Introduction to organisations and management/organisations and managers:
What is an organisation?
A deliberate arrangement of people to accomplish some specific purpose.
o Has a distinct purpose.
o Deliberate structure.
o Composed of people.
Why organisations are changing:
o Because the world around them has changed and is continuing to change.
o Societal, economic, global and technological changes have created an
environment in which successful organisations must embrace new ways of
getting their work done.
o E.g. the quest for more sustainable organisational practices, increased
dependence on e-business models and approaches, continuing spread of
information technology and its impact on workplaces.
o The changing organisation:
TRADITIONAL ORGANISATION NEW ORGANISATION
Job focused. Skills focused.
Workdays defined as 9 to 5. Work days have no time boundaries.
Command oriented. Tem oriented.
Managers always make decisions. Employees participate in decision making.
Who are managers?
Someone who coordinates and oversees the work of others so that organisational
goals can be accomplished.
o First-line managers: Managers at the lowest level of the organisation who
manage the work of non-managerial employees who are directly involved
with the production or creation of the organisation’s products.
o Middle managers: Managers between the first-line level and the top level of
the organisation who manage the work of first-line managers.
o Top managers: Managers at or near the top level of the organisation who are
responsible for making organisation-wide decisions and establishing the
goals and plans that affect he entire organisation.
What is management?
The process of coordinating and overseeing the work activities of others so that their
activities are completed efficiently and effectively.
o Efficiency: Doing things right, or getting the most output from the least
amount of inputs.
o Effectiveness: Doing the right things, or completing activities so that
organisational goals are attained.
What do managers do?
o Planning: Involves defining goals, establishing strategies for achieving those
goals, and developing plans to integrate and coordinate activities.
o Organising: Involves determining what tasks are to be done, who is to do
them, how the tasks are to be grouped, who reports to whom and where
decisions are to be made.
o Leading: Involves motivating subordinates, influencing individuals or teams
as they work, selecting the most effective communication channels, or
dealing in any way with employee behaviour issues.
o Controlling: Involves monitoring actual performance, comparing actual to
standard, and taking action if necessary.
Management roles (Mintzberg):
o Specific categories of managerial behaviour. ROLE DESCRIPTION EXAMPLES OF
Interpersonal. Involve people and other
duties that are ceremonial
and symbolic in nature.
Figurehead. Symbolic head; obliged to Greeting visitors; signing
perform a number of routine legal documents.
duties of a legal or social
Leader. Responsible for the Performing virtually all
motivation of subordinates, activities that involve
staffing, training and subordinates.
Liaison. Maintains self-developed Acknowledging mail, doing
network of outside contacts external board work;
and informers who provide performing other activities
favours and information. that involve outsiders.
Informational. Involve receiving, collecting
Monitor. Seeks and receives wide Reading periodicals and
variety of internal and reports; maintaining personal
external information to contacts.
develop a thorough
understanding of the
Disseminator. Transmits information Holding informational
received from outsiders or meetings; making phone
from subordinates to calls to relay information.
members of the organisation.
Spokesperson. Transmits information to Holding board meetings;
outsiders on organisation’s giving information to the
plans, policies, actions, media.
Decisional. Revolves around making
Entrepreneur. Searches organisation and Organising strategy and
its environment for review sessions to develop
opportunities and initiates new programs.
‘improvement projects’ to
bring about changes.
Disturbance handler. Responsible for corrective Organising strategy and
action when organisation review sessions that involve
faces important, unexpected disturbances and crises.
Resource allocator. Responsible for the Scheduling; requesting
allocation of organisational authorisation; performing any
resources of all kinds – activity that involves
making or approving all budgeting and the
significant organisational programming of
decisions. subordinates’ work.
Negotiator. Responsible for representing Participating in union
the organisation at major contract negotiations.
o An evaluation: As managers perform these different roles, Mintzberg concluded that
their actual work activities involved interacting with others, with the
organisation itself and with the context outside the organisation.
Also proposed that as managers perform these roles, their activities
include reflection and action.
Management skills (Katz):
Knowledge of and proficiency in a certain specialised field.
Tend to be more important for lower level managers because they
typically are managing employees who are using tools and
techniques to produce the organisation’s products or service the
The ability to work well with other people individually and in a group.
