Why Do Managers Plan?

Four reasons for planning:

Provides direction
Reduces uncertainty
Minimizes waste and redundancy(idleness)
Sets the standards for controlling

a good overview of some key reasons why managers engage in planning.

1. Provides Direction:
 Planning helps set clear objectives and goals for an organization. It outlines the
path that needs to be followed to achieve these objectives.
 By defining a direction, planning helps align the efforts of individuals and teams
within the organization toward common goals.
2. Reduces Uncertainty:
 The business environment is often dynamic and unpredictable. Planning allows
managers to anticipate potential challenges and changes in the environment.
 Through forecasting and scenario analysis, managers can develop strategies to
mitigate risks and uncertainties.
3. Minimizes Waste and Redundancy (Idleness):
 Planning helps in allocating resources efficiently. It involves assessing the
available resources and using them in the most effective manner to achieve
organizational objectives.
 By identifying and eliminating unnecessary activities or redundancies, planning
minimizes waste and ensures optimal resource utilization.
4. Sets Standards for Controlling:
 Planning establishes a benchmark against which actual performance can be
measured.
 It provides a basis for comparison, allowing managers to assess whether the
organization is progressing toward its goals or if adjustments need to be made.
 Standards set during the planning phase become the basis for evaluating and
controlling ongoing activities.

What Is Planning?
Planning generally refers to the process of setting goals, determining the actions or
strategies to achieve those goals, and organizing resources to implement those actions.
 It is a fundamental aspect of human cognition and behavior, applicable in various
contexts, including personal life, business, project management, and more.

In different contexts, planning can involve different aspects:

1. Setting Goals: This involves defining what you want to achieve. Goals provide a clear
direction and purpose for planning
2. Scheduling: Planning often includes creating a timeline or schedule to outline when
specific tasks or actions should be completed. This helps in managing time effectively.
3. Risk Assessment and Mitigation: Identifying potential risks and developing strategies
to mitigate or manage them is an essential part of planning.
4. Monitoring and Evaluation: Planning is not a one-time activity; it involves continuous
monitoring of progress towards goals. Regular evaluations help to identify what is
working well and what needs adjustments.
Formal planning
Formal planning refers to the systematic process of setting goals, defining strategies, and
outlining tasks to achieve specific objectives within an organization. It is a structured
approach that involves careful consideration of various factors and usually follows a
predetermined set of steps. Formal planning is commonly used in business, project
management, and other organizational settings to ensure clarity, coordination, and
effectiveness in achieving desired outcomes.

Key components of formal planning include:

1. Goal Setting: Clearly defining specific, measurable, achievable, relevant, and time-
bound (SMART) goals is the foundation of formal planning. Goals provide a sense of
direction and purpose for the organization..
2. Tactical Planning: Once strategies are in place, tactical planning involves breaking
down the overall plan into specific action steps. This includes assigning tasks, setting
deadlines, and allocating resources to ensure efficient implementation.
3. Operational Planning: Operational plans focus on day-to-day activities and processes
necessary to carry out tactical plans. This level of planning involves detailed procedures
and guidelines for routine tasks.
4. Communication: Effective communication is crucial in formal planning to ensure that all
stakeholders understand the goals, strategies, and expectations. This helps foster
alignment and collaboration within the organization.
 Planning and Performance
Planning and performance are closely intertwined concepts within the realm of
organizational management. The effectiveness of planning often has a direct impact on
organizational performance. Here's how planning and performance are interconnected:

1. Goal Alignment: Planning involves setting clear goals and objectives for an
organization. When these goals are well-defined and aligned with the overall mission
and vision, they serve as a roadmap for the organization.
2. Strategic Planning: Strategic planning is a key aspect of organizational planning that
involves defining long-term objectives and determining the best course of action to
achieve them. Resource Allocation: Planning helps in the effective allocation of
resources, including human resources, financial resources, and time. When resources are
allocated in line with the organizational plan, it enhances efficiency and contributes to
improved performance.
3. Risk Mitigation: Planning also involves anticipating and mitigating risks. By identifying
potential challenges and developing contingency plans, organizations can minimize
disruptions and negative impacts on performance.
4. Tactical and Operational Planning: Tactical and operational planning break down
strategic plans into actionable steps. These plans outline specific tasks, responsibilities,
and timelines, ensuring that day-to-day activities

Goals vs. Plans

A goal is your vision – your North Star. Goals are the “what” part of an idea. A plan is
your strategy – your map to the North Star. It’s the “how” part of an idea.

