.PPTs to accompany Contemporary Management 2e by Waddell, Jones & George © 2011 McGraw-Hill Australia Pty Ltd 11-1

Chapter 11

Managing information: communication and

technology

.PPTs to accompany Contemporary Management 2e by Waddell, Jones & George © 2011 McGraw-Hill Australia Pty Ltd 11-2

Learning objectives

After studying the chapter, you should be able to:– explain why effective communication—the sharing

of information—helps an organisation gain a competitive advantage, and describe the communication process

– describe the communication process and explain the role of perception in communication

– define information richness and describe the information richness of communication media available to managers

.PPTs to accompany Contemporary Management 2e by Waddell, Jones & George © 2011 McGraw-Hill Australia Pty Ltd 11-3

Learning objectives (cont.)

– differentiate between data and information, list the attributes of useful information and describe three reasons why managers must have access to information to perform their tasks and roles effectively

– describe the computer hardware and software innovations that have created the information technology revolution and changed the way managers behave

– differentiate among six performance-enhancing kinds of management information systems.

.

Management challenge

‘Technology tunes up customer contact’

Case Study:

SAP Australia and

mobile devices

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Overview

– Information Technology (IT) is a tool to improve human communications, NOT a substitute.

– IT needs to be humanised.– Ineffective communication leads to poor

performance.– Effective communication is very important.– A huge range of communication media/options

exist.– Good communication leads to competitive

advantage.

.PPTs to accompany Contemporary Management 2e by Waddell, Jones & George © 2011 McGraw-Hill Australia Pty Ltd 11-6

Information and the manager’s job

– Information is essential to the manager’s job. It is the source of knowledge and informs managers to make knowledgeable, prudent choices.

– Data are raw, unsummarised and unanalysed facts.

– Information is data that has been organised in a meaningful fashion (e.g. graphs, tables, reports).

– Decisions can be made from information.– IT can help order data into useful

information.

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Attributes of useful information

Attributes

Quality The accuracy and reliability of available information affects the quality of decisions that managers make using the information.

Timelessness The availability of real-time information that reflects current conditions allows managers to maximise the effectiveness of their decisions.

Completeness Complete information allows managers to consider all relevant factors when making decisions.

Relevance Having information specific to a situation assists managers in making better decisions.

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Information systems and technology

Information technology – A system for acquiring,

organising, storing,

manipulating

and transmitting

information

.PPTs to accompany Contemporary Management 2e by Waddell, Jones & George © 2011 McGraw-Hill Australia Pty Ltd 11-10

Management information systems (MIS)

A specific form of IT that managers utilise to generate the specific, detailed information they need to perform their roles effectively

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Information and decision-making

In planning, organising, leading and controlling, much of management is about making decisions.

To make effective decisions, managers need information, both from inside and outside the organisation.

.PPTs to accompany Contemporary Management 2e by Waddell, Jones & George © 2011 McGraw-Hill Australia Pty Ltd 11-12

Information and controlManagers achieve control by establishing measurable

goals, measuring actual performance, comparing actual performance with goals and taking any corrective action.

Managers must have information to achieve control over any organisational activity.

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Information and coordination

Coordination problems that managers face in managing global supply chains are increasing.

Managers have adopted sophisticated IT that helps them coordinate the flow of materials, semi-finished goods and finished goods throughout the world.

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Communication, information and management

Communication: the sharing of information between two or more individuals or groups to reach a common understanding

Something has been communicated when a common understanding is achieved.

Good communication is essential for achieving:– efficiency– quality– responsiveness to customers

– innovation.

This leads to competitive advantage.

IT facilitates effective communications.

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The communication process

Sender: person or group sending the message

Message: information intended for sharing

Encoding: converting the message into understandable symbols or language

Noise: anything hampering any stage of the communication process

Messages are transmitted through a medium such as email, phone, reports or meetings.

Messages are decoded or interpreted by a receiver.

The receiver ‘feeds back’ to original sender.

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Encoding messages

Messages can be encoded into words, written or spoken, making for verbal communication.

Messages can be encoded into non-verbal communication (NVC) with no written or spoken words.

– Examples are facial expressions, hand movements, posture and dress

– Non-verbal communication sometimes involuntary and less controlled than verbal communication

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Dangers of ineffective communication

– Up to 85 per cent of a manager’s time is spent on communication.

– Managers need to help subordinates communicate effectively.

– Performance suffers with poor communication.

• Loss of competitive advantage• Jeopardy to safety and human life

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Information richness and communication media

– Effective communication needs the right medium.• Right medium (phone, fax, meeting) will vary—need to

choose carefully• Need to choose the right level of ‘information richness’

– Information richness is the amount of information that a medium can carry and the extent to which the chosen medium enables the sender and the receiver to reach a common understanding.

– Face-to-face communication has the highest information richness—less ambiguity and confusion.