Important for managers at all levels, because managers need to be
aware of their own attitudes, assumptions and beliefs, as well as
being sensitive to their subordinates’ perceptions, needs and
The ability to think and to conceptualise about abstract and complex
More important for managers at top level, because they deal with
abstract ideas, whereas lower-level managers normally spend more
time dealing with observable objects and processes.
o An evaluation:
In today’s demanding and dynamic workplace, employees who wish
to be invaluable to an organisation must be willing to upgrade their
skills constantly and to take on extra work outside their own specific
Is the manager’s job universal?
o Differences in degree and emphasis, not function.
o All managers make decisions, set goals, create workable organisation
structures, hire and motivate employees, etc, but they measure performance
o Importance of roles differs significantly.
o E.g. role of spokesperson more important in small firms whereas resource
allocator is more important in large firms.
o Managerial concepts not generic (don’t apply universally regardless of
economic, social, political or cultural differences).
How is the manager’s job changing?
Changing technology (digitisation). Shifting organisational boundaries.
More mobile workforce.
Flexible work arrangements.
Increased threats to security. Risk management.
Work life-personal life balance.
Employee assistance. Increased emphasis on organisational and Redefined values.
managerial ethics. Rebuilding trust.
Increased competitiveness. Customer service.
Increased environmental concerns. Management for sustainability.
Reduced consumption of energy and other
Challenges and rewards of being a manager:
Do hard work. Create a work environment in which
Have to deal with a variety of personalities. organisational members can work to the best
Often have to make do with limited of their ability.
resources. Have opportunities to think creatively and use
Motivate workers in chaotic and uncertain imagination.
situations. Help others find meaning and fulfilment in
Successfully blend knowledge, skills, work.
ambitions and experiences of a diverse work Support, coach and nurture others.
group. Work with a variety of people.
Success depends on others’ work Good managers are needed by
Management yesterday and today:
Six main approaches to management:
Scientific management – The use of scientific methods to define the ‘one best way’ for a job
to be done.
o Frederick W. Taylor:
Developed four principles of management (focused on first-line):
1. Develop a science for each element of an 2. Scientifically select and then train, teach
individual’s work, which will replace the old and develop the worker (previously workers
rule-of-thumb method. chose their own work and trained
3. Heartily cooperate with the workers so as 4. Divide work and responsibility almost
to ensure that all work is done in accordance equally between management and workers.
with the principles of the science that has Management takes over all work for which it
been developed. is better fitted than the workers are
(previously, almost all the work and most
responsibility was thrown on the workers).
o Frank and Lillian Gilbreth:
Studied hand and body motions.
Experimented with the design and use of the proper tools and
equipment for optimising work performance.
Invented a device called a microchronometer that recorded a
worker’s motions and the amount of time spent doing each motion.
Wasted motions missed by the naked eye could be identified and
Also devised a classification scheme to label 17 basic a=hand
How do today’s managers use scientific management? o Guidelines that were devised for improving production efficiency are still used
in organisations today.
o When managers analyse the basic work tasks that must be performed, using
time-and-motion study to eliminate wasted motions, hire the best qualified
workers for a job and design incentive systems based on output, they are
using scientific management.
General administrative theorists – writers who developed more general theories of what
managers do and what constituted good management practice.
o Henri Fayol (focused on all levels):
Described the practice of management as something distinct from
accounting, finance, production, distribution and other typical
Argued that management was an activity, common to all human
endeavours in business, government and even in the home.
Stated the 14 principles of management (fundamental rules of
management that could be taught in schools and applied in all
1. Division of work. Specialisation increases output by making
employees more efficient.
2. Authority. Managers must be able to give orders.
Authority gives them this right.
3. Discipline. Employees must obey and respect the rules
that govern the organisation.
4. Unity of command. Every employee should receive orders from
only one superior.
5. Unity of direction. The organisation should have a single plan of
action to guide managers and workers.
6. Subordination of individual interests to the The interests of any one employee or group
general interest. of employees should not take precedence
over the interests of the organisation as a
7. Remuneration. Workers must be paid a fair wage for their
8. Centralisation. The degree to which subordinates are
involved in decision making.
9. Scalar chain. The line of authority from top management to
the lowest ranks.
10. Order. People and materials should be in the right
place at the right time.
11. Equity. Managers should be kind and fair to their
12. Stability of tenure of personnel. Management should provide orderly
personnel and ensure that replacements are
available to fill vacancies.
13. Initiative. Employees who are allowed to originate and
carry out plans will exert high levels of effort.
14. Esprit de corps. Promoting team spirit will build harmony and
unity within the organisation.
o Max Weber:
Developed a theory of authority structures and relations.
