Management EXT

8/2/2019 Management EXT

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Department of BusinessAdministration -University of Sri

Organizat ions andThei r In t erna l

Dynamics


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An organization is

a Socio-economic entity. A group of people

working together toachieve a common

objective


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Elements of anorganization

A group of people An interaction A common objective


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What is a System

A system is an assemblage ofinteracting and interdependentcomponents working together to

achieve a common goal.


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Main features of a systemMain features of a system

Set of interacting components

But, an integrated whole

Operates within a certain boundary

Work together to achieve a commongoal


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Why weneed organizations?

Accomplishment of otherwise

impossible tasks.

Provision of means to achieve human

needs Organizations create and preserve

knowledge

Organizations make the whole society


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A business is .

An Activity

Involves producing goods and services

Uses limited resources

Focus on achieving certain objective/s


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What is an Objective

Objectives are those endresults toward which the

organizational activitiesare directed.


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Bases of Classification of Objectives

? ? ?Levels of the business

Degree of SignificanceSMART Qualities

Measuring InstrumentTime Horizon


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Key Results areasMarket Standing

InnovationProductivity

Physical & Financial Resources

Profitability

Manager Performance & Developments

Worker Performance & AttitudesPublic Responsibility


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Internal EnvironmentAll the factors inside an organization that

affect its performance; including

StructureResources

Culture

ProcessesLeadership

Goals

StructureResources

Culture

ProcessesLeadership

Goals


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External Environment All the factors outside an organization

that affect its performance

Consists of Micro Environment

Macro Environment


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Micro EnvironmentAll the individuals, groups and institutions external to the organization

that affect its performance.

Customers Suppliers

Competitors Government

Media Trade Unions Professional institutions Trade Associations

Political parties

Local Bodies NGOs Debtors

Creditors


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Macro Environment

A set of broad forces, created as a

result of the interactions of microenvironmental constituents,

affecting the performance of theorganization.


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Busin

essE

nviro

nment

Micro

Environment

Internal

Environment

Macro Environment

Ecological Environment

Political

& Legal

Forces

EconomicForces

Social &Cultural

Forces

Technological

Forces

Customers

Competitors

Government

Trade

Unions

Suppliers

Creditors

Debtors

Media

Political

Parties

Community

Resources Culture

Structure Leadership

Processes


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Social Responsibility

The obligation of a business to

maximize its positive impacts andminimize its negative impacts on

the society


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Management Definitions

Management is decisionmaking

Management is the art of getting

things done through other people Management is the process of

achieving organizational objectiveseffectively by efficiently using limitedresources.


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Management- A science or an

Art?

Management Theory

The Real World ofApplication

Discovery ofmanagementKnowledge(A Science)

Use of managementKnowledge

(An Art)


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Management as a Process

Planning

Organizing

Directing

Controlling


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Why Management?

Ever IncreasingScarcity of Resources

Discipline of Management

Increasing Social &

Competition

A Quest for better

knowledge on Handling

Resources

Development of StrategicAspects of Management

A Quest for betterknowledge & Skills of

Competing

Cost of Mistakes will beunbearable

Development of

Quality aspects ofManagement

Highly Dynamic BusinessWorld

Development of Dynamic

& Learning Aspects ofManagement

A Quest for betterknowledge & Skills ofcoping with changes

A Quest for betterknowledge & Skills for

perfection


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How it is done?

Whatisd

one?

I n t he r ight w ay I n t he w rong w ay

Righ

tThing

WrongTh

ing

EFFICIENT &EFFECTIVE

Grow

EFFICIENT &EFFECTIVE

Grow

EFFECTIVE butINEFFICIENT

Survive

EFFECTIVE butINEFFICIENT

Survive

EFFICIENT but

INEFFECTIVE

Die Slow

EFFICIENT but

INEFFECTIVE

Die Slow

INEFFECTIVE &

INEFFICIENT

Die Fast

INEFFECTIVE &

INEFFICIENT

Die Fast

Efficiency & Effectiveness

Doing The Right Thing In The Right Way


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Productivity productivity is the relationship between

the output generated by a productionor service system and the inputprovided to create this output.

Output

Input


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Types of Managers

Different types of managers can beidentified according to:

1 The Level of Authority2 The Functional Area of

Specialization3 The Line and Staff Nature of

Activities


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Classification of Managers by the

Level of Authority

TopManagement

Middle Management

Lower Management

Workers


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Classification of Managers by the

Functional Area of Specialization

Production

Manager

Marketing

Manager

Marketing

Manager

Finance

Manager

Finance

Manager

ManagingDirector

General Managers

Functional Managers


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Classification of Managers by theLine and Staff Nature of Activities

(Responsibility)

Production

Manager

Marketing

Manager

Marketing

Manager

Finance

Manager

Finance

Manager

General

Manager

HR

Manager

HR

Manager

Line

ManagersStaff

Managers

Direct Responsibility Indirect Responsibility


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What Managers Do?

