PART I:

Introduction
1
Managers
and Chapter 1
Management
PowerPoint Presentation by Charlie Cook
The University of West Alabama
Principles of Management
• Instructor: Ambreen Kashif
• Book: Fundamentals of Management Essential
Concepts and Applications by
Stephen P Robbins,
David A DeCenzo,
Sanghamitra Bhattacharyya,
Madhushree Nanda Agarwal
Pearson 6thEdition.
Management
Management is an
organizational
process of getting things done,
effectively and efficiently,
through and with other people.
 Management is an
organizational
process (planning, organizing, leading,
controlling) of getting things done,
effectively and efficiently,
through and with other people.
Who Are Managers And Where Do They
Work?
• Organization
 A systematic arrangement of people brought together
to accomplish some specific purpose; applies to all
organizations—for-profit as well as not-for-profit
organizations.
 Where managers work (manage).
• Common characteristics
 Goals
 Structure
 People
Common Characteristics of Organizations

Exhibit 1.1
People Differences
• Operatives
 People who work directly on a job or task and have
no responsibility for overseeing the work of others.
• Managers
 Individuals in an organization who direct the activities
of others.
Organizational Levels

Exhibit 1.2
Identifying Managers
• First-line managers
 Supervisors responsible for directing the day-to-day
activities of operative employees
• Middle managers
 Individuals at levels of management between the first-
line manager and top management
• Top managers
 Individuals who are responsible for making decisions
about the direction of the organization and establishing
policies that affect all organizational members
How Do We Define Management?
• Management
 The process of getting things done, effectively and
efficiently, through and with other people
 Efficiency
 Means doing the thing correctly; refers to the
relationship between inputs and outputs; seeks to
minimize resource costs
 Effectiveness
 end.: doing the right things; goal attainment
Efficiency and Effectiveness

Exhibit 1.3
Management Process
• Henri Fayol – five managers activities
• Plan , organize, command, coordinate and control
• In mid 1950’s professors at UCLA used –
planning, organizing, staffing , directing and controlling
Management
Process
Activities

Management process:
planning, organizing,
leading, and
controlling

Exhibit 1.4
Management Processes
• Planning
 Includes defining goals, establishing strategy, and
developing plans to coordinate activities
• Organizing
 Includes determining what tasks
to be done, who is to do them,
how the tasks are to be
grouped, who reports to
whom, and where
decisions are to be made
Management Processes (cont’d)
• Leading
 Includes motivating employees, directing the
activities of others, selecting the most effective
communication channel, and resolving conflicts
• Controlling
 The process of monitoring performance,
comparing it with goals, and
correcting any significant
deviations
• A role is a set of specific tasks a person
performs because of the position they hold.
 Mintzberg’s Managerial Roles
• Interpersonal • Decisional
 Figurehead  Entrepreneur
 Leader  Disturbance handler
 Liaison  Resource allocator
• Informational  Negotiator
 Monitor
 Disseminator
 Spokesperson

Source: The Nature of Managerial Work (paperback) by H. Mintzberg. Table 2, pp. 92–93. Exhibit 1.5
Reprinted by permission of Pearson Education Inc., Upper Saddle River, New Jersey.
Interpersonal Roles
• Figureheads: Projecting a set of values, communicating an image.
----symbolizes the organization and what it is trying to achieve,
conducting social, ceremonial and legal responsibilities, providing
mission, vision and symbolizing authority.

• Leader role: Needs to be informed, as well as informing.

----Train, counsel, mentor and encourage high employee performance
---- Act of directing roles, evaluating employee performance,
monitoring, training, motivating employees
Coaches, political
leaders
• Liaison role: Developing channels of communication, especially
informal channels with other corporate directors, political
connections, media, public figures
---- Link and coordinate people inside and outside the organization to
help achieve goals, Connecting people inside and outside the
organization.
Mark
Zuckerberg
Informational Role
• Monitor: Sifting, sorting, selecting information (to help set the agenda)
—phone, meetings, memos, social functions, mail, public gatherings.
----Analyzes information from both the internal and external
environment, productivity of employees (sick leaves, vacation days,
commissions, which customers pay or does not pay on time.

• Disseminator: The passing of relevant information to subordinates.

----manager transmits information to influence attitudes and behavior of
employees, Analyses information collected from internal and external
sources, interprets and shares the interpretations.

• Spokesperson: Has to be able to express it, have solid verbal skills—

right message at right time.
--- Coordinating campaigns, advertising in local newspapers.
 Decisional Role
• Entrepreneurial: Ability to identify opportunities and threats—able to do this in diverse
situations—work or leisure.
----change makers, process improvements, creative spark, new ideas, solve problems, making
innovation happens.
Steve

• Disturbance handler: More information available, more likely correct decision is made.
---- Removing roadblocks/obstacles, changing tactics, work around problems

• Resource allocator: To divisions or departments; managers need to have an understanding of

what resources are needed for effective functioning (e.g. budget gamesmanship).
• ----Monetary, human recourse, time, effort, space and equipments

• Negotiator: Managers need precise and relevant information to facilitate this role.
----’Negotiation is an art’. Discipline, technique, imagination, represents the best
interests/agreement of each parties.
Donald
Is The Manager’s Job Universal?
• Level in the organization
 Do managers manage differently based on where
they are in the organization?
• Profit versus not-for-profit
 Is managing in a commercial enterprise different than
managing in a non-commercial organization?
• Size of organization
 Does the size of an organization affect how managers
function in the organization?
 Distribution of Time per Activity
by Organizational Level

Source: Adapted from T. A. Mahoney, T. H. Jerdee, and S. J. Carroll, Exhibit 1.6

“The Job(s) of Management.” Industrial Relations 4, no. 2 (1965), p. 103.
 Importance of
Managerial Roles
in Small and Large
Businesses

Source: Adapted from J. G. P. Paolillo,

“The Manager’s Self Assessments of
Managerial Roles: Small vs. Large Firms,”
American Journals of Small Business, Exhibit 1.7
January–March 1984, pp. 61–62.
General Skills for Managers
• Conceptual skills
 A manager’s mental ability to coordinate all of the organization’s
interests and activities
• Interpersonal skills
 A manager’s ability to work with, understand, mentor, and
motivate others, both individually and in groups
• Technical skills
 A manager’s ability to use the tools, procedures, and techniques
of a specialized field
• Political skills
 A manager’s ability to build a power base and establish the right
connections
Specific Skills for Managers
• Behaviors related to a manager’s effectiveness:
 Controlling the organization’s environment and its
resources. Stay proactive
 Organizing and coordinating.
 Handling information.
 Providing for growth and development.
 Motivating employees and handling conflicts.
 Strategic problem solving.
Managerial Job Dimensions