Described an ideal type of organisation he called a bureaucracy (a
form of organisation characterise by division of labour, a clearly
defined hierarchy, detailed rules and regulations, and impersonal
Used it as a basis for theorising about work and how work could be
done in large groups. His theory became the model structural design for many of today’s
Weber’s ideal bureaucracy – division of labour, authority hierarchy,
formal selection, formal rules and regulations, impersonality and
o How today’s managers use general administrative theories:
The functional view of the manager’s job can be attributed to Fayol.
Concepts and theories of POLC have evolved from the 14 principles.
Bureaucratic mechanisms used to ensure resources are used
efficiently and effectively.
Quantitative approach to management – the use of quantitative techniques to improve
E.g. data collection and mathematical manipulation.
Involves the application of statistics, optimisation and information models, and
computer stimulation to management activities.
How today’s managers use the quantitative approach:
o Contributed directly to management decision-making in the areas of planning
o When managers budget, schedule, monitor quality and similar decisions, they
typically rely on quantitative techniques.
o The availability of sophisticated computer software programs to aid in
developing models, equations and formulas has made the use of quantitative
techniques less intimidating for managers.
Organisational behaviour – a field of study concerned with the actions (behaviours) of people
o Robert Owen (late 1700s).
Concerned about deplorable working conditions.
Proposed idealistic workplace.
Argued that money spent improving labour was a smart investment.
o Hugo Munsterberg (early 1900s):
Created field of industrial psychology – scientific study of people at
Suggested using psychological tests for employee selection, learning
theory concepts for employee training and study of human behaviour
for employee motivation.
o Mary Parker Follett (early 1900s):
One of the first to recognise that organisations could be viewed from
perspective of individual and group behaviour.
Proposed more people-oriented ideas rather than scientific
Thought organisations should be based on group ethic.
o Chester Barnard (1930s):
Actual manager who thought organisations were social systems that
Believed manager’s job was to communicate and stimulate
employees’ high levels of effort.
First to argue that organisations were open systems.
The Hawthorne Studies:
o A series of studies during the 1920s and 1930s that provided new insights
into individual and group behaviour.
Dramatic impact on the direction of management beliefs about the
role of human behaviour in organisations.
Behaviour and sentiments are closely related, that group influences
significantly affect individual behaviour, that group standards
establish individual worker output, and that money is less a factor in
determining output than are group standards, group sentiments and
security. These conclusions led to a new emphasis on the human behaviour
factor in the functioning of organisations and the attainment of their
The human relations movement:
o The belief, for the most part unsubstantiated by research, that a satisfied
worker will be productive.
o People associated with this movement:
Abraham Maslow and Douglas McGregor – views were shaped more
by their personal philosophies than by substantive research
Abraham Maslow (humanistic psychologist), proposed a theoretical
hierarchy of five needs.
Douglas McGregor, best known for his formulation of the
assumptions of Theory X (assumes that people have little ambition,
dislike work, want to avoid responsibility and need to be closely
directed to work effectively) and Theory Y (people can exercise self-
direction, accept responsibility and consider work to be as natural as
rest and play).
Behavioural science theorists:
o Psychologists and sociologists who relied on scientific method for the study
of organisational behaviour.
Engaged in objective research of human behaviour in organisations.
How do today’s managers use the behavioural approach?
o Much of what the early advocates proposed, and the conclusions from the
Hawthorne Studies, provided the foundation for our current theories of
motivation, leadership, group behaviour and development, and numerous
other behavioural topics.
The systems approach –
System – a set of interrelated and interdependent parts arranged in a manner that
produces a unified whole.
Closed systems – systems that are not influenced by and do not
interact with their environment.
Open systems – systems that dynamically interact with their
The systems approach and managers:
o Systems researchers envisioned an organisation as being made up of
‘interdependent factors, including individuals, groups, attitudes, motives,
formal structure, interactions, goals, status and authority’.
o Managers coordinate the work activities of the various parts of the
organisation and ensure that all the interdependent parts of the organisation
are working together so that the organisation’s goals can be achieved.
o Approach implies that decisions and actions taken in one organisational area
will affect others, and vice versa.
o Recognises that organisations are not self-contained, they rely on their
environments for essential inputs and as sources to absorb their outputs.
The organisation as an open system:
Inputs: Transformation Outputs:
Raw materials. process: Products and
Human resources. Employees’ work services.
Capital. activities. Financial services.
Technology. Management Information.
Information. activities. Human results.
operations. The contingency approach:
An approach that says that organisations are different, face different situations
(contingencies) and require different ways of managing.
