Management Perspective 1

MANAGEMENT PERSPECTIVE Process August 2008, N L Dalmia Full Time- 1st. Sem 1

Definition • Accomplishment of objectives through the efforts of people performing certain functions. • Analyze definition (1) Accomplishment of results thru the efforts of other people. (2)Art of getting things done – organized groups. (3) Mgmt is a process of Planning, Organizing, Actuating and Controlling to determine and accomplish the objectives. 2

Management as a process • Series of interrelated functions- Planning, organizing, staffing, leading, & controlling. • Social process – provides an environment, provides incentives for good performance. • Management as a discipline – specialized branch of knowledge. • Management as an activity performed by managers; planning, organizing, staffing, directing & controlling. 3

Scope of Management • Three distinct areas.(1) Economic resource, (2) System of Authority, (3) A class or elite. • Economic resource along with land, labor and capital. Effective use of the 5 M’s (Manpower, materials, money, machinery, methods) • System of Authority- Herbison & Myers declares Mgmt is rule enforcing body bound together by relationships between superior & subordinates • Mgmt as a class or elite – a distinct class in society having own value system 4

Functions of Management • Five functions: 1. Planning 2. Organizing 3. Staffing. 4. Leading 5. Controlling. • Management applies to any kind of organizations. • Applies to managers at all levels • Aim of all managers is to create surplus • Management is concerned with productivity, effectiveness & efficiency 5

Functions of Management • Managers must operate in external environment that effect operation. • Must be responsive to economic, social, ecological, political & ethical factors. • Time spent for each function may differ.

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Why management principals? • 1. To increase efficiency: Principles aid thinking & action. Need for guess work, haphazard activities reduced. Rapid changes in the environment can be solved • To crystallize the nature of Management: Principals crystallize knowledge without which not possible to impart knowledge & provide training to managers. 7

Why management principals? • To improve research in management: Management deals with highly unpredictable human beings. Principals help in testing human behavior understanding & predicting the outcome. To attain social goals: Managers quality of life & standard of living can be improved Managers can commit resources & employ them in a judicious manner. 8

Skills of An Effective Manager • Must possess 5 skills as presented below • Planning skills: Ability to forecast, ability to think ahead, state organizational objectives clearly and precisely, set performance standards • Organizing skills: Ability to analyze & describe various organizational jobs. Ability to select, train, develop, maintain & retain people. Ability to define working relationship & authority flow. Ability to get along with changing situations 9

Skills of An Effective Manager • Leading skills: Ability to see big picture. Ability to communicate ideas effectively. Ability to inspire people to do better. Ability to inculcate a sense of team work. Ability to assess situation & initiate changes. • Controlling Skills: Ability to keep the activities on the desired path. Ability to initiate corrective steps at right time. Ability to ensure control without hurting the feelings of employees. 10

Skills of An Effective Manager • Decision making skills: Ability to make good and timely decisions. Ability to devote on key, important and strategic issues. Ability to make right choices & take the organization forward. Ability to commit funds to the best advantage.

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Levels of Management • In a large organization, 3 levels of management are usually identified Top, Middle Lower level management. • TOP MANAGEMENT : • Determines objectives and policies • Designs the basic operating & financial structure of an organization • Provides guidance and direction • Lays down standards of performance • Maintains good public relations. 12

Levels of Management • MIDDLE MANAGEMENT • Interprets and explains the policies framed by the top management • Issues detailed instructions • Participates in operating decisions • Trains other managers • LOWER MANAGEMENT • Plans day to day operations, arranges tools & eqipment • Assign jobs to workers, provides supervision • Maintain discipline 13

Who are effective Managers? • • • • • •

Have vision, think long term, set direction. Are good communicators & good listeners Understand operations Know where to spend time and prioritise Do not resist change Delegate well, accept responsibility & admit mistakes • Are motivating, curious, honest, credible & decisive 14

Emergence of Management Thought • Federick W Taylor – Father of scientific management. Increase productivity through greater efficiency in production. • Increased pay for workers – Apply scientific knowledge • Create group harmony and cooperation for maximizing output & developing workers. • Gantt: Scientific selection of workers. Cooperation between labor & management. 15

Emergence of Management Thought • Frank & Lilian: Time and motion studies. • Henri Fayol: Introduced modern operational theory. Divided industrial activities in 6 groups (A) Technical (B) Commercial (C) Financial (D) Security (E) Accounting & (F) Managerial • Elton Mayo: Famous for studies of social attitudes & relationship of work groups. 16

Fayol’s 14 Universal Principals • • • •

1. Division of work – specialization of labor 2. Authority – right to give orders. 3. Discipline- Obedience & respect 4. Unity of command- Each employee receives orders only from one supervisor. • 5. Unity of direction: Coordinated & focused • 6. Subordination of individual interest • 7. Remuneration: Should be paid fairly 17

Fayol’s 14 Universal Principals • 8. Centralization & Decentralization is a matter of proportion. • 9. Scaler chain: Formal chain of command • 10. Order: Men & material in proper places • 11. Equity: Fairness & justice lead to devoted & loyal service. • 12. Stability & tenure: to learn jobs • 13. Initiative: satisfaction to carry out plan. • 14. Esprit de corps: Team spirit for harmony. 18

Environment of Management • External environment- Operating in a pluralistic society • Technological environment: The knowledge age- rethinking to balance freedom & restriction for control purposes • Ecological Environment- relation of people with land, water air. Example: (a) Bhopal tragedy and Union Carbide. (b) The greening of Toshiba. 19

Organizational Environment • Intrapreneur & Entrepreneur • Intrapreneur- person who focuses on innovation & creativity within the organization for profitable venture. • Entrepreneur- person does above things but outside the organizational settings • They see an opportunity, obtain capital, know-how and other inputs. Take personal risk of success or failure. 20

Management- Science or Art • • • •

Arguments on both sides: start - science Systemized body of knowledge Management is a social science Management is an inexact science: not like physics or chemistry. No absolute principals as business conditions flexible • Manager Vs Scientist: Scientist can wait but managers cannot. 21

