ?? adoorstep appliance to -eep 'ood deliveries hot or cold until owners came home'rom wor-. 0t was ignored. So was their plan to create a membership club 'orpeople who wanted home repair services.

The ne2t step 'or hirlpool was getting the rest o' its global wor-'orce involved.Snyder set up an intranet site that o''ered a do?it?yoursel' course in innovationand listed every project in the pipeline. (mployees were invited to post ideas orto networ- in'ormally with others and get their e2pertise. The company hostedinnovation 'airs to salute inventors and elicit more ideas. &or one show, hirlpool'illed the concourse o' 8rchards Mall, outside "enton Barbor, with 76 e2hibits o'

new products shown o'' by proud employees, including a 4uartet o' engineers'rom hirlpoolOs oven 'actory in 82'ord, Miss. The 'our had invented acombination gas grill3re'rigerator3oven3boom bo2 'or tailgate parties @outdoorsusing the tailgate o' a pic-?up van as a table @http:33www.tailgate?party?ideas.com3 . 0tOs a promising idea now being redesigned to wor- out sa'etyissues.

hitwam, meanwhile, continued to encourage wor-ers to go to their bosses withproposals or to come to him directly i' the managers wouldnOt listen. And he puthis money where his mouth was, setting aside 67 million 'rom the capital budget'or innovation in *$$$ and doubling that amount in *$$#. Although they didnOtreceive money 'or their ideas, ordinary employees were thrilled to be treated as

peers and as-ed 'or advice. 0n *$$# and O$*, hirlpoolOs P-nowledgemanagementP site recorded up to +$$,$$$ hits per month. P0 had never seen astrategy that was so energiCing to so many people,P hitwam says.

Management, however, wouldnOt buy it. Midlevel e2ecutives were annoyed thattheir wor-ers were o'' doing side projects when they still had real wor- to do. Andupper?level managers could shrug o'' the initiative, because hitwam hadnOtgiven them any concrete goals or tied their per'ormance to any innovationmetrics.

So hitwam and his managers were 'orced to be innovative themselves. hilenot completely abandoning their come?one, come?all approach, they realiCed in*$$* that they had to bring more order to the innovation process. They decidedthat new ideas would have to improve the companyOs e2isting brands or products.

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Top management would evaluate and 'und all new proposals at monthlyinnovation?board meetings. These groups, in turn, reported to hirlpoolOs nine?member e2ecutive committee. 9reen?lighted projects would be assigned to pros?? representatives 'rom the design, mar-et research, 1N(, and manu'acturingdepartments ?? to see them through. 0n addition, hitwam began setting annualrevenue and pipeline targets in *$$* and conducting employee surveys to gaugewor-ersO involvement in innovation. Senior e2ecutives would have to hit all o'these numbers or lose +$ o' their annual bonus.

To ma-e certain that only high?potential ideas reached the 0?board, Snyder andher innovation specialists came up with something called the 0?bo2, a two?stepgraphing tool. The goal: to ma-e it easier to design products that re'lectedconsumersO needs and desires.

1 )pportunities de*eloped to create new customers and business

models

The first step re4uired innovators to demonstrate that their proposals weresomething that real people would buy. That could entail months o' mar-etresearch, 4uiCCing thousands o' consumers. Their ideas were then graded byinnovation consultants on a scale o' # to #$, 'rom dud to sure thing. 8nly ideaswith a grade o' at least ;.7 could proceed.

2 Completely new products created .or consumers unmet needs

Step two involved analysing whether the new product would command above?average prices, again through mar-et research. 8n this test, also, ideas thatscored less than a ;.7 got weeded out. The tool altered the companyOs

development process. P0nstead o' a guy in the lab inventing something he thin-sis cool, innovation is coming 'rom the consumer through research,P says amela1ogers, global director o' customer e2cellence and innovation.

The company has also become much more 'le2ible and adaptable. 0ncollaboration with "est "uy /o. @


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design made under contract in Me2ico and sells 'or #==.