The contingency approach and managers:
o There are no universally applicable management rules that would work in all
o Method of managing depends on the situation.
o Contingency variables:
Organisation size – as size increases, so do the problems of
Routineness of task technology – to achieve its purpose, an
organisation uses technology. Routine technologies require
organisational structures, leadership styles and control systems that
differ from those required by customised or non-routine technologies.
Environmental uncertainty – the degree of uncertainty caused by
environmental changes influences the management process. What
works best in a stable and predictable environment may be totally
inappropriate in a rapidly changing and unpredictable environment.
Individual differences – individuals differ in terms of their desire for
growth, autonomy, tolerance of ambiguity and expectations. These
and other individual differences are particularly important when
managers select motivation techniques, leadership styles and job
Current trends and issues:
o Working with people from different cultures.
o Coping with anti-capitalist backlash.
o Movement of jobs to countries with low-cost labour.
Workforce diversity – a workforce that is more heterogeneous in terms of gender,
race, ethnicity, age and other characteristics that reflect differences.
Entrepreneurship – the process whereby an individual or group of individuals uses
organised efforts and means to pursue opportunities to create value and grow by
fulfilling wants and needs through innovation and uniqueness, no matter what
resources are currently controlled.
Managing an e-business world.
o E-business – a comprehensive term describing the way in which an
organisation does its work by using electronic linkages with its key
constituencies in order to achieve its goals efficiently and effectively.
Knowledge management and learning organisations:
o Learning organisations – organisations that have developed the capacity to
learn, adapt and change continuously.
o Knowledge management – cultivating a learning culture where organisational
members systematically gather knowledge and share it with others in the
organisation so as to achieve better performance.
Quality management – a philosophy of management driven by continual improvement
and responding to customer needs and expectations.
Managing for sustainability: o Sustainability – the ability of humanity to ensure that it meets the needs of the
present without compromising the ability of future generations to meet their
o Sustainable management – the responsibility of organisations to ensure that
their operations use all forms of capital – human, natural and financial – in
such a way that all stakeholders receive value, and that the capital required
by future generations in maintained.
The External Environment:
Those factors and forces outside the organisation that affect the organisation’s performance.
The specific environment – those external forces that have a direct impact on
managers’ decisions and actions and are directly relevant to the achievement of the
Absorb the organisation’s output.
Represent potential uncertainty to an organisation as their tastes can
change or they can become dissatisfied with the organisation’s
products or services.
Includes financial and labour inputs and suppliers of materials and
Managers seek to ensure a steady flow of needed inputs at the
lowest possible price.
Uncertainties include unavailability or delay – can significantly reduce
the organisation’s effectiveness.
Managers go to great lengths to ensure a steady, reliable flow.
Managers cannot afford to ignore the competition.
Includes pricing, new products developed, services offered.
Managers must monitor and be prepared to respond to these
o Pressure groups:
Managers must recognise the special interest groups that attempt to
influence the actions of organisations.
As social and political movements change, so too does the power of
Managers should be aware of the power these groups can exert on
The general environment – broad external conditions that may affect the
o Economic conditions e.g. interest rates, inflation, changes in disposable
income, share market fluctuations, and the stage of if the general business
o Political/legal conditions:
Federal, state and local governments influence what organisations
can and cannot do.
Organisations spend a great deal of time and money meeting
government regulations, but the effects of these regulations go
beyond time and money.
E.g. cannot just fire an employee, employee has rights.
o Sociocultural conditions:
Managers must adapt their practices to the changing expectations of
the society in which they operate.
As societal values, customs and tastes change, managers must also
E.g. as workers have begun seeking more balance in their lives,
organisations have had to adjust be offering family leave policies,
more flexible work hours and arrangements and even onsite
childcare facilities. o Demographic conditions:
Encompasses trends in the physical characteristics of a population
such as gender, age, level of education, geographic location, income,
family composition, etc.
Changes in these characteristics may constrain how managers
o Technological conditions:
Organisations are adapting major technological advances to gain a
competitive advantage over those who don’t.
o Global conditions:
Globalisation is one of the main factors affecting managers and
Advances in communication technology and reductions in cross-
nation trade barriers have created a truly global market.
How the environment affects managers:
o Knowing what the various components of the external environment are is
important to managers.
o Understanding how the external environment affects managers is equally
Assessing environmental uncertainty:
o Not all environments are the same – they differ by their degree of
The degree of change and complexity in an organisation’s
Determined by two dimensions – Degree of change and degree of
complexity in an organisation’s environment.
