CILT(UK) Level 5 Professional Diploma in Logistics and Transport

Management Element 1

Introduction to Study
Welcome to the study guide for the Core Management Unit, which is intended to assist students in successfully completing the Chartered Institute of Logistics and Transport (CILT) Level 5 Professional Diploma in Logistics and Transport. These icons below represent key activities to be undertaken specific activities have been set to assist learning and references are made to the recommended textbook. The aims are clearly set out at the beginning of each section and key benchmarks are highlighted as tasks on each of the sections to enable you (the student) to monitor your own progress. Key to icons:

Reading Self-test tasks

Test questions

Abbreviations
AGM CILT EGM EU HR IT JIT KPI NPV PBIT RDC Annual General Meeting The Chartered Institute of Logistics and Transport Extraordinary General Meeting European Union Human Resources Information Technology Just In Time Key Performance Indicator Net Present Value Profit Before Interest and Tax Regional Distribution Centre

BCCI The Bank of Credit and Commerce International CIMA The Chartered Institute of Management Accountants

ROCE Return On Capital Employed ROI SMART SME STEEP SWOT Return On Investment Simple, Measurable, Achievable, Realistic, Timely Small to Medium Enterprises Societies, Technologies, Economic development,

Environment and Political systems and regulation Strengths, Weaknesses, Opportunities, Threats VOSA Vehicle and Operator Standards Agency

Essential reading
Key text book
Cole, G.A. (2004), Management Theory and Practice 6th Ed, Thomson (www.thomsonlearning.co.uk) ISBN 1-84480-088-1.

Bibliography:

Atkinson, P. (1988), Achieving Results Through Time Management, Pitman. Back, K. & Back, K. (1994), Assertiveness at Work, 2nd Ed, Pitman. Cole, S. (1987), Applied Transport Economics, Kogan Page. Covey, S.R. (1989), The Seven Habits of Highly Effective People, Simon & Schuster. Drucker, P. (1954), The Practice of Management, Heinemann. Fayol,H. (1949), General and Industrial Management, Pitman. Grant, R. (1998), Contemporary Strategy Analysis, Blackwell. Hamel, G. & Prahalad, C.K. (1994), Competing for the Future, Harvard Business School Press. Handy, C. (1993), Understanding Organizations, 4th Ed, Penguin Business. Harvey-Jones, J. (1988), Making It Happen: reflections on leadership, Harper-Collins.

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Hofstede, G. (1980), Cultures Consequences: International Differences in Work-related Values, Sage Publications. Hofstede, G. (1997), Cultures and Organisations, McGraw-Hill. Hunter, J.E. and Hunter, R.F. (1984), Validity and utility of alternative predictors of job performance, Psychological Bulletin, Vol. 96. Janis. I. J. (1972), Victims of Groupthink, Houghton Mifflin. Johnson, G. & Scholes, K. (1993), Exploring Corporate Strategy, Prentice Hall. Maslow,A. (1954), Motivation and Personality, Harper & Row. Kotler, P. and Armstrong, D. (1996), Principles of Marketing, 7th Ed, Prentice-Hall International. Kotter, J.P. (1996), Leading Change, Harvard Business School Press. Lewin, K. (1951), Field Theory in Social Science, Harper. Mintzberg, H. (1973), The Nature of Managerial Work, Harper & Row. Mintzberg, H. (1979), The Structuring of Organisations a Synthesis of the Research, PrenticeHall. Mintzberg, H. (1983), Structure in Fives: Designing Effective Organisations, Prentice-Hall. Mintzberg, H. (1994), The Rise and Fall of Strategic Planning, PrenticeHall. Morgan, G. (1986), Images of Organisations, Sage. Moss Kanter, R. (1984), The Change Masters Corporate Entrepreneurs at Work, Allen & Unwin. Ohmae, K. (1982), The Mind of the Strategist, McGraw-Hill. Pascale, R. (1991), Managing on the Edge, Penguin. Peters, T. (1988), Thriving on Chaos: Handbook for a Management Revolution, Macmillan. Peters, T. & Waterman, R. (1982), In Search of Excellence: Lessons from Americas Best-Run Companies, Harper & Row.

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Study techniques:
Below are some useful tips relating to study techniques: You must, from the very outset, manage your time and set realistic targets for each section of the specification. An allowance of 25 -30 hours is usually recommended for each section of this unit. In addition, many of you will need to allow additional time for examination preparation and revision. You are advised to work in quiet areas, with minimal distractions. Whilst this may be difficult for those attempting to study at work or at home, distractions do add significant time to any study and, if you are unable to study without distractions, additional study time should be allowed. Make clear notes and bullet points where appropriate make use of the highlighted sections and icons within the course manual to guide you to the key information. Refer to the recommended reading as directed. Develop this core information with wider reading. In all events do not try to rush through this unit as it contains elements which will enable you to enhance your written examination answers and assignment responses in the later Elective and Optional Units.