Demands • Activities or duties that must

be carried out
• Standards or levels of
minimum performance that
must be met.
Managerial Job Dimensions

Demands • Factors that limit the

response of the manager
 Time
Constraints  Budgets
 Technology
 Attitudes of subordinates
 Legal regulations
Managerial Job Dimensions

Demands • Discretionary behavior

 How work is to be done
 How much work is to be done
Constraints  Who will do the work
 What initiatives will be
Choices undertaken from almost
infinite possibilities
Two Managerial Jobs

Job A: Project Job B: Fast Foods

Team Manager Restaurant Manager
Demands  Develop new product  Maintain attractive
with strong market appearance of
appeal restaurant
 Hold formal weekly  Keep employee costs
progress meeting with as low as possible
boss  Meet standards for
 Frequent travel to speed of service
other company sites

Adapted from Exhibit 1.4: Two Managerial Jobs with Different Demands, Constraints and Choices
Two Managerial Jobs

Job A: Project Job B: Fast Foods

Team Manager Restaurant Manager
Constraints  12 month deadline for  Most employees have
product development limited formal education
 Project budget limit of  Few monetary
$1 million incentives to reward
 No choice in selecting outstanding
team members performance
 Federal and state
health and safety
regulations

Adapted from Exhibit 1.4: Two Managerial Jobs with Different Demands, Constraints and Choices
Two Managerial Jobs

Job A: Project Job B: Fast Foods

Team Manager Restaurant Manager
Choices  The organizational  Selection of employee
structure of the project to promote to
team supervisor
 Sequencing of project  Scheduling of shifts and
tasks assignments
 Budget allocation  Local advertising
promotions

Adapted from Exhibit 1.4: Two Managerial Jobs with Different Demands, Constraints and Choices
How Much Importance Does The
Marketplace Put On Managers?
• Good (effective) managerial skills are a scarce
commodity.
 Managerial compensation packages are one measure
of the value that organizations place on them.
 Management compensation reflects the market forces
of supply and demand.
 Management superstars, like superstar athletes in
professional sports, are wooed with signing bonuses,
interest-free loans, performance incentive packages,
and guaranteed contracts.
Why Study Management?
• We all have a vested interest in improving the
way organizations are managed.
 Better organizations are, in part, the result of good
management.
• You will eventually either manage or be
managed.
 Gaining an understanding of the management
process provides the foundation for developing
management skills and insight into the behavior of
individuals and the organizations.
How Does Management Relate To Other
Disciplines?

Sociology

Political Science Psychology

Management
Economics Philosophy

Anthropology
The Pre-modern Era
• Ancient massive construction projects
 Egyptian pyramids
 Great Wall of China
• Michelangelo, the manager.
Adam Smith’s Contribution To The Field
Of Management

• Wrote the Wealth of Nations (1776)

 Advocated the economic advantages that
organizations and society would reap from the
division of labor:
 Increased productivity by increasing each worker’s
skill and dexterity.
 Time saved that is commonly lost in changing tasks.
 The creation of labor-saving inventions and
machinery.
The Industrial Revolution’s Influence
On Management Practices

• Industrial revolution
 Machine power began to substitute for human power
 Lead to mass production of economical goods
 Improved and less costly transportation systems
became available
 Created larger markets for goods.
 Larger organizations developed to serve larger markets
 Created the need for formalized management practices.
Classical Contributions
• Classical approach
 The term used to describe the hypotheses of the
scientific management theorists and the general
administrative theorists.
 Scientific management theorists
– Looked at the field from the perspective of how to
improve the productivity of operative personnel
– Fredrick W. Taylor, Frank and Lillian Gilbreth, and
Henry Gantt
 General administrative theorists
– Concerned with overall organization and how to
improve it
– Henri Fayol and Max Weber
Scientific Management
• Frederick W. Taylor
 The Principles of Scientific Management (1911)
 Advocated the use of the scientific method to define the “one
best way” for a job to be done
 Believed that increased efficiency could be achieved
by selecting the right people for the job and training
them to do it precisely in the one best way.
 To motivate workers, he favored incentive wage
plans.
 Separated managerial work from operative work.
 Pig iron exmple
Taylor’s Four Principles of
Management
1. Develop a science for each element of an individual’s work,
which replaces the old rule-of-thumb method.
2. Scientifically select and then train, teach, and develop the
worker. (Previously, workers chose their own work and trained
themselves as best they could.)
3. Heartily cooperate with the workers so as to ensure that all work
is done in accordance with the principles of the science that has
been developed.
4. Divide work and responsibility almost equally between
management and workers. Management takes over all work for
which it is better fitted than the workers. (Previously, almost all
the work and the greater part of the responsibility were thrown
upon the workers.)

Exhibit HM-1
Scientific Management Contributors
• Frank and Lillian Gilbreth
 Bricklaying efficiency improvements
 Time and motion studies ( therbligs- 17 basic hand
motions)
• Henry Gantt
 Incentive compensation systems
 Gantt chart for scheduling work operations
General Administrative Theory
• General administrative theorists
 Writers who developed general theories of what managers
do and what constitutes good management practice
 Henri Fayol (France)
 Managing director of a French coal mining firm –a
practitioner
 Fourteen Principles of Management: Fundamental or universal
principles of management practice
 Max Weber (German sociologist)
 Bureaucracy: Ideal type of organization characterized by division of
labor, a clearly defined hierarchy, detailed rules and regulations,
and impersonal relationships
 Fayol’s Fourteen Principles of
Management
• Division of work • Centralization
• Authority • Scalar chain
• Discipline • Order
• Unity of command • Equity
• Unity of direction • Stability of tenure of
personnel
• Subordination of the
individual Interest • Initiative
• Remuneration • Esprit de corps
Exhibit HM-2
Weber’s Ideal Bureaucracy
• Division of Labor
• Authority Hierarchy
• Formal Selection
• Formal Rules and Regulations
• Impersonality
• Career Orientation

