1. Survey of Principles of
Management
Chapter 1 and 2
Reporter: Carlo Acosta
MBA Candidate
2. Chapter 1
An Overview: Managers and
Managing
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3. What is Management?
ï” The planning, organizing, leading, and controlling of human and other
resources to achieve organizational goals efficiently and effectively.
ï” Being fundamentally anchored on the idea of the need to do planning,
organizing, staffing, directing, evaluating business activites for the success of
the organization, that is, not only for profit but meeting its vision and
mission.
ï” Operation Management are activities that relate to the creation of goods and
services through the transformation of inputs to outputs.
7. What are the Levels and Skills of Managers?
Mintzbergâs Typology
Type of Role Specific Role Examples of Role Activities
Decisional Entrepreneur Commit organizational resources to develop innovative goods and
services; decide to expand internationally to obtain new customers
for the organizationâs products.
Disturbance handler
Move quickly to take corrective action to deal with unexpected
problems facing the organization from the external environment, such
as a crisis like an oil spill, or from the internal environment, such as
producing faulty goods or services.
Resource allocator Allocate organizational resources among different tasks and
departments of the organization; set budgets and salaries of middle
and first-level managers
Negotiator Work with suppliers, distributors, and labor unions to reach
agreements about the quality and price of input, technical, and
human resources; work with other organizations to establish
agreements to pool resources to work on joint projects.
Interpersonal Figurehead Outline future organizational goals to employees at company
meetings; open a new corporate headquarters building; state the
organizationâs ethical guidelines and the principles of behavior
employees are to follow in their dealings with customers and
suppliers.
Leader Provide an example for employees to follow; give direct commands
and orders to subordinates; make decisions concerning the use of
human and technical resources; mobilize employee support for
specific organizational goals.
Liaison oordinate the work of managers in different departments; establish
alliances between different organizations to share resources to
produce new goods and services.
8. Liaison oordinate the work of managers indifferent departments; establish
alliances betweendifferent organizations to share resources to
produce new goods and services.
Informational Monitor Evaluate the performance of managers indifferent tasks and take
corrective actionto improve their performance; watchfor changes
occurring inthe external and internal environments that mayaffect
the organizationinthe future.
Disseminator
Inform employees about changes taking place inthe external and
internal environments that will affect them and the organization;
communicate to employees the organizationâs visionand purpose.
Spokesperson
Launcha national advertising campaignto promote new goods and
services; give a speechto inform the local communityabout the
organizationâs future intentions.
What are the Levels and Skills of Managers?
9. First Line
Managers
Middle Managers
TOP MANAGERS
CEO and The
Executive
Team
Division
Manager
Specific
Functional
Group
Specific
Functional
Group
Specific
Functional
Group
Department
Head
Specific
Functional
Group
What are the Levels and Skills of Managers?
11. Recent Changes in Management Practices
Restructuring
Downsizing an organization by eliminating the jobs of large numbers of top, middle, and
first-line managers and nonmanagerial employees.
Outsourcing
Contracting with another company, usually abroad, to have it perform an activity the
organization previously performed itself.
Empowerement
It is a management technique that involves giving employees more authority and
responsibility over how they perform their work activities.
12. Challenges for Management in a Global
Environment
Building Competitive Advantage
Competitive
AdvantageEfficiency
Innovation
Quality
Customer
relations
Strategic
Alliance
13. Maintaining Ethical and Socially Responsible Standards
Managers at all levels, especially after the recent economic crisis, are under considerable
pressure to make the best use of resources to increase the level at which their organizations
perform. For example, top managers feel pressure from shareholders to increase the
performance of the entire organization to boost its stock price, improve profits, or raise
dividends. In turn, top managers may pressure middle managers to find new ways to use
organizational resources to increase efficiency or quality and thus attract new customers and
earn more revenuesâand then middle managers hit on their departmentâs supervisors.