Although the company has modi'ied hitwamOs original vision, it has succeededin achieving his top goals. Since *$$+, innovation revenue has 4uadrupledannually, easily surpassing goals. &ettig attributes + points o' hirlpoolOs salesgrowth rate, which has averaged = since *$$+, to creative new products.Moreover, hirlpool is no longer caught in a price war, 'orcing rivals to innovateas well or 'ade away, as Maytag did with its aging product line.

&or the past three years, the average price o' hirlpool appliances has risen 7annually. The company has *6 I-consultants and 7. P/huc-P )ones, hirlpoolOs vice?president o' globalproduct design. That meant 'ancier touches and better materials ?? and a +==retail price. onetheless, the company is selling the upscale version as 'ast as its'actory can churn it out. PThere is a rational component to purchasing appliances,but 'ar outweighing that is an emotional component,P says )ones. Phat the eyeadmires, the heart desires.P

%.$. hy Management Matters ?/ompetitive advantage through people

0n his boo-s (om'etitive )%vantage through Peo'le and The $uman *+uation,#uil%ing Profits b Putting Peo'le First& Stan'ord University business pro'essor)e''rey 'e''er contends that what separates top per'orming companies 'rom their competitors is the way they treat their wor- 'orces i.e. their management.

'e''er 'ound that managers in top?per'orming companies used ideas li-eemployment security, selective hiring, sel'?managed teams and decentralisation,high pay contingent on company per'ormance, e2tensive training, reduced statusdistinctions @between managers and employees and e2tensive sharing o''inancial in'ormation to achieve 'inancial per'ormance that, on average, was 6$per cent higher than that o' other companies.

8rganisations thus develop wor-'orces that are smarter, better trained, moremotivated and more committed than their competitorsO wor-'orces. Also, asindicated by the phenomenal growth and return on investment earned by thesecompanies, smarter, better trained and more committed wor-'orces providesuperior products and service to customers, who -eep buying and, by tellingothers about their positive e2periences, bring in new customers.


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'e''er also argues that companies that invest in their people will create long?lasting competitive advantages that are di''icult 'or other companies to duplicate.0ndeed, other studies clearly demonstrate that good management practices canproduce big advantages in 'our critical areas o' organisational per'ormance: salesrevenues, pro'its, stoc- mar-et returns and customer satis'action. 0n terms o'sales revenues and pro'its, a study o' nearly #$$$ US 'irms 'ound that companiesthat use just some o' the ideas shown in Table # had US*%, $66 more sales peremployee and US+


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wor-ers. (mployees can innovate and increasecompany productivity without 'earing the loss o' their jobs.

* Selective hiring 0' employees are the basis 'or a companyOscompetitive advantage, and those employeeshave employment security, then the companyneeds to aggressively recruit and selectivelyscreen applicants in order to hire the mosttalented employees available.

+. Sel'?managed teams and decentralisation

Sel'?managed teams are responsible 'or theirown hiring, purchasing, job assignments andproduction. Sel'?managed teams can o'tenproduce enormous increases in productivitythrough increased employee commitment and

creativity. !ecentralisation allows employeeswho are closest to @and most -nowledgeableabout problems, production and customers toma-e timely decisions. !ecentralisationincreases employee satis'action andcommitment.

6. Bigh wages contingent on organisational per'ormance

Bigh wages are needed to attract and retaintalented wor-ers and to indicate that theorganisation values its wor-ers. (mployees,li-e company 'ounders, shareholders, andmanagers, need to share in the 'inancial

rewards when the company is success'ul.hy5 "ecause employees who have a'inancial sta-e in their companies are moreli-ely to ta-e a long?run view o' the businessand thin- li-e business owners.

7. Training and s-illdevelopment

>i-e a high?tech company that spends millionso' dollars to upgrade computers or researchand development labs, a company whosecompetitive advantage is based on its peoplemust invest in the training and s-illdevelopment o' its people.

;. 1eduction o' statusdi''erences

The company treats everyone, no matter whatthe job, as e4ual. There are no reservedpar-ing spaces. (veryone eats in the sameca'eteria and has similar bene'its.The result: Much improved communication asemployees 'ocus on problems and solutionsrather than on how they are less valued thanmanagers.

