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MANAGEMENT
FUNDAMENTALS
Lesson 1- Part 1
What are Organisations
“A group of people working together over a
period of time to achieve a common goal or
an objective”
Classification of Organisations
Organisations
Objective
Profit
Non Profit
Size
Large
Small
Ownership
Private
Public
Defining Management
Management is the attainment of organisational
goals in an effective and an efficient manner
through planning, organising, leading, and
controlling organisational resources
Managers get things done through the organisation
Create right systems and environment
Organisations need good managers
What Managers Do
Management Process
Functions of Management
Planning : Planning means identifying goals for future organisational
performance and deciding on the tasks and use of resources needed to
attain them.
Organising : Organising involves assigning tasks, grouping tasks in to
departments, delegating authority and allocating resources across the
organisation.
Leading : Use influence to motivate employees to achieve organisational
goals.
Controlling : Monitoring employees’ activities, determining whether the
organisation is on target towards its goals, and making corrections necessary.
Management Types
Vertical
Top managers are responsible for the entire organisation
Middle managers are responsible for business units
First-line managers are responsible for production of goods
and services
Horizontal
Functional managers are responsible for departments that
perform specific tasks
General managers are responsible for several departments
Management Levels
Managerial Roles
Manager roles are important to understand but they are not discrete
activities
Management cannot be practiced as independent parts
Managers need time to plan and think
There are 10 key roles identified by Mintzberg under 3 key categories
Informational roles
Interpersonal roles
Decisional roles
Informational
Monitor Seek and receive information, scan
periodicals and reports, maintain
personal contacts
Disseminator Forward information to other
organisation member, send memos and
reports, make phone calls
Spokesperson Transmit information to outsiders through
speeches, reports, memos
Interpersonal roles
Figurehead Performs ceremonial and symbolic
duties. e.g. greeting visitors, signing
legal documents
Leader Direct and motivate subordinates,
training, counseling, and
communicating with subordinates
Liaison Maintain information links both inside
and outside organisation; use mail,
phone calls, meetings
Decisional roles
Entrepreneur Initiate improvement projects, identify new ideas,
delegate idea responsibility to others
Disturbance
Handler
Take corrective action during disputes or crises:
resolve conflicts among subordinates; adapt to
environmental crises
Resource
Allocator
Decide who gets resources, scheduling,
budgeting, setting priorities
Negotiator Represent department during negotiation of
union , contracts, sales, purchases, budgets ect.
Managerial Skills
Three categories of skills: conceptual, human, technical
The degree of the skills may vary but all managers
must possess the skills
The application of management skills change as
managers move up the hierarchy
Managerial Skills
Technical Skills - Ability to use tools, techniques, and specialized knowledge.
Human Relations Skills - Ability to work effectively with people. (Inter-Personal Skills)
Conceptual Skills - Ability to see the organisation as a whole and solve problems
to benefit the total system.
Relationship of Skills to Management
When Skills Fail
Unethical behaviour
During turbulent times, managers must apply their skills
Common management failures:
Not listening to customers
Misinterpreting signals from marketplace
Not building teams
Inability to execute strategies
Failure to comprehend and adapt to change
Poor communication and interpersonal skills
Innovative Management for the New Workplace
Rapid environmental shifts:
Technology
Globalisation
Shifting social values
The Transition to a New Workplace
Becoming a New Manager
Organisations often promote star performers to
management
Becoming a manager is a transformation
Move from being a doer to a coordinator
Many new managers expect more freedom to make
changes
Successful managers build teams and networks
Do You Really Want to Be a Manager?
The increased workload
The challenge of supervising former peers
The headache of responsibility for other people
Being caught in the middle
MANAGEMENT
FUNDAMENTALS
Lesson 1- Part 2
Management and Organisation
Managers need to look for new techniques and approaches to meet
shifting organisational needs
Looking at history gives managers a broader perspective for interpreting
and responding to current opportunities and problems
Management and organisations are shaped by forces in the larger society
Social Forces – influence of culture that guides people and relationships
Political Forces – influence of political and legal institutions
Economic Forces – the availability, production, and distribution of resources
Management perspectives over time
Classical Perspective
Emerged during the nineteenth and early twentieth centuries
Rise of the factory system
Issues regarding structure, training, and employee satisfaction
Large, complex organisations required new approaches to
coordination and control
Three subfields
Scientific management
Bureaucratic organisations
Administrative principles
Scientific Management
Improve efficiency and labour productivity through scientific
methods
Frederick Winslow Taylor proposed that workers “could be
retooled like machines”
Management decisions would be based on precise procedures
based on study
Henry Gantt developed the Gantt chart to measure and plan
work
The Gilbreths pioneered time and motion studies to promote
efficiency
Characteristics of Scientific Management
Developed standard methods for promoting each job
Selected workers with appropriate abilities for each job
Trained workers in standard methods
Supported workers by planning their work and
eliminating interruptions
Provided wage incentives to workers to increase their
output
Contributions and Criticisms of Scientific Management
Contributions
Demonstrated the importance of compensation for performance
Initiated the careful study of task and job
Demonstrated the importance of personnel selection and training
Criticisms
Did not appreciate the social context of work and higher needs of
workers
Did not acknowledge variance among individuals
Tended to regard workers as uninformed and ignored their ideas and
suggestions
Bureaucratic Organisations
Max Weber, a German theorist, introduced the concepts
Manage organisations on impersonal, rational basis
Organisation depends on rules and records
Managers use power instead of personality to delegate
Although important productivity gains come from this
foundation, bureaucracy has taken on a negative tone
Characteristics of Weberian Bureaucracy
Administrative Principles
Focused on the entire organisation
Henri Fayol, a French mining engineer, was a major contributor
Identified five functions of management: planning, organising, commanding,
coordinating, and controlling
14 general principles of management; many still used today:
Unity of command – Each subordinate receives orders from on superior
Division of work – Work is subdivided among employees
Unity of direction – Similar activities are grouped
Scalar chain – Chain of authority flows from top to bottom of the organisation
Humanistic Perspective: Early Advocates
Mary Parker Follett and Chester Barnard
Understand human behaviours, needs, and attitudes in
the workplace
Importance of people rather than engineering
techniques: contrast to scientific management
Empowerment: facilitating instead of controlling
Recognition of the informal organisation
Introduced acceptance theory of authority
Humanistic Perspective: Human Relations Movement
Effective work comes from within the employee
Human relations is the key variable in increasing
performance
Employees performed better when managers treated
them positively
Combine motivation with job design
Humanistic Perspective: Behavioral Sciences Approach
Use scientific methods which combines sociology, psychology,
anthropology, economics and other social sciences disciplines to
develop theories on human behaviour in an organisation.
