Chapter 17 People, Organizations, and Management Systems

Chapter 17Chapter 17

People, Organizations, and Management Systems

People, Organizations, and Management Systems

IntroductionIntroduction

• People and their organizations are critical to the successful function of the modern business

• The management system provides an intellectual framework not only for management actions, but also for employee actions

• IT organizations are in transition as self-sufficiency gives way to managed IT dependency

• People and their organizations are critical to the successful function of the modern business

• The management system provides an intellectual framework not only for management actions, but also for employee actions

• IT organizations are in transition as self-sufficiency gives way to managed IT dependency

Technology is Reshaping Organizations

Technology is Reshaping Organizations

• Today’s IT is the union of information systems with rapidly advancing telecommunication technology– Business executives have an enormous

capability to expand their operations, form alliances and joint ventures, and restructure their assets for greater effectiveness

– Organizations are using telecommunications to reduce the barriers of time and distance, and establish vital new relationships with suppliers and customers

• Today’s IT is the union of information systems with rapidly advancing telecommunication technology– Business executives have an enormous

capability to expand their operations, form alliances and joint ventures, and restructure their assets for greater effectiveness

– Organizations are using telecommunications to reduce the barriers of time and distance, and establish vital new relationships with suppliers and customers

Important Technology Trends

Important Technology Trends

• Bandwidth is growing nearly four times more rapidly than computing capacity– Driving down costs and making

bandwidth more cost-effective than computing

– Low-cost bandwidth favors a shift toward remote computing with more centralized network services

• Bandwidth is growing nearly four times more rapidly than computing capacity– Driving down costs and making

bandwidth more cost-effective than computing

– Low-cost bandwidth favors a shift toward remote computing with more centralized network services

Large-Scale Organizational Transitions

Large-Scale Organizational Transitions

• As firms grow larger, they tend to decentralize operational control, placing decision-making capability closer to operational centers– For many firms, growth via acquisition is

accompanied by the decentralization of profit centers

– Decentralized operations with limited centralized control offers flexibility with IT / telecommunications providing near real time centralized monitoring and reporting

• As firms grow larger, they tend to decentralize operational control, placing decision-making capability closer to operational centers– For many firms, growth via acquisition is

accompanied by the decentralization of profit centers

– Decentralized operations with limited centralized control offers flexibility with IT / telecommunications providing near real time centralized monitoring and reporting

The Span of Communication

The Span of Communication

• Intranets greatly increase the span of communication and remove the need for some intermediate layers of management– Organizational structures will have fewer

levels of management– Narrow span of control is being replaced by

broader span of communications– IT organizations must also form partnerships

and develop alliances

• Intranets greatly increase the span of communication and remove the need for some intermediate layers of management– Organizational structures will have fewer

levels of management– Narrow span of control is being replaced by

broader span of communications– IT organizations must also form partnerships

and develop alliances

People are the Enabling Resource

People are the Enabling Resource

• Human resources are the most important assets contributing to business success– The ability to recruit, train, and retain

talented individuals may limit the performance of some organizations

– Organizational performance usually relates directly to individual performance

• Significant contributions that materially improve an organization’s performance have oftentimes been made by a small number of individuals

• Human resources are the most important assets contributing to business success– The ability to recruit, train, and retain

talented individuals may limit the performance of some organizations

– Organizational performance usually relates directly to individual performance

• Significant contributions that materially improve an organization’s performance have oftentimes been made by a small number of individuals

People and Information Technology

People and Information Technology

• Introduction of complex and rapidly evolving technology is limited by the scarcity of skilled employees and experienced managers

• IT managers and their superiors must plan to cope with skill shortages

• Organizations that fail to manage their present staff stand little chance of obtaining and retaining outstanding individuals

• Introduction of complex and rapidly evolving technology is limited by the scarcity of skilled employees and experienced managers

• IT managers and their superiors must plan to cope with skill shortages

• Organizations that fail to manage their present staff stand little chance of obtaining and retaining outstanding individuals

Essential People-Management SkillsEssential People-

Management Skills• Employing skilled people, managing

them with sensitivity, and providing effective leadership are necessary conditions for success

• Skillful managers believe that most employees prefer to engage in meaningful, self-satisfying work that offers them a chance for self-development

• Employing skilled people, managing them with sensitivity, and providing effective leadership are necessary conditions for success

• Skillful managers believe that most employees prefer to engage in meaningful, self-satisfying work that offers them a chance for self-development

