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Chapter 12-14

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McMaster University
Rita Cossa

CHAPTER TWELVE – MANAGEMENT AND LEADERSHIP Managers’ Roles are Evolving  Resources: incorporates human resources, natural resources, financial resources  Managers becoming more like coaches instead of bosses  Treat employees as partners/equal Functions of Management  Management: process used to accomplish organizational goals through planning, organizing, leading, controlling people and other organizational resources  Planning: o Anticipating trends o Determining best strategies/tactics to achieve organizational goals o One objective is to please customers  Organizing: o Designing structure of organization o Creating conditions and systems in which everyone can work together to achieve goals o Everyone work together to please customer at a profit  Leading: o Creating vision for organization o Guiding, training, coaching, motivation others to work to achieve goals  Controlling: o Measure results against corporate objectives o Monitor performance relative to standards o Reward outstanding performance o Take corrective action when necessary Planning: Creating a Vision Based on Values  Vision: encompassing explanation of why organization exists and where it’s trying to head  Values: o Set of fundamental beliefs that guide business decisions o Determines how employees should interact with stakeholders  Mission statement: outline of fundamental purposes of an organization  Mission statement should address: o Organization’s self-concept o Company philosophy and goals o Long-term survival o Customer needs o Social responsibility o Nature of company’s product/services  Goals: o Broad, long-term accomplishments an organization wishes to attain o Must be agreed on by workers and management  Objectives: specific, short-term statements detailing how to achieve goals  All management functions depend on planning SWOT Analysis  Analyzes Strengths, Weaknesses, Opportunities, Threats  Strengths & Weaknesses: o Identifies relative to competitors o PRIMO-F: people, resources, innovation and ideas, marketing, operations, finance  Opportunities & Threats: o Identified by business environment analysis o PESTLE: political, economic, social, technological, legal, environmental Four Forms of Planning 1. Strategic Planning o Broad, long-range goals set by top managers o Provides foundation for policies, procedures, strategies for obtaining and using resources to achieve goals o Decides what customers to serve, what goods/services to sell, where to sell 2. Tactical Planning: o Identification of specific, short-range objectives by lower managers o Statements about what is to be done, who is to do it and how it is to be done o Setting annual budgets 3. Operational Planning o Setting of work standards and schedules o Specific responsibilities of supervisors, department managers, individual employees o Can include operational budgets 4. Contingency Planning o Backup plans incase primary plans fall o Preparing alternative courses of action o Estimate potential damage/financial loss resulting from unforeseen emergency o Want to ensure business continuity, reduce risk to employees, maintain productivity o Crisis Planning: reacting to sudden change in environment Decision Making: Finding the Best Alternative  Decision making: choosing among two or more alternatives  Seven D’s of decision making: (1)Define the situation (2)Describe and collect needed information (3)Develop alternatives (4)Develop agreement among those involved (5)Decide which alternative is best (6)Do what is indicated (7)Determine whether the decision was a good one, follow up  Problem solving: o Process of solving everyday problems that occur o Calls for quicker action than decision making  Brainstorming: coming up with as may solutions to a problem as possible in short period of time  PMI: o Listing all the Pluses for solution in one column o List all Minuses in another o List all interesting in a third Organizing: Creating a Unified System  Organizational chart: o Visual device o Shows relationships among people o Divides organization’s work o Shows who is accountable for completing work o Who reports to whom  Top management: o Highest level of management o President, key company executives o Develop strategic plans o CEO: introduces change into organization o COO (lots of companies are eliminating): puts changes into effect, rewards people for good work o CFO: obtains funds, plans budgets, collects funds  Middle management: o General managers, division manager, branch/plant managers o Responsible for tactical planning and controlling o Many firms have eliminated middle managers  Supervisory management: o First-line managers o Managers directly responsible for supervising workers and evaluating daily performance Tasks and Skills at Different Levels of Management  Further up managerial ladder, less important original job skills become  A manager must have three categories of skills: 1. Technical skills: o Ability to perform tasks in specific discipline/department o Ex. marketing or information systems 2. Human relations skills: o Communication and motivation o Enable managers to work with people 3. Conceptual skills: o Ability to picture organization as a while and relationships among its various parts o Needed in planning, organizing, controlling, systems development, problem analysis, decision making, coordinating, delegating The Stakeholder-Oriented Organization  Stakeholders: customers, employees, suppliers, dealers, environmental groups, surrounding communities  Organizing so that customers have greatest influence  Establish dialogue with customers on Internet  Must have good relationship with suppliers  Organizations working together are more effective  Must create unified system out of multiple organizations Leading: Providing Continuous Vision and Values  Difference between mangers and leaders: o Managers strive to provide order and stability o Leaders embrace and manage change  Leadership: o Creating vision for others to follow o Establishing corporate values and ethics o Transforming way organization does business to improve effectiveness and efficiency  Leaders motivated by intrinsic values (needs, desires, motive, will power)  Leaders must: o Communicate vision and rally others around vision o Establish corporate values o Promote corporate ethics o Embrace transformational change The Importance of Middle Managers to Leadership  Middle managers now considered essential link to making change throughout organization  Middle managers can be trained to be top managers