Management- Science or Art • Start : Art – Use of Knowledge • Creative art – Combines human & non human resources to achieve results. • Personalized: Every manager has his own way of managing people. Managers learn over years by trial & error method. • Constant practice: Learn from mistakes. Gains knowledge over a period of time 22

10 Managerial roles - Mintzberg Interpersonal Roles Figure head role Leader role Liaison role Informational role Recipient role Disseminator role Spokesperson role 23

10 Managerial roles - Mintzberg • • • • •

Decision role Entrepreneurial role Disturbance handler role Resource allocator role Negotiator role

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Environment in Management • Managers, in business, govt, university etc takes account of external environment. • In Pluralistic society many groups exercise power. Manager’s must integrate aims. • Manager’s identify, evaluate & react to the forces outside the enterprise • Society has influence on organizations which can affect their operations. 25

Manager’s Social Responsibility • Corporate Social Responsibility & Social Responsiveness • Public needs have changed. Discourages govt. intervention. More freedom/flexibility. • Benefits to society & neighborhood. • Reaction or proaction? • The role of government. 26

Ethics in Managing • Definition: Defined as the discipline dealing with what is good and bad and with moral duty and obligation. • Personal Ethics: Rules by which an individual lives own personal life • Accounting Ethics: Codes that guide the professional conduct of accountants. • Business Ethics: Concerned with truth and justice (for society, competition, public relation, advertising, corporate behavior etc.) in home country & abroad. 27

Ethics in Managing • Managers compete for information, influence & resources – 3 theories. • Utilitarian theory- plans & actions should be evaluated by their consequences, greatest good for greatest number of people. • Theory based on their rights – all people have basic rights - right to freedom, free speech etc. • Theory of Justice – Decision makers be guided by fairness, equity & impartiality • Ethics be institutionalized. 28

Institutionalizing Ethics • Top level managers responsible to create organizational environment fostering ethical decision by institutionalizing ethics • 1. By establishing company policy or code and publish the same • 2. By using formally appointed ethics committee • 3. Teaching ethics in Management Development Programs 29

Planning • Involves selecting missions and objectives & actions to achieve them • Requires decision making to choose future course of action from alternatives. • Various types of plans ranging from overall purposes to detailed action. • No plan exists until a decision – a commitment of human or material resources has been made 30

Planning • Practical steps in planning • 1. Being aware of opportunity in light of the a) Market b) Competition c) Customer’s want d) Strength & e) Weakness • 2. Setting objectives or goals a) where we want to be? b) What we want to accomplish and when? • 3. Considering planning premises a) In what environment? b) Internal or external. c) Will our plans operate? 31

Planning • 4. Identifying Alternatives – what are the most promising alternatives • 5. Comparing alternatives – in light of goals. Which alternatives give us the best chance at lowest cost and highest profit • 6. Choosing an alternative: Selecting the course of action to be pursued. • 7. Formulating supporting plans: such as plans to a) buying equipment b) buy materials c) Hire & train workers d) develop a new product. 32

Planning • 8. Numbering plans by making budgets Develop such budgets as: • 9. Volume & price of sales. • 10. Operating expenses • 11. Expenditures for capital equipment

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Planning • Strategy & Policy • The term “strategy” derived from the Greek word STRATEGOS meaning general. • Strategy refers to the determination of the purpose or mission & long term objectives. • Adopts courses of action and allocation of resources to achieve aims. • Objectives are a part of strategy formulation

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PLANNING • Policies • Are general statements guiding manager’s thinking in decision making. • Decisions must fall within certain limits. • Intend to guide managers commitment to the decision they ultimately make. • Essence of policy is discretion. Strategy, on the other hand concerns the direction in which human & material will be applied 35

Strategic Planning Process • Industry Analysis. • Formulation of strategy requires evaluation of attractiveness of an industry by analyzing the external environment. • Focus should be on the competition. • Possibility of new firms entering market. • Availability of substitute products/services. • Bargaining position of suppliers & buyers 36

Major Objective & Strategic Intent • Major objective • Are the end points towards which the activities of the enterprise are directed • Strategic Intent • It is the commitment to win in the competitive environment

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Present & Future External Environment • Above must be assessed in terms of threats and opportunities. • Evaluation focuses on the competitive situation, economic, social, political, legal, demographic & geographic factors. • Environment is scanned for technological developments for products & services. • For other factors, check competitive factors. 38

Internal Environment Internal environment should be audited & evaluated in respect to its resources. Weakness & strength in research & development, production, marketing, operations, procurement & services evaluated. Internal factors should include human & financial resources, company image, organization structure, planning & control system & relations with customers. 39

Development of Alternative Strategies • Strategic alternatives are developed on the basis of an analysis of the external & internal environment. • Firm may diversify operation into new & profitable markets. • Another strategy is to go international. • Under certain conditions, liquidation strategy by terminating unprofitable line. • Retrenchment strategy often an option. 40

Consistency Testing & Contingency Planning • This is the last aspect but essential • Even if alternative seems profitable, management may decide against it because it may hurt the value system. • Since future cannot be predicted, contingency plans need to be prepared. • Contingency plan may be made where the scenario includes major recession. 41

TOWS Matrix – A Modern Tool • TOWS matrix has been introduced for analyzing competitive situation of a company or nation. Updated version of BCG matrix – Boston Portfolio Matrix. • Has a wider scope but does not replace the earlier one. • TOWS- conceptual frame work for systematic analysis. • Matches external threats & opportunities with internal weaknesses and strengths. 42

TOWS Matrix • T- threats, O- opportunities, W- weakness, S- strengths. TOWS starts with threats. • Strategic planning takes place in conditions of threat, or perceived crisis or problem. • 4 alternate strategies – analysis of external & internal environment (TOWS).

