Principles of Management PPT Midterm

Courtesy : Stephen P.
Robins
Managers
and Management
PowerPoint Presentation by Charlie
Cook
Copyright 2004 Prentice Hall,
Inc.
All rights reserved.
1. Describe the difference between managers and
operative employees.
2. Explain what is meant by the term management.
3. Differentiate between efficiency and effectiveness.
4. Describe the four primary processes of
management.
5. Classify the three levels of managers and identify
the primary responsibility of each group.
Inc. All rights reserved.
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6. Summarize the essential roles performed by
managers.
7. Discuss whether the managers job is generic.
8. Describe the four general skills necessary for
becoming a successful manager.
9. Describe the value of studying management.
10. Identify the relevance of popular humanities
and social science courses to management
practices.
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Organization
A systematic arrangement of people brought
together to accomplish some specific purpose;
applies to all organizationsfor-profit as well as
not-for-profit organizations.
Where managers work (manage)
Common characteristics
Goals
Structure
People
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EXHIBIT 1.1
Operatives
People who work directly on a job or task and have
no responsibility for overseeing the work of others
Managers
Individuals in an organization who direct the
activities of others
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EXHIBIT 1.2
First-line managers
Supervisors responsible for directing the day-to-
day activities of operative employees
Middle managers
Individuals at levels of management between the
first-line manager and top management
Top managers
Individuals who are responsible for making
decisions about the direction of the organization
and establishing policies that affect all
organizational members
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Management
The process of getting things done, effectively and
efficiently, through and with other people
Efficiency
Means doing the thing correctly; refers to the
relationship between inputs and outputs; seeks to
minimize resource costs
Effectiveness
Means doing the right things; goal attainment

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EXHIBIT 1.3
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EXHIBIT 1.4
Management process:
planning, organizing,
leading, and controlling
Planning
Includes defining goals, establishing strategy, and
developing plans to coordinate activities
Organizing
Includes determining what tasks
to be done, who is to do them,
how the tasks are to be
grouped, who reports to
whom, and where
decisions are to be made
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Leading
Includes motivating employees, directing the
activities of others, selecting the most effective
communication channel, and resolving conflicts
Controlling
The process of monitoring performance,
comparing it with goals, and
correcting any significant
deviations
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Interpersonal
Figurehead
Leader
Liaison
Informational
Monitor
Disseminator
Spokesperson
Decisional
Entrepreneur
Disturbance hander
Resource allocator
Negotiator

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EXHIBIT 1.5
Source: Adapted from The Nature of Managerial Work (paperback) by H. Mintzberg, Table 2, pp.9293.
Copyright 1973 Addison Wesley Longman. Reprinted by permission of Addison Wesley Longman.
Level in the organization
Do managers manage differently based on where they are
in the organization?
Profit versus not-for-profit
Is managing in a commercial enterprise different than
managing in a non-commercial organization?
Size of organization
Does the size of an organization affect how managers
function in the organization?
Management concepts and national borders
Is management the same in all economic, cultural, social
and political systems?
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EXHIBIT 1.6
Source: Adapted from T. A. Mahoney, T. H. Jerdee, and S. J. Carroll,
The Job(s) of Management, Industrial Relations 4, No.2 (1965), p.103.
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EXHIBIT 1.7
Source: Adapted from J. G. P. Paolillo, The Managers Self Assessments of Managerial Roles:
Small vs. Large Firms, American Journals of Small Business, JanuaryMarch 1984, pp.6162.
Conceptual skills
A managers mental ability to coordinate all of the
organizations interests and activities
Interpersonal skills
A managers ability to work with, understand, mentor, and
motivate others, both individually and in groups
Technical skills
A managers ability to use the tools, procedures, and
techniques of a specialized field
Political skills
A managers ability to build a power base and establish the
right connections
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Behaviors related to a managers
effectiveness:
Controlling the organizations environment and its
resources.
Organizing and coordinating.
Handling information.
Providing for growth and development.
Motivating employees and handling conflicts.
Strategic problem solving.
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1. Initiate and implement change
and improvement in services,
products, and systems
2. Monitor maintain, and
improve service and product
delivery
3. Monitor and control the use of
resources
4. Secure effective resource
allocation for activities and
projects
5. Recruit and select personnel
6. Develop teams, individuals,
and self to enhance
performance
7. Plan, allocate, and evaluate
work carried out by teams,
individuals and self
8. Create, maintain, and enhance
effective working
relationships
9. Seek, evaluate, and organize
information for action
10. Exchange information to solve
problems and make decisions
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EXHIBIT 1.8
We all have a vested interest in improving the
way organizations are managed.
Better organizations are, in part, the result of good
management.
You will eventually either manage or be
managed
Gaining an understanding of the management
process provides the foundation for developing
management skills and insight into the behavior of
individuals and the organizations.
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Anthropology
Economics Philosophy
Political Science Psychology
Sociology
Management
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Ancient massive construction projects
Egyptian pyramids
Great Wall of China
Michelangelo the manager
(High Renaissance)

