What are the elements of

an organization?
1.
2.People / staff
3.Infrastructure / buildings / vehicles..
4.Technology / machines, medicines..
5.Resources/money and
6.Common objective/Goal
7.


1
 And What is an Organization?
 A social entity that is:
 goal directed
 designed to achieve some outcome
 deliberately structured
tasks are divided and responsibility for their
performance is assigned


Concept from the behavioral

viewpoint of management
(alternative to systems viewpoint)

2
 An Alternative Definition
An organization
 involves the interactions and efforts of
People
• in order to achieve Objectives
• channelled and coordinated through
Structure
• directed and controlled via Management
 [Mullins 1996]

3
 What is a Manager?
Someone whose primary responsibility
is to carry out the management
process
Someone who plans and makes
decisions, organizes, leads, and
controls human, financial, physical,
and information resources
 [Griffin 2003]

4
What is the role of a Manager?
“They get work done!”
Plans/designs programme and
activities, gets resources, technology
Defines tasks & gets people to work
on them
Monitors results & controls work
Motivates the staff and directs them.
Understands needs of the clients and
plans services as per the needs.
Generate and control resources.


5
 MANAGEMENT

THE PROCESS OF PLANNING, ORGANIZING,

LEADNIG, AND CONTROLLING THE WORK
OF ORGANIZATION MEMBERS AND OF
USING ALL AVAILABLE ORGANIZATIONAL
RESOURCES TO REACH STATED
ORGANIZATIONAL GOALS.

6
 Traditional Definition of
Management
Attainment of organizational goals in
an effective and efficient manner
through:
 Planning
 Organizing
 Leading
 Controlling
and some authorities add:

 Staffing

7
 What is Management?

 “The art of getting things done

through people”
 [M. P. Follett, quoted in Daft 1993]


8
 What is Management?

 “The Manager’s job can be broadly

defined as deciding what should
be done and getting other people
to do it.”
 [Rosemary Stewart quoted in Mullins 1999]

9
 What is Management?
“[Management] involves people


looking beyond themselves and

exercising formal authority over
the activities and performance of
other people.”
 [Mullins 1999]

10
 FAYOL’S PRINCIPLES OF MANAGEMENT

•DIVISION OF LABOR
•AUTHORITY
•DISCIPLINE
•UNITY OF COMMAND
•UNITY OF DIRECTION
•SUBORDINATION OF INDIVIDUAL INTEREST
TO THE COMMON GOOD
•REMUNERATION

11
 PRINCIPLES OF MANAGEMENT

•CENTRALIZATION
•THE HIERARCHY
•ORDER
•EQUITY
•STABILITY OF STAFF
•INITIATIVE
•EXPRIT DE CORPS.

12
 MANAGERIAL PERFORMANCE

THE MEASURE OF HOW EFFICIENT AND

EFFECTIVE A MANAGER IS – HOW WELL HE
OR SHE DETERMINES AND ACHIEVES
APPROPRIATE OBJECTIVES.

ORGANIZATIONAL PERFORMANCE

THE MEASURE OF HOW EFFICIENT AND

EFFECTIVE AN ORGANIZATION IS – HOW
WELL IT ACHIEVES APPROPRIATE OBJECTIVES.

13
 Is Management Art or
Science?
 The Science of Management
 Assumes that problems can be approached using
rational, logical, objective, and systematic ways
 Requires technical, diagnostic, and decision-
making skills and techniques to solve problems
 The Art of Management
 Decisions are made and problems solved using a
blend of intuition, experience, instinct, and
personal insights
 Requires conceptual, communication,
interpersonal, and time-management skills to
accomplish the tasks associated with managerial
activities

14
Key Concepts of Management

 The four functions of management

 • Planning
 • Organizing
 • Leading
 • Controlling
 Sometimes a fifth is added:
• Staffing
 Attainment of organizational goals

in an effective & efficient manner

15
 What Do We Mean By…
 Effectiveness?
 The degree to which goals are achieved
 Making the right decisions and successfully
implementing them
 Doing the right things in the right way at the
right times
 Efficiency?
 Using minimal resources to produce the desired
volume of output
 Using resources wisely and in a cost-effective
way
 Operating in such a way that resources are not
wasted
16
 Four Functions Defined
Planning
 Setting an organization’s goals and
selecting a course of action from a set
of alternatives to achieve them [Griffin
2003]
 Deciding in advance what to do, how to
do it, when to do it, and who is to do it
Organizing
 Determining how activities and resources
are grouped [Griffin 2003]
 Determining the composition of work
groups and the way in which work and
activities are to be coordinated

17
 Four Functions Defined
 Leading
 The set of processes used to get
organizational members to work together
to advance the interests of the
organization [Griffin 2003]
 Motivating and communicating with the
organization’s human resources to
ensure goals are attained


18
 Four Functions Defined
 Controlling
 Monitoring organizational
progress towards goals [Griffin 2003]
 The process of comparing results
and expectations and making the
appropriate changes
And that fifth one: Staffing
 The recruitment, selection,
assignment, training,
development, evaluation and
compensation of staff
19
 Management Cycle
Planning

Monitoring Getting
Resources

Implementation

20
 Classical Management
Functions
 Planning
 Organizing
 Staffing
 Directing
 Coordination/Control
 Reviewing
 Budgeting


 Acronym to remember:
POSDCoRB


21
 New Management
Functions:

Problem Solving
Innovation
Leadership & team building
Motivation of staff





22
 For improving services
and ensuring higher
utilization inputs alone
are not enough


Management of inputs to


produce high quality

service is essential

23
 Models of Management
Planning
Select goals
and ways to
attain them
Resources Performance
Human
•Human •Attain goals
Controlling Organizing
Financial
•Financial Products
•Products
Monitor activities Assign
•Raw Materials responsibility for Services
•Services
and make
Technological
•Technological corrections task accomplishment Efficiency
•Efficiency
Information
•Information Effectiveness
•Effectiveness

Leading
Use influence to
motivate employees

24
 The Evolution of
Management Theory

25
The Evolution of Management
Theory

26
 Theories of
Management
M a n a g e m e n t
T h e o r y

C l a s s i c a l B e h a v i o u r a Ql u a n t i t a t i v Ce o n t e m p o r a r
T h e o r i e s T h e o r i e s T h e o r i e s T h e o r i e s

S c i e n t i f i c B e h a v i o u r i sM t a n a g e m e n tS y s t e m s
M a n a g e m e n tT h e o r i e s S c i e n c e T h e o r y

B u r e a u c r a t i cH a w t h o r n e O p e r a t i o n s C o n t i n g e n
M a n a g e m e n t S t u d i e s M a n a g e m e n t T h e o r y

A d m i n i s t r a t i v eH u m a n M a n a g e m e n Et m e r g i n g
M a n a g e m e n tR e l a t i o n s I n f o r m a t i o n V i e w s
S y s t e m s

B e h a v i o u r a l
S c i e n c e

27
 Scientific Management
Theory

Evolution of Modern Management

 Began in the industrial revolution in the late
19th century as:
 Managers of organizations began seeking
ways to better satisfy customer needs.
Large-scale mechanized manufacturing began
to supplanting small-scale craft production in
the ways in which goods were produced.
Social problems developed in the large groups
of workers employed under the factory
system.
Managers began to focus on increasing the
efficiency of the worker-task mix.
28
 Four Principles of Scientific
Management
Principles to increase efficiency:
1.Study the ways jobs are performed now
and determine new ways to do them.
Gather detailed time and motion
information.
Try different methods to see which is best.
2.Codify the new methods into rules.
Teach to all workers the new method.
3.Select workers whose skills match the
rules.
4.Establish fair levels of performance and
pay a premium for higher performance.
Workers should benefit from higher output
29
 Frederick
Taylor

Developed the specific principles of

Scientific Management
30
 Taylor’s 4 Principles of
Scientific Management
Scientificallystudy each part of a task
and develop the best method for
performing the task

Carefully select workers and train
them to perform the task by using
the scientifically developed method

31
 Taylor’s 4 Principles of
Scientific Management
Cooperate fully with workers to
ensure that they use the proper
method
Divide work and responsibility so that
management is responsible for
planning work methods using
scientific principles and workers are
responsible for executing the work
accordingly

32
 Problems with Scientific
Management
Managers frequently implemented
only the increased output side of
Taylor’s plan.
 Workers did not share in the increased
output.
Specialized jobs became very boring,
dull.
 Workers ended up distrusting the Scientific
Management method.
Workers could purposely “under-
perform.”
 Management responded with increased
use of machines and conveyors belts. 33
 Frank and Lillian Gilbreth

Refined Taylor’s work and made many

improvements to the methodologies of
time and motion studies.
 Time and motion studies
Breaking up each job action into its
components.
Finding better ways to perform the action.
Reorganizing each job action to be more
efficient.
Also studied worker-related fatigue
problems caused by lighting, heating,
and the design of tools and machines. 34
 Administrative Management
Theory
Administrative Management
 The study of how to create an organizational
structure that leads to high efficiency and
effectiveness.
Max Weber
 Developed the concept of bureaucracy as a
formal system of organization and
administration designed to ensure efficiency
and effectiveness.

35
 Weber’s Five Principles of
Bureaucracy
Authority is the power to hold
people accountable for their
actions.

Positions in the firm should be held
based on performance, not social
contacts.

36
Position duties are clearly identified so
that people know what is expected of
them.

Lines of authority should be clearly
identified such that workers know
who reports to who.

Rules, standard operating procedures
(SOPs), and norms guide the firm’s
operations.

37
Behavioural Theories

Emphasise the importance of

attempting to understand the
various factors that affect
human behaviour in
organisations.

38
 The Behavioral Approach
 The Human Relations Movement

 An effort to make managers more
sensitive to their employees’ needs.
•
 Arose out the influences of
 the threat of unionization.
the Hawthorne studies.
the philosophy of industrial humanism.

39
The Human Relations Movement
Pyramid

40
 Hawthorne Studies

Researchers monitored the productivity

of five women who assembled electrical
relays for several years.
41
The Hawthorne Studies

A group of studies conducted at

the Hawthorne plant of the
Western Electric Company
during the late 1920’s and
early 1930’s

42
 The Hawthorne Studies
Elton Mayo hired to explain the results
of a study of illumination on
productivity and Western Electric
Conducted two additional studies
 Relay Room
 Bank Wiring Room


43
 Percentage of Standard Output

116

100
108
124
132

conditions
Standard work
Two 5-min. rests

Two 10-min. rests

in work conditions
In general, productivity

Six 5-min. rests

increased with each change

15-min. rests + lunch

Same + 4:30 p.m. stop

Same + 4 p.m. stop

15-min. rests + lunch

Same + Sat. a.m. off

Standard
7

15-min. rests + lunch

44
 Bank Wiring Room
Introduced incentive pay system.
Expected individual worker output to
increase.
Found no change in worker output.
Workers established informal norms
because they feared the company
would increase their quota.