Organisational Development – field that uses behavioural sciences
to improve the organisation
Other strategies based on behavioural science:
Matrix Organisations
Self-Managed Teams
Corporate Culture
Quantitative Perspective
Used in the World War II to solve military problems
Use of mathematics and statistics to aid management decision making
Enhanced by development and growth of the computer
There are three subsets of the quantitative approach
Operations research consists of building mathematical models
Operations management focuses on the physical production of goods and
services
Information technology focuses on technology and software to aid
managers
Recent Trends: Systems Thinking
The ability to see the distinct elements of a situation as
well as the complexities
The relationship among the parts form the whole system
Subsystems are parts of the system that are all
interconnected
Synergy – the whole is greater than the sum of its parts
Managers must understand subsystem interdependence
and synergy
Recent Trends: Contingency View
Every situation is unique; there is no universal
management theory
Managers must determine what method will work
Managers must identify key contingencies for the current
situation
Organisational structure should depend upon industry
and other variables
Recent Trends: Total Quality Management
Quality movement is strongly associated with Japan
Total Quality Management (TQM) became popular in the 1980s and 1990s
Integrate high-quality values in every activity
Elements of Quality Management
Employee involvement
Focus on the customer
Benchmarking
Continuous improvement
Innovative Management: Thinking for a Changing World
Management ideas trace their roots to historical
perspectives
New ideas continue to emerge to meet the changing
needs and difficult times
The shelf life of trends is getting shorter and new
ideas peak in fewer than three years
Managing the Technology- Driven Workplace
Customer Relationship Management – technology used to
build relationships with customers
Outsourcing – contracting functions or activities to other
organisations to cut costs
Supply Chain Management – managing supplier and
purchaser relationships to get goods to consumers
MANAGEMENT
FUNDAMENTALS
Lesson 2
The Organisational Environment
Business Environment
The external organisational environment includes all outside elements
that affect the organisation
General Environment:
Outer layer that indirectly affects organisation
Task Environment:
Sectors that conduct transactions with the organisation
Internal Environment
Elements within the organisation boundaries
Organisational stakeholders are part of the task and internal
environment
Stakeholder Defined
• A group of people or a body who has an interest on
the organisation
• A group of people or a body who will influence the
direction and interests of the organisation
• A group of people or a body who can be influenced
by the organisation
Types of Stakeholders
Internal Connected External
Managers
Employees
Shareholders
Bankers
Customers
Suppliers
Government
Local Authorities
Pressure Groups
Professional Bodies
Competitors
International Environment
Globalization influences all other aspects of the
external environment
New competitors, customers, suppliers
Changes in social, technological, and economic trends
All organisations must compete and think globally
Economic power has shifted to China and India
The global environment is complex and ever-changing
Technological Environment
The tool for doing business
Massive changes for organisations
Advances are impacting organisations and
managers
Sociocultural Environment
Demographic characteristics, norms, customs, and
values
Population is aging
Large influx of immigrants
Younger working generation
Economic Environment
Economic health of the country/region
Extended globally with uncertainty
Economic shift impacted small business although there is
still vitality in small business sector of economy
Consumer purchasing power
Unemployment rate
Legal-Political Environment
Government regulation
Political activities
Government agencies and regulation
Managers must recognize the power of pressure
groups
Work to influence companies to behave in a socially
responsible way
Natural Environment
Growing importance and pressure
Organisations must be sensitive to the environment
Natural dimension does not have own voice
Environmental groups advocate action/policy
Reduce pollution
Develop renewable energy
Climate change/global warming
Organisation-Environment Relationship
The environment creates uncertainty for managers
Managers must respond and design adaptive
organisations
Uncertainty can be managed through effectiveness
Corporate Culture
Corporate culture is the set of key
values, beliefs, understandings,
and norms that members of an
organisation share
The concept of culture helps
managers understand the hidden
complexities of an organisation
Levels of Corporate Culture
Types of Corporate Cultures
Adaptability culture
Emerges in an environment that requires fast response and high risk decision making
Employees are given autonomy to make quick decisions
Achievement culture
Doesn’t seek rapid changes an serves specific customers
Results oriented and values competitiveness, aggressiveness, personal initiative and ability to work
longer hours
Involvement culture
Expects employees to adapt to rapid environmental changes
Organisation focus on to meet the needs of the employees
Consistency culture
Follows a set of rules and regulations and deals with a more stable environment
Arrange rewards in a more methodical manner
Shaping Corporate Culture for Innovative Response
Corporate culture plays a key role in learning and innovate
responses
Bottom-line strategies are successful in the short term
Successful companies balance culture and performance
Culture is the “glue” that holds the organisation together
Managing in a Global Environment
A Borderless World
Organisations and managers are not
isolated from international forces:
Trade barriers have fallen
Communication is faster, cheaper
Consumer tastes come together
The difficulties and risks of a borderless
world are matched by benefits and
opportunities
Globalization
Globalization can be defined as the growing
economic interdependences of countries worldwide
through increasing volume and variety of cross
border transactions in goods and services, free
international capital flows and more rapid wide
spread of technology
Globalisation
Four Stages of Globalization
Factors Driving Globalization
Development of Technology
Improved communication
Political realignments
Growth of global industries and institutions
Specialization
Efficiency and lower costs
Choices
Impact of Globalization
Industrial relocation
Emergence of new markets
Cross national business alliances and mergers
Widening economic divisions between countries
Impact on cultural and traditional value systems