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4 Alternative Strategies • WT strategy- lower right hand corneraims to minimize weakness & threats (mini-mini strategy) Form JV, retrench or liquidate. • WO strategy- minimize weakness & maximize opportunities. Develop areas within organization or acquire needed competencies. (Middle right hand, above WT) 44

4 Alternative Strategies • ST- strategy, Organization’s strength to deal with threats in the environment. Maximize strength minimize threat. (Left of WT-Middle column bottom) • Use technological, financial, managerial or marketing strength to cope with threats of a new product introduced by its competitor • Most desirable situation- can use strengths to take advantage of opportunities – SO strategy. Weakness have be overcome making them strengths. Facing threats will help them cope & focus on opportunities. Middle column middle. 45

TOWS Matrix- Time Dimension • External and internal environment are dynamic. Some factors change over time. • Strategy designer must prepare several TOWS matrixes at different points of time • May start TOWS analysis of the past, continue analysis of the present and most importantly focus on different time period in the future. 46

The Portfolio Matrix • Tool for allocating resources • Business Portfolio Matrix developed by Boston Consulting Group shows linkages between the growth rate of the business & the relative competitive position (market share) of the firm. • Question mark – need cash investment. • Star – opportunities for growth & profit- continue cash supply for more profits • Cash cows – provide cash to organization • Dogs – not profitable, can be disposed of. 47

Management By Objectives • MBO- a comprehensive system integrating key managerial activities in systematic manner. It is directed towards firms’ organizational achievements. • It should be goal driven, success oriented comprehensive management system. • Can be used for performance appraisals, motivating individuals & strategic planning. • Other sub systems include HR , planning, development, reward system, budgeting etc. 48

How To Set Objectives • Objectives to be measurable & verifiable • Non Verifiable & Verifiable Objectives Make reasonable profit- Achieve return on investment of 12% at end of fiscal year. • Improve productivity of Production DeptIncrease production output by 5% by Dec 31,08 without extra cost & current quality level. • Install a computer system- Install computerized control system in production dept by 31 Dec, 08 within 500 hours operating at less than 10% downtime during 1st 3 months & 2% thereafter. 49

Benefits Of MBO • Considerable evidences show motivation due to clear goals. • Improvement of managing through result oriented planning • Clarity on organizational jobs, structures & delegation of authority. • Encouragement of personal commitment to their own & organizational goals. • Development of effective controls, measuring results leading to corrective action. 50

Failure of MBO • Failure to teach the philosophy of MBO. Managers do not explain to subordinates. Give guidelines to goal setters. Managers must know corporate goals, know planning basics and knowledge of company policies Difficulty in setting verifiable goals. Participating in MBO programs. Excessive concern for economic results encourage unethical behaviour. Emphasis on short term goals at the expense of long term goals. Danger of flexibility make managers hesitate change objectives even if was good for the company. Overuse of quantitative goals- using numbers where they are not applicable. Downgrade important goal that are difficult to state result.

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Organizing • Good managers make any organization pattern work. Good people and those who want to cooperate will work together. • For an organizational role 3 things are needed. 1) Verifiable objectives – major part of planning. 2) Clear idea of major duties and 3) An understood area of discretion or authority so that the person filling the role knows what he or she can do to accomplish goals 52

Organizing • In addition, to make role work effectively, provision should be made for supplying needed information & performance. • Organizing is • 1. Identification & Classification of required activities. 2) The grouping of activities necessary to attain the objective. 3) Assignment of each grouping to a manager with the authority (delegation) necessary to supervise it & 4) Provision to have horizontal (same org level) & vertical (e.g. corporate head quarters, divisions & department) in the organizational structure. 53

Organization Structure • Organization structure should be designed to classify who is to do what tasks & who is responsible for what results – no confusion & uncertainty of assignment, & furnish decision making & communications networks reflecting enterprise objectives. • Organizational structure is formal framework by which tasks are divided, grouped & coordinated. • When Managers develop or change an organization structure, they are engaged in organization design needing 6 key elements. 54

Organizational Design • 6 key elements • 1.Work specialization 2.Departmentalization • 3. Chain of command 4.Span of control 5.Centralization & decentralization 6.Formalization. • Work Specialization • Essence of work specialization is that an entire job is broken down into steps & each step is completed by different person. • Entire job is never done by one person. 55

Organizational Design • Departmentalization : The basis by which jobs are grouped together is called departmentalization. Every organization has its own way of grouping/classifying. • 5 common forms of departmentalization • Functional dept: Groups by job function. • Product dept: group jobs by product line. Each major product area under one manager who is a specialist. 56

Organizational Design • Geographical Dept: Groups jobs on the basis of territory or regions or by countries. • Process Dept: Groups jobs on the basis of product or customer flow. Work activities follow a natural processing flow of products or customers. • Customer Dept: Group jobs on basis of customers having common needs or problems to be solved by specialists. 57

Organizational Design • Chain of Command: It is the continuous line of authority that extends from upper organizational levels to the lowest levels & clarifies who reports to whom. • Span of control: It indicates how many employees can a manager efficiently & effectively manage. To a large degree this determines the number of levels and managers an organization has. Every thing being equal, the wider the span, the more efficient the organization. 58

Organizational Design • Centralization & Decentralization: In some organizations, top managers make all decisions and lower level managers & employees carry out their directives. • In other extreme decision making is pushed down to the managers who are closest to action. Former – Centralized, Later – Decentralized. • If top managers make key decisions with no inputs from below, then the org is centralized. In contrast, if lower level employees make decisions, the more decentralization there is. 59

Organizational Design. • Formalization: Refers to the degree to which jobs within the org are standardized & the extent to which employee behavior are guided by rules and procedures. • When job highly formalized – minimum discretion. When formalization is low – job behavior is unstructured – more freedom • High degree of formalization needs explicit job description, rules & defined procedures • Varies widely between organizations e.g. Newspapers – high discretion. Compositors & type setters – highly standardized. 60

Common Organizational Design • Traditional Organizational Designs: • 1.Simple, 2.Divisional & 3. Functional structure – tend to be more mechanisticrigid & tightly controlled structure. High specialization , narrow span of control, rigid departmentalization, high formalization, limited info network (mostly downward communication), less participation in decision making by lower level employees. 61

Simple Structure • An organizational design with low departmentalization, wide spans of control, authority centralized & little formalization. • Most common in small businesses in which the owner & manager are the same. • Strengths: Fast, flexible, inexpensive, clear accountability. • Weakness: Not proper as org grows, reliance on one person risky.

