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B. Sc. In Business Management Special Degree

The Management Process

Students Course Material

Module Lecturer: Mr. Kolitha Ranawaka B. Sc. (Hons.), MIM (SL), ADCP, MBA
kolithansbm@gmail.com

National School of Business Management

Introduction to the Study of Management and the Fundamentals of Management

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What Is an Organization?
A group of people working together in a structured and coordinated fashion to achieve a set of goals.

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How Do Managers Combine and Coordinate the Various Kinds of Resources?

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What Is Management?
A set of activities (including planning and decision making, organizing, leading, and controlling) directed at an organizations resources (human, financial, physical, and informational) with the aim of achieving organizational goals in an efficient and effective manner.
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The Managers Job Is To:

PLAN:
A manager cannot operate effectively unless he or she has long range plans.

A plan for each days work:

What is to be done, and why do it? When is it to be done, and how will it be done? Who is to do the job? Where should it be done?
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The Manager Must Organize

When there is more than one employee needed to carry out a plan. Then organization is needed. A team must be formed. Each job must be carefully defined in terms of what is to be done. Establish delegation of responsibility.

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The Manager Must Control

Control means? A method of checking up to find what has been done and what must be done. A manager must know how well employees are performing.

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The Management Process

Planning and Decision Making Setting the organizations goals and deciding how best to achieve them. Organizing Determining how best to group activities and resources. Leading Motivating members of the organization Controlling Monitoring and correcting activities
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The Managerial Process

The managers primary responsibility is to carry out the management process. This figure illustrates the basic definitions and interrelationships of the basic managerial functions:
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Kinds of Managers
Managing at Different Levels of the organization:
Top Managers Small group of executives who manage the overall organization, the strategic level. Middle Managers A large group that implement the strategies developed at the top.
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Kinds of Managers
First-Line Managers
Supervise and coordinate the activities of operating employees.

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Kinds of Managers by Level and Area

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Managing in Different Areas of the Organization

Marketing Managers Financial Managers Operations Managers Human Resource Managers Administrative Managers Specialized Management

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Basic Managerial Roles and Skills

Regardless of level or area within an organization, all managers must play certain roles and exhibit certain skills in order to be successful, such as:
Do certain things. Meet certain needs. Have certain responsibilities.
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The Three Interpersonal Roles

Figurehead Leader Liaison, Coordinator

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The Three Informational Roles

Monitor Disseminator Spokesperson

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The Four DECISIONAL ROLES

Entrepreneur Disturbance Handler Resource Allocator Negotiator

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Managerial Skills
In addition to fulfilling roles, managers also need a number of specific skills. The most fundamental management skills are:
Technical Interpersonal Conceptual Diagnostic Communication Decision-making Time-management
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Technical Skills
Necessary to accomplish or understand the specific kind of work being done. These skills are especially important for first line managers.

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Interpersonal Skills
The ability to communicate with, understand, and motivate both individuals and groups. Be able to get along with: Subordinates Peers Those at higher levels
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Conceptual Skills
A managers ability to think in the abstract. The mental capacity to:
Understand organizational goals and its environment. How the organization is structured. Viewing the organization as system.
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Diagnostic Skills
Skills that enable a manager to visualize the most appropriate response to a situation.

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Communication Skills
A managers abilities both to effectively convey ideas and information to others and to effectively receive ideas and information from others.

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Decision-Making Skills
A managers ability to correctly recognize and define problems and opportunities and to then select an appropriate course of action to solve problems and capitalize on opportunities.

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Time-Management Skills
The managers ability to prioritize work, to work efficiently, and to delegate appropriately.

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The Nature of Management

The managers job is fraught with: Uncertainty Change Interruption Fragmented activities

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A Manager Must be a Leader of Employees

It means overseeing the team by influencing the employees to get the job done. Motivating employees. Creating an environment that makes employees work efficiently. Managers get employees to put forth their best effort.

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Traditional and Contemporary Issues and Challenges in Management

Traditional and Contemporary Issues and Challenges

The role of theory and history in management:
Theory is a conceptual framework for organizing knowledge and providing a blueprint for action. History: Understanding the historical context of management provides a sense of heritage and can help managers avoid the mistakes of others.

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The Practice of Management Can Be Traced Back Thousands of Years

The Egyptians used management functions of planning, organizing, and controlling when they constructed the pyramids. Observe the next slide, it will illustrate a few of the most important management breakthroughs and practices over the last 4000 years:

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A Timeline of the development of Management

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The Three Traditional Management Perspectives

The Classical Management Perspective: Ideas of the early 20th century theorists and managers converged with the emergence and evolution of large-scale business and management practice. This perspective actually includes two different viewpoints: scientific management and administrative management.
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Scientific Management
Concerned with improving the performance of individual workers. Frederick Taylor developed this system, which he believed would lead to a more efficient and productive work force.

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Steps in Scientific Management

1. Develop a science for each element of the job. 2. Scientifically select employees and then train them to do the job. 3. Supervise employees to make sure they follow prescribed methods.

Continue to plan the work, but use workers to get the work done.

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Steps in Scientific Management

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Administrative Management
Whereas scientific management deals with the jobs of individual employees, administrative management focuses on managing the total organization. Administrative management laid the foundation for later development in management theory. It is more appropriate for stable and simple organizations than for todays dynamic and complex organizations.