%. Sharing in'ormation 0' employees are to ma-e decisions that are

good 'or the long?run health and success o' thecompany, they need to be given in'ormation


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about costs, 'inances, productivity,development times and strategies that waspreviously -nown only by company managers

Acti*ity 15Bow did QhirlpoolH use the 'ollowing methods to bring the best out in theiremployees and turn a loss ma-ing company into a pro'itable company with astrong competitive advantage5 Use e2amples 'rom the case study

# (mployment security

* Selective hiring

+. Sel'?managed teams and decentralisation

6. Bigh wages contingent on organisational per'ormance

7. Training and s-illdevelopment

;. 1eduction o' statusdi''erences


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%. Sharing in'ormation

Mana0ement Competen,e

!eveloping highly competent managers is much more complicated thandeveloping trade or wor- s-ills.

&irst, management s-ills are behavioural, they are not personality

characteristics. Managers are not born they learn on the job so their

behaviour can undergo change 'rom the time they start as theyprogress and climb the corporate ladder

Second, people can develop and improve their management s-ills

through practice. Managers learn on the job and the wider thee2perience the more s-illed the manager gets handling operational,human and technical matters.

Third, management s-ills are interrelated and overlapping in

other words they need combinations o' s-ills. This chapter loo-ed atessential management 'unctions, roles and s-ills all o' which amanager needs to be e''icient and e''ective.

&ourth, some o' these management s-ills may be con'licting, 'ore2ample e''ective managers may be re4uired to be both participativei.e. assisting employees and directive i.e. telling ine2perienced orunwilling employees what to do and 'le2ible i.e. allowing 'or variationin interpretation and per'ormance, yet controlled i.e. stic-ing by therules, depending on circumstances.

Closin0 Case Stu!#

)ane and eter were both employed by the one organisation where both haddisplayed management potential. Bowever, the two had distinctly di''erent

bac-grounds.

eter had a degree in psychology and was a manager in the human resourcesdepartment. )ane had an engineering bac-ground and was currently a managerin one o' the organisationHs manu'acturing plants.

At an interview 'or a middle?management position, both were as-ed, Qhat arethe 4ualities o' a good manager5

eter summed up his position by saying: Q0tHs obvious to me that a good managercan communicate e''ectively, -nows about motivating people and providingleadership. 0Hm convinced that a good manager understands human behaviour.H

)ane said that good managers need to be strong technically. They have to -now

how to allocate resources well, be -nowledgeable about job design and wor-'low,and -now how to monitor output, costs and so on.


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hich one would be the better choice 'or the middle?management position5

0n 'act, they were both partly right, because a good manager needs tocommunicate e''ectively, -now about motivating people, providing leadership andunderstand human behaviour.

0n addition, a good manager also needs to have strong technical s-ills, -now howto allocate resources well, be -nowledgeable about job design and wor-'low, and-now how to monitor output, costs and so on.

1e'erences:

"artol, Fathryn, Tein Margaret, Matthews 9raham, Sharma "ishnu, Scott?>add"renda, @*$##, Management Foun%ations& ) Pacific "im Focus 3r% e%ition,Mc9raw?Bill, Sydney.

Bill >inda& #ecoming a Manager, Master of a Ne /%entit& Barvard "usinessSchool.

)ones, 9areth 1. and 9eorge, )enni'er, M., @*$$;, *ssentials of (ontem'orarManagement 2 n% *%ition, gs., **?*+, Mc9raw Bill, Sydney

FatC, 1obert >. @#=%6, PS-ills o' an (''ective Administrator.P $arvar% #usiness"evie . "oston: Sep?8ct, Vol. 7*, o. 7K p. =$

'e''er, )e''rey& @#==6, (om'etitive )%vantage through Peo'le& Barvard"usiness School ress.