Growing World
China manufactures many products for U.S. companies
China is also a growing consumer market
Regulations and government policies make doing business in
China a challenge
India is a service giant, growing in software design and
engineering
Brazil is a country that is gaining the attention of American
managers
The International Business Environment
Planning, organising, leading, and controlling in multiple
countries can be challenging
Managers must be mindful in the global marketplace
In Africa, the baby food includes pictures to aid illiterate
consumers
It took McDonald’s a year to figure out that
Hindus in India do not eat beef
International Market Strategies
Exporting – transferring products for sale to foreign countries
Outsourcing – also called offshoring, work activities are done in countries
with cheap labour
Licensing – enabling a company to produce and market a product in another
country
Franchising is licensing that provides a complete package of materials and
services
Direct Investing – high level of involvement, company manages and controls
assets
Joint venture and other types of partnerships are common
Key Factors in International Environment
The Economic Environment
Economic Development – Countries are categorized as either developed or
developing based on per capita income
Government Policies
Market Size
Financial Markets
Infrastructure
Resource and Product Markets
Companies must evaluate market demand
The current economic crisis has highlighted how
interconnected economies are around the world
The Legal-Political Environment
Political risk is defined as the risk of lost assets,
earning power, or managerial control
Managers must be concerned with the political
instability of global markets
Terrorism is a key concern in the global marketplace
The Sociocultural Environment
Organisational Values
Social Values
Communication Differences
Other Cultural Characteristics
Language
Religion
Social OrganiSation
Education
Attitudes
Hofstede’s Value Dimensions
Hofstede identified four dimensions of national value systems that influence organisational and
employee working relationship
Power Distance - Power among institutions, organisations and people
High Power Distance (value inequality in power) - Malaysia
Low Power Distance (value equality in power) - Denmark
Uncertainty Avoidance – Tolerance level of uncertainty
High Uncertainty Avoidance (feels uncomfortable with uncertainty) - Portugal
Low Uncertainty Avoidance (feels comfortable with uncertainty) - Singapore
Individualism and Collectivism
Individualism (individuals take care of themselves) – United States
Collectivism (individuals looks after each other) - China
Masculinity and Femininity
Masculinity (values heroism, assertiveness and material success) – Germany
Femininity (values corporation, relationships and quality of life) - Norway
Ethics and Social Responsibility
Managerial Ethics
Ethics – code of moral principles and values that
govern the behaviours of right or wrong
Standards about good/bad
Ethical issues can be complex
People in organisations have divergent
views about right/wrong
Three Domains of Human Action
Ethical Management Today
Ethical scandals during the last decade have been pervasive
Corporations and people have become associated with greed,
dishonesty, irresponsibility, and lack of moral conscience
Managers carry a big responsibility for setting an ethical
climate
Ethical crises have brought ethical management to the forefront
Criteria for Ethical Decision Making
Utilitarian Approach – moral behavior produces the greatest good for the greatest
number
Individualism Approach – acts are moral if they promote the individual’s long-term
interest
Moral-Rights Approach – humans have fundamental rights and liberties that cannot
be taken away by an individual’s decision
Justice Approach – moral decisions must be based on standards of equity, fairness,
and impartiality
Virtue Ethics Approach – moral behavior stems from personal virtues
Practical Approach – bases decisions on prevailing standards, society, and all
stakeholders
A Manager’s Ethical Choices
Individuals bring their own personality and traits to
organisations
Personal needs, family influence, and religious
background shape individuals
Personality characteristics such as ego, confidence, and
independence may enable managers to make ethical
choices
Unethical and Illegal Organizational Behavior
Social Responsibility
The obligation of an organisation's management
towards the welfare and interests of the society and
environment in which it operates
Criteria of Corporate Social Performance
MANAGEMENT
FUNDAMENTALS
Lesson 3
Strategic and Operational Planning
What is Planning
Planning is the process of setting organisation’s goals and
deciding how best to achieve them.
Also known as the process of establishing goals and suitable
course of action for achieving those goals.
Levels of Goals/Plans and their Importance
Benefits of Goals and Plans
Legitimacy
Source of motivation and commitment
Resource allocation
Guides to action
Rationale for decisions
Standards of performance
Organisational Mission
The mission statement is the reason the organisation exists
Top of the goal hierarchy
Describes the values, aspirations and reason for being
A well-defined mission is the basis for all other goals
Mission statements outline the stated purpose and values
to stakeholders
Areas to be addressed in an effective mission statement
Product and business priorities
Market and specific requirement of its customers
Technology and operational capabilities
Core values of an organisation
Interest of key stakeholders
Core purpose of existence
Types of Goals and Plans
Strategic Goals and plans
Tactical Goals and plans
Operational Goals and plans
Strategic Goals and plans
Strategic Goals
Official goals, broad statements about the organisation
Strategic Plans
Define the action steps the company intends to attain
The blueprint that defines activities and resource
allocation
Tactical Goals and plans
Tactical Goals
The results that major divisions and department within the
organisation intend to achieve
Tactical plans
Tactical plans are designed to help execute major strategic
plans and to accomplish specific part of the company’s
strategy
Plans of the divisions and departments
Operational Goals and plans
Operational Goals
Results expected from departments, work groups, and
individuals
Operational Plans
Develop at the lower levels of the organisation to specify
action steps towards achieving operational goals
Criteria for Effective Goal Setting
Specific and measurable
Cover key result areas
Challenging but realistic
Defined time period
Linked to rewards
Planning Approaches
Management by objective
Single-use plans
Standing plans
Contingency Plans
Management By Objective (MBO)
The term was first outlined by management guru Peter Drucker in 1954 in his
book "The Practice of Management."
