Principles of Management Chapter 1-5

Management
Getting work done through others – everyone enabled to do what they do well
Efficiency
Getting work done with minimal effort, expense, or waste
Effectiveness
Accomplishing tasks that help fulfill organizational objectives
Fayol’s 4 functions of being successful
Planning, organization, leading, controlling
Top Managers
CEO – Chief Executive Officer
CFO – Chief Financial Officer
CIO – Chief Information Officer
COO – Chief Operating Officer
Top Managers Responsible for:
Direction, context for change, long-range mission, employee commitment, ownership of performance, positive culture, impart values, monitor business environments, link external and internal world
Middle Manager
Plant, regional, divisional,
Middle Manager Responsible for:
Setting objectives consistent with top’s goals
planning & implementing strategies to achieve goals
Coordinate and link groups/depts/divisions
Monitor and manager performance of subunits
Implement the changes from Top
First Line Managers
Office, Shift, Department
DO NOT supervise other managers
Monitor and teach entry level
Scheduling
Short term plans
Team Leader Managers
Facilitate team activities, at service of group, bring resources to team, show team how to think about job, foster good relationships/address problematic ones
Interpersonal Managerial Roles
Face to face communication with others
Figurehead – represent the company
Leader – motivate/encourage workers
Liaison – Deal with people outside their unites
Informational Managerial & 3 Roles
Obtaining and sharing information (40% of their time)
Monitor – scan environment for information, contact others for information, receive information
Disseminator – Share information with everyone
Spokesperson – Share to outside (shareholders, board, media)
Decisional Managerial & 4 Roles
Entrepreneur Role – Adapt themselves, subordinates, and units to change
Disturbance Handler Role – Respond to severe pressures/problems that need immediate action – if not handled, will get worse
Technical Skills
Specialized procedures, techniques, and knowledge required to get the job done
Most important for team leads/first line managers & becomes less important rising through ranks
Human Skills
Ability to work well with others
Front Managers work with people 57% of the time; Middle 63%; Top 78%
Conceptual Skills
See organization as a whole, understand how different parts affect each other and recognize how company fits in environment – importance increases rising through ranks
Motivation to Manage
An assessment of how enthusiastic employees are about managing work of others
10 Mistakes Managers Make
Insensitive to others (bully)
Cold, aloof, arrogant
Betray trust
Overly ambitious (play politics)
Specific Performance problems
Over-managing (unable to delegate)
Unable to staff effectively
Unable to think strategically
Unable to adapt (to a boss with a different style)
Over-dependant on mentor (can’t do anything alone)
Arrivers vs. Derailers
Arriver – managers make it to the top
Derailers – Successful early on, knocked off management track at upper and middle levels because of the 10 mistakes managers make (possessing 2+)
Transition to Management
Initial Expectations – Be the boss; formal authority; manage tasks not people
After 6 Months – Expectations were wrong; fast pace/heavy workload; problem solver and trouble shooter
After 2 Year – No longer a ‘doer’ (able to delegate); communication, listening, positive reinforcement; adapt and control stress; people development
Employment Security
Employees can innovate and increase productivity without fear of loss of jobs – ultimate form of company investment
Selective Hiring
Hire most talented person available
Self-Managed Teams and Decentralization
Own hiring, purchasing, job assignments, and production; increased employee commitment and creativity; Decentralization allows employees who are closes to the problem make the decisions
High wages contingent on performance
Sharing in financial rewards keeps employees around; view business in the long-run
Training and Skill Development
Investing in employees
Reduction of Status Differences
Everyone is equal; no reserved parking, same cafeteria for all ranks, etc.
Sharing information
If employees are to make long-term decisions, they need to know the information
Sumer
Modern Iraq 8000-3000BCE
Owned and traded goods using tokens made of clay to calculate quantities and store data
Ancient Egyptians
Needed planning, organizing, controlling during the building of pyramids
Scientific Management
Thoroughly studying and testing different work methods to identify the best, most efficient way to complete a job
75% science; 25% common sense
Frederick W Taylor’s Four Principles of Managment
1856-1915
1. Develop a science for each element of a man’s work
2. Scientifically select and train, teach, and develop the workman
3. Heartily cooperate with the men to ensure all work being done in accordance to science
4. Equal division of work and responsibility between management and workmen
Frank Gilbreth
1868-1924
Developed Motion Study – Breaking each task into its separate motions; eliminating unnecessary/repetitive
Invented Micro-Chronometer – Large clock recorded time 1/2000 of a second; attach a strobe light to worker’s hands to identify direction and sequence of key movement
Time Study
Timing how long it takes good workers to complete each part of the job. Standard Time created; pay was contingent on standard time.
