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This document summarizes key aspects of management theory and processes. It discusses (1) the management process of planning, organizing, leading, and controlling; (2) innovative developments in small businesses like employees defining their own jobs; and (3) different types of managers from first-line to top managers. It then covers influential management thinkers and theories including scientific management, classical organization theory, and the behavioral school. A case study is presented on restructuring an airline by empowering employees.
This document summarizes key aspects of management theory and processes. It discusses (1) the management process of planning, organizing, leading, and controlling; (2) innovative developments in small businesses like employees defining their own jobs; and (3) different types of managers from first-line to top managers. It then covers influential management thinkers and theories including scientific management, classical organization theory, and the behavioral school. A case study is presented on restructuring an airline by empowering employees.
This document summarizes key aspects of management theory and processes. It discusses (1) the management process of planning, organizing, leading, and controlling; (2) innovative developments in small businesses like employees defining their own jobs; and (3) different types of managers from first-line to top managers. It then covers influential management thinkers and theories including scientific management, classical organization theory, and the behavioral school. A case study is presented on restructuring an airline by empowering employees.
Planning: selection of goals for the organization Organizing: managers must match an organizaitons structure to its goals and resources, a process called organizational design Leading Controlling: establish standards of performance; measuring current performance comparing this performance to established standards and taking corrective action if deviations are detected
Innovative developments in small businesses: 1) Workers Defining their own jobs 2) Open-book policy of sharing business operations information with employees 3) Opportunity for employees to develop the versatility of management practices that workers need in todays challenging work environment Types of Managers: 1) First line managers: foreman or production supervisor 2) Middle managers 3) Top managers: CXOs, VPs, President overall mgmt of organization Demings fourteen points for quality improvement for top managers: 1) Create constancy of purpose for improvement of product and service 2) Adopt the new philosophy 3) Cease dependence on mass inspection 4) End the practice of awarding business on price tag alone 5) Constantly and forever improve the system of production and service 6) Institute modern methods of training on the job 7) Institute leadership 8) Drive out fear 9) Break down barriers between staff areas 10) Eliminate slogans, exhortations, and targets for the work force 11) Eliminate numerical quotas 12) Remove barriers to pride of workmanship 13) Institute a vigorous program of education and training 14) Take action to accomplish the transformation Note: The marketing function commonly consists of sales, promotion, distribution and market research activities. Functional Managers handle each specific area and General Managers handle the overall operations Managers must look at change as a constant in their lives Henry Fayol (management theorist) identified 3 skills every manager must possess: 1) Technical Skill 2) Human Skill 3) Conceptual Skill: see the organization as a whole, understand and anticipate how a change in any of its parts will affect the whole Example: NUMMI (New United Motor Manufacturing Inc. marked the 1 st JV between GM(US) and Toyota(Japan) at Fremont, California plant. It produces Toyota Corolla and Toyota trucks through its 3 goals: 1) To serve management by improving overall quality and productivity 2) To serve workers by involving them in the design and control of their own work 3) To encourage learning, to communicate innovation and to systematize continuous improvement Note: Toyota Production System [TPS] operating philosophy: 1) Kaizen 2) Kanban: reduce costs with JIT 3) Development of full human potential 4) Build mutual trust 5) Developing team performance 6) Treating every employee as a manger 7) Providing a stable livelihood for all employees Note: Ethics of an Organization 1) Nike has developed a technological process model of recycling every type of shoe the company makes except for cleated models 2) Ethics deals with both conflict and opportunity in human relationships 3) child-care hotline, education hotline, part-time & flexible working for women is needed to become more responsive to changes in cultural and gender diversities in a fast-changing business environment 4) MBWA: Management by walking around
The Evolution of Management Theory Example: Body Shop [boutique and cosmetics company](1976) owner Anita Roddick says, She allocates promotional money to social activism instead of consumer advertising. She is always available to press. She respects and adheres both to the staffs expectations and Citys (Londons Wall Street) expectations