eventually Leadership Styles 1. Autocratic leadership: o Involves making managerial decisions without consulting others o Effective in emergencies and with unskilled workers 2. Participative (democratic) leadership: o Managers and employees working together to make decisions o Increases jobs satisfaction o Everyone contributes to decisions 3. Free-reign (laissez-faire) leadership: o Managers set objectives and employees are free to do whatever it takes to accomplish objectives Managing Knowledge  Knowledge management: o Finding right information o Keeping information in accessible place o Making info known to everyone in the firm  Must determine what knowledge is most important  “What do I still not know?” Controlling: Making Sure It Works  Five steps: 1) Establishing clear performance standards 2) Monitoring and recording performance (results) 3) Comparing results against plans and standards 4) Communicating results and deviations to employees 5) Taking corrective action and providing positive feedback  Weakest link of control system is setting standards  Must be specific, attainable and measurable  Cannot be vague (ex. “better quality”, “more efficiency”) A New Criterion for Measurement: Customer Satisfaction  External customers: o Dealers who buy products to sell to others o Ultimate customers who buy products for personal use  Internal customers: o Individuals in the firm that receive services from other individuals o Ex. some people do research for other people in company CHAPTER THIRTEEN – MOTIVATING EMPLOYEES The Importance of Motivation  Motivation: a person’s internal drive to act  Costs of turnover: o Direct: hiring replacement, training, etc. o Indirect costs: productivity o Soft costs: loss of intellectual capital, decreased moral, employee stress, negative reputation  Intrinsic reward: good feeling after doing a job well  Extrinsic reward: something given to you by someone else as recognition for good work (pay increase, praise, promotions) Frederick Taylor: The Father of Scientific Management  The Principles of Scientific Management published in 1911  Goal was to increase worker productivity to benefit firm and worker  Determine best way to perform each task and teach people those methods  Scientific management: studying workers to find the most efficient ways of doing things and teaching people those techniques  Three elements in his approach: time, methods, rules of work  Time motion studies: studies of which tasks must be performed to complete job and time needed to do each task  Principle of motion economy: every job could be broken down into series of elementary motions  Critics say he treated people as machines and did not care about emotions Elton Mayo and the Hawthorne Studies  Tested degree of lighting associated with optimum productivity  Productivity of workers went up no matter what they did to the room  Conclusions: o Workers in test room thought of themselves as social group, felt special and worked hard to stay in the group o Workers were involved with planning of experiments, felt ideas were respected o Workers enjoyed atmosphere and additional pay for more productivity no matter what physical conditions were  Hawthorne effect: tendency for people to behave differently when they know they are being studied Motivation and Maslow’s Hierarchy of Needs 1. Physiological Needs: basic survival needs (food, water, shelter) 2. Safety Needs: need to feel secure at work and at home 3. Social Needs: need to feel loved, accepted, part of the group 4. Esteem Needs: need for recognition/acknowledgement from others, as well as self-respect and sense of status 5. Self-Actualization Needs: need to develop to one’s fullest potential Herzberg’s Motivating Factors  Most important motivating factors: 1) Sense of achievement 2) Earned recognition 3) Interest in work itself 4) Opportunity for growth 5) Opportunity for advancement 6) Importance of responsibility 7) Peer and group relationships 8) Pay 9) Supervisor’s fairness 10)Company policies and rules 11)Status 12)Job security 13)Supervisor’s friendliness 14)Working conditions  Motivators: cause employees to be productive and give satisfaction (job content)  Hygiene factors: can cause dissatisfaction if missing but do not motivate employees if increased (job environment, pay) Applying Herzberg’s Theories  Hygiene factors are taken for granted  Only noticed when they are not there  Community involvement is one of biggest things that draws employees to work for a firm  Must have open, honest communication and recognition for good work to motivate employees Job Enrichment  Job enrichment: motivational strategy that emphasizes motivating worker through the job itself  Workers responsible for successful completion of task from start to finish  Characteristics of work that affect individual motivation: 1. Skill variety (job demands different skills) 2. Task identity (job requires doing task from beginning to end) 3. Task significance (jobs has substantial impact on lives/work of others in company) 4. Autonomy (degree of freedom, independence in scheduling work) 5. Feedback (amount of direct info received about job performance)  Job enlargement: extends work cycle by adding related tasks to job description  Job rotation: moving employees from one job to another (results in flexible, cross-trained employees) McGregor’s Theory X and Theory Y Theory X  Assumptions of Theory X management: o Average person dislikes work and will avoid if possible o Workers must be forced, controlled, directed, threatened with punishment o Average worker prefers to be directed, wants to avoid responsibility, has little ambition o Primary motivators are fear and money  Do not give workers flexibility, responsibility  Motivate with punishments not rewards Theory Y  Assumptions: o Most people like work o Most people naturally work toward goals o Depth of person’s commitment to goals depends on rewards o Most people accept and seek responsibility o People can use imagination, creativity and cleverness to solve problems o People motivated by rewards  Relaxed managerial atmosphere  Empowers employees Goal-Setting Theory and Management by Objectives  Goal-setting theory: o Setting ambitious but attainable goals can motivate workers and improve performance o Goals must be accepted, accompanies by feedback and facilitated by organizational conditions  Improves employee performance by: 1. Stretching intensity and persistence of effort 2. Giving employees clearer role perceptions so effort is channeled toward behaviours that will improve work performance  Management by objectives (MBO): o System o
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