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Wrote the Wealth of Nations (1776)
Advocated the economic advantages that
organizations and society would reap from the
division of labor:
Increased productivity by increasing each workers
skill and dexterity (talent).
Time saved that is commonly lost in changing tasks.
The creation of labor-saving inventions and
machinery.
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Industrial revolution
Machine power began to substitute for human
power
Lead to mass production of economical goods
Improved and less costly transportation systems
became available
Created larger markets for goods.
Larger organizations developed to serve larger
markets
Created the need for formalized management
practices.
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Classical approach
The term used to describe the hypotheses of the
scientific management theorists and the general
administrative theorists.
Scientific management theorists
Fredrick W. Taylor, Frank and Lillian Gilbreth, and Henry
Gantt
General administrative theorists
Henri Fayol and Max Weber
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Frederick W. Taylor
The Principles of Scientific Management (1911)
Advocated the use of the scientific method to define
the one best way for a job to be done
Believed that increased efficiency could be achieved
by selecting the right people for the job and
training them to do it precisely in the one best way.
To motivate workers, he favored incentive wage
plans.
Separated managerial work from operative work.
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Develop a science for each element of an individuals work,
which replaces the old rule-of-thumb method.
Scientifically select and then train, teach, and develop the
worker. (Previously, workers chose their own work and trained
themselves as best they could.)
Heartily cooperate with the workers so as to ensure that all
work is done in accordance with the principles of the science
that has been developed.
Divide work and responsibility almost equally between
management and workers. Management takes over all work
for which it is better fitted than the workers. (Previously,
almost all the work and the greater part of the responsibility
were thrown upon the workers).
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Frank and Lillian Gilbreth
Bricklaying efficiency improvements
Time and motion studies (therbligs)

Henry Gantt
Incentive compensation systems
Gantt chart for scheduling work operations
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General administrative theorists
Writers who developed general theories of what
managers do and what constitutes good
management practice
Henri Fayol (France)
Fourteen Principles of Management: Fundamental or
universal principles of management practice
Max Weber (Germany)
Bureaucracy: Ideal type of organization characterized
by division of labor, a clearly defined hierarchy,
detailed rules and regulations, and impersonal
relationships
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Henri Fayol, a French industrialist, is now
recognized as the Father of Management. In
year 1916 Fayol wrote a book entitled
"Industrial and General Administration".

In this book, he gave the 14 Principles of
Management. These 14 principles of
management are universally accepted and
used even today. According to Henri Fayol, all
managers must follow these 14 principles.
Division of work
Authority
Discipline
Unity of command
Unity of direction
Subordination of the
individual
Remuneration
Centralization
Scalar chain
Order
Equity
Stability of tenure of
personnel
Initiative
Esprit de corps
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EXHIBIT HM2
Work should be divided among individuals and
groups to ensure that effort and attention are focused
on special portions of the task.
Fayol presented work specialization as the best way
to use the human resources of the organization.
Subdivision of work makes it simpler and results in
efficiency.
It also helps the individual in acquiring speed,
accuracy in his performance.

Specialization allows the individual to build
up experience, and to continuously improve
his skills. Thereby he can be more
productive.

The concepts of Authority and responsibility are
closely related. Authority was defined by Fayol as the
right to give orders and the power to claim obedience.
Responsibility involves being accountable, and is
therefore naturally associated with authority. Whoever
assumes authority also assumes responsibility.
There should be a balance between the two i.e. they
must go hand in hand.
Authority without responsibility leads to
irresponsible behavior whereas responsibility
without authority makes the person ineffective.

The right to issue commands, along with
which must go the balanced responsibility
for its function.

