Managing Chapter 01 Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

Globalization  Today’s enterprises are global, with offices and production facilities in countries all over the world  Means that a company’s talent can come from anywhere  Internet makes globalization inevitable 1-2

Technological Change: The Internet  Marketplace  Means for manufacturing goods and services  Distribution channel  An information service 1-3

Technological Change: The Internet  Drives down costs and speeds up globalization.  Improves efficiency of decision making.  Facilitates design of new products, from pharmaceuticals to financial services 1-4

Knowledge Management  Knowledge management  Practices aimed at discovering and harnessing an organization’s intellectual resources  Knowledge workers 1-5

Collaboration across “Boundaries”  Requires productive communications among different departments, divisions, or other subunits of the organization 1-6

Collaboration across “Boundaries”  Companies today must motivate and capitalize on the ideas of people outside the organization e.g. its consultants, ad agencies, and suppliers 1-7

Managing for Competitive Advantage InnovationQuality ServiceSpeed Cost Competitiveness 1-8

Managing for Competitive Advantage 1-9  Innovation  the introduction of new goods and services  often the most important innovation is not the product itself, but how it is delivered

Managing for Competitive Advantage  Quality  The excellence of your product (goods or services)  Historically, quality referred to attractiveness, lack of defects, reliability, and long-term dependability 1-10

Managing for Competitive Advantage  Today quality is about preventing defects and having continuous improvement in how the firm operates 1-11

Managing for Competitive Advantage  Service  The speed and dependability with which an organization delivers what customers want 1-12

Managing for Competitive Advantage  Speed  Fast and timely execution, response, and delivery of results. 1-13

Managing for Competitive Advantage  Cost competitiveness  Keeping costs low to achieve profits and be able to offer prices that are attractive to consumers. 1-14

The Functions of Management  Management  The process of working with people and resources to accomplish organizational goals  Efficient, effective 1-15

The Functions of Management  Planning  Systematically making decisions about the goals and activities that an individual, a group, a work unit, or the overall organization will pursue  analyzing current situations, anticipating the future, determining objectives, deciding in what types of activities the company will engage 1-16

The Functions of Management  Organizing  assembling and coordinating the human, financial, physical, informational, and other resources needed to achieve goals  specifying job responsibilities, grouping jobs into work units, marshaling and allocating resources, 1-17

The Functions of Management  Leading  stimulating people to be high performers  Controlling  monitoring performance and making needed changes. 1-18

Management Levels and Skills 1-19 Top Level Managers Middle-Level Managers Frontline Managers

Management Levels and Skills  Top-level managers  Senior executives responsible for the overall management and effectiveness of the organization.  Middle-level managers  Managers located in the middle layers of the organizational hierarchy, reporting to top-level executives. 1-20

Management Levels and Skills  Frontline managers  Lower-level managers who supervise the operational activities of the organization 1-21

Transformation of Management Roles and Activities 1-22 Table 1.1

Managerial Roles: What Managers Do 1-23 Table 1.2

Management Skills  Technical skill  The ability to perform a specialized task involving a particular method or process 1-24

Management Skills  Conceptual and decision skills  Skills pertaining to the ability to identify and resolve problems for the benefit of the organization and its members. 1-25

Management Skills  Interpersonal and communication skills  People skills; the ability to lead, motivate, and communicate effectively with others. 1-26

You and Your Career  Emotional intelligence  The skills of understanding yourself, managing yourself, and dealing effectively with others.  Social capital  Goodwill stemming from your social relationships 1-27

You and Your Career 1-28 Be both a specialist and a generalist Be self-reliantBe connected Actively manage your relationship with your organization Survive and thrive

Keys to Career Management 1-29 Table 1.3

Common Practices of Successful Executives  They ask “What needs to be done?” rather than “What do I want to do?”  They write an action plan. They don’t just think, they do, based on a sound, ethical plan.  They take responsibility for decisions.  They focus on opportunities rather than problems. 1-30

Evolution of Management  Throughout history most managers operated strictly on a trial-and-error basis  The management profession as we know it today is relatively new  wide swings in management approaches over the last 100 years  parts of each approach have survived and been incorporated into modern perspectives on management

BUREAUCRATIC MANAGMENT  Max Weber – late 19 th century Germany  RULES – uniformity/stability  IMPERSONALITY – fairness for clients and employees  DIVISION OF LABOR – functional specialization  HIERARCHICAL STRUCTURE – decentralization  AUTHORITY STRUCTURE – rational-legal authority  LIFELONG CAREER COMMITEMENT  RATIONALITY – logical and scientific