Exhibit HM-3
Human Resources Approach

• Robert Owen
 Scottish businessman and reformer who advocated
for better treatment of workers.
 Claimed that a concern for employees was
profitable for management and would relieve
human misery.
• Hugo Munsterberg
 Created the field of industrial psychology—the
scientific study of individuals at work to maximize
their productivity and adjustment.
 Psychology and Industrial Efficiency
 Saw a link between Industrial psychology and scientific
management
Human Resources Approach
• Mary Parker Follett
 Recognized that organizations could be viewed from
the perspective of individual and group behavior.
 Believed that individual potential could only be
released by group association.
 Described the notion of “power with” rather than
“power over” employees.
• Chester Barnard (practitioner)
 Saw organizations as social systems that require
human interaction and cooperation.
 Expressed his views on the “acceptance of authority”
in his book The Functions of the Executive (1938).
Hawthorne Studies
• A series of studies done during the 1920s and 1930s that
provided new insights into group norms and behaviors
 Hawthorne effect
 Social norms or standards of the group are the key
determinants of individual work behavior.
• Changed the prevalent view of the time that people were no
different than machines.
• Elton Mayo concluded:
 Behaviors and sentiments are closely related
 Group influences effect the individual behavior
 Group standards establish individual output levels
 Money is less a factor in determining output than group standards,
sentiments and security.
Human Relations Movement
• Based on a belief in the importance of employee
satisfaction—a satisfied worker was believed to
be a productive worker.
• Advocates believed in people’s capabilities and
were concerned with making management
practices more humane.
 Dale Carnegie
 Abraham Maslow
 Douglas McGregor
The Quantitative Approach

• Operations Research (Management Science)

 Evolved out of the development of mathematical
and statistical solutions to military problems during
World War II.
 Involves the use of statistics, optimization models,
information models, and computer simulations to
improve management decision making for planning
and control.
 Robert McNamara and Charles Thornton (Whiz
Kids)
Social Events That Shaped Management
Approaches

• Classical approach
 The desire for increased efficiency of labor
intensive operations
• Human resources approach
 The backlash to the overly mechanistic view of
employees held by the classicists.
 The Great Depression.
• The quantitative approaches
 World War II
PART I:
Introduction
Chapter 2
2
The Management Environment

PowerPoint Presentation by Charlie Cook

The University of West Alabama
The Changing Economy
• Agriculture
 Until the late nineteenth century, all economies were
agrarian.
• Industrialization
 From the late 1800s until the 1960s, most developed
countries moved from agrarian societies to industrial
societies.
• Information
 Information technology is transforming society from
its manufacturing focus to one of service.
 The Changing Economy
Old Economy
• National borders limit competition
• Technology reinforces rigid
hierarchies and limits access to
information
• Job opportunities are for blue-collar
industrial workers
• Population is relatively
homogeneous
• Business is estranged from its
environment
• Economy is driven by large
corporations
• Customers get what business
chooses to give them
New Economy
• National borders no longer define an
organization’s operating boundaries
• Technological change makes
information more accessible
• Job opportunities are for knowledge
workers
• Population is characterized by
cultural diversity
• Business accepts its social
responsibilities
• Economy is driven by small
entrepreneurial firms
• Customer needs drive business
Exhibit 2.1
A Global Marketplace
• Global village
 The concept of a boundaryless world; the production
and marketing of goods and services worldwide.
• Borderless organization
 A management structure in which internal
arrangements that impose artificial geographic
barriers are broken down
Global Competition
• Multinational corporations (MNCs)
 Companies that maintain significant operations in two or more
countries simultaneously but are based in one home country.

• Transnational corporation (TNC)

 A company that maintains significant operations in more than
one country simultaneously and decentralizes decision making in
each operation to the local country.

• Strategic alliances
 A domestic firm and a foreign firm share the cost of developing
products or building production facilities in a foreign country.
Stages of Going Global

Exhibit 2.3
Globalization’s Effect On Managers
• Parochialism
 A narrow focus in which one sees things solely
through one’s own view and from one’s own
perspective
• Hofstede’s framework for assessing cultures:
 Power distance
 Individualism versus collectivism
 Quantity of life versus quality of life
 Uncertainty avoidance
 Long-term versus short-term orientation
Global Leadership and Organizational
Behavior Effectiveness (GLOBE)
• An ongoing cross-cultural
investigation of leadership
and national culture
 Confirms and extends
Hofstede’s earlier work on
national cultural dimensions
and leadership.
 Also found that the strength
of cultural dimensions
appear to be changing.
• Cultural Dimensions
 Assertiveness
 Future orientation
 Gender differentiation
 Uncertainty avoidance
 Power distance
 Individualism/Collectivism
 In-group collectivism
 Performance orientation
 Humane orientation
 GLOBE Highlights

Source: M. Javidan and R. J. House, “Cultural Acumen for the Global Manager: Exhibit 2.4
Lessons from Project GLOBE,” Organizational Dynamics, Spring 2001, pp. 289–305.
 GLOBE Highlights

Source: M. Javidan and R. J. House, “Cultural Acumen for the Global Manager: Exhibit 2.4 (cont’d)
Lessons from Project GLOBE,” Organizational Dynamics, Spring 2001, pp. 289–305.
Emphasis on Technology
• Technology
 Any equipment, tools, or operating methods that are
designed to make work more efficient
• Information Technology (IT)
 Benefits of IT
 Costsavings (e.g., inventory control)
 Freedom from fixed locations for operations

 Challenges
 Increased worker skill requirements
 A leveling of the the competitive playing field that
increases competition
Internet Business Terms
• E-commerce
 Any computer transaction that occurs when data are
processed and transmitted over the Internet
• E-organization
 The applications of e-business concepts offered to
stakeholders.
• E-business
 The full breadth of activities included in a successful
Internet-based enterprise
 What Defines
an E-Business?

