1. part 6 PowerPoint Presentation by Charlie Cook Copyright © 2003 South-Western College Publishing. All rights reserved. All rights reserved. Professional Management in the Growing Firm 18 Small Business Management 12e

2. Copyright © by South-Western College Publishing. All rights reserved. 18–2 Looking Ahead After studying this chapter, you should be able to: 1. Discuss the distinctive features of small firm management. 2. Identify the various kinds of plans and approaches to planning. 3. Discuss the entrepreneur’s leadership role. 4. Describe the nature and features of an organizational structure for small businesses. 5. Discuss the way in which control is exercised in a small firm.

3. Copyright © by South-Western College Publishing. All rights reserved. 18–3 Looking Ahead (cont’d) 6. Describe the problem of time pressure and suggest solutions. 7. Explain the various types of outside management assistance.

4. Copyright © by South-Western College Publishing. All rights reserved. 18–4 Issues Affecting Small Firm Management Resource Constraints Professional Management Founders as Managers Managerial Weakness Small Firm Management The Manager as Negotiator Firm Growth and Management

5. Copyright © by South-Western College Publishing. All rights reserved. 18–5 Distinctive Characteristics of Small Firm Management Professional Manager –A manager who uses systematic, analytical methods of management. Founders as Managers –Are not always good organizational members. –Have difficulty fitting into conventional roles. –Have a different orientation from that of professional managers.

6. Copyright © by South-Western College Publishing. All rights reserved. 18–6 Firm Growth and Management

7. Copyright © by South-Western College Publishing. All rights reserved. 18–7 Fig. 18.1 Stage 3 Intermediate Supervision Stage 4 Formal Organization Stage 2 Player-Coach Stage 1 One-Person Operation Organizational Stages of Small Business Growth

8. Copyright © by South-Western College Publishing. All rights reserved. 18–8 Managing Versus Doing STAGE 1STAGE 2STAGE 3STAGE 4 One-Person Operation Player-Coach Intermediate Supervision Formal Organization Time spent managing Time spent doing

9. Copyright © by South-Western College Publishing. All rights reserved. 18–9 The Manager as Negotiator Negotiation –Two-way communication used to resolve differences in needs, goals, or ideas. –Win-lose negotiations  One party must win and the other party must lose. –Win-win negotiations  Both parties find a solution that satisfies both parties’ basic interests.  End result of negotiations promotes long-term continuing relationships.

10. Copyright © by South-Western College Publishing. All rights reserved. 18–10 The Nature of Managerial Work ControllingControlling PlanningPlanningLeadingLeading OrganizingOrganizing Managerial Work

11. Copyright © by South-Western College Publishing. All rights reserved. 18–11 Planning Activities The Benefits of Formal Planning –Improved productivity –Better focus on goal attainment –Increased credibility with stakeholders Planning Time –“Tyranny of the urgent” –Planning requires discipline –Planning should not be postponed Employee Participation –Employees are an excellent planning resource

12. Copyright © by South-Western College Publishing. All rights reserved. 18–12 Planning Activities: Types of Plans

13. Copyright © by South-Western College Publishing. All rights reserved. 18–13 Leading and Motivation Personal Involvement of the Entrepreneur –Creates a significant personal relationship with employees based on loyalty and respect. –Directly influences employees’ understanding of how the firm operates (e.g., its ethics). –Makes the firm attractive to new employees.

14. Copyright © by South-Western College Publishing. All rights reserved. 18–14 Leading and Motivation (cont’d) Leadership That Builds Enthusiasm –Empowerment  Giving employees authority to make decisions or take actions on their own –Work teams  Groups of self-managed employees with the freedom to function without close supervision –Benefits  Workers are more satisfied with their working environment  Productivity and profitability are enhanced

15. Copyright © by South-Western College Publishing. All rights reserved. 18–15 Effective Communication Stimulating Two-Way Communication –Conduct periodic performance review sessions to get employee feedback –Use bulletin boards to keep employees informed about developments affecting them –Make suggestion boxes available to solicit employees’ ideas –Hold staff meetings to discuss current issues and problems

16. Copyright © by South-Western College Publishing. All rights reserved. 18–16 Creating Organizational Structure Structure of the Firm –Structure evolves as the firm evolves. –Growth creates the need for structural change Chain of Command –The official, vertical channel of communication in an organization. –Unity of Command  A situation in which each employee’s instructions come directly from only one immediate supervisor  Entrepreneurs’ personal relationships with employees creates problems in complying with the chain and the unity of command in their firms.

17. Copyright © by South-Western College Publishing. All rights reserved. 18–17 Creating Organizational Structure Line organization –A simple organization in which each person reports to one supervisor. Line and staff organization –An organizational structure that includes staff specialists who assist management. –Line activities  Activities contributing directly to the primary objectives of the firm. –Staff activities  Activities that support line activities

18. Copyright © by South-Western College Publishing. All rights reserved. 18–18 Fig. 18.3 President Sales Manager Production Manager Financial/Office Manager SalespeoplePlant EmployeesOffice Employees Line Organization

19. Copyright © by South-Western College Publishing. All rights reserved. 18–19 Fig. 18.4 President Human Resources Manager Sales Manager Production Manager Financial/Office Manager SalespeoplePlant EmployeesOffice Employees Assistant to the President Line-and-Staff Organization

20. Copyright © by South-Western College Publishing. All rights reserved. 18–20 Factors Determining Optimum Span of Control Greater Number of Subordinates Simple work Very experienced workers Superior with much ability Fewer Subordinates Complex work Inexperienced workers Superior with limited ability More Subordinates Moderately difficult work Moderately experienced workers Superior with moderate ability

21. Copyright © by South-Western College Publishing. All rights reserved. 18–21 Delegation of Authority –Granting to a subordinate the right to act or make decisions –Benefits of delegation  Frees up superior to perform more important tasks  Develops subordinate’s skills  Improves two-way communications

22. Copyright © by South-Western College Publishing. All rights reserved. 18–22 Measuring Performance Exercising Control Establishing standards Planning and Goal Setting Taking Corrective Action

23. Copyright © by South-Western College Publishing. All rights reserved. 18–23 Fig. 18.5 Stages of the Control Process

24. Copyright © by South-Western College Publishing. All rights reserved. 18–24 Time Management The Problem of Time Pressure –Many owner-managers work 60-80 hours per week. –Effect of overwork is inefficient work performance. Time Savers for Busy Managers –Effective use of time (time management)  Analyze how time is normally spent  Eliminate practices that waste time  Carefully plan available time  Use a daily planner to prioritize activities  Don’t avoid unpleasant or difficult tasks  Limit conference and meeting times

25. Copyright © by South-Western College Publishing. All rights reserved. 18–25 Outside Management Assistance Student Consulting Teams Service Corps of Retired Executives (SCORE) Small Business Development Centers (SBDCs) Management Consultants Entrepreneurial Networks Other Business and Professional Services Business Incubators

26. Copyright © by South-Western College Publishing. All rights reserved. 18–26 Fig. 18.6 Services Provided by Business Incubators to New Firms