Note: Ford company established in 1903 and Model T [the affordable mass produced automobile] built in 1908 to cater to all masses in general GM founder Alfred Sloan (1920s) made Buick, Oldsmobile, Pontiac, Cadillac, Chevrolet lines to cater to different segments of the public The Scientific Management School [Frederick Taylor (worked with Ford), Henry Gantt (initially worked with Taylor), Frank & Lillian Gilbreth (husband-wife team)] focussed on increasing productivity by improving worker efficiency Taylors philosophy is based on 4 basic principles: 1. The development of a true science of management: time study and devise the best suited method 2. The scientific selection of workers: differential (pay) rate system (incentive system) 3. The scientific education and development of the worker 4. Intimate, friendly cooperation between management and labour Note: Taylors idea was to break each function or operation into much smaller units so that each could be mechanized and speeded up and eventually flow into a straight line production of little pieces becoming steadily larger Limitations: Undue worker pressure and exploitation Gantts technique: 1. Incentive for supervisor who trains workers to meet daily set targets 2. Gantt chart for production scheduling Note: basis was Gantt Chart CPM (Critical Path Method) developed by Du Pont PERT (Program Evaluation and Review Technique developed by the Navy Lotus 1-2-3 is also a creative application Gilbreths: Using motion picture cameras, they tried to find the most economical motions for each task in order ot upgrade performance and reduce fatigue. Classical Organization Theory School (founder: Henry Fayol) He drew up a blueprint for a cohesive doctrine of management, investigated managerial behaviour and systematized it. He was interested in total organization and focused on management. Fayols 14 Principles of Management: 1) Division of labour 2) Authority (but with relevant expertise will be long-term sustainable) of managers 3) Discipline (respect rules and regulations) 4) Unity of Command (Each employee must receive instruction from only one person 5) Unity of Direction (All operations must have the same objective, should be directed by only one manager using one plan) 6) Subordination of Individual interest to the Common Good 7) Remuneration for work done 8) Proper degree of Centralization so manager has the final say and subordinates also enjoy their space to work properly 9) Organization must have proper hierarchy 10) Order: Materials and people (particularly) must be in the jobs or positions they are most suited to 11) Equity: Managers should be both friendly and fair to their subordinates 12) Stability of staff: low attrition 13) Initiative: Subordinates must be given the freedom to conceive and carry out their plans 14) Espirit de Corps: Promoting team spirit will give the organization a sense of unity Max Weber He considered the ideal organization to be a bureaucracy whose activities and objectives were rationally thought out and whose divisions of labour were explicitly spelled out. He also believed that technical competence should be emphasized and that performance evaluations should be made entirely on the basis of merit. Mary Parker Follett She believed that individuals could combine their diverse talents into something bigger and her holistic model of control took into account not just individuals and groups, but the effects of such environmental factors as politics, economics, and biology. Chester Barnard People come together in formal organizations to achieve ends they cannot accomplish working alone An enterprise can operate efficiently and survive only when the organizations goals are kept in balance with the aims and needs of the individuals working for it, i.e. people should be able to work in stable and mutually beneficial relationships over time The greater the employees zone of indifference (i.e what the employee would do without questioning the managers authority), the smoother and more cooperative and organization would be. He understood the role of individual worker as the basic strategic factor in organization. The Behavioural School : The Organization is People To managers frustration, people did not always follow predicted or expected patterns of behaviour. So, several theorists tried to strengthen classical organization theory with the insights of sociology and psychology. Hawthorne experiments: 1. The researchers (Elton Mayo from Harvard and associates) concluded that employees (test group) would work harder if they believed management was concerned about their welfare and supervisors paid special attention to them called the Hawthorne effect 2. Since the control group received no special supervisory treatment or enhancement of working conditions but still improved its performance, they speculated that the control groups productivity gains resulted from the special attention of the researchers themselves 3. Mayos concept was of social man to complement the old concept of rational man motivated by personal economic needs Example At Sky Chiefs, a $45o mn airline in-flight services operations company, they realised that for a successful restructuring (downsizing and reassigning the roles of employees), instead of management dictating what would happen, the employees who are seen as the backbone of the company should be empowered to facilitate this process. So, prior to restructuring process, an employee- managed restructuring committee was selected by management to assemble, interpret, and evaluate the data; help those who were to be let go, extensive counselling and outplacement services were