Lillian Gilbreth
1878-1972
First woman to receive PhD in industrial psych
Concerned about human side of work – originated ways to improve office communication, incentive programs, job satisfaction, management training
Convinced Government to exact safety, workplace ergonomics, and child labor laws
Henry Gantt
1861-1919
Gantt Chart – visually indicates what tasks must be completed at which times in order to complete a project
Max Weber
1864-1920
Bureaucratic Management – the exercise of control on the basis of knowledge. Chosen by knowledge, expertise, and experience
Elements of Bureaucratic Organizations (7)
Qualification Based Hiring
Merit-Based promotions
Chain of Command
Divison of Labor
Impartial application of rules and procedures
Recorded in writing
Managers separate from Owners
Henri Fayol
1841-1925
“The success of an enterprise generally depends much more on the administrative ability of its leaders than on their technical ability”
Small amount of knowledge on everything, not an expert on anything
Fourteen Principles of Management (Fayol)
Division of work
Authority and Responsibility
Disciple and clearly defined rules
Unity of command (each employee reports to one boss)
Unity of Direction (one person and one plan)
Subordination of individual interests to general interests
Renumeration – don’t under/over pay employees
Centralization – Strike balance between centralization and decentralization
Scalar Chain – Communication should follow vertical chain of authority
Order
Equity
Stability of tenure of personnel (low turnover rate)
Initiative
Esprit de corps – strong sense of morale/unity
Human Relations Management
Management focuses on people – the psych and social aspects of work; efficiency alone is not enough – organizational success depends on treating workers well
Mary Parker Follett
1868-1933
Conflict – the appearance of difference, difference of opinions, of interests
Domination in Conflict
An approach to dealing with conflict in which one party satisfies its desires and objectives at the expense of the other party’s desires and objectives
Compromise in Conflict
An approach to dealing with conflict in which both parties give up some of what they want in order to reach agreement on a plan to reduce or settle the conflict
Integrative Conflict Resolution
An approach to dealing with conflict in which both parties indicate their preferences and then work together to find an alternative that meets the needs of both
Elton Mayo
1880-1948
Hawthorne Studies – Effects of lighting levels and incentives on employee productivity
– Human factors related to work were found to be more important than physical conditions
Chester Bernard
1886-1961
Defines organization as – a system of consciously coordinated activities or forces of 2+ persons
The extent to which people willingly cooperate depends on how workers perceive executive authority
Zone of Indifference
Acceptance of managerial authority is automatic. These requests must be understood, consistent with the purpose of the organization, compatible with people’s personal interests, can actually be done
Operations Management
Managing the daily production of goods and services.
Uses quantitative/mathematical approach to find ways to increase productivity, improve quality, manage/reduce cost
Information Management
Organizations have pushed for and quickly adopted new information technologies to reduce cost, increase speed in which they can acquire, retrieve, or communicate information
E.g. – Gutenberg cut costs by 99.8%
Systems Management
System – Set of interrelated elements or parts that function as a whole; composed of subsystems
Synergy
Two or more subsystems working together to produce more than they can working apart
Closed systems
Function without interacting with their environments
Open Systems
Systems that can sustain themselves only by interacting with their environments, on which they depend their survival
Contingency Management
No universal management theories and the most effective management theory/idea depends on the kinds of problems and situations managers are facing at a particular time and place
Renumeration
Incentive for employees
E.g. – Stock options, raises
External Environments
All events outside a company that have the potential to influence/effect it
Environmental Change
The rate at which a company’s general and specific environments change
Stable Environments
The rate of environmental change is slow
Dynamic Environment
An environment in which the rate of change is fast
Punctuated Equilibrium Theory
Theory that companies go through long periods of stability, followed by short periods of dynamic, fundamental change
Environmental Complexity
The number and intensity of external factors in the environment that affect organizations
Simple Environments
Few environmental factors that affect organizations
Complex Environments
Many environmental factors that affect organizations
Resource Scarcity
The abundance or shortage of critical organization resources in an organization’s extern environment
Uncertainty
How well managers can understand/predict the external changes and trends affecting their business
General Environment
The economic, technological, sociocultural, and political/legal trends that indirectly affect all organizations
Specific Environment
The customers, competitors, suppliers, industry regulations, advocacy groups that are unique to an industry and directly affect how a company does business
Growing Economy
More people working, wages growing, consumers have money to spend; Provide an environment favorable to business growth
Business Confidence Indices
Show how confident actual managers are about business growth
Technology
The knowledge, tools, techniques, used to transform inputs (materials, information, etc.) into outputs (products and services)
Sociocultural Component
The demographic characteristics, general behavior, attitudes, and beliefs of people in a particular society
Political and Legal Component
Includes the legislation, regulations, and court decisions that govern and regulate business behavior
e.g. sexual harassment laws, medical leave act, legalities of hiring/firing, etc.