MBO is a method whereby managers and employees define goals for every
department, project and person and use them to monitor subsequent
performances
A management model that aims to improve performance of an organisation by
clearly defining objectives that are agreed by both management and employees
Goal setting and action plans should ensure better participation and commitment
among employees, as well as alignment of objectives across the organisation
Model of the MBO Process
MBO Benefits and Problems
Benefits of MBO
Manager and employee efforts are
focused on activities that will lead
to goal attainment.
Performance can be improved at all
company levels
Employees are motivated
Departmental and individual goals
are aligned with company goals
Problems with MBO
Constant change prevents MBO from
taking hold.
Poor employer-employee relations
reduces MBO effectiveness.
Strategic goals may be displaced by
operational goals.
Mechanistic organisational values that
discourage participation can harm the
MBO process.
Too much paper work saps MBO energy.
Single Use plan
A single use plan is developed to achieve goals not
likely to be repeated in future
Help to carryout a course of action that is not likely to
be repeated in the future
A programme is a complex set of objectives and plans to
achieve an important, one-time organisational goal
A project is similar to a programme, but generally smaller in
scope and complexity
Standing Plan
Ongoing plans that provide guidance for tasks performed repeatedly
within the organisation
Developed to carry out the activities that recur regularly over the
period of time
A policy is a general guide to action and provides direction for people
within the organisation
Procedures define a precise series of steps to be used in achieving a
specific job
Rules describe how a specific action is to be performed
Contingency Plans
Contingency plan is plan that determine the
alternative course of action to be taken if an
intended plan is unexpectedly disrupted or
rendered inappropriate
Plans for emergencies, setbacks or
unexpected conditions
Strategic Planning
Is a formal process designed to help an
organisation identify and maintain an optimal
alignment with the most important elements of the
environment within which the organisation resides.
Is a complex and ongoing process of organisational
change.
Levels of Strategy
Corporate-Level Strategy
The level of strategy concerned with the question, “What business are we in?”
Pertains to the organisation as a whole and the combination of business units and
product lines that make it up.
Business-Level Strategy
The level of strategy concerned with the question, “How do we compete?”
Pertains to each business unit or product line within the organisation.
Functional-Level Strategy
The level of strategy concerned with the question, “How do we support the
business-level strategy?”. Pertains to all of the organisation’s major
departments.
Benefits and Limitations of Planning
Goals and plans provide a source of motivation and commitment
Goals and plans guide resource allocation
Goals and plans are a guide to action
Goals and plans set a standard of performance
Goals and plans can create a false sense of certainty
Goals and plans may cause rigidity in a turbulent environment
Goals and plans can get in the way of intuition and creativity
Fundamentals of Organising
What is Organising
Organising is the deployment of organisational resources to
achieve strategic goals.
Organising is deciding how best to group organisational
activities and resources so that the organisation will achieve
its goals.
Organising structure defines:
The set of formal tasks assigned to individuals and departments
The design of the systems to ensure effective coordination
Formal reporting relationships
The Process of Organising
Identification of Work
Dividing the workload in to jobs
Grouping jobs in to departments
Deciding Spans of Management
Creation of Hierarchy
Delegating authority
Determining systems of working
Allocation of resources
Establishing coordinating mechanisms
Organisation structure
The set of formal tasks assigned to individuals and
departments
Formal reporting relationships, including lines of authority,
decision responsibility, number of levels and span of
control
The design of systems to ensure effective coordination
of employees across departments
Organising Chart for a Water Bottling Plant
Organising Concepts
28
Work Specialization is the degree to which
organisational tasks are subdivided into
individual jobs; also called division of labor
Chain of Command is an unbroken line of authority
that links all individuals in the organisation and
specifies who reports to whom
Authority
Authority is the formal and legitimate right to make decisions and issues
orders
Power that has been legitimized by an organisation
Authority is vested in organisational positions, not in people
Authority is received from mainly legal sources but managers can develop authority
by acceptance as well.
Authority is accepted by subordinates
Authority flows down the vertical hierarchy
Authority can be transferred from one to another
Responsibility
Responsibility is the duty to perform the task or activity assigned
Requirements of assigned task to be done
It should be match with the responsibility
Ultimate responsibility cannot be transferred
Responsibility is highly connected to accountability
Accountability
The obligation to demonstrate and take responsibility
for performance in light of agreed expectations.
There is a difference between responsibility and
accountability:
responsibility is the obligation to act
accountability is the obligation to answer for an action
Delegation of Authority
Definition: The act of assigning formal authority and
responsibility for completion of specific activities to a
subordinate
Also known as passing authority to a lower level
Benefits of delegation
More effective use of your time
Motivation of staff
Training
Self development
More effective working team
Barriers to delegation
Lack of abilities to carry out the delegated tasks
Fear of subordinates
Fear of losing control
Fear that subordinates might do a better job
Some employees do not accept the delegated tasks
Concern about what to do with extra time
Feeling of indispensability
Span of Management
The number of employees reporting to a supervisor is span of management
Factors associated with less supervisor involvement and larger span of control
Work is stable and routine
Subordinates perform similar work
Subordinates in single location
Highly trained and need little direction
Rules and procedures are defined
Support systems and personnel are available to manager
Little supervision is required
Reorganisation and Span of Management
Tall vs flat organisations
Many layers of mgt between
lowest and highest levels
Small span of control
Close supervision, better
communication and reduce
delegation.
