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7 Chapter Management, Leadership, and the Internal Organization

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1 7 Chapter Management, Leadership, and the Internal Organization

2 Learning Goals Define management and the three types of skills necessary for managerial success. Explain the role of vision and ethical standards in business success. Summarize the benefits of planning and distinguish strategic, tactical, and operational planning. Describe the strategic planning process. Contrast the types of business decisions and list the steps in the decision-making process. Define leadership and compare different styles of leadership. Discuss the meaning and importance of corporate culture. Identify the five major forms of departmentalization and four main types of organization structures. 1 5 2 6 3 7 8 4

3 What is Management? Management is the process of achieving organizational objectives through people and other resources. Although some companies maintain a very simple structure and relationship with employees, many organizations have complex hierarchies that include multiple levels. Management falls into three levels: top, middle, and supervisory. Being a manager today involves many skills besides just being a “boss.” Class Activity: Discuss the varying types of stress at each level of management and the contributing factors.

4 Top Management Develop long-range strategic plans for the organization. Inspire executives and employees to achieve their vision for the company’s future. The highest level of management is top management, which includes key executives: vice president, CEO, CFO, and other top managers. Activities at this level focus on the long-range direction of the organization.

5 Middle Management Focus on specific operations, products, or customer groups within an organization. Responsible for developing detailed plans and procedures to implement the firm’s strategic plans. Middle managers include general managers, plant managers, division managers and branch managers. Middle managers focus on specific tasks and plans to implement the strategic plan that are more detailed than top management’s.

6 Supervisory Management
Implement the plans developed by middle managers. Responsible for non-manager employees. Motivate workers to accomplish daily, weekly, and monthly goals. The first-line managers are directly responsible for the customer relationships. Supervisory management includes supervisor, section chief, team leader, and store manager. These managers work directly with employees who do the work of the daily operation.

7 Skills Needed for Management Success
Technical skills Manager’s ability to understand and use the techniques, knowledge, and tools and equipment of a specific discipline or department. Human skills Interpersonal skills that enable a manager to work effectively with and through people. Conceptual skills Ability to see the organization as a unified whole and to understand how each part of the overall organization interacts with other parts. Managers must maintain and balance a toolbox of skills. They must be able to do the work they are managing. These technical skills are important. They must be able to connect with and lead employees using their human skills, and ultimately they must be able to see the “big picture.” Conceptual skills aid managers in understanding decisions for the entire organization.

8 Managerial Functions Planning Organizing Directing Controlling
Process of anticipating future events and conditions and determining courses of action for achieving organizational objectives. Organizing Blending human and material resources through a formal structure of authority. Directing Guiding and motivating employees to accomplish organizational objectives. Controlling Evaluating an organization’s performance to determine whether it is accomplishing its objectives. Establish performance standards. Monitor actual performance. Compare actual performance with established standards. Take corrective action if required. There are four key functions that managers perform. Each of these functions is different at every level of management, but these functions are all important to every manager. Managers must make plans for the company. They must organize workers and resources. They must also lead and direct the actions of employees. Finally, managers must constantly check on the progress of plans, employees, and other goals. Controlling requires four steps: establishing performance, monitoring the performance, comparing the performance to the standard, and then taking corrective action.

9 Setting a Vision and Ethical Standards
Vision is the perception of marketplace needs and the methods an organization can use to satisfy them. Must be focused yet adaptable to changes in the business environment. Long-term success is also tied to the ethical standards that the top management team sets. High ethical standard can also encourage, motivate, and inspire employees to achieve goals. Ethical company list A company’s vision should be focused but flexible. Vision serves as the target for a firm’s action. Vision should be combined with ethical standards that start with top management. There have been a number of public firms displaying unethical leadership in the news. The publicity has hurt many firms, and some of them no longer exist due to their lapse in ethics. Ethics are an important long-term view for a firm and must be combined with the firm’s vision. Click on the link to identify ethical companies and discuss any that have “local connections” or that students work for.

10 Importance of Planning
There are different types and levels of plans. Organizations should have a comprehensive planning framework. From mission statement to objectives and goals Narrow functional plans Plans outline the steps the company will take to meet outlined goals and objectives. Planning is an important process that turns vision to reality. It takes place at every level of the organization to align efforts from the mission statement to the daily operations.

11 Planning at Different Organizational Levels
The four levels of planning are conducted by different levels of managers. These different types of plans must be aligned to meet the company goals and objectives. Lecture Enhancer: What specific details must be considered in operational planning?

12 SWOT Analysis The SWOT analysis is a tool to help in the strategic planning process. The SWOT analysis is an organized approach to assessing a company’s internal strengths and weaknesses and its external opportunities and threats.

13 Managers as Decision Makers
Decision making is the process of recognizing a problem or opportunity, evaluating alternative solutions, selecting and implementing an alternative, and assessing the results. Programmed decision involves simple, common problems with predetermined solutions. Nonprogrammed decision involves a complex, unique problem or opportunity with important consequences for the organization. In addition to decisions in the planning process, managers make a variety of decisions every day, all day long. Some decisions are common while many can be more challenging. Programmed decisions may include reordering supplies, creating a discount schedule, or setting a salary for a new employee. There are rules and policies that exist to help guide these decisions. Nonprogrammed decisions are more challenging. They are not routine. Decisions to enter a new market, acquire a company, and introduce a new product are all examples of nonprogrammed decisions.