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Management in Logistics and Transport

Contents

Section 1: Internal Organisational Dynamics

1.1 1.2 1.3 1.4 1.5 1.6 1.7 Introduction 1 Culture 1 Organisational Structures 3 Change 4 Empowerment 6 Communications 8 Managing 10

Management Unit Context:

This Management Unit is the Core Unit of the CILT Professional Diploma because, irrespective of the specific industry sector to which you either belong, are employed within, or most closely align with, you are first and foremost a manager and, in order to succeed in a management role, you need to have knowledge and understanding of the dynamics which impact business, and thus on business managers, and how effective management of all resources can, through the business planning process, equip modern managers with the tools and techniques they need to enable themselves and the business they represent, to sustain themselves in the market place and formulate competitive strategies sufficient to improve future business performance. This Core Unit has also been produced to give readers an opportunity to gain knowledge and understanding of many generic management skills and techniques which can be transposed to improve departmental management skills, irrespective of the departmental disciplines concerned. It is largely because of this that most students attempt the Core Unit before attempting any Elective or Optional Units in order that they may take advantage of the content contained below to enhance written answers to examination and assignment questions contained within the later Elective and Optional Units. Further help is offered at the end of the Unit where you will find some sample examination questions included to give you an awareness of the level and style of the Professional Diploma Management Unit examination questions you will be expected to answer, should you be studying by the examination route. These may also serve to provide portfolio evidence where students may not be able to use work-related evidence, or to supplement work-related evidence.

Introduction
Before beginning Section One, it may help to prepare if we spend a little time examining what is actually meant by management and then move on to consider some management roles. It will also be of benefit if you attempt the initial self test tasks, as these have been included to help you to produce short written answers whilst considering your own organisation. In turn, producing written answers of this type will help many students to re-establish essay skills which may not have been exercised for some time!

What is management?
Early contributors to the theory of management included both practising managers and academics. Generally, the practising managers would reflect upon their own experiences and observations, seeking to expound theories which would have practical uses, and enable others to apply the theories in reality. These theories tended to be very practical in nature: how to organise a workforce; the types of organisational structure to have; etc. These early theorists have been labelled as Scientific Managers, or Classical theorists. These academics, or social scientists, as they were sometimes called, focussed upon the human behavioural aspects of work. Initially this was around seeking greater efficiencies, by looking at such areas as the effects upon the employee of their surroundings, and work practises. Later this moved on to areas such as motivation, and communication. These later theorists were known as the Human Relations theorists. A fundamental idea behind the later theories is that it is peoples needs that are the decisive factor behind achieving organisational successes, in the area of effectiveness. In the late 1960s/early 1970s, there was another group of theories emerging. These were the Systems and Contingency approaches. The basis of these theories was that as an organisation interacts with its environment; there would be no one theory that would guarantee company, or organisation wide, success. Instead the organisation would need to mix the application of theories according to its needs at the time; these needs would result from the internal/external pressures it faced at any given time. Whilst this approach went some way to meeting business needs, it still needed to be enhanced in order to allow the business, or organisation, to predict and manage. In order to help predict and cater for current and possible future need, modern management approaches tend to focus strongly on strategic issues. This is a focus on doing the right things, as opposed to doing things right. Some areas of importance here are: organisational culture; quality management; empowerment, and relationship management.

Read Chapter 1 (pp3-6) of Cole GA (2004) Management Theory and Practice. Letts, 6th Edition, published by Thompson.

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1.1

Internal Organisation Dynamics

Introduction

We begin the first section of this unit by examining internal organisational dynamics of organisations to enable you to meet the requirements of the CILT Professional Diploma Management Unit Standards. The standards outcomes for this Unit expect that, by the end of this section, you should be able to: 1. 2. 3. 4. Design appropriate organisational control structures Manage individual and group activities to meet corporate objectives. Draw up a plan to implement a change programme. Outline the structure of and appraise information systems.

These are the expected outcomes which relate to the standards for the first section of the Management Unit and you should keep a focus on these expected outcomes in order to ensure that, by the end of the section, you are able to meet the standards required. If at the end of the section you feel that you cannot meet these standards, you should allow additional time to raise your knowledge and/or understanding to the required standard. This is particularly important for those of you proposing to be assessed by examination for this Unit.

1.2

Culture

The internal dynamics of any organisation can be said to be largely attributed to that organisations culture. The questions are - what is culture, and how can it be defined within business terms? Culture can, in essence, be described as the way we do things around here. It is about the shared values and beliefs that exist within the organisation.