45
 Impact of the Hawthorne
Studies
Elton Mayo is considered the father of
the Human Relations movement
Human Relations recognizes that
there are other factors beyond
rational economics that drive
individual behavior.
Productivity and satisfaction are
inextricably linked—You cannot
forget the human side of the
equation

46
 Behavioral Approach
Behavioral Approach theorists
believe that effectiveness is
attained through:


 decreased control
 greater autonomy for people
 encouragement of innovation
 creativity

47
Behavioral Approach Examples

Ad agencies

Design firms

Most dotcoms

Software development

48
 The Philosophy of
Industrial Humanism
Elton Mayo


 Believed emotional factors were

more important determinants of
productive efficiency than were
physical and logical factors.

49
Mary Parker Follett


 Advocated that managers become

aware of how complex each employee
is and how to motivate employees to
cooperate rather than to demand
performance from them.


50
Douglas McGregor


 Developed Theory X and Theory Y

Theory X: management’s traditionally
negative view of employees as
unmotivated and unwilling workers.
Theory Y: the positive view of employees
as energetic, creative, and willing
workers.

51
 Management Science
Theory
An approach to management that
uses rigorous quantitative
techniques to maximize the use of
organizational resources.
 Quantitative management—utilizes
linear programming, modeling,
simulation systems.

52
 Total Quality Management (TQM)—
focuses on improving quality
throughout an organization.
•
 Operations management—techniques
to analyze all aspects of the production
system.
•
 Management Information Systems
(MIS)—provides information about the
organization.
53
Management Information
Systems
Focuses on designing and
implementing computer-based
information systems for use by
management.

These systems turn raw data into

information that is useful to various
levels of management.
54
 Systems Theory

Based on the idea that

organisations can be visualised as
systems

System
A set of interrelated parts that
operate as a whole in pursuit of
common goals 55
 Systems Approach
 Systems Approach theorists believe
that
effectiveness is attained through:
 planning
 programming
 monitoring
 measuring
 controlling
 specialization of function
 clear job definitions
 standard procedures
 clear lines of authority

56
 The Systems Approach
 Chester I. Barnard’s Early Systems
Perspective
 Wrote Functions of the Executive.
 Characterized all organizations as
cooperative systems.
 Defined principle elements in an
organization as
willingness to serve.
common purpose.
communication.
 Strong advocate of business ethics.
•

57
 General Systems Theory
General Systems Theory
 An area of study based on the
assumptions that everything is part of a
larger, interdependent arrangement.
Levels of systems
 Each system is a subsystem of the system
above it.
 Identification of systems at various levels
helps translate abstract systems theory
into more concrete terms.

58
 General Systems Theory
(cont’d)
Closed Versus Open Systems
 Closed system
A self-sufficient entity.
 Open system
Something that depends on its surrounding
environment for survival.
 Systems are classified open (closed) by
how much (how little) they interact with
their environments.

59
 General Systems Theory
(cont’d)
NewDirections in Systems Thinking:
Organizational learning and
knowledge management
Organizations are living and thinking open
systems that learn from experience and
engage in complex mental processes.
Chaos theory
 Every complex system has a life of its own, with
its own rule book.
Complex adaptive systems
Complex systems are self-organizing.

60
 Models of Management
Systems Model of Management

environ environ
ment ment
Inputs Outputs
output Transformation
output to
from
(process through other
other
management systems
systems
functions)
Inputs Outputs
aims & organizat
organizat
ional
ional goals &
objective output
s
Feedback (Measure of Achievement )

61
 Systems Approach
Examples
Military & government agencies
Traditional major industrial production
(automobiles, etc.)
Some service firms
(insurance,banking)

62
 Contingency Theory

A viewpoint that argues that

appropriate managerial action
depends on the circumstances of the
situation.
In other words ………..
there is no single right way to manage

63
 Contingency Theory
Contingency View
Appropriate
managerial
action depends on
situation

Situation A
Situation C
Universal
Management
Principals Situation B

64
 The Contingency Approach
Contingency Approach
 A research effort to determine which
managerial practices and techniques are
appropriate in specific situations.
 Different situations require different
managerial responses.
Can deal with intercultural feelings in which
custom and habits cannot be taken for
granted.

65
 The Contingency Approach
(cont’d)
Contingency Characteristics
 An open-system perspective
How subsystems combine to interact with
outside systems.
 A practical research orientation
Translating research findings into tools and
situational refinements for more effective
management.
 A multivariate approach
Many variables collectively account for
variations in performance.

66
 The Contingency Approach
Lessons from the Contingency
Approach
 Approach emphasizes situational
appropriateness rather than rigid
adherence to universal principles.
 Approach creates the impression that an
organization is captive to its environment.
 Approach has been criticized for creating
the impression that an organization is a
captive of its environment.

67
 A Modern Unconventional
Approach
Peter and Waterman’s Approach
 Attacked conventional management theory
and practice as outmoded in almost every
dimension.
 Replaced conventional management
terminology with new catch phrases.
 Made key points with anecdotes and
stories rather than quantifiable objective
data and facts.
•

68
 Attributes of Excellence: A
Modern Unconventional Approach
(cont’d)

A Critical Appraisal of the Excellence

Approach
 Raises more questions than it answers.
 Ignores the contingency approach to
management.
 Relies heavily on unsupported
generalizations.
 Fails to position management effectiveness as
important to sustaining corporate
excellence.
Lessons from the Excellence Approach
 Reminded managers to pay close attention to
the basics.
69
 THE FLOWS AND FEEDBACK IN AN OPEN SYSTEM

EXTERNAL
ENVIRONMENT

INPUT (RESOURCES)
HUMAN
CAPITAL
TRANSFORMATION OUTPUT
LAND OR GOODS
EQUIPMENT CONVERSION SERVICES
BUILDING PROCESS OTHER
TECHNOLOGY
INFORMATION

FEEDBACK
70
 Integrated Management
Perspectives
Systems Approach Contingency Perspective
 Recognitionof internal  Recognition
of the situational
interdependencies nature of management
Recognition of Response to particular
environmental influences characteristics of situation

Classical Behavioral Quantitative

Management Management Management
Perspectives Perspectives Perspectives
Methods for Insights for moti- Techniques for
enhancing vating performance improving decision
efficiency and and understanding making, resource
facilitating planning, individual behavior, allocation, and
organizing, and groups and teams, operations
controlling and leadership

Effective and efficient management

SOURCE: Adapted from Fundamentals of Management, Griffin, R. W. , Houghton Mifflin 2003

71
Management Levels
(typical)

/CIO

CTO

72
 Management Levels
Defined
 First line Managers
• directly responsible for day-to-day operations
 supervise and coordinate the activities of
operating employees
 Middle Managers
• work in the middle levels of the organization
• responsible for sections or departments
• supervise and coordinate the activities of
lower-level managers
 responsible for implementing the policies and
plans of top managers

73
Management Levels Defined
 Top (or Senior) Managers
• usually form a team
• manage the organization’s overall goals,
strategy, and operating policies
• responsible for the entire enterprise
Middle and top managers may also be:
• Functional Managers
 responsible for a distinct function in the
enterprise

74
 Horizontal Differences
Functional managers
 Responsible for departments that perform a
single functional task
General managers
 Responsible for several departments that
perform different functions

75
 Managers by Area
 Marketing Managers
 Work in areas related to getting consumers and
clients to buy the organization’s products or
services
 Financial Managers
 Deal primarily with an organization’s financial
resources
 Typically supervise IT in small organizations (!)
 Operations Managers
 Concerned with creating and managing the
systems that create organization’s products
and services
 May be IT managers in IT businesses (but even
then are primarily focused on production)
 [Griffin 2003] 76
 Manager by Area
 Human Resource Managers
 Human resource planning, recruiting and
selection, training and development, designing
compensation and benefit systems, formulating
performance appraisal systems
 Administrative Managers
 Generalists familiar with all functional areas of
management and who are not associated with
any particular management specialty
 Other Kinds of Managers
 Specialized managerial positions directly related
to the needs of the organization
 May include IT management
 [Griffin 2003]

77
 Management Skills
Management skills required
by management levels
Top
Top Managers
Managers
Middle
Middle Managers
Managers
First
First-Line
-Line Managers
Managers Conceptual Skills “People” Skills
Non Technical Skills
Non-managers
-managers (Personnel
(Personnel) )

78
 Fundamental Management
Skills
 Technical
 Skills necessary to accomplish or understand
the specific kind of work being done in an
organization
 Interpersonal
 Ability to communicate with, understand, and
motivate both individuals and groups
 Conceptual
 Ability to think in the abstract and to see the
organization as a complete unit and to
integrate and give direction to its diverse
activities so that objectives are achieved
 [Griffin 2003]

79
 Fundamental Management
Skills
 Diagnostic
 Ability to visualize the most appropriate
response to a situation
 Communication
 Abilities both to convey ideas and information
effectively to others and to receive ideas and
information effectively from others
 Decision-Making
 Ability to recognize and define problems and
opportunities correctly and then to select an
appropriate course of action to solve the
problems and capitalize on opportunities
 [Griffin 2003]

80
 Fundamental Management
Skills

Time-Management
 Ability to prioritize work, to work efficiently,
and to delegate appropriately
 [Griffin 2003]

81
 Current Management
Issues
 Acute labor shortages in high-technology
job sectors and an oversupply of less
skilled labor
 Increasingly diverse and globalized
workforce
 Need to create challenging, motivating,
and flexible work environments
 Effects of information technology on how
people work
 [Griffin 2003]

82
Complex array of new ways of
structuring organizations
Increasing globalization of product
and service markets
Renewed importance of ethics and
social responsibility
Use of quality as the basis for
competition
Shift to a predominately service-
based economy
[Griffin 2003]
83
 The “New Workplace”:

Centered around information and ideas

Work is free-flowing and flexible

Work is often virtual

84
 THE MILLENNIUM MANAGER

The profile of a millennium

manager should be drastically
different from that of a
conventional one.
make use of technology to the
maximum advantage
take every decision that maximizes
the shareholder value
predict uncertain events more
accurately


85
use the speed of response to
the advantage
be aware of the global trends
in the business procedures,
culture and so on
continue to be patient,
committed to the cause of
the organization

86
be unconventional and creative
maintain the competitive edge
conduct the affairs of the
organization in a transparent
manner
fulfill his responsibility towards the
society in general and the
underprivileged in particular.