14 How Managers Make Decisions
Making good decisions is never easy, as they always involve some risk. Once a problem is identified, good managers use the systemic approach to decision-making. This is a five-step process that starts with problem recognition and ends with follow-up.

15 Managers as Leaders Leadership is the ability to direct or inspire people to attain certain goals. Involves the use of influence or power. Three traits are common among many leaders: Empathy Self-awareness Objectivity in dealing with others Leadership involves the use of influence or power. Leadership is the most visible component of a manger’s responsibility. It is important because managers use their leadership to guide employees to meet goals and objectives. Though every leader’s leadership style differs, there are three common traits of good leaders. Empathy is the ability to imagine yourself in someone else’s position.

16 Leadership Styles Autocratic Leadership Democratic Leadership
Make decisions on own without consulting employees. Democratic Leadership Involve employees in decisions, delegate assignments, and ask employees for suggestions. Free-Rein Leadership Leave most decisions to employees. There is no perfect leadership style, and leadership does not mean tight control. Leadership styles range from autocratic leaders who make all the decisions to free-rein leaders who let employees make all of the decisions. An important trend in leadership is empowerment, a practice in which managers lead employees by sharing power, responsibility, and decision making with them.

17 Corporate Culture Corporate Culture: Organization’s system of principles, beliefs, and values. Managers use symbols, rituals, ceremonies, and stories to reinforce corporate culture. Corporate culture is typically shaped by the leaders who founded and developed the company and by those who have succeeded them. Corporate culture can be changed, but that is challenging. Strong culture is where everyone knows and supports the same principles, beliefs, and values. A weak or constantly shifting culture has a lack of a clear sense of purpose.

18 Organizational Structures
Organization: structured grouping of people working together to achieve common goals. Three key elements: Human interaction Goal-directed activities Structure Organization structure is the process of blending human and material resources through a formal structure of tasks and authority.

19 Departmentalization Process of dividing work activities into units within the organization. Product departmentalization: organized based on the goods and services a company offers. Geographical departmentalization: organized by geographical regions within a country or, for a multinational firm, by region throughout the world. Customer departmentalization: organized by the different types of customers the organization serves. Functional departmentalization: organized by business functions such as finance, marketing, human resources, and production. Process departmentalization: organized by work processes necessary to complete production of goods or services. Departmentalization is the process of dividing work activities into units within the organization. There are five major ways in which companies departmentalize. Companies choose a structure based on their organization and its goals.

20 Different Forms of Departmentalization
Many companies combine the different types of departmentalization to build their structure. Lecture Enhancer: What are some potential drawbacks for a company with very rigid departmentalization?

21 Delegating Work Assignments
Delegation is the act of assigning work activities to subordinates. Providing employees with the responsibility and the necessary authority for completing tasks. Employees have accountability, or responsibility for the results of the way they perform their assignments. Authority and responsibility move down; accountability moves up. Span of management is the number of subordinates, or direct reports, a supervisor manages. Centralization: decision making is retained at the top of the management hierarchy. Decentralization: decision making is located at the lower levels. Many firms believe it enhances their flexibility and responsiveness to customer needs. There are a variety of concepts that managers must think about as they build their organizational structures. Managers will often delegate work to employees, but delegation requires responsibility, accountability, and authority. Managers must also think about how many people report to each manager. In some organizations, the span of management is wide. Depending on the type of subordinates, managers must think about their span of management. Managers must also think about who can make decisions. Is decision-making centralized among top management or is it shared throughout the organization? Decentralization allows organizations to operate more flexibly and responsively to customers.

22 Types of Organizational Structures
Line Organizations Oldest and simplest form; direct flow of authority from CEO to subordinates. Chain of command indicates who directs which activities and who reports to whom. Line-and-Staff Organizations Combines line departments and staff departments. Line departments participate directly in decisions that affect the core operations of the organization. Staff departments lend specialized technical support. Line organizations have a clear and simple chain of command. Organizations with staff functions have departments/employees that support line departments. Staff may include legal, marketing, or human resource support to an organization.

23 Line and Staff Organizations
Note the support functions of the staff. They do not have direct authority over the plant operations, but they support the department.

24 Committee Organizations
Authority and responsibility are in the hands of a group of individuals. Often part of a line-and-staff structure. Often develop new products. Tend to act slowly and conservatively. Often make decisions by compromising conflicting interests rather than choosing best alternative. A committee structure empowers all of the members instead of a single manager. Some committees act slowly and conservatively. Some committees include a diverse group of employees from across the company with different skills and expertise.

25 Matrix Organizations Project management structure that links employees from different parts of the organization to work together on specific projects. Employees report to a line manager and a project manager. Advantages: Flexibility in adapting to changes. Focus on major problems or products. Outlet for employees’ creativity and initiative. Disadvantages: Integrating skills of many specialists into a coordinated team. Team members’ permanent functional managers must adjust the employees’ regular workloads. In the matrix organization, employees have two managers. The matrix organization has become popular at high-technology and multinational corporations. The major benefits come from its flexibility.

26 The Matrix Organization
The matrix organization links employees from different parts of the organization to work together on specific projects.

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