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The Behavioral Management Perspective

Unlike the classical management perspective, the behavioral management perspective placed more emphasis on individual attitudes and behaviors and on group processes and recognized the importance of behavioral processes in the work place.

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The Human Relations Movement

Proposed that workers respond primarily to the social context of the workplace, including social conditioning, group norms, and interpersonal dynamics.

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Organizational Behavior
Human behavior in organizations is complex. The field of organizational behavior draws from a broad, interdisciplinary base of psychology, sociology, anthropology, economics, and medicine. There are two theories on how employees behave:

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Behavioral Theory on How Employees Behave Toward Work

Theory X Assumptions:
Employees dislike work. Employees are irresponsible. Employees lack ambition. Employees resist change.

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Another Theory on How Employees Behave

Theory Y Assumptions:
Employees are willing to work. Employees are self directed. They accept responsibility. Employees are creative. They are self-controlled.

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The Quantitative Management Perspective

Management Science vs. Quantitative Management:
Management Science focuses specifically on the development of mathematical models. Quantitative Management applies quantitative techniques to management.

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The Systems Perspective of Organizations

Inputs from the environment: material inputs, human inputs, financial inputs, and information inputs. Transformation Process: technology, operating systems, administrative systems, and control systems Outputs into the environment: products/services, profits/losses, employee behaviors, and information outputs

Feedback

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Concepts
Synergy: two or more subsystems working together may often be more successful then working alone. Entropy: a normal process leading to system decline. Universal perspective: tempting to identify one best way. Contingency perspective: depending on elements in that situation.
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An Integrative Framework of Management Perspectives

Systems Approach Contingency Perspective

Recognition of internal interdependencies. Recognition of environmental influences.

Classical Management Perspectives: Methods for enhancing efficiency and facilitating planning, organizing, and controlling

Recognition of the situational nature of management. Response to particular characteristics of situation.

Quantitative Management Perspective: Techniques for improving decision making, resource allocation, and operations

Behavioral Management Perspectives: Insights for motivating performance and understanding individual behavior, groups and teams, and leadership

Effective and efficient management

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Understanding a System
System: an interrelated set of elements functioning as a whole. Types of Systems:
Open System: an organizational system that interacts with its environment. Closed System: an organizational system that does not interact with its environment. Subsystem: a system within a broader system.
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Operations Management
Operations management techniques are generally concerned with helping the organization produce products or services more efficiently.

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Integrating Perspectives for Managers

A complete understanding of management requires an appreciation of, classical, behavioral, and quantitative approaches. The systems and contingency perspectives can help managers integrate the three approaches and enlarge understanding of all three.

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The Emergence of Modern Management Perspectives

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3 The Environment
and Culture of Organizations

The Organizations Environments

External environment: everything outside an organizations boundaries that might affect it. The uncontrollable environment. Internal environment: the conditions and forces within an organization. The controllable environment.
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The Organization and Its Environments

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The General Environment

Economic dimensions: the overall health and vitality of the economic system in which the organization operates. Technical dimensions: the methods available for converting resources into products or services. Socio-cultural dimensions: the customs, mores, values, and demographics of the society in which the organization functions.

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Additional Dimensions
Political-Legal dimension: the government regulation of business and the general relationship between business and government. International dimension: the extent to which an organization is involved in or affected by business in other countries.

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McDonalds General Environment

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The Organizational Environment

Public pressure groups Suppliers Customers

Government

The Organization

Labor unions

Competitors

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The Task Environment

Competitors: an organization that competes with other organizations. Customer: whoever pays money to acquire an organizations products or services. Supplier: an organization that provides resources for other organizations. Regulator: a unit that has the potential to control, legislate, or influence an organizations policies and practices.
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Task Environments Continued

Interest group: a group organized by its members to attempt to influence organizations. Strategic partner: an organization working together with one or more organizations in a joint venture or other partnership.
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Figure 3.3: McDonalds Task Environment

Copyright Houghton Mifflin Company. All rights reserved.

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The Internal Environment

Owner: someone who has legal property rights to a business. Board of directors: governing body elected by a corporations stockholders and charged with overseeing the general management of the firm. Employees: those employed by the organization. Physical work environment: the firms facilities.

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Environmental Change, Complexity, and Uncertainty

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Organizational Culture
The set of values, beliefs, behaviors, customs, and attitudes that helps the members of the organization understand what it stands for, how it does things, and what it considers important. Organizational culture is important for it determines the feel of the organization. Its starting point is often the founder.

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Managing Organizational Culture

The manager must understand the current culture and then decide if it should be maintained or changed. Managers must walk a fine line between maintaining a culture that still works effectively versus changing a culture that has become dysfunctional.

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Organizational Environment Relationships

Uncertainty: a driving force that influences many organizational decisions. Competitive forces:
Threat of new competitive entrants. Competitive rivalry. Threat of substitute products. The power of buyers. The power of suppliers.
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Environmental Turbulence
Terrorist attacks. Workplace violence. Computer viruses. Such crises affect organizations in different ways.