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Information technology aids richness

Use of videoconferencing– visual and audio

Use of teleconferencing– audio

Voicemail messages

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Personal written communications

– Demand greater attention– Are personally tailored to the receiver– Do not have immediate feedback mechanism– Email can be one example of a personal message– Importance of etiquette, politeness, succinctness

and format in all written messages

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Email’s ‘seven sins’

– Ignoring emails– Denying receipt of emails– Tactlessness– ‘Waffle’– Presumption that email has

been sent– Copying unnecessary people

into emails– Sloppiness

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Abuse of email

– Harassment– Use for purposes other than

company work– Junk mail– Email overload– Compulsion to view emails

All lead to loss of productivity.

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The information technology revolution

The tumbling price of information– The cost of computer hardware has

dropped dramatically while the power of computers has risen sharply.

– IT can greatly improve communication.

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The information technology revolution (cont.)

Wireless communications– Cellular service has

grown rapidly to over 110 million users.

– Wireless access now connects laptops to networks.

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The information technology revolution: computer networks

Networking– Networking is the exchange of information through a group or network of

interlinked computers.

– Servers are powerful computers that relay information to client computers connected on a Local Area Network (LAN).

– Mainframes are large computers processing vast amounts of information.

– The Internet is a world-wide network of computers.

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Software developments

Operating system software– Tells computer hardware how to run

Applications software– Designed for a specific task or use

Artificial intelligence– Behaviour performed by a machine that, if performed by a human being, would

be called intelligent

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The organisational hierarchyTraditionally, managers have used the organisational hierarchy as the main system for gathering information necessary to make decisions and coordinate and control activities.

Drawbacks– Can reduce timeliness of information– Reduces quality of information– Tall structure can make for an expensive information system

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Types of information systemsTransaction processing systems (TPS)

– Systems designed to handle large volumes of routine transactions– The first computer-based information systems handling billing, payroll and supplier

payments

Operations information systems (OIS)– Systems that gather, organise and summarise comprehensive data in a form of value to

managers– Can help managers with non-routine decisions such as customer service and productivity

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Types of information systems (cont.)

Decision support systems (DSS)– Provide interactive models to help managers

make non-routine decisions– Analyse investment potential, new product pricing

Expert systems and artificial intelligence– Employ human knowledge embedded in a

computer to solve problems usually requiring human expertise

– Use artificial intelligence to recognise, formulate and solve problems and learn from experience

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Types of information systems (cont.)

Enterprise resource planning systems– Multi-module application software

packages that coordinate the functional activities necessary to move products from the product design stage to the final customer stage

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Impact of information systems

Computer-based information systems– Increasingly associated with decentralisation

of managerial decision-making– Flattening (‘delayering’) organisations

• Information systems reduce the need for the hierarchy to control the firm.

• Managers control and coordinate using the system, not workers.

.PPTs to accompany Contemporary Management 2e by Waddell, Jones & George © 2011 McGraw-Hill Australia Pty Ltd 11-36

How computer-based information systems affect the organisational hierarchy

.PPTs to accompany Contemporary Management 2e by Waddell, Jones & George © 2011 McGraw-Hill Australia Pty Ltd 11-37

Impact of information systems

Horizontal information flows– Information networks can bridge functional

departments which allows information to flow horizontally between departments, leading to much higher productivity, quality and innovation.

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Information systems and competitive advantage

Competitive advantages of information systems– Improved managerial decision-making capability– Reduced need for hierarchical control systems– Increased efficiency by reducing requirements for personnel

Virtual products– Firms can use their information systems to custom-tailor goods and services

individually for each of their customers

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Limitations of information systems

Loss of the human element– Information systems cannot present all kinds of information

accurately.

– Thick information, which is rich in meaning and not quantifiable, is best suited to human analysis.

– Information systems should support face-to-face communication, and not be expected to replace it.

.PPTs to accompany Contemporary Management 2e by Waddell, Jones & George © 2011 McGraw-Hill Australia Pty Ltd 11-40

Limitations of information systems (cont.)

Causes of difficult implementations– Information systems can be hard to develop

and put into service.– Consistent standards for systems do not

always exist.• Makers of hardware may use different standards

which makes it hard to share information between systems.

.PPTs to accompany Contemporary Management 2e by Waddell, Jones & George © 2011 McGraw-Hill Australia Pty Ltd 11-41

Limitations of information systems (cont.)

Implementation difficulties To avoid problems:

– list major organisational goals and the information types required to measure those goals

– audit the current system to verify that information collected is accurate, reliable, timely and relevant

– investigate other sources of information

– build support for the system with workers

– create formal training programs

– emphasise that face-to-face contact is important.

.

Management in the media

‘How can managers

create competitive

advantage by using it

to improve

communication?’

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Summary– IT now central to operation of most

organisations– Need quality, timely, relevant and sufficient

information– IT can improve productivity markedly– Good communication essential for

competitive advantage– Information richness needed for

understanding– Great increases in IT power and great

decreases in IT cost

.PPTs to accompany Contemporary Management 2e by Waddell, Jones & George © 2011 McGraw-Hill Australia Pty Ltd 11-44

Summary (cont.)

– Four types of MIS• transactions processing• operations information• decision support • artificial intelligence

– IT has limitations as well as advantages– Human element must be preserved