Chapter 8 Leadership Textbook Notes

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Accounting & Financial Management
AFM 131
Robert Sproule

Chapter8-Leadership Managers’ Roles are Evolving  Managers get things done effectively using scarce human, natural and financial resources o Factors of production  Managers used to be called the boss o They knew more and were more proficient than employees o Reprimand those who did not do things correctly o Generally impersonal  Now managers are more like coaches o Educated to guide, train, support, motivate getting the best out of employees rather than telling them what to do o Utilizing teamwork and co-operation since employees may know more than they do o Treat employees as more like partners rather than workers  Long-term employment with one firm no longer the norm so building trust is an important issue  Managers need to be more transparent in how they do their job as their teams will contribute to the manager's evaluation o New manager requirements: skilled communicator, team player, planner, coordinator, organizer, and supervisor Functions of Management  Management: the process used to accomplish organizational goals through planning, organization, leading, and controlling people and other organizational resources  Planning: anticipating trends and determining the best strategies and tactics to achieve organizational goals and objectives o Includes activities such as: monitor the environment, find business opportunities, and watch for challenges  Setting goals, strategies to reach those goals, determining the resources needed, and setting standards o Other management functions all depend heavily on having a good plan o Most often reflected in a set of budgets  Organizing: designing the structure of the organization and creating conditions and systems in which everyone and everything work together to achieve the organization’s goals and objectives o Commonly designed around the customer o Must remain flexible and adaptable to accommodate change o Allocating resources, make organization chart, and various HR functions  Leading: creating a vision for the organization and guiding, training, coaching, and motivating others to work effectively to achieve the organization’s goals and objectives o Direct relationship between motivation and output o Less directing compared to before o Guiding employees to work effectively o Giving assignments, explaining routines, clarifying policies and providing feedback  Controlling: establishing clear standards to determine whether or not an organization is progressing toward its goals and objectives, rewarding people for doing a good job and taking corrective actions if they are not Planning: Creating a Vision Based on Values  Vision: encompassing explanation of why the organization exists and where it is trying to head o Gives the organization a sense of purpose o All stakeholders should be involved in creating it o Should be one sentence long and is never reached as it continues to evolve o Managing an organization without first establishing a vision can be counterproductive o Visions form values  Values: a set of fundamental beliefs that guide a business in the decisions they make o Unite workers in a common place o Without values, company has no basis for determining how to interact with stakeholders o Topics may include: treatment of customers, treatment of employees, an approach to every job, individual employee responsibility, financial management of the business, and communication within and outside the business  Mission Statement: an outline of the fundamental purpose of an organization o Should be 2 to 3 sentences, reason for organization's existence o Should address: organization's self-concept, company philosophy and goals, long-term survival, customer needs, social responsibility, and nature of an organization's product or service o Or alternatively: what is the business, for whom is the company in business for, and how does the company fulfill its function o Becomes the foundation for setting goals  Goals: broad, long-term accomplishments and organization wishes to attain o Goal setting is often a team process  Objectives: specific, measurable, short term statements on how to achieve goals or strategies  Planning answers two fundamental questions: o What is the situation now?  What is the gap between where an organization is now and where it wants to be o What trends are being observed, what customers and products will be most profitable, why do customers buy or not buy our products, who are our major competitors, what opportunities exist for meeting customer needs should be exploited, and what threats are there o SWOT analysis: a planning tool used to analyze an organization’s strengths, weakness, opportunities, and threats o Strengths/Weaknesses (internal assessment)  In terms of: PRIMO-F (people, resources, innovation and ideas, marketing, operations and finance) o Opportunities/Threats (external assessment)  In terms of: PESTLE (political, economic, social, technological, legal and environmental) o How do we get there from here?  Using strategic, tactical, operational, and contingency planning o Strategic Planning: process of determining the major goals of the organization and the policies and strategies for obtaining and using resource’s to achieve those goals  Decides which customers to serve, what goods and services to sell, and where to compete in  Responsibility of top managers o Tactical Planning: process of developing detailed, short-term statements about what is to be done, who is to do it, and how it is to be done  Ex: setting annual budgets in order to meet the strategic objectives  Responsibility of middle managers o Operational Planning: process of setting work standards and schedules necessary to implement the company’s tactical objectives  Ex: standards, schedules, and operational budgets  Responsibility of lower managers and individual employees o Contingency Planning: process of preparing alternative courses of action that may be used if the primary plans do not achieve the organization’s objectives  Not just in case of operational shutdown  Also consider: healthcare related emergencies contingency plans  In case of global epidemic spread  Benefits: ensures business continuity, reducing risk, maintaining productivity, and minimizing possible litigation  Crisis Planning: involves reacting to sudden changes in the environment  Part of contingency planning  Involves risk management  Benefits of strategic planning o Provision of a road map o Develop a sense of security throughout the organization o Shape the course of events and provide a consistency in action and directions o Balance short-term crisis management with long-term vision and direction o Encourage rationale and logical thinking\develop a frame of reference for decision making o Encourage creativity from everyone in the organization Decision Making: Finding the Best Alternative  Decision Making: choosing among two or more alternatives o Heart of all management functions  Decision making model: o Define the situation o Describe and collect information o Develop alternatives o Develop agreement o Decide which alternative o Implement o Evaluate  Problem Solving: process of solving everyday problems, less formal and quicker o Techniques include:  Brainstorming: coming up with as many solutions to a problem as possible, in censoring of ideas  PMI: listing all the pluses for a solution in one column, all the minuses in another, and the interesting in a third column  Interesting column is for writing down the outcomes of taking the action Organizing: Creating a Unified System  Or
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