Effective People Management

Effective People Management

• Respect for individual dignity is the basis of effective people management

• Effective people managers strive to understand each individual’s preferences and motivations– Talented professionals expect to be treated

as special individuals and good managers meet this expectation

• Respect for individual dignity is the basis of effective people management

• Effective people managers strive to understand each individual’s preferences and motivations– Talented professionals expect to be treated

as special individuals and good managers meet this expectation

Attitudes and Beliefs of Good People Managers


• Good people managers believe that employees are honest and industrious and act with the firm’s best interests in mind– Believe employees are intelligent and willing to

learn– That they desire self-fulfillment

• Effective managers establish environments of high but reasonable expectations for their employees

• Management equals leadership

• Good people managers believe that employees are honest and industrious and act with the firm’s best interests in mind– Believe employees are intelligent and willing to

learn– That they desire self-fulfillment

• Effective managers establish environments of high but reasonable expectations for their employees

• Management equals leadership



• Assume responsibility to remove or reduce barriers to accomplishment

• Expect employees to be thoughtful about their work, but they also expect action

• Expect employees to solve problems for the firm, but they also expect them to prevent problems from occurring

• Establish an environment of high productivity and good morale

• Assume responsibility to remove or reduce barriers to accomplishment

• Expect employees to be thoughtful about their work, but they also expect action

• Expect employees to solve problems for the firm, but they also expect them to prevent problems from occurring

• Establish an environment of high productivity and good morale

Achieving High MoraleAchieving High Morale

• Employee morale and opinions of their manager’s performance strongly correlate with the level of trust and confidence employees have in their manager

• Managers whose behavior is reliable, based on predictable organizational norms, and consistent across similar situations inspire employee trust and confidence

• Employee morale and opinions of their manager’s performance strongly correlate with the level of trust and confidence employees have in their manager

• Managers whose behavior is reliable, based on predictable organizational norms, and consistent across similar situations inspire employee trust and confidence

Managerial Actions that Increase Employee Trust and

Confidence


Confidence1. Maintain two-way communication with

employees to understand their needs and desires and to share company information

2. Provide training and complete information so that employees can work effectively and efficiently

3. Inform employees of promotional and career advancement opportunities

4. Listen to employee suggestions for improving the work environment, and respond encouragingly to all suggestions

1. Maintain two-way communication with employees to understand their needs and desires and to share company information

2. Provide training and complete information so that employees can work effectively and efficiently

3. Inform employees of promotional and career advancement opportunities

4. Listen to employee suggestions for improving the work environment, and respond encouragingly to all suggestions


Confidence


Confidence5. Sponsor teamwork and cooperation among

department members6. Be available when employees seek consultation7. Understand the amount and quality of each

employee’s work8. Use the knowledge of each employee’s work to

grant fair salary increases and promotions9. Lead the department enthusiastically toward

achieving its goals and objectives

5. Sponsor teamwork and cooperation among department members

6. Be available when employees seek consultation7. Understand the amount and quality of each

employee’s work8. Use the knowledge of each employee’s work to

grant fair salary increases and promotions9. Lead the department enthusiastically toward

achieving its goals and objectives

Ethical and Legal Considerations

Ethical and Legal Considerations

• Rules or disciplines distinguishing what is good, bad, or morally obligatory are termed ethics– Well-managed organizations act to ensure

that managers and employees understand the basic beliefs and policies governing behavior within the organization and in external business relationships

• Managers must understand the firm’s code of conduct and must present it to employees unambiguously

• Rules or disciplines distinguishing what is good, bad, or morally obligatory are termed ethics– Well-managed organizations act to ensure

that managers and employees understand the basic beliefs and policies governing behavior within the organization and in external business relationships

• Managers must understand the firm’s code of conduct and must present it to employees unambiguously

Ethics Guide for ManagersEthics Guide for Managers

1. Develop a statement of ethical principles for the firm2. Establish employee and manager rules of conduct3. State and enforce penalties for rule violations4. Emphasize ethics as a critical factor in the firm5. Inform employees about applicable laws and regulations6. Recognize ethical behavior in performance evaluations7. Maintain business controls, thus removing temptation8. Support a confidential forum for answering and

addressing ethical questions9. Lead by outstanding example

1. Develop a statement of ethical principles for the firm2. Establish employee and manager rules of conduct3. State and enforce penalties for rule violations4. Emphasize ethics as a critical factor in the firm5. Inform employees about applicable laws and regulations6. Recognize ethical behavior in performance evaluations7. Maintain business controls, thus removing temptation8. Support a confidential forum for answering and

addressing ethical questions9. Lead by outstanding example

The Collection of Management Processes

The Collection of Management Processes

• Operating the IT management system effectively is a critical success factor for IT managers– Management systems contain tools,

techniques, and processes that furnish a framework for guiding both employee and manager actions