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Functional Structure • It is an organizational design that groups similar or related occupational specialist together. It’s the functional approach to departmentalization. • Strengths: Cost saving from specialization (economies of scale, minimal duplication) • Weakness: Managers loose sight what’s best for the org because of pursuing functional goals. • Functional specialists become insulated & have little understanding what other units are doing. 63

Divisional Structure • It is an organizational structure made up of separate units or divisions. Each unit has limited autonomy with divisional manager responsible for performance. He has strategic & operational authority over his unit. • Here the parent unit acts as an external overseer to coordinate & control various divisions. Provides legal & financial support. • Strengths: Focuses on results. Divisional managers responsible for their products & services. • Weakness: Duplication of activities & resources increases costs & reduces efficiency. 64

Delegation of Authority • Authority is delegated when a superior gives a subordinate discretion to make decisions. Superiors cannot delegate authority they do not have. • Process of delegation involves 1. Determining the results expected from a position 2. Assigning tasks to the position 3. Delegating authority for accomplishing these tasks. 4. Holding the person in that position responsible for the accomplishment of the tasks. 65

Delegation of Authority • Splintered authority: Splintered authority exists wherever a problem cannot be solved without pooling the authority of two or more managers • Such problems could be handled by merely referring the decision upward until it reaches a person with the authority to make it unilaterally. 66

Delegation of Authority • Recovery of Delegated Authority: Manager who delegates authority does not permanently dispose of it – delegated authority can always be regained. • Reorganization inevitably involves some recovery & redelegation of authority • Rights are recovered by the responsible head of a firm & then redelegated to managers of new or modified departments 67

Delegation of Authority • Art of Delegation: Most failures in delegation occur not because managers have not understood it, but because they are unable or unwilling to apply them. • Much of the reason lies in personal attitudes towards delegation. • Receptiveness: The delegator is unwilling to give others a chance, feels unsafe when decision of junior differs with superiors. They cannot welcome new ideas or compliment them on their ingenuity 68

Delegation of Authority • Willingness to let go: The manager must effectively delegate authority & relinquish his right to make decisions. • Small business owners who have grown large wants to continue making decisions • Presidents & VP’s should spend quality time in doing more important work rather than engaging themselves to routine decision making work. 69

Delegation of Authority • Willingness- let others make mistakes No manager would like to see his juniors making mistakes. However, if continual checking is done, purpose of delegation is defeated. Since everybody makes mistakes, juniors be allowed to make mistakes & their cost must be considered as investment for personal development. • Repeated mistakes: Can be avoided by nullifying delegation or hindering the development of subordinates. Counseling, explaining objectives & policies can solve problem. Should never discourage subordinates.

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Delegation of Authority • Willingness to trust subordinates: When delegating, superiors must trust their subordinates. Delegation implies trustful attitude. Superior may put off delegation with the thought that subordinates are inexperienced. • Provide training or select other subordinates who are prepared to assume responsibility. • Sometimes bosses feel threatened & do not wish to let go their powers or do not know how to set up controls ensuring proper use of authority and delegate wisely. 71

Delegation of Authority • Willingness to establish broad Controls If superiors cannot delegate responsibility for performance & should not delegate authority unless they are willing to find means of getting feedback to convince themselves that they are doing it for the good of the organization. • More than often, reluctance to delegate & trust comes from superiors inadequate planning & fear of loss of control. 72

Guide for Overcoming Weak Delegation • 1. Define assignment & delegate authority in light of results expected. • 2. Select person in light of job to be done. • 3. Maintain open lines of communication – Seniors do not delegate all the authority or abdicate all responsibility, decentralization should not result in insulation. There should be free flow of information & subordinates should receive information related to make decisions & to interpret them properly. Delegation, therefore, depends on situations. 73

Establish Proper controls • Because no manager can relinquish responsibility, delegations should be accompanied by techniques for ensuring that the authority is properly used. But if controls are to enhance delegation, they must be relatively broad & be designed to show deviations from plans, rather than interfering with routine actions of subordinates. 74

Reward Effective Delegation & Success • Assumption of authority: Managers should be watchful for means of rewarding both effective delegation & effective assumption of authority. • Although, many of these rewards will be monetary, the granting of greater discretion & prestige – both in a given position & by promotion to a higher position is often even more of an incentive. 75

Advantages of Decentralization • 1.Relieves top management of some burden of decision making & forces upper level managers to let go. • 2. Encourages decision making & assumption of authority & responsibility. • 3. Gives managers more freedom & independence in decision making. • 4. Promotes establishment & use of broad controls which may increase motivation. • 5. Makes comparison of performance of different organizations units possible. 76

Advantages of Decentralization • 6.Facilities for setting up profit centers. • 7. Facilitates product diversification. • 8. Promotes development of General Managers. • 9. Aids in adoption in fast changing environment.

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Limitations of Decentralization • 1. Makes it difficult to have uniform policy. • 2. Increases complexity of coordination of decentralized organizational units. • 3. May result in loss of some control by upper level managers. • 4. May be limited by inadequate control techniques. • 5. May be constrained by inadequate planning & control systems. 78

Limitations of Decentralization • 6. Can be limited by the availability of qualified managers. • 7.Involves considerable expenses for training managers. • 8. May be limited by external forces (Govt, national labor unions, control, tax policies). • 9. May not be favored by economies of scale of some operations. 79

Chapter

Fundamentals of Organizing

80 Copyright © 2002 by South-Western, a division of Thompson Learning. All rights reserved.

Organizing • The deployment of organizational resources to achieve strategic goals • Reflects deployment of resources • Shows division of labor • Formal lines of authority and mechanisms is developed

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Organization Structure Defines how tasks are divided, resources are deployed, and departments are coordinated The set of formal tasks assigned Formal reporting relationships The design of systems to ensure effective coordination of employees across department 82

The Organization Chart Visual representation Set of formal tasks Framework for vertical control Formal reporting relationships

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Work Specialization • Tasks are subdivided into individual jobs • Division of labor concept • Employees perform only the tasks relevant to their specialized function • Jobs tend to be small, but they can be performed efficiently 84