provided, including group workshops on networking, interviewing techniques, and hiring. Now, after restructuring, productivity and operating profits were increasing because remaining employees had accepted their new roles and responsibilities, and morale continues to improve. From Human Relations (Mayo) to the Behavioural Science Approach (Abraham Maslow and Douglas McGregor) 1. People wanted more than instantaneous pleasure or rewards, viz. self- actualizing people. Since, many lower-level needs (physical and safety needs) are satisfied in contemporary society, most people are motivated more by the higher-level ego and self-actualizing needs 2. But, some behavioural scientists refute this claim and chose the more realistic model of human motivation, as complex person i.e. no two people are exactly alike and tailors motivational approaches according to individual needs McGregor proposed another angle on this complex person idea. He distinguished two alternative basic assumptions about people and their approach to work called Theory X and Theory Y, taking opposite view of peoples commitment to work in organizations. Theory X managers assume that people must be constantly coaxed into putting forth effort in their jobs. Theory Y managers assume that people relish work and eagerly approach their work as an opportunity to develop their creative capacities. Note: In accordance with McGregors thinking, GE CEO Jack Welch argues, We are going to win on our ideas, not by whips and chains. The Management Science School By pooling the expertise of mathematicians, physicists, and other scientists in OR teams, the British and Americans (during World War II) were able to achieve significant technological and tactical breakthroughs. Over the years, OR procedures were formalized into what is now called the management science school. The OR team constructs a mathematical model that shows all relevant factors bearing on the problem and how they are interrelated. By changing the values of the variables in the model (such as increasing the cost of raw materials) and analyzing the different equations of the model with a computer, the team can determine the effects of each change. Eventually, the management science tam presents management with a na objective basis for making a decision Drawback: It promotes an emphasis on only the aspects of the organization that can be captured in numbers, missing the importance of people and relationships Recent development in Management Theory 1. The Systems Approach Rather than dealing separately with the various segments of an organization, this theory views the organization as a unified, purposeful system composed of interrelated parts The activity of any segment of an organization affects, in varying degrees, the activity of every other segment E.g. Production managers prefer long uninterrupted production runs of standardized products in order to maintain maximum efficiency and low costs. Marketing managers want to offer customers quick delivery of a wide range of products and would like a flexible manufacturing schedule that can fill special orders on short notice Systems oriented production manager trade-offs and balances the production runs accordingly. For this, they must mesh their department with the whole enterprise Subsystems (parts that make up whole system); Synergy (whole is greater than sum of its parts); Open & Close Systems (automobile- open; monastery or prison-close (do not interact with the environment); System Boundary; Flow(man, material, information); Feedback
The Contingency Approach (situational approach) When methods highly effective in one situation failed to work in other situations, they (mangers, consultants and researchers) sought an explanation and understood that a managers task is to identify which technique will, in a particular situation, under particular circumstances, and at a particular time, best contribute to the attainment of management goals. E.g. for improving worker productivity: if the workers are unskilled and training opportunities and resources are limited, work simplification would be the best solution. However, with skilled workers driven by pride in their abilities, a job-enrichment program might be more effective. E.g. Taco Bell(restaurant chain) redefined business based on the simple premise that customers value food, service, and the physical appearance of the restaurant. So, they outsourced much of the assembly-line food preparation, such as shredding lettuce, allowing employees to focus on customers, bringing a 60% growth in sales Entering an era of Dynamic Engagement New Organizational Environments Ethics and Social Responsibility Globalization and Management Inventing and Re-inventing Organizations Cultures and Multiculturalism Quality The dynamic engagement approach challenges us to see organizations and management as integral parts of modern global society. Case Study: Hewlett Packard and The Digital Revolution Everything from telephone calls to telephone programs was being translated into binary computer code so that it could be transmitted anywhere in the world that a digital network taught So, Lewis Platt as Chairman, President and CEO of HP company brought in reengineering team and began developing equipment for the fast- paced telecommunications industry Takeaway: A Company has to reinvent itself continuously even if it is doing well Organizational Design and Organizational Structure Managers must take into account two kinds