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How Organizations Respond to Their Environments:

General environment Task environment Information management Mergers, takeovers acquisitions, alliances

Social responsibility The Organization Strategic responses Organization design and flexibility

Direct influence

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How Organizations Adapt to Their Environments

Each organization must asses its own unique situation then adapt according to the wisdom of senior management, for example:
Information systems. Strategic responses. Mergers, acquisitions, and alliances. Organizational design and flexibility. Direct influence of the environment.
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The Environment and Organizational Effectiveness

How well the organization understands, reacts to, and influences its environment. The systems resources approach: extent to which the organization can acquire needed resources. The internal processes approach: internal mechanisms of the organization and forces on minimizing strain. The goal approach: how well the firm obtains goals. Strategic constituencies: groups who have a stake in the organization.

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A Model of Organizational Effectiveness

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Foundations of Planning and Decision Making

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Organizational Goals
Goals are critical to organizational effectiveness and serve a number of purposes. Purposes of goals: Provide guidance. Promote good planning. Serve as sources of motivation. Mechanism for evaluation and control.
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Organizations Have a Purpose That Is Why They Need Goals

Identification Integration

Organizational purpose for goals

Adaptation

Collaboration

Revitalization

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Kinds of Goals
Goals vary by level, area, and time frame. Mission: a statement of an organizations fundamental purpose. Strategic goal: a goal set by and for top management of the organization. Tactical goal: set by and for middle managers of the organization. Operational goal: set by and for lower managers of the organization.
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Other Goals
Area: organizations also set goals for different areas. Time frame: organizations also set goals across different time frames.

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Responsibilities for Setting Goals

Who sets goals?
All managers should be involved in the goal setting process. Each manager has responsibilities for setting goals that correspond to their level.

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Managing Multiple Goals

When setting goals organizations sometimes experience conflicts or contradictions among goals. Conflicts are addressed through the use of the Optimizing concept: Optimizing: balancing and reconciling possible conflicts among goals.
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What is to be accomplished?

The planning function consists of:

How is it to be accomplished?
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1. Objectives

2. Actions

Planning has four (04) elements:

4. Resources

3. Implementation

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Why Is Planning Important?

What has to be done

A task can not be accomplished if the manager is not aware of:

How is it to be done

When is it to be done

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Organizational Planning
Kinds of organizational plans:
Strategic plan: a general plan outlining decisions of allocation, priorities, and action steps necessary to reach strategic goals.

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Tactical Plans
A plan aimed at achieving tactical and developed to implement specific parts of a strategic plan. Operational plan: a plan that focuses on carrying out tactical plans to achieve operational goals.
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Time Frames for Plans

Long-range plan: covers many years, perhaps even decades; common long-range plans are for five years or more. Intermediate plan: usually covers periods from one to five years. Short-range plan: generally covers a span of one year or less.

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More Types of Plans

Action plan: used to put into operation any other kind of plan. Reaction plan: designed to allow the company to react to an unforeseen circumstance.

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Responsibilities for Planning

Planning staff: some large organizations develop a professional planning staff. Planning task force: often comprised of line managers with special interest in the relevant area of planning. Board of directors: establish the corporate mission and strategy, and in some companies take part in the planning process.
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Contingency Planning
The determination of alternative courses of action to be taken if an intended plan of action is unexpectedly disrupted or rendered inappropriate.

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Crisis Management
The set of procedures the organization uses in the event of a disaster or other unexpected calamity. A related concept is the set of procedures the organization uses in the event of a disaster or other unexpected calamity.

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Tactical Planning
The development and executing of tactical plans:
Tactical plans are used to accomplish specific parts of a strategic plan. Each strategic plan is generally implemented through several tactical plans. Effective tactical planning involves both development and execution.

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Tactical Plan Development and Execution

Development:
Recognize and understand overarching strategic plans and tactical goals. Specify relevant resource and time issues. Identify and articulate human resource commitments.

Execution:
Evaluate each course of action in light of its goals. Obtain and distribute information and resources. Monitor horizontal and vertical communication and integration of activities. Monitor ongoing activities for goal achievement.

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Types of Operational Planning

Single-use plan: developed to carry out a course of action not likely to be repeated in the future. For a program, a plan for a large set of activities. For a project, a plan of less scope and complexity than a program.

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Standing Plan
Developed for activities that recur regularly over a period of time:
For a policy, a standing plan specifying the organizations general response to a designated problem or situation. Standard operating procedure: a standing plan outlining steps to be followed in particular circumstances. Rules and regulations: standing plans describing exactly how specific activities are to be carried out.
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Barriers to Goal Setting and Planning

Major Barriers
Inappropriate goals. Improper reward system. Dynamic and complex environment. Reluctance to establish goals. Resistance to change. Constraints.

Overcoming Barriers
Understanding the purposes of goals and planning. Communication and participation. Consistency, revision, and updating. Effective reward system.

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Managing Decision Making and Problem Solving

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The Nature of Decision Making

Decision making: The act of choosing one alternative from among a set of alternatives. Decision-making process: Recognizing and defining the nature of a decision situation, identifying alternatives, choosing the best alternative, and putting it into practice.

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Types of Decisions
Programmed decision: A decision that is fairly structured or recurs with some frequency (or both). Non-programmed decision: A decision that is relatively unstructured and occurs much less often than a PROGRAMMED DECISION.

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A View of Decision-Making Conditions

The decision maker faces conditions of:

Certainty

Risk

Uncertainty

Level of ambiguity and chances of making a bad decision

Lower

Moderate
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Higher

Decision-Making Conditions
State of certainty: A condition in which the decision maker knows with reasonable certainty what the alternatives are and what conditions are associated with each alternative. State of risk: A condition in which the availability of each alternative and its potential payoffs and costs are all associated with probability estimates.
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State of Uncertainty
A condition in which the decision maker does not know all the alternatives, the risks associated with each, or the likely consequences of each alternative.