87
 Today’s Managers…
 Create organizations that are:
 Fast
 Flexible
 Adaptable
 Relationship-oriented
 Focus on:
 Leadership
 Staying connected to employees and
customers
 Team building
 Developing a learning organization

88
 Strategy is…
a pattern of decisions that integrates an
organization’s major goals, policies, and
operating procedures into a cohesive whole
 a set of tools to marshal and allocate an
organization’s resources into a unique and
viable position based on its relative
competencies and shortcomings,
anticipated changes in the environment,
and contingent moves by intelligent
opponents
 the other part of this course…

89
 SOCIAL
RESPONSIBILITY
AND ETHICS

90
 C O R P O R A T E S O C IA L R E S P O N S IB ILIT Y

W H A T A N O R G A N IZ A T IO N D O E S T O

IN FLU E N C E T H E S O C IE T Y IN W H IC H

IT E X IS T S , SU C H AS TH R O U G H

V O LU N T E E R A S S IS TA N C E

PR O G R A M S .
91
 E T H IC S

T H E S T U D Y O F R IG H T S A N D O F

W H O IS – O R S H O U LD B E –

B E N E FIT E D O R H A R M E D B Y A N

A C T IO N .

92
 DEVELOPING ETHICAL CONDUCT
THROUGHOUT
THE ORGANIZATION:
Provide clear guidelines for ethical
behavior.
Teach ethical guidelines and their
importance.
Where it is likely that the acts of a
managers can be questioned,
avoid such areas. In other words,
don’t get into problem areas that
invite criticism.

93
 Appoint an outside agency (that reports
directly to the Board of Directors) to
audit the ethical behavior of managers.
Such controls facilitate a check on
illegal or unethical deeds. Conduct
frequent and surprise audits.
 Punish trespassers in a meaningful way,
and make it public so that it may deter
others.
 Emphasize regularly that loyalty to the
company does not excuse improper
behavior or actions.
94
 C O R P O R A T E S O C IA L R E S P O N S IV E N E S S
A T H E O R Y O F S O C IA L R E S O N S IB ILIT Y T H A T
FO C U S E S O N H O W C O M PA N IE S R E S P O N D T O
IS S U E S , R A T H E R T H A N T R Y IN G T O D E T E R M IN E
T H E IR U LT IM A T E S O C IA L R E S P O N S IB ILIT Y.

C O R P O R A T E S O C IA L P E R FO R M A N C E

A S IN G LE T H E O R Y O F C O R P O R A T E S O C IA L A C T IO N
E N C O M PA S S IN G S O C IA L P R IN C IP LE S , P R O C E S S E S ,
A N D P O LIC IE S .

95
THE FOUR LEVELS OF ETHICAL QUESTIONS

LEVEL 4
THE INDIVIDUAL

LEVEL 3
INTERNAL POLICY

LEVEL 2
STAKEHOLDERS

LEVEL 1
SOCIETY
96
 SOCIAL RESPONSIBILITY OF
MANAGERS
Responsibility towards
shareholders
 Responsibility towards
consumers
 Responsibility towards
employees


97
Responsibility towards creditors
Responsibility towards the
government
 Responsibility towards suppliers
 Responsibility towards
competitors
 Responsibility towards general
public

98
 QUESTIONS FOR EXAMINING THE ETHICS
OF A BUSINESS DECISION

1.HOW YOU DEFINED THE PROBLEM ACCURATELY?

2.HOW WOULD YOU DEFINE THE PROBLEM IF YOU STOOD
ON THE OTHER SIDE OF THE FENCE?

3.HOW DID THIS SITUATION OCCUR IN THE FIRST PLACE?

4.TO WHOM AND TO WHAT DO YOU GIVE YOUR LOYALTY

AS A PERSON AND AS A MEMBER OF THE CORPORATION?

5.WHAT IS YOUR INTENTION IN MAKING THIS DECISION?

6.HOW DOES THIS INTENTION COMPARE WITH THE PROBABLE

RESULTS?
Contd…

99
7.WHOM COULD YOUR DECISION OR ACTION INJURE?
8.CAN YOU DISCUSS THE PROBLEM WITH THE AFFECTED
PARTIES BEFORE YOU MAKE YOUR DECISIONS?
9. ARE YOU CONFIDENT THAT YOUR DECISION WILL BE AS
VALID OVER A LONG PERIOD OF TIME AS IT SEEMS NOW?
10.COULD YOU DISCLOSE WITHOUT QUALM YOUR DECISION
OR ACTION TO YOUR BOSS, YOUR CEO, THE BOARD OF
DIRECTORS, YOUR FAMILY, SOCIETY AS A WHOLE?
11.WHAT IS THE SYMBOLIC POTENTIAL OF YOUR ACTION IF
UNDERSTOOD? IF MISUNDERSTOOD?
12.UNDER WHAT CONDITIONS WOULD YOU ALLOW EXCEPTIONS
TO YOUR STAND?

100
ORGANIZATIONAL

DECISION MAKING

101
 Decision Making
 - How are decisions made in
organizations?
 What are the useful decision making
models?
 How do intuition, judgment, and
creativity affect decision making?
 How can the decision-making process
be managed?
 How do technology, culture, and
ethics influence decision making?

102
 ORGANIZATIONAL DECISION
MAKING

 THE PROCESS OF IDENTIFYING

AND SELECTING A COURSE OF
ACTION TO SOLVE A SPECIFIC
PROBLEM.

103
 PROBLEM

 SITUATION THAT OCCURS

WHEN AN ACTUAL STATE OF
AFFAIRS DIFFERS FROM A
DESIRED STATE OF AFFAIRS.


104
 PROBLEM RECOGNITION

PROBLEM RECOGNITION CAN NOT BE

SEPARATED FROM THE
HISTORICALTIME IN WHICH MANAGERS
MAKE DECISIONS.
 (IN THE EARLY YEARS OF THE AUTO
INDUSTRY, PASSENGER SAFETY WAS LESS A
CONCERN THAN IT IS TODAY, AS WE CAN SEE
IN THE DEVELOPMENT OF AIR BAGS).


105
 APPROACHES TO MANAGEMENT
PROBLEM SOLVING

D E S I R E D R E S U L T

M A N A G E M E N T
P R O B L E M S

R O U T I N S E C I E N T DI F E I CC I S I O C N R A EL A T QI V U E A N T I T A T

106
 R A T IO N A L M O D E L O F D E C IS IO N M A K IN G

A FO U R -S T E P P R O C E S S T H A T H E LP S

M A N A G E R S W E IG H A LT E R N A T IV E S

A N D C H O O S E T H E A LT E R N A T IV E W IT H

TH E B EST C H A N C E O F SU C C ESS.

107
STAGE 1: INVESTIGATE THE SITUATION

•DEFINE THE PROBLEM

•DIAGNOSE THE CAUSES
•IDENTIFY THE DECISION OBJECTIVES

STAGE 2: DEVELOP ALTERNATIVES

BRAINSTORMING

DECISION MAKING AND PROBLEM SOLVING TECHNIQUE IN

WHICH INDIVIDUALS OR GROUP MEMBERS TRY TO IMPROVE
CREATIVITY BY SPONTANEOUSLY PROPOSING
ALTERNATIVES WITHOUT CONCERN FOR REALITY OR
TRADITION.

108
S TA G E 3 : E V A LU A T E A LT E R N A T IV E S
A N D S E LE C T T H E B E S T O N E A V A ILA B LE

•IS T H IS A LT E R N A T IV E FE A S IB LE ?
•
•IS T H E A LT E R N A T IV E A S A T IS FA C T O R Y
S O LU T IO N ?
•
•W H A T A R E T H E P O S S IB LE C O N S E Q U E N C E S
FO R T H E R E S T O F T H E O R G A N IZ A T IO N ?

S TA G E 4 : IM P LE M E N T A N D M O N IT O R
T H E D E C IS IO N

109
 THE RATIONAL DECISION-MAKING PROCESS

1.INVESTIGATE THE 2. DEVELOP

SITUATION ALTERNATIVES
•DEFINE PROBLEM •SEEK CREATIVE
•DIAGNOSE CAUSES ALTERNATIVES
•IDENTIFY DECISION- •DO NOT EVALUATE YET
OBJECTIVES

4.IMPLEMENT AND 3. EVALUATE

MONITOR ALTERNATIVES AND
•PLAN IMPLEMENTATION SELECT THE BEST ONE
•IMPLEMENT PLAN AVAILABLE
•MONITOR •EVALUATE ALTERNATIVES
IMPLEMENTATION AND •SELECT BEST
MAKE NECESSARY ALTERNATIVES
ADJUSTMENTS
•

110
 How are decisions made
in organizations?

ØThe systematic decision-making

process may not be followed where
substantial change occurs and
many new technologies prevail.
ØNovel decision techniques may yield
superior performance in certain
situations.
ØEthical consequences of decision
making must be considered.

111
 How are decisions made
in organizations?

ØDecision environments include:

 Certain environments.

 Risk environments.

 Uncertain environments.


112
 How are decisions made
in organizations?

ØCertain environments.
 Exist when information is sufficient to
predict the results of each alternative in
advance of implementation.
 Certainty is the ideal problem solving and
decision making environment.

113
 How are decisions made
in organizations?

ØRisk environments.
 Exist when decision makers lack
complete certainty regarding the
outcomes of various courses of action,
but they can assign probabilities of
occurrence.
 Probabilities can be assigned through
objective statistical procedures or
personal intuition.

114
 How are decisions made
in organizations?

ØUncertain environments.
 Exist when managers have so little
information that they cannot even
assign probabilities to various
alternatives and possible outcomes.
 Uncertainty forces decision makers to
rely on individual and group creativity to
succeed in problem solving.

115
 How are decisions made
in organizations?
ØUncertain environments — cont.
 Also characterized by rapidly changing:
 External conditions.
Information technology requirements.
Personnel influencing problem and choice
definitions.
 These rapid changes are also called
organized anarchy.

116
 How are decisions made
in organizations?
ØTypes of decisions.
 Programmed decisions.
Involve routine problems that arise
regularly and can be addressed through
standard responses.
 Nonprogrammed decisions.
Involve nonroutine problems that require
solutions specifically tailored to the
situation at hand

117
 What are the useful
decision making models?
ØClassical decision theory.
 Views the decision maker as acting in a
world of complete certainty.
ØBehavioral decision theory.
 Accepts a world with bounded rationality
and views the decision maker as acting
only in terms of what he/she perceives
about a given situation.

118
 What are the useful
decision making models?
ØClassical decision theory.
 The classical decision maker:
Faces a clearly defined problem.
Knows all possible action alternatives and
their consequences.
Chooses the optimum alternative.
 Is often used as a model of how
managers should make decisions.

119
 What are the useful
decision making models?

ØBehavioral decision theory.

 Recognizes that human beings operate
with:
Cognitive limitations.
Bounded rationality.
 The behavioral decision maker:
Faces a problem that is not clearly defined.
Has limited knowledge of possible action
alternatives and their consequences.
Chooses a satisfactory alternative.

120
 What are the useful
decision making models?

ØClassical decision theory:

 May not fit well in a chaotic world.
 Can be used toward the bottom of many
firms, even most high-tech firms.
ØBehavioral decision theory:
 Fits with a chaotic world of uncertain
conditions and limited information.
 Encourages satisficing decision making.

121
 What are the useful
decision making models?

ØThe garbage can model.

