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Lecture notes, lectures 1-11

Principles of Management (Macquarie University)

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Who are managers and where do they work?

- Managers: individuals who work in an organisation directing and overseeing
the activities of other people.

- Organisation: deliberate arrangement of people brought together to
accomplish a specific purpose.
- 3 Characteristics of organisations

Goals • Have a distinct purpose

• Achieve goals through people

People who engage in activities and

• Deliberate & systematic structure

Structure that defines & limits behaviours
• Rules and regulations guide

- The operation system creates value by transforming inputs into finished goods
and services.

- People - Goods
- Technology TRANSFORMATION - Services
- Capital PROCESS 
- Equipment
- Materials
- Information

How are managers different from non managerial employees?

Non-managerial employees: people who work directly on a job and have no

responsibility overseeing the work of others.
Eg: Sales and services staff. Can be called team members, associates.

Managers: individuals who direct activities of others within organisations

They instruct, train, and check performance.

* Note: Non managerial employees do their own work, managers are responsible for

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What titles do managers have?

Managers  Top Managers: Make decisions about the direction of org.
Middle Eg: president, chief executive officer, vice president
Managers  Middle managers: Manage the activities of other managers
Eg: district manager, division manager
First-line Managers  First-line Managers : responsible for directing non-
managerial employees
Non-managerial Employees Eg: supervisor, team leader

What is management?
Management: process of getting things done effectively and efficiently with and
through other people
Process: set of ongoing and interrelated activities required to achieve an outcome.
Primary activities of functions that managers perform
Effectiveness: Doing the right things
Efficiency: getting the most output from the least amount of inputs (people, money
and equipment).
*Goal-Low waste, high attainment

What do managers do?

 Functions approach
-PLANNING : define org purpose and how to achieve it
-ORGANISING : arranging and structuring work to accomplish org goals
-LEADING: directing work activities of others whilst motivating and using effective
-CONTROLLING: monitoring, comparing & correcting work performance,

 Roles approach
• INTERPERSONAL ROLE: involve people
- Figurehead- symbolic head performing legal/social duties.
Eg: signing legal docs, greeting visitors
- Leader- responsible for motivation of subordinates, training and staffing.
Eg: performing all activities
- Liaison – maintain network of people who provide favours and information
Eg: acknowledge mail

• INFORMATIONAL ROLE: collecting, receiving and disseminating info.

- Monitor- seek and receive wide variety of internal and external info to better
understand business.
Eg: reading periodicals and reports
- Disseminator- transmits info from outside or subordinates to the org
Eg: meetings phone calls
- Spokesperson – transmits info regarding plans, policies, results to outsiders.
Eg: board meeting

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• DECISION ROLE: entail making decisions or choices

- Entrepreneur –searches environment for opportunities and improvement
Eg: organising strategy and review sessions to develop new programs
- Disturbance handler- handles corrective action when disturbances arise
Eg: organising strategy and review sessions that involve disturbances.

- Resource allocator – (as it sounds)

Eg: scheduling, requesting authorisation

- Negotiator- representing organization at major negotiations.

Eg: participate in union contract negotiations

 Skills approach (characteristics needed)

- CONCEPTUAL SKILLS: Used to analyse complex situations
- INTERPERSONAL SKILLS: used to communicate, motivate, mentor, delegate.
Working well in groups and as an individual.
- TECHNICAL SKILLS job specific knowledge and techniques (know about
industry too)
- POLITICAL SKILLS: used to build a power base and establish connections.

* Must also have motivation to manage

Is the managers job universal?

Job dependant of 4 factors:

1)Level in organisation
Top managers do more planning than supervisors & first level mangers to more
leading. (In terms of PLOC)

2)Size of organisation
 Small businesses (5-19) – emphasis on spokesperson
Medium (20-199)
 Large (200+) – managers mostly resource allocators.

3)Profit vs non profit

- performance measured on different objectives
- profit businesses  focus on efficiency in minimising costs & effectiveness s in
generating revenues
- non profit businesses  focus on efficiency in minimising costs & effectiveness in
delivering assistance to as many people as possible.

4) National boarders
Concepts need to be modified in other global environments.

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Why formally study management?

In order to influence human behaviour, managers must understand it.

Studying management helps in deciding which approaches are most useful and
appropriate to a businesses needs.
Anthropology : helps managers understand differences in fundamental values,
attitudes and behaviours within orgs and diff countries.
Economics: understand economy
Philosophy: values and ethics, legitimate authority and linking rewards to
Political science: conflict and power
Psychology: motivation, leadership, trust, employee selection
Sociology: how social changes alter future markets

What factors are reshaping and re-driving management?

- Changing workplace - Global economic uncertainties
- Ethical an trust issues - Changing technology

Why is innovation important to he managers job?

Zappos example:
-“Nothing is more risky than not innovating”
- They deliver high online customer services
- Given $2000 bonus to leave company if not tabbing into Zappos culture of

History of management theory

• (3000-2500BC) Egyptian pyramids materials and tasks needed to be organised

• (1776) Adam Smith -division of labour ^ productivity
EARLY • (1780s-mid1800s)Industrial Revolution brought the need for demand forcasts & ensuring adequate supplies.

• (1911) Frederick Taylor Scientific management - determine the ONE best way to do a job.
• (1916-1947) Henri Fayol & Max Weber --> general administrative theory
• Rules and principles were developed that would be taught and used in a variety of settings

• Boost productivity recognising the needs of workers beyond pay (physically and mentally) Eg: meal breaks, rest breaks
• Mary Follett - Power with rather than power over

• Focuses on statistics, information models


• focuses on learning and adaptation

• (1950s) Total Quality management - philosophy devoted to continual improvement as customer needs are responded to.
• (1960s) Contingency approach- recognises that orgs and employees are different and require differentways of managing

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How do changing environments affect organisations?

Systems theory of organisations

Systems Theory: sees an organisation as a set of interrelated parts that
function together to achieve a common purpose

An organisation system has 5 components:

1) Inputs – raw material, human and informational resources
2) Transformation process - activities used to transform inputs into outputs
3) Outputs - organisational products
4) Feedback – about the outputs
5) The environment - provides feedback

What determines environmental uncertainty?