Exhibit 2.5
In What Ways Does Technology Alter A
Manager’s Job?
• Effectiveness and efficiency
 Managers have access to more complete and
accurate information than before, enabling them to
function as better managers.
• Place
 Telecommuting: the linking of a worker’s computer
and modem with those of co-workers and
management at an office.
Society’s Expectations of Business
• Social responsiveness
 The ability of a firm to adapt to changing societal
conditions. Meaningful guide to decision making.
• Social responsibility
 A firm’s obligation, beyond that required by the law
and economics, to pursue long-term goals that are
beneficial to society. Determine what's right or wrong.
• Social obligation
 The obligation of a business to meet its economic and
legal responsibilities and no more.
 Arguments for Social Responsibility

• Public expectations • Balance of responsibility

• Long-run profits and power
• Ethical obligation • Stockholder interests

• Public image • Possession of resources

• Better environment • Superiority of prevention

over cures
• Discouragement of further
government regulation

Exhibit 2.6
 Arguments against Social Responsibility
• Violation of profit maximization
• Dilution of purpose
• Costs
• Too much power
• Lack of skills
• Lack of accountability
• Lack of broad public support

Exhibit 2.6 (cont’d)

What Is Entrepreneurship?
• Entrepreneurship
 The process of initiating a business venture,
organizing the necessary resources, and assuming
the risks and rewards
• Steps in the entrepreneurial process
 Exploring the entrepreneurial context.
 Identifying opportunities and competitive advantages
 Starting the venture.
 Managing the venture
What Do Entrepreneurs Do?
• No two entrepreneurs are exactly alike
 They are creating something new, something
different.
 They’re searching for change, responding to it, and
exploiting it.
• Intrapreneur
 A persons within an organization who demonstrates
entrepreneurial characteristics—has confidence in his
or her abilities, is willing to seize opportunities for
change, and expects surprises and capitalizes on
them.
Diversity and the Workforce
• Increasing workforce diversity
 More variation in the background of organizational
members in terms of gender, race, age, sexual
orientation, and ethnicity
• Characteristics of the future workforce
 More heterogeneous/diverse
 Increasingly older
 More multicultural
• Diversity will require more managerial sensitivity
to individual differences.
 Mars Incorporated Diversity Philosophy
“Distinctive voices working together within a common
culture” is one of the ways we have described how we do
business at Mars. We believe that the success of our business
can be enhanced by having a workforce made up of associates
from many different backgrounds, much as our society and
consumer base consist of a wide variety of individuals. We
value the talents and contributions of our diverse workforce in
reaching toward our future and in playing responsible
leadership roles.

Exhibit 2.8
Source: www.mars.com/other_policies/diversity.as
Labor Supply and Demand Adjustments
• Downsizing
 An activity in an organization designed to create a
more efficient operation through extensive layoffs
• Rightsizing
 Linking staffing levels to organizational goals
• Outsourcing
 An organization’s use of outside firms for providing
necessary products and services
Flexible Workforces
• Core employees
 The small group of full-time employees of an
organization who provide some essential job tasks for
the organization
• Contingent workforce
 Part-time, temporary, and contract workers who are
available for hire on an as-needed basis
 Contingent Workers
• Part-time employees
 Work fewer than 40 hours a week
 Are a good source of staffing for peak hours.
 May be involved in job sharing
• Temporary employees
 Are generally employed during peak periods
 Can fill in for employees for an extended period of time
 Create a fixed labor cost during a specified period
• Contract workers
 Are hired by organizations to work on specific projects.
 Are paid when the firm receives particular deliverables.
 Are a labor cost that is fixed by contract
Exhibit 2.9
Making a Company’s Culture More
Customer-responsive
• Actions that create employees with the competence,
ability, and willingness to solve customer problems as
they arise:
 Selection: hiring the right personalities and attitudes
 Training: developing the customer-focus employees
 Organizing: creating customer-friendly controls
 Empowerment: independence in relating to customers
 Leadership: commitment to the customer-focus vision
 Evaluation: performance measured by behaviors
 Rewards: contingent on outstanding customer service
 Shaping a
Customer-
Responsive
Culture

Exhibit 2.10
Increased Concern for Quality
• Continuous improvement
 Organizational commitment to constantly improving
the quality of a product or service
 JosephJuran
 W. Edwards Deming

 Kaizen: the Japanese term for an organization

committed to continuous improvement
• Work process engineering
 Radical or quantum change in an organization
 Components of Continuous Improvement
1. Intense focus on the customer.
2. Concern for continuous improvement.
3. Improvement in the quality of everything the
organization does.
4. Accurate measurement.
5 Empowerment of employees.
.

Exhibit 2.11
PART II: Planning

Chapter 3 3
Foundations of Planning
PowerPoint Presentation by Charlie Cook
The University of West Alabama
 Case
Ayesha works in the admission department at LSE.
The next approaching month is May when the
admission advertisement will be placed that the
admissions are open. She needs to plan the coming
months ahead in order to avoid any bottlenecks.
-Hire 4-5 employees who deal with incoming
customers
-Enough registration documents are printed and
placed
-Training the employees
Planning Defined

Planning is concerned with ends (what is to be done)

as well as with means (how it is to be
done).
 What Is Planning?
• Defining the organization’s goals
 Desired outcomes for individuals, groups, or entire
organizations
• Establishing an overall strategy for achieving
those goals
 How shall we achieve the goals?
• Developing a comprehensive set of plans to
integrate and coordinate organizational work
 Who is going to do what?
 How will resources be allocated?
What Is Planning?

Informal planning - nothing is written down

•little or no sharing of goals
•general and lacking in continuity
•exist in small and large businesses.

Formal planning – written

•defines specific goals
•specific action programs exist to achieve goals
Reasons for
Planning

Exhibit 3.1
Criticisms Of Formal Planning
• Planning may create rigidity.
• Plans can’t be developed for a dynamic
environment.
• Formal plans can’t replace intuition and
creativity.
• Planning focuses managers’ attention on today’s
competition, not on tomorrow’s survival.
• Formal planning reinforces success, which may
lead to failure.
Planning and Performance
• Formal planning generally means higher profits,
higher return on assets, and other positive
financial results.
• Planning process quality and implementation
probably contribute more to high performance
than does the extent of planning.
• When external environment restrictions allowed
managers few viable alternatives, planning did
not lead to higher performance.
 How Do Managers Plan?
Goals - desired outcomes
•provide direction for all management decisions
•represent the criteria against which actual work
accomplishments can be measured
Types of Goals
•financial goals - relate to financial performance
•strategic goals - relate to other areas of performance

Plans - outline how goals are going to be met

Four Types of Planning (according to the hierarchy)
1. Strategic Long range, broad
Planning goals
2. Tactical To implement a
Planning strategic plan;
shorter term and
more specific
3. Operational Creating very specific
Planning policies and
procedures
Contingency Alternative actions
Planning for unusual or crisis
situations
Hierarchy and planning