 A model of decision making that views
problems, solutions, participants, and
choice situations as mixed together in
the “garbage can” of the organization.
In stable settings, behavioral decision
theory may be more appropriate.
In dynamic settings, the garbage model
may be more appropriate.

122
 What are the useful
decision making models?

ØImplications of the garbage can

model.
 Choice making and implementation may
be done by different individuals.
Because of interpretation, there is a risk
that the actual implementation does not
exactly match the choice.
 Many problems go unsolved.

123
 What are the useful
decision making models?

ØDecision making realities.

 Managers face complex choice processes.
 Decision making information may not be
available.
 Bounded rationality and cognitive
limitations affect the way people define
problems, identify alternatives, and
choose preferred solutions.

124
 What are the useful
decision making models?

ØDecision making realities — cont.

 Most decision making in organizations
goes beyond step-by-step rational
choice.
 Most decision making in organizations
falls somewhere between the highly
rational and the highly chaotic.
 Decisions must be made under risk and
uncertainty.

125
 What are the useful
decision making models?

ØDecision making realities — cont.

 Decisions must be made to solve
nonroutine problems.
 Decisions must must be made under time
pressures and information limitations.
 Decisions should be ethical.


126
 How do intuition, judgment, and
creativity affect decision making?
ØIntuition.
 The ability to know or recognize quickly
and readily the possibilities of a given
situation.
 A key element of decision making under
risk and uncertainty.

127
 How do intuition, judgment, and
creativity affect decision making?
ØJudgmental heuristics.
 Simplifying strategies or “rules of thumb”
used to make decisions.
 Makes it easier to deal with uncertainty
and limited information.
 Can lead to systematic errors that affect
the quality and/or ethics of decisions.

128
 How do intuition, judgment, and
creativity affect decision making?
Ø Types of heuristics.
 Availability heuristic — bases a decision on
recent events relating to the situation at
hand.
• Representativeness heuristic — bases a
decision on similarities between the
situation at hand and stereotypes of similar
occurrences.
• Anchoring and adjustment heuristic — bases
a decision on incremental adjustments to
an initial value determined by historical
precedent or some reference point.

129
 How do intuition, judgment, and
creativity affect decision making?
ØGeneral judgmental biases in
decision making.
 Confirmation trap.
The tendency to seek confirmation for what
is already thought to be true and to not
search for disconfirming information.
 Hindsight trap.
The tendency to overestimate the degree to
which an event that has already taken
place could have been predicted.

130
 How do intuition, judgment, and
creativity affect decision making?
ØCreativity factors.
 Creativity in decision making involves the
development of unique and novel
responses to problems and
opportunities.
 Creativity is especially important in a
dynamic environment full of nonroutine
problems.

131
 How do intuition, judgment, and
creativity affect decision making?
ØStages in the creative thinking
process.
 Preparation.
 Concentration.
 Incubation.
 Illumination
 Verification.

132
 How can the decision-making
process be managed?

ØChoosing problems to address.

 Ask and answer the following questions:
Is the problem easy to deal with?
Might the problem resolve itself?
Is this my decision to make?
Is this a solvable problem within the context
of the organization?

133
 How can the decision-making
process be managed?

ØReasons for decision making failure.

 Managers too often copy others’ choices
and try to sell them to subordinates.
 Managers tend to emphasize problems
and solutions rather than successful
implementation.
 Managers use participation too
infrequently.

134
 How can the decision-making
process be managed?

Ø Deciding who should participate.

 Authority decisions.
 Made by the manager or team leader without
involving other people and by using information
that he/she possesses.
 Consultative decisions.
Made by one individual after seeking input from
group members.
 Group decisions.
Made by all members of the group.

135
 How can the decision-making
process be managed?

Ø Vroom, Yetton, and Jago decision making

framework.
 Decision-making method used should fit the
problem.
 In choosing among individual, consultative,
or group methods, managers should
analyze:
Quality requirements.
Availability and location of relevant information.
Commitments required to implement decision.
Available time.

136
 How can the decision-making
process be managed?

ØKnowing when to quit — eliminating

escalating commitments
 Escalating commitment reflects the
continuation and renewed efforts on a
previously chosen course of action even
when feedback suggests that it is
failing.
 Eliminating escalating commitment
requires self-discipline to admit
mistakes and change direction.

137
 How do technology, culture, and
ethics influence decision making?
ØIncreasingly complex problems and
opportunities face decision makers
in organizations due to various
workplace trends.
ØThese workplace trends are changing
the who, when, where, and how of
decision making.

138
 How do technology, culture, and
ethics influence decision making?
Ø Information technology and decision
making.
 Artificial intelligence.
The study of how computers can be programmed
to think like human beings.
Will allow computers to displace many decision
makers.
 Expert systems that support decision making
by following “either-or” rules to make
deductions.
139
 How do technology, culture, and
ethics influence decision making?
ØInformation technology and decision
making — cont.
 Fuzzy logic and neural networks that
reason inductively.
 Computer support for decision making.
The Internet.
Company intranets.
Decision support software to facilitate
virtual teamwork.

140
 How do technology, culture, and
ethics influence decision making?
ØInformation technology and decision
making — cont.
 Information technology does not deal
with issues raised by the garbage can
model.
•


141
How do technology, culture, and ethics
influence decision making?
Ø Cultural factors and decision making.
 Culture is “the way in which a group of
people solves problems.”
 North American culture stresses
decisiveness, speed, and the individual
selection of alternatives.
 Other cultures place less emphasis on
individual choice than on developing
implementations that work.
 The most important impact of culture on
decision making concerns which issues are
elevated to the status of problems solvable
with the firm.
142
How do technology, culture, and ethics
influence decision making?

ØEthical issues and decision making.

 Ethical dilemma.
A situation in which a person must decide
whether or not to do something that,
although personally or organizationally
beneficial, may be considered unethical
and perhaps illegal.
 Ethical dilemmas are often associated
with:
Risk and uncertainty.
Nonroutine problem situations.

143
How do technology, culture, and ethics
influence decision making?

ØEthical decision-making checklist.

 Is my action legal?
 Is it right?
 Is it beneficial?
 How would I feel if my family found out
about this?
 How would I feel if my decision were
printed in the local newspaper?

144
How do technology, culture, and ethics
influence decision making?
Ø Suggestions for integrating ethical decision
making into the firm.
 Develop a code of ethics and follow it.
 Establish procedures for reporting violations.
 Involve employees in identifying ethical
issues.
 Monitor ethical performance.
 Reward ethical behavior.
 Publicize ethical efforts.

145
 How do technology, culture,
and ethics influence decision
making?
ØImplications of ethics for decision
making.
 Morality is involved in:
Choosing problems.
Deciding who should be involved in
making decisions.
Estimating the impacts of decision
alternatives.
Selecting an alternative for
implementation.
 Moral conduct does not arise from
after-the-fact embarrassment.

146
147
A PLAN IS A REAL THING, AND THINGS PROJECTED
ARE EXPERIENCED. A PLAN ONCE MADE AND
VISUALIZED BECOMES A REALITY ALONG WITH
OTHER REALITIES – NEVER TO BE DESTROYED BUT
EASILY TO BE ATTACKED.
John Steinbeck,
The Pearl

148
 PLANNING

PLANNING IS A PARTICULAR KIND OF DECISION

MAKING THAT ADDRESSES THE SPECIFIC FEATURE
THAT MANAGERS DESIRE FOR THEIR ORGANIZATION.

149
 PLANNING
PLANNING INVOLVES SELECTING MISSIONS AND
OBJECTIVES AND THE ACTIONS TO ACHIEVE THEM. IT
ENDS WITH DECISION MAKING, THAT IS, CHOOSING
THE BEST ALTERNATIVE FROM THE AVAILABLE
FUTURE COURSES OF ACTION. PLANS, THUS, PROVIDE
A RATIONAL APPROACH TO PREDETERMINED
OBJECTIVES. PLANNING ALSO STRONGLY IMPLIES
MANAGERIAL INNOVATION.

150
 THE HIERARCHY OF PLANS
CREATED BY:

Founder, Board
of Directors, or MISSION STATEMENT
Top Managers

Top and Middle

Managers STRATEGIC PLANS

Middle and
First-Line
Managers OPERATIONAL PLANS

151
 THE HIERARCHY OF ORGANIZATIONAL PLANS
GOALS

STRATEGIC PLANS

OPERATIONAL PLANS

FOR NONRECURRING ACTIVITIES FOR RECURRING ACTIVITIES

STANDING PLANS
SINGLE-USE PLANS

POLICIES

PROGRAMS
STANDARD
PROCEDURES
BUDGETS AND METHODS

PROJECTS
RULES
152
 TYPES OF PLANS

Purpose
of mission

Objectives

Strategies

Policies: major or minor

Procedures

Rules

Programs: major or minor and supporting

Budgets: numberized or dollarized progams

153
THE FIVE Ws AND THE HOW OF PLANNING

1.Why must it be done?

2.What action is necessary?
3.Where will it take place?
4.When will it take place?
5.Who will do it?
6.How will it be done?

154
 MAJOR STEPS IN PLANNING

• CLARIFY THE PROBLEM.

• OBTAIN COMPLETE INFORMATION ABOUT THE
ACTIVITIES INVOLVED.
• ANALYZE AND CLASSIFY THE INFORMATION.
• ESTABLISH PLANNING PREMISES AND CONSTRAINTS.
• DETERMINE ALTERNATE PLANS.
• CHOOSE PROPOSED PLAN.
• ARRANGE DETAILED SEQUENCE AND TIMING FOR
THE PROPOSED PLAN.
• PROVIDE PROGRESS CHECKUP TO PROPOSED PLAN.

155
 OVERALL VIEW OF PLANNING AND ITS
RELATIONSHIP TO THE MANAGEMENT PROCESS

PLANNING

STRATEGIC TACTICAL
PLANNING PLANNING

PURPOSE OF ENTERPRISE SALES FORECAST

POLICIES OR PARTICULAR
PLAN CREATIVITY
PLANS

156
 • WHAT
• WHY
• WHERE
• WHEN Analyze
• WHO alternative
• HOW actions

Revision of the
particular plan

Reevaluation of
short-run, intermediate,
and long-run objectives

Subsequent information
and forecasts

Organize Actuate Control

157
158
MAJOR TYPES OF MANAGEMENT PLANS

• POLICY
• PROCEDURE
• METHOD
• STANDARD
• BUDGET
• PROGRAM
• TECHNOFACTOR

159
PURPOSE OR MISSIONS
The mission or purpose identifies the basic function or task of
an enterprise or agency, or any part of it. Every kind of organized
operation has, or at least should have if it is to be meaningful,
purposes or missions.

OBJECTIVES
Objectives or goals are the ends toward which activity is aimed,
and every organization strives hard to achieve them.