 Environmental uncertainty: how well mangers can understand or predict the

changes and trends in the environments affecting their organisation.

 Environmental uncertainty determines attention to conditions and trends &

responsiveness to new information and circumstances.

 Three aspects determining how uncertain the environment is:

1) Dynamism
The rate and predictability of change in the organisations external environment
Dynamic environment: quick changes
 Stable environment: changes occur slowly

2) Environmental complexity
Determined by the number of external factors affecting the organisation
 Simple environment: affected by few factors
 Complex environment: influenced by many factors

3) Resource availability
How abundant are critical resources in an organisations external environment
 Abundant resources: plenty of resources
 Scarce resources: few resources

Simple environment Complex & dynamic environment

+ +
abundant resources scarce resources
+ +
slow change quick change
= =
LOW environment uncertainty HIGH environment uncertainty.

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What is the external environment of an organisation?

 External organisational environment – forces and conditions outside the

organisation that can affect it.
 General and specific environment

 General environment

General environment: consists of broad sociocultural, technological, economic, political/legal

and global conditions

SOCIOCULTURAL  Culture characteristics

DIMENSION - Customs, values, tastes, attitudes, behaviours in society
- Determine what society is most likely to value:
Eg: global warming, flexible work arrangements
 Demographic conditions
- Physical characteristics of the population such as gender, average age,
level of education, geographic dispersal, income and household

- Demographic characteristics affect markets for organisational

products and services and organisational staffing
 Methods
- Used to convert resources (raw materials, info, labour) into products and
- Advancements can change product or process
ECONOMIC  Type of economic system the country operates under
DIMENSION - Capitalist/socialist
 Current economic conditions
- Current interest rate
- Level of inflation
- Levels of unemployment
 Economic cycles
- Speed and strength of growth/decline cycles
POLITICAL/LEGAL  General conditions and stability
DIMENSION - well established, stable/unstable
 Government regulation
- OH&S legislation
- Environmental protection
- Consumer protection & safety
- Import and export activities
- Employment practices
 Impact of government spending on economic environment
allocation of funds
GLOBAL  Events or changes that originate in foreign countries
- Global warming
- Internet

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 Forces and developments having a global impact

- Transportation and communication technology

Global organisation
An org is considered global if it:
 Exchanges goods and services with consumers in other countries
 Uses managerial and technical employee talent from other countries
 Uses financial sources and resources outside their home (financial
Eg: Avon, McDonalds, Law enforcement, medical services

Managers need to understand countries differences in social context or culture.

What is GLOBE? How can it assist managers in global firms ?

G- lobal
L- eadership

 9 dimensions that help managers understand societal issues:

1) UNCERTAINTY AVOIDANCE: society's reliance on social norms

and procedures to alleviate the unpredictability of future events .

2) POWER DISTANCE: degree to which power is unequally shared.

3) INDIVIDUALISM/COLLECTIVISM: degree to which individuals are

integrated into groups
4) ASSERTIVENESS: degree to which society encourages people to be
tough, confrontational, assertive or competative vs modest.

5) FUTURE ORIENTATION: encouraging planning, delaying


6) GENDER DIFFERENTIATION: gender role differences

7) IN GROUP COLLECTIVISM: pride in membership in small groups

(family, friends, org)

8) PERFORMACE ORIENTATION: encouraging group members for

performance and improvement - rewards

9) HUMANE ORIENTATION: reward for being fair, generous, caring

and kind to others

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 Specific organisation

How do the following affect organisations..?

Specific organisation: the stakeholders of the business, that is, anyone who affects or is affected by the
achievement of the organisations objectives.
Factors in the specific environment have a direct and immediate effect on operations and performance

CUSTOMERS  Def: people and orgs that acquire goods/services from the org for exchange for
 They influence product:
- type,
- quality
- prices
COMPEITTORS  Def: individuals or orgs within the same industry whom it competes for
resources with.
 Offer substitutes that customers see as providing the same value.
 They influence:
- Products and prices
- Costs and availability of supplies
- Access to distribution channels
- Profitability
SUPPLIERS  Def: companies and individuals who provide the organisation with input
 Input: material, physical, human, financial, informational resources and business
 Determine input:
- quality
- availability
- cost
 Influence:
- product and service quality & production capacity
- competitiveness
- profitability
 Supplier dependence: the extent orgs rely on a particular supplier. Input
importance & supplier availability. (^ input importance=^dependence)
 High supply dependence = suppliers can set their own business terms.
EMPLOYEES,  Employees: individuals who labour on behalf of the org in exchange for
UNIONS, payment.
LABOUR  They provide knowledge, skills, effort and creativity.
MARKETS  Labour market/supply: pool of people employable by the organisation
 Unions: employee associations whom negotiate pay and conditions with
employers and have the ability to take industrial action on behalf of members.
Eg: strikes, court, work stoppages
STRATEGIC  Def: orgs that work together for a mutual benefit
PARTNERS  Opportunities:
- Combine resources & ideas
- Spread risk
- Learn from each other
 Threats:

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- Knowledge attained through collaboration used to become competitive

REGULATORS  Def: create and enforce regulations to protect consumers, workers and society.
 Government agencies: provide services and enforce compliance with laws at
local, state and federal levels.
INTEREST  Def: organisesd to serve the interests of their members by influencing business
GROUPS activities in specific areas (enviro, ethics)
 Organised around a geographic locality, social issue or industry or profession.
 Negotiate directly with orgs
 Lobbying governments and local residents

What is the organisational culture?

Organisational culture: the shared values, principles traditions and ways of doing
things that influence the way organisational members act.

 Culture is:
- perceived
- descriptive
- shared

 Employees learn organisation culture through stories (narrative of significant

events or people) , rituals (repetitive sequences of activities) , material symbols,
and language

Creating a customer responsive culture

 Employee requirements for a customer responsive culture

- friendly and courteous

- accessible
- knowledgeable
- prompt in responding to customer needs
- willing to do what’s necessary to please customer.

