Certification Study Group Principles and Theories of Management October 11, 2005 Management Management is a set of activities directed at an organization’s resources with the aim.
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Certification Study Group Principles and Theories of Management October 11, 2005 Management Management is a set of activities directed at an organization’s resources with the aim of achieving organizational goals in an efficient and effective manner Management Activities include the four functions of management Planning (and decision making) Organizing Leading Controlling Management Resources include: Human Financial Physical Information Management in Organizations Planning and decision making Organizing Inputs from the environment • Human resources • Financial resources • Physical resources • Information resources Goals attained • Efficiently • Effectively Controlling Leading Important Definitions Top Managers Middle Managers First-line Managers Operative Employees The Management Process Planning and Decision Making Setting the organization’s goals and deciding how best to achieve them Controlling Monitoring and correcting ongoing activities to facilitate goal attainment Organizing Determining how best to group activities and resources Leading Motivating members of the organization to work in the best interests of the organization Figure 1.2 The Basic Functions of Management A Circular Process Planning and Decision Making Organizing Controlling Leading Skills and the Manager Fundamental Management Skills Management Skill Mixes at Different Organizational Levels Classical Management Perspective Scientific Management Frederick Taylor The Gilbreths Henry Gantt Steps in Scientific Management 1 Develop a science for each element of the job to replace old rule-of-thumb methods 2 Scientifically select employees and then train them to do the job as described in step 1 3 Supervise employees to make sure they follow the prescribed methods for performing their jobs 4 Continue to plan the work, but use workers to get the work done Figure 1.3 The Classical Management Perspective Administrative Management – focuses on managing the total organization Henry Fayol Lyndal Urwick Max Weber Weber’s Theory of Bureaucracy Division of labor Reliance on rules and regulations Hierarchy of authority Employment based on expertise Inflexible Rigid Impersonal The Behavioral Management Perspective Placed much more emphasis on individual attitudes and behaviors and on group processes in organizations. Recognized the importance of behavioral processes in organizations Hugo Munsterberg Mary Parker Follet Elton Mayo Behavioral Management Perspective Elton Mayo – Hawthorne Studies Illumination study Group study Human Relations Movement Grew out of the Hawthorne studies. Proposed that workers respond primarily to the social context of work, including social conditioning, group norms, and interpersonal dynamics. Assumed that the manager’s concern for workers would lead to increased worker satisfaction and improved worker performance. Behavioral Management Perspective Abraham Maslow Advanced a theory that employees are motivated by a hierarchy of needs that they seek to satisfy. Douglas McGregor Proposed Theory X and Theory Y concepts of managerial beliefs about people and work. Maslow’s Hierarchy of Needs Five levels Physiological – hunger, thirst, shelter, sex Safety – security and protection Social – affection, interpersonal relationships Esteem – self-respect, achievement status Self-actualization – achieving full potential Usually thought in the form of a pyramid Maslow’s Hierarchy of Needs SA Esteem Needs Social Needs Security Needs Physiological Needs Theory X and Theory Y Theory X Assumptions People do not like work and try to avoid it. Managers have to control, direct, coerce, and threaten employees to get them to work toward organizational goals. People prefer to be directed, to avoid responsibility, and to want security; they have little ambition. Source: Douglas McGregor, The Human Side of Enterprise, Copyright © 1960 by McGraw-Hill. Reprinted by permission of The McGraw-Hill Companies. Theory X and Theory Y Theory Y Assumptions People do not dislike work; work is a natural part of their lives. People are internally motivated to reach objectives to which they are committed. People are committed to goals to the degree that they receive rewards when they reach their objectives. Source: Douglas McGregor, The Human Side of Enterprise, Copyright © 1960 by McGraw-Hill. Reprinted by permission of The McGraw-Hill Companies. Theory X and Theory Y Theory Y Assumptions People seek both seek responsibility and accept responsibility under favorable conditions. People can be innovative in solving problems. People are bright, but under most organizational conditions their potentials are underutilized. Source: Douglas McGregor, The Human Side of Enterprise, Copyright © 1960 by McGraw-Hill. Reprinted by permission of The McGraw-Hill Companies. Theory X – Theory Y Think of these theories as a continuum Theory X Theory Y Employees fall somewhere in between the two ends The Behavioral Management Perspective Contemporary behavioral science in management – emerged because of the too simplistic descriptions of work behavior by the human relations theorists. Organizational behavior takes a holistic view of behavior, including individual, group, and organization processes Organizational Behavior Important topics in organizational behavior research: Job satisfaction and job stress Motivation and leadership Group dynamics and organizational politics Interpersonal conflict The structure and design of organizations The Quantitative Management Perspective Focuses on decision making, economic effectiveness, mathematical models, and the use of computers in organizations Management science Operations management The Quantitative Management Perspective Contributions Developed sophisticated quantitative techniques to assist decision making Models have increased our awareness of complex organizational processes and have aided in the planning and controlling processes Limitations Cannot fully explain or predict behavior Mathematical sophistication may come at the expense of other important skills Models may require unrealistic or unfounded assumptions Contemporary Management Theory The Systems Perspective A system is an interrelated set of elements functioning as a whole. An organization as a system is composed of four elements: Inputs (material and/or human resources) Transformation processes (technical and managerial processes) Outputs (products and services) Feedback (reactions from the environment) The Integrated Systems Model Inputs From the environment: Human Material Financial Information Processing Outputs Transformation process: Into the environment Technology Operating systems Administrative systems Control systems Product Services Profit/loss Employee behavior Information Feedback Systems Perspective Synergy Subsystems are more