Here are some examples of each (and how they work together).

 Goal —> Post 100 videos to YouTube

 Plan —> Post 2 videos per week for 1 year
 Goal —> Release music to Spotify
 Plan —> Spend 2-3 hours every evening writing, producing and mixing songs
 Goal —> Start a creative business
 Plan —> Solve my own problems, turn my solutions into content, fine tune things,
create an offer
 Financial Goals:
 o Definition: Objectives related to monetary achievements or financial well-
being.
o Example: Saving $10,000 for a down payment on a house within the next
two years.
 Strategic Goals:
 A strategic goal is a long-term, “big picture” objective for a business, rather
than a short-term tactic that addresses a current problem or challenge.

 Related to the performance of the firm relative to factors in its external

environment (e.g., competitors).

Strategic Goals examples:

 Market Leadership:
o Priority: Become the market leader in [industry/niche].
o Resource Allocation: Allocate significant budget and manpower to
research, development, and marketing efforts.
o Budget: Increase R&D budget by 20% to foster innovation and product
differentiation.
o Team Formation: Form cross-functional teams to enhance collaboration
and innovation.
 Operational Excellence:
o Priority: Achieve operational efficiency and cost-effectiveness.
o Resource Allocation: Invest in technology upgrades and process
optimization.
o Budget: Reduce operational costs by 15% through streamlined processes
and automation.
o Team Formation: Create task forces to identify and implement operational
improvements.


 Stated Goals:
o Definition: Objectives explicitly communicated or declared by individuals,
organizations, or entities.
o Example: A company publicly announcing its commitment to reducing
carbon emissions by 30% in the next decade.
 Real Goals:
 o Definition: Objectives that reflect actual intentions or underlying
motivations, which may differ from what is explicitly stated.
o Example: A person stating a fitness goal of losing weight, while the
underlying real goal is to improve overall health and well-being.

DIFFERENCE BETWEEN GOALS AND STRATEGIES.

Goals and strategies are two distinct but interconnected concepts in the context of
planning and achieving desired outcomes. Understanding the difference between goals
and strategies is crucial for effective planning and execution. Here's a breakdown of
each term:

1. Goals:
 Definition: Goals are the broad, overarching objectives or outcomes that an
individual, organization, or entity aims to achieve. They represent the desired
results or accomplishments.
 Nature: Goals are often qualitative and provide a clear direction for what needs
to be accomplished. They answer the question, "What do we want to achieve?"
 Examples: Increasing revenue by 20%, improving customer satisfaction,
expanding market share, or launching a new product are examples of goals.
2. Strategies:
 Definition: Strategies are the plans, approaches, or methods employed to
achieve the defined goals. They involve a set of actions, decisions, and resource
allocations designed to move from the current state to the desired state.
 Nature: Strategies are more specific and operational than goals. They outline
how the goals will be accomplished and provide a roadmap for implementation.
 Examples: Developing a new marketing campaign, entering a new market
segment, implementing cost-cutting measures, or investing in research and
development are examples of strategies.
 Plans
A plan is your strategy – your map to the North Star. It’s the “how” part of an idea.