According to Fayol, Discipline means sincerity,
obedience, respect of authority & observance of rules
and regulations of the enterprise.
This principle applies that subordinate should respect
their superiors and obey their order.
Discipline is not only required on path of subordinates
but also on the part of management.

Employees must obey, but this is two-sided:
employees will only obey orders if
management play their part by providing
good leadership.

Each worker should have only one boss with no other
conflicting lines of command.
In other words, a sub-ordinate should not receive
instructions from more than one person because -
- It undermines authority
- Weakens discipline
- Creates confusion
- Delays the work
- Escaping responsibilities
- Duplication of work
- Overlapping of efforts

Each worker should have only one boss with
no other conflicting lines of command.
The entire organization should be moving towards a
common objective in a common direction.
People engaged in the same kind of activities must
have the same objectives in a single plan. This is
essential to ensure unity and coordination in the
enterprise.
Unity of command does not exist without unity of
direction but does not necessarily flows from it.
People engaged in the same kind of
activities must have the same objectives in a
single plan. This is essential to ensure unity
and coordination in the enterprise. Unity of
command does not exist without unity of
direction but does not necessarily flows
from it.

The interests of one person should not take priority
over the interests of the organization as a whole.
In an organization, there are two types of interest, the
individual interest of the employees, and the general
interest of the organization. The individual interest
should be given less importance, while the general
interest should be given most importance. If not, the
organization will collapse.
For example, for change of location of
plant, for change of profit sharing ratio, etc.

Management must see that the goals of the
firms are always paramount.

Remuneration is the price for services received. If an
organization wants efficient employees and best
performance, then it should have a good
remuneration policy. This policy should give
maximum satisfaction to both employer and
employees.
It should include both financial and non-financial
incentives (free education, insurance, medical
& residential facilities).

Payment is an important motivator although
by analyzing a number of possibilities, Fayol
points out that there is no such thing as a
perfect system
Centralization means concentration of authority at the top level.
In other words, centralization is a situation in which top
management retains most of the decision making authority.
Decentralization means disposal of decision making authority to
all the levels of the organization. In other words, sharing authority
downwards is decentralization.
According to Fayol, Degree of centralization or decentralization
depends on no: of factors like size of business, experience of
superiors, dependability & ability of subordinates etc.
Anything which increases the role of subordinate is
decentralization & anything which decreases it is centralization.
Fayol suggested that absolute centralization or decentralization is
not feasible. An organization should strike to achieve a lot
between the two.

This is a matter of degree depending on the
condition of the business and the quality of
its personnel.

Scalar Chain is a line of authority. This line joins all
the members (managers and employees) from top to
bottom. Every member must know who his superior
is. He must also know who his subordinate is. Scalar
Chain is necessary for good communication. Scalar
Chain must not be broken in norm circumstances.
However, if quick action is necessary, then this chain
can be broken. This is done using "Gang Plank"
A hierarchy is necessary for unity of direction.
But lateral communication is also
fundamental, as long as superiors know that
such communication is taking place. Scalar
chain refers to the number of levels in the
hierarchy from the ultimate authority to the
lowest level in the organization. It should not
be over-stretched and consist of too-many
levels
There should be an Order for Things and People in
the organization.
Order for things is called Material Order. Order for
people is called Social Order.
Material Order refers to "a place for everything and
everything in its place."
Social Order refers to the selection of the "right man
in the right place".
There must be orderly placement of the resources
such as Men and Women, Money, Materials, etc.
Misplacement will lead to misuse and disorder.

Both material order and social order are
necessary. The former minimizes lost time
and useless handling of materials. The latter
is achieved through organization and
selection.
The employees should be treated with fairness, kindness &
justice if devotion is expected of them.
It implies that managers should be fair and impartial while
dealing with the subordinates.
They should give similar treatment to people of similar
position.
They should not discriminate with respect to age, caste, sex,
religion, relation etc.
Equity is essential to create and maintain cordial relations
between the managers and sub-ordinate.
But equity does not mean total absence of harshness.
Fayol was of opinion that, at times force and harshness might
become necessary for the sake of equity.

In running a business a combination of
kindliness and justice is needed. Treating
employees well is important to achieve
equity.
Employees work better if job security and career progress are
assured to them. An insecure tenure and a high rate of
employee turnover will affect the organization adversely
According to Fayol. Time is required for an employee to get
used to a new work & succeed to doing it well but if he is
removed before that he will not be able to render worthwhile
services.
As a result, the time, effort and money spent on training the
worker will go waste.
Stability of job creates team spirit and a sense of
belongingness among workers which ultimately increase the
quality as well as quantity of work.