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The Classical Model of Decision Making

and end up with a decision that best serves the interests of the organization.

Obtain complete and perfect information. Eliminate uncertainty. Evaluate everything rationally and logically When faced with a decision situation, managers should

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Rational Perspectives on Decision Making

Classical model: A prescriptive approach to decision making that tells managers how they should make decisions. It assumes that managers are logical and rational and that they make decisions that are in the best interests of the organization.

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Steps in Rational Decision Making

STEP
Recognize and define situation. Identify alternatives. Evaluate alternatives. Select alternative. Implement alternative. Follow up and evaluate results.

DETAIL
Stimulus may be positive or negative. Alternatives must be generated. Feasibility check. Choose best fit alternative. Implementation. Does it work?

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Identifying Alternatives
When the decision situation has been recognized and defined, the second step is to identify alternative courses. The third step in the decision-making process is evaluating each alternative. See next slide Figure 9.3 for an illustration of a decision tree.

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Evaluating Alternatives in the Decision-Making Process

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Behavioral Aspects of Decision Making

The Administrative Model: A decision making model showing that managers: 1. Have incomplete and imperfect information. 2. Are constrained by bounded rationality. 3. Tend to satisfice when making decisions.
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The Administrative Model of Decision Making

...and end up with a decision that may or may not serve the interests of the organization.

Use incomplete and imperfect Information. Are constrained by bounded rationality. Tend to satisfice When faced with a decision situation managers actually

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Bounded Rationality
A concept suggesting that decision makers are limited by their values and unconscious:
A. B. C. D. Values. Unconscious reflexes. Skills. Habits.

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Satisficing
The tendency to search for alternatives only until one is found that meets some minimum standard of sufficiency.

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Political Forces in Decision Making

Coalition:
An informal alliance of groups formed to achieve a common goal.

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Intuition and Escalation of Commitment

Intuition:
An innate belief about something without conscious consideration.

Escalation of commitment:
A decision makers staying with a decision even when it appears to be wrong.

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Risk Propensity and Decision Making

Risk propensity:
The extent to which a decision maker is willing to gamble when making a decision.

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Group and Team Decision Making in Organizations

Forms of Group and Team Decision Making:
Interacting group or team:
A decision making group or team in which members openly discuss, argue about, and agree on the best alternative.

Delphi group:
A form of group decision making in which a group solicits input from a panel of experts who contribute individually; their opinions are combined and, in effect, averaged.

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Nominal Groups
Unlike the Delphi method where group members do not see one another, this group is brought together. A structured technique used most often to generate:
Creativity. Innovative alternatives. Ideas.
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Advantages and Disadvantages of Group and Team Decision Making

ADVANTAGES More information and knowledge available. More alternatives generated. More acceptance. Enhanced communication. Better discussions. DISADVANTAGES The process takes longer. Compromised decisions result from indecisiveness. One person may dominate. Groupthink may occur.
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Groupthink
A situation that occurs when a group or teams desire for consensus and cohesiveness overwhelms the goal of reaching the best possible decision.

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6 Basic Elements of
Organizing

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What Is Organizing?
Deciding how best to group organizational activities and resources. What are the building blocks of organizing?
Organization Structure: The set of elements that can be used to configure an organization.
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Why Do You Have to Organize an Organization?

Because all the structural elements of the company and how those elements work together are used to manage the total organization.

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The Importance of Organizing

Clarifies Divides Provides Establishes Develops Relates Establishes authority
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Organizing Leads to Decision Making

Decision making is part of planning that involves selecting a course of action. When the manager is organized activities are coordinated.

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Organizational Structure
The building blocks used to form an organization. One of the managers jobs is to know how to put the building blocks together.

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Designing Jobs
What is one of the building blocks?
Job Design: The determination of an individuals workrelated responsibilities.

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Overall Tasks Are Broken Down By?

Job Specialization:
The degree to which the overall task of the organization is broken down and divided into smaller component parts.

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The Five Alternatives to Job Specialization:

Job Rotation:
Involves systematically moving employees from one job to another.

Job Enlargement:
Involves increasing the total number of tasks worker performs.

Job Enrichment:
Involves increasing both the number of tasks the worker does and the control the worker has over the job.
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Alternatives Continued
Job Characteristics Approach: Suggests that jobs should be diagnosed and improved along five core dimensions, taking into account both the work system and employee preferences. Work Teams: Allows an entire group to design the work system it will use to perform an interrelated set of tasks.
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Job Characteristics Approach

This is an alternative to job specialization. The job characteristics approach suggests that jobs should be diagnosed and improved along five core dimensions:
Skill variety Task identity Task significance Autonomy Feedback

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The Job Characteristics Approach

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Grouping Jobs: Departmentalization

What is it?
The process of grouping jobs according to some logical arrangement.

Functional Departmentalization:
Grouping jobs involving the same or similar activities.

Product Departmentalization:
Grouping activities around products or product groups.
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Bases for Departmentalization:

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Other Forms of Departmentalization:

Some organizations group certain activities by: Time. Sequence.

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Other Considerations
Sometimes departments are called something different, such as:
Division. Units. Section. Bureaus.