of factors when they organize: They must outline their goals for the organization, their strategic plans for pursuing those goals and capabilities at their organizations for carrying out those strategic plans They must consider what is going on now, and what is likely to happen in the future, in the organizational environment The specific pattern of relationships that managers create in this process is called the Organizational structure Four Building Blocks of Organizing 1) Division of Work: Divide the total workload for individuals or groups. a) As Adam Smith pointed, by breaking the total job down to small, simple, separate operations, total productivity was multiplied geometrically b) It creates a variety of jobs people can choose or be assigned to positions that match their talents and interests c) Drawback: Job specialisation leads to alienation the absence of a sense of control may easily develop as proposed by Karl Marx [Volvo of Sweden employed flexible assembly-line work to overcome the alienation and boredom] 2) Departmentalization: Combine tasks/workforce in an efficient and logical manner 3) Hierarchy: Specify who reports to whom in the organization a) Span of control/span of management: It is the number of people and departments that report directly to a particular manager. Universal maximum span was 6,earlier. i) Too wide a span mean that managers are overextended and employees are receiving too little guidance or control. Too narrow a span in inefficient and underutilization of managers ii) Narrow span results in tall hierarchies and wide spans result in flat hierarchies (recent trend)(quick decision making, maximum competitiveness and productivity by focussing on customer service) iii) E.g. Enator, a medium-sized Swedish computing consulting company, once it acquires more than 50 employees , it splits into two separate companies for better coordination and development of personnel iv) Latest developments: At Northern Telecoms (North Carolina), under team direction, the employees order materials, calculate productivity, schedule and track overtime, review budgets, take interviews, perform pee performance evaluations and provide feedback for employee corrective action. But, once such self-direction is implemented, it is virtually impossible to go back to a traditional management hierarchy 4) Coordination: Set up mechanisms for integrating departmental activities into a coherent whole and monitoring the effectiveness of the organization a) A high degree of coordination is required for unpredictable and non-routine jobs (The Big Three: GM, Chrysler and Ford are coordinating on developing low-polluting automobiles) The following process of Differentiation tend to complicate the task of effectively coordinating work activities: Perspective: people in different working units tend to develop their own perspective on the organizations goals and how to pursue them Time orientation: production people are accustomed to handling crises while people in R&D may be preoccupied with problems that will take years to solve Interpersonal styles: production people may favour somewhat abrupt communication and clear-cut answers but fast decisions. R&D employees may prefer easy-going communication that encourages brainstorming and consideration of multiple alternatives Formality: production dept. has specific standards of performance while personnel dept. has a more general standard Takeaway: It is not advisable to reduce differentiation and not to go on integrating the functions otherwise sales dept., e.g., instead of advising to the graphic artists will start interfering & thus impairing their work Three Approaches to achieving effective coordination 1) Using basic management techniques: a) Chain of command facilitates the flow of information b) Set of rules and procedure allow employee to work independently c) Management by walking around 2) Boundary spanning: when the number of contacts between departments increases dramatically, it may be best to create a permanent liaison between the departments. 3) Reducing the need for coordination a) Providing slack (additional) resources gives car-mfg units a leeway in meeting each others requirements. Without this safety margin, having enough cars at the right time might require close coordination between production and sales b) To create independent units whose members can perform all the tasks themselves rather than relying on other departments Organizational Design Classical Approach: Contributors were Max Weber, Frederick Taylor and Henri Fayol. Most effective and efficient organization had a hierarchical structure Members were guided in their actions by a sense of duty to the organization Abide by rules and regulations Such organizations were characterized by specialization of task, appointment by merit, routinization of activities, provision of career opportunities for members and a rational, impersonal organizational climate; this was called a bureaucracy by Weber Task Technology Approach It refers to the kinds of production technology involved in making different kinds of products. 