Survey of Principles of Management

Chapter 1 and 2 Reporter: Carlo Acosta

MBA Candidate

Chapter 1An Overview: Managers and

Managing

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What is Management?

The planning, organizing, leading, and controlling of human and other resources to achieve organizational goals efficiently and effectively.

Being fundamentally anchored on the idea of the need to do planning, organizing, staffing, directing, evaluating business activites for the success of the organization, that is, not only for profit but meeting its vision and mission.

Operation Management are activities that relate to the creation of goods and services through the transformation of inputs to outputs.

MANAGEMENT

Material Resources

Human Resources

Financial Resources

Informational Resources

Organizational Goals

MANAGEMENT

Material Resources

Human Resources

Financial Resources

What is a manager’s goal?

Photo credit: http://www.wearetheliving.com/are-you-a-maker-or-a-manager

What is a manager’s goal?

What are The Essential Managerial Tasks?

Planning

Organizing

Leading

Controlling

 

What are the Levels and Skills of Managers?Mintzberg’s Typology

Type of Role Specific Role Examples of Role Activities Decisional Entrepreneur Commit organizational resources to develop innovative goods and

services; decide to expand internationally to obtain new customers for the organization’s products.

Disturbance handler Move quickly to take corrective action to deal with unexpected problems facing the organization from the external environment, such as a crisis like an oil spill, or from the internal environment, such as producing faulty goods or services.

Resource allocator Allocate organizational resources among different tasks and departments of the organization; set budgets and salaries of middle and first-level managers

Negotiator Work with suppliers, distributors, and labor unions to reach agreements about the quality and price of input, technical, and human resources; work with other organizations to establish agreements to pool resources to work on joint projects.

Interpersonal Figurehead Outline future organizational goals to employees at company meetings; open a new corporate headquarters building; state the organization’s ethical guidelines and the principles of behavior employees are to follow in their dealings with customers and suppliers.

Leader Provide an example for employees to follow; give direct commands and orders to subordinates; make decisions concerning the use of human and technical resources; mobilize employee support for specific organizational goals.

Liaison oordinate the work of managers in different departments; establish alliances between different organizations to share resources to produce new goods and services.

Informational Monitor

Disseminator

Spokesperson

Type of Role Specific Role Decisional Entrepreneur

Disturbance handler

Resource allocator

Negotiator

Interpersonal Figurehead

Leader

Liaison oordinate the work of managers in different departments; establish alliances between different organizations to share resources to produce new goods and services.

Informational Monitor Evaluate the performance of managers in different tasks and take corrective action to improve their performance; watch for changes occurring in the external and internal environments that may affect the organization in the future.

Disseminator

Inform employees about changes taking place in the external and internal environments that will affect them and the organization; communicate to employees the organization’s vision and purpose.

Spokesperson

Launch a national advertising campaign to promote new goods and services; give a speech to inform the local community about the organization’s future intentions.

 

What are the Levels and Skills of Managers?

First Line Managers

Middle Managers

TOP MANAGERSCEO and

The Executive

Team

Division Manager

Specific Functional

Group

Specific Functional

Group

Specific Functional

Group

Department Head

Specific Functional

Group

What are the Levels and Skills of Managers?

Management Skills

Analytic

Interpersonal

Communication

Conceptual

Technical

Core Competencies

What are the Levels and Skills of Managers?

Recent Changes in Management Practices

Restructuring

Downsizing an organization by eliminating the jobs of large numbers of top, middle, and first-line managers and nonmanagerial employees.

Outsourcing

Contracting with another company, usually abroad, to have it perform an activity the organization previously performed itself.

Empowerement

It is a management technique that involves giving employees more authority and responsibility over how they perform their work activities.

Challenges for Management in a Global Environment

Building Competitive Advantage

Competitive

AdvantageEfficienc

y

Innovation

QualityCustome

r relations

Strategic Alliance

Maintaining Ethical and Socially Responsible Standards

 Managers at all levels, especially after the recent economic crisis, are under considerable pressure to make the best use of resources to increase the level at which their organizations perform. For example, top managers feel pressure from shareholders to increase the performance of the entire organization to boost its stock price, improve profits, or raise dividends. In turn, top managers may pressure middle managers to find new ways to use organizational resources to increase efficiency or quality and thus attract new customers and earn more revenues—and then middle managers hit on their department’s supervisors. Pressure to increase performance can be healthy for an organization because it leads managers to question how the organization is working, and it encourages them to find new and better ways to plan, organize, lead, and control. However, too much pressure to perform can be harmful. It may induce managers to behave unethically, and even illegally, when dealing with people and groups inside and outside the organization.