– IT managers must have systems guiding them toward critical goals for themselves, their organization, and their firm

• Operating the IT management system effectively is a critical success factor for IT managers– Management systems contain tools,

techniques, and processes that furnish a framework for guiding both employee and manager actions

– IT managers must have systems guiding them toward critical goals for themselves, their organization, and their firm

Strategizing and PlanningStrategizing and Planning

• Building IT strategies and developing long- and short-range plans to implement IT’s strategic direction are critical steps for IT managers– These link the IT organization to the firm’s

management system and align IT’s strategic direction with the firm’s business direction

– The firm’s business strategy and IT strategy are linked through shared goals, objectives, and processes

• Building IT strategies and developing long- and short-range plans to implement IT’s strategic direction are critical steps for IT managers– These link the IT organization to the firm’s

management system and align IT’s strategic direction with the firm’s business direction

– The firm’s business strategy and IT strategy are linked through shared goals, objectives, and processes

IT Planning and ControlIT Planning and Control

Portfolio Asset ManagementPortfolio Asset Management

• Firms spend significant portions of their IT budget maintaining and enhancing application programs and managing the data resources associated with these applications

• Portfolio management processes integrated with strategy and plan development activities generate the information IT managers need for application and data resource planning

• Firms spend significant portions of their IT budget maintaining and enhancing application programs and managing the data resources associated with these applications

• Portfolio management processes integrated with strategy and plan development activities generate the information IT managers need for application and data resource planning

Application ManagementApplication Management


• Application asset managers must consider– Alternative acquisition methods

• Alliances• Joint Ventures• Purchased application packages

– Alternative strategies• Web hosting• Building or leasing e-business systems• Outsourcing application development and

operation• Use of computer utilities or e-sourcing

• Application asset managers must consider– Alternative acquisition methods

• Alliances• Joint Ventures• Purchased application packages

– Alternative strategies• Web hosting• Building or leasing e-business systems• Outsourcing application development and

operation• Use of computer utilities or e-sourcing


• New technology plays an important role in many of the activities– It is important in the development of

business and IT strategies and must be reflected in strategic and tactical plans

– Plans must incorporate new hardware or software and include e-business or other new technology applications

• New technology plays an important role in many of the activities– It is important in the development of

business and IT strategies and must be reflected in strategic and tactical plans

– Plans must incorporate new hardware or software and include e-business or other new technology applications

E-Business and Network Operation Disciplines

E-Business and Network Operation Disciplines

• Service-level agreements, batch operations, and online operations link production operations departments to IT customers– Service-level agreements between service

users and service providers develop and document customer expectations

– Customer service requirements described in SLAs drive the performance of batch or online processes

• Service-level agreements, batch operations, and online operations link production operations departments to IT customers– Service-level agreements between service

users and service providers develop and document customer expectations

– Customer service requirements described in SLAs drive the performance of batch or online processes

Production Operations – Customer Performance

System

Production Operations – Customer Performance

System

Production Operations – Internal Systems

Management

Production Operations – Internal Systems

Management

Network ManagementNetwork Management

• Advances in technologies for processing, transmitting, and storing data have led to systems that handle voice, data, and image information interchangeably– Consolidation of hardware and software to

process all information types is followed by the consolidation of supporting organizations

– Firms that have merged their IT and telecommunication departments also consolidated these departments’ individual management systems

• Advances in technologies for processing, transmitting, and storing data have led to systems that handle voice, data, and image information interchangeably– Consolidation of hardware and software to

process all information types is followed by the consolidation of supporting organizations

– Firms that have merged their IT and telecommunication departments also consolidated these departments’ individual management systems

Configuration Management System

Configuration Management System

Financial and Business Controls


• IT managers must control the financial and business aspects of their operations through appropriate systems and business controls– Monitoring and maintaining financial

control begins with tactical planning and budgeting

• IT managers must control the financial and business aspects of their operations through appropriate systems and business controls– Monitoring and maintaining financial

control begins with tactical planning and budgeting



• IT managers must review and compare actual expenditures with planned expenditures and resolve variances– If IT operates cost centers, the financial plan

will contain planned cost-center support and expenses

– If IT operates a profit center, both revenue and expenses must be analyzed for discrepancies