These values and beliefs can arise from many varied sources; company rules and regulations, organisational policies and procedures; the leadership style that is prevalent within the organisation, the influence of Trade Unions within the organisation, stories that are told within the organisation about events that have occurred, etc. The culture of one organisation may be widely different to that of another organisation, but it is likely that the culture of one organisation will be broadly similar throughout the whole organisation. In new, or very young, organisations it is relatively easy to mould the culture according to the beliefs of the leadership. Employing people with the same set of basic business beliefs and ethos, closely working with employees and pointing them in the directions the management team require to be followed. However, in a large, well established, organisation that has been in existence for several years, changing the organisational culture [or even small parts of it] can be extremely difficult. At best it will change over a period of time. Often this period is measured in terms of years as opposed to months because to change culture within an organisation is a lengthy process and not something that can be effectively achieved, and most importantly sustained, by short term initiatives.

Read Chapter 13 (pp104-112) of Cole GA (2004) Management Theory and Practice. Letts, 6th Edition, published by Thompson.

The issues surrounding cultures within an organisation are further exacerbated, for an international organisation, by the differing cultural beliefs and practises between countries.

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Read Chapter 15, sections 27-36 (pp129-133) of Cole GA (2004) Management Theory and Practice. Thompson. Letts, 6th Edition, published by

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In 400500 words, explain the culture within your organisation. Where does it come from? Who are the shapers?

1.3

Organisational Structures
It

The structure of an organisation plays a huge role in its performance.

impacts upon various elements, including the productivity, efficiency, morale, and the very culture of the organisation itself. The choices of how to structure an organisation are seemingly endless. There are certain factors that play a key role in determining the structure of an organisation. They include the tasks that are to be undertaken and achieved, the skills of the people within the organisation, the culture of the organisation, and the technology available. One of the key questions is whether to centralise or decentralise. These activities involve the decision of whether or not to delegate authority, and some control, from the central functions [normally Head Office] down to more local levels. This frees up time for more senior managers to focus their attention on strategy as opposed to operations; speeds up the decision making processes, and can actually motivate those staff that are given more autonomy. There are, though, some potential downsides. An organisation can lose consistency as one area may either outperform, or under-perform, its colleagues. It requires the senior management to be able to let go without interfering, and it requires the organisation to have at its disposal a number of more capable managers.

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Read Chapter 22, (pp184-198) of Cole GA (2004) Management Theory and Practice. Letts, 6th Edition, published by Thompson.

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In 500600 words, describe the structure of your own organisation and comment upon its strengths and weaknesses. Having described the structure, explain how your organization could improve its organisational control structure, justifying each of your improvement recommendations.

1.4

Change

Organisations can face change for a variety of reasons. Some of these may be voluntary decisions, seeking to make proactive changes for the benefit of the business, or they may be involuntary, necessary changes reacting to market forces. A new competitor may have come on the scene, or a new product been launched that has impacted upon their market share, for example. Making changes does not necessarily mean that these changes are either innovative or radical. Within a more established organisation, where current systems and procedures are also well established, the harder the changes will be to make. This could be said to be because people generally need to be persuaded of the value of change, particularly if a current way of working appears to them to be effective. Change merely for the sake of change is usually far harder to implement, as people do not buy into that concept and resistance to change can prove both costly and time consuming to any organisation.

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Read Chapter 24, (pp204-212) of Cole GA (2004) Management Theory and Practice. Letts, 6th Edition, published by Thompson.

P E R F O R M A N C E

TIME

The figure above shows the general progress through a period of change. The time span through a period of change starts on the left with notification of the impending change, when there is normally a slight improvement immediately the change is known about! Some of the causes of this can be, for example, peoples fear of losing their jobs, and a wanting to be seen to be willing and to be seen as an employee that embraces change. This is commonly followed by a rapid drop in performance due to any new procedures, the uncertainty surrounding them, and peoples general anxious reaction to change. As the procedures become better understood, the performance improves, until the performance again plateaus [at, one hopes, a higher level than before the change was made] as the changes become more accepted and ingrained. In addition, the morale of the workforce, during any period of change, is likely to follow a similar curve to that of their performance. The greater the change,

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and the larger its impact on the workforce, the larger the impact upon morale, and the deeper the curve is likely to drop. Employees within an organisation need a huge amount of support through periods of large-scale change and effective communication is an essential element of any successful change management.

Read Chapter 25 (pp212-220) of Cole GA (2004) Management Theory and Practice. Letts, 6th Edition, published by Thompson.

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Consider some recent long term change activity within your own organization, or within a sector of industry with which you are familiar and, in no more than 300 words, comment upon any mistakes that were made by senior management in relation to that change and how those mistakes could have been avoided.