Employees work better if job security and
career progress are assured to them. An
insecure tenure and a high rate of employee
turnover will affect the organization
adversely.
Management should encourage initiative. That is,
they should encourage the employees to suggest
ideas, experiences& new method of work.
It helps in developing an atmosphere of trust and
understanding
It creates eagerness to initiate actions without being
asked to do so.
Allowing all personnel to show their
initiative in some way is a source of strength
for the organization. Even though it may
well involve a sacrifice of personal vanity
on the part of many managers.

Management must foster the morale of its employees.
He further suggests that: real talent is needed to
coordinate effort, encourage keenness, use each
persons abilities, and reward each ones merit
without arousing possible jealousies and disturbing
harmonious relations.
Here Fayol emphasizes the need for building and
maintaining of harmony among the work force , team
work and sound interpersonal relationships.

Management must foster the morale of its
employees. He further suggests that: real
talent is needed to coordinate effort,
encourage keenness, use each persons
abilities, and reward each ones merit without
arousing possible jealousies and disturbing
harmonious relations.
Division of Labor
Authority Hierarchy
Formal Selection
Formal Rules and Regulations
Impersonality
Career Orientation
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EXHIBIT HM3
Robert Owen
Claimed that a concern for employees was
profitable for management and would relieve
human misery.
Hugo Munsterberg
Created the field of industrial psychologythe
scientific study of individuals at work to maximize
their productivity and adjustment.
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Mary Parker Follett
Recognized that organizations could be viewed
from the perspective of individual and group
behavior.
Chester Barnard
Saw organizations as social systems that require
human cooperation.
Expressed his views in his book The Functions of
the Executive (1938).
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A series of studies done during the 1920s
and 1930s that provided new insights into
group norms and behaviors
Hawthorne effect
Social norms or standards of the group are the key
determinants of individual work behavior.
Changed the prevalent view of the time that
people were no different than machines.
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Based on a belief in the importance of
employee satisfactiona satisfied worker was
believed to be a productive worker.
Advocates were concerned with making
management practices more humane.
Dale Carnegie
Abraham Maslow
Douglas McGregor
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Operations research (management science)
Evolved out of the development of mathematical
and statistical solutions to military problems during
World War II.
Involves the use of statistics, optimization models,
information models, and computer simulations to
improve management decision making for planning
and control.

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Classical approach
Desire for increased efficiency of labor intensive
operations
Human resources approach
The backlash to the overly mechanistic view of
employees held by the classicists.
The Great Depression.
The quantitative approaches
World War II
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Management theory jungle (Harold Koontz)
The diversity of approaches to the study of
managementfunctions, quantitative emphasis,
human relations approacheseach offer something
to management theory, but many are only
managerial tools.
Planning, leading, and controlling activities
are circular and continuous functions of
management.

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Defines a system as a set of interrelated and
interdependent parts arranged in a manner
that produces a unified whole
Closed system : a system that is not influenced by
and does not interact with its environment
Open system: a system that dynamically interacts
with its environment
Stakeholders: any group that is affected by
organizational decisions and policies
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EXHIBIT HM4
The situational approach to management that
replaces more simplistic systems and
integrates much of management theory
Four popular contingency variables
Organization size
Routineness of task technology
Environmental uncertainty
Individual differences
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8 Key Result Areas Where Managers Must
Pursue Clear Objectives - Kotelnikov, 2008

Marketing

In order for a business to create a customer, there needs to be
a market.

Innovation

New ideas are required by a business in order to create a
demand for a product.

Human organization
Financial resources
Physical resources

According to Drucker, 2007 the above three Key Result Areas
are interlinked and all businesses depend on them. These are
known as the factors of production.

Productivity

Resources must be used productively and the productivity
must grow in order for the business to survive.

Social responsibility

A business exists in a society therefore it has certain
obligations towards the community and is responsible for its
impact on the environment.