'e'er, )e''rey& @#==


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Capter

Management

Part 2

History ofManagement


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Te E2olution of Mana0ement Teories

#.$. A brie' history o' management

(ach day, managers are as-ed to solve challenging problems and are given onlya limited amount o' time, people or resources. Get itOs still their responsibility toget things done on time and within budget. Tell todayOs managers to Orewardwor-ers 'or improved production or per'ormanceO, Oset speci'ic goals to increasemotivationO, or Oinnovate to create and sustain a competitive advantageO, andtheyOll respond, O8' course ho doesnOt -now that5O

A mere #*7 years ago, however, business ideas and practices were so di''erent

that todayOs widely accepted management ideas would have been as Osel'?

evidentO as space travel, cell phones and the 0nternet. 0n 'act, #*7 years ago,

management wasnOt yet a 'ield o' study and there were no management jobs and

no management careers. So, i' there were no managers #*7 years ago, but youcanOt wal- down the hall today without bumping into one, where did management

come 'rom5

#.#. Management ideas and practice throughout history

The Din dynasty in /hina developed a nationwide bureaucracy with publice2amnations open to all and nine levels o' public service. Be divided his empireinto +; provinces. (ach province was divided into districts. Be put twogovernment o''icials in charge o' each province. 0t was their job to put strongpeople in charge o' each district. or-ers were well trained and paid. Theyreported to supervisors. eople at each level supervised those below them. Beintroduced one system o' weights, measures, money, written language, and laws.obody argued with him. Be introduced a new law code that applied toeverybody. Be created a huge law en'orcement group, whose job was to en'orcethe laws.

Be built roads, canals, and bridges. Bis public wor-s projects probably savedmillions o' lives that would have been lost to 'loods and 'amine. Bis greatestachievement the 9reat all, to protect /hina 'rom the nomadic Buns who raped,pillaged and burnt cities around /hina. The wall was +7,$$$ -m long a length that

would ta-e it twice around the earth.

Sumerian priests developed a 'ormal system o' writing @scripts that allowed them

to record and -eep trac- o' the goods, 'loc-s and herds o' animals, coins, land

and buildings that were contributed to their temples. &urthermore, to encourage

honesty in such dealings, the Sumerians instituted managerial controls that

re4uired all priests to submit written accounts o' the transactions, donations and

payments they handled to the chie' priest. )ust li-e clay or stone tablets and

animal?s-in documents, these scripts were 'irst used to manage the business o'

Sumerian temples.


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Case %tudy $he Pyramids o. 9i=a to the %ydney )pera Douse

(2amples o' management thought and practice can be 'ound throughout history.&or e2ample, the (gyptians recognised the need 'or planning, organising and

controllingK 'or submitting written re4uestsK and 'or consulting sta'' 'or advicebe'ore ma-ing decisions. The practical problems they encountered while buildingthe great pyramids no doubt led to the development o' these management ideas.

The enormity o' the tas- they 'aced is evident in the pyramid o' Fing /heops,

which contains *.+ million bloc-s o' stone. (ach bloc- had to be 4uarried, cut to

the precise siCe and shape, cured @hardened in the sun, transported by boat 'or

two to three days, moved onto the construction site, numbered to identi'y where it

would be placed and then shaped and smoothed so that it would 'it per'ectly into

place. 0t too- *$$$$ wor-ers *+ years to complete this pyramidK more than tdappro2imately 7.7m. Stage 00: roo' shells M.1. Bornibroo- @S ty >tdappro2imately #*.7m. Stage 000: completion The Bornibroo- 9roup 7;.7m.

Separate contracts: stage e4uipment, stage lighting and organ =.$m. &ees andother costs #;.7m.

http://en.wikipedia.org/wiki/Expressionist_architecturehttp://en.wikipedia.org/wiki/Thin-shell_structurehttp://en.wikipedia.org/wiki/Spherehttp://en.wikipedia.org/wiki/Bilfinger_Bergerhttp://en.wikipedia.org/wiki/Expressionist_architecturehttp://en.wikipedia.org/wiki/Thin-shell_structurehttp://en.wikipedia.org/wiki/Spherehttp://en.wikipedia.org/wiki/Bilfinger_Berger


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The original cost estimate in #=7% was +,7$$,$$$ @% million. The originalcompletion date set by the government was *; )anuary #=;+ Thus, the projectwas completed ten years late and over?budget by more than 'ourteen times.

Acti*ity 141ead: The yramids o' 9iCa to t

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Business Management Student Manual V5_1.0_FINAL