E.g. banking organisation
Fewer levels in hierarchy
Wider span of control
Subordinates grater decision
making authority, few mgt
cost , grater employee
motivation but less control
Characteristics of tall structure Characteristics of flat structure
Centralization and Decentralization
Centralization means that
decision authority
is located near the
top of the organisation
Decentralization means
decision authority is
pushed downward to lower
organisational levels
Change and uncertainty are usually associated with decentralization
The amount of centralization or decentralization should fit the firm’s strategy
During crisis or risk of company failure, authority may be centralized
Departmentalization
Basis for grouping positions into departments
Choices regarding chain of command
Traditional approaches:
Vertical Functional
Divisional
Matrix
Innovative approaches:
Teams
Virtual Networks
Functional and Divisional
Vertical Functional Approach
Grouping of positions into departments based on skills,
expertise, work activities, and resource use
Divisional Approach
Grouping based on organisational output
Product, Program, Business (self-contained unit)
Geographic or Customer-Based Divisions
40
Functional versus Divisional Structures
Geographic-Based Global
Organisation Structure
Matrix and Team Approach
Matrix approach combines functional and divisional
approaches
Improve coordination and information
Dual lines of authority
Team approach is a very widespread trend
Allows managers to delegate authority
Flexible, responsive
43
Dual-Authority Structure in a Matrix Organisation
Global Matrix Structure
Virtual Network Approach
Extends idea of horizontal coordination and
collaboration
Partnerships
Alliances
Could be a loose interconnected group
i.e., outsourcing
Virtual network structure means that the firm
subcontracts most of its major functions to separate
companies
46
Network Approach
Structural Advantages and Disadvantages
MANAGEMENT
FUNDAMENTALS
Lesson 4
The Nature of Leadership
Leading is a process of directing and influencing the
task oriented activities of group members or the entire
organisation
Leadership is the ability to influence people towards the
attainment of goals
Many styles of leadership can be effective
Major Functions of Leadership
Directing Function
Communication Function
Motivational Function
Culture Building Function
Changing Function
From Management to Leadership
Good management is essential to organisations
However, good managers must be leaders
Management promotes stability, order, and problem
solving
Leadership motivates toward vision and change
Leadership cannot replace management, there should
be a balance of both
Managers vs. Leaders
Focus on things
Do things right
Plan
Organise
Direct
Control
Follows the rules
Focus on people
Do the right things
Inspire
Influence
Motivate
Build
Shape entities
Manager Leader
Major approaches to Leadership
Trait approach
Behavioral approach
Contingency approach
Contemporary approach
Traits Theories of Leadership
Early research on leadership focused on traits
Assume leaders are born with having outstanding leadership qualities
Attempt to identify common personality traits that successful leaders
display.
Trait theories consider personality, social, physical, or intellectual traits to
differentiate leaders from non-leaders.
Effective leaders possess varied traits and combine these with their
strengths
Personal Characteristics of Leaders
Physical Characteristics:
Energy
Physical stamina
Intelligence & Ability:
Intelligence, cognitive ability
Knowledge
Judgment, decisiveness
Personality:
Self-confidence
Honesty & integrity
Enthusiasm
Desire to lead
Independence
Social Characteristics:
Sociability, interpersonal skills
Cooperativeness
Ability to enlist cooperation
Tact, diplomacy
Work Related Characteristics:
Achievement drive, desire to excel
Conscientiousness in pursuit of goals
Persistence against obstacles, tenacity
Social Background:
Education
Mobility
Criticisms of Trait approach
Some good leaders do not exhibit number of
traits mention above
Some traits are unclear & difficult to describe
Role of leaders will be influenced by their
behaviour
Behavioural approach
Focus on the behaviour of leaders
Assume leaders are not born, leaders can be made
Those theories isolate behaviours that differentiate
effective leaders from ineffective leaders.
Defined two leadership behaviours:
Task-oriented behaviour
People-oriented behaviour
Ohio State Studies
Identified two major behaviours:
Consideration - people oriented
Mindful of subordinates
Respects ideas and feelings
Establishes mutual trust
Initiating structure - task behaviour
Task oriented
Directs work activities toward goals
Michigan Studies
Compared the behaviour of effective and ineffective
supervisors
Employee-centered leaders (most effective)
Establish high performance goals
Display supportive behaviour
Job-centered leaders (not effective)
Focus on meeting schedules, cost-management, and efficiency
Less concerned with goal achievement/human needs
The Leadership (Managerial) Grid
1,9
Country club management
Thoughtful attention to needs of people
for satisfying relationships leads to
A comfortable, friendly organisation
atmosphere and work tempo
9,9
Team management
Work accomplishment is from
committed people, interdependence
through a “common stake” in organisation
purpose leads to relationship
of trust and respect
1,1
Impoverished Management
Exertion of minimum effort to get
required work done is appropriate
to sustain organisation membership
5,5
Organisation Man Management
Adequate organisation performance
possible through balancing the necessity to
get out work with maintaining
morale of the people at a satisfactory level9,1
Authority-Obedience
Efficiency in operations results
from arranging conditions of
work in such a way that human
elements interfere to a minimal degree
1
2
3 4 5 6 987
1
2
3
4
5
6
7
8
9
Concern for productionLow High
Low
High
Con
cern
for
peop
le
Contingency Approaches
A model of leadership that describes the relationship between leadership
styles and specific organisational situations.