successful working together than working alone. The whole, working together, is greater than the sum of its parts. Entropy A natural process leading to system decline which can be avoided through organizational change and renewal. Contemporary Management Issues & Challenges Downsizing Diversity and the New Workforce Information Technology New Ways of Managing Globalization Ethics and Social Responsibility Managing for Quality Service Economy Certification Study Group The Functions of Management The Functions of Management A Circular Process Planning Organizing/ Staffing Controlling Leading/Directing Plans Mission Statement Strategic Tactical Operational Mission Statement & Objectives Written explanation of company aims What goods and services the company will offer What market the company will serve Company belief vision Statement about employee treatment may be included Objectives - The ends or results desired by the organization and are derived from the organization’s mission. Plans Are Classified on Their Scope Strategic Plans become more specific as they move from strategic to operational Tactical Operational Contingency Management & Planning Levels Top Tactical Strategic Middle Supervisory Operational Certification Study Group Decision Making Managers As Decision Makers Decision making – the process of recognizing a problem or opportunity and creating a solution A decision is a choice between alternatives Steps in the Decision Making Process Recognize and define the decision situation Develop options Analyze options Select the best option Implement the decision Monitor the consequences Decision Making Process Recognizing Evaluate Identifying Alternatives Implement decision Evaluate Alternatives Select Alternative Steps in the Rational Decision-Making Process Step Detail Example 1. Recognizing and defining the decision situation Some stimulus indicates that a decision must be made. The stimulus may be positive or negative. A plant manager sees that employee turnover has increased by 5 percent. 2. Identifying alternatives Both obvious and creative alternatives are desired. In general, the more important the decision, the more alternatives should be considered. The plant manager can increase wages, increase benefits, or change hiring standards. 3. Evaluating alternatives Each alternative is evaluated to determine its feasibility, its satisfactoriness, and its consequences. Increasing benefits may not be feasible. Increasing wages and changing hiring standards may satisfy all conditions. Steps in the Rational Decision-Making Process Step Detail Example 4. Selecting the best alternative Consider all situational factors, and choose the alternative that best fits the manager’s situation. Changing hiring standards will take an extended period of time to cut turnover, so increase wages. 5. Implementing the chosen alternative The chosen alternative is implemented into the organizational system. The plant manager may need permission from corporate headquarters. The human resource department establishes a new wage structure. 6. Following up and evaluating the results At some time in the future, the manager should ascertain the extent to which the alternative chosen in step 4 and implemented in step 5 has worked. The plant manager notes that, six months later, turnover has dropped to its previous level. Evaluating Alternatives in the Decision-Making Process Is the alternative feasible? Yes Is the alternative satisfactory? Yes Are the alternative’s consequences affordable? No No No Eliminate from consideration Eliminate from consideration Eliminate from consideration Yes Retain for further consideration Figure 4.3 The Classical Model Rational Decision-making Process Steps A Circular Process 1 6 2 5 3 4 Types of Decisions Programmed Decisions A structured decision or one that occurs frequently Have well established and understood solutions Nonprogrammed Decisions An unstructured decision, which occurs less frequently than a programmed decision Involves complex, important, and nonroutine problems or opportunities Decision-Making Conditions The decision maker faces conditions of... Certainty Risk Uncertainty Level of ambiguity and chances of making a bad decision Lower Moderate Higher Distinguishing Between Decision Making Conditions There are different kinds of conditions in which to make a decision. Source: Barney, Jay B. and Ricky W. Griffin. The Management of Organizations. Copyright © 1992 by Houghton Mifflin Company. Used with permissions. Decision-Making Conditions Decision Making Under Certainty Decision Making Under Risk Decision Making Under Uncertainty Rational Perspectives on Decision Making The Classical Model of Decision Making • obtain complete When faced with a and perfect information decision situation, • eliminate uncertainty managers should. . . • evaluate everything rationally and logically . . . and end up with a decision that best serves the interests of the organization. Behavioral Aspects of Decision Making The Administrative Model of Decision Making • use incomplete and When faced with a decision situation managers actually… imperfect information • are constrained by bounded rationality • tend to satisfice . . . and end up with a decision that may or may not serve the interests of the organization. The Administrative Model Important Behavioral Concepts Bounded rationality Satisficing Coalition Intuition Escalation of Commitment Risk Propensity Ethics and Decision Making Components of managerial ethics: Relationships of the firm to employees Employees to the firm The firm to other economic agents Group and Team Decision Making in Organizations The most common method of group and team decision making are: Interacting groups Delphi groups Nominal groups. Group Decision Making Advantages Disadvantages More information & knowledge are available The process takes longer, so it is more costly More alternatives are likely to be generated More acceptance of the final decision is likely Enhanced communication of the decision may result Better decisions Compromise decisions due to indecisiveness may emerge One person may dominate the group Groupthink may occur Groupthink A situation that occurs when a group or team’s desire for consensus and cohesiveness overwhelms its desire to reach the best possible decision. Source: Gregory Moorhead, Group & Organizations Studies (Vol. 7, No. 4), pp. 429-444. Copyright © 1982 by Sage Publications, Inc. Reprinted by permission of Sage Publications, Inc. Managing Group and Team Decision-Making Processes Promoting the Effectiveness of Group and Team Decision Making: Be aware of the pros and cons of having a group or team make a decision. Set deadlines for when decisions must be made. Avoid problems with dominance by managing group membership. Hold a follow-up meeting to recheck the decision. Have each group member individually and critically evaluate all alternatives. As a manager, do not make your position known too early. Appoint a group member to be a “devil’s advocate.”