If components in an organisation’s environment change frequently it
is called a dynamic environment, if change is minimal it is called a
Degree of complexity – the number of components in an
organisation’s environment and the extent of the knowledge about
Managing in a global environment:
The legal-political environment:
o Of concern to managers because as other countries’ social and political
systems differ from Australia’s.
o Managers must recognise these differences if they are to understand the
constraints under which they operate and the opportunities that exist.
o Managers must also be aware that laws with regards to working conditions,
payment of bribes, etc differ between nations.
The economic environment:
o Must understand the type of economic system under which the country
operates. Two main types:
Market economy – Economic system in which resources are primarily
owned and controlled by the private sector.
Command economy – Economic system in which all economic
decisions are planned by a central government.
The cultural environment:
o Countries also have cultures, just like organisations do.
National culture – Values and attitudes shared by individuals from a
specific country that shape their behaviour and beliefs about what is
o Hofstede’s framework for assessing cultures:
Invidualism versus collectivism:
Individualism – Cultural dimension in which people are
supposed to look after their own interests and those of their
immediate family. Collectivism – Cultural dimension in which people expect
others in their group to look after and protect them when they
are in trouble.
Power distance – Cultural measure of the extent to which a society
accepts the unequal distribution of power in institutions and
Uncertainty avoidance – Cultural measure of the degree to which
people tolerate risk and unconventional behaviour.
Achievement versus nurturing:
Achievement orientation – National culture attribute
describing the extent to which societal values are
characterised by assertiveness and materialism.
Nurturing orientation – National culture attribute that reflects
the emphasis placed on relationships and concern for others.
Long term orientation – National culture attribute that
emphasises the future and values thrift and persistence.
Short-term orientation – National culture attribute that values
maintaining personal stability or happiness and living for the
o The GLOBE framework for assessing cultures:
Identified nine dimensions on which national cultures differ:
1. Assertiveness. The extent to which a society encourages people to be tough,
confrontational, assertive and competitive versus modest and
2. Future orientation. The extent to which a society encourages and rewards future
oriented behaviours such as planning, investing in the future
and delaying gratification,
3. Gender differentiation. The extent to which a society maximises gender-role
differences as measured by how much status and decision-
making responsibilities women have.
4. Uncertainty avoidance. Society’s reliance on social norms and procedures to alleviate
the unpredictability of future events.
5. Power distance. The degree to which members of a society expect power to
be unequally shared.
6. Individualism/collectivism. The degree to which individuals are encouraged by societal
institutions to be integrated into groups within organisations
7. In-group collectivism. The extent to which members of a society take pride in
membership small groups.
8. Performance orientation. The degree to which a society encourages and rewards group
members for performance improvement and excellence.
9. Humane orientation. The degree to which a society encourages and rewards
individuals for being fair, altruistic, generous, caring and kind
The internal environment:
The shared values, principles, traditions and ways of doing things that influence the way
organisational members act.
Individuals perceive the culture of the organisation on the basis of what they see,
hear or experience within the organisation.
Even though individuals may have different backgrounds or work at different levels in
the organisation, they tend to describe the organisation’s culture in similar terms.
Concerned with how members perceive the organisation, not whether they like it. It
describes, rather than evaluates. Dimensions of organisational culture:
Attention to detail – degree to which employees are expected to exhibit precision,
analysis and attention to detail.
Outcome orientation – degree to which managers focus on results rather than how
they are achieved.
People orientation – degree to which management decisions take into account the
effects on people in the organisation.
Team orientation – degree to which work is organised around teams rather than
Aggressiveness – degree to which employees are aggressive and competitive rather
Stability – degree to which organisational decisions and actions emphasise
maintaining the status quo.
Innovation and risk taking – degree to which employees are encouraged to be
innovative and take risks.
Strong versus weak cultures:
Strong cultures – organisations in which the key values are intensely held and widely
o Have a greater influence on employees.
o The more employees accept the organisation’s key values and the greater
their commitment to those values, the stronger the culture is.
Strong cultures: Weak cultures:
Values widely shared. Values limited to a few people – usually top
Culture conveys consistent messages about management.
what is important. Culture sends contradictory messages about
Most employees can tell stories about what is important.
company history/heroes. Employees have little knowledge of company
Employees strongly identify with culture. history/heroes.
Strong connection between shared values Employees have little identification with
and behaviours. culture.
Little connection between shared values and
The source of culture:
Organisation’s current customs, traditions and general way of doing things are largely
due to what it has done before and the degree of success it has had with those
Source usually reflects the vision or mission of its founders.