Key Assumption - Leaders must fit to situations; options to accomplish this:
Select leader to fit situation
Change situation to fit leader
Main theories are,
Hersey and Blanchard’s Situational Theory
Fiedler’s Contingency Theory
Path-Goal Theory
Substitute for Leadership
Hersey and Blanchard’s
Situational Leadership Theory
Situational Leadership Theory (SLT)
A contingency theory that focuses on followers’ readiness.
Leader: decreasing need
for support and supervision
Follower readiness:
ability and willingness
Unable and
Unwilling
Unable but
Willing
Able and
Willing
Directive High Task and Relationship
Orientations
Supportive
Participative
Able and
Unwilling
Monitoring
Hersey and Blanchard’s Situational Model
Fiedler’s Contingency Theory
Leader’s style, is task oriented or relationship oriented
Goal is to match the leader’s style with organisational situation
Analyze the leader’s style to the favourability of the situation
Leadership situations can be analyzed in terms of three elements.
Leader-member relations – refers to group atmosphere and members’ attitude toward
and acceptance of the leader.
Task structure – refers to the extent to which tasks performed by the group are defined,
involve specific procedures, and have clear, explicit goals.
Position power – is the extent to which the leader has formal authority over subordinates
How Leader’s Style Fits the Situation
Path-Goal Theory
The theory that it is the leader’s
job to assist followers in attaining
their goals and to provide them
the necessary direction and/or
support to ensure that their goals
are compatible with the overall
objectives of the group or
organisation.
The Path-Goal Theory
Substitute for Leadership
Situational variables can be so powerful that they actually
substitute for or neutralize the need for leadership.
Substitute – a situational variable that makes a leadership
style unnecessary or redundant.
Neutralizer – a situational variable that counteracts a
leadership style and prevents the leader from displaying
certain behaviors.
Contemporary Approaches
Leadership evolves as the needs of the organisation change
Leadership has evolved with technology, economic, labour, social,
and cultural changes
Responding to the turbulence and uncertainty of the environment
new theories of leadership are developed
Four approaches for today’s turbulent times:
Level 5 Leadership
Servant Leadership
Authentic Leadership
Interactive Leadership (gender differences)
Level-Five Leadership
Servant Leadership
Work exists for the development of the worker
Servant leaders transcend self-interest to serve
others
Servant leaders give away power, ideas,
information, recognition, credit, and money
Authentic Leadership
Leaders who know and understand themselves
Inspire trust and commitment
Staying true to one’s values and beliefs
Respect diverse viewpoints
Espouse and act with higher order ethical values
Encourage collaboration
Help others learn, grow, and develop as leaders
Components of Authentic Leadership
Interactive Leadership
Derived from studies of female leaders (gender differences)
Consistent with Level 5 leadership
Consensual and collaborative
Influence derived from relationships
Gender Differences in Leadership Behaviors
Charismatic and Visionary Leadership
Charismatic leaders are skilled in the art of visionary
leadership
Inspire and motivate people to do more
A superior vision
Ability to understand and empathize
Empowering and trusting subordinates
Visionary leaders speak to the hearts of employees to be a
part of something big
Transformational versus Transactional Leadership
Transactional
Clarify tasks
Initiate structure
Provide awards
Improve productivity
Hard working
Tolerant and fair-minded
Focus on management
Transformational
Innovative
Recognize follower needs
Inspire followers
Create a better future
Promote significant change
Power in Organisations
Ability to influence others and to resist being influenced.
Control of valuable resources.
Capacity to affect another persons rewards and costs.
Ability to control what happens to another
individual.
Two bases of power
Position
Personal
Bases of Power (Position)
Reward power
Ability to deliver positive consequences or to remove negative
consequences. May backfire if perceived as a bribe.
Coercive power
Ability to deliver negative consequences or to remove positive
consequences. People follow commands but tend to avoid the
person in the future.
Legitimate power
Based upon one’s position in the group.
Power comes with the title
Bases of Power (Personal)
Referent power
Group members look up to and want to be like the
leader. Thus, they do as asked.
Expert power
Power resulting of leaders special knowledge or skill
regarding the task performed by followers.
MANAGEMENT
FUNDAMENTALS
Lesson 5
Motivation
The Concept of Motivation
Motivation – the arousal, direction, and persistence of
behavior
Forces either intrinsic or extrinsic to a person that arouse
enthusiasm and persistence
Employee motivation affects productivity
A manager’s job is to channel motivation toward the
accomplishment of goals
A Simple Model of Motivation
Content Perspectives on Motivation
If managers understand employees’ needs, they can
design appropriate reward systems
Needs motivate people
Needs translate into an internal drive that motivates
behavior
People have a variety of needs
Maslow’s Hierarchy of Needs
ERG Theory
Existence needs – the needs for physical well-being
Relatedness needs – the needs for satisfactory relationships with others
Growth needs – the needs that focus on the development of human potential
and the desire for personal growth
Frustration-regression principle: failure to meet a high-order need may
cause a regression to an already satisfied lower-order need
Herzberg’s Two-Factor Theory
Theory X and Theory Y (Douglas McGregor)
Theory X
Assumes that employees dislike work,
lack ambition, avoid responsibility,
and must be directed and coerced to
perform.
Theory Y
Assumes that employees like work,
seek responsibility, are capable of
making decisions, and exercise self-
direction and self-control when
committed to a goal.
David McClelland’s Acquired Needs Theory
nAch
nPow
nAff
Need for Achievement
The drive to excel, to achieve in
relation to a set of standards, to
strive to succeed.
Need for Affiliation
The desire for friendly and
close personal
relationships.
Need for Power
The need to make others behave
in a way that they would not
have behaved otherwise.
Process Perspectives on Motivation
How people select behavioral actions
Goal-Setting Theory
Equity Theory
Expectancy Theory
Goal-Setting Theory (Edwin Locke)
Goal-Setting Theory
The theory that specific and difficult goals, with feedback,
lead to higher performance.