BUREAUCRATIC MANAGEMENT  BENEFITS  Consistency  Jobs clearly defined  Expertise/specialization  Continuity  Efficient under conditions of stability  COSTS  Rigid rules and red tape  Protection of authority  Slow decision making  Incompatibility with changing technology  (Incompatibility with worker values)

ASSESSING BUREAUCRATIC MANAGEMENT  MOST EFFECTIVE WHEN:  1. Standardized information/production requiring efficiency  2. Needs of customers known and not changing  3. Technology is routine and stable  4. Need to coordinate activities of large numbers of employees

SCIENTIFIC MANAGEMENT  Frederick W. Taylor – early 20 th century  Methods engineering/time and motion studies  Basic observations  Great loss through inefficiencies  Remedy in systematic management  Best management is a true science  Standardization of job performance and uniformity of behavior  Impersonalization and replaceability of workers is key to efficiency  Motivation through monetary incentive systems

SCIENTIFIC MANAGEMENT  STUDIES AT BETHLEHEM IRON WORKS IN 1898 REPORTED BY TAYLOR  Picked Schmidt (Nolls) as his subject  Trotted to and from work (over a mile)  Had purchased land and was building a house  Had reputation of being “close with a dollar”  Increased from 12 ½ to 47 tons  Pay increased from $1.15 to $1.85  Earlier studies had failed because of social influences

SCIENTIFIC MANAGEMENT  Frank and Lillian Gilbreth  Developed tools for scientific management – time and motion studies  Trained industrial engineers  Popular subjects for newsreels in the 1920s  “Cheaper by the Dozen” movie (not the new one)  Economic needs versus other needs

ADMINISTRATIVE MANAGEMENT  Henri Fayol – French industrialist – 14 principles  1. Division of labor – specialization  2. Authority and responsibility – delegation  3. Discipline – clear rules and consequences for violating  4. Unity of command – one boss for each employee  5. Unity of direction – similar activities under one manager  6. Subordination of individual interests to the common good  7. Remuneration – fair pay  8. Centralization – power and authority at the top

ADMINISTRATIVE MANAGEMENT  9. Scalar Chain – from the lowest employee to the top  10. Order – human and materials coordinated  11. Equity – managers should be fair with subordinates  12. Stability and tenure of staff – avoid high turnover  13. Initiative – free to take initiative  14. Esprit de corps – team spirit, sense of unity

BEHAVIORAL VIEWPOINT  Chester Barnard’s Acceptance Theory of Authority  Different from traditional view of authority that authority flows from top down  Effective authority requires willingness of employees to follow management’s orders  Zone of indifference

HAWTHORNE STUDIES  Lighting studies by industrial engineers  Productivity continued to increase even when lighting was reduced below starting levels  Motivational factor  Relay Assembly Test Room Studies  Five workers plus supervisor  Error in text concerning financial incentives  Group incentive plan  Mayo (not a researcher in the study) concluded that the results supported his theories concerning work groups replacing family

HAWTHORNE STUDIES  Five workers not randomly selected  Two workers replaced because not cooperating  Replacements wanted to be in the experiment because of the financial incentives – one of these became the informal leader  Workers formed tightly knit, cohesive work group with high production goals operating under informal, participative leadership plus a strong informal leader within the group  If all of the results are considered, the behavioral approach has consistencies with the original scientific management studies

Quantitative Management  Teams of quantitative experts tackle complex issues facing large organizations  Helps management make a decision by developing formal mathematical models of the problem  Personalities  military planners in World War II  mathematics and u-boats –Bletchley Park

Quantitative Management (cont.) Application of quantitative analysis to management decisions Developed specific mathematical methods of problem analysis Helped managers select the best alternative among a set Models neglect nonquantifiable factors Managers not trained in these techniques may not trust or understand the techniques’ outcomes Not suited for nonroutine or unpredictable management decisions Key concepts Limitations Contributions

Systems Theory Organization is viewed as a managed system Management must interact with the environment Organizational goals must address effectiveness and efficiency Organizations contain a series of subsystems There are many avenues to the same outcome Synergies enable the whole to be more than the sum of the parts Recognized the importance of the relationship between the organization and the environment Does not provide specific guidance on the functions of managers Key concepts Limitations Contributions

Contingency Perspective Situational contingencies influence the strategies, structures, and processes that result in high performance There is more than one way to reach a goal Managers may adapt their organizations to the situation Identified major contingencies Argued against universal principles of management Not all important contingencies have been identified Theory may not be applicable to all managerial issues Key concepts Limitations Contributions