Types of Plans
1. Strategic Plans:
 Definition: Strategic plans are high-level, overarching plans designed to guide an
organization in achieving its long-term goals and objectives.
 Example: A technology company developing a five-year plan to become a leader
in sustainable and eco-friendly innovations.
2. Operational Plans:
 Definition: Operational plans outline specific actions and tasks required to
implement the strategies defined in the strategic plans. They focus on day-to-day
activities.
 Example: A retail store creating a monthly operational plan that details inventory
management, sales targets, and staff schedules.
3. Long-Term Plans:
 Definition: Long-term plans extend beyond three to five years, providing a
roadmap for the organization's future, including strategic goals and major
initiatives.
 Example: An educational institution devising a ten-year plan to expand campus
facilities and enhance academic programs.
4. Specific Plans:
 Definition: Specific plans outline clear and precise details regarding tasks,
deadlines, and resources required for a particular project or goal.
 Example: A marketing team developing a specific plan for a product launch,
including advertising strategies, budget allocation, and launch event details.
5. Directional Plans:
 Definition: Directional plans provide general guidelines without specifying
detailed steps, allowing flexibility in implementation.
 Example: A startup company adopting a directional plan to foster innovation and
adaptability in response to market changes without dictating specific procedures.

Steps in Goal-Setting

1. Review the organization’s mission, or purpose.

2. Evaluate available resources
3. Determine the goals individually or with input from others
 4. Write down the goals and communicate them to all who need to know
5. Review results and whether goals are being met.

Well-Written Goals

1. Written down
2. Written in terms of outcomes rather than actions
3. Measurable and quantifiable
4. Clear as to a time frame
5. Challenging yet attainable
6. Communicated to all necessary organizational members

Approaches to Planning

• In the traditional approach, planning is done entirely by top-level managers often

are assisted by a formal planning department
• Formal planning department:

A group of planning specialists whose sole responsibility is helping to write

organizational plans

Management:

• The fundamental notion of principles of management was developed by French

management theorist Henri Fayol (1841–1925). He is credited with the original
planning-organizing-leading-controlling framework (P-O-L-C)
• Definition of management: Coordination of activities with and through people
to achieve specific objective effectively and efficiently.
• Other Definitions.
• Koontz and Weihrich offer an interesting perspective on management.
• "Management is a process of designing and maintaining an environment in which
individuals work together in groups to efficiently accomplish selected aims".
• McFarland gives a holistic view on management.
• "Management is a process by which managers create, direct, maintain and
operate purposive organizations, through systematic, coordinated, cooperative
human effort".

Manager

• A person responsible for controlling or administering an organization or group of

staff.
• What Managers Do
• Planning:
 • Setting Goals: Managers are involved in defining organizational goals and
objectives.
• Strategic Planning: Top-level managers are often responsible for long-
term strategic planning, determining the overall direction
• Organizing:
• Structuring Work: Managers organize resources, including human
resources and materials, to ensure efficient and effective task completion.
• Creating Teams: Managers build and lead teams, assigning roles and
responsibilities to team members based on their skills and expertise.
• Leading:
• Motivating and Inspiring: Managers motivate employees to achieve their
best performance. This involves creating a positive work environment
• Decision-Making: Managers make decisions that impact their teams and
the organization.
• Coordinating:
• Communication: Managers facilitate communication within the team and
between different departments.
• Conflict Resolution: Managers address conflicts and challenges that may
arise within the team, seeking resolutions that maintain a productive and
positive work environment.
• Controlling:
• Monitoring Performance: Managers track progress toward goals and
assess individual and team performance.
• Adjusting Strategies: Based on performance assessments, managers may
need to make adjustments to strategies, processes, or resource allocations
to improve outcomes.
• Developing People:
• Training and Development: Managers are responsible for the
professional development of their team members..
• Performance Reviews: Managers conduct performance evaluations and
provide constructive feedback to help employees grow in their roles.
• Adapting to Change:
• Change Management: Managers play a crucial role in leading their teams
through periods of change. This could include changes in organizational
structure, technology, or processes.
Functions of the Manager

• Planning is the process of setting goals and charting the best way of action for
achieving the goals. This function also includes, considering the various steps to be taken to
encourage the necessary levels of change and innovation.

• For example, if a company is planning for a promotional campaign, then the manager
responsible for the campaign has to chart out actions that are in the best interest of the firm.