160
STRATEGIES
Three definitions are indicative of the most common usages of the
erm strategies:

1.general programs of action and deployment of resources to attain

comprehensive objectives;

2.the program of objectives of an organization and their changes,

with a focus on resources used to attain these objectives; and
policies governing the acquisition, use and disposition of these
resources; and

3.the determination of the basic long-term objectives of an

enterprise, the adoption of courses of action and allocation of
resources necessary to achieve these goals.

161
POLICIES
Policies also are plans in that they are general statements or
understandings that guide or channel thinking in decision-making.

Policies define an area within which a decision is to be made and

ensure that the decision will be consistent with, and contribute to,
an objective. Policies help decide issues before they become
problems, make it necessary to analyze the same situation every
time it comes up, and unify other plans, thus, permitting managers
to delegate authority and still maintain control over what their
subordinates do.

PROCEDURES
Procedures are plans that establish a required method of handling
future activities. They are guides to action, rather than to thinking,
and they detail the exact manner in which certain activities must be
accomplished. They are chronological sequences of required
actions. Procedures often cut across department lines.
162
RULES
Rules spell out specific required actions or non-actions, allowing
no discretion. They are usually the simplest type of plan.

PROGRAMS
Programs refer to a set of clear instructions in a clear and logical
sequence to perform a particular task. They explain how to carry
out a given course of action. They are ordinarily supported by
budgets.

BUDGETS
A budget is a statement of expected results expressed in numbers.
In fact, the operating budget, expressed in terms of revenues and
expenses, is often called a profit plan. A budget may be expressed
either in financial terms or in terms of labor hours, units of product,
machine hours or any other numerically measurable parameter.
Budgets are also control devices.

163
 A D V A N TA G E S O F P LA N N IN G

• M A K E S FO R P U R P O S E FU L A N D
O R D E R LY A C T IV IT IE S .
• P O IN T S O U T N E E D FO R FU T U R E
C H A N G E.
• A N S W E R S “ WHAT IF” Q U E S T IO N S .

164
PROVIDES A BASIS FOR
CONTROL.
 ENCOURAGES ACHIEVEMENT.
 COMPELS VISUALIZATION OF
ENTIRETY.
 INCREASES AND BALANCES
UTILIZATION OF FACILITIES.
 ASSISTS MANAGER IN GAINING
STATUS.


165
 D IS A D V A N TA G E S O F P LA N N IN G

• P LA N N IN G IS LIM IT E D B Y T H E
ACCU RACY O F IN FO R M A T IO N A N D
FU T U R E FA C T S .
• P LA N N IN G C O S T S T O O M U C H .
• P LA N N IN G H A S P S YC H O LO G IC A L
B A R R IE R S .
•
166
PLANNING STIFLES INITIATIVE.
 PLANNING DELAYS ACTIONS.
 PLANNING IS OVERDONE BY
PLANNERS.
 PLANNING HAS LIMITED
PRACTICAL VALUE.


167
Organizing

168
 Overview/Objectives:
The organizing function
Complexities of determining

appropriate organizational
structure
Advantages and disadvantages

of division of labor


169
Relationship between division of
labor and coordination

Span of management and the
factors that influence its
appropriateness


Scalar relationships


170
ØWhat is organizing as a
management function?
Ø
ØWhat are the major types of
organization structures?
Ø
ØWhat are the new developments
in organization structures?
Ø
ØWhat organizing trends are
changing the workplace?

171
Ø
 Organizing


 The process of arranging

people and other resources
to work together to
accomplish a goal.

172
Organizing viewed in relationship
with the other management
functions.

173
FO R M A L O R G A N IZ A T IO N
E LE M E N T S

1. D IV IS IO N O F LA B O R

2. D E PA R T M E N TA T IO N

3. S PA N O F C O N T R O L .

174
D IV IS IO N O F W O R K

The b re a kd o w n of a
co m p lex ta sk in to
co m p o n e n ts so th a t
in d ivid u a ls a re re sp o n sib le
fo r a lim ite d se t o f
a ctivitie s in ste a d o f th e
ta sk as a w h o le .
S o m e tim e s re fe rre d to a s
d ivisio n o f la b o r. 175
 D E PA R T M E N TA LIZ A T IO N
T h e g ro u p in g in to d e p a rtm e n ts
o f w o rk a ctivitie s th a t a re sim ila r
a n d lo g ica lly co n n e cte d .

176
 Organizational
Structure:


The ways in which an

organization’s activities are
divided, organized and
coordinated


 The system of tasks,
workflows, reporting relationships,
and communication channels that
link together diverse individuals
and groups.


177
ØFormal structures 
 The structure of the organization in its
official state.
 An organization chart is a diagram
describing reporting relationships and the
formal arrangement of work positions
within an organization.
 An organization chart identifies the
following aspects of formal structure:
 The division of work.
Supervisory relationships.
Communication channels.
Major subunits.
Levels of management.

178
ØInformal structures 
Ø
 A “shadow” organization made up of the
unofficial, but often critical, working
relationships between organization
members.
 Potential advantages of informal
structures:
Helping people accomplish their work.
Overcoming limits of formal structure.
Gaining access to interpersonal networks.
Informal learning.

• 179
ØInformal structures (cont.) 
 Potential disadvantages of informal
structures:
May work against best interests of entire
organization.
Susceptibility to rumor.
May carry inaccurate information.
May breed resistance to change.
Diversion of work efforts from important
objectives.
Feeling of alienation by outsiders.

180
 Major types of organization
structures
ØFunctional structures
 People with similar skills and performing
similar tasks are grouped together into
formal work units.
 Members work in their functional areas of
expertise.
 Are not limited to businesses.
 Work well for small organizations
producing few products or services.

181
Functional structures in a business,
branch bank, and community
hospital.

182
ØPotential advantages of functional
structures:
Ø
 Economies of scale.
 Task assignments consistent with
expertise and training.
 High-quality technical problem
solving,
 In-depth training and skill
development.
 Clear career paths within functions.

183
ØPotential disadvantages of
functional structures:
Ø
 Difficulties in pinpointing
responsibilities.
 Functional chimneys problem.
 Sense of cooperation and common
purpose break down.
 Narrow view of performance
objectives.
 Excessive upward referral of decisions.

184
ØDivisional structures
Ø
 Group together people who work on the
same product or process, serve
similar customers, and/or are located
in the same area or geographical
region.
 Common in complex organizations.
 Avoid problems associated with
functional structures.


185
 Divisional structures based on
product, geography, customer, and
process.

186
ØPotential advantages of divisional
structures:


 More flexibility in responding to

environmental changes.
•Improved coordination.
•Clear points of responsibility.
•Expertise focused on specific
customers, products, and
regions.
•Greater ease in restructuring.
187
ØPotential disadvantages of
divisional structures:
Ø
 Duplication of resources and efforts
across divisions.
 Competition and poor coordination
across divisions.
 Emphasis on divisional goals at
expense of organizational goals.

188
 major types of organization
structures
Ø Types of divisional structures and how
they group job and activities:
 Product structures focus on a single
product or service.
 Geographical structures focus on the
same location or geographical region.
 Customer structures focus on the same
customers or clients.
 Process structures focus on the same
processes.
•

189
 M A T R IX S T R U C T U R E

A n o rg a n iza tio n a lstru ctu re in

w h ich e a ch e m p lo ye e re p o rts to
b o th a fu n ctio n a lo r d ivisio n
m anager and
to a p ro je ct o r g ro u p m a n a g e r.

190
 Major types of organization
structures
Ø Matrix structure
 Combines functional and divisional
structures to gain advantages and
minimize disadvantages of each.
 Used in:
 Manufacturing
Service industries
Professional fields
Non-profit sector
Multi-national corporations

191
Matrix structure in a small multi
project business firm.

192
 THE DOW-CORNING MATRIX
BOARD CHAIRMAN

PRESIDENT
Cost Centers Other Services

Functions
MFG TS & D RES EVAL
MKTG
MGR MGR MGR CONTR
MGR
Profit Centers
Bus. No.1

Business
Bus. No.2 Board

Bus. No.3

Bus. No.4
Functional
Future Professionalism 193
ØPotential advantages of matrix
structures:
Ø
 Better cooperation across
functions.
 Improved decision making.
 Increased flexibility in
restructuring.
 Better customer service.
 Better performance
194
Ø Potential disadvantages of matrix
structures:
Ø
 Two-boss system is susceptible to power
struggles.
 Two-boss system can create task
confusion and conflict in work priorities.
 Team meetings are time consuming.
 Team may develop “groupitis.”
 Increased costs due to adding team leers
to structure.

195
Ø Guidelines for horizontal structures:
Ø
• Focus the organization around processes, not
functions.
• Put people in charge of core processes.
• Decrease hierarchy and increase the use of teams.
• Empower people to make decisions critical to
performance.
• Utilize information technology.
• Emphasize multiskilling and multiple competencies.
• Teach people how to work in partnership with
others.
• Build a culture of openness, collaboration, and
performance commitment.


196
ØTeam structures

 Extensively use permanent and

temporary teams to solve

problems, complete special
projects, and accomplish day-
to-day tasks.

 Often use cross-functional

teams. 197
How a team structure uses cross-
functional teams for improved
lateral relations.

198
ØPotential advantages of team
structures:
 Eliminates difficulties with communication
and decision making.
 Eliminates barriers between operating
departments.
 Improved morale.
 Greater sense of involvement and
identification.
 Increased enthusiasm for work.
 Improved quality and speed of decision
making.
199
ØPotential disadvantages of team
structures:
 Conflicting loyalties among members.
 Excessive time spent in meetings.
 Effective use of time depends on
quality of interpersonal relations,
group dynamics, and team
management.

200
ØNetwork structures
Ø
 A central core that is linked through
networks of relationships with
outside contractors and suppliers of
essential services.
 Own only core components and use
strategic alliances or outsourcing to
provide other components.

201
202
ØPotential advantages of network
structures:
 Firms can operate with fewer full-time
employees and less complex internal
systems.
 Reduced overhead costs and
increased operating efficiency.
 Permits operations across great
distances.

203
ØPotential disadvantages of network
structures:
Ø
 Control and coordination problems
may arise from network complexity.
 Potential loss of control over
outsourced activities.
 Potential lack of loyalty among
infrequently used contractors.
 Excessively aggressive outsourcing
can be dangerous.

204
ØDeadly sins of outsourcing:
• Outsourcing activities that are part of the
core.
• Outsourcing to untrustworthy vendors.
• Not having good contracts with the vendor.
• Overlooking impact on existing employees.
• Not maintaining oversight; losing control to
vendors.
• Overlooking hidden costs of managing
contracts.
• Failing to anticipate need to change
vendors, cease outsourcing.

205
Ø Boundaryless organizations
Ø
 Eliminate internal boundaries among
subsystems and external boundaries with the
external environment.
 A combination of team and network structures,
with the addition of “temporariness.”
 Key requirements:
 Absence of hierarchy.
Empowerment of team members.
Technology utilization.
Acceptance of impermanence.