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Establishing Reporting Relationships

What needs to be clarified?
Chain of Command: Clear and distinct lines of authority among all positions in an organization. Span of Management: What is it? The number of people who report to each manager.
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Tall Versus Flat Organizations

What is the difference?
Flat organizational structure leads to higher levels of employee morale and productivity. Tall organizational structures usually tend to be more expensive requiring more managers.

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Tall Versus Flat Organizations

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Factors Influencing the Span of Management

Competence of supervisor and subordinates. Dispersion of subordinates. Extent of non-supervisory work. Degree of required supervision. Extent of standard procedures. Similarity of tasks. Frequency of new problems. Preferences of supervision.

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Distributing Authority: An Important Building Block

Authority:
Power that has been legitimized by the organization.

Delegation:
The process by which managers assign a portion of their total workload to others.

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Steps in the Delegation Process

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Decentralization and Centralization

What are the differences?
Decentralization:
The process of systematically delegating power and authority throughout the organization to middle- and lower-level managers.

Centralization:
The process of systematically retaining power and authority in the hands of upper-level managers.

Copyright Houghton Mifflin Company. All rights reserved.

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Coordinating Activities
What is coordination? The process of linking the activities of the various departments of the organization. Why coordinate? Systems must be put into place to keep the activities of each department focused on organizational goal attainment.
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Three Major Forms of Interdependence

Pooled Interdependence: When units operate with little interaction; their output is simply pooled at the organizational level. Sequential Interdependence: When the output of a unit comes becomes then input for another unit. Reciprocal Interdependence: When activities flow both ways.
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Structural Coordination Techniques

Managerial hierarchy. Rules and procedures. Liaison roles. Task force.

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What Is the Difference Between Line and Staff?

Line Position:
A position in the direct chain of command that is responsible for the achievement of an organizations goals.

Staff Position:
A position intended to provide expertise, advise, and support for the line position.
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Managing Organizational Design

The Nature of Organizational Design

What is organizational design?
The overall set of structural elements and relationships among those elements used to manage the total organization.

Organization design can be traced back to two universal perspectives:

1. Bureaucratic model. 2. Behavioral model.
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Why Are There Different Types of Organizations?

Depending on what the product or service is, the management has to structure the organization to met the customers needs.

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Bureaucracy: Based on a Legitimate and Formal System of Authority

The organization should adopt a distinct division of labor. Develop a consistent set of rules. Establish a hierarchy of positions. Managers should conduct business impersonally to maintain social distance. Employment and promotion should be based on technical expertise, and employees should be protected from arbitrary dismissal.
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Behavioral Model
A model of organization design consistent with the human relations movement and stressing attention to developing work groups and concern about interpersonal process.
Copyright Houghton Mifflin Company. All rights reserved. 12 - 151

System 1 Design
Leadership process includes no perceived confidence and trust. Motivational process taps only physical, security, and economic motives. Communication process is such that information flows downward. Interaction process is closed. Decisions occur at the top. Goal setting occurs at top. Control is centralized. Performance goals are low.
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System 4 Organization
Leadership process includes perceived confidence and trust. Motivational process taps a full range of motives through participatory methods. Communication flows freely. Interaction process is open. Decisions occur at all levels. Goal setting encourages group participation. Control process is dispersed. Performance goals are high.
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Situational Influences on Organizational Design

What is it? Optimal design depends on a set of relevant situational factors. Situational factors play a role in determining the best organization design for any particular circumstance. There are four basic situational factors.

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Figure 12.2: Conglomerate (H-Form) Design at Pearson PLC

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The Basic Situational Factors

Technology:
Conversion processes used to transform inputs into outputs.

Environment:
Organizations in stable environments tend to have different kind of design from organizations in unstable environments.

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Two Designs Emerged from Stable and Unstable Environments

Can you name them?
Mechanistic organization:
Similar to the bureaucratic or system 1 model; most frequently found in stable environments.

Organic organization:
Very flexible and informal model of organization design; most often found in unstable and unpredictable environments.

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Organizations Characterized by Two Primary Factors:

Differentiation:
The extent to which the organization is broken down into subunits.

Integration:
The degree to which the various subunits must work together in a coordinated fashion.

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Organizational Size
What does organizational size mean?
The total number of full-time or full-time equivalent employees.

What is organizational life cycle?

Progression through which organizations evolve as they grow and mature.

What are the life cycle stages?

Birth Youth Midlife Maturity.
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Strategy and Organization Designs

What is corporate level strategy? Organizations can adopt a variety of corporate level strategies, such as: Single-product strategy. Portfolio approach. The chosen strategy affects the organizational design.

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Business Level Strategy

These strategies can affect the design of individual businesses within the organization as well the overall organization itself. What are the possible outcomes?
An organization can be centralized or decentralized.

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Organizational Functions
Aggressive marketing strategy calls for separate departments such as advertising, direct sales, and sales promotion. A production strategy can call for manufacturing in diverse locations. Human resource strategy may call for a lesser degree of decentralization.

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Basic Forms of Organizational Design

U-Form or Functional design:
An organizational arrangement based on the functional approach to departmentalization.

H-Form or Conglomerate design:

An arrangement used by an organization made up of a set of unrelated businesses.

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Functional or U-Form Design for a Small Manufacturing Company

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M-Form or Divisional Design

An organizational arrangement based on multiple businesses in related areas operating within a larger organizational framework. Matrix design:
An organizational design based on two overlapping bases of departmentalization.