• IT managers must review and compare actual expenditures with planned expenditures and resolve variances– If IT operates cost centers, the financial plan

will contain planned cost-center support and expenses

– If IT operates a profit center, both revenue and expenses must be analyzed for discrepancies

Business ManagementBusiness Management

• Sound management systems are essential as they provide frameworks for accomplishing the firm’s objectives– Properly functioning systems guide

managers and help them fulfill their responsibilities in a logical and organized manner

– Systems operate through people so good people relationships are needed to make systems effective

• Sound management systems are essential as they provide frameworks for accomplishing the firm’s objectives– Properly functioning systems guide

managers and help them fulfill their responsibilities in a logical and organized manner

– Systems operate through people so good people relationships are needed to make systems effective

Business ManagementBusiness Management

• IT managers foster improved interaction with clients, increase coupling between customers and suppliers, and provide input for improving service

• Effective IT executives maintain and improve communication between IT and the rest of the organization

• They understand the value of communication and strive to maintain close contact with their peers in the firm

• IT managers foster improved interaction with clients, increase coupling between customers and suppliers, and provide input for improving service

• Effective IT executives maintain and improve communication between IT and the rest of the organization

• They understand the value of communication and strive to maintain close contact with their peers in the firm

IT Service RepresentativesIT Service Representatives

1. Provide high-speed communication links between IT and other functions

2. Obtain information on new or changing client needs

3. Broaden communications between clients and IT

4. Answer user questions on IT procedures5. Facilitate problem resolution for clients6. Advise on client-developed programs

1. Provide high-speed communication links between IT and other functions

2. Obtain information on new or changing client needs

3. Broaden communications between clients and IT

4. Answer user questions on IT procedures5. Facilitate problem resolution for clients6. Advise on client-developed programs

Management Processes for E-Business


• As e-commerce develops and involves more participants, the intensity of the management processes increases– Functional managers and IT managers

interact more often and more closely with people outside the firm

– The responsibility for customer relations now becomes more diffuse

– Well-designed and excellent-functioning systems can help firms earn trust and loyalty and result in repeat e-business

• As e-commerce develops and involves more participants, the intensity of the management processes increases– Functional managers and IT managers

interact more often and more closely with people outside the firm

– The responsibility for customer relations now becomes more diffuse

– Well-designed and excellent-functioning systems can help firms earn trust and loyalty and result in repeat e-business



• When firms outsource, IT managers accept the additional responsibility of representing their firm and its users to IT service suppliers– IT managers must negotiate service

agreements, reconcile costs and expenses, support-level agreements as well as monitor service to ensure compliance with contracts

– Outsourcing activities raise the level of management intensity for the IT organization

• When firms outsource, IT managers accept the additional responsibility of representing their firm and its users to IT service suppliers– IT managers must negotiate service

agreements, reconcile costs and expenses, support-level agreements as well as monitor service to ensure compliance with contracts

– Outsourcing activities raise the level of management intensity for the IT organization

SummarySummary

• Today’s business environment is undergoing rapid and fundamental changes and becoming increasingly complex– Information and telecommunications

systems are a major factor driving these changes

– Restructuring enables firms to reduce costs, improve their value chains, and compete globally, but can present both problems and opportunities

• Today’s business environment is undergoing rapid and fundamental changes and becoming increasingly complex– Information and telecommunications

systems are a major factor driving these changes

– Restructuring enables firms to reduce costs, improve their value chains, and compete globally, but can present both problems and opportunities

SummarySummary• Organizations must always conduct their

operations responsibly and ethically– A firm must have a document stating its

business conduct and ethics guidelines and must adhere to its principles without exception

– Firms without written policies governing conduct and ethics, or those who claim their policies are unwritten, are shirking their corporate responsibilities

– Firms must establish that ethics are important and that unethical behavior will not be tolerated

• Organizations must always conduct their operations responsibly and ethically– A firm must have a document stating its

business conduct and ethics guidelines and must adhere to its principles without exception

– Firms without written policies governing conduct and ethics, or those who claim their policies are unwritten, are shirking their corporate responsibilities

– Firms must establish that ethics are important and that unethical behavior will not be tolerated

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Chapter 17 People, Organizations, and Management Systems