Reactive Customer Monitoring
Identifying and addressing customer trends and problems after they occur
Proactive Monitoring
Identifying and addressing customer needs, trends, issues before they occur
Competitor Component
companies in the same industry that sell similar products or services to customers
Competitor Analysis
Involves deciding who your competitors are, anticipating their moves, determining their strengths and weaknesses
Supplier Component
Companies that provide material, human, financial, informational resources to other companies
Supplier Dependence
The degree to which a company relies on that supplier because of the importance of the product
Buyer Dependence
The degree to which a supplier relies on the buyer because of the importance of that buyer to the sales
Opportunistic Behavior
One party benefits at the expense of the other
Relationship Behavior
Focuses on establishing a mutually beneficial, long-term relationship between buyers and suppliers
Industry Regulation
Regulations and Rules that govern the practices and procedures of specific industries, businesses, and professions
Advocacy Groups
Groups of concerned citizens who band together to try to influence the business practices of specific industries, businesses, and professions
Public Communications
Advocacy group tactic that relies on voluntary participation by the news media and the advertising industry to get the message out
Media Advocacy
Typically involves framing issues as public issues; exposing questionable, exploitative, unethical practices; forcing media coverage by creating controversy or buying media time
Product Boycott
Advocacy group tactic that involves protesting a company’s actions by persuading consumers not to purchase its product/service
Environmental Scanning
Step 1 of making sense of changing environments; searching the environment for important events or issues that might affect an organization – reduces uncertainty; detect changes before they become a crisis
Interpreting Environmental Factors
Step 2 of making sense of changing environments; Determine what factors and issues mean to the organization; (step three) either threats or opportunities – threats: Take steps to protect the company; Opportunities: strategic alternatives for taking advantage to improve company performance
Cognitive Maps
Summarize the perceived relationships between environmental factors and possible organizational actions; shows environmental factors, potential actions, and company strengths
Internal Environment
Trends and events within an organization that affect the management, employees, and organizational culture
Organizational Culture
Values, beliefs, attitudes shared by organizational members – affect what people think, feel, and do at work
Primary Source – Company founder
Organizational Stories
Make sense of organizational events and changes and to emphasize culturally consistent assumptions, decisions, and actions
Organizational Heroes
Organizational people admired for their qualities and achievements within the organization
Successful organization culture
based on adaptability, involvement, a clear mission, consistency
Company Mission
Business’s purpose or reason for existing; guide discussion, behavior, environment
Consistent Organizational Culture
Company actively defines and teaches organizational values, beliefs, and attitudes – consistent with code of conduct
Changing Organizational Culture (3 Levels)
1. Surface – seen and observed
2. Values and beliefs expressed by people in company
3. Unconsciously held assumptions and beliefs about the company – rarely shared or discussed unless change is attempted
Change a corporate culture
using behavior substitution and addition to establish new patterns of behavior
Behavior Addition
Process of having managers and employees perform a new behavior
Behavior Substitution
Having managers and employees perform new behavior in place of an old behavior
Visible Artifacts
Visible signs of an organization’s culture – office design, dress code, benefits and perks, stock options
Ethics
Set of moral principles or values that define right and wrong for a person or group
Ethical Behavior
Behavior that conforms to a society’s accepted principles of right and wrong
Workplace Deviance
Unethical behavior that violates organizational norms about right and wrong
Production Deviance
Unethical behavior that hurts the quality and quantity of work produced
Leaving early, taking excessive breaks, intentionally working slowly, wasting resources
Property Deviance
Unethical behavior aimed at the organization’s property or products
Employee theft, sabotaging equipment, accepting kickbacks, lying about hours
Political Deviance
Using one’s influence to harm others in the company
Favoritism, gossiping, blaming coworkers, competing nonbeneficially
Personal aggression
Hostile or aggressive behavior toward others
Sexual harassment, verbal abuse, stealing from coworkers, endangering coworkers
Establishing a Compliant Program (7 Steps)
1. Establish standards and procedures
2. Assign upper level managers to be in charge
3. Delegate decision making authority only to ethical employees
4. Encourage employees to report violations
5. Train employees on standards and procedures
6. Enforce standards consistently and fairly
7. Improve program after violations
Ethical Intensity & 6 Factors
The degree of concern people have about an ethical issue