 Key variables shaping customer responsiveness cultures

- Employee type: outgoing and friendly

- Employee freedom – no rigid rules, procesdures and regulations
- Employee empowerment – decision discretion
- Listening skills – in understanding customers
- Organisational citizenship behaviour – take initiative, even when its outside
their normal job requirements to satisfy a customers needs.

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Managerial actions
The following are actions designed better employee competencies and
willingness to solve a customer problem if it arises.

Selection hire: people

Empowerment: work independently
with confidence, drive without managers authorisation.
and maturity

Organising : flatter
organisational structure
Training: training programs for new and existing
giving employees more
employees to improve product knowledge
controlin service

Evaluation: Of employee Rewards: for employees

.Leadership: customer
performance based on who have been singled
focused vision &
effort, teamwork, out by customers or
commitment to
friendliness & problem demonstrate
solving extraordinary effort

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Week 3: Ethics, Sustainability and

Corporate Social Responsibility

What is social responsibility?

Social responsibility: a businesses intention, beyond that required by law or
economics to pursue long term goals that are good for society.

 Managers are faced with determining how their organisation ‘fits’ with its
 Society develops rules and regulations about how businesses should be
transacted and managed.,
 Activities include fair prices, high quality products and services, safe products,
promoting social justice, preserving the environment and supporting social
and cultural activities.

Social obligation: obligation of a business to meet its economic and legal

responsibilities. (classical view) Social duty is to its shareholders.

Social responsiveness: capacity of a firm to adopt to changing societal

conditions. Guided by social norms.

Two opposing views:

 Classical view (conventional/ economic)
 States that managements only social resp. is to maximise profits
 “Defeat the competitor “approach.
 Nobel Friedman – says businesses primary responsibility is to operate a
business in the best interest of shareholders. (financial return). He does not
agree with this approach however.

 Socioeconomic view (sustainable)

 States that management’s responsibility goes well beyond the marking of
profits. It also includes improving and society’s welfare.
 ‘Maximising profits is a company’s second priority’
 More profitable in the long run

Reasons for and against corporate social responsibility

 Public expectations –  Violation of profit
supporting business maximisation
 Long-run profits *  Costs
 Discouragement of further  Too much power – social goals
governmental regulation give them more power
 Stockholder interest  Lack of skills

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Sustainable development as a core issue for managers

 Organisations must make balanced/ equitable decisions regarding both
short term and long term:
- Financial/ economic outcomes
- Environmental outcomes TRIPLE BOTTOM
- Social outcomes LINING

 Ecologically sustainable development: using, conserving and

enhancing the communities resources so that the ecological processes, on
which life depends are maintained and the total quality of life, now and in
the future can be increased.

Green actions

 Legal approach: doing what is required legally. They exhibit little

sensitivity., but use law to their advantage.
 Market approach : responds to customer demands in terms of
environmental preferences
 Stakeholder approach : business works to meet demands of multiple
stakeholders (employees, suppliers and community)
 Activist approach : looks for ways to respect and preserve the earth and
its natural resources.

 Managerial Ethics 

Managerial ethics
 Help us decide what is ‘right’ or ‘wrong’ in social context
 Absolutists: absolute right and wrongs
 Relativists: ethical positions depend on circumstances, culture and
consequences of action.

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How can mangers identify the ethical thing to do?

 The three main views of ethical behaviour are:

1) Utilitarian view: behaviour should be based on outcomes/
consequences to provide the greatest good for the greatest number
2) Rights View: behaviour should respect/protect peoples individuals
liberties and privileges. Eg: privacy, freedom of speech, due process.
3) Justice view
- procedural justice: decisions consented by those affected and
made impartially.
- distributive justice: rewards/punishments are distributed
equitably and based on performance. Eg: Talking in class
expelled from unit, but other student isn’t… is this fair? Nope!
- compensatory justice: if distrb. or proc. justice is
compromised, those adversely affected by the decision should
be compensated.

Levels of moral development

 Influenced exclusively by
personal interest.

Influenced by the 
expectations/obligations of

 Influenced by personal
ethical principles of what
is right.

Factors that affect ethical and unethical behaviour


4) Organisational 2) Structural
culture MODERATORS variables

3) Issue intensity

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Factors that affect ethical and unethical behaviour cont’d

1) Individual characteristics
 Personal values: basic convictions about what is right and wrong
 Ego strength: personality measure of persons convictions. Individuals
with high ego strength are more likely to do what they believe is right.
 Locus of control: personality attribute that reflects the degree to which
people believe they control their own fate.
 Internal (believe they control own destinies)
 External (believe what happens to them is luck or chance)

2) Structural variables
- performance appraisal system
- rules and regulations … (consider social media)
- rewards system
- time pressures
- cost constraints
- competitive pressures

3) Organisational culture
 An organisational culture most likely to shape high ethical standards is
one that is high in risk tolerance, control and conflict tolerance.
 Employees encouraged to be aware that unethical practices will be
discovered and feel free to openly challenge unrealistic expectations.
 Value based management: organisations values guide employees in the
way they do their jobs. The purposes:
 guide decision making
 shape employee behaviour
 influence marketing efforts
 build team spirit

4) Issue Intensity
 Concentration of effect: how many people are affected?
Eg: something that puts 100 people out of work is more harmful than affecting
 Consensus of evil: belief that this is good or bad
Eg: shoplifting
 Probability of harm: will it affect people? Psych harm?
Eg: selling a gun to a known armed robber
 Immediacy of consequences : is there immediate harm or will the
consequences occur much later?
Eg: James Hardie asbestos
 Proximity to victim : not in my backyard (overseas rather) so don’t care
Eg: plastic affecting wildlife
 Magnitude of consequences : degree of harm

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Eg: heart bypass vs hip replacement

Ethics in a global context

 Ethic standards are not universal
 Culture determine ethically considered behaviour
 Managers need to consider who’s ‘ethical’ behaviour should determine org

Employee selection --should be used to learn about employees

moral values, locus of control, see if they fit in with culture
Codes of ethics and decision rules- formal statements
Top managment leadership

Job goals and performance appraisal

Ethics training

Independent social audits

Formal Protective mechanisms

Addressing Ethical Dilemmas

Step 1: What is the ethical dilemma?
Step 2: Who are the affected stakeholders?
Step 3: What personal, organisational and external factors are important to my
Step 4: What are possible alternatives
Step 5: Make a decision and act on it.