Informational

Roles

InterpersonalRoles

Decisional

Roles


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To be an effective and efficient manager, we needTo be an effective and efficient manager, we need

KnowledgeKnowledge Positive AttitudesPositive Attitudes

Positive attitudes on workPositive attitudes on work

Positive attitudes on peoplePositive attitudes on people

Positive attitudes on environmentPositive attitudes on environment

Positive attitudes on selfPositive attitudes on selfConceptual

Skills

Conceptual

Skills

Technical SkillsTechnical Skills

Human SkillsHuman Skills

SkillsSkills

General SkillsGeneral Skills Specific SkillsSpecific Skills

Know-whatKnow-what Know-howKnow-how


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Managerial Skills

ConceptualSkills

Technical

Skills

HumanRelation

Skills

Top

Level

Lower Level

MiddleLevel


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Evolution of ManagementThought


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The Process of Planning


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Planning Defined

Planning is the process of

establishing goals and suitablecourses of action for achieving

those goals. (Stoner andFreeman. 1995)


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Planning is the process of decidingthe objectives or goals of the

organization and preparing how tomeet them.(G.A. Cole, 1993)

Planning

Defined


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Activities Involved inPlanning

1. Setting the goals & objectives2. Setting Strategies

f i


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Issuance of Key Targets to Departments

Preparation of Tactical/Operational Plans

Evaluation and Revision as necessary

Determination Of Corporate Strategies

Agree On Strategic Plan

Agree/Revise Strategic Objectives

Establishment of MissionPolicy

Statement

Social

Responsibility

ThreatsWeaknessesUnfavourabl

e

OpportunitiesStrengthsFavourable

ExternalInternal

Environmental Analysis

The Process of Planning


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Formulation of Mission

Management

Values

Interests

of owners

Interests

of the Society

Mission


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Definition of a business in its scope and

philosophy The fundamental, unique purpose that

sets a business apart from other firms ofits types and identifies the scope of itsoperations in product and market terms.

Mission


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Contents of MissionStatement

Fundamental Purpose - and

Business Scope Business philosophy


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Colourful dream of the future of the

business, deeply embedded in the

founders mind

Vision


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Environmental Analysis

ThreatsWeaknesses

Unfavourable

Opportunities

StrengthsFavourable

ExternalInternalEnvironment

Effect


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The broad programme for achieving anorganizations objectives and

implementing its mission. (Stoner &Freeman)

A comprehensive plan foraccomplishing an organizations goals(Griffin)

The organization's response to itsenvironment overtime. (Stoner &Freeman)

Corporate Strategies


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Operational Plans

plans that provide the details needed

to incorporate strategy into day today operations. Eg,

Policies

Procedures

Programs

Projects

Rules and regulations

Budgets

Effective Plan Implementation


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Effective Plan Implementation

1. Communicate strategies

2. Develop and communicate planningassumptions etc.

3. Make sure actions plans reflect major objectivesand strategies

4. Review strategies regularly

5. Develop contingency plans and programs

6. Ensure that organizations structure followsplanning needs

7. Continue to remember plans implementations

8. Create an organization culture which drives forplanning

9. Establish a supporting organizational leadershipand culture


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Contents of a Good Planning Document

Organisational Profile

Executive Summary

Detailed SWOT Analysis (Highlight distinct Competencies)

Hierarchy of Aims (Vision, Mission, Goals & Objectives)

Strategies (Corporate, Functional and Operational Level)

Policies and Ground Rules

Programmes and Procedures (SOPs)

Work Instructions and Operational Guidelines

Budgets

Monitoring and Review Guidelines


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Hierarchy of PlansCorporate plan

SBU Plans

Functional Plans

Operational Plans

T f Pl


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Types of Plans

4

SBUs

SBUs

Divisions

Group

Corporate Strategic Plan(At Corporate Level)

Strategic Plans(At SBU Level)

TacticalPlans

FunctionalPlans

Operational

Plans

Single use

Standing


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Types of Operational Plans

Single-Use Plans

Single use plan is a

detailed course ofaction used once oronly occasionallyto solve a problemthat does not occurrepeatedly.

Standing Plans

Standing plan is an

established set ofdecisions used bymanagers to dealwith recurringorganizationalactivities.