How an organisation’s culture continues:
Potential workers assessed on how well they might fit into the organisation.
Socialisation – process that helps employees adapt to the organisation’s culture.
How employees can learn culture:
Stories e.g. of specific people or events.
Rituals (reinforce the key values of the organisation) e.g. awards ceremonies.
Material symbols e.g. type of work environment, layout of facilities.
Language e.g. own vocabulary, unique terms to describe equipment.
How culture affects managers:
The degree of risk that plans should contain. The degree to which managers are
Whether plans should be developed by concerned with increasing employee job
individuals or teams. satisfaction.
The degree of environmental scanning in What leadership styles are appropriate.
which management will engage. Whether all disagreements should be
Organising: Controlling: How much autonomy should be designed Whether to impose external controls or to
into employee’s jobs. allow employees to control their own actions.
Whether tasks should be done by individuals What criteria should be emphasised in
or in teams. employee performance evaluations.
The degree to which department managers What repercussions will occur from
interact with each other. exceeding one’s budget.
Current organisational culture issues facing managers:
Creating an ethical culture.
Be a visible role model.
Communicate ethical expectations.
Provide ethics training.
Visibly reward ethical acts and punish unethical ones.
Provide protective mechanisms so employees can discuss ethical
dilemmas and report unethical behaviour without fear.
Creating an innovative culture:
o Challenge and involvement.
o Trust and openness.
o Idea time.
o Conflict resolution.
o Risk taking.
Creating a customer-responsive culture.
Hire service-contact people with the personality and attitudes
consistent with customer service.
Train customer service people continuously by focusing on improving
product knowledge, active listening, showing patience and displaying
Socialise new service contact people to the organisation’s goals and
Design customer service jobs so that employees have as much
control as necessary to satisfy customers.
Empower service-contact employees with the discretion to make day-
to-day decisions on job-related activities.
As the leader, convey a customer-focused vision and demonstrate
through decisions and actions the commitment to customers.
Creating an organisational culture that embraces sustainability:
Deeply ingrained values.
Top management support.
Spirituality and organisational culture:
o Workplace spirituality – culture where organisational values promote a sense
of purpose through meaningful work that place in the context of community.
Strong sense of purpose.
Focus on individual development.
Trust and openness.
Toleration of employee expression. WEEK 5
The decision-making process:
Decision – a choice of two or more alternatives.
Decision making process – a set of 8 steps that include identifying a problem, selecting an
alternative and evaluating the decision’s effectiveness.
Step 1: Identifying a problem: E.g. ‘I need to decide the best franchise to
Problem – a discrepancy between an existing purchase’.
and a desired state of affairs.
Step 2: Identifying decision criteria. E.g. financial qualifications, franchisor
Decision criteria – criteria that define what is history, start-up costs, open geographical
relevant in a decision. locations, franchisor support.
Step 3: Allocating weights to the criteria. E.g. start-up costs = 10
Franchisor support = 8
Financial qualifications = 6.
Open geographical locations = 4.
Franchisor history = 3.
Step 4: Developing alternatives. E.g. Fernwood Women’s Health Club versus
Cabot Square versus Jumping Jays.
Step 5: Analysing alternatives. Strengths and weaknesses of each.
Step 6: Selecting an alternative. E.g. Fernwood Women’s Health Club.
Step 7: Implementing the alternative.
Step 8: Evaluating decision effectiveness.
The manager as decision maker:
What are the organisation’s long-term How do I handle employees who appear to
objectives? be low in motivation?
What strategies will best achieve those What is the most effective leadership style in
objectives? a given situation?
What should the organisation’s short-term How will a specific change affect worker
objectives be? productivity?
How difficult should individual goals be? When is the right time to stimulate conflict?
How many employees should I have report What activities in the organisation need to be
directly to me? controlled?
How much centralisation should there be in How should those activities be controlled?
the organisation? When is a performance deviation significant?
How should jobs be designed? What type of management information
When should the organisation implement a system should the organisation have?
Making decisions: Rationality, bounded rationality and intuition:
o Rational decision making – describes choices that are consistent and value
maximising within specified constraints.
o Assumption of rationality (lead to rational decision making):
The problem is clear and unambiguous.
A single, well-defined goal is to be achieved.
All alternatives and consequences are known.
Preferences are clear.
Preferences are constant and stable.
No time or cost constraints exist.