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Week 4: Foundations of Planning


What is planning?
 Often called ‘primary management function’ as it establishes basis for all
managerial activities.
 Concerned with ends (what is to be done) and means (how its to be done)

Why do managers need to plan?

1) Provide direction and facilitate coordinated effort
2) Reduce uncertainty
3) Reduce overlapping and wasteful activities
4) Establish goals/standards that facilitate control

What are some criticisms of formal planning?

 May create rigidity (inflexibility)
 Intuition & creativity ignored
 Focuses on todays competition, not tomorrows survival
 Reinforces success, which may lead to failure


 Strategic management: what managers do to develop an organisation’s

 Strategies: plans for how the organisation will undertake its purpose,
how it will compete successfully and attract customers.
 Strategic Management Process: 6 step process of strategy planning,
implementation and evaluation
o STEP 1 – identify current mission, goals, strategies
Mission Statement  organisation’s purpose (inc customers,
market, philosophy, technology, concerns for survival growth and
Capabilities  skills/abilities in doing work activities needed
Core Competencies  major value-creating capabilities of an org
o STEP 2 – external analysis
SWOT Opportunities and Threats
o STEP 3 – internal analysis
o SWOT  Strengths and weaknesses
o STEP 4 – create strategies
Growth  Org. expands # of markets served OR products
Strategy offered through:
1) current business or
2) new business

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 Growth strategies: concentration,

vertical/horizontal integration, diversification.

Stability  Continues doing what they’re doing

Renewal  Addresses declining organisational
Strategy performance
Competitive  How an org will compete in its business
strategy  Strategic business units (SBUs) : single
businesses that are independent and formulate
their own competitive strategy.
 Types of Competitive strategies:
Cost Leadership Strategy: Competing by
having lowest cost in industry
 Differentiation Strategy: Competing
through unique products
 Focus Strategy: Competing in a narrow
segment or niche with either cost or
differentiation focus. Fun

Functional  Used in functional departments to support

Strategy competitive strategy.

o STEP 5 – implement strategies

o STEP 6 – evaluate results

How do managers set and develop goals and plans?

 Goals: desired outcomes or targets
 Stated Goals: official statements of what an organisation says/wants its
stakeholders to believe its goals are
 Plans: documents outlining how goals will be met.

Setting Goals
 Real Goals: pursued goals
 Traditional goal setting: goals set by top managers flow down the org and
become sub-goals

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 Means-End Chain: network of goals where higher-level goals are linked to

lower-level goals
 Management by Objectives (MBO): setting mutually agreed-upon goals and
using them to evaluate employee performance. 4 elements to MBO programs
1) Goal Specificity
2) Participative decision making
3) Explicit time frame
4) Performance feedback

Steps in Goal Setting



Types of Plans
Describe plans in terms of
 Breadth
 Strategic Plans: apply to entire org, encompassing overall goals
 Tactical Plans: specify the details of how the overall goals are to be
 Time frame
 Long-term Plans: > 3yrs
 Short Term Plans: <1yr
 Specificity
 Specific Plans: clearly defined and leave no room for interpretation
 Directional Plans: flexible plans with general guidelines set
 Frequency of use
 Single use Plan: one time plan for unique situation
 Standing Plans ongoing plans for repeated activities

Traditional Planning Approach

 Undertaken by top management
 Assisted by formal planning department (group whose sole
responsibility is to help write the various org plans)

Alternative Approach
Actively involve org members, giving them access to all relevant info.

Environmental Competitive Benchmarking

Scanning: intelligence: Search for best practices
Analysis of external enviro Form of environmental among competitors/
involving large amounts of scannig that gives noncompetitors that
info todetect trends managers info about lead to superior
competitors performance

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Week 5: Foundations of Decision Making

How do managers make decisions?

Decision making process: 8 steps that include identifying a problem, selecting a

solution, and evaluating the effectiveness of solution.

Problem: discrepancy between an existing and desired state of affairs

Decision criteria: factors that are relevant in a decision

Decision Implementation: Conveying the decision to those affected and getting their
commitment to it. If employees are unhappy with the decision , they may choose to
resist it.

When making decisions, use weighted criteria to make your selection.

Common decision making errors and biases

 Managers simplify their decision-making .
 Heruistics: applying ‘rule of thumb’ to all situations, biases in evaluating . You
actually need to assess each situation specifically and consider all

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Three decision making approaches

1) Rational decision making

 Assumptions are:
- fully objective and rational
- problem faced is clear and unambiguous
- decision maker has a clear and specific goal
- all possible alternatives and consequences are known
- Logical and consistent choices that aim to maximise value
2) Bounded rationality
 Human beings are rational within limits.
 Satisfice (find a solution that's ‘good enough)
 Cant calculate all of the outcomes of all alternatives
 Look for evidence that contradicts our assumptions
 Increased commitment to a previous decision, despite knowing it may be
wrong. (because you’ve already evaluated it prior)
3) Intuitive decision making
 Making decisions based on the basis of experience, feelings and judgement.


based Five Values of
Ethics Based

decisions Decisions

Affect- Experience of
Initiated Ethics Based
decisions Decisions

How do problems differ?

 Must think about the nature of a problem
 Structured problem: straightforward, familiar problem, goal of decision making is
 Unstructured problem: new or unusual problem where information is ambiguous
or incomplete. Eg: entering a new market
 Programmed decisions: repetitive decision that can be handled using a routine
- Rules: statement of what managers what they should or shouldn't do.
- Policy : provides guidelines of how we are supposed to behave or deal with
specific parameters.
- Procedure : sequential steps that can be used to respond to a well structured
 Non-programmed decisions: unique nonrecurring decision that requires a custom
made solution.

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What decision making conditions do managers face?