Profit requirements

Profit is essential for a business to succeed. It is one of the
main reasons behind the existence of a business and without
it there would be no way of covering the risk of potential
losses, financing future projects and most importantly none
of the other above areas would exist without profit.
Cascading of organizational goals and
objectives.
Specific objectives for each member.
Participative decision making.
Explicit time period.
Performance evaluation and feedback.
Specific
Measurable
Achievable
Realistic
Time-related
Management by Objectives also
introduced the SMART method for
checking the validity of the objectives.
Copyright 2010 Pearson
Education, Inc. Publishing as
Prentice Hall

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Managers
as
Decision Makers
6.1 The Decision-Making Process.
Define decision.
Describe the eight steps in the decision-making process.
6.2 Managers Making Decisions.
Discuss the assumptions of rational decision making.
Describe the concepts of bounded rationality, satisficing,
and escalation of commitment.
Explain intuitive decision making.

Copyright 2010 Pearson Education,
Inc. Publishing as Prentice Hall

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6.3 Types Of Decisions and Decision-Making
Conditions.
Explain the two types of problems and decisions.
Contrast the three decision making conditions.
Explain maximax, maximin, and minimax decision choice
approaches.
6.4 Decision-Making Styles
Describe two decision-making styles.
Discuss the twelve decision-making biases.
Explain the managerial decision-making model.


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6.5 Effective Decision Making In Todays
World.
Explain how managers can make effective
decisions in todays world.
List the six characteristics of an effective decision
making process.
List the five habits of highly reliable organizations.


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Decision
Making a choice from two or more alternatives.
The Decision-Making Process
Identifying a problem and decision criteria and
allocating weights to the criteria.
Developing, analyzing, and selecting an alternative
that can resolve the problem.
Implementing the selected alternative.
Evaluating the decisions effectiveness.

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You are driving along in your car on a wild,
stormy night, it's raining heavily, when suddenly
you pass by a bus stop, and you see three
people waiting for a bus

An old lady who looks as if she is about to die.
An old friend who once saved your life.
The perfect partner you have been dreaming about.

Which one would you choose to offer a ride to,
knowing very well that there could only be one
passenger in your car?

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This is a moral/ethical dilemma that was once
actually used as part of a job application.

* You could pick up the old lady, because she is
going to die, and thus you should save her first;

* or you could take the old friend because he
once saved your life, and this would be the
perfect chance to! pay him back.

* However, you may never be able to find your
perfect mate again.


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The candidate who was hired (out of 200 applicants)
had no trouble coming up with his answer. Guess
what was his answer?

He simply answered:

"I would give the car keys to my Old friend and let
him take the lady to the hospital. I would stay behind
and wait for the bus with the partner of my dreams."

Sometimes, we gain more if we are able to give up
our stubborn thought limitations. Never forget to
"Think Outside of the Box."


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Interviewer (to a student girl candidate) - What is
one morning you woke up & found that you were
pregnant.

Girl - I will be very excited and take an off, to
celebrate with my husband.

Normally an unmarried girl will be shocked to
hear this, but she managed it well.

Why I should think it in the wrong way, she said
later when asked


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Problem
A discrepancy between an existing and desired
state of affairs.
Characteristics of Problems
A problem becomes a problem when a manager
becomes aware of it.
There is pressure to solve the problem.
The manager must have the authority, information,
or resources needed to solve the problem.

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Decision criteria are factors that are important
(relevant) to resolving the problem such as:
Costs that will be incurred (investments required)
Risks likely to be encountered (chance of failure)
Outcomes that are desired (growth of the firm)

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Step 3: Allocating Weights to the
Criteria Decision criteria are not of equal
importance:
Assigning a weight to each item places the
items in the correct priority order of their
importance in the decision-making process.

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0
Criterion Weight
Memory and Storage 10
Battery life 8
Carrying Weight 6
Warranty 4
Display Quality 3
Identifying viable alternatives
Alternatives are listed (without evaluation) that can
resolve the problem.

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Step 5: Analyzing Alternatives
Appraising each alternatives strengths and
weaknesses
An alternatives appraisal is based on its ability
to resolve the issues identified in steps 2 and 3.

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Choosing the best alternative
The alternative with the highest total weight is
chosen.

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Step 7: Implementing the
Alternative
Putting the chosen alternative into action.
Conveying the decision to and gaining
commitment from those who will carry out the
decision.

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The soundness of the decision is judged by
its outcomes.
How effectively was the problem resolved by
outcomes resulting from the chosen alternatives?
If the problem was not resolved, what went wrong?