Strategic planning

Tactical planning

Operational planning
The Relationships
Between Goals and
Plans
Types of Plans
Strategic Planning
• Strategic plans
 Apply broadly to the entire organization.
 Establish the organization’s overall objectives.
 Seek to position the organization in terms of its
environment.
 Provide direction to drive an organization’s efforts to
achieve its goals.
 Serve as the basis for the tactical plans.
 Cover extended periods of time.
 Are less specific in their details.
Tactical Planning
• Tactical plans (operational plans)
 Apply to specific parts of the organization.
 Are derived from strategic objectives.
 Specify the details of how the overall objectives are
to be achieved.
 Cover shorter periods of time.
 Must be updated continuously to meet current
challenges.
Short-term versus Long-term
• Short-term plans
 Plans that cover less than one year
• Long-term plans
 Plans that extend beyond five years
Specific Versus Directional
Plans
Specific and Directional Plans
• Specific plans
 Plans that have clearly defined objectives and leave
no room for misinterpretation.
 “What,when, where, how much, and by whom”
(process-focus)
• Directional plans
 Flexible plans that set out general guidelines.
 “Go from here to there” (outcome-focus)
Single-Use and Standing Plans
• Single-use plans
 A plan that is used to meet the needs of a particular
or unique situation
 Single-day sales advertisement
• Standing plan
 A plan that is ongoing and provides guidance for
repeatedly performed actions in an organization
 Customer satisfaction policy
Stated versus Real Goals

• Broadly-worded official statements of the

organization (intended for public consumption)
that may be irrelevant to its real goals (what
actually goes on in the organization)!
Management by Objectives
• Management by Objectives (MBO)
 A system in which specific performance objectives are
jointly determined by subordinates and their
supervisors, progress toward objectives is periodically
reviewed, and rewards are allocated on the basis of
that progress.
 Links individual and unit performance objectives at all
levels with overall organizational objectives.
 Focuses operational efforts on organizationally
important results.
 Motivates rather than controls.
Cascading of Objectives

Exhibit 3.4
Elements of MBO
• Goal specificity
• Participative decision making
• Explicit time period for performance
• Performance feedback
Setting Employee Objectives
• Employees should have a clear understanding
of what they’re attempting to accomplish.
• Every manager can better facilitate this process
by following these guidelines.
 Identify an employee’s key job tasks.
 Establish specific and challenging goals for each key task.
 Allow the employee to actively participate.
 Prioritize goals.
 Build in feedback mechanisms to assess goal progress.
 Link rewards to goal attainment.
 Goal Goal
Difficulty Specificity

Is There a Downside to MBO?

Top
Participation
Management
Strategic Management
• Strategic Management Process
 A nine-step process that involves strategic planning,
implementation, and evaluation

Exhibit 3.5
SWOT Analysis
• Strengths (strategic)
 Internal resources that are available or things that an
organization does well.
 Core competency: a unique skill or resource that represents
a competitive edge.
• Weaknesses
 Resources that an organization lacks or activities that it does not
do well.
• Opportunities (strategic)
 Positive external environmental factors.
• Threats
 Negative external environmental factors.
Grand Strategies
• Growth strategy
 A strategy in which an organization attempts to increase the
level of its operations.
• Stability strategy
 A strategy that is characterized by an absence of significant
change.
• Retrenchment strategy
 A strategy characteristic of a company that is reducing its size,
usually in an environment of decline.
• Combination strategy
 The simultaneous pursuit by an organization of two or more of
growth, stability, and retrenchment strategies.
Growth Strategies
• Direct Expansion
 Involves increasing a company’s size, revenues,
operation, or workforce.
• Merger
 Occurs when two companies, usually of similar size,
combine their resources to form a new company.
• Acquisition
 Occurs when a larger company
buys a smaller one and incorporates
the acquired company’s operations
into its own.
Competitive Strategies
• Strategies that position an organization in such a
way that it will have a distinct advantage over its
competition:
 Cost-leadership strategy
 Becoming the lowest-cost producer in an industry.
 Differentiation strategy
 Attempting to be unique in an industry within a broad
market.
 Focus strategy
 Attempting to establish an advantage (such as cost or
differentiation) in a narrow market segment.
Evaluating Strategy

Strategy Implementation
Formulation and Execution

Evaluation
Quality as a Strategic Weapon
• Benchmarking
 The search for the best practices among competitors
or noncompetitors that lead to their superior
performance.
• ISO 9000 series
 Standards designed by the International Organization
for Standardization (ISO) that reflect a process
whereby independent auditors attest that a
company’s factory, laboratory, or office has met
quality management requirements.
PART II: Planning

4
Chapter 4

Foundations of Decision Making

PowerPoint Presentation by Charlie Cook
The University of West Alabama
Decision Making
• Decision
 Making a choice from two or more alternatives.
• Importance of Decision making
 Today’s decision will effect the tomorrow of the
organization
 Managers make more than 25,000 decisions everyday
 Agency problem (theory) exist between CEO, BOD and
managers
 “Right decision?” - Justification of decisions is required
What is decision making?
• Decision making is a process of selecting the
best among the different alternatives.
• It is the act of making a choice.
• There are so many alternatives found in the
organization and departments.
• Decision making is defined as the selection of
choice of one best alternative.
 Examples of Planning-Function Decisions

 What are the organization’s long-term objectives?

 What should the organization’s short-term objectives be?
 What is the most efficient means of completing tasks?
 What budgets are needed to complete department
tasks?
 How difficult should individual goals be?

Exhibit 4.1
Decision-making process
• Decision-making process
 A set of eight steps that includes identifying a
problem, selecting a solution, and evaluating the
effectiveness of the solution
• Problem
 A discrepancy between an existing and a desired
state of affairs
• Decision criteria
 Factors that are relevant in a decision
The Decision-Making Process

Exhibit 4.2
Step 1: Identifying the Problem
• Problem
 A discrepancy between an existing and desired state of
affairs.
• Characteristics of Problems
 A problem becomes a problem when a manager
becomes aware of it (Iceberg principle).
 There is pressure to solve the problem (time
restrictions).
 The manager must have the authority, information, or
resources needed to solve the problem.
Step 2: Identifying Decision Criteria
• Decision criteria are factors that are important
(relevant) to resolving the problem such as:
 Costs that will be incurred (investments required)
 Risks likely to be encountered (chance of failure)
 Outcomes that are desired (growth of the firm)

Step 3: Allocating Weights to the Criteria

• Decision criteria are not of equal importance:
 Assigning a weight to each item places the items in
the correct priority order of their importance in the
decision-making process.
Exhibit 6–2 Criteria and Weights for Computer Replacement
Decision

2. Criterion 3.Weight
Memory and Storage 10
Battery life 8
Carrying Weight 6
Warranty 4
Display Quality 3
Step 4: Developing Alternatives
• Identifying viable alternatives
 Alternatives are listed (without evaluation) that can
resolve the problem.