Benefits of Planning


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Benefits of Planning

1. Provide a sense of direction

2. Prerequisite to successful growth3. Set up the organizational framework

4. Helps delegation

5. Helps motivate people6. Serves as a communication media

7. Lays the basis for control

8. Provides coordination9. Facilitates efficient use of resources.

10. Reduces uncertainty by anticipating

change


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Organizing

The Process of OrganizingThe Process of Organizing


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The Process of OrganizingThe Process of Organizing

1. Identification of Work

2. Dividing the workload in to jobs3. Grouping jobs in to departments

4. Deciding Spans of Management

5. Creation of Hierarchy6. Delegating authority

7. Determining systems of working

8. Allocation of resources9. Establishing coordinating mechanisms

O i ti l St t


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Organizational Structure.

The way in which an organizationsactivities are divided organized and

coordinated.

Elements of an


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Elements of an

Organizational Structure

Work specialization

Departmentalization

Chain of command

Span of Management

Delegation

Formalization Coordination

Factors Affecting Structure


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Factors Affecting Structure

1. Nature of the business

2. Company objectives &

Policies3. Business Strategies

4. Size of the business

5. Growth Rate6. Nature of the Ownership

7. Product Differentiation &Diversification

8. Management Styles9. Nature of the market

10.Financial Position of theorganization

11.Nature of the BusinessEnvironment

12.Production Technology13.Business Life-cycle


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Department of Business

Administration -University of Sri

Organizational Chart

Visual Presentation of

the organizationalStructure

Benefits of Using the


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Benefits of Using the

Organizational Chart Whole structure canbe viewed at one glance

OrganizationsHierarchy is explained

Number and types of

positions are explained

Departments anddivisions are shown

Managementrelationships areidentified

Communication

Channels are shown

Limitations of the Organizational Chart


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Informal Relationships are not explained

Informal Communication Channels are

not explained

Degree of delegation is not explained

Degree of formalization is not shown

Introduce rigidity in to relationships

Creates status problems

Cost of preparation, storing, andstudying

Can soon become out of dated

Limitations of the Organizational Chart


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Leadership


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Definitions of Leadership Leadership is the ability to

influence a group toward theachievement of goals. (Robinson,1995)

Leadership is "the process ofdirecting and influencing the task-related activities of group

members". (Stoner and Freeman,1992)


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Leadership is" the ability to influence

individuals and groups to work towardattaining organizational objectives".

(Mescrn, Albert and Khedourn)

Definitions of Leadership


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Power and Influence

Power: The ability to influenceothers

Influence: The act of changingothers behaviour

Management and Power


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PowerPower

InfluenceInfluence

Getting Things DoneThrough Other People

(Management)

Getting Things DoneThrough Other People

(Management)

RewardPower

RewardPower

CoercivePower

CoercivePower

LegitimatePower

LegitimatePower

ExpertPower

ExpertPower

ReferentPower

ReferentPower

Information Power

Information Power

LeaderManagerCriteria


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Administration -University of Sri Followers goalsCompany GoalsPrimary goal

OutwardInwardOrientation / Focus

Emotional, charismatic.May alter the mood offollowers and raise their

hopes and expectations.

Rational, logical,analytical. Tends to relyon models, computers,

and number crunching

Type of decisionmaking most often used

ReceiveExpectRespect

InnovativeStatus-quoAttitude towards change

Far-sightedShort-sightedFuture focus

Rewards and CharismaPunishmentsInfluencing mode

PersonalPositionalSources of Power

FollowersSubordinatesMembers known as

Leadership Theories &


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Approaches

Trait Approach

Behavioural Approach

Situational Approach

Trait Approach


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Trait Approach

In this approach, leadership is

understood by identifying the personalcharacteristics of leaders.

Therefore leadership is determined by

leader's own personal characteristicsbelieved to be taken from birth.

Hence, it is assumed that leaders areborn but not made.


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Traits - Examples Physical factors

Intelligence Self confidence

Sociability

Will (Initiative, Persistence, ambition)

Dominance

Surgency (Talkative, cheerfulness, geniality,enthusiasm, expressiveness, avertness,Originality)

Limitations of the Study


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Limitations of the Study

It does not consider the wholeenvironment

There cannot be generalization of traitsfor a successful leader.

No evidence has been given about thedegree of the various traits

There is a problem of measuring traits.

There have been many people withtraits specified for leader, but they werenot good leaders.


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Significance of the Study

Easy to understand

Gives an indication as to the personalcharacteristics that a leader should

possess. Helps management to develop such

qualities through training and

development programmes.

Behavioural approach


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Focused on two aspects of leadershipbehaviour namely

leadership functions, and

leadership styles.