- Certainty : situation whereby a decision maker can make accurate decisions as
all outcomes are known.
- Risk: able to estimate the likelihood of certain outcomes.
- Uncertainty: a situation in which a decision maker has neither certainty nor
reasonable probability estimates available

Group decisions

 Advantages  Disadvantages
- more complete info - time consuming
- generate more alternatives - no one is responsible
- increases legitimacy - pressure to conform
- diversity of experience is higher. - groupthink: get small group of
homogenous backgrounds. (lack of
diversity of opinion or innovation)
 Effectiveness
 Effective for decisions that require
- Accuracy
- Speed
- Creativity
- Acceptance

 5-15 members is an ideal group size

 Improving group decision-making

 Brainstorming: idea generation without criticism
 Nominal Group Technique: groups secretly write lists of problem and then present
ideas are a discussion. It permits formal meetings but doesn’t restrict independence
of thought.
 Electronic meeting: participants anonymously linked

What contemporary decision making issues do managers face?

 Decision making processes differ in terms of culture (eg: degree of risk they’re
willing to take, group/individual) and creativity.
 Creativity requires:
- expertise
- creative thinking skills – ability to use analogies
- intrinsic task motivation – desire to work on something because its interesting,
involving or exciting

 Organisational factors that can impede creativity

- expected evaluation – focusing on possible evaluations of how you’re working
- surveillance – being constantly watched
- competition
- constrained choices

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Week 6: Organisational Structure &

Organising – function of management that creates the organistions structure
Organisational design – development or changing of org structure

Elements of organisational design

1. Work Specialisation – dividing jobs into separate tasks and assigning

tasks to individuals or groups. Each employee takes on a specific approach.
Use this approach in hiring unskilled jobs and training them to do a job.
- Common in manufacturing and service industries .
- Efficiency and productivity to reduce costs.
- Limiting skills people are brining to the job benefits management- making it
cheaper when people leave.
- Highly monitored and control
- DIS: boredom, stressful, unhappiness will lead to absenteeism, high

2. Departmentalisation – how jobs are grouped together. Types of dept

- Functional : grouped by the functions performed eg: engineering,
accounting, info systems, human resources
- Product : grouping by product lines, creating a dept for each product
and create activities for each.
- Customer: types of customer serving. Eg: people dealing with bank
- Geographic : regions or territory. Groups identity is tied into the
region they live in. Regional vs urban . Geographical focus is the thing
that unites the group.
- Process : group on the basis of work or customer flow
eg: hospital – admission, collection of blood, tissue sample.
 Cross dept teams . How orgs seeking to respond to complexities in
the environment.

3. Authority and responsibility –

Chain of command : line of authority that clarityes who reports to who.
Eg: military forces
Authority : Rights inherent in a managerial position to give orders and
expect obedience from them. When delegating authority they must be
given the same amount of auth.
 Line authority: entitles a manager to direct the work of an employee
 Staff Authority : right to advise or assist those who possess line
authority as well as personnel.
- POWER: individuals capacity to influence decisions. Authority is part of
the larger concept of power.

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4. Span of control: number of employees a manager can efficiently and

effectively supervise.

5. Centralisation & Decentralisation

Choice isn’t an either or choice. Most businesses involve both. How much
decision would you like to give each groups.
Centralise: decision making takes place at upper levels of the
-AD: Easier to introduce policies as a chole, easy to organise and
coordinate, provides with economies of scale, quicker decisions
- DIS : bureaucratic, less flexibility and less discretion
Decentralise: lower level managers provide input or actually make
Eg: major supermarkets
AD: decisions can be made closer to the customer. Customer services
DIS difficult to ensure consistent practices

6. Formalisation – how standardised an organisations h=jobs are and

the extent to which employee behaviour is guided by rules and

 Never a single best structure – multiple ways

 Today managers are re-evaluating these traditional approaches that best

support and facilitate employees work.  achieve efficiency and flexibility

Mechanistic organisation – combining 6 elements. Each person controlled or

supervised by another person
 rigid hierarchical relationships
 fixed duties
 many rules
 taller structures
 centralised decision authority

Organic – less rigid and stable than an mechanistic org. Allows it to change
 few rules
 Adaptable duties
 Flatter structures
 decentralised
 communication more open
 collaboration

 How does strategy, size and environment influence structure?

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Large organisations are more mechanistic

 How does technology and culture influence structure

More routine the technology, the more mechanistic the structure

Simple structure:
AD Flexible inexpensive to maintain, accountability is clear
DIS Everything may depend on one or two people

Traditional organisational designs

Functional structure : groups similar occupations together. Grouped on type of

work and skills required to complete that task. Eg: Mktg, Oper, r&D, sSles
AD: capacity to mentor employees, using those specialised forces

Divisional structure: made up of separate business units or division

 Matrix Structure : function and division

Contemporary organisational design

Team structures : eg amazon, Motorola
Project structure : employers continuously work on project. Flexible.
DIS: complexity
Boundaryleess : greater collaboration
Limited chain of command, widened span of control, empowered employee

A virtual organisation: A small core of full time employees and outside

specialists temporarily hired as needed on projects.
Ad: access to high security, rewarding jobs (inner)
A network organisation : uses interal and networks of outside suppliers to
provide other needed product components or work processes.

 considers specifics of the organisation

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Week 7: Human Resource Management

Human Resource management – mgmt. function concerned with attracting,
training, motivating and retaining competent employees


 Functions of the HRM process

- Ensuring that competent employees are identified and selected
- Providing employees with up-to date knowledge and skills to do their jobs
- Ensuring the organisation retains competent and high performing employees.

HRM: legal environment

HMR laws are enforced so that work conditions are:
- fair and equitable
- non discriminatory
- safe and healthy
- protective of individual needs

eg: Fair Work Act 2009 (employment conditions), Equal Employment Opportunity
1987 ( equity)


Employment Planning: process whereby managers ensure they have the right
numbers and kinds of people in the right places at the right time.

