Management – Exam Revision Notes

Organisations:

• A Distinct Purpose

• Comprised of People

• A deliberate Structure

Changing of Organisations from Traditional to Contemporary:

• Dynamic

• Flexible

• Team orientated

• Involvement Orientated

• Participative Decision Making

• Diverse Work-force

• No Time Boundaries

• Anywhere, anytime (No Fixed work location)

Top Level Managers – Organisation wide (Decisions), Conception Skills

Middle Level Managers – All between First Level and Top Level, Human Skills

First Level Managers – Manages work of non-managerial employees, Technical Skills.

Efficiency – Maximum output from Minimal input (Doing things Right)

Effectiveness – Work Activities to assist the organisation reach its goals.

Managers – Plan, Organise, Command, Control and Coordinate

Henry Fayol’s – Functions of Management:

• Planning

• Organising

• Leading

• Controlling

Top Level Middle Level First Level

Planning 22% 36% 51%

Organising 36% 33% 24%

Leading 28% 18% 15%

Controlling 14% 19% 10%

Mintzberg (1973) – Nature of Managerial Work

• Interpersonal (Liason, Leader, Figure head)

• Informational (Disseminator, Spokesperson, Monitor)

• Decision Maker (Resource Allocator, Entrepreneur, Disturbance Handler, Negotiator)

Development of Management – Adam Smith (1776) ‘Wealth of Nations’ emphasised the ‘Division of

Labour’ after the Industrial Revolution in the UK

Scientific Management

• Frederick Winslow Taylor (‘Taylorism’) 1911.

• Defined ‘One Best way’ for a job to be done.

Taylor’s Principles

• Develop a science for each element of work

• Select, Train, Teach and Develop (Minimal Training)

• Cooperation between Management and workers on Tasks

• Equal division of responsibility between management and workers.

Scientific Management Encouraged:

• Standardisation (Product, Quality, Process)

• Non-decisional Workforce Emphasised:

• Speed of Production

• Low cost Production

• Availability of an unskilled workforce.

(MacDonaldization – Modern Taylorism in the Service Sector)

General Administration Theory

Management with a focus on managing the total organisation:

• Henry Fayol (Functions and Principles of Management)

• Max Weber (Theory of Bureaucracy)

Fourteen Principles (Fayol):

• Division of Work

• Authority

• Discipline

• Unit of Command

• Unity of Direction

• Subordination of Individual Interest to General

• Remuneration

• Centralisation

• Scalar Chain

• Order

• Equity

• Stability of Tenure of Personnel

• Initiative

• Esprit de Corps

Max Weber – Developed ‘Theory of Authority’, structure and Relations

‘Ideal’ Type of organisation (Bureaucracy) based on:

• Division of Labour

• Authority Hierarchy

• Formal Selection

• Formal Rules and Regulation

• Impersonality

• Career Oreintation

GAT Advantages:

• Foundation for Later development of Management Theory

• Identified processes, functions and skills GAT Disadvantages:

• For Stable and simple rather than dynamic and complex organisations

• Overlooked needs of workers (i.e. Job Satisfaction).

Organisational Behaviour – Mintzberg: ‘Management is about influencing action’

Hawthorne Studies (1920s -1930s), Elton Mayo:

• Individual work behaviour set by social norms/group standards

• Behaviour & Attitude intertwined

• Money of less importance

Muldoon (2012) Hawthorne Legacy

Value

• Focused on workers interactions

• Scientific and Statistical

• Combined multiple fields

Criticism

• Nothing new (Ignored existing knowledge)

• Did not consider outside influence

• Manipulative techniques

Hawthorne Studies Recognised:

• Sources of Individual Job Satisfaction and dissatisfaction

• Different ways of Supervising workers

• Group is important

• Managers need good interpersonal skills.

Human Relations Movement:

• Satisfied workers are productive

• Shaped by person philosophy (Maslow, Gregor)

Planning

1. Organisational Goals and Objectives

2. Strategy to achieve those Goals

3. Plan to integrate strategy into operational activities

Formal and Informal Planning

Planning provides:

• Direction

• Reduces uncertainty

• Reduces redundancy and waste

• Establishes goals and standards for controlling.

Goals – Traditionally set at the Top and then broken down into sub-groups

Steps in Goal Setting

1. Review Organisations Mission

2. Evaluate Available Resources

3. Determine Goals individually or with other input

4. Set Goals and Communicate Goals

5. Review; See if Goals are being met.

Contingency Factors in Planning

a. Level in the Organisation

i. High Level = Strategic

ii. Lower Level = Operational

b. Degree of Environment Uncertainty

i. High Uncertainty = Specific plans, but flexible.

c. Length of Future Commitments

Criticisms of Planning:

• Creates Rigidity

• Not of Dynamic Environments

• Hinders Intuition and creativity

• Creates Focus on today’s competition, not future survival

• Only planning, is not efficient.