Chain of Command • Unbroken line of authority that links all persons in an organization • Shows who reports to whom • Associated with two underlying principles Unity of Command Scalar Principle 85

Authority • Formal and legitimate right of a manager to make decisions and issue orders • Allocate resources to achieve organizationally desired outcomes • Authority is distinguished by three characteristics Authority is vested in organizational positions, not people Authority is accepted by subordinates Authority flows down the vertical hierarchy

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Responsibility • The duty to perform the task or activity an employee has been assigned • Managers are assigned authority commensurate with responsibility

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Accountability Mechanism through which authority and responsibility are brought into alignment People are subject to reporting and justifying task outcomes to those above them in the chain of command Can be built into the organization structure 88

Delegation Process managers use to transfer authority and responsibility

Organization encourage managers to delegate authority to lowest possible level

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Delegation Give thorough instructions

Maintain feedback

Evaluate and reward performance

Techniques for Delegation

Delegate the whole task

Ensure that authority equals responsibility

Select the right person 90

Span of Control • Number of employees who report to a supervisor • Traditional view, about seven subordinates per manager • Many lean organizations today have 30, 40, or even higher subordinates • When supervisors must be closely involved with subordinates, the span should be small • Supervisors need little involvement with subordinates, it can be large

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Factors Associated With Less Supervisor Involvement • • • • •

Work is stable and routine Subordinates perform similar work tasks Subordinates are concentrated in a single location Subordinates are highly trained Rules and procedure defining task activities are available • Support systems and personnel are available for the manager • Little time is required in nonsupervisory activities • Managers’ preferences and styles favor a large span

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Tall versus Flat Structure • Span of Control used in an organization determines whether the structure is tall or flat • Tall structure has a narrow span and more hierarchical levels • Flat structure has a wide span, is horizontally dispersed and fewer hierarchical levels • The trend has been toward wider spans of control 93

Centralization versus Decentralization • Greater change and uncertainty in the environment are usually associated with decentralization • The amount of centralization or decentralization should fit the firm’s strategy • In times of crisis or risk of company failure, authority may be centralized at the top 94

Departmentalization

The basis on which individuals are grouped into departments

Vertical functional approach. People are grouped together in departments by common skills. Divisional approach. Grouped together based on a common product, program, or geographical region. Horizontal matrix approach. Functional and divisional chains of command. Some employees report to two bosses

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Team-based approach. Created to accomplish specific tasks Network approach. Small, central hub electronically connected to their other organizations that perform vital functions. Departments are independent, and can be located anywhere. Virtual approach. Brings people together temporarily to exploit specific opportunities then disbands 96

Five Approaches to Structural Design

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Five Approaches to Structural Design Slide 2

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Divisional Structure Advantages • Efficient use of resources • Skill specialization development • Top management control • Excellent coordination • Quality technical problem solving

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Divisional Structure Disadvantages • Poor communications • Slow response to external changes • Decisions concentrated at top • Pin pointing responsibility is difficult • Limited view of organizational goals by employees 100

Horizontal Matrix Advantages • More efficient use of resources than single hierarchy • Adaptable to changing environment • Development of both general and specialists management skills • Expertise available to all divisions • Enlarged tasks for employees 101

Dual Authority Structure in a Matrix Organization

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Horizontal Matrix Disadvantages • Dual chain of command • High conflict between two sides of matrix • Many meetings to coordinate activities • Need for human relations training • Power domination by one side of matrix 103

Team Advantages • Same advantages as functional structure • Reduced barriers among departments • Quicker response time • Better morale • Reduced administrative overhead 104

Team Disadvantages • Dual loyalties and conflict • Time and resources spent on meetings • Unplanned decentralization

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Network Approach Advantages • Global competitiveness • Work force flexibility • Reduced administrative overhead

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Network Approach Disadvantages • No hands-on control • Loss of part of the organization severely impacts remainder of organization • Employee loyalty weakened

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Horizontal Organization • When organizations grow and evolve, two things happen: New positions and departments are added Senior managers have to find a way to tie all of the different departments together

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Coordination Quality of collaboration across departments

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Evolution of Organization Structures

Traditional Vertical Structure

Teams and Project Managers for Horizontal Coordination

Reengineering to Horizontal Processes

New Workplace Learning Organization

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Structural Design • Task Force...A temporary team or committee formed to solve a specific shortterm problem • Team…Participants from several • Team…Participants from several departments who departments who meet to solve ongoing meet to solve ongoing problems problems • Project Manager…A person responsible for coordinating the activities of several departments 111

Leadership & Management • Committee: It is a group of persons to whom as group some matter is committed (board, task force, commission, team etc) • Team: A small number of people with complimentary skills, committed to a common purpose or goals for which they hold themselves mutually accountable. • Group processes in committees & teams : Groups go through 4 stages • 1. Forming : The group gets to know each other • 2. Storming: Members of the group determine the objective of the meetings, conflicts arise. • 3. Norming: Group agrees on norms & behavioural rules 112

Leadership & Management • 4. Performing: Group gets down to task. • Functions of committees: Some undertake managerial functions, some make decisions, while others deliberate. Some have authority, others do not. • A committee may have either staff or line functions depending on its authority. • Committees may be formal or informal. If established with delegated duties & authority, they are formal. Those that are informal are organized without delegation of authority. • Committees can be permanent or temporary. Formal committees are relatively permanent and may be formed for a specific task after which it is disbanded. 113

Reasons for using committees & teams. • The advantage of group deliberation & judgment. Most problems require more knowledge, experience & judgment from production, finance, engineering or sales. • Fear too much authority in a single person • Fear of delegating too much to one person • Representation of interested groups : • Board of directors are often selected on the basis of groups interested in the company • Coordination of Departments, Plans & Policies: There is general agreement that committees are very useful for coordinating activities, plans & policies & implementing the same. • Transmission & sharing of information: Committees are useful for transmitting & sharing information All group members affected by a mutual problem can learn about it simultaneously & decisions and instructions can be received uniformly. This saves time. 114

