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Management and Its Evolution Chapter 1 Management and Its Evolution McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives After reading this chapter, you should be able to: Understand the roles played by individuals, teams, and managers in carrying out company activities. Practice the four major functions of management Recognize the interpersonal, informational, and decisional roles played by top level managers. Apply the general skills needed to carry out managerial responsibilities. Integrate the major elements from the various perspectives of management theory. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

The performance of organizations depends to a large extent on how their resources are allocated and their ability to adapt to changing conditions. Successful organizations know how to manage people and resources efficiently to accomplish organizational goals and to keep those goals in tune with changes in the external environment. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Management in the New Millennium A firm can be efficient by making the best use of people, money, physical plant, and technology. It is ineffective if its goals do not provide a sustained competitive advantage. A firm with excellent goals would fail if it hired the wrong people, lost key contributors, relied on outdated technology, and made poor investment decisions. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Levels of management Strategic Managers Tactical Managers Operational Managers McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Strategic Managers The firm’s senior executives with overall responsibility for the firm. Developing the company’s goals Focus on long-term issues Emphasize the growth and overall effectiveness of the organization Concerned primarily with the interaction between the organization and its external environment. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Tactical Managers Responsible for translating the general goals and plans developed by strategic managers into specific objectives and activities. Shorter time horizon Coordination of resources These are middle managers McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Operational Managers Lower-level managers who supervise the operations of the organization. Directly involved with non-management employees Implementing the specific plans developed with tactical managers. This is a critical role to the organization. Operational managers are the link between management and non-management staff McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Management Functions Planning Organizing Leading Controlling McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. 3

Planning The management function that assesses the management environment to set future objectives and map out activities necessary to achieve those objectives. To be effective, the objectives of individuals, teams, and management should be coordinated to support the firm’s mission. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Organizing The management function that determines how the firm’s human, financial, physical, informational, and technical resources are arranged and coordinated to perform tasks to achieve desired goals. The deployment of resources to achieve strategic goals. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Leading The management function that energizes people to contribute their best individually and in cooperation with other people. This involves: Clearly communicating organizational goals Inspiring and motivating employees Providing an example for others to follow Guiding others Creating conditions that encourage management of diversity McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Controlling The management function that measures performance, compares it to objectives, implements necessary changes, and monitors progress. Many of these issues involve feedback or identifying potential problems and taking corrective action. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Management as a set of roles Day-to-day management activities are routine, orderly, and rational. These include: Interpersonal roles - communication with superiors, peers, subordinates, and people from outside the organization. Information Roles - obtaining, interpreting, and giving out information. Decisional Roles - choosing among competing alternatives. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Management as a set of skills The four basic management functions require a set of skills to be carried out properly. Because most managerial tasks are unique, ambiguous, and situation-specific, there is seldom one best way to approach them. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Management as a set of skills Four major categories of skills will help you become a good manager: Strategic Skills - the ability to see “the big picture”, focus on key objectives without getting mired in details, and having a sense what is happening inside and outside the company. Task-Related Skills - the ability to define the best approach to accomplish personal and organizational objectives. They include consideration of all resources, including time, organizational structure, financial resources, and people. They also involve the ability to prioritize, remain flexible to make necessary changes, and ensure that value is being created Top executives are usually responsible for making major strategic decisions affecting the entire organization. However, successful firms instill a strategic mentality and develop the strategic skills of individuals and teams at different levels. The interaction between the inputs provided by individuals and teams and the organization-wide perspective of senior executives greatly enhances the success of major strategic decisions. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Management as a set of skills People-Related Skills - getting work done through others and with others. Include the ability to delegate tasks, share information, resolve conflicts, be a team player, and work with people from very different backgrounds Self-Awareness Skills - Being aware of your personal characteristics can help you adapt to others and can help you understand why you react to them the way you do. These skills can help you to avoid rushed judgments, appreciate the nuances of particular situations, size up opportunities, capitalize on your personal strengths, and avoid situations in which you are likely to fail. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Skills for Managerial Success Strategic Skills Environmental assessment scanning Strategy formulation Mapping strategic intent and defining mission Strategy implementation Human resource congruency Task Skills Setting and prioritizing objectives Developing plan of action and implementation Responding in a flexible manner Creating value Working through the organizational structure Allocating human resources Managing time efficiently McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Skills for Managerial Success (continued) People Skills Delegating Influencing Motivating Handling conflict Win-win negotiating Networking Communicating Verbal Nonverbal Listening Cross-cultural management Heterogeneous teamwork Self-Awareness Skills Personal adaptability Understanding personal biases Internal locus of control McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

The Evolution of Management Thought Early Management Thought Classical Perspective Contemporary Management Perspectives Behavioral Perspective McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. 3

Early Management Thought Early ideas about management strategy Sun Tzu, The Art of War Early ideas about leadership Nicolò Machiavelli, The Prince Early ideas about the design and organization of work Adam Smith, The Wealth of Nations division of labor McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

The Operational Perspective Scientific Management Frederick W. Taylor Quantitative Management Ford W. Harris Quality Management Walter A. Shewhart Bureaucratic Management Max Weber Administrative Management Henri Fayol McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Taylor’s Four Principles of Scientific Management Scientifically study each part of a task and develop the best method of performing the task. Carefully select workers and train them to perform the task by using the scientifically developed method. Cooperate fully with workers to ensure that they use the proper method. Divide work and responsibility so that management is responsible for planning work methods using scientific principles and workers are responsible for executing the work accordingly. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Key Characteristics of Weber’s Ideal Bureaucracy Specialization of labor Formal rules and procedures Impersonality Well-defined hierarchy Career advancement based on merit McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Fayol’s 14 Principles of Management Division of work Authority Discipline Unity of command Unity of direction Subordination of individual interest to the general interest Remuneration Centralization Scalar chain Order Equity Stability and tenure Initiative Esprit de corps McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Behavioral Perspective The behavioral perspective acknowledges that psychological and social processes of human behavior can result in improvements in productivity and work satisfaction. The Hawthorne effect - when a manager shows concern for employees, their motivation and productivity levels are likely to improve. Human Relations Approach - the relationship between employees and a supervisor is a vital aspect of management. Employee motivation Leadership style McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Hawthorne Effect The discovery that paying special attention to employees motivates them to put greater effort into their jobs. (from the Hawthorne management studies, performed from 1924 – 1932 at Western Electric Company’s plant near Chicago) McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Maslow’s Hierarchy of Needs Need for Social Relations Self-Actualization Need for Self Esteem Need for Social Relations Need for Security Physical Needs McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

McGregor’s Theory X and Theory Y Leaders and managers who hold Theory X assumptions believe that employees are inherently lazy and lack ambition. A negative perspective on human behavior. Leaders and managers who hold Theory Y assumptions believe that most employees do not dislike work and want to make useful contributions to the organization. A positive perspective on human behavior. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Contemporary Management Perspectives Systems Theory Contingency Theory The Learning Organization Perspective McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Systems Theory Views the organization as a system of interrelated parts that function in a holistic way to achieve a common purpose. Systems theory concepts that affect management thinking: Open and closed systems Subsystems Synergy Equifinality McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Contingency Theory States that there is no “one best way” to manage an organization. Because what works for one organization may not work for another Situational characteristics (contingencies) differ Managers need to understand the key contingencies that determine the most effective management practices in a given situation McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

The Learning Organization The management approach based on an organization anticipating change faster than its counterparts to have an advantage in the market over its competitors. There are two ways organizations can learn: Experimental learning External learning McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.