Hybrid design:
The use of two or more common forms of organizational design.
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Multidivisional (M-Form) Design at The Limited, Inc.

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A Matrix Organization

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Emerging Issues in Organizational Design

Team organization: Relies almost exclusively on product type teams, with little or no underlying functional hierarchy. Virtual organization: Has little or no formal structure. Learning organization: Works to facilitate the lifelong learning and personal development of all its employees while transforming itself to respond to changes and demands.
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International Organizational Design

International markets create an organization design that fits unique circumstances: Separate international divisions. Extension of product departmentalization. Extension of the multidivisional structure.
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Common Organization Designs for International Organizations, A

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Common Organization Designs for International Organizations, B

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Common Organization Designs for International Organizations, C

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Common Organization Designs for International Organizations, D

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Managing Employee Motivation and Performance

The Nature of Motivation

If an employee chooses to work hard one day, and work just hard enough to avoid reprimand, or as little as possible on another day, what then is Motivation? Motivation is the set of forces that causes people to behave in certain ways.

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The Motivational Framework

Need or deficiency Search for ways to satisfy needs Choice of behavior to satisfy need

Determination of future needs and search/choice for satisfaction

Evaluation of need satisfaction

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The Importance of Motivation in the Workplace

What are the three factors that determine individual performance?
Motivation: The desire to do the job. Ability: The capability to do the job. Work environment: The resources needed to do the job.
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Content Perspectives on Motivation

Content perspectives are?
Approaches to motivation that try to answer the question, What factors in the workplace motivate people?

Maslows hierarchy of needs is?

Physiological Security Belongingness Esteem Self-actualization

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Maslows Hierarchy of Needs

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What Is the ERG Theory?

Suggests that peoples needs are grouped into three possibly overlapping categories. What are they?
Existence. Relatedness. Growth.

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What Is the Two-Factor Theory?

Suggests that peoples satisfaction and dissatisfaction are influenced by two independent set of factors. Can you name them?
Motivation factors. Hygiene factors.

The following is a micro view of the TwoFactor theory:

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The Two-Factor Theory of Motivation

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What Are the Individual Human Needs?

Need for achievement:
The desire to accomplish a goal or task more effectively than in the past.

Need for affiliation:

The desire for human companionship and acceptance.

Need for power:

The desire to be influential in a group and to control ones environment.
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Process Perspectives on Motivation Is?

How does motivation occur? Process perspectives: Approaches to motivation that focus on why people choose certain behavioral options to satisfy their needs and how they evaluate their satisfaction after they have attained these goals.
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What Is the Expectancy Theory?

Suggests that motivation depends on two factors. What are the two factors?
How much we want something. How likely we think we are to get it.

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The Expectancy Model of Motivation

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The Equity Theory

What is it? Suggests that people are motivated to seek social equity in the rewards they receive for performance. Porter-Lawler Extension theory: Suggests that if performance results in equitable rewards, people will be more satisfied. Thus, performance can lead to satisfaction.

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Goal-Setting Theory
Goal difficulty:
The extent to which a goal is challenging and requires effort.

Goal specificity:
The clarity and precision of the goal.

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The Expanded Goal-Setting Theory of Motivation

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Elements of Reinforcement Theory

Arrangement of the reinforcement contingencies:
Positive reinforcement. Avoidance. Punishment. Extinction.

Schedules for applying reinforcement:

Fixed interval. Variable interval. Fixed ratio. Variable ratio.

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Popular Motivational Strategies

Empowerment:
The process of enabling workers to set their own work goals, make decisions, and solve problems within their sphere of responsibility and authority.

Participation:
The process of giving employees a voice in making decisions about their own work.

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New Forms of Working Arrangements

Flexible work schedules. Job sharing. Compressed work schedules. Telecommuting.

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Reward Systems
Reward system: The formal and informal mechanism by which employee performance is defined, evaluated, and rewarded. Merit system: A reward system whereby people get different pay raises at the end of the year depending on their overall job performance. Incentive system: A reward system whereby people get different pay amounts at each pay period in proportion to what they do.
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Managing Leadership and Influence Processes

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The Nature of Leadership

What does leadership mean? A process, the use of non-coercive influence to shape the groups or organizations goals, and: Motivate behavior. Define group or organizational culture. What are the characteristics of those who are perceived to be leaders?

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Who Are Leaders?

People who:
Can influence the behaviors of others. Are able to influence without having to rely on force. Are accepted by others as leaders.

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Leadership Versus Management

MANAGEMENT:
Planning and budgeting. Organizing and staffing. Controlling and problem solving. Producing a degree of predictability.

LEADERSHIP:
Establishing direction. Aligning people. Motivating and inspiring. Producing change, often to a dramatic degree.

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Power and Leadership

What is power? The ability to affect the behavior of others. Legitimate power: Power granted through the organizational structure, it is the power accorded people occupying particular positions as defined by the organization.

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Reward Power Defined

Reward power: The power to give or withhold rewards, such as: Salary increases. Bonuses. Promotion. Recommendation

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Types of Power
Coercive power: The power to force compliance by means of psychological, emotional, or physical threat. Referent power: The personal power that accrues to someone based on identification, imitation, loyalty, or charisma.
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What Is Expert Power?