Self-Efficacy
The individual’s belief that he or she is
capable of performing a task.
Factors influencing the goals–
performance relationship:
Goal commitment, adequate self-
efficacy, task characteristics, and
national culture.
Equity Theory
Equity Theory
Individuals compare their job inputs and outcomes with
those of others and then respond to eliminate any
inequities.
Equity Theory (cont’d)
Choices for dealing with inequity:
Change inputs
Change outcomes (increase output)
Distort/change perceptions of self
Distort/change perceptions of others
Choose a different referent person
Leave the field (quit the job)
Equity Theory (cont’d)
Distributive Justice
Perceived fairness of the amount
and allocation of rewards among
individuals.
Procedural Justice
The perceived fairness of
the process to determine the
distribution of rewards.
Expectancy Theory
Motivation depends on individuals’ expectations about their
ability to perform tasks and receive desired rewards
E → P: putting effort into a given task will lead to high
performance
P → O: successful performance of a task will lead to the
desired outcome
Valence – the value or attraction an individual has for an
outcome
Major Elements of Expectancy Theory
Reinforcement Perspective on Motivation
Behavior Modification
Reinforcement theory
techniques used to
modify behavior
Reinforcement
An act that causes a
behavior to be
repeated or inhibited
Law of Effect
Positively reinforced
behavior tends to be
repeated and
unreinforced behavior
inhibited
Positive Reinforcement
Pleasant and rewarding
consequences following
a desired behavior
Changing Behavior with Reinforcement
Social Learning Theory
Individual’s motivation can result from thoughts, beliefs,
and observations
Vicarious learning – observational learning from seeing
others’ behaviors and rewards
Self-reinforcement – motivating yourself by reaching goals
and providing positive reinforcement for yourself
Self-efficacy – belief about your own ability to accomplish
tasks
Job Design for Motivation
Job Simplification
Job Rotation
Job Enlargement
Job Enrichment
Innovative Ideas for Motivating
Organizations are using various types of incentive
compensation to motivate employees to higher levels of
performance
Variable compensation is a key motivational tool
Incentive plans can backfire
They should be combined with motivational ideas and intrinsic
rewards
Incentives should reward the desired behavior
Empowering People to Meet Higher Needs
Employees receive information about company
performance
Employees have knowledge and skills to contribute to
company goals
Employees have the power to make substance decisions
Employees are rewarded based on company
performance
Teamwork
Why Teams at Work?
Work in organizations is interdependent
What Is a Team?
Two or more people who interact and coordinate their work
toward a goal
The Dilemma of Teams
We have to give up our independence
We have to put up with free riders
Teams are sometimes dysfunctional
Differences between Groups and Teams
Five Common Dysfunctions of Teams
How to Make Teams Effective
Successful teams don’t just happen
Team members should consider:
Defining roles
Establishing norms
Setting goals
Work-team effectiveness is based on:
Productive output
Personal satisfaction
Capacity to adapt and learn
Types of Teams
Formal Team – defined by formal organization structure
Vertical: functional or command team
Horizontal: committee with cross-functional membership
Special Purpose: project teams
Self-Directed Teams – supervised by elected employee
Diverse skills and functions
Access to resources
Team is empowered to make decisions
Innovative Use of Teams
Virtual Teams
Use technology to build relationships
Shape culture through technology
Monitor progress and reward members
Global Teams
Cross-border work teams
Members from different nationalities
May operate virtually
Stages of Team Development
Forming – orientation and acquaintance
Storming – personalities and roles emerge
Norming – conflicts develop
Performing – focus on problem solving
Adjourning – disbandment
Team Cohesiveness
Determinants of Team Cohesiveness
Team interaction
Shared goals
Personal attraction to the team
Consequences of Team Cohesiveness
Morale
Productivity
Managing Team Conflict
Teams deal with task conflict and relationship conflict
Balancing Conflict and Cooperation
Conflict can help eliminate groupthink
Conflict can cause morale and productivity problems
Causes of Conflict
Competition over resources
Communication breakdowns
Balancing Conflict and Cooperation
Styles to Handle Conflict
Competing style
Avoiding style
Compromising style
Accommodating style
Collaborating style
Reaching a Win-Win Solution
Separate the people from the problem
Focus on interests, not current demands
Generate many alternatives for mutual gain
Insist that results be based on objective standards
MANAGEMENT
FUNDAMENTALS
Lesson 6
Managing Change and Innovation
Innovation and Change in the Workplace
If organisations don’t successfully change and
innovate, they die
Change and innovation can come from outside forces
Managers want to initiate change from the inside
Disruptive innovation is a goal for global competition
Organisational Change
Organisational change is defined as the adoption of a new idea or
behavior by an organisation
Change is not easy; organisations must take an ambidextrous approach
An ambidextrous approach means incorporating structure and processes
that appropriate for both creative impulse and systematic implementation
of innovations
Managers encourage flexibility and freedom to innovate
Changing Things: New Products and Technologies
Product Change – a change in the organisation’s
product or service outputs
Technology Change – a change in the organisation’s
production process
Three innovation strategies: exploration, cooperation,
and entrepreneurship
Three Innovation Strategies
Exploration
Creativity – novel ideas that meet perceived needs
or offer opportunities
Idea incubator – a safe harbor where employees
can develop ideas and experiment
Cooperation
Horizontal coordination mechanisms – simultaneously
contribute to innovation
Internal and external
Open innovation – commercialization of ideas
beyond the organisation
Includes customers and partners
Coordination Model for Innovation
Entrepreneurship
Managers should support entrepreneurship activities and foster idea
champions
Energy and effort is required to promote a new idea
Sponsors approve and protect ideas when critics challenge the
concept
New-venture teams give free rein to creativity
New-venture funds provide resources for new ideas
Skunkworks are informal, autonomous, secretive groups that focus on