1.5

Empowerment

This is a term that is often used in a number of ways. In terms of its meaning in business, it is used to convey an organisational technique where members of staff are given greater freedom to act; greater ability to control both their own destiny, and that of the organisation. Those people who are empowered are given the authority and power to act on their business beliefs, and are also given the responsibility for achieving a set level of performance. With empowerment comes both responsibility and accountability. Empowerment is not necessarily given to all employees, nor is it normally given in one discrete package; it is often given a little at a time. Much like building a house of bricks, one lays one brick at a time and one row at a time.

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In relation to empowerment, span of control is always an issue. For instance, just how many direct reports should one person have? How many can they cope with? What is the optimum number? Perhaps there is no absolutely right answer, as this will always depend upon the capabilities of each individual. However, it is often the case that the higher up in the organisational hierarchy the position is, the more complex business relationships become, and therefore the fewer direct reports there should be. Many people have argued that, whilst at the lower levels of organisational management, where, for instance, a supervisor may be dealing with employees carrying out routine tasks, it is acceptable to have a larger span of control whereas at higher managerial levels it is not. It is generally accepted that at management levels a span greater than six people starts to become a little unwieldy, and many more than that will soon become unworkable. What is undeniable however is the fact that, if this part of an organisations structure is not correct it can have a huge impact upon the overall efficiency of the business.

Read Chapter 23 (pp199-204) of Cole GA (2004) Management Theory and Practice. Letts, 6th Edition, published by Thompson.

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It is generally accepted that managers may empower and delegate but they cannot delegate their responsibility. Produce a statement of not more than 50 words to either support or argue against this viewpoint.

1.6

Communications
methods of communication and ensuring effective

Communications in business are one of the major keys to success. But communication, communication are complex issues that have the capacity to seriously

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damage unprepared or unaware organisations.

There are many different

types of communications, from reports to emails, from one-to-one meetings to large seminars, from fax to phone. But some things amongst all of this remain a constant. The art of communicating is threefold, it is all about: Listening. Really listening to what is being said, both by those above you, and especially by those below you. Remember, good communication is a two-way street. Using the correct medium for your message. An informal face-to-face chat and a formal report both have their place; consider when best to use them. Ensuring that your message is understood, and tailored for the audience. Your message needs to be understandable by the intended audience. Do not give your board level presentation to those working on the shop floor; do not use words/phraseology that they may not comprehend. It may sound smart, and appear to impress but, in reality, you may only be impressing yourself! Remember, if your audience has not understood your message, or you have patronised them to a degree where they feel alienated, or even insulted, then you are at fault, not them. In management circles, communication is often most notably encountered because it is commonly accepted that all managers, at some point in their career, will be required to give a presentation. That could be to senior management, or to staff on the shop floor. Whilst it can easily be argued that preparation is the key, as many people like to prepare their presentation content and then practice giving their presentation, it must be recognised that this preparation may not work for all people as it can lead to a presentation more resembling a recital than original thought. Another way to prepare to communicate in this way is by learning what the content is about, understanding your subject matter fully, and writing the presentation in a bullet point format. Many managers prefer to think a lot about what they want to say and the points they want to stress, without
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actually practising giving the presentation. In this way, the presentation often appears more natural, and less stilted. Basically, it is for the individual to decide what works best for them. If the first method doesnt work, then try something different. Clearly there are many more than just these two methods, and it is about finding whatever way helps you to get the correct message across to your audience.

Read Chapter 26 (pp220-229) of Cole GA (2004) Management Theory and Practice. Letts, 6th Edition, published by Thompson.

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You are the Managing Director of a multi-national organisation, with a large unionised workforce. You are about to undergo a period of massive change due to the loss of your monopoly, and the resultant increase in competition. In approximately 1,500 words give a detailed description of your communication and information plans.

1.7

Managing Self

You have to take responsibility for managing your own time, and hence your own effectiveness at work, whether that means cutting out things that are unnecessary, or prioritising your workload.

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HIGH DISCOURAGE U R G E N C Y HIGH LOW IGNORE DEVELOP ACTION PLAN DELAY ACT UPON IMMEDIATELY

IMPORTANCE

There are other tools available to help you, or you and your team, to prioritise, but this is one of the simplest. It is a four-box matrix that shows urgency against importance. Draw the box on a sheet of paper and write your current task within the relevant box. This will help you focus on those tasks that need to be done as a matter of priority, and those that do not. Those things that are both urgent and important need to be acted upon immediately. If something is not urgent and is not important, then ignore it. It is not worth your time to do it. Arguably if you have the time to do these less important tasks, then you may have too much time on your hands and need to be more usefully employed! If something is important, but not urgent, then develop an action plan. In this case, you have the time to enable you to do it well, so take advantage of that fact. Urgent but unimportant items are often harder to deal with. Quite often they are merely interruptions, and distractions. However they may need you to be tactful in the way that you either delay your attentions, or discourage the interruption. Because they are often seen by someone in the organisation as

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a priority, you may be required to act in an assertive manner to avoid being diverted from more important issues..

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