Leadership Functions


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Leadership Functions

Leadership functions are the set ofactivities that must be performed by theleader, for a group to perform effectively.

Those activities are

1. Task-related functions, Functions which directly help theorganization to achieve its objectives

2. Group-maintenance functionsFunctions that focus atfurthering employees well-being.

Leadership Styles


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Leadership Styles

Task Oriented Style

People Oriented Style

Task-orientation / Style


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yTask-orientation is the degree to which the leaderorganizes and defines relationships in the group byactivities such as

Assigning specific tasks, Specifying procedures to be followed

Scheduling work, and clarifying expectations

Encourage people to work harder

Emphasize meeting deadlines

See to it that people in the work group are workingup to capacity

Closely supervise employees and

Getting the job done is more important to themthan employees growth or personal satisfaction

Employee orientation / Style


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Employee orientation is the degree to which the leadercreates an environment of emotional support, warmth,friendliness, and trust.

Employee oriented leaders are Friendly,

Trustful,

Earn respect,

Have a warm relationship with team members, Do personal favours for people in the work group,

Treat all people in the work group as his/her equal,

Be willing to make changes,

Back up what people do

Have a participative decision making

The Ohio State University Study


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This study concentrated basically ontwo fundamental styles of leadership asfollows:

Task Oriented Leadership

Employee Oriented Leadership



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y y

Findings

The employee turnover is lowest andsatisfaction is highest under "employeeoriented leaders". Among "task

oriented" leaders employees had highgrievances (complaints) and highturnover rates.

University of Michigan studies


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Leadership Styles: Employee centeredand Production centered

Found that most productive workgroups tended to have leaders who

were employee centered rather thanproduction centered.



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Findings Found that the most effective leaders form

supportive relationships with their subordinates

Tended to depend on group rather thanindividual decision-making, and encouragedsubordinates to set and achieve high

performance goals. Michigan researches strongly favoured

employee oriented leaders. Such leaders were

associated with high group productivity andhigher job satisfaction. Production orientedleaders tended to be associated with low groupproductivity and lower worker satisfaction.


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The Managerial Grid

Developed by Robert Blakeand JaneMouton

helps to measure a managers relative

concern for people and task.

Located in this grid a manager can

have either of five majorleadership/management styles.

9.91.9

Country-clubManagement

DemocraticManagementid


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9.11.1

5.5

Middle-of-theRoad

Management

g g

ImpoverishedManagement

AuthoritarianManagementT

he

Man

agerialGr

Situational determinants of


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Leadership

Leadership

effectiveness

Leadershipeffectiveness

Superiorsexpectations and

behaviour

Superiorsexpectations and

behaviour

Taskrequirements

Taskrequirements

Peersexpectations

andbehaviours

Peersexpectations

andbehaviours

Leaderspersonality past

experience andexpectations

Leaderspersonality past

experience andexpectations

Organizationsculture and

policies

Organizationsculture and

policies

Subordinatescharacteristics,

expectations and

behaviours

Subordinatescharacteristics,

expectations andbehaviours

Charismatic Leadership Theories


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charismatic leaders have someextraordinary or heroic personal abilityand they are capable of having profoundand extraordinary effects on followers.

Followers of charismatic leader identifythe leader and the mission of the leaderand follow them, exhibit extreme loyalty tothe leader and have confidence in theleader, emulate the leaders values andbehavior, and derive self-esteem fromtheir relationship with the leader.

Characteristics of Charismatic


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Leaders.

Self-confidence. Ability to articulate the vision.

Strong convictions about the ordinary.

Behavior that is of extra ordinary.

Perceived as being a change agent.

Environment sensitivity.


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ManagerialDecision Making

What is a Decision ?


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Decision is a solution for a problem

A Problem is

The unfavorable difference betweenthe actual state of affairs and desiredstate of affairs


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Decision MakingThe process of selecting the

best among the alternatives inorder to solve a problem


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Decision Making Process1.Identification of the problem

2.Analyzing causes for The problem3.Developing alternative solutions

4.Evaluating the alternatives & selectingthe best

5.Implementing and evaluation

Managerial Decision Situations and


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Types of Decisions Programmed Decisions

Decisions made in routine, repetitive,a wellstructured situation through the use ofpredetermined decision rules such as

habit, computational techniques, policies,procedures etc.

Non-programmed Decisions

Decisions made in non-routine, novel, ill-structured situations

Conditions of Decision Making


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Certainty-All possible Alternative solutions &exact consequences of them are perfectly

known

Risk-All possible alternative solutions are known.Consequences for each of them are multiple and

probable

Uncertainty-All possible alternative solutions arenot known. Consequences of whatever theknown possibilities can not be expressed evenwith a probability

D i i M ki S l


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Decision Making Styles1. Rational Decision Making

(Objectivity, Information based andlogical)

2. Non-Rational Decision Making

(Based on personal qualities such as

intuition, gut feelings, opinions, priorexperiences etc.)