Pressure to increase performance can be healthy for an organization because it leads managers
to question how the organization is working, and it encourages them to find new and better ways
to plan, organize, lead, and control. However, too much pressure to perform can be harmful. It
may induce managers to behave unethically, and even illegally, when dealing with people and
groups inside and outside the organization.
14. Major challenge for managers everywhere is to recognize the ethical need and legal
requirement to treat human resources fairly and equitably. Today the age, gender, race,
ethnicity, religion, sexual preference, and socioeconomic composition of the workforce
presents new challenges for managers. To create a highly trained and motivated workforce, as
well as to avoid lawsuits, managers must establish human resource management (HRM)
procedures and practices that are legal and fair and do not discriminate against any
organizational members. Today most organizations understand that to motivate effectively and
take advantage of the talents of a diverse workforce, they must make promotion opportunities
available to each and every employee. Managers must recognize the performance-enhancing
possibilities of a diverse workforce, such as the ability to take advantage of the skills and
experiences of different kinds of people.
Managing a Diverse Workforce
15. Chapter References:
Pride W.M., et al. (2015). Foundation of Business, Eighth Edition. Cengage Learning
200 First Stamford Place, 4th Floor Stamford, CT 06902
Jones G.R. and George J.M. (2016). Contemporary Management Ninth Edition,
McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121.
Noe R.A., Hollenbeck J.R., ET AL (2012). Human Resource Management: Gaining
Competitive Advantage Eighth Edition, McGraw-Hill Education, 2 Penn Plaza, New York,
NY 10121.
Baye M.R and Prince J.T. (2014). Managerial Economics and Business Strategy Eighth
Edition. McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121.
Orcullo N.A. (2013). Fundamentals of Strategic Management, Rex Book Store, C.M.
Recti Avenue Manila, Philippines.
Stevenson J.S. (2012). Operations Management Eleventh Edition. McGraw-Hill
Education, 2 Penn Plaza, New York, NY 10121.
18. ï” job specialization â Adam Smith found that the performance of the
factories (England in 1700s) in which workers specialized in only one or a
few tasks was much greater than the performance of the factory in which
each worker performed all 18 pin-making tasks. In fact, Smith found that 10
workers specializing in a particular task could make 48,000 pins a day,
whereas those workers who performed all the tasks could make only a few
thousand the process by which a division of labor occurs as different
workers specialize in tasksâ improves efficiency and leads to higher
organizational performance.
Job Specialization and the Division of Labor
19. Scientific Management Theory
The systematic study of relationships between people and
tasks for the purpose of redesigning the work process to
increase efficiency
Principle 1: Study the way workers perform their tasks,
gather all the informal job knowledge that workers
possess, and experiment with ways of improving how
tasks are performed.
Principle 2: Codify the new methods of performing tasks
into written rules and standard operating procedures.
Principle 3: Carefully select workers who possess skills
and abilities that match the needs of the task, and train
them to perform the task according to the established
rules and procedures.
Principle 4: Establish a fair or acceptable level of
performance for a task, and then develop a pay system
that rewards performance above the acceptable level.
20. The Gilbreths
Two prominent followers of Taylor were Frank Gilbreth (1868â1924) and Lillian
Gilbreth (1878â1972), who refined Taylorâs analysis of work movements and made
many contributions to time-and-motion study. Their aims were to
1. Analyze every individual action necessary to perform a particular task and break
it into each of its component actions,
2. find better ways to perform each component action, and
3. reorganize each of the component actions so that the action as a whole could be
performed more efficientlyâat less cost in time and effort.
22. Administrative Management Theory
The study of how to create an organizational structure and control system that leads to high efficiency and
effectiveness.
Administrative management , the study of how to create an organizational structure and control system
that leads to high efficiency and effectiveness. Organizational structure is the system of task and authority
relationships that controls how employees use resources to achieve the organizationâs goals. Two of the
most influential early views regarding the creation of efficient systems of organizational administration were
developed in Europe: Max Weber, a German sociology professor, developed one theory; and Henri Fayol,
the French manager who developed the model of management introduced in Chapter 1, developed the other.