Magnitude of consequences
Social Consensus
Probability of Effect
Temporal Immediacy
Proximity of effect
Concentration of effect
Moral Development
Your decision to be ethical or unethical will be based on your level of ____________________
Preconventional – Make decisions based on selfish reasons
Conventional Level – Make decisions that conform to societal expectations
PostConventional – People make decisions based on internalized principles
5 Stages of Moral Development
1. (pre) – punishment and obedience stage – primary concern to avoid trouble
2. (pre) – Instrumental Exchange – Worry less about punishment and more about doing things that advance your wants and needs
3. – Do what other people are doing
4. – Law and order- whatever the law permits
5. (post) – Social Contract – Society as a whole is better off when the rights of others are not violated
6. (post) – Universal Principle Stage – Depends on your principles of right and wrong
Principle of Long-Term Self Interest
An ethical principle that holds that you should never take any action that is not in your or your organization’s long-term self interest
Principle of Personal Virtue
An ethical principle that holds that you should never do anything that is not honest, open, and truthful, and that you would not be glad to see reported in media
Principle of Religious Injunctions
An ethical principle that holds that you should never take any action that is not kind and that does not build a sense of community
Principle of Government Requirements
An ethical principle that holds that you should never take any action that violates the law, for the law represents the minimal moral standard
Principle of Utilitarian Benefits
An ethical principle that holds that you should never take any action that does not result in greater good for society
Principle of Individual Rights
An ethical principle that holds that you should never take any action that infringes on others’ agreed upon rights
Principle of Distributive Justice
An ethical principle that holds that you should never take any action that harms the least fortunate among us; the poor, the uneducated, the unemployed
Overt Integrity Test
A written test that estimates a job applicant’s honesty by directly asking them what they think or feel about theft, punishment of unethical behavior
Personality-Based integrity Test
A written test that indirectly estimates job applicants’ honesty by measuring psychological trait
Codes of Ethics
A Company must communicate its code to others – inside and outside the company; management must develop practical ethical standards and procedures specify to the company’s line of business
Ethics Training
Sponsor and be involved in ethics and compliance training in order to create an ethical company culture
Ethical Climate
1. Act Ethically themselves
2. Top managers active in/committed to company ethics program
3. Put in place by a reporting system that is encouraging
Whistleblowing
Reporting others’ ethics violations to management or legal authorities
Model of Ethical Decision Making
Identify the problem
Identify the constituents
Diagnose the situation
Analyze your options
Make your choice
Act
Social Responsibility
A business’s obligation to pursue policies, make decisions, and take actions that benefit society
Shareholder Model
A view of Social Responsibility that holds that an organization’s overriding goal should be profit maximization for the benefit of shareholders (owners of the company)
Stakeholder Model
A theory of corporate responsibility that holds that management’s most important responsibility long-term survival is achieved by satisfying the interests of multiple corporate stakeholders
Stakeholders
Persons or groups with a stake, or legitimate interest in a company’s actions
Primary Stakeholders
Groups on which the organization depends on for its long-term survival; they include shareholders, employees, customers, suppliers, government, local communities
Secondary Stakeholders
Any group that can influence or be influenced by a company and can affect public perceptions about the company’s socially responsible behavior; community, special interest groups
Economic Responsibility
A company’s social responsibility to make a profit by producing a valued product or service
Legal Responsibility
A company’s social responsibility to obey society’s laws and regulations
Ethical Responsibility
A company’s social responsibility to not violate accepted principles of right and wrong when conducting its business
Discretionary Responsibilities
The social roles that a company fulfills beyond its economic, legal, and ethical responsibilities
Social Responsiveness
A company’s strategy to respond to stakeholders’ economic, legal, ethical, or discretionary expectations concerning social responsibility
Reactive Strategy
A social responsiveness strategy in which a company does less than society expects
Defensive Strategy
A social responsiveness strategy in which a company admits responsibility for a problem but does the least required to meet societal expectations
Accommodative Strategy
A social responsiveness strategy in which a company accepts responsibility for a problem and does all that society expects to solve that problem
Proactive Strategy
A social responsiveness strategy in which a company anticipates a problem before it occurs and does more than society expects to take responsibility for and address the problem