Step 5: Analyzing Alternatives

• Appraising each alternative ’s strengths and
weaknesses
 An alternative’s appraisal is based on its ability to
resolve the issues identified in steps 2 and 3.
 Market research
Exhibit 6–3 Assessed Values of Laptop
Computers Using Decision Criteria
5. Evaluation
4. Alternatives

Step 6: Selecting an Alternative

• Choosing the best alternative
 The alternative with the highest total weight is
chosen.
Exhibit 6–4 Evaluation of Laptop Alternatives
Against Weighted Criteria

6. Criteria x Evaluation
Step 7: Implementing the Alternative
• Putting the chosen alternative into action.
 Conveying the decision to and gaining commitment
from those who will carry out the decision.
 Agency problem

Step 8: Evaluating the Decision’s

Effectiveness
• The soundness of the decision is judged by its
outcomes.
 How effectively was the problem resolved by
outcomes resulting from the chosen alternatives?
 If the problem was not resolved, what went wrong?
Making Decisions
• Rationality
 Managers make consistent, value-maximizing choices
with specified constraints.
 Assumptions are that decision makers:
 Are perfectly rational, fully objective, and logical.
 Have carefully defined the problem and identified all
viable alternatives.
 Have a clear and specific goal
 Will select the alternative that maximizes outcomes in the
organization ’s interests rather than in their personal
interests.
Creativity Importance in Decision
Making
• What is creativity?
 The ability to produce novel and useful ideas
• Creative potential is based on:
 Expertise
 Creative thinking skills
 Individualtraits associated with the development of
creative ideas include intelligence, independence, self-
confidence, risk-taking, an internal locus of control,
tolerance for ambiguity, and perseverance in the face of
frustration.
 Intrinsic task motivation- turns creative potential into
actual creative ideas.
Making Decisions (cont’d)
• Bounded Rationality (Herbert Simon)
 Managers make decisions rationally, but are limited
(bounded) by their ability to process information.
 Assumptions are that decision makers:
 Will not seek out or have knowledge of all alternatives
 Will satisfic —choose the first alternative encountered that
satisfactorily solves the problem—rather than maximize the
outcome of their decision by considering all alternatives and
choosing the best.
 Influence on decision making
 Escalation of commitment: an increased commitment to a
previous decision despite evidence that it may have been wrong.
The Role of Intuition
• Intuitive decision making
 Making decisions on the basis of experience, feelings, and
accumulated judgment.
 An unconscious process created out of distilled experience
• Conditions Favoring Intuitive Decision Making
 A high level of uncertainty exists
 There is little precedent to draw on
 Variables are less scientifically predictable
 “Facts” are limited
 Facts don’t clearly point the way
 Analytical data are of little use
 Several plausible alternative solutions exist
 Time is limited and pressing for the right decision
Types of Problems and Decisions
• Structured Problems
 Involve goals that are clear.
 Are familiar (have occurred before).
 Are easily and completely defined —information about
the problem is available and complete.

• Programmed Decision
 A repetitive decision that can be handled by a routine
approach.
Types of Programmed Decisions
• Procedure
 A series of interrelated steps that a manager can use
to respond (applying a policy) to a structured problem.
• Rule
 An explicit statement that limits what a manager or
employee can or cannot do.
• Policy
 A general guideline for making a decision about a
structured problem.
Policy, Procedure, and Rule Examples
(SOP’s)
• Policy
 Accept all customer-returned merchandise.

• Procedure
 Follow all steps for completing merchandise return
documentation.

• Rules
 Managers must approve all refunds over $50.00.
 No credit (card) purchases are refunded for cash.
Problems and Decisions (cont’d)
• Unstructured Problems
 Problems that are new or unusual and for which
information is ambiguous or incomplete.
 Problems that will require custom-made solutions.

• Nonprogrammed Decisions
 Decisions that are unique and nonrecurring.
 Decisions that generate unique responses.
Exhibit 6–7 Programmed Versus Nonprogrammed Decisions
Decision Making: Styles
• Directive style
 Characterizes the low tolerance for ambiguity and a
rational way of thinking of individuals who are logical
and efficient and typically make fast decisions that
focus on the short term.
• Analytic style
 Characterizes the high tolerance for ambiguity
combined with a rational way of thinking of
individuals who prefer to have complete information
before making a decision.
Decision Making: Styles (cont’d)
• Conceptual style
 Individuals who tend to be very broad in outlook, to
look at many alternatives, and to focus on the long
run and often look for creative solutions.
• Behavioral style
 Individuals who think intuitively but have a low
tolerance for uncertainty; they work well with others,
are open to suggestions, and are concerned about
the individuals who work for them.
Decision-Making Styles

Exhibit 4.9
PART III: Organizing

Chapter 5
5
Basic Organization Designs

PowerPoint Presentation by Charlie Cook

The University of West Alabama
The Elements of Structure
• Organization design
 A process in which managers develop or change their
organization’s structure.

• Six elements of structure

 Work specialization
 Unity of command
 Span of control
 Authority and responsibility
 Centralization vs Decentralization
 Departmentalization
• Work specialization
 A component of organization structure that involves
having each discrete step of a job done by a different
individual rather than having one individual do the
whole job.

 McDonalds
 Doctors
Economies and Diseconomies
of Work Specialization

Exhibit 5.1
Organizational Structure: Control
• Chain of command
 The continuous line of authority that extends from
upper organizational levels to the lowest levels and
clarifies who reports to whom.
• Unity of Command
 The management principle that no person should report
to more than one boss.
• Span of control
 The number of subordinates a manager can direct
efficiently and effectively.
 Wide versus narrow
Chain of Command

Exhibit 5.2
Organizational Structure: Control
(cont’d)
• Authority
 The rights inherent in a managerial position to give
orders and expect them to be obeyed.
 Early management scholars assumed that the
authority and rights inherent in one’s formal position
were the sole source of influence; so, managers were
all powerful.