206
207
ØBoundaryless organizations (cont.)
Ø
 Encourage creativity, quality, timeliness,
flexibility, and efficiency.
 Knowledge sharing is both a goal and
essential component.
 Virtual organization.
A special form of boundaryless organization.
Operates in a shifting network of external
alliances that are engaged as needed, using IT
and the Internet.

208
Changing trends in organizing at
the workplace
ØContemporary organizing trends
include:
 Shorter chains of command.
 Less unity of command.
 Wider spans of control.
 More delegation and empowerment.
 Decentralization with centralization.
 Reduced use of staff.

209
ØShorter chains of command
Ø
 The line of authority that vertically
links all persons with successively
higher levels of management.
 Organizing trend:
 Organizations are being “streamlined” by
cutting unnecessary levels of
management.
Flatter structures are viewed as a
competitive advantage.

210
ØLess unity of command
Ø
 Each person in an organization should
report to one and only one
supervisor.
 Organizing trend:
Organizations are using more cross-
functional teams, task forces, and
horizontal structures.
Organizations are becoming more
customer conscious.
Employees often find themselves
working for more than one boss.

211
ØWider spans of control
•
 The number of persons directly
reporting to a manager.
•
 Organizing trend:
Many organizations are shifting to wider
spans of control as levels of
management are eliminated.
Managers have responsibility for a larger
number of subordinates who operate
with less direct supervision.


212
Spans of control in “flat”
versus “tall” structures.

213
ØReduced use of staff
•
 Specialized staff
 People who perform a technical
service or provide special
problem-solving expertise to
other parts of the organization.
•
 Personal staff
People working in “assistant-to”
positions that provide special
support to higher-level managers.


214
Ø Line and staff managers may
disagree over staff authority.
 Advisory Authority.
Functional authority.
 No one best solution for dividing line-
staff responsibilities.
 Organizing trend:
Organizations are reducing staff
size.
Organizations are seeking
increased operating efficiency by
employing fewer staff personnel
and smaller staff units.

215
FU N C T IO N A L O R G A N IZ A T IO N
A fo rm o f d e p a rtm e n ta liza tio n in
w h ich in d ivid u a ls e n g a g e d in o n e
fu n ctio n a l a ctivity , su ch a s m a rke tin g
o r fin a n ce , a re g ro u p e d in to o n e u n it.

P R E S I D E N T

V I C V E I C V P E IR C V EP E ISR C I EP D E SR E I EP DN SR E T
P r o M d a u F r c k i t nH e i a o tu in n m n c g ae n

216
P R O D U C T O R G A N IZ A T IO N :
T h e o rg a n iza tio n o f a co m p a n y in to d ivisio n s th a t
b rin g to g e th e r th o se in vo lve d w ith a ce rta in typ e o f
p ro d u ct.
M A R K E T O R G A N IZ A T IO N :
T h e o rg a n iza tio n o f a co m p a n y in to d ivisio n s th a t
b rin g to g e th e r th o se in vo lve d w ith a ce rta in typ e o f
m a rke t.
D IV IS IO N :
La rg e o rg a n iza tio n d e p a rtm e n t th a t re se m b le s a
se p a ra te b u sin e ss; m a y b e d e vo te d to m a kin g a n d
se llin g sp e cific p ro d u cts o r se rvin g a sp e cific
m a rke t.
217
218
 P R O D U C T / M A R K E T O R
F O R A M A N U F A C T U R

P R E S I D E N T

V I C E P VR EI C S E I D P E R N E T S I D E N
M a r k e t i nF g i n a n c e

V I C E P VR EI C S E I D P E R N E T S I D E N
P r o d u c H t i ou nm a n R e s o u r c e s

V I C E P V R I E C S E I D P V ER IN E C TS E I D P ER N E ST I D
N o r t h A L m a t e i r n i c A a E m u e r ro i pc ea , A f r i c a
a n d F a ra n E d a sM t i d d l e E a

219
POWER AND THE

DISTRIBUTION

OF AUTHORITY

220
POWER:
The ability to exert influence;
that is, the ability to change
the attitudes or behavior of
individuals or groups.

221
REWARD POWER:


 Power derived from the fact that

one person, known as an

influence, has the ability to
reward another person, known
as an influence, for carrying out
orders, which may be expressed
or implied.

222
 EXERT POWER:
 Power based on the belief or
understanding that the
influencer has specific
knowledge or relevant expertise
that the influence does not.


223
REFERENT POWER:


Power based on the desire of the

influence to be like or identify

with the influencer.


224
 AUTHORITY:


A form of power, often used more

broadly to refer to a people’s
ability to wield power as a result
of qualities such as knowledge or
titles such as judge.


225
 TWO VIEWS OF FORMAL AUTHORITY

Constitution
guarantees right to
own property and
control a business

The Classical View The Acceptance View

Manager Manager
issues commands issues commands

Commands Recipient
obeyed considers
acceptance

Acce1ptance Non compliance

226
LINE AUTHORITY:


The authority of those

managers directly responsible,
throughout the organization’s
chain of command, for
achieving organizational goals.

227
STAFF AUTHORITY:


The authority of those groups of

individuals who provide line

managers with advice and
services.


228
FUNCTIONAL AUTHORITY:


The authority of members of

staff departments to control

the activities of other
departments as they relate to
specific staff responsibilities.


229
DELEGATION:


The act of assigning formal

authority and responsibility for

completion of specific
activities to a subordinate.


230
D E LE G A T IO N O F A U T H O R IT Y:
E fficie n t fu n ctio n in g of an
o rg a n iza tio n re q u ire s th a t
m a n a g e rs m u st d e le g a te
re sp o n sib ility a n d a u th o rity to
e m p lo ye e s.
D e le g a tin g m a xim ize s th e
e ffe ctive n e ss of e m p lo ye e s,
sp e e d s-u p d e cisio n -m a kin g , a n d
ca n le a d to b e tte r d e cisio n s.
231
 TASKS OF EFFECTIVE DELEGATION

1.Decide which tasks can be delegated.

2.Decide who should get the assignment.
3.Provide sufficient resources for carrying
out the delegated task.
4.Delegate the assignment.
5.Be prepared to run interference, if
necessary
6.Establish a feedback system.

232
C E N T R A LIZ A T IO N :
T h e a m o u n t o f a u th o rity a n d
a u to n o m y g ive n to a
m u ltin a tio n a l d ivisio n a l m a n a g e r
is a re fle ctio n o f th e re la tive
ce n tra liza tio n o r d e ce n tra liza tio n
o f th e o rg a n iza tio n .

233
B E N E FIT S O F D E C E N T R A LIZ A T IO N

• P R O X IM IT Y O F T H E M A R K E T.

• LO C A L K N O W LE D G E .

• C U S T O M E R A C C E P TA N C E A N D

K N O W LE D G E .

• D E A LE R ’ S C O M FO R T.

234
LE A D E R S H IP

235
LE A D E R S H IP IS DEFINED AS
IN FLU E N C E , T H A T IS , T H E A R T O R
P R O C E S O F IN FLU E N C IN G P E O P LE S O
T H A T T H E Y W ILL S T R IV E W ILLIN G LY
A N D E N T H U S IA S T IC A LLY T O W A R D S
T H E A C H IE V E M E N T O F G R O U P G O A LS .

236
LE A D E R S H IP

T H E P R O C E S S O F D IR E C T IN G A N D
IN FLU E N C IN G T H E TA S K -R E LA T E D
A C T IV IT IE S O F G R O U P M E M B E R S .

237
 FIRST, LEADERSHIP INVOLVES OTHER
PEOPLE –

 EMPLOYEES OR FOLLOWERS. BY
THEIR WILLINGNESS TO ACCEPT
DIRECTIONS FROM THE LEADER,
GROUP MEMBERS HELP DEFINE THE
LEADER’S STATUS AND MAKE THE
LEADERSHIP PROCESS POSSIBLE;
WITHOUT PEOPLE TO LEAD, ALL THE
LEADERSHIP QUALITIES OF A
MANAGER WOULD BE IRRELEVANT.


238
FOURTH ASPECT COMBINES THE FIRST THREE AND
ACKNOWLEDGES THAT LEADERSHIP IS ABOUT
VALUES. MORAL LEADERSHIP CONCERNS VALUES
AND REQUIRES THAT FOLLOWERS BE GIVEN
ENOUGH KNOWLEDGE OF ALTERNATIVES TO MAKE
INTELLIGENT CHOICES WHEN IT COMES TIME TO
RESPOND TO A LEADER’S PROPOSAL
TO LEAD.

239
INGREDIENTS OF LEADERSHIP
1.THE ABILITY TO USE POWER EFFECTIVELY AND IN A
RESPONSIBLE MANNER,
2.THE ABILITY TO COMPREHEND THAT HUMAN BEINGS
HAVE DIFFERENT MOTIVATION FORCES AT
DIFFERENT TIMES AND IN DIFFERENT SITUATIONS
3. THE ABILITY TO INSPIRE, AND
4.THE ABILITY TO ACT IN A MANNER THAT WILL
DEVELOP A CLIMATE CONDUCIVE TO RESPONDING
TO AND AROUSING MOTIVATIONS.

240
LEADERSHIP FUNCTIONS
THE GROUP-MAINTENANCE AND TASK-RELATED
ACTIVITIES THAT MUST BE PERFORMED BY THE LEADER,
OR SOMEONE ELSE, FOR A GROUP TO PERFORM
EFFECTIVELY.

LEADERSHIP STYLES
THE VARIOUS PATTERNS OF BEHAVIOR FAVORED BY
LEADERS DURING THE PROCESS OF DIRECTING AND
INFLUENCING WORKERS.

241
THE TRAIT APPROACH TO LEADERSHIP
N SEARCHING FOR MEASURABLE LEADERSHIP TRAITS,
RESEARCHERS HAVE TAKEN TWO APPROACHES
1)COMPARING THE TRAITS OF THOSE WHO HAVE
EMERGED AS LEADERS WITH THE TRAITS OF THOSE WHO
HAVE NOT; AND (2) COMPARING THE TRAITS OF EFFECTIVE
LEADERS WITH THOSE OF INEFFECTIVE LEADERS.

•LEADERS AND NONLEADERS

•EFFECTIVE AND INEFFECTIVE LEADERS

242
TRAITS APPROACHES TO LEADERSHIP

FIVE PHYSICAL TRAITS (SUCH AS ENERGY, APPEARANCE,

AND HEIGHT), FOUR INTELIGENCE AND ABILITY TRAITS,
SIXTEEN PERSONALITY TRAITS (SUCH AS ADAPTABILITY,
AGGRESSIVENESS, ENTHUSIASM, AND SELF-CONFIDENCE),
SIX TASK-RELATED CHARACTERISTICS (SUCH AS
ACHIEVEMENT DRIVE, PERSISTENCE, AND INITIATIVE),
AND NINE SOCIAL CHARACTERISTICS (SUCH AS
COOPERATIVENESS, INTERPERSONAL SKILLS, AND
ADMINISTRATIVE ABILITY).