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Rationality
Managers make consistent, value-maximizing
choices with specified constraints.
Assumptions are that decision makers:
Are perfectly rational, fully objective, and logical.
Have carefully defined the problem and identified all
viable alternatives.
Have a clear and specific goal
Will select the alternative that maximizes outcomes in
the organizations interests rather than in their
personal interests.

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Bounded Rationality
Managers make decisions rationally, but are limited
(bounded) by their ability to process information.
Assumptions are that decision makers:
Will not seek out or have knowledge of all alternatives
Will satisficechoose the first alternative encountered that
satisfactorily solves the problemrather than maximize the
outcome of their decision by considering all alternatives and
choosing the best.
Influence on decision making
Escalation of commitment: an increased commitment to a
previous decision despite evidence that it may have been
wrong.

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Structured Problems
Involve goals that are clear.
Are familiar (have occurred before).
Are easily and completely definedinformation
about the problem is available and complete.
Programmed Decision
A repetitive decision that can be handled by a
routine approach.

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Procedure
A series of interrelated steps that a manager can
use to respond (applying a policy) to a structured
problem.
Rule
An explicit statement that limits what a manager or
employee can or cannot do.
Policy
A general guideline for making a decision about a
structured problem.


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Unstructured Problems
Problems that are new or unusual and for which
information is ambiguous or incomplete.
Problems that will require custom-made solutions.
Nonprogrammed Decisions
Decisions that are unique and nonrecurring.
Decisions that generate unique responses.

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Certainty
A situation in which a manager can make an
accurate decision because the outcome of every
alternative choice is known.
Risk
A situation in which the manager is able to estimate
the likelihood (probability) of outcomes that result
from the choice of particular alternatives.

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decision
Decision-making process
problem
decision criteria
rational decision making
bounded rationality
satisficing
escalation of commitment
intuitive decision making
structured problems
programmed decision
procedure
rule

policy
unstructured problems
nonprogrammed decisions
certainty
risk
uncertainty
directive style
analytic style
conceptual style
behavioral style
heuristics
business performance
management (BPM)
software


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7.1 The What And Why Of Planning
Define planning.
Describe the purposes of planning.
Explain what studies have shown about the relationship
between planning and performance.
7.2 Goals And Plans
Define goals and plans.
Describe the types of goals organizations might have.
Describe each of the different types of plans.

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7.3 Setting Goals and Developing Plans
Discuss how traditional goal setting and MBO work.
Describe well written goals and explain hw to set them.
Discuss the contingency factors that affect planning.
Describe the approaches to planning.
7.4 Contemporary Issues in Planning
Explain the criticisms of planning.
Describe how managers can effectively plan in todays
dynamic environment.

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Planning
A primary managerial activity that involves:
Defining the organizations goals
Establishing an overall strategy for achieving those
goals
Developing plans for organizational work activities

Formal planning
Specific goals covering a specific time period
Written and shared with organizational members
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Purposes of Planning
Provides direction
Reduces uncertainty
Minimizes waste and redundancy
Sets the standards for controlling
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The Relationship Between Planning and
Performance
Formal planning is associated with:
Higher profits and returns on assets.
Positive financial results.
The quality of planning and implementation affects
performance more than the extent of planning.
The external environment can reduce the impact of
planning on performance.
Formal planning must be used for several years before
planning begins to affect performance.
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Elements of Planning
Goals (also Objectives)
Desired outcomes for individuals, groups, or entire
organizations
Provide direction and evaluation performance criteria
Plans
Documents that outline how goals are to be
accomplished
Describe how resources are to be allocated and
establish activity schedules

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Financial Goals
Are related to the expected internal financial
performance of the organization.
Strategic Goals
Are related to the performance of the firm relative
to factors in its external environment (e.g.,
competitors).
Stated Goals versus Real Goals
Broadly-worded official statements of the
organization (intended for public consumption) that
may be irrelevant to its real goals (what actually
goes on in the organization).
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Strategic Plans
Apply to the entire organization.
Establish the organizations overall goals.
Seek to position the organization in terms of its
environment.
Cover extended periods of time.
Operational Plans
Specify the details of how the overall goals are to be
achieved.
Cover a short time period.
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Long-Term Plans
Plans with time frames extending beyond three
years
Short-Term Plans
Plans with time frames of one year or less
Specific Plans
Plans that are clearly defined and leave no room for
interpretation
Directional Plans
Flexible plans that set out general guidelines and
provide focus, yet allow discretion in
implementation
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Single-Use Plan
A one-time plan specifically designed to meet the
need of a unique situation.
Standing Plans
Ongoing plans that provide guidance for activities
performed repeatedly.