Motivation through participation • Committees permit wide participation in decision making. Persons who take part in planning/decision making a program feel enthusiastic about accepting & executing it. Limited participation can be helpful. • Avoidance of action: One of the surest ways to delay the handling of a problem & even to postpone a decision indefinitely is to appoint a committee. At times committee members are i chosen in a way aimed at delaying action. 115

Team & Team Building. • Team is a small number of people with complimentary skills who are committed to a common purpose, goals for which they hold themselves mutually accountable. • Some make recommendations, others have the power to make decisions, some actually run operations, some teams solve problems, others engage in activities in cross functional areas in design, marketing, finance etc. • Team members should be selected according to the skills needed to achieve the purpose. 116

Team & Team Building. • Teams should have the right mix of skills such as functional or technical skills problem solving and decision making skills • The team needs to be guided by rules for group behaviour such as attendance etc. • Goals and tasks should be identified early in the team formation. • Members should encourage each other through recognition, positive feed back & reward. 117

Team & Team Building. • Self Managing Teams: Organizations have started using self managing teams where the members have a variety of skills. • These teams are empowered what, when & how to do. • Virtual Teams: Virtual management is described as “ the ability to run a team whose members aren’t in the same location, don’t report to you, and may not even work for your organization. Therefore, it is important to have a clear purpose, task, and communicate the same to all concerned. Carefully watch for conflicts. 118

Group Decision Making • Many of the basic processes of individual & group decision are same. The rational model is used both by individuals & groups • Impact of groups on decision making: The process of social interaction makes group decision different from individual decision complicating the dynamics. Sometimes group decisions can be an asset but at other times it can be a liability. • The trick for a manager is to discover when & how to invite group participation in discussions. 119

Group Decision Making • Many of the basic processes of individual & group decision are same. The rational model is used both by individuals & groups • Impact of groups on decision making: The process of social interaction makes group decision different from individual decision complicating the dynamics. Sometimes group decisions can be an asset but at other times it can be a liability. • The trick for a manager is to discover when & how to invite group participation in discussions. 120

Group Decision Making Group impact relative to non programmed decisions: 1. In establishing objectives – Groups are typically superior to individuals-they bring greater cumulative knowledge to problems 2. In identifying alternatives: Individual efforts ensure that different & perhaps unique solutions are identified from various functional areas that later can be considered by the groups 3. In evaluating alternatives group judgment is often superior to individual judgment because it involves a wide range of view points. 4. In choosing alternatives, involving group members often leads to greater acceptance of the final outcome 5. In implementing the choice, individual responsibility is generally superior to group responsibility Whether decisions are made individually or collectively, individuals perform better in carrying out the decision than groups do. 121

Assets & Liabilities of Group Decision Making • Assets :Groups can accumulate more knowledge & facts. • Groups have a broader perspective & consider more alternatives. • Individuals who participate in group decisions are most satisfied with the decision & are more likely to support it. • Group decision processes serve an important communication function as well as a useful political function.

• Liabilities: Groups often work more slowly than individuals. • Group decisions involve considerable compromise that may lead to less than optimal decisions. • Groups are often dominated by one individual or a small clique thereby negating many of the virtues of the group processes. • Over reliance on group decisions making or inhibit management’s ability to act quickly & decisively when necessary. 122

Guidelines for Overcoming Groupthink • For the company: Establish several independent groups to examine the same problem • Train managers in groupthink prevention techniques. • For the leader: Assign everyone the role of critical evaluator • Use outside experts challenging the group • Assign a devil’s advocate role to one member of the group • Try to be impartial & refrain from stating your own views. • For group members: Try to retain your objectivity & be a critical thinker. • Discuss group deliberations with a trusted outsider & report back to the group. 123

Guidelines for Overcoming Groupthink • For the deliberation process: • At times, break the group into sub groups to discuss the problem. • Take time to study what other companies or groups have done in similar situations. • Schedule second – chance meeting to provide an opportunity to rethink the issues before making a final decision. 124

Managing Change • First, the focus is on change of individuals (Specifically manager development & training). Second, the focus shifts to groups and individuals. • Manager development refers to long term, future oriented programs and the progress the person makes learning how to manage • Managerial training pertains to programs that facilitate the learning process and is mostly a short term activity. • Organizational development is a systematic, integrated & planned approach to improving the effectiveness of groups of people and of the whole organization or a major organizational unit. 125

Manager Development Process • Manager development & training must be based on needs analysis derived from a comparison of actual performance & behaviour with required performance & behaviour. • Future needs: Progressive organizations go one step further; they prepare for the more distant future. They forecast what new competencies will be demanded by changing technology & methods. • On the job training: Many opportunities for development can be found on the job. 126

Manager Development Process • Planned progression is a technique that gives managers clear idea of their path of development. Managers know where they stand & where they are going. • Job rotation: Purpose is to broaden the knowledge of managers. They may rotate through 1. Non supervisory work 2. Obser- vation assignments 3. Various managerial training positions 4. Middle level ‘assistant’ positions 5. Unspecified rotation to various managerial positions in different deparments. • Creation of “Assistant–to” positions_ frequently created to broaden the view points. Work closely with senior managers who devote time for development of trainees. 127

Manager Development Process • Temporary promotions: Appointed as “acting” managers. Temporary promotions are developmental device • Committees & junior boards: Used as developmental techniques. Work with experienced managers. • Coaching: it is the responsibility of every line manager. Must be done in a climate of confidence & trust. Patience & wisdom are required of superiors willing to delegate authority & give recognition & praise for jobs well done. 128

Approaches to Manager Development • • • •

Conference programs University Management Program Readings, Television & Video instructions Business simulation & Experimental Exercise • Special Training program • Evaluation & Transfer. 129

Resistance to Change. • Many reasons why people resist change. • What is not known causes fear & induces resistance. People want to feel secure & have some control over the change. • Not knowing the reason for the change can cause resistance. (why necessary?) • Change may result in a reduction of benefits or a loss of power. 130

Reduction of Resistance • Reduction of resistance can be achieved in many ways. • Involvement of organizational members in planning change can reduce uncertainty. • Communication about proposed changes also helps clarify the reasons or effects of the changes. • Some approaches focus on the people involved in the change, others involve changes in organization structure or technology. 131