Major challenge for managers everywhere is to recognize the ethical need and legal requirement to treat human resources fairly and equitably. Today the age, gender, race, ethnicity, religion, sexual preference, and socioeconomic composition of the workforce presents new challenges for managers. To create a highly trained and motivated workforce, as well as to avoid lawsuits, managers must establish human resource management (HRM) procedures and practices that are legal and fair and do not discriminate against any organizational members. Today most organizations understand that to motivate effectively and take advantage of the talents of a diverse workforce, they must make promotion opportunities available to each and every employee. Managers must recognize the performance-enhancing possibilities of a diverse workforce, such as the ability to take advantage of the skills and experiences of different kinds of people.

Managing a Diverse Workforce

Chapter References:

 

Pride W.M., et al. (2015). Foundation of Business, Eighth Edition. Cengage Learning 200 First Stamford Place, 4th Floor Stamford, CT 06902

Jones G.R. and George J.M. (2016). Contemporary Management Ninth Edition, McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121.

Noe R.A., Hollenbeck J.R., ET AL (2012). Human Resource Management: Gaining Competitive Advantage Eighth Edition, McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121.

Baye M.R and Prince J.T. (2014). Managerial Economics and Business Strategy Eighth Edition. McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121.

Orcullo N.A. (2013). Fundamentals of Strategic Management, Rex Book Store, C.M. Recti Avenue Manila, Philippines.

Stevenson J.S. (2012). Operations Management Eleventh Edition. McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121.

The History and Evolution of Management Thought

Organizational Environment Theory

Management Science Theory

Behavioral Management Theory

Administrative Management Theory

Scientific Management Theory

1890

1900

1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

2010

job specialization — Adam Smith found that the performance of the factories (England in 1700s) in which workers specialized in only one or a few tasks was much greater than the performance of the factory in which each worker performed all 18 pin-making tasks. In fact, Smith found that 10 workers specializing in a particular task could make 48,000 pins a day, whereas those workers who performed all the tasks could make only a few thousand the process by which a division of labor occurs as different workers specialize in tasks— improves efficiency and leads to higher organizational performance.

Job Specialization and the Division of Labor

Scientific Management Theory

The systematic study of relationships between people and tasks for the purpose of redesigning the work process to increase efficiency

Principle 1: Study the way workers perform their tasks, gather all the informal job knowledge that workers possess, and experiment with ways of improving how tasks are performed.

Principle 2: Codify the new methods of performing tasks into written rules and standard operating procedures.

Principle 3: Carefully select workers who possess skills and abilities that match the needs of the task, and train them to perform the task according to the established rules and procedures.

Principle 4: Establish a fair or acceptable level of performance for a task, and then develop a pay system that rewards performance above the acceptable level.

The Gilbreths

Two prominent followers of Taylor were Frank Gilbreth (1868–1924) and Lillian Gilbreth (1878–1972), who refined Taylor’s analysis of work movements and made many contributions to time-and-motion study. Their aims were to

1. Analyze every individual action necessary to perform a particular task and break it into each of its component actions,

2.  find better ways to perform each component action, and

3. reorganize each of the component actions so that the action as a whole could be performed more efficiently—at less cost in time and effort.

Self-

ActualizationSelf-Esteem

Social

Safety

Physiological

Abraham Harold Maslow’s Hierarchy of needs

Administrative Management Theory

The study of how to create an organizational structure and control system that leads to high efficiency and effectiveness.

Administrative management , the study of how to create an organizational structure and control system that leads to high efficiency and effectiveness. Organizational structure is the system of task and authority relationships that controls how employees use resources to achieve the organization’s goals. Two of the most influential early views regarding the creation of efficient systems of organizational administration were developed in Europe: Max Weber, a German sociology professor, developed one theory; and Henri Fayol, the French manager who developed the model of management introduced in Chapter 1, developed the other.

The Theory of Bureaucracy

Max Weber (1864–1920) wrote at the turn of the 20th century, when Germany was undergoing its industrial revolution. To help Germany manage its growing industrial enterprises while it was striving to become a world power, Weber developed the principles of

Bureaucracy is a formal system of organization and administration designed to ensure efficiency and effectiveness.

Authority The power to hold people accountable for their actions and to make decisions concerning the use of organizational resources.

Bureaucracy

Principle 1: Formal

authority derives from

one’s position inside the

organization.

Principle 2: Individuals

occupy positions

because of their

performance.

Principle 3: Each

individual’s authority and responsibilities are specified

by the organization.

Principle 4: Authority is exercised effectively

when positions are

arranged hierarchically.

Principle 5: Rules of the organization are followed and control individual behavior.

Fayol’s Principles of Management Henri Fayol (1841–1925) was the CEO of Comambault Mining. Working at the same time as Weber, but independently, Fayol identified 14 principles (summarized in Table 2.1 ) that he believed essential to increase the efficiency of the management process. 30 We discuss these principles in detail here because, although they were developed at the turn of the 20th century, they remain the bedrock on which much of recent management theory and research is based. In fact, as the “Management Insight” feature following this discussion suggests, modern writers such as well-known management guru Jim Collins continue to extol these principles.