The personal power that accrues to someone based on the information or expertise that they possess.

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The Leadership Grid

A method of evaluating leadership styles to train managers using OD techniques so that they are simultaneously more concerned for both people and production. Concern for production:
Deals with the job aspects of leader behavior.

Concern for people:

Deals with the people aspects of leader behavior.

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The Leadership Grid

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Related Perspectives on Leadership

Substitutes for leadership:
Identifies situations in which leader behaviors are neutralized or replaced by characteristics of subordinates, the task, and the organization.

Charismatic leadership:
Assumes that charisma in an individual characteristic of the leader.

Charisma:
A form of interpersonal attraction that inspires support and acceptance.
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Transformational Leadership
Leadership that goes beyond ordinary expectations by transmitting a sense of mission, stimulating learning experiences, and inspiring new ways of thinking.

Copyright Houghton Mifflin Company. All rights reserved.

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Political Behavior in Organizations

Political behavior: Activities carried out for the specific purpose of acquiring, developing, and using power and other resources to obtain ones preferred outcomes. Impression management: A direct and intentional effort by someone to enhance his/her image in the eyes of others.
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10

Managing Interpersonal Relations and Communications

What Is the Definition of Communication?

The process of transmitting information from one person to another. What is effective communication? The process of sending a message in such a way that the message received is as close in meaning as possible to the message intended.
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What Are the Basic Functions of Management That Communication Relates to?
Planning Organizing Leading Controlling

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The Communication Process

Noise

Sender
2 Encoding 3 Transmission through Channels

Receiver 4 Decoding

Start

1 Meaning

Noise

5 Meaning

8 Decoding

7 Transmission through channels

6 Encoding Sender

Receiver
Noise
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Forms of Communication in Organizations

What is oral communication?
Face to face conversations Group discussions Telephone calls Other situations in which the spoken word is used to express meaning

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Formal Communication in Organizations

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What Is Vertical Communication?

It flows up and down the organization. How does it flow? Usually along formal lines. Where does it take place? Between managers and their subordinates and may involve several different levels of the organization.
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What Is Horizontal Communication?

Flows laterally within the organization. Who is involved?
Colleagues and peers at the same level of the organization and may involve individuals from several different organizational units.

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Informal Communication in Organizations

The grapevine?
An informal communication network that can permeate an entire organization.

Management by wandering around?

An approach to communication that involves the manager literally wandering around and having spontaneous conversations with others who are involved with the company in some way.

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Informal Communication in Organizations

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What Is Nonverbal Communication?

Any communication exchange that does not use words or that uses words to carry more meaning than the strict definition of the words themselves.

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Barriers to Communication
Individual Barriers:
Conflicting or inconsistent cues. Credibility about the subject. Reluctance to communicate. Poor listening skills. Predispositions about the subject.
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Organizational Barriers:
Semantics. Status or power differences. Different perceptions. Noise. Overload.

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More and Less Effective Listening Skills

More Effective Listening
Stays active, focused

Less Effective Listening

Is passive, laid back

Pays attention Asks questions

Is easily distracted

Asks no questions

Keeps an open mind

Has preconceptions

Assimilates information

Disregards information

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Managing Work Groups and Teams

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How Would You Define a Group?

Two or more people who interact regularly to accomplish a common purpose or goal. Groups are a ubiquitous part of organizational life.

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Types of Groups in Organizations

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What Are the Types of Groups?

Functional Group: A permanent group created by the organization to accomplish a number of organizational purposes with an indefinite time horizon. Informal or Interest Group: Created by its own members for purposes that may or may not be relevant to organizational goals.

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Other Types of Teams

Problem-solving team:
Comprises knowledge workers who gather to solve a specific problem.

Management team:
Consists mainly of managers from various functions.

Work team:
Responsible for the daily work.

Virtual team:
New form of team that interacts by computer.

Quality circle:
Declining in popularity.
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Why Do Organizations Create Task Groups?

To accomplish a relatively narrow range of purposes within a stated or implied time horizon.

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What Does a Team Consist of?

A group of workers who function as a unit. They function with little or no supervision to carry out workrelated:
Tasks Functions Activities
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How Do People Join Groups?

They join functional groups simply by working for an organization. When an employee is assigned a job they become members of a functional group. Then employees volunteer to serve on: committees, task forces, and teams. They also join informal interest groups.
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The Stages of Group Formation

FORMING:
Members get acquainted, test interpersonal behaviors.

NORMING:
Members share acceptance of roles, sense of unity.

STORMING:
Members develop group structure and patterns of interaction.

PERFORMING:
Members enact roles, direct effort toward goal attainment and performance.

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Stages of Group Development

Forming: Members get acquainted, test interpersonal behaviors Slow evolution to next stage Storming: Members develop group structure and patterns of interaction Burst of activity to next stage

Slow evolution to next stage Performing: Members enact roles, direct effort toward goal attainment and performance

Norming: Members share acceptance of roles, sense of unity

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Characteristics of Groups and Teams

What is a role? The part an individual plays in helping the group reach its goal. What does role structure accomplish? The set of defining roles and interrelationships among those roles that the group or team members define and accept.
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The Development of a Role

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Types of Roles
Role ambiguity: When the sent role is unclear and the individual does not know what is expected of them. Role conflict: When the messages and cues comprising the sent role are clear but contradictory or mutually exclusive. Role overload: When expectations for the role exceed the individuals capabilities.
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What Are Behavioral Norms?