The Theory of Bureaucracy
Max Weber (1864â1920) wrote at the turn of the 20th century, when Germany was undergoing its industrial
revolution. To help Germany manage its growing industrial enterprises while it was striving to become a
world power, Weber developed the principles of
23. Bureaucracy is a formal system of organization and administration designed
to ensure efficiency and effectiveness.
Authority The power to hold people accountable for their actions and to make
decisions concerning the use of organizational resources.
Bureaucracy
Principle 1:
Formal authority
derives from
oneâs position
inside the
organization.
Principle 2:
Individuals
occupy positions
because of their
performance.
Principle 3: Each
individualâs
authority and
responsibilities
are specified by
the organization.
Principle 4:
Authority is
exercised
effectively when
positions are
arranged
hierarchically.
Principle 5: Rules
of the
organization are
followed and
control individual
behavior.
24. Fayolâs Principles of Management
Henri Fayol (1841â1925) was the CEO of Comambault Mining. Working at the same
time as Weber, but independently, Fayol identified 14 principles (summarized in Table
2.1 ) that he believed essential to increase the efficiency of the management process.
30 We discuss these principles in detail here because, although they were developed
at the turn of the 20th century, they remain the bedrock on which much of recent
management theory and research is based. In fact, as the âManagement Insightâ
feature following this discussion suggests, modern writers such as well-known
management guru Jim Collins continue to extol these principles.
25. Division of labor
Authority and responsibility Unity of command
Line of authority
Centralization
Unity of direction
Equity
Order
Initiative
Discipline.
Remuneration of personnel
Stability of tenure of personnel
Subordination of individual interests to the common interest
Esprit de corps
Table 2.1
Fayolâs 14 Principles of Management
26. Behavioral Management Theory
The study of how managers should behave to motivate employees and
encourage them to perform at high levels and be committed to the
achievement of organizational goals.
Mary Parker Follett
She pointed out that management often overlooks the multitude of ways in
which employees can contribute to the organization when managers allow them
to participate and exercise initiative in their everyday work lives
Follett proposed that âauthority should go with knowledge . . . whether it is up
the line or down.â In other words, if workers have the relevant knowledge, then
workers, rather than managers, should be in control of the work process itself,
and managers should behave as coaches and facilitatorsânot as monitors
and supervisors. In making this statement, Follett anticipated the current
interest in self-managed teams and empowerment. She also recognized the
importance of having managers in different departments communicate directly
with each other to speed decision making. She advocated what she called
âcross-functioningâ: members of different departments working together in
cross-departmental teams to accomplish projectsâan approach that is
increasingly used today. 41
27. Hawthorne effect - The finding that a managerâs behavior or leadership approach can
affect workersâ level of performance.
Human Relations Movement
A management approach that advocates the idea that supervisors should
receive behavioral training to manage subordinates in ways that elicit their
cooperation and increase their productivity
The Hawthorne Studies and Human Relations
28. Theory X, Y and Z
Theory X, Y, Z
Assumption:
Employees need heavy
supervision.
Micromanagement.
Assumption:
Employees have
potential to be engaged
in work. Empowered
Employees.
Assumption:
The organization is a
family. Encourages
participation and
Cooperation. Employees
are well informed and
organizational values
are known.
29. âą Quantitative management uses mathematical techniquesâsuch as linear and
nonlinear programming, modeling, simulation, queuing theory, and chaos theoryâto help
managers decide, for example, how much inventory to hold at different times of the year,
where to locate a new factory, and how best to invest an organizationâs financial capital. IT
offers managers new and improved ways of handling information so they can make more
accurate assessments of the situation and better decisions.
âą Operations management gives managers a set of techniques they can use to analyze
any aspect of an organizationâs production system to increase efficiency. IT, through the
Internet and through growing B2B networks, is transforming how managers acquire inputs
and dispose of finished products.
âą Total quality management (TQM) focuses on analyzing an organizationâs input,
conversion, and output activities to increase product quality. Once again, through
sophisticated software packages and computer-controlled production, IT is changing how
managers and employees think about the work process and ways of improving it.