Decision Making Process

1. Identifying a Problem (Symptom or Problem)

2. Identifying decision criteria

3. Allocating Weights (Prioritising)

4. Developing Alternatives

5. Analyse Alternatives

6. Selecting an Alternative

7. Implementing the Alternative

8. Evaluating decision Effectiveness

Decisions

a. Rationality

i. Choices which are consistent and value Maximising.

b. Intuition

i. Previous Experience ‘ Gut –Level feeling’

ii. Accumulated Judgement

c. Bounded Rationality

i. Within parameters of a simplified model

ii. Bounded by limitations

iii. ‘Good enough’ decisions (Sacrificing)

Structures Problems and Decisions – Easily defined problems, decisions handled by a routine

approach (Programmed, ready, short).

Unstructured Problems and Decisions – New or Unusual problems , non programmed decisions with a

custom approach (Incomplete, long, vague, upper levels).

Decision Making Conditions (Errors and Bias in Decision Making)

• Certainty

• Risk

• Uncertainty

Organising

• Structuring Work to accomplish organisational goals

• Formal Arrangement of Jobs – Organisational Design

Organisational Design Elements

a. Work Specialisation (Ford, Taylor, Smith)

i. Small, Simple, Separate Tasks

b. Departmentalisation

i. Functional

ii. Geographic

iii. Product

iv. Process

v. Customer

c. Chain of Command

i. Authority (Right to give orders)

ii. Responsibility

iii. Unit of Command (Single vs Multiple)

d. Span of Control

i. Number of subordinates managers can direct effectively and efficiently.

e. Centralised / De-Centralised

i. Centralised – Decisions at upper level, stable environment (Inexperienced lower

managers) i.e. Fast food chains.

ii. De-Centralised – Lower level provides input or actually makes decisions, complex

environment (Experience lower level managers) i.e. Hotel Chains –Marriot, Hilton

f. Formalisation

i. High – Highly Regulated (i.e. Military)

ii. Low – Lowly Regulated (i.e. Google)

Organisational Design

• Mechanistic (Rigid & Tightly Controlled) – Centralised

• Organic (Highly Adaptive and Flexible) – De-centralised.

Strategy

• Innovation (Organic)

• Cost Minimisation (Mechanistic)

• Imitation (both)

Size – Organic to Mechanistic with growth (Exceptions = Google etc)

Technology:

• Unit (Organic)

• Mass (Mechanistic)

• Process (Organic) (Traditional or Contemporary)

Leading – Ability to Influence Others (May not be managerial Authority)

• Leadership – Process of influencing a group to achieve goals.

Trait Theories

• Leaders are born not trained

• Characteristics: i. Intelligence

ii. Charisma

iii. Decisiveness

iv. Enthusiasm

v. Strength

vi. Bravery

vii. Integrity and Self-Confidence

Seven Main Traits (Did not always predict the ‘right’ people for leadership roles):

a. Drive

b. Desire to lead

c. Honesty and Integrity

d. Self-Confidence

e. Intelligence

f. Job-Relevant Knowledge

g. Extra-version

Behavioural Theories – Based on the best leadership styles identified, leader could be trained.

• Main Studies o University of Iowa

§ Democratic, Autocratic, Laissez-Fair

o University of Ohio State

§ Consideration vs Initiating Structure

o University of Michigan

§ Employee vs production orientated

o Managerial Grid

§ Concern for People vs Concern for Production

Contingency Theories (Ability to ‘Read’ and ‘Adapt’)

• Fiedler Contingency Model (Control or Influence) o Two Types:

§ Task Orientated

§ Relationship Orientated

• Three Contingency dimensions (Key to leadership effectiveness) o Leader-member relations

o Task structure

o Position Power

(However, leaders cannot change their leadership style)

Hersey Situational Leadership Model

• Relationship behaviour or Task Behaviour o S1 Telling

o S2 Selling

o S3 Participating

o S4 Delegating

• Readiness Based on: o Employee Ability

o Willingness

o Confidence

Leaders and Power

Sources of Power

Legitimate

Power of Position Coercive

Reward

Expert Power of Person

Referent

Trust (Developing)

• Credibility – Degree to which followers perceive someone as honest, competent and able to inspire.

• Five Dimensions: o Integrity

o Loyalty

o Competence

o Openness

o Consistency

• Ethics - part of leadership o Moral virtue, serving others, being honest.

Motivation – Process by which a person’s efforts are energised, directed and sustained towards

attaining a goal.

a. Energy – measure of intensity or drive

b. Direction – towards organisational goals

c. Persistence – effort to achieve those goals

Types of Motivation:

• Intrinsic (Deep approach) – inner desire of the field or job to engaged (Enjoyment)

• Extrinsic (Surface Level Approach) – ‘Stepping Stone’ approach, needs to be done (i.e. Working for reward).

Content Theory

• Satisfying employees needs creating employee satisfaction

• Different needs for different employees

Hertzberg’s Two Factor Theory (Motivation-Hygiene Theory)

• Rewards o Intrinsic derived Personally – Job satisfaction

o Extrinsic are awarded by another person

Motivators Hygiene

Achievement Supervision

Recognition Working Conditions

Work Itself Salary

Responsibility Status

Advancement Security

Growth Relationships

Job Satisfaction Job Dissatisfaction

McClelland’s Three needs Model

• Need for Achievement (nAch)

• Need for Power (nPow) – to Influence Others

• Need of Affiliation (nAff) – Interpersonal Relationships

Process Theories of Motivation (More Contemporary)

• Assist the understanding of how motivation is energised and sustained.