Bounded Rationality Theory


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decision makers are bounded or restrictedby variety of constraints such as,Informational limitations, Computationallimitations, Psychological limitations andCognitive limitations. Therefore, decision

making is characterized by Limitedinformation Processing, Satisfying rathermaximizing and Use of rules of thumbs or

shorts cuts


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Managing the HumanResource of an Organization:Staffing

Staffing-Definition


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Recognition of the importance of the

company's workforce as vital humanrecourses and the utilization of severalfunctions and activities to ensure that they

are used effectively as legally for thebenefit of the individual, the organizationand the society.

Focuses of HRM


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Well-being of the Organization

Well-being of the Employees Well-being of the Society

HRM Functions


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1.Job Analysis2.Man Power Planning

3.Employee Procurement3.1 Recruitment3.2 Selection

3.3 Hiring3.4 Induction / Orientation

4.Training and Development

5.Performance Evaluations6.Reward Management


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7. Employee Movements

7.1 Promotions

7.2 Demotions7.3 Transfers

7.4 Layoffs

7.5 Terminations8. Discipline Administration

9. Grievance Handling

10.Employee Health and Safety Administration

11.Employee Welfare Administration

12.Labour Relations


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Motivation

Motivation is


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Motivation isThe willingness to exert high level of effort

towards organizational goals, conditionedby the efforts ability to satisfy someindividual need.

Process of Motivation


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1. Unsatisfied needs

2. Tension3. Drives4. Search behaviour

5. Satisfied need6. Reduction of tension

Theories of Motivation


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Abraham Maslows Hierarchy of Needs

There are five needs which areidentified in a hierarchy. When the

lowest level need is fulfilled, the nexthigher level need emerges. Thenindividual moves up one step of the

hierarchy.

Self- actualization

NeedsHierarchy ofNeeds


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Esteem Needs

Social Needs

Security Needs

Physiological Needs

Hierarchy ofNeeds

Hertzberg's Two Factors Theory


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Dissatisfiers / Hygienefactors

(Company Policy, Supervision,Relationships with others,Work conditions ,Salary,Personal Life, Security)

Satisfiers /Motivators

(Achievement, Recognition, Workitself, Responsibility,Advancement, Growth)

Dissatisfaction

Satisfaction

Indifference

ERG Theory (Clayton Alderfer)


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Need of Existence

Need of Relatedness

Need of Growth

Three needs theory (David McClelland)


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Need for Achievement (N Ach)

Need for Power (N Pow)

Need for Affiliation (N Aff)


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Commun ica t ion

Process of Communication


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Noise

Feedback

Idea

Encoding

Sender

Media

Message

Transmission

Behaviour

Understanding

Reception

Decoding

Receiver

Forms and Medium of

communication


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communication

Verbal Communication Non-verbal Communication

Communication

Oral Written

Communication Structure


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FormalCommunication

Informal

Communication

Communication

Downward Horizontal

Upward

Organizational


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Organizational

Control

Control


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Management control is the process ofensuring that actual activities conform

to planned activities.(Stoner and Freeman, 1992).

The process of monitoring activities toensure they are being accomplished asplanned and of correcting anysignificant deviation.

Process of Controlling


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1. Establish Performance Criteria andStandards

2. Measure Actual Performance3. Compare Actual Performance against

Standards

4. Evaluate and Take Corrective Actions- Correct deviations- Change standard

- Maintain Status quo

Operational Controls


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Feed -forward Control

Concurrent Control Feed-back Control

Controlling Methods and

Techniques


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qFinancial ControllingTechniques Costing Financial Audit

Financial Budgets

Break even Analysis

Financial Statements

Financial RatioAnalysis

Non-financial ControllingTechniques Supervision Quality Control

Inventory Control

Security Personnel Performance

Evaluation

Non-financial RatioAnalysis

Behavioral Implications of

control


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Control affects individual freedom

Controls carry status and powerimplications in organizations

Control actions may create intergroupor interpersonal conflicts

Excessive number of controls may

limit flexibility and creativity

Behavioral guidelines for effective

controlS i f l bl d


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Set meaningful, acceptable andattainable standards

Establish an effective, accurate andtimely two way communication

Reward attainment of standards Develop voluntary co-operation,

participation, sense of responsibility,self-control and self-discipline.

Documents

Management EXT