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INTRO TO MANAGEMENT.docx

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Department
Management
Course
MGC1010
Professor
Various
Semester
Spring

Description
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 Stable. Dynamic. Inflexible. Flexible. 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?  Management functions: 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 IDENTIFIABLE ACTIVITIES 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 nature. Leader. Responsible for the Performing virtually all motivation of subordinates, activities that involve staffing, training and subordinates. associated duties. 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 and disseminating information. 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 organisation and environment. 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. results, etc. Decisional. Revolves around making decisions. 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. disturbances. 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. 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): o Technical:  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 organisation’s customers. o Human:  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 motivations. o Conceptual:  The ability to think and to conceptualise about abstract and complex situations.  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 job area. Is the manager’s job universal?  Organisational level: o Differences in degree and emphasis, not function.  Organisational type: o All managers make decisions, set goals, create workable organisation structures, hire and motivate employees, etc, but they measure performance differently.  Organisational size: 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.  Cross-national transferability: o Managerial concepts not generic (don’t apply universally regardless of economic, social, political or cultural differences). How is the manager’s job changing? Change: Impact: Changing technology (digitisation). Shifting organisational boundaries. Virtual workplaces. More mobile workforce. Flexible work arrangements. Empowered employees. Increased threats to security. Risk management. Work life-personal life balance. Restructured workplace. Discrimination concerns. Globalisation concerns. Employee assistance. Increased emphasis on organisational and Redefined values. managerial ethics. Rebuilding trust. Increased accountability. Corporate governance. Increased competitiveness. Customer service. Innovation. Globalisation. Efficiency/productivity. Increased environmental concerns. Management for sustainability. Carbon-neutral operations. Recycling. Reduced consumption of energy and other resources. Challenges and rewards of being a manager: Challenges: Rewards: 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 performance. organisations. WEEK 2 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.  Contributions: 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 themselves). 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 eliminated.  Also devised a classification scheme to label 17 basic a=hand motions,  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.  Contributions: o Henri Fayol (focused on all levels):  Described the practice of management as something distinct from accounting, finance, production, distribution and other typical business functions.  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 organisational situations). 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 whole. 7. Remuneration. Workers must be paid a fair wage for their services. 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 subordinates. 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 relationships).  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 large organisations.  Weber’s ideal bureaucracy – division of labour, authority hierarchy, formal selection, formal rules and regulations, impersonality and career orientation. 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 decision-making.  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 and control. 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 at work.  Early advocates: 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 work.  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 management theories.  Thought organisations should be based on group ethic. o Chester Barnard (1930s):  Actual manager who thought organisations were social systems that required cooperation.  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 goals.  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 evidence.  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. o Types:  Closed systems – systems that are not influenced by and do not interact with their environment.  Open systems – systems that dynamically interact with their environment.  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: ENVIRONMENT 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. Technology and 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 situations. o Method of managing depends on the situation. o Contingency variables:  Organisation size – as size increases, so do the problems of coordination.  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 designs. Current trends and issues:  Globalisation: o Working with people from different cultures. o Coping with anti-capitalist backlash. o Movement of jobs to countries with low-cost labour.  Ethics:  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 own needs. 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. WEEK 3 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 organisation’s goals. o Customers:  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. o Suppliers:  Includes financial and labour inputs and suppliers of materials and equipment.  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. o Competitors:  Managers cannot afford to ignore the competition.  Includes pricing, new products developed, services offered.  Managers must monitor and be prepared to respond to these environmental forces. 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 pressure groups.  Managers should be aware of the power these groups can exert on their decisions.  The general environment – broad external conditions that may affect the organisation. o Economic conditions e.g. interest rates, inflation, changes in disposable income, share market fluctuations, and the stage of if the general business cycle. 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 change.  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 POLC. 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 organisations.  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 important.  Assessing environmental uncertainty: o Not all environments are the same – they differ by their degree of environmental uncertainty.  The degree of change and complexity in an organisation’s environment.  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 stable environment.  Degree of complexity – the number of components in an organisation’s environment and the extent of the knowledge about those components. 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 important. 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 organisations.  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.  Time orientation:  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 present. 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 tender. 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 and society. 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 to others. WEEK 4 The internal environment: Organisational culture: 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 individuals.  Aggressiveness – degree to which employees are aggressive and competitive rather than cooperative.  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 shared. 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 behaviours. 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 endeavours.  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: Planning: Leading: 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 eliminated. 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. o Suggestions:  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 Freedom. o Trust and openness. o Idea time. o Playfulness/humour. o Conflict resolution. o Debates. o Risk taking.  Creating a customer-responsive culture. o Suggestions:  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 emotions.  Socialise new service contact people to the organisation’s goals and values.  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: o Qualities:  Deeply ingrained values.  Strategic positioning.  Top management support.  Systematic alignment.  Metrics.  Holistic integration.  Stakeholder engagement.  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. o Characteristics:  Strong sense of purpose.  Focus on individual development.  Trust and openness.  Employee empowerment.  Toleration of employee expression. WEEK 5 Planning: 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: Planning: Leading: 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? Organising: Controlling: 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? different structure?  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 process information.  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 approach. 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 solutions. 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 members. Why do manager’s plan?  Purposes: 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 organisation.  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 interpretation.  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 performed repeatedly. 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.  Developing plans: 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 organisational plans. 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 tomorrow’s survival. 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.  External analysis: o SWOT:  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 has. o W – activities the organisation does not do well, or resources it needs but does not possess.  Formulating strategies.  Implementing strategies.  Evaluating results. WEEK 6 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.  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 organisation’s structure.  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 extremes.  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 specialisation.  Departmentalisation: o The basis by which jobs are grouped together. o Forms:  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. o Concepts:  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 empowerment.  Employees can gain information that used to be only available to top management.  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 done.  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
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