Norms are standards of behavior that the group or team accepts for its members. What do norms define?
Boundaries between acceptable and unacceptable behavior.
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Norm Conformity
Some groups or teams exert more pressure for conformity. Initial stimulus that prompts behavior can affect conformity. Individual traits can determine conformity. Situational factors such as team size contribute to conformity.
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What Is Socialization?
Generalized norm conformity that occurs as a person makes the transition from being an outsider to being an insider in the organization.

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What Are the Factors That Influence Group Cohesiveness?

Factors that increase cohesiveness:
Inter-group competition. Personal attraction. Favorable evaluation. Agreement on goals. Interaction.

Factors that reduce cohesiveness:

Group size. Disagreement on goals. Intra-group competition. Domination. Unpleasant experiences.

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Factors That Influence Group Cohesiveness

FACTORS THAT INCREASE COHESIVENESS FACTORS THAT REDUCE COHESIVENESS

Inter-group competition Personal attraction Favorable evaluation Agreement on goals Interaction

Group size Disagreement on goals Intra-group competition Domination Unpleasant experiences

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The Interaction Between Cohesiveness and Performance Norms

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Formal and Informal Leadership

Formal leadership: One appointed by the organization or chosen or elected by members of the group. Informal leader: A person who engages in leadership activities but whose right to do so has not been formally recognized by the organization or group.
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The Nature of Conflict

How would you define conflict? A disagreement between two or more: Individuals. Groups. Organizations.

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The Nature of Organizational Conflict

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Methods for Stimulating Conflict

Stimulating conflict:
Increase competition Hire outsiders Change established procedures

Controlling conflict:
Expand resource base Enhance coordination of interdependence Set supra-ordinate goals Match personalities and work
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Resolving and Eliminating Conflict

Avoid conflict Convince conflicting parties to compromise. Bring conflicting parties together to confront and negotiate conflict.
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12 The Controlling
Process

Why Control?
Control is an issue every manager faces. How does control help the manager? Control is a process to regulate organizational activities to make them consistent with established: Plans Targets Standards
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What Is the Purpose of Control?

It is one of the four basic management functions and has four basic functions. What are the functions? Adapts to change. Limits accumulation of error. Helps coping with complexity. Helps minimize costs.

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The Purpose of Control

Adapt to environmental change Limit the accumulation of error

Control helps the organization

Cope with organizational complexity

Minimize costs

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Name the Levels of Control?

Operational control:
Focuses on the processes used to transform resources into products or services.

Financial control:
Concerned with financial resources.

Structural control:
How the elements of structure are serving the intended purposes.

Strategic control:
How effective are the functional strategies helping the organization meet its goals.
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Levels of Control

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Who Is Responsible for Control?

Control rests with all managers. Large corporations have a controller. What does a controller do?
Helps line managers with their control activities.

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What Are the Steps in the Control Process?

Establish standards. Measure performance. Compare performance against standards. Determine need for corrective action. The sub-steps:
Maintain status quo. Correct deviation. Change standards.
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Steps in the Control Process

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What Does Preliminary Control Monitor?

It attempts to monitor quality and quantity of:
Financial resources. Material resources. Human resources. Information resources.

Why?
Before they become part of the system.

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What Is the Purpose of Screening Controls?

They focus on how inputs are being transformed into outputs. They also rely heavily on feedback processes during the transformation process.

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What Do Postaction Controls Focus On?

Focus is on outputs from the organizational system. What do they monitor?
They monitor the output results of the organization after the transformation process is complete. (see Figure 20.4 illustration)

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Figure 20.4: Forms of Operational Control

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What Are the Reasons for Financial Controls?

They control the financial resources as they flow into the organization. Then they are held by the organization. Then they flow out of the organization. Businesses must manage their finances so that revenues are sufficient to cover expenses and still return a profit.

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What Is a Budget?
It is a plan expressed in numerical terms. What is the time frame for a budget?
Usually a year, but sometimes broken down into quarters and months.

Budgets are quantitative in nature and provide yardsticks for measuring performance and facilitating comparisons.

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Developing Budgets in Organizations

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Other Tools for Financial Control

Financial Statement: A profile of some aspect of an organizations financial circumstances.
Balance Sheet: List of assets and liabilities of an organization at a specific point in time, usually the last day of the fiscal year. Ratio Analysis: The calculation of one or more financial ratios to assess some aspect of the organizations financial health.

Income Statement: A summary of financial performance over a period of time, usually one year.

Audit: An independent appraisal of an organizations accounting, financial, and operational system.

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What Is Bureaucratic Control?

A form of organizational control characterized by formal and mechanistic structural arrangements. What is clan control? An approach to organizational control characterized by informal and organic structural arrangements.

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Organizational Control

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What Is Meant by Strategic Control

Control aimed at ensuring that the organization is maintaining an effective alignment with its environment and moving toward achieving its strategic goals.

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Characteristics of Effective Control

Integration with planning Flexibility Accuracy Timeliness Objectivity

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What Influences Resistance to Control?

Over-control Inappropriate focus Rewards for inefficiency Too much accountability

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How Can Resistance to Control Be Overcome?

When employees are involved with planning and implementing the control system, they are less likely to resist. Verification procedures need to be developed to provide checks and balances in order for managers to verify the accuracy of performance indicators.
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