• Consider a manufacturing company like Toyota. When they decide to introduce a new car
model, they engage in extensive market research, set production targets, and determine a
production schedule, all part of the planning process.

• Organizing is the process of allocating and arranging work, authority and resources, to
the members of the organization so that they can successfully execute the plans.

• Example:

• In a hospital, the organization of resources involves assigning roles and responsibilities to

doctors, nurses, and administrative staff to ensure efficient patient care.

• Leading involves directing, influencing and motivating employees to perform

essential tasks. This function involves display of leadership qualities, different leadership
styles, different influencing powers, with excellent abilities of communication and
motivation.

• Example: Imagine a software development company. The CEO's leadership is crucial in

motivating and guiding teams to develop innovative software products.

• Controlling is the process of devising various checks to ensure that planned

performance is actually achieved. It involves ensuring that actual activities confirm to the
planned activities. Monitoring the financial statements, checking the cash
registers to avoid overdraft etc., form part of this process.

• Once the plan is in action, managers must monitor progress and make necessary adjustments
to ensure that everything stays on track.
 • Example: When an e-commerce giant like Amazon tracks real-time sales data and adjusts
inventory and delivery schedules to meet customer demand, it's a form of controlling
resources.

Importance of Management
• Management is crucial for several reasons:

• Achieving Goals: It helps organizations reach their objectives and fulfill their mission.

• Efficiency: Good management increases productivity and resource utilization, minimizing

waste.

• Effectiveness: It ensures that the right things are done, not just things done right.

• Adaptability: In an ever-changing business environment, management helps organizations

adapt and stay competitive.

• Innovation: Effective management encourages creativity and innovation.

• Decision Making: Managers make critical decisions that can shape an organization's future.

Examples:
• Achieving Goals: Consider the nonprofit organization, Save the Children. They rely on effective
management to ensure that resources are used efficiently to achieve their mission of
improving children's lives worldwide.

• Efficiency: In a manufacturing plant, like that of Apple, effective management minimizes

waste, reduces production costs, and ensures a smooth supply chain.

• Effectiveness: A university's management ensures that not only are classes scheduled and
facilities maintained, but also that the curriculum aligns with the latest educational trends.

• Adaptability: In the fast-paced tech industry, companies like Apple must adapt to changing
consumer preferences and technological advancements to remain competitive.

• Innovation: Tech giants such as Google encourage innovation through management practices
like the 20% time rule, where employees can work on their passion projects.

• Decision Making: In the financial sector, investment firms like Goldman Sachs rely on sound
management decisions to make wise investments and navigate the complexities of global
markets.
Managerial Roles
• Managers play several roles within organizations, which were first categorized by Henry
Mintzberg:

• Interpersonal Roles: These include being a figurehead, a leader, and a liaison.\

• Example: Think of a hospital's Chief Medical Officer who serves as a figurehead, leader, and
liaison, responsible for representing the hospital, leading medical staff, and collaborating with
external organizations.

• Informational Roles: Managers collect and distribute information within and outside the
organization.

• Example: In the entertainment industry, a studio executive collects and disseminates

information, from market trends to audience feedback, to make informed decisions.

• Decisional Roles: Managers make decisions related to resource allocation, problem-solving,

and negotiation.

• Example: In a tech company, the Chief Technology Officer plays a key role in deciding which
technology projects to pursue, allocating resources, and negotiating partnerships with tech
suppliers.

Skills of a Manager
• Managers need a blend of technical, human, and conceptual skills. These can be summarized
as:

• Technical Skills: The ability to apply specialized knowledge and expertise.

• Human Skills: The ability to work effectively with people and understand their motivations
and behaviors.

• Conceptual Skills: The ability to think critically, analyze complex situations, and formulate
strategic plans.

• Examples:

• Technical Skills: An engineer leading a manufacturing plant needs strong technical skills to
oversee production processes effectively.

• Human Skills: A school principal must understand the motivations and behaviors of teachers,
students, and parents to create a positive and productive learning environment.
 • Conceptual Skills: In a consulting firm, managers need conceptual skills to analyze complex
client issues and formulate strategic recommendations.