- Mission and goals are translated into HR terms to enable fulfilment of these
- Two steps are: (1) Assess current and future HR needs
(2) Develop a plan to meet these needs

 Employee assessment
- Job Analysis: defines jobs and behaviours required to perform them
- Job Description: A written statement that describes a job
- Job Specification: written statements of the minimum qualifications an individual
must possess to perform a given job successfully.

 How are future employee needs determined?

- Managers estimate future revenues, then predict how many employees will be

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How do organisations recruit employees

- Recruitment: locating, identifying and attracting capable applicants
- Selection process: screening applicants to ensure the most appropriate candidates
are hired

Making valid and reliable decisions

- Reliability: degree to which a selection device measures to same thing consistently
- Validity: proven relationship b/w a selection device and a criteria.

Selection and Retention Techniques

Selection techniques:


Selection devices based on

actual job behaviours Most universal selection
devices, along with
applicant form

Retention technique:
Realistic Job Preview (RJP) : job preview providing positive and negative information
about job and company



1. Orientation (induction): introducing a new employee to the job and the

 Job orientation : expands on info obtained from recruitment and
selection stages. Responsibilities clarified and unrealistic expectations
are corrected.

 Work unit orientation : employee becomes familiar with company

goals and their role in achieving those goals.

 Organisational orientation : informs about goals, history, procedures

and rules.
2. Employee training: an experience, which improves an employee’s ability to
perform on the job.
 involves changing skills, knowledge, attitudes or behaviour.

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A safe work environment is provided through:

- Training programs
- Workplace health and safety autdits
- Consultation with employee groups, unions, consultants and government
- Effective monitoring of productivity, absenteeism, accident/injury rates
and worker compensation claims.


Performance management system: a system that established performance

standards that are used to evaluate employee perforce.
Eg: written essay, critical incidents (time consuming), graphic rating scales,
BARS, MBO, 360 appraisal

 Correcting employee performance

- Discipline: Actions taken by a manager to enforce an organisations
standards and regulations
- Employee counselling: A process designed to help employees overcome
performance-related problems.

 Compensating employees
- Compensation administration: determining a cost-effective pay
structure that will attract and retain employees with incentives to
- Skill-based pay: pay system that rewards skills demonstrated.
- Variable pay: pay system dependent on performance
- Employee benefits : non financial rewards designed to enrich employees

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* Factors that affect the level of compensation include: size of company, type of
business/ job, geographic location, management philosophy, company

 Competing globally brings new challenges

GLOBALISATION  International HRM: addresses the complexity
that results from recruiting, selecting,
developing and maintaining a diverse
workforce on a global scale.

 Widen recruiting net

DIVERISTY  Avoid discrimination
 Encourage better match b/w minority and
organisation culture
 Increase diversity awareness with staff

 Downsizing: planned elimination of jobs

DOWNSIZING  Layoff-survivor sickness (survivor
syndrome) : set of attitudes, perceptions and
behaviours of employees who survive layoffs.
 Downsizing options:
- reduced hours
- job share
- transfers
- early retirement
- redundancies
- firing
 inform those being let go asap and follow laws

 Sexual harassment: unwelcome conduct of a

SEXUAL sexual nature that makes a person feel
HARRASSMENT offended, humiliated or intimidated.
 Employees have a legal liability to protect staff
 Lawsuits can be costly
 Creates unpleasant/unproductive environment

 Career: sequence of work positions held by a

CAREER person during his/ her lifetime
DEVELOPMENT  Career planning: process of matching career
goals and individual capabilities with
opportunities for achieving those goals.

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Week 8: Managing change and



Organisational change: any alteration of an organisation’s people, structure or

Change Agents: people who act as change catalysts and assume the
responsibility for managing the change process.

 Categories of organisational change (with examples)

1. Structure: authority relationships, job redesign, spans of control.
coordinating mechanisms
2. Technology: work processes, work methods, equipment
3. People: attitudes, expectations, perceptions, behaviour.

 Forces causing changes

 Strategy  Marketplace
 Workforce composition Eg TV internet access b/c of how the
Eg: age, gender, education, marketplace watches stuff
nationality  Technology
 Employee attitude Eg: assembly line undergone changes,
replacing human labour for
mechanical robots
 Government Laws & Regulations
Eg introducing GST
 Economy
Eg economic lifecycles-
income/spending, job opportunities
 Labour markets
Eg skill shortages prompt raising
retirement age.

 Change metaphors
1. Calm waters metaphor of change: likens organisational change to a large
ship making a predictable trip across a calm sea and experiencing an
occasional storm.
2. White-water rapids metaphor of change: likens organisational change to a
small raft navigating a raging river.

*** Three step change process: Unfreeze change refreeze ***

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 Organisational Development (OD)

- Constructively changing the attitudes and values of org. members
- Relies on employee participation to foster an environment of open
communication and trust.

 OD activities
 Survey feedback: used to assess employee attitudes towards change
 Process consultation: using outside consultants to assess organisational
processes such as workflow, informal intra-unit relationships & formal
communication channels
 Team building: using activities to help work groups set goals & develop
interpersonal relationships. Help clarify roles and responsibilities of team
 Intergroup development: activities that attempt to make several groups
work more cohesive.


 Why do people resist organisational change?

 They disagree with the need for change
 change replaces the known with uncertainty
 Fear of losing something already possessed.
 Believe the change is not in the best interest of the organisation
 Limited tolerance for change

 Techniques for overcoming barriers to change

 Education and
communication  Negotiation
(+) clear up (+) can ‘buy’ commitment
misunderstanding (-) potentially high cost
(-) ineffective when mutual
trust and credibility is lacking  Manipulation &
 Participation (+) inexpensive, easy way to
(+) increases involvement gain support
and acceptance (-) can backfire, lose
(-) time consuming, poor credibility
 Coercion (persuasion
 Facilitation & Support through threats)
(+) provides feedback on (+) inexpensive, easy way to
progress gain support
(-) expensive, may be (-) may be illegal

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 Stress : The adverse reaction people have to excessive pressure placed on
them from extraordinary demands, constraints or opportunities

 Symptoms of stress
 Physical symptoms :
- change in metabolism
- increased heart rate
- headaches
- high bp