Equity Theory – Employees compare jobs by job inputs and outcomes and refers it and corrects the

inequity.

• Distributive - Perceived fairness of amount and allocation of rewards, which highly

affects employee satisfaction.

• Procedural - Process used to determine the distribution of rewards, affects employee commitment.

Expectancy Theory

• Individuals act in certain ways based on the expectation that the act will be followed by a given outcome.

• Three Variables: 1. Expectancy – Effort-performance Linkage

2. Instrumentality – Performance –reward Linkage

3. Valence – Attractiveness of Reward

• Individual Effort to Individual Performance = Expectancy

• Individual Performance to Organisational Rewards = Instrumentality

• Organisational Rewards to Individual Goals = Valence

Issues with Motivation

• Cultural Challenges

• Unique groups of Workers (Flexibility)

Suggestions for Motivating

• Recognise individual differences

• Goals to challenge employees (Attainable Goals)

• Individualise Rewards (Link to Performance)

• Equitable

• Monetary

Controlling – Process of Monitoring, Comparing and correcting work performance

• Allows managers to know whether goals are being met.

• Protects the organisation’s assets

Control Process

1. Measuring Actual Performance

2. Comparing Actual Performance against Organisation’s Standards

3. Taking Managerial Action (Goal might be too high or low etc).

Measuring:

• Personal Observation or Statistical Reports etc.

• Employee Satisfaction – Turnover and Absenteeism etc.

Organisational Performance

• Better Asset Management

• Increased ability to provide customer value

• Impact on Organisational Reputation. Measurement:

• Productivity

• Effectiveness

• Rankings (Forbes, BRW etc.)

Dysfunctional Effects of Control

• Consumes Resources

• “Red Tape”

• Inappropriate Goals

• Decreases Satisfaction

• Increases absenteeism

• Increases Turnover

• Creates Stress

Contemporary Issues

• Adjusting for cross-cultural difficulties

• Workplace privacy vs workplace monitoring

• Employee theft

• Workplace violence

• Controlling customer interactions

• Corporate Governance

POLC in Changing Environment

Views on Management:

• Omnipotent View – Managers are directly accountable for the success or failure of an organisation

• Symbolic View – Managers only have a limited affect on substantive organisational outcomes, because of the factors outside the managers control.

Parameters of Discretion

• External Environment o Specific – Factors directly affecting the organisation

§ Customers, Suppliers, Competitors, Pressure Groups/Government

Agencies.

o General – Factors (Broad) that indirectly impact the organisation

§ Economic, Political, Social-cultural, Technology, Demographics

Environmental Uncertainty

• Degree of Change o Dynamic (e.g. Apple/Microsoft)

o Stable (e.g. Coles/Safeway)

• Degree of Complexity o Simple (e.g. Monash Bookshop)

o Complex (e.g. eBay/Amazon)

• Omnipotent View relates to Simple and Stable environments

• Symbolic View relates to Complex and Dynamic environments

Organisational Stakeholders

• Any internal/external parties affected by the organisation.

• Important because they can affect the organisational outcomes.

Manage Stakeholder Relationships

1. Identify Key Stakeholders

2. Explore interest or concerns of each stakeholder

3. Explore interest or concerns to the organisations decisions and actions

4. Develop specific approaches to manage each stakeholder relationships

Challenges of Managing in a Modern Society

• Diversity – differences amongst people (age, race, gender etc)

Obligation to Manage Diversity

• International Labour Organisation – (1 of 4 core labour Standards = Elimination of discrimination in employment and occupation).

• Need to understand different consumers

• Necessary for continuous innovation

Multi-Cultural Organisation

• Organisations that actively promote and embrace pluralism and respect for diversity o Equality

o Mentoring and Support Groups

o Absence of Prejudice

o Minimal Intergroup conflict

Diversity Management and POLC

• Planning o Recruitment Goals

o Organisational goals

o Individual Workloads

• Organising o Allocation of resources across Gender, Age and cultural groups

• Leading o Percentage of minority groups in leadership positions

• Controlling o Measuring employee performance subject to opportunities and individual

circumstances

Social Identity Theory

• States that individuals favour their ‘ingroup’ at the expense of ‘outgroups’

• Easer to communicate

• Share social identity.

Social Dilemmas of workforce diversity

a. Individual Participation

b. Managerial Participation

c. Organisation Participation

Solutions to Dilemmas

• Aligning individual interest with Organisational diversity initiatives, restructure incentives.

• Develop measurable objectives for diversity

• Goals through cooperation

• Work environment which encourages and facilitates communication between groups

• Teams and groups kept small. Ethical Considerations

• Job design

• Workload

• Flexibility

• Mentoring and Career Assistance

• Equal Opportunity

• Inclusive work environment

• Leave Entitlements.