âą Management information systems (MIS) give managers information about events
occurring inside the organization as well as in its external environmentâinformation
that is vital for effective decision making. IT gives managers access to more and better
information and allows
Management Science Theory
30. Organizational Environment Theory
An important milestone in the history of management thought occurred when researchers went beyond
the study of how managers can influence behavior within organizations to consider how managers
control the organizationâs relationship with its external environment, or organizational environment â
the set of forces and conditions that operate beyond an organizationâs boundaries but affect a
managerâs ability to acquire and utilize resources.
Organic structure
An organizational structure in which authority is decentralized to middle and first-line
managers and tasks and roles are left ambiguous to encourage employees to cooperate
and respond quickly to the unexpected.
Mechanistic structure
An organizational structure in which authority is centralized, tasks and rules are clearly
specified, and employees are closely supervised.
31. Open-System Organization
âąGoods and
Services.
âąSales
âąMachines
âąInformation
Systems
âąTechnical Skills
âą Raw materials
âąMoney and capital
âą Human resources
Input:
Organization
obtains inputs
from its
environment.
Conversion:
Organization
transforms
inputs and
adds value to
them.
Output:
Organization
releases
outputs to its
environment
Sold Goods
and Services
allow the
organization
obtain new
supplies.
32. Contingency Theory
Characteristics of the
environment
Determine the design of an
organizationâs structure and
control systems.
Organizations in stable
environments choose a
mechanistic structure
(centralized authority, vertical
communication flows, control
through strict rules and
procedures).
Organizations in changing
environments choose an
organic structure
(decentralized authority,
horizontal communication
flows, cross-departmental
cooperation).
33. Chapter References:
Pride W.M., et al. (2015). Foundation of Business, Eighth Edition. Cengage Learning 200
First Stamford Place, 4th Floor Stamford, CT 06902
Jones G.R. and George J.M. (2016). Contemporary Management Ninth Edition, McGraw-
Hill Education, 2 Penn Plaza, New York, NY 10121.
Baye M.R and Prince J.T. (2014), Managerial Economics and Business Strategy Eighth
Edition. McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121.
Helms M. (2006). Encyclopaedia of Management, 5th ed. Thomson Gale 27500 Drake Rd.
Farmington Hills, MI 48331-3535
Hinweis der Redaktion
The Managerâs goal is achieving high organizational performance which is measured in terms of efficiency and effectiveness.
Organizational performance is a measure of how efficiently and effectively managers use available resources to satisfy customers and achieve organizational goals. Organizational performance increases in direct proportion to increases in efficiency and effectiveness, as Figure 1.1 shows
Efficiency is a measure of how productively resources are used to achieve a goal. 5 Organizations are efficient when managers minimize the amount of input resources (such as labor, raw materials, and component parts) or the amount of time needed to produce a given output of goods or services.
Effectiveness is a measure of the appropriateness of the goals that managers have selected for the organization to pursue and the degree to which the organization achieves those goals.
Henry Mintzberg was one of the first to show that management is often chaotic, marked by quick decisions in a tense and sometimes emotional environment. Quick, immediate reactions to situations, than deliberate thought and reflection, are an important aspect of managerial action. 19 Henry Mintzberg, a professor at McGill University, has spent most of his life researching management in an attempt to help organizations better achieve their goals in an ethical manner. Some of his most important research examined the different roles that managers play in organizations, and directly informs our discussion in this chapter. Often managers are overloaded with responsibilities and do not have time to analyze every nuance of a situation; they therefore make decisions in uncertain conditions not knowing which outcomes will be best. 20 Moreover, top managers face constantly changing situations, and a decision that seems right today may prove to be wrong tomorrow. The range of problems that managers face is enormous; managers usually must handle many problems simultaneously; and they often must make snap decisions using the intuition and experience gained through their careers to perform their jobs to the best of their abilities. 21 Henry Mintzberg, by following managers and observing what they actually do hour by hour and day by day, identified 10 kinds of specific roles, or sets of job responsibilities, that capture the dynamic nature of managerial work. 22 He grouped these roles according to whether the responsibility was primarily decisional, interpersonal, or informational; they are described in Table 1.1 .