• Responsibility
 An obligation to perform assigned activities.
Types of Organizational Authority
• Line authority
 The position authority (given and defined by the
organization) that entitles a manager to direct the
work of operative employees.
• Staff authority
 Positions that have some authority (e.g., organization
policy enforcement) but that are created to support,
assist, and advise the holders of line authority.
Line Versus Staff Authority

Exhibit 5.3
Organizational Structure: Control
(cont’d)
• Power
 An individual’s capacity to influence decisions
 The cone analogy above acknowledges two facts:
 (1) the higher one moves in an organization, the
closer he or she is to the power core
 (2) even those without authority can wield power
because one can move horizontally inward toward the
power core without moving up.
Authority Versus Power: Authority

Exhibit 5.4a
Authority Versus Power: Power

Exhibit 5.4b
 Types of Power (French & Raven)
Coercive power Power based on fear.
Reward power Power based on the ability to distribute
something that others value.
Legitimate power Power based on one’s position in the
formal hierarchy.
Expert power Power based on one’s expertise,
special skill, or knowledge.
Referent power Power based on identification with a
person who has desirable resources or
personal traits.

Exhibit 5.5
Centralization And Decentralization
• Centralization
 A function of how much decision-making is
concentrated at a single point in the organization.
The more centralized an organization, the higher the
level at which decisions are made
• Decentralization
 The pushing down of decision-making authority to
the lowest levels of an organization
Many production decisions are pushed down to lower
levels in the organization, or even outside to some
suppliers, financial and product distribution decisions
remain in the hands of senior management
Types of Departmentalization

Functional
Product
Customer
Geographic
Process

Exhibit 5.6
Departmentalization
• Functional departmentalization
 The grouping of activities by functions performed to pursue
economies of scale by sharing skills and knowledge into work
groups.
• Product departmentalization
 The grouping of activities by product produced – under one
manager
• Customer departmentalization
 The grouping of activities by common customers or type of
customers
• Geographic departmentalization
 The grouping of activities by territory if the customers are
geographically dispersed.
• Process departmentalization
 The grouping of activities by work or customer flow where
homogenous activities will be categorized
Contingency Variables Affecting
Structure
• After studying nearly 100 large companies, Alfred
Chandler concluded that changes in corporate
strategy foster changes in an organization’s structure.
• Mechanistic organization
 The bureaucracy; a structure that is high in specialization,
formalization, and centralization
• Organic organization
 An adhocracy; a structure that is low in specialization,
formalization, and centralization
 Mechanistic versus Organic Organizations
• Rigid hierarchical relationships
• Fixed duties
• Many rules
• Formalized communication
channels
• Centralized decision authority
• Taller structures
• Extensive departmentalization
• Narrow span of control
• Collaboration (both vertical and
horizontal)
• Use of cross functional teams
• Adaptable duties
• Few rules
• Informal communication
• Decentralized decision authority
• Flatter structures
Structure follows
strategy
• A differentiation strategy must innovate to
survive; it is flexible and adaptable

• A cost-leadership strategy, on the other hand,

seeks stability and efficiency
 Effect of size on
•
structure
Large organizations (2,000+ employees) vs
small organizations.

Effect of environment on
•structure
Stable environment vs dynamic environments
Technology and Structure
• Unit production
 Production in terms of units or small batches
• Mass production
 Production in terms of large batch manufacturing
• Process production
 Production in terms of continuous processing
Organization Design Applications
• Simple structure
 An organization that is low in specialization and
formalization but high in centralization
• Functional structure
 An organization in which similar and related
occupational specialties are grouped together
• Divisional structure
 An organization made up of self-contained units
Functional Structure

Exhibit 5.8
Divisional Structure

Exhibit 5.9
Other Organizational Structures
• Matrix structure
 An organization in which specialists from functional
departments are assigned to work on one or more
projects led by a project manager
• Team-based structure
 An organization that consists entirely of work groups or
teams
• Boundaryless organization
 An organization that is not defined or limited by
boundaries or categories imposed by traditional
structures
Matrix Structure

Exhibit 5.10
Virtual Organization
Learning Organization
• An organization that has developed the capacity
to continuously adapt and change because all
members take an active role in identifying and
resolving work-related issues.
 Organization design
 Information sharing
 Leadership
 Organizational culture
 Characteristics of a Learning Organization

Source: Based on P. M. Senge, The Fifth Discipline: The Art and Practice of Learning Organizations (New
York: Doubleday, 1990); and R. M. Hodgetts, F. Luthans, and S. M. Lee, “New Paradigm Organizations: Exhibit 5.11
From Total Quality to Learning to World Class.” Organizational Dynamics (Winter 1994), pp. 4–19.
Organization Culture

• Organization culture
 A system of shared meaning within an organization
that determines, to a large degree, how employees
act

 Shared values are shown in cultural elements:

 Stories, rituals, material symbols, and language unique
to the organization
PART III: Organizing

PowerPoint Presentation by Charlie Cook

The University of West Alabama
Human Resources Management (HRM)
• The management function that is concerned with
getting, training, motivating, and keeping
competent employees.
 Balancing
the supply of employees with the demand for
employees.
 Matching the talents and skills of employees with those
required by the organization.
 Creating
a working environment that fosters high
employee performance.
 Meeting the pay and benefits needs of employees.
The Strategic
Human Resources
Management Process
Exhibit 6.1
Employment Planning
• Employment planning
 The process by which management ensures it has
the right number and kinds of people in the right
places at the right time, who are capable of
helping the organization achieve its goals
• Steps in the planning process:
1. Assessing current human resources.
2. Assessing future human resources needs and
developing a program to meet those needs.
Employee Assessment
• Human resource inventory report
 A report listing the name, education, training, prior
employer, languages spoken, and other information
about each employee in the organization
• Job analysis
 An assessment of the kinds of skills, knowledge, and
abilities needed to successfully perform each job in
an organization
Job Analysis Components
• Job description
 A written statement of what a job holder does, how it
is done, and why it is done
 Tasks, duties and responsibilities that the job entails
• Job specification
 A statement of the minimum acceptable qualifications
that an incumbent must possess to perform a given
job successfully
 Knowledge, skills, and abilities required of the job
holder
Recruitment And Selection
• Recruitment
 The process of locating, identifying, and attracting
capable applicants
• Selection process
 The process of screening job applicants to ensure
that the most appropriate candidates are hired
 Traditional Recruiting Sources
• Internal searches
• Advertisements
• Employee referrals
• Public employment
agencies
• Private employment
agencies
• School placement
• Temporary help services
• Employee leasing and
independent contractors
Exhibit 6.3
Selection Decision Outcomes

Exhibit 6.5
Selection Terms
• Reliability
 The degree to which a selection device measures the
same thing consistently (stability)
 Example: an individual consistently achieves nearly
identical scores on the same exam.
• Validity
 The proven relationship between a selection device
and some relevant criterion (a measure of job
success)
 Example:superior job performance and high
employment test scores
Selection Devices
• Written tests
 Intelligence, aptitude, ability, and interest test batteries

• Performance-simulation tests
 Selection devices that are based on actual job behaviors; work sampling
and assessment centers

• Interviews
• Effective if conducted correctly. The interview is most valid in determining
an applicant’s intelligence, level of motivation, and interpersonal skills.
• Structured and well-organized interviews are more reliable than
unstructured and unorganized ones.