Division of laborAuthority and responsibility Unity of command

Line of authority Centralization

Unity of direction EquityOrder

InitiativeDiscipline.

Remuneration of personnel Stability of tenure of personnel

Subordination of individual interests to the common interest Esprit de corps

Table 2.1 Fayol’s 14 Principles of Management

Behavioral Management Theory

The study of how managers should behave to motivate employees and encourage them to perform at high levels and be committed to the achievement of organizational goals.

Mary Parker Follett She pointed out that management often overlooks the multitude of ways in which employees can contribute to the organization when managers allow them to participate and exercise initiative in their everyday work lives

Follett proposed that “authority should go with knowledge . . . whether it is up the line or down.” In other words, if workers have the relevant knowledge, then workers, rather than managers, should be in control of the work process itself, and managers should behave as coaches and facilitators—not as monitors and supervisors. In making this statement, Follett anticipated the current interest in self-managed teams and empowerment. She also recognized the importance of having managers in different departments communicate directly with each other to speed decision making. She advocated what she called “cross-functioning”: members of different departments working together in cross-departmental teams to accomplish projects—an approach that is increasingly used today. 41

Hawthorne effect - The finding that a manager’s behavior or leadership approach can affect workers’ level of performance.

Human Relations Movement

A management approach that advocates the idea that supervisors should receive behavioral training to manage subordinates in ways that elicit their cooperation and increase their productivity

The Hawthorne Studies and Human Relations

Theory X, Y and Z

Theory X, Y, Z

Assumption:Employees need

heavy supervision. Micromanagement.

Assumption:Employees have potential to be

engaged in work. Empowered Employees.

Assumption: The organization is a family. Encourages participation and

Cooperation. Employees are well

informed and organizational values

are known.

• Quantitative management uses mathematical techniques—such as linear and nonlinear programming, modeling, simulation, queuing theory, and chaos theory—to help managers decide, for example, how much inventory to hold at different times of the year, where to locate a new factory, and how best to invest an organization’s financial capital. IT offers managers new and improved ways of handling information so they can make more accurate assessments of the situation and better decisions.

• Operations management gives managers a set of techniques they can use to analyze any aspect of an organization’s production system to increase efficiency. IT, through the Internet and through growing B2B networks, is transforming how managers acquire inputs and dispose of finished products.

• Total quality management (TQM) focuses on analyzing an organization’s input, conversion, and output activities to increase product quality. Once again, through sophisticated software packages and computer-controlled production, IT is changing how managers and employees think about the work process and ways of improving it.

• Management information systems (MIS) give managers information about events occurring inside the organization as well as in its external environment—information that is vital for effective decision making. IT gives managers access to more and better information and allows

Management Science Theory

Organizational Environment Theory

An important milestone in the history of management thought occurred when researchers went beyond the study of how managers can influence behavior within organizations to consider how managers control the organization’s relationship with its external environment, or organizational environment —the set of forces and conditions that operate beyond an organization’s boundaries but affect a manager’s ability to acquire and utilize resources.

Organic structure

An organizational structure in which authority is decentralized to middle and first-line managers and tasks and roles are left ambiguous to encourage employees to cooperate and respond quickly to the unexpected.

Mechanistic structure

An organizational structure in which authority is centralized, tasks and rules are clearly specified, and employees are closely supervised.

Open-System Organization

• Goods and Services.

• Sales

• Machines• Information Systems

• Technical Skills

• Raw materials• Money and capital• Human resources

Input: Organization obtains

inputs from its

environment.

Conversion: Organizatio

n transforms inputs and adds value to them.Output:

Organization releases outputs to

its environmen

t

Sold Goods and

Services allow the

organization obtain new

supplies.

Contingency Theory

Characteristics of the environment

Determine the design of an organization’s

structure and control systems.

Organizations in stable environments choose a mechanistic structure (centralized authority, vertical communication flows, control through

strict rules and procedures).

Organizations in changing environments choose an

organic structure (decentralized authority, horizontal communication flows, cross-departmental

cooperation).

Chapter References:

Pride W.M., et al. (2015). Foundation of Business, Eighth Edition. Cengage Learning 200 First Stamford Place, 4th Floor Stamford, CT 06902

Jones G.R. and George J.M. (2016). Contemporary Management Ninth Edition, McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121.

Baye M.R and Prince J.T. (2014), Managerial Economics and Business Strategy Eighth Edition. McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121.

Helms M. (2006). Encyclopaedia of Management, 5th ed. Thomson Gale 27500 Drake Rd. Farmington Hills, MI 48331-3535