Challenges in Contemporary Management

• The modern business environment presents several challenges to managers:

• Globalization: Expanding markets and competition worldwide.

• Example: Consider a multinational retailer like Walmart, which must adapt its products,
pricing, and marketing strategies to suit various countries and cultures.

• Diversity: Managing a diverse workforce.

• Example: In a tech startup, managing a diverse workforce may involve creating inclusive
policies and fostering a culture that values different perspectives.

• Technology: Rapid technological advancements and their implications.

• Example: In the banking sector, the rapid adoption of online and mobile banking requires
managers to stay updated on technological trends and ensure the security and efficiency of
digital services.

• Ethical and Social Responsibility: Addressing ethical dilemmas and being socially responsible.

• Example: Companies like Nike must address ethical concerns, such as labor conditions in
factories, and engage in social responsibility efforts to maintain their reputation.

• Sustainability: Meeting environmental and social sustainability goals.

• Example: An energy company, like ExxonMobil, faces growing pressure to address

environmental concerns, reduce carbon emissions, and invest in sustainable energy sources.

Organizational Culture

 Culture is an accumulation of the beliefs, traditions, language and values of a particular group
of people.

 Organizational culture encompasses values and behaviors that contribute to the unique social
and psychological environment of a business.

 “Leaders often treat culture as a happy accident— something that develops organically, driven
by personalities. What a mistake. Culture is a critical building block of success.”—Hiroshi
Mikitani, Founder And Ceo Of Rakute

HEROES:
  A hero is a figure who exemplifies the deeds, character, and attributes of a strong culture.
Heroes are role models for employees to follow.

 Heroes with strong legacies may continue to influence a culture even after they are gone.

 Example: Many people have wondered if the culture that Steve Jobs created at Apple would
be sustained after his death in 2011.

 Job exemplified the creativity, innovation, risk taking, and boundary-breaking thinking that
made the company famous. When Jobs’s health began to fail, Apple’s board began
considering replacements who could sustain the fertile culture that Jobs created. They chose
Tim Cook, who long had served as second-in-command. Cook is trying to nurture a culture that
reflects the values and behaviors of Apple’s hero, Steve Jobs. “Apple has a culture of
excellence that is, I think, so unique and so special. I’m not going to witness or permit the
change of it,” he said.

SLOGANS

 A slogan is a phrase or sentence that briefly expresses a key corporate value.

 Many companies use slogans or sayings to convey special meaning to employees.

For example,

1. Disney uses the slogan “The happiest place on earth.”

2. The Ritz-Carlton adopted the slogan, “Ladies and gentlemen taking care of ladies and
gentlemen” to demonstrate its cultural commitment to take care of both employees and
customers

STORIES

 A story is a narrative based on true events that is repeated frequently and shared among
organizational employees. Stories paint pictures that help symbolize the firm’s vision and
values and help employees personalize and absorb them.

 Example: UPS(one of the largest and most trusted Global shipping & logistics companies
worldwide)

 A frequently told story at UPS concerns an employee who, without authorization, ordered an
extra Boeing 737 to ensure timely delivery of a load of Christmas packages that had been left
behind in the holiday rush. As the story goes, rather than punishing the worker, UPS rewarded
his initiative. By telling this story, UPS workers communicate that the company stands behind
its commitment to worker autonomy and customer service

Symbol:
  A symbol is an object, act, or event that conveys meaning to others. Symbols can be
considered a rich, nonverbal language that vibrantly conveys the organization’s important
values concerning how people relate to one another and interact with the environment

 Examples:

 CEO of a hospital system removed the door from his office to reinforce his open door policy.

 The actual office layout is often use as a symbolic method of reinforcing a desired company
culture. An open, collaborative space is symbolic for company values that encourage an open
line of communication across all positions. A cubicle and closed office door environment is
more symbolic of a system using the chain of command and formal processes.

OFFICE CULTURES AND THEIR LAYOUTS

1. Hierarchy