• Realistic job preview (RJP)

 Providing positive and negative information about the job and the
company during the job interview
Potential Biases in Interviews
• Prior knowledge about the applicant will bias the
interviewer’s evaluation.
• The interviewer tends to hold a stereotype of what
represents a good applicant.
• The interviewer tends to favor applicants who share his
or her own attitudes.
• The order in which applicants are interviewed will
influence evaluations.
• The order in which information is elicited during the
interview will influence evaluations.
Potential Biases in Interviews (cont’d)
• Negative information is given unduly high weight.
• The interviewer may make a decision concerning the
applicant’s suitability within the first four or five minutes
of the interview.
• The interviewer may forget much of the interview’s
content within minutes after its conclusion.
Making Interviews More Effective
• Behavioral (Situation) Interview
 An interview in which candidates are observed not
only for what they say, but how behave to determine
how they might behave under stress.
 Candidates are presented a complex situation and
asked to “deal with” it.

 Research indicates that behavioral interviews are nearly

eight times more effective than other interview formats.
Introducing Employee to the
Organization
• Employee Orientation
 The introduction of a new employee to the job and
the organization
• Objectives of orientation
 To reduce the initial anxiety all new employees feel
as they begin a new job
 To familiarize new employees with the job, the work
unit, and the organization as a whole
 To facilitate the outsider–insider transition
Training
• Employee training
 A learning experience in that it seeks a relatively
permanent change in employees such that their
ability to perform on the job improves.
 Changing skills, knowledge, attitudes, or behavior
 Changing what employees know, how they work; or
their attitudes toward their jobs, co-workers, managers,
and the organization
Determining if Training Is Needed

Exhibit 6.6
 Typical Training Methods
• On-the-Job Training Methods
 Job rotation
 Understudy assignments(apprenticeship)

• Off-the-Job Training Methods

 Classroom lectures
 Films and videos
 Simulation exercises
 Vestibule training
Exhibit 6.7
Performance Management
• Performance management system
 A process of establishing performance standards and
evaluating performance in order to arrive at objective
human resource decisions and to provide
documentation to support personnel actions
Other Appraisal Methods
• Adjective rating scales
 Rating an individual on each job performance factor
on an incremental scale.
• 360-degree appraisal
 An appraisal device that seeks feedback from a
variety of sources for the person being rated.
Adjective rating scale
Direct Comparison Methods
• Group-order ranking
 Requires the evaluator to place employees into a
particular classification such as “top fifth” or “second
fifth.”
• Individual ranking approach
 Requires the evaluator merely to list the employees in
order from highest to lowest.
Group Order Ranking
Direct Comparison Methods (cont’d)
• Paired comparison approach
 Each employee is compared with every other
employee in the comparison group and rated as
either the superior or weaker member of the pair.
 Each employee is assigned a summary ranking based
on the number of superior scores achieved.
• MBO
 Employees are evaluated by how well they
accomplish a specific set of objectives determined to
be critical in the successful completion of their jobs.
 Performance Appraisal Methods
METHOD ADVANTAGE DISADVANTAGE
Written essay Simple to use More a measure of evaluator’s
writing ability than of employee’s
actual performance
Critical incidents Rich examples Time-consuming; lack
behaviorally basedquantification
Graphic rating Provide quantitative Do not provide depth of job
scales data; less time- behavior assessed
consuming than others
BARS Focus on specific Time-consuming; difficult to
and measurable job develop measures
behaviors
Multiperson Compares employees Unwieldy with large number of
with one another employees
MBO Focuses on end goals; Time-consuming
results oriented
360°Appraisal More thorough Time-consuming Exhibit 6.8
Critical Incident
Graphic Rating Scale
BARS
When Performance Falls Short
• Performance impediments
 Mismatched skills
 Inadequate training
 Employee’s personal problems
• Discipline
 Actions taken by a manager to enforce an
organization’s standards and regulations
• Employee counseling
 A process designed to help employees overcome
performance-related problems
Compensation And Benefits
• Compensation administration
 Determining a cost-effective pay structure that will
attract and retain competent employees, provide an
incentive for them to work hard, and ensure that pay
levels will be perceived as fair.
• Factors influencing pay levels
 Employee’s job
 Kind of business
 Environment surrounding the job
 Geographic location
 Employee performance levels and seniority.
Benefits
• Employee benefits
 Nonfinancial rewards designed to enrich employees’
lives
• Types of benefits
 Social Security
 Workers’ and unemployment compensations
 Paid time off from work
 Life and disability insurance
 Retirement programs
 health insurance
Violence in the Workplace
• Workplace violence
 The increase in violent crimes being committed at the work site.

• Preventing violence in the workplace

 Training supervisory personnel to identify troubled employees
before the problem results in violence.
 Designing employee assistance programs (EAPs) specifically to
help individuals in need.
 Implementing stronger security mechanisms.
 Preventing violence paraphernalia from entering facilities
altogether.
Layoffs and Downsizing
• Layoff-survivor sickness
 The set of attitudes, perceptions, and behaviors of
employees who remain after involuntary staff
reductions
• Dealing with the “Survivor Syndrome”
 Provide opportunities for employees to talk to
counselors about their guilt, anger, and anxiety.
 Provide group discussions for the survivors to vent
their feelings.
 Implement employee participation programs such as
empowerment and self-managed work teams.
 Downsizing Options
• Firing
• Layoffs
• Attrition
• Transfers
• Reduced workweeks
• Early retirements
• Job sharing

Exhibit 6.4