breakthrough ideas
Four Roles in organisational Change
Changing People and Culture
Changes in how employees think
Changes in mind-set
People change = Training and Development
Culture change = organisational Development
Large culture change is not easy
organisational Development
Planned, systematic process of change using
behavioral science
Addresses three types of problems:
Mergers and acquisitions
organisational decline and revitalization
Conflict management
OD Steps
Unfreezing
Change efforts to overcome the pressures
of both individual resistance and group
conformity
Changing
Efforts to get employees involved in the
change process
Refreezing
Stabilizing a change intervention by
balancing driving and restraining forces
OD Approaches to Culture Change
Need for Change
Changes in products or services
Changes in size or structure
Changes in administrative structures
Changes in technology
Government regulation
Economic competition
Performance Gaps
Resistance to Change
Self-Interest
Lack of Understanding and Trust
Different Assessments and Goals
Uncertainty
Force-Field Analysis
Driving forces – problems or opportunities that
provide motivation for change
Restraining forces – barriers to change
Force-Field Analysis Example
Tactics for Overcoming Resistance to Change
Managing Diversity
The Changing Workplace
The differences people bring to the workplace are valuable
The workforce is changing as organisations build cohesive
teams:
Three-generation workforce
Aging workers
Growth in number of Hispanic and Asian workers
Women outnumbering men
Growth in foreign-born population
Diversity on a Global Scale
Social and cultural differences can create difficulties
Europe has very complex social and cultural systems
National cultures are intangible, pervasive, and difficult
to comprehend
It is imperative to understand local cultures
Managing Diversity
Today diversity is defined broadly:
Race
Gender
Age
Lifestyle
Disability
Traditional vs. Inclusive Models of Diversity
Dividends of Workplace Diversity
Better use of employee talent
Increase understanding of the marketplace
Enhanced breadth of understanding in leadership
positions
Increased quality of team problem solving
Reduced cost associated with high turnover absenteeism
and lawsuits
Factors Shaping Personal Bias
Prejudice – different is deficient
Discrimination – acting on
prejudicial attitudes
Stereotypes – rigid,
exaggerated, and irrational
beliefs
Stereotyping versus Valuing Cultural Differences
The Female Advantage
There are advantages to hiring, retaining, and
promoting women in organisations
Men still have higher wages and faster promotions than
women, but
Women have “the female advantage” because they are
more collaborative, less hierarchical, and more
relationship-oriented
Factors Affecting Women’s Careers
Glass Ceiling – an invisible
barrier that separates
women from top management
positions
Opt-Out Trend – women are
voluntarily leaving the
workforce for various reasons
Cultural Competence
Managers struggle to create culture that values and
nurtures diverse employees
organisations must reduce obstacles for disadvantaged
employees
Managers must have the ability to interact effectively with
people of different cultures
Five Steps to Develop Diversity
Diversity Initiatives and Programs
Changing Structures and Policies
Expanding Recruitment Efforts
Establishing Mentor Relationships
Accommodating Special Needs
Providing Diversity Skills Training
Increasing Awareness of Sexual Harassment
New Diversity Initiatives
Companies believe that diversity initiatives help
maintain competitive advantage, and
Improving morale
Decreasing interpersonal conflict
Facilitating progress in new markets
Increasing creativity
Multicultural teams and employee network groups are
two new approaches to diversity
MANAGEMENT
FUNDAMENTALS
Lesson 7
Organisational Control
Controlling
Managers use a variety of measures to monitor
performance:
Controlling work processes
Regulating employee behavior
Systems for financial resources
Evaluating profitability
The Meaning of Control
Organisational control is the systematic process
through which managers regulate organisational
activities to make them consistent with expectations
established in plans, targets, and standards of
performance
Choosing Standards and Measures
Common measures and controls:
Sales
Revenue
Profit
More focus on measuring intangibles
Customer service
Increased revenue
The Balanced Scorecard
Balanced perspective of company performance
Integrates various areas of the organisation
Managers record, analyze, and discuss the metrics
Serves as core management-control system
The Balanced Scorecard
Three Types of Control
Feedforward Controls
Used to anticipate problems before they arise so that
problems do not occur later during the conversion
process
Giving stringent product specifications to suppliers in
advance
IT can be used to keep in contact with suppliers and to
monitor their progress
Concurrent Controls
Give managers immediate feedback on how
efficiently inputs are being transformed into outputs
Allows managers to correct problems as they arise
Feedback Controls
Used to provide information at the output stage
about customers’ reactions to goods and services so
that corrective action can be taken if necessary
Feedback Control Model
Application to Budgeting
Budgetary control – setting targets and
monitoring expenditures
Budgets list planned and actual expenditures
Budgets are associated with a division or
department
The unit of analysis for budgeting is the responsibility
centre
Financial Control
Financial Statements provide basic information for
financial control
Hierarchical versus Decentralized Approaches
Hierarchical controls include the monitoring of behavior
through rules, policies, reward systems, and written
documentation
Decentralized controls based on values and assumptions;
rules are only used when necessary
Culture is adaptive, uniting individuals and teams
Managers’ approach to control is changing in many of
today’s organisations
Comparing Methods of Control
Open-Book Management
Decentralized philosophy
Gets every employee thinking like an owner
Information sharing and teamwork
Allows employees to see the financial
condition of company
Sees how his/her job fits into organisational
success
Total Quality Management (TQM)
Infuse quality into every aspect of the business, all
day-to-day activities
Focuses on:
Teamwork
Collaboration
Identifying improvements
The goal of TQM is zero defects
Quality Management Techniques
Quality Circles
Benchmarking
Six Sigma
Reduced Cycle Time
Continuous Improvement
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