 Psychological
- job related dissatisfaction
- tension
- anxiety
- irritability
- boredom
- procrastination

 Behavioural
- Absenteeism
- Job turnover
- Sleeping disorders
- ^ smoking or alcohol consumption

 Stressors
 Stressors: factors that cause stress


 Task demands  Bringing personal problems
- Job design (autonomy, variety) to work
- Work conditions, layout  Personality
- Interdependence b/w employees - Type A personality: chronic
 Role demands sense of urgency and an
- Role Ambiguity excessive competitive drive.
Role expectations are not clearly - Type B Personality: relaxed,
understood. easy going and change easily
- Role Conflicts
Expectations hard to satisfy
- Role Overload
Time not permitting
 Interpersonal demands
- Pressures created by other employees
 Organisation structure
- Excessive rules
- Lack of participation opportunities
 Organisation leadership
- Supervisory style

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 How can stress be reduced?

 Control certain organisational factors
Employee selection, communication, performance management, job
 Employee Assistance Programs (EAPs)
Programs designed to identify and help resolve problems  affect
employee wellbeing and performance.
 Wellness Programs
Programs designed to keep employees healthy.


 Creativity : Ability to combine ideas in a unique way or to make usual
associations between ideas.
 Innovation : Process of taking a creative idea and turning it into a useful
product, service, or method of operation. Innovation variables:
- Structural variables
Organic structures
Abundant resources
Minimal time pressure
- Human resources variables
Creative people
High job security
Training and development
- Cultural variables
Acceptance of ambiguity
Tolerance of risk
Tolerance of conflict
Positive feedback
Low external controls

 Idea champions : individuals who actively and enthusiastically support new

ideas, build support for , overcome resistance to and ensure that innovations
are implemented.

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Week 9: Understanding Groups and

Managing Work Teams
Group: tow or more interacting and interdependent individuals who come
together to achieve a specific goal.

 Examples of formal work groups

 Command groups – determined by org chart and comprised of
individuals who report directly to a given manager
 Task groups – individuals brought together to complete a specific job
task – when the task is complete, group disperses
 Problem solving teams – collaboration for improvements
 Self managed work teams – formal group of employees who are
responsible for executing a complete work process or segment and for
managing themselves
 Cross functional teams -
 Self managed teams
 Virtual teams


1. FORMING: first stage whereby people join and define group purpose,
structure and leadership.

2. STORMING High levels of disagreement and challenge. Members compete for


3. NORMING Close relationships and cohesiveness. Shared expectations

4. PERFORMING : group has matured and conflict is resolved rationally through

group communication. High performance

5. ADJOURNING: (when groups are disbanded) Not all groups have this final
stage (if they haven’t made it though each stage


Role – Behaviour patterns expected of someone who occupies a given position in
a social unit.
Eg: work roles and family roles compete with one another causing conflict.

Norms- standards or expectations that are accepted and shared by group

members. Pressure can be placed on group members to conform to standards.
Eg: do you have a flexible meeting time/place?

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Status – a prestige grading, position or rand within a group


Large groups : good for gaining diverse input
Small groups : typically faster and implementation
Social loafing : tendency for individuals to extend less effort when working
collectively than when working individually

Group cohesiveness: degree to which group members are attracted to another

and share the groups goals. Conformity not always a bad thing.


- Increased efficiency

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- Increased responsiveness to customer needs and demands

- Enhanced creativity and innovation
- Opportunities for learning
- Greater sense of belonging



SELECTION: people with skills and ability to work effectively in
TRAINING: trained in behaviours necessary to be a team player
REWARDS: an organisations reward system should recognised
appropriate team behaviours


- taking too much time

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- teams require managers to communicate more, manage

conflicts and run meetings
- benefits of using teams to exceed the cost

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Week 10: Motivating and rewarding

 Motivation: process whereby efforts are energised, directed and sustained
towards attaining a goal.
- Individuals differ in motivational drive
- Motivation diffs based on situation

 Elements of motivation:
- Energy: measure of intensity or drive
- Direction: effort channelled in a direction that benefits the organisation
- Persistence: when employees persist to achieve goals



 MCGREGORS THEORY X: Assumption that employees dislike work, are

THEORY X & THEORY Y lazy avoid responsibility and must be forced to work
THEORY Y: Assumption that employees are creative,
enjoy work, seek responsibility and can exercise self

 HERZBERG’S TWO Intrinsic factors  related to job satisfaction

FACTOR THEORY Extrinsic factors  related to job dissatisfaction
HYGIENE FACTORS: Factors that eliminate job
dissatisfaction but don't motivate
MOTIVATORS: Factors that increase job satisfaction and

 MCCLELLANDS Need for Achievement (nAch) : drive to succeed and

THREE NEEDS THEORY excel in relation to a set of standards.
Need for Power (nPow) Need to make others behave in
a way they wouldn't have usually behaved in.
Need for Affiliation (nAff) Desire for friendly and close
interpersonal relationships.

 EXPECTANCY An individual usually behaves in a certain way based on:

THEORY - expecting that their act will produce a given outcome
- attractiveness of the outcome to the individual.

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Individual effort  Individual performance  Org

rewards  Individual goals
THEORY Specific goals increase performance
Difficult goals present higher performance
*Self efficacy: individuals belief that he or she is capable
of performing a task
Based on:
1) goal commitment
2) self efficacy
3) national culture

 EQUITY THEORY- Equity theory: Theory of employees comparing their

input-outcome ratio with others, and then corrects any
Referent: persons, systems or selves against which
individuals compare themselves to assess equity.
Distributive Justice: perceived fairness of the amount
and allocation of rewards among individuals.
Procedural justice: perceived fairness of the process
used to determine the distribution of rewards


 Job design : the way tasks are combined to form complete jobs
 Job Characteristics Model (JCM): a framework for analysing and
designing jobs that identifies 5 key job dimensions , their
interrelationships and impact on outcomes.
 Job enrichment: vertical expansion of a job by adding, planning and
evaluating responsibilities

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 Compressed workweek : employees work longer hours but fewer days

 Flexible working hours (flextime) : employees are required to work a
certain number of hours per week but are free, within limits to vary hours
of work.
 Job Sharing : when 2 or more people slit a fulltime job
 Telecommuting : a job approach in which employees work at home but
are linked by technology to workplace


 Employee recognition programs: programs that consist of personal

attention and expression of interest, approval and appreciation for a job
well done.
 Pay for performance programs : variable compensation plans that pay
employees on the basis of some performance measurement

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Week 11: Leadership & Trust/

Communication & Interpersonal Skills

 Written Communications  Oral Communications

- Memos, letters, e-mail, newsletter - Allow receivers to respond
- Tangible, verifiable, permanent - Presents feedback evidence that
the message has been received and

How do non verbal cues affect communication?