Final choice will maximise payoff.
o Bounded rationality – behaviour that is rational within the parameters of a
simplified decision-making process that is limited by an individual’s ability to
Managers satisfice (acceptance of solutions that are ‘good enough’)
rather than maximise.
o Role of intuition: Intuitive decision making – a subconscious process of making
decisions on the basis of experience and accumulated judgement.
Types of problems and decisions:
o Structured problems – straightforward, familiar and easily defined problems.
o Programmed decision – a repetitive decision that can be handled by a routine
o Procedure – a series of interrelated sequential steps that a manager can use
to respond to a structured problem.
o Rule – an explicit statement that tells a manager what they can or cannot do.
o Policy – a guideline that establishes pararmeters for making decisions.
o Unstructured problems – problems that are new or unusual and for which
information is ambiguous or incomplete.
o Non-programmed decisions – unique decisions that require custom-made
o Programmed versus non-programmed decisions:
CHARACTERISTICS PROGRAMMED NON-PROGRAMMED
Type of problem. Structure. Unstructured.
Managerial level. Lower levels. Upper levels.
Frequency. Repetitive, routine. New, unusual.
Information. Readily available. Ambiguous or incomplete.
Goals. Clear, specific. Vague.
Time frame for solution. Short. Relatively long.
Solution relies on. Procedures, rules, policies. Judgement and creativity.
Decision making conditions:
o Certainty – a situation in which a manager can make accurate decisions
because the outcome of every alternative is known.
o Risk – conditions in which the decision maker is able to estimate the
likelihood of certain outcomes.
o Uncertainty – situation in which a decision maker has neither certainty nor
reasonable probability estimates available.
Decision making styles:
o Directive style – characterised by a low tolerance for ambiguity and a rational
way of thinking.
o Analytic style – characterised by a high tolerance for ambiguity and a rational
way of thinking.
o Conceptual style – characterised by a high tolerance for ambiguity and an
intuitive way of thinking.
o Behavioural style – characterised by a low tolerance for ambiguity an intuitive
way of thinking.
Decision making biases and errors:
o Heuristics – rules of thumb that managers use to simplify decision-making. What is planning?
Management function that involves defining goals, establishing strategies for achieving those
goals and developing plans to integrate and coordinate activities.
Informal planning – nothing is written down and there is little or no sharing goals with
others in the organisation.
Formal planning – specific goals are written down and shared with organisational
Why do manager’s plan?
o Provides direction to managers and non-managers.
o Reduces uncertainty by forcing managers to look ahead, anticipate and
consider the impact of change and develop appropriate responses.
o Minimises waste and redundancy.
o Establishes the goals or standards that are used in controlling.
How do manager’s plan?
The role of goals and plans:
o Goals – desired outcomes for individuals, groups and entire organisations.
o Plans – documents that outline how goals are going to be met and that
typically describe resource allocations, schedules and other necessary
actions to accomplish the goals.
o Types of goals:
Financial – goals related to the financial performance of the
Strategic – related to other areas of an organisation’s performance.
Stated – official statements of what an organisation says and what it
wants its various stakeholders to believe its goals are.
Real – goals that an organisation actually pursues, as defined by the
actions of its members.
o Types of plans:
Strategic – plans that apply to the entire organisation, establish the
organisation’s overall goals, and seek to position the organisation in
terms of its environment.
Operational – plans that specify the details of how the overall goals
are to be achieved.
Long-term – plans with a time frame beyond 3 years.
Short-term – plans covering one year or less.
Specific – plans that are clearly defined and leave no room for
Directional – plans that are flexible and set out general guidelines.
Single-use – a one-time plan specifically designed to meet the needs
of a unique situation.
Standing – ongoing plans that provide guidance for activities
Establishing goals and developing plans:
Approaches to establishing goals:
o Traditional goal setting – goals are set at the top level of the organisation and
then broken down into subgoals for each level of the organisation.
o Means-ends chain – integrated network of goals in which the
accomplishment of goals at one level serves as the means for achieving the
goals, or ends, at the next level.
o Management by objectives – process of setting mutually agreed-upon goals
and using those goals to evaluate employee performance.
Characteristics of well-designed goals:
o Written in terms of outcomes rather than actions.
o Measureable and quantifiable.
o Clear as to a time frame.
o Challenging yet attainable. o Written down.
o Communicated to all necessary organisational members.
Steps in goal setting:
o Review the organisation’s mission.
o Evaluate available resources.
o Determine the goals individually or with input from others.
o Write down the goals and communicate them to all who need to know.
o Review results to see whether goals are being met.
o Contingency factors:
Commitment concept – plans should extend far enough to meet
those commitments made today.