1) Unit production: production of individual items tailored to a customers specifications 2) Small-batch production: products made in small quantities in separate stages and later assembled 3) Large-batch production/ Mass production: manufacture of large quantities of products on an assembly line (e.g. computer chips) 4) Process production: production of materials that are sold by weight or volume e.g. chemicals or drugs (continuous flow) Takeaways: The more complex the technology ranging from unit to process production the greater the number of managers and managerial levels Span of control for 1-level managers increases as we move from unit to mass production, but decreases when we move from mass to process production As a firms technological complexity increases, its clerical and administrative staffs become larger The Environmental Approach Mechanistic system: the activities of the organization are broken down into separate, specialized tasks setup by the higher-level managers Organic system: individuals are more likely to work in a group setting than alone, where there Is less emphasis on taking orders from a manager Burns and Stalker concluded that the mechanistic system was best suited to a stable environment, whereas organic systems were best suited to a turbulent one. But, organizations usually uses combinations of both the systems In a turbulent environment, jobs must be constantly redefined, the employees need to communicate openly and involve in creative problem solving and decision making, which happens in organic system Downsizing It is the restructuring usually involving the shrinking of organizations. Positives are efficiency, productivity and quality, with organizations converting to leaner, more flexible structures that can respond more readily to the pace of change in global markets Negatives include loss of self-esteem, alcoholism and divorce, and permanently lowered standards of living downward mobility Types of Organization Structures Functional Organization (most logical and basic form) 1) An organization divided by function might have separate manufacturing, marketing and sales departments 2) Advantages: a) It makes supervision easier, since each manager must be expert in only a narrow range of skills b) Used by smaller firms that offer a limited line of products 3) Disadvantage: a) As organization expands geographically, functional managers have to report to central headquarters, so it can be difficult to get quick decisions b) If a new product fails, who is to blame R&D, production or marketing? c) Because members of each department may feel isolated from those in other departments, they may have difficulty working with others in a unified way Product/ Market Organization 1) It is referred to as organization by division, brings together in one work unit all those involved in the production and marketing of a product or a related group of products. 2) Most large, multiproduct companies, such as GM, have a product or market organization because due to sheer size, functional organization becomes unwieldy. 3) It follows any one of the three patterns: a) Division by product b) Division by geography c) Division by customer: organization is divided according to the different ways customers use products Advantages: All the activities, skills and expertise required to produce and market a product are grouped in one place under a single head, so quality and speed of decision making are enhanced; burden on central management is eased Accountability is clear Disadvantages Interests of the division may be placed ahead of the goals for the total organization Matrix Organization (multiple command system) A hybrid that attempts to combine the benefits of both types of designs while avoiding their drawbacks. It has two types of structure existing simultaneously. i.e. employees have two bosses one is functional command and other is a command by a project/group manager Although matrix organizational structures are necessarily complex they have advantages. It is the efficient means for bringing together the diverse specialized skills required to solve a complex problem. Another advantage- it gives the organization a great deal of cost-saving flexibility Disadvantage- not everyone adapts well to a matrix system; morale can be adversely affected when personnel are rearranged once projects are completed and new ones begin; if hierarchy is not firmly established and effectively communicated, there is the danger of conflicting directives and ill-defined responsibilities The Formal and Informal Organizational Structure The organization charts are useful for showing the formal organizational structure but does not capture the informality involved E.g. an employee in sales may establish a working relationship with an employee in production, who can provide information about product availability faster than the formal reporting system first recognized by Chester Barnard. He noted that informal relationships help organization members satisfy their social needs and get things done Virtual Corporations It is a temporary network of independent companies suppliers, customers, even erstwhile rivals linked by information technology to share skills, costs, and access to one anothers markets and exploit the fast-changing opportunities. It will have neither central office nor organization chart. It will have no hierarchy, no vertical integration Key attributes are: Technology: informational networks help far-flung companies and entrepreneurs link up and work together Opportunism: Partnerships will be less permanent, less formal and more opportunistic Excellence: because each partner brings its core competencies Trust: these organizations require far more trust than ever before No Borders: More cooperation makes it harder to determine where one company ends and another begins