Learning Organization • A learning organization is one that can adapt to changes in the external environment through continuous renewal of its structure & practices. • 5 technologies that help the organization to learn. • 1. Systems thinking 2. Personal mastery 3. Mental models. 4. a shared vision 5. Team learning. 132

Control Process • • • • • • •

•

Basic control process involves 3 steps. 1. establishing standards 2. measuring performance against these standards 3. correcting variations from standards & plans. Plans are yardsticks to devise controls. Establishment of standards: Plans vary in detail & complexity, so managers don’t use it Standards are simply criteria of performance They are the selected points in an entire planning program at which measures of performance are made. Best standards are verifiable goals. Measurement of Performance: Should be ideally done on a forward-looking basis, so that deviations can be detected in advance & avoided by appropriate action. Deviations should be disclosed as early as possible. If standards are properly drawn, appraisal of actual performance is fairly easy There are many activities which are hard to measure. In the less technical kinds of work for eg. controlling the work of the Vice President finance or Director, Industrial Relations is not easy because definite standards are not easily developed. The superior managers often relies on vague standards such as financial health of the company, the attitude of the labor unions, the absence of strikes etc 133

Control Process • Correction of deviation: It is the point at which control can be seen as a part of the whole system of management. Managers may correct deviations by redrawing their plans or by modifying their goals. They may hire additional staff or train their subordinates.

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Critical Control Points • Principle of critical-point control: Effective control requires attention to those factors critical to evaluating performance against plans. • The points selected for control should be critical, in the sense either of being limiting factors or of showing better than other factors. • With such standards, managers can handle a larger group of subordinates and thereby increase their span of management with resultant cost saving & improved communication 135

Selecting Critical Points of Control • The ability to select critical points of control is one of the arts of management. • Questions are to be asked – 1. What will best reflect goals of the department? 2. What will best show us when these goals are not being met? 3. What will measure best critical deviations? 4. What will tell me who is responsible for any failure? 5. What standards will cost the least? 6. For what standards is information economically available? 136

Critical Point Standards • • • • • •

Standards are of the following types: 1. Physical Standards: eg. Labor-hours Cost standards.: eg. labor cost per hour Capital standards: eg. Return on investment Revenue standards.: average sale per customer Program standards.: program for improving quality of sales force. • Goals as standards.: Verifiable quantitative or qualitative goals • Intangible Standards :Public relations program effectiveness • Strategic plans as control points for strategic control: here planning and controlling are closely related 137

Benchmarking • Approach for setting goals & productivity measures based on best industry practices. • Developed out of the need to have data against which performance can be measured. What should be the criteria? • 3 types of bench marking: 1. Strategic bench marking 2. Operational benchmarking 3. Management benchmarking. • Identify what is to be benchmarked. Select superior performers. Data gathered & analyzed. This becomes the basis for performance goals. 138

Control as a Feedback System • Management control is perceived as a feedback system similar to that which operates in common household thermostat Managers do measure actual performance correcting for deviation. • Managers do measure actual performance compare this measurement against standards, identify & analyze deviations. • Develop a program for corrective action & implement this program to arrive at the required performance level. 139

Real-time information & Control. • One of the interesting advances arising from the use of the computer and from electronic gathering, transmission and storage of data is the development of systems of real time information. • Some people see real time information as a means of getting real-time control in areas of importance to managers. Here control can be effected at the very time information shows a deviation from plans. • Development of programs of correction & the implementation of these programs are likely to be time consuming tasks. • Prompt measurement of performance is necessary. The sooner the manager knows that activities are not proceeding as per plans, the faster they can take action. 140

Feedforward Control • The time lag in the management control process shows that control must be directed toward the future if it is to be effective. • Using feedback & this measurement of output as means of control is not enough. • Managers need for effective control is a system that will tell them in advance to take corrective action. Otherwise the whole exercise becomes a post mortem. • Future directed control is largely disregarded in practice as managers are used to accounting & statistical data for purposes of control 141

Requirements for feedforward Control • 1. Make a thorough & careful analysis of the planning & control system & identify the more important input variables. • 2. Develop a model of the system. • 3. Model to be up to date. It should be reviewed regularly to check input variables are identified. Their interrelationships continue to represent realities. • 4. Collect data on input variables regularly & put them into the system. 142

Requirements for feedforward Control • 5. Regularly assess the variations of actual input data from planned-for inputs, and evaluate the impact on the expected end result. • 6.Take action. Like any other technique of planning and control, all that the system can do is indicate problems; people must obviously take action to solve them 143

Information Technology for Controlling • Management information system has been used differently by various authors. It is defined as a formal system of gathering, integrating comparing, analyzing & dispersing information internal & external to the enterprise in a timely, effective and efficient manner. • MIS has to be tailored to specific needs & may include routine information & information necessary to predict the future. 144

Impact of Computers • Information needs differ at various levels: • Supervisory level activities are usually highly programmable & repetitive. Use of computers is wide spread at this level. Scheduling, planning, & controlling are just a few examples. • Middle level managers: Dept heads, plant mgrs receives information which are also shared by the top management regarding administration & coordination. • Need for middle level mgrs reduced because of computer. Their roles may be expanded or changed. 145

Impact of Computers • Top level managers are responsible for the strategy and overall policy. • The tasks of CEO’s are not easily programmable. Yet they can use the computer to get information from the data base to facilitate the application of decision models. • Enables the company to make timely responses to changes in the external environment. • Will affect the jobs of top managers less severely than it will affect the jobs of those at lower levels. 146

Challenges Created By Information Technology • • • • •

Resistance to computer application. Speech Recognition Devices. Telecommuting. Computer Networks Internet

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Total Quality Management • One popular approach to improve quality is called Total Quality Management – TQM • Definition- Organizations long term commitment to the continuous improvement of quality – throughout the organization and with active participation of all members at all levels – to meet and exceed customers’ expectations. • TQM requires careful analysis of the customers’ needs, an assessment of the degree to which these needs are currently met, & a plan to fill the possible gap between the current & the desired situation. • To make TQM effective, top managers must be involved including cooperation of suppliers. Management must provide vision, emphasize quality, set quality goals and deploy resources for the quality program. • TQM demands free flow of information – vertically, horizontally and diagonally. 148