Approaches to planning:
Formal planning department – group of planning specialists
whose sole responsibility is helping to write the various
Contemporary issues in planning:
Criticism of planning:
o Planning may create rigidity.
o Plans cannot be developed for a dynamic environment.
o Formal plans cannot replace intuition and creativity.
o Planning focuses managers’ attention on today’s competition, not on
o Formal planning reinforces success, which may lead to failure.
o Just planning is not enough. The importance of strategic management:
What is strategic management:
o What manager’s do to develop the organisation’s strategies.
o Strategies – decisions and actions that determine the long-run performance
of an organisation.
o Business model – strategic design for how a company intends to profit from
its strategies, work processes and work activities.
Why its important:
o Can make a difference to how well an organisation performs.
Positive relationship between strategic planning and performance.
o Better able to cope with the uncertain environments.
o Involved in many of the decisions that managers make.
The strategic management process:
Six-step process that encompasses strategic planning, implementation and evaluation.
Identifying the organisation’s current mission, goals and strategies.
o Mission – statement of the purpose of an organisation.
O – positive trends in external environmental factors.
T – negative trends in external environmental factors.
Analysing the organisation’s resources and capabilities:
o Resources – organisation’s assets that are used to develop, manufacture and
deliver products/services to its customers.
o Capabilities – organisation’s skills and abilities in doing work activities
needed in its business.
o Core competencies – organisation’s major value-creating skills and
capabilities that determine its competitive weapons.
o S – any activities the organisation does well, or any unique resources that it
o W – activities the organisation does not do well, or resources it needs but
does not possess.
Organisational structure and design:
Defining organisational structure and design:
Organisational structure – the formal arrangement of jobs within an organisation.
When managers develop or change an organisation’s structure they are engaged in
Organisational design - process that involves decisions about 6 key elements: work
specialisation, departmentalisation, chain of command, span of control, centralisation
and decentralisation and formalisation when developing and changing an
Purposes of organising:
o Divides work to be done into specific jobs and departments.
o Assigns tasks and responsibilities associated with individual jobs.
o Coordinates diverse organisational tasks.
o Clusters jobs into units.
o Establishes relationships between individuals, groups and departments.
o Establishes formal lines of authority.
o Allocates and deploys organisational resources.
Elements of organisational design: Work specialisation:
o The degree to which tasks in an organisation are divided into separate jobs.
o Today’s views:
Most managers see work specialisation as an important organising
mechanism but not as a source of ever-increasing productivity.
They recognise the economies it provides in certain types of jobs, but
they also recognise the problems it creates when it is carried to
E.g. McDonald’s uses high work specialisation to make and sell its
fast-food products efficiently; organisations such as Ford Australia
have successfully broadened the scope of jobs and reduced work
o The basis by which jobs are grouped together.
Functional – grouping jobs by functions performed.
Product – grouping jobs by product line.
Geographic – grouping jobs on the basis of geographical region.
Process – grouping jobs on the basis of product or customer flow.
Customer – grouping jobs on the basis of specific and unique
customers who have common needs.
o Today there is an increased use of cross-functional teams – work teams
composed of individuals from various functional specialties.
Chain of command:
o The line of authority that extends from the upper organisational levels to the
lowest levels, which clarifies who reports to whom.
Authority – refers to the rights inherent in a managerial position to tell
people what to do and to expect them to do it.
Responsibility – the obligation to perform any assigned duties.
Unity of command – the management principle (Fayol) that states
that a person should report to one manager only, helps to preserve
the concept of a continuous line of authority.
o Concepts considerably less relevant today because of IT and employee
Employees can gain information that used to be only available to top
Employees communicate with anyone in the organisation without
going through formal channels (chain of command).
Employees are empowered to make decisions that were previously
reserved for management.
As more organisations use self-managed and cross-functional teams,
and as new organisational designs with multiple bosses continue to
be implemented, the traditional concepts of authority, responsibility
and chain of command are becoming less relevant.
Span of control:
o The number of employees a manager can efficiency and effectively manage.
o If it’s too large, employee performance suffers because managers no longer
have the time to provide the necessary leadership and support.
o Today’s view:
The contemporary view of span of control recognises that many
factors influence the appropriate number of employees that a
manager can efficiently and effectively manage; include skills and
abilities of manager and employees, characteristics of the work being
Therefore, managers who have well-trained and experienced
employees can function quite well with a wider span.
Other contingency variables that will determine the appropriate span
include similarity of em