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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Transcript 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.

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

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
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
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
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
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:

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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.”