Total Quality Management • Training & development are very important Need developing skills to use tools & techniques. Teamwork often becomes a prerequisite for an effective & efficient operation. • Quality improvement efforts need to be continuously monitored thru data collection evaluation, feedback & improvement programs. • TQM should result in greater customer satisfaction, fewer defects, less waste, higher productivity, reduced cost & improved profitability and an environment for high quality. 149

Motivational Techniques • What motivational techniques managers can use? There is no single best answer. • Money: 1. Money cannot be overlooked as a motivator, in the form of wages, incentives, bonus, stock options, insurance, medical. Gives status & power. • 2. Difference of opinion: Some behavioral scientist think money is important to those who are young & raising family, but not so important to those who have “arrived”their needs are not urgent. • 3. Money is needed in organization to avoid poaching & keep adequate staff. Wages & salaries need to be competitive. Managers in comparable levels are paid similar compensation. • 4. Bonuses must reflect individual performance. 150

Motivational Techniques • • •

•

Participation: People are motivated by being consulted on action affecting them. Participation also means recognition. It gives people a sense of accomplishment. Quality Of Working Life (QWL): Interesting approach to motivation. Gives very broad approach to job enrichment. Also gives interdisciplinary field of inquiry covering psychological, social & leadership theory. Received support from managers as they think QWL is useful means for dealing with stagnating productivity. Workers & unions also like it as they see it as a means to improve their working conditions and improved productivity can justify their higher wage demands. The government feels it can reduce labor disputes as QWL can be a means of increasing productivity & reducing inflation. Job Enrichment: Research & analysis indicates importance of making job challenging & meaningful. This applies to jobs for managers as well as to those of non managers. Job enrichment should be distinguished from job enlargement. Job enlargement attempts to make a job more varied by removing the dullness of the repetitive job. This means enlarging the scope of the job by adding similar tasks without enhancing responsibility. In job enrichment, the attempt is to build into jobs a higher sense of challenge. 151

Motivational Techniques • Limitations to job enrichment: One of the limitations are technology. With specialized machinery & assembly line techniques, it may not be possible to make all the jobs meaningful. • Another limitation is cost. Another question whether workers really want job enrichment, especially the kind that changes the basic content of their jobs. High percentage of workers are not dissatisfied with their present job. Few need more interesting jobs. Above all they need job security and pay. Moreover, workers are concerned that changing the nature of tasks to increase productivity may mean a loss of jobs. 152

Motivational Techniques • Limitation of job enrichment apply mainly to jobs requiring low skill levels. The jobs of highly skilled workers, professional & managers already contain varying degrees of challenge & accomplishment. Perhaps these could be enriched considerably more than they are. But this can probably be done best by management techniques such as managing by objectives, more status symbols in the form of titles, delegation of authority, tying bonus & other rewards to performance. 153

Motivational Techniques • Making Job enrichment effective: 1.Organizations need a better understanding of what people want. Wants vary with people & situations. • Workers with few skills want such factors as job security, pay, benefits, less restrictive plant rules & more sympathetic & understanding supervisors. • As people move up the ladder they find that other factors become increasingly important.. But very little research has been done on high level professionals & managers. 154

Motivational Techniques • 2. Second, if productivity increases are the main goal of enrichment, the program must show how the workers will benefit. • 3. Third, people like to be involved and to be given an opportunity to offer suggestions. • 4. Fourth, people like to feel that their managers are truly concerned with their welfare. Workers like to know what they are doing & why. They like feedback on their performance. They like to be appreciated & recognized for their work. 155

Organizational Communication • In an organization, communication flows in various directions, downward, upward, & crosswise. Traditionally downward communication was emphasized but problems can develop. It can be argued communication should start with the subordinate & this means primarily upward communication. Communication also flows horizontally that is between same levels. Communication involving persons from different levels who are not in direct reporting relationship such information flow is called diagonal flow. • Since horizontal & diagonal communication has some common characteristics, they are also called crosswise communication 156

Organizational Communication • Downward Communication: It flows from higher level to lower level in the organizational hierarchy normally seen in an authoritarian atmosphere. • Oral downward communication include speeches, instructions, memorandum, letters, policy statements, telephone, meetings, loudspeakers, handbooks, pamphlets, procedures, & electronic news displays. • Information is often lost or distorted as it comes down the chain. • Top management’s issuance of policies are not understood or even read. Consequently, a feedback system is essential to know what went wrong. • Downward flow of information through different levels is time consuming and frustrating for top management. 157

Organizational Communication • Upward Communication: It travels from subordinates to superiors. Often this flow is hindered by managers who filters the messages & do not transmit all the information- specially unfavorable news to their bosses. Upper management needs to know production performance, marketing information, financial data, what lower level people are thinking & so on. • Upward communication is primarily non directive & is usually found in participative & democratic organizations. Suggestions, appeal, grievance, complaints, counseling are encouraged. • Ombudsperson: Companies have found that the position of the ombudsperson can provide a valuable upward communication link. Effective upward communication requires an environment in which subordinates feel free to communicate. • Managers must create an informal climate that encourages upward communication. • Lack of upward communication can be disastrous. 158

Organizational Communication • Crosswise Communication: This type of communication includes the horizontal flow of information, among people on the same or similar organizational levels, & the diagonal flow, among persons at different levels who have no direct reporting relationships with one another. • This kind of communication is used to speed information flow, to improve understanding, & to coordinate efforts for the achievement of organizational objectives. A great deal of communication does not follow the organizational hierarchy but cuts across the chain of command.

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Organizational Communication • Written, Oral & Nonverbal Communication: Each mode has favorable & unfavorable characteristics. Therefore, they are used together so that the favorable qualities of each can compliment the other. • Visual aids & handouts may be used to supplement oral & written communication. • Written Communication: It has the advantage of providing records, references & legal defenses. Good for mass mailing. It can promote uniformity in policy & procedure • Disadvantages: Written messages may create mountains of paper, may be poorly expressed & may provide no immediate feedback. It may take a long time to know whether a message has been received or properly understood.

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