Restructuring: Downsizing an organization by eliminating the jobs of large numbers of top, middle, and first-line managers and nonmanagerial employees. Restructuring can be done by eliminating product teams, shrinking departments, and reducing levels in the hierarchy, all of which result in the loss of large numbers of jobs of top, middle, or first-line managers, as well as nonmanagerial employees. Modern ITâs ability to improve efficiency has increased the amount of downsizing in recent years because IT makes it possible for fewer employees to perform a given task. IT increases each personâs ability to process information and make decisions more quickly and accurately, for example. U.S. companies are spending over $100 billion a year to purchase advanced IT that can improve efficiency and effectiveness
Outsourcing: Contracting with another company, usually abroad, to have it perform an activity the organization previously performed itself. Outsourcing increases efficiency because it lowers operating costs, freeing up money and resources that can be used in more effective waysâfor example, to develop new products. Low-cost global competition dramatically increased outsourcing at the turn of the century. In 2013 nearly 2.6 million U.S. jobs were outsourced offshore. India, Indonesia, and China were rated as the best outsourcing countries. Companies primarily reported offshore outsourcing to control costs and gain access to unavailable resources while freeing up internal ones.
Empowerment: It is a management technique that involves giving employees more authority and responsibility over how they perform their work activities.
Competitive advantage is the ability of one organization to outperform other organizations because it produces desired goods or services more efficiently and effectively than its competitors. The four building blocks of competitive advantage are superior efficiency; quality; speed, flexibility, and innovation; and responsiveness to customers
ivision of labor Job specialization and the division of labor should increase efficiency, especially if managers take steps to lessen workersâ boredom. Authority and responsibility Managers have the right to give orders and the power to exhort subordinates for obedience. Unity of command An employee should receive orders from only one superior. Line of authority The length of the chain of command that extends from the top to the bottom of an organization should be limited. Centralization Authority should not be concentrated at the top of the chain of command. Unity of direction The organization should have a single plan of action to guide managers and workers. Equity All organizational members are entitled to be treated with justice and respect. Order The arrangement of organizational positions should maximize organizational efficiency and provide employees with satisfying career opportunities. Initiative Managers should allow employees to be innovative and creative. Discipline Managers need to create a workforce that strives to achieve organizational goals. Remuneration of personnel The system that managers use to reward employees should be equitable for both employees and the organization. Stability of tenure of personnel Long-term employees develop skills that can improve organizational efficiency. Subordination of individual interests to the common interest Employees should understand how their performance affects the performance of the whole organization. Esprit de corps Managers should encourage the development of shared feelings of comradeship, enthusiasm, or devotion to a common cause.
Most continued to follow in the footsteps of Taylor and the Gilbreths. To increase efficiency, they studied ways to improve various characteristics of the work setting, such as job specialization or the kinds of tools workers used. One series of studies was conducted from 1924 to 1932 at the Hawthorne Works of the Western Electric Company. 42 This research, now known as the Hawthorne studies, began as an attempt to investigate how characteristics of the work settingâspecifically the level of lighting or illuminationâ affect worker fatigue and performance. The researchers conducted an experiment in which they systematically measured worker productivity at various levels of illumination. T he experiment produced some unexpected results. The researchers found that regardless of whether they raised or lowered the level of illumination, productivity increased. In fact, productivity began to fall only when the level of illumination dropped to the level of moonlightâa level at which workers could presumably no longer see well enough to do their work efficiently. T he researchers found these results puzzling and invited a noted Harvard psychologist, Elton Mayo, to help them. Mayo proposed another series of experiments to solve the mystery. These experiments, known as the relay assembly test experiments, were designed to investigate the effects of other aspects of the work context on job performance, such as the effect of the number and length of rest periods and hours of work on fatigue and monotony. 43 The goal was to raise productivity. D
Hawthorne effect âseemed to suggest that workersâ attitudes toward their managers affect the level of workersâ performance. In particular, the significant finding was that each managerâs personal behavior or leadership approach can affect performance. This finding led many researchers to turn their attention to managerial behavior and leadership. If supervisors could be trained to behave in ways that would elicit cooperative behavior from their subordinates, productivity could be increased. From this view emerged the h uman relations movement , which advocates that supervisors be behaviorally trained to manage subordinates in ways that elicit their cooperation and increase their productivity.