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Traditional Goal Setting
Broad goals are set at the top of the organization.
Goals are then broken into sub-goals for each
organizational level.
Assumes that top management knows best
because they can see the big picture.
Goals are intended to direct, guide, and constrain
from above.
Goals lose clarity and focus as lower-level
managers attempt to interpret and define the goals
for their areas of responsibility.
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Maintaining the Hierarchy of Goals
MeansEnds Chain
The integrated network of goals that results from
establishing a clearly-defined hierarchy of
organizational goals.
Achievement of lower-level goals is the means by
which to reach higher-level goals (ends).
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Setting Goals and Developing Plans
Management By Objectives (MBO)
Specific performance goals are jointly determined
by employees and managers.
Progress toward accomplishing goals is
periodically reviewed.
Rewards are allocated on the basis of progress
towards the goals.
Key elements of MBO:
Goal specificity, participative decision making, an
explicit performance/evaluation period, feedback
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1. The organizations overall objectives and strategies are
formulated.
2. Major objectives are allocated among divisional and
departmental units.
3. Unit managers collaboratively set specific objectives for their
units with their managers.
4. Specific objectives are collaboratively set with all department
members.
5. Action plans, defining how objectives are to be achieved, are
specified and agreed upon by managers and employees.
6. The action plans are implemented.
7. Progress toward objectives is periodically reviewed, and
feedback is provided.
8. Successful achievement of objectives is reinforced by
performance-based rewards.
Reason for MBO Success
Top management commitment and involvement
Potential Problems with MBO Programs
Not as effective in dynamic environments that
require constant resetting of goals.
Overemphasis on individual accomplishment may
create problems with teamwork.
Allowing the MBO program to become an annual
paperwork shuffle.
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Written in terms of
outcomes, not actions
Focuses on the ends, not
the means.
Measurable and
quantifiable
Specifically defines how
the outcome is to be
measured and how much
is expected.
Clear as to time frame
How long before
measuring
accomplishment.
Challenging yet
attainable
Low goals do not
motivate.
High goals motivate if
they can be achieved.
Written down
Focuses, defines, and
makes goals visible.
Communicated to all
necessary
organizational
members
Puts everybody on the
same page.
1. Review the organizations mission statement.
Do goals reflect the mission?
2. Evaluate available resources.
Are resources sufficient to accomplish the mission?
3. Determine goals individually or with others.
Are goals specific, measurable, and timely?
4. Write down the goals and communicate them.
Is everybody on the same page?
5. Review results and whether goals are being met.
What changes are needed in mission, resources, or goals?
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Contingency Factors in a Managers Planning
Managers level in the organization
Strategic plans at higher levels
Operational plans at lower levels
Degree of environmental uncertainty
Stable environment: specific plans
Dynamic environment: specific but flexible plans
Length of future commitments
Commitment Concept: current plans affecting future
commitments must be sufficiently long-term to meet
those commitments.
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Establishing a formal planning department
A group of planning specialists who help managers
write organizational plans.
Planning is a function of management; it should
never become the sole responsibility of planners.
Involving organizational members in the
process
Plans are developed by members of organizational
units at various levels and then coordinated with
other units across the organization.
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Criticisms of Planning
Planning may create rigidity.
Plans cannot be developed for dynamic
environments.
Formal plans cannot replace intuition and creativity.
Planning focuses managers attention on todays
competition not tomorrows survival.
Formal planning reinforces todays success, which
may lead to tomorrows failure.
Just planning isnt enough.
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Effective Planning in Dynamic Environments
Develop plans that are specific but flexible.
Understand that planning is an ongoing process.
Change plans when conditions warrant.
Persistence in planning eventually pay off.
Flatten the organizational hierarchy to foster the
development of planning skills at all organizational
levels.
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planning
goals
plans
stated goals
real goals
framing
strategic plans
operational plans
long-term plans
short-term plans
specific plans
directional plans
single-use plan
standing plans
traditional goal setting
means-ends chain
management by
objectives (MBO)
mission
commitment concept
formal planning
department
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