243
IN GENERAL, THE STUDY OF LEADERS’ TRAITS HAS NOT BEEN A
VERY FRUITFUL APPROACH TO EXPLAINING LEADERSHIP. NOT

ALL LEADERS POSSESS ALL THE TRAITS, AND MANY NONLEADERS

MAY POSSESS MOST OR ALL THEM. ALSO, THE TRAIT APPROACH
GIVES NO GUIDANCE AS TO HOW MUCH OF ANY TRAIT A PERSON

SHOULD HAVE. FURTHERMORE, THE DOZENS OF STUDIES THAT

HAVE BEEN MADE DO NOT AGREE AS TO WHICH TRAITS ARE

LEADERSHIP TRAITS OR WHAT THEIR RELATIONSHIPS ARE TO

ACTUAL INSTANCES OF LEADERSHIP. MOST OF THESE SO-CALLED
TRAITS ARE REALLY PATTERNS OF BEHAVIOR.

244
LEADERSHIP BEHAVIOR AND STYLES

1. LEADERSHIP BASED ON THE USE OF AUTHORITY,

2. LIKERT’S FOUR SYSTEMS OF MANAGING,

3. THE MANAGERIAL GRID, AND

4. LEADERSHIP INVOLVING A VARIETY OF STYLES,

RANGING FROM A MAXIMUM TO A MINIMUM USE
OF POWER AND INFLUENCE.

245
STYLES BASED ON USE OF AUTHORITY
THE AUTOCRATIC LEADER COMMANDS AND EXPECTS COMPLIANCE,
IS DOGMATIC AND POSITIVE, AND LEADS BY THE ABILITY TO WITH-
HOLD OR GIVE REWARDS AND PUNISHMENT. THE DEMOCRATIC, OR
PARTICIPATIVE LEADER CONSULTS WITH SUBORDINATES ON
PROPOSED ACTIONS AND DECISIONS AND ENCOURAGES
PARTICIPATION FROM THEM. THIS TYPE OF LEADER RANGES FROM
THE PERSON WHO DOES NOT TAKE ACTION WITHOUT
SUBORDINATES’ CONCURRENCE TO THE ONE WHO MAKES
DECISIONS BUT CONSULTS WITH SUBORDINATES BEFORE DOING
SO.

THE FREE-REIN LEADER USES HIS OR HER POWER VERY LITTLE, IF

AT ALL, GIVING SUBORDINATES A HIGH DEGREE OF
INDEPENDENCE IN THEIR OPERATIONS. SUCH LEADERS DEPEND
LARGELY ON SUBORDINATES TO SET THEIR OWN GOALS AND THE
MEANS OF ACHIEVING THEM, AND THEY SEE THEIR ROLE AS ONE
OF AIDING THE OPERATION OF FOLLOWERS BY FURNISHING THEM
WITH INFORMATION AND ACTING PRIMARILY AS A CONTACT WITH
THE GROUP’S EXTERNAL ENVIRONMENT.

246
THE FLOW OF INFLUENCE WITH THREE LEADERSHIP STYLES
AUTOCRATIC
LEADER

FOLLOWER FOLLOWER FOLLOWER

DEMOCRATIC
OR
PARTICIPATIVE
LEADER

FOLLOWER FOLLOWER FOLLOWER

FREE-REIN
LEADER

FOLLOWER FOLLOWER FOLLOWER

247
MANAGERIAL GRID
DEVELOPED SOME YEARS AGO BY ROBERT BLAKE AND JANE MOUTON.

GRID DIMENSIONS
THE GRID HAS TWO DIMENSIONS: CONCERN FOR PEPOLE AND
CONCERN FOR PRODUCTION. “CONCERN FOR PRODUCTION”
INCLUDES THE ATTITUDES OF A SUPERVISOR TOWARD A WIDE
VARIETY OF THINGS, SUCH AS THE QUALITY OF POLICY DECISIONS,
PROCEDURES AND PROCESSES, CREATIVENESS OF RESEARCH,
QUALITY OF STAFF SERVICES, WORK EFFICIENCY, AND VOLUME OF
OUTPUT. “CONCERN FOR PEOPLE” IS LIKEWISE INTERPRETED IN A
BROAD WAY. IT INCLUDES SUCH ELEMENTS AS DEGREE OF
PERSONAL COMMITMENT TOWARD GOAL ACHIEVEMENT,
MAINTENANCE OF A SELF-ESTEEM OF WORKERS, PLACEMENT OF
RESPONSIBILITY ON THE BASIS OF TRUST RATHER THAN OBEDIENCE,
PROVISION OF GOOD WORKING CONDITIONS, AND MAINTENANCE
OF SATISFYING INTERPERSONAL RELATIONS.

248
FOUR EXTREME STYLES
1.1 STYLE (REFERRED TO AS “IMPOVERISHED
MANAGEMENT”)
9.9 MANAGERS – TEAM MANAGERS
1.9 MANAGEMENT (CALLED “COUNTRY CLUB
MANAGEMENT” BY SOME)
9.1 MANAGERS (SOMETIMES REFERRED TO “AUTOCRATIC
TASK MANAGERS”)
5.5 MANAGERS AUTOCRATIC ATTITUDE TOWARD PEOPLE

249
LEADERSHIP AS A CONTINUUM
THE STYLES VARY WITH THE DEGREE OF FREEDOM A
LEADER OR MANAGER GRANTS TO SUBORTINATES. THIS
APPROACH OFFERS A RANGE OF STYLES.

MANAGER’S STYLE CAN BE SEEN ALONG A CONTINUUM

AS (1) THE FORCES OPERATING IN THE MANAGER’S PERSONALITY,
INCLUDING HIS OR HER VALUE SYSTEM, CONFIDENCE IN
SUBORDINATES, INCLINATION TOWARD LEADERSHIP STYLE, AND
FEELINGS OF SECURITY IN UNCERTAIN SITUATIONS; (2) THE FORCES
IN SUBORDINATES (SUCH AS THEIR WILLINGNESS TO ASSUME
RESPONSIBILITY, THEIR KNOWLEDGE AND EXPERIENCE, AND THEIR
TOLERANCE FOR AMBIGUITY) THAT WILL AFFECT THE MANGER’S
BEHAVIOR; AND (3) THE FORCES IN THE SITUATION, SUCH AS
ORGANIZATION VALUES AND TRADITIONS, THE EFFECTIVENESS OF
SUBORDINATES WORKING AS A UNIT, THE NATURE OF A PROBLEM
AND THE FEASIBILITY OF SAFELY DELEGATING THE AUTHORITY
TO HANDLE IT, AND THE PRESSURE OF TIME.

250
FIEDLER’S CONTINGENCY APPROACH TO LEADERSHIP
FRED E. FIEDLER AND HIS ASSOCIATES AT THE UNIVERSITY OF
ILLINOIS HAVE SUGGESTED A CONTINGENCY THEORY OF
LEADERSHIP. THE THEORY HOLDS THAT PEOPLE BECOME LEADERS
NOT ONLY BECAUSE OF THE ATTRIBUTES OF THEIR PERSONALITIES
BUT ALSO BECAUSE OF VARIOUS SITUATIONAL FACTORS AND THE
INTERACTIONS BETWEEN LEADERS AND GROUP MEMBERS.

CRITICAL DIMENSIONS OF THE LEADERSHIP SITUATION

1.POSITION POWER
2.TASK STRUCTURE
3.LEADER-MEMBER RELATIONS

LEADERSHIP STYLES
FAVORABLENESS OF SITUATION

251
 A PATH-GOAL APPROACH TO LEADERSHIP

PATH-GOAL MODEL
A LEADERSHIP THEORY EMPHASIZING THE LEADER’S
ROLE IN CLARIFYING FOR SUBORDINATES HOW THEY
CAN ACHIEVE HIGH PERFORMANCE AND ITS ASSOCIATED
REWARDS.

252
ATH-GOAL APPROACH TO LEADERSHIP EFFECTIVENESS
HE PATH-GOAL THEORY SUGGESTS THAT THE MAIN FUNCTION OF
HE LEADER IS TO CLARIFY AND SET GOALS WITH SUBORDINATES,
ELP THEM FIND THE BEST PATH FOR ACHIEVING THE GOALS,AND
EMOVE OBSTACLES.

ACTORS CONTRIBUTING TO EFFECTIVE LEADERSHIP SHOULD INCLUDE:

CHARACTERISTICS OF SUBORDINATES, SUCH AS THEIR NEEDS,

SELF-CONFIDENCE, AND ABILITIES; AND

THE WORK ENVIORNMENT, INCLUDING SUCH COMPONENTS AS

THE TASK, THE REWARD SYSTEM, AND THE RELATIONSHIP WITH
COWORKERS.

253
 PATH-GOAL APPROACH TO LEADERSHIP EFFECTIVENESS

CHARACTERISTICS
OF
SUBORDINATES

FUNCTIONS LEADER MOTIVATED EFFECTIVE

OF THE BEHAVIOR SUB- ORGANI-
LEADER ORDINATES ZATION

WORK
ENVIRONMENT

254
 LEADERSHIP STYLES STUDIED AT OHIO STATE

(High)
Low Structure High Structure
and and
High Consideration High Consideration

CONSIDERATION

Low Structure High Structure

and and
Low Consideration Low Consideration

(Low)
(Low) (High)

255
 CONTINGENCY APPROACHES TO LEADERSHIP

CONTINGENCY APPROACH
THE VIEW THAT THE MANAGEMENT TECHNIQUE THAT
BEST CONTRIBUTES TO THE ATTAINMENT OF
ORGANIZATIONAL GOALS MIGHT VARY IN DIFFERENT
TYPES OF SITUATIONS OR CIRCUMSTANCES.

SITUATIONAL LEADERSHIP MODEL

AN APPROACH TO LEADERSHIP DEVELOPED BY HERSEY
AND BLANCHARD THAT DESCRIBES HOW LEADERS
SHOULD ADJUST THEIR LEADERSHIP STYLE IN RESPONSE
TO THEIR SUBORDINATES’ EVOLVING DESIRE FOR
ACHIEVEMENT, EXPERIENCE, ABILITY, AND WILLINGNESS
TO ACCEPT RESPONSIBILITY.

256
 LEADERSHIP STYLE AND THE WORK SITUATION:
THE FIEDLER MODEL

LEAST PREFERRED CO-WORKER (LPC)

FIEDLER’S MEASURING INSTRUMENT FOR LOCATING A
MANAGER ON THE LEADERSHIP-STYLE CONTINUUM.

LEADER-MEMBER RELATIONS
THE QUALITY OF THE INTERACTION BETWEEN A LEADER
AND HIS OR HER EMPLOYEES; ACCORDING TO FIEDLER,
THE MOST IMPORTANT INFLUENCE ON THE MANAGER’S
POWER.