Management science theory is a contemporary approach to management that focuses on the use of rigorous quantitative techniques to help managers make maximum use of organizational resources to produce goods and services. In essence, management science theory is a contemporary extension of scientific management, which, as developed by Taylor, also took a quantitative approach to measuring the workerâtask mix to raise efficiency. There are many branches of management science; and IT, which is having a significant impact on all kinds of management practices, is affecting the tools managers use to make decisions. Each branch of management science deals with a specific set of concerns:
n important milestone in the history of management thought occurred when researchers went beyond the study of how managers can influence behavior within organizations to consider how managers control the organizationâs relationship with its external environment, or o rganizational environment âthe set of forces and conditions that operate beyond an organizationâs boundaries but affect a managerâs ability to acquire and utilize resources. Resources in the organizational environment include the raw materials and skilled people that an organization requires to produce goods and services, as well as the support of groups, including customers who buy these goods and services and provide the organization with financial resources. One way of determining the relative success of an organization is to consider how effective its managers are at obtaining scarce and valuable resources. 53 The importance of studying the environment became clear after the development of open-systems theory and contingency theory during the 1960s.
ne of the most influential views of how an organization is affected by its external environment was developed by Daniel Katz, Robert Kahn, and James Thompson in the 1960s. 54 These theorists viewed the organization as an open system âa system that takes in resources from its external environment and converts or transforms them into goods and services that are sent back to that environment, where they are bought by customers (see Figure 2.4 ). A t the input stage an organization acquires resources such as raw materials, money, and skilled workers to produce goods and services. Once the organization has gathered the necessary resources, conversion begins. At the conversion stage the organizationâs workforce, using appropriate tools, techniques, and machinery, transforms the inputs into outputs of f inished goods and services such as cars, hamburgers, or flights to Hawaii. At the output stage the organization releases finished goods and services to its external environment, where customers purchase and use them to satisfy their needs. The money the organization obtains from the sales of its outputs allows the organization to acquire more resources so the cycle can begin again. T he system just described is said to be open because the organization draws from and interacts with the external environment in order to survive; in other words, the organization is open to its environment. A closed system , in contrast, is a self-contained system that is not affected by changes in its external environment. Organizations that operate as closed systems, that ignore the external environment, and that fail to acquire inputs are likely to experience entropy , which is the tendency of a closed system to lose its ability to control itself and thus to dissolve and disintegrate.
Synergy , the performance gains that result from the combined actions of individuals and departments, is possible only in an organized system. The recent interest in using teams combined or composed of people from different departments reflects systems theoristsâ interest in designing organizational systems to create synergy and thus increase efficiency and effectiveness.
Another milestone in management theory was the development of contingency theory in the 1960s by Tom Burns and G. M. Stalker in Britain and Paul Lawrence and Jay Lorsch in the United States. 55 The crucial message of contingency theory is that there is no one best way to organize: The organizational structures and the control systems that managers choose depend on (are contingent on) characteristics of the external environment in which the organization operates. According to contingency theory, the characteristics of the environment affect an organizationâs ability to obtain resources; and to maximize the likelihood of gaining access to resources, managers must allow an organizationâs departments to organize and control their activities in ways most likely to allow them to obtain resources, given the constraints of the particular environment they face. In other words, how managers design the organizational hierarchy, choose a control system, and lead and motivate their employees is contingent on the characteristics of the organizational environment (see Figure 2.5 ).