 Body Language: such as facial expressions, gestures and other body
 Verbal Intonation: emphasis given to words or phrases that conveys meaning.

 Barriers to effective communication:

 Overcoming barriers to effective communication:

Use feedback: check the accuracy of what has been communicated
Simplify language: Use words that the intended audience understands
Listen actively: Listen for the full meaning of the message without making premature
judgement or interpretation.
Constrain emotions: recognise when your emotions are running high.
Watch nonverbal cues: be aware that your actions speak louder than your words.

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 Active Listening
Active listening: listening for full meaning without making premature judgements or

 Active listening requires

- Intensity
- Empathy
- Acceptance
- Willingness to take responsibility completeness

 Feedback
 Positive feedback: more readily and accurately perceived then negative
 Negative feedback: more likely to be accepted when it comes from a credible
source or if its objective

Tips for effective feedback: focus n specific behaviours, keep feedback goal oriented
and impersonal

 Delegation
 Assigning authority to another person to carry out specific activities
 In participative decision making authority- authority is shared
 Contingency factors in delegation include:
- size of the organisation
- task complexity
- organisation culture
- qualities of employees
- importance of the duty or decision

 Negotiation
 Negotiation: a process where 2 or more parties (who have different
preferences) must make a joint decision and come to an agreement.
 Distributive bargaining: under zero-sum conditions in which any gain that
you make is at the expense of the other person.
 Integrative bargaining: negotiation where there is at least one settlement that
involves no loss to either party. Facilitates working together in the future.

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 Conflict: perceived differences resulting in interference or opposition
 Functional conflicts conflict that's constructive and supports an organisation’s
 Dysfunctional conflicts: conflict that's destructive and prevents an
organisation from achieving its goals.
 Traditional vies of conflict : view that all conflict is bad and must be avoided
 Human relations view of conflict : view that conflict is natural and inevitable
and has the potential to be a positive force
 Interactionist view of conflict: view that some conflict is necessary for an
organisation to perform effectively.

 Task conflict : conflict relating to the content and goals of work

 Relationship conflict : conflict that focuses on interpersonal relationships
 Process conflict : conflict that refers to how the work gets done.

 Strategies for conflict management

 Avoidance
 Accommodation
 Forcing : used when a quick resolution is important
 Compromise
 Collaboration : use when time pressures are minimal

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 Leader : someone who can influence others who has managerial authority
 Leadership: process of leading a group and influencing that

 Traits associated with leadership

Drive Intelligence
Desire Job relevant knowledge


 Behavioural Theories of Leadership (University of Iowa)

 Behaviours that differentiate effective leaders from ineffective leaders.
 Autocratic Style: a leader who centralises authority, dictates work methods,
makes one-sided decisions and limits employee participation.
 Democratic (participative) Style: a leader who involves employees in
decision making, delegates authority, encourages participation and uses
feedback to coach employees.
 Laissez Faire Style: Leader who gives employees complete freedom to makes
 Employee oriented style: a leader who emphasises the people aspects
 Production oriented style: a leader who emphasises the technical or task
(Ohio – identified 2 categories accounting for leadership behaviour)
 Initiating structure: extent to which a leader defines and structures their role.
 Consideration: job relationship characterised by mutual trust, respect for
employee ideas and regards for feelings.


 A two-dimensional grid for appraising leadership styles
 It identifies 5 styles for management
1) impoverished management – minimum effort to get work done
2) task management – efficiency in operations
3) middle of the road management – balancing demanding work & morality
4) country club – comfortable, friendly org with good atmosphere
5) team management – common goal with committed people


 Fiedler Contingency Model

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 Proposes that effective group performance depends on the proper mat h

between a leaders style and the degree to which the situation allowed the leader
to control and influence.
 Least-preferred co-worker (LPC) Questionnaire
 Measures whether a leader was task or relationship oriented

 Three contingency dimensions

Degree of
confidence, trust &
respect employees
had for their leader


degree of influence degree to which job
a leader had over assignments were
activities eg: hiring, formalised and
discipline, promos structuresd

 Situational Leadership Theory (SLT)

 Contingency theory that focuses on followers readiness
 Readiness
 Extent to which people have the ability



(high task, low (high task, high (low task high (low task low
relationship) relationship) relationship) relationship)
 Defines roles and  Provides both  Followers share  Provides little
tells people how, directive and in decision direction or
when, and where supportive making support
to do various behaviour  Main role of the
task. leader is
facilitating and

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 Leader participation model : based on a set of rules for determining how much
participation a leader uses in decision making.
Path Goal Theory : says that a leaders job is to assist followers in attaining their
goals and to provide direction/ support.
- Environmental factors : task structure, work group
- Outcomes : performance, satisfaction
- Employee contingency factors: locus of control, experience, perceived ability,
- Leader behaviour: directive, supportive, participate


Transactional Leaders : lead primarily by using social exchanges (or transactions)
Transformational Leaders : leaders who stimulate and inspire followers to achieve
extraordinary outcomes.

Charismatic leaders :enthusiastic, self onfident leaders whose personalities and

actions influence people to behave in certain ways
Visionary Leadership: ability to create and articulate a realistic, credible and
attractive vision of the future that improves on present situation.


EI is exhibited by:
- Self awareness
- Self management
- Self motivation
- Empathy
- Social skills

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