257
TASK STRUCTURE
A WORK SITUATION VARIABLE THAT, ACCORDING TO
FIEDLER, HELPS DETERMINE A MANAGER’S POWER. IN
STRUCTURED TASKS, MANAGERS AUTOMATICALLY HAVE
HIGH POWER; IN UNSTRUCTURED TASKS, THEIR POWER
IS DIMINISHED.

POSITION POWER
THE POWER, ACCORDING TO FIEDLER, THAT IS INHERENT
IN THE FORMAL POSITION THE LEADER HOLDS. THIS
POWER MAY BE GREAT OR SMALL, DEPENDING ON THE
SPECIFIC POSITION.

258
 THE FUTURE OF LEADERSHIP THEORY

TRANSACTIONAL LEADERS
LEADERS WHO DETERMINE WHAT SUBORDINATES NEED
TO DO TO ACHIEVE OBJECTIVES, CLASSIFY THOSE
REQUIREMENTS, AND HELP SUBORDINATES BECOME
CONFIDENT THEY CAN REACH THEIR OBJECTIVES.

TRANSFORMED LEADERS
LEADERS WHO, THROUGH THEIR PERSONAL VISION AND
ENERGY, INSPIRE FOLLOWERS AND HAVE A MAJOR
IMPACT ON THEIR ORGANIZATINOS; ALSO CALLED
CHARISMATIC LEADERS.

259
A CHARISMATIC LEADER
OCCASIONALLY A LEADER EMERGES WHOSE HIGH
VISIBILITY AND PERSONAL CHARISMA CATCHES THE
PUBLIC CONSCIOUSNESS. NOW-RETIRED AUTO-
INDUSTRY EXECUTIVE LEE LACOCCA, WHO LED
CHRYSLER CORPORATION BACK FROM THE EDGE OF
BANKRUPTCY, ENGENDERED CONSIDERABLE PUBLIC
RECOGNITION AND SUPPORT.

260
 CONTROLLING

THE MANAGERIAL FUNCTION OF CONTROLLING IS

THE MEASUREMENT AND CORRECTION OF

PERFORMANCE IN ORDER TO MAKE SURE THAT

ENTERPRISE OBJECTIVES AND THE PLANS DEVISED

TO ATTAIN THEM ARE ACCOMPLISHED.

261
 BASIC CONTROL PROCESS

THE BASIC CONTROL PROCESS, WHERE IT IS FOUND

AND WHATEVER IS BEING CONTROLLED, INVOLVES
THREE STEPS: (1) ESTABLISHING STANDARDS,
(2) MEASURING PERFORMANCE AGAINST THESE
STANDARDS, AND (3) CORRECTING VARIATIONS
FROM STANDARDS AND PLANS.

262
ESTABLISHMENT OF STANDARDS

STANDARDS ARE BY DEFINITION SIMPLY CRITERIA OF

PERFORMANCE. THEY ARE THE SELECTED POINTS IN
AN ENTIRE PLANNING PROGRAM AT WHICH MEASURES
OF PERFORMANCE ARE MADE SO THAT MANAGERS CAN
RECEIVE SIGNALS ABOUT HOW THINGS ARE GOING AND
THUS DO NOT HAVE TO WATCH EVERY STEP IN THE
EXECUTION OF PLANS.

263
MEASUREMENT OF PERFORMANCE

ALTHOUGH SUCH MEASUREMENT IS NOT ALWAYS

PRACTICABLE, THE MEASUREMENT OF PERFORMANCE
AGAINST STANDARDS SHOULD IDEALLY BE DONE ON
A FORWARD-LOOKING BASIS SO THAT DEVIATIONS
MAY BE DETECTED IN ADVANCE OF THEIR OCCURRENCE
AND AVOIDED BY APPROPRIATE ACTIONS.

BUT THERE ARE MANY ACTIVITIES FOR WHICH IT IS

DIFFICULT TO DEVELOP ACCURATE STANDARDS, AND
THERE ARE MANY ACTIVITIES THAT ARE HARD TO
MEASURE.

264
CORRECTION OF DEVIATIONS

CORRECTION OF DEVIATIONS IS THE POINT AT WHICH

CONTROL CAN BE SEEN AS A PART OF THE WHOLE
SYSTEM OF MANAGEMENT AND CAN BE RELATED TO
THE OTHER MANAGERIAL FUNCTIONS.

MANAGERS MAY CORRECT DEVIATIONS BY:

•REDRAWING THEIR PLANS OR BY MODIFYING THEIR GOALS.

•CORRECT DEVIATIONS BY EXERCISING THEIR ORGANIZING
FUNCTION THROUGH REASSIGNMENT OR CLARIFICATION OF
DUTIES.
•ADDITIONAL STAFFING, BY BETTER SELECTION AND TRAINING OF
SUBORDINATES.
•BETTER LEADING – FULLER EXPLANATION OF THE JOB OR MORE
EFFECTIVE LEADERSHIP TECHNIQUES.

265
 THE PRINCIPLE OF CRITICAL-POINT CONTROL

EFFECTIVE CONTROL REQUIRES ATTENTION TO THOSE

FACTORS CRITICAL TO EVALUATING PERFORMANCE

AGAINST PLANS.

266
TYPES OF CRITICAL-POINT STANDARDS

1.PHYSICAL STANDARDS
2.COST STANDARDS
3.CAPITAL STANDARDS
4.REVENUE STANDARDS
5.RPOGRAM STANDARDS
6.INTANGIBLE STANDARDS
7.GOALS AS STANDARDS AND
8.STRATEGC PLANS AS CONTROL POINTS
FOR STRATEGIC CONTROL.

267
PHYSICAL STANDARDS
PHYSICAL STANDARDS ARE NONMONETARY MEASUREMENTS AND
ARE COMMON AT THE OPERATING LEVEL,WHERE MATERIALS ARE
USED, LABOR IS EMPLOYED, SERVICES ARE RENDERED, AND
GOODS ARE PRODUCED.

COST STANDARDS
COST STANDARDS ARE MONETARY MEASUREMENTS AND, LIKE
PHYSICAL STANDARDS, ARE COMMON AT THE OPERATING LEVEL.
THEY ATTACH MONETARY VALUES TO THE COSTS OF OPERATIONS.
ILLUSTRATIVE OF COST STANDARDS ARE SUCH WIDELY USED
MEASURES AS DIRECT AND INDIRECT COSTS PER UNIT PRODUCED,
LABOR COST PER UNIT OR PER HOUR, MATERIAL COST PER UNIT,
MACHINE-HOUR COSTS, COSTS PER PLANE RESERVATION AND
SELLING COSTS PER RUPEE OR UNIT OF SALES.

268
CAPITAL STANDARDS
THERE ARE A VARIETY OF CAPITAL STANDARDS, ALL ARISING FROM
THE APPLICATION OF MONETARY MEASUREMENTS TO PHYSICAL
ITEMS. THEY HAVE TO DO WITH THE CAPITAL INVESTED IN THE
FIRM RATHER THAN WITH OPERATING COSTS AND ARE THEREFORE
PRIMARILY RELATED TO THE BALANCE SHEET RATHER THAN TO
THE INCOME STATEMENT.

REVENUE STANDARDS
REVENUE STANDARDS ARISE FROM ATTACHING MONETARY VALUES
TO SALES. THEY MAY INCLUDE SUCH STANDARDS AS REVENUE
PER BUS PASSENGER-MILE, AVERAGE SALE PER CUSTOMER OR
SALES PER CAPITAL IN A GIVEN MAREKT AREA.

269
PROGRAM STANDARDS
A MANAGER MAY BE ASSIGNED TO INSTALL A VARIABLE BUDGET
PROGRAM, A PROGRAM FOR FORMALLY FOLLOWING THE DEVELOP-
MENT OF NEW PRODUCTS, OR A PROGRAM FOR IMPROVING THE
QUALITY OF A SALES FORCE. ALTHOUGH SOME SUBJECTIVE JUDGE-
MENT MAY HAVE TO BE APPLIED IN APPRAISING PROGRAM
PERFORMANCE, TIMING AND OTHER FACTORS CAN BE USED AS
OBJECTIVE STANDARDS.

INTANGIBLE STANDARDS
MORE DIFFICULT TO SET ARE STANDARDS NOT EXPRESSED IN EITHER
PHYSICAL OR MONETARY MEASUREMENTS. MANY INTANGIBLE
STANDARDS EXISTS IN BUSINESS, PARTIALLY BECAUSE ADEQUATE
RESEARCH INTO WHAT CONSTITUTES DESIRED PERFORMANCE HAS
NOT BEEN DONE ABOVE THE LEVEL OF THE SHOP, THE DISTRICT
SALES OFFICE, THE SHIPPING ROOM OR THE ACCOUNTING DEPT.
PERHAPS A MORE IMPORTANT REASON IS THAT WHERE HUMAN
RELATIONSHIPS COUNT IN PERFORMANCE ASTHEY DO ABOVE THE
BASIC OPERATING LEVELS, IT IS VERY HARD TO MEASURE WHAT
IS “GOOD,” “EFFECTIVE,” OR “EFFICIENT.”

270
GOALS AS STANDARDS
IN COMPLEX PROGRAM OPERATIONS, AS WELL AS IN THE PERFOR-
MANCE OF MANAGERS THEMSELVES, MODERN MANAGERS ARE
FINDING THAT THROUGH RESEARCH AND THINKING IT IS POSSIBLE
TO DEFINE GOALS THAT CAN BE USED AS PERFORMANCE STANDARDS.
WHILE THE QUANTITATIVE GOALS ARE LIKELY TO TAKE THE FORM
OF THE THE STANDARDS OUTLINED ABOVE, DEFINITION OF QUALI-
TATIVE GOALS REPRESENTS AN IMPORTANT DEVELOPMENT IN THE
AREA OF STANDARDS.

STRATEGIC PLANS AS CONTROL POINT FOR STRATEGIC CONTROL

A GREAT DEAL HAS BEEN WRITTEN ABOUT STRATEGIC PLANNING,
BUT RELATIVELY LITTLE IS KNOWN ABOUT STRATEGIC CONTROL.
STRATEGIC CONTROL COMPRISES SYSTEATIC MONITORING AT
STRATEGIC CONTROL POINTS AS WELL AS MODIFYING THE
ORGANIZATION’S STRATEGY ON THE BASIS OF THIS EVALUTION.
MOREOVER, SINCE CONTROLS FACILITATE COMPARISONS OF INTENDED
GOALS WITH ACTUAL PERFORMANCE, THEY ALSO PROVIDE OPPOR-
TUNITIES FOR LEARNING, WHICH IN TURN, IS THE BASIS FOR
ORGANIZATION CHANGE.

271
 FEEDBACK LOOP OF MANAGEMENT CONTROL

Competition
Measurement of actual
Desired Actual performance
of actual
performance performance against
performance
standards

Implemen- Program of Analysis of

causes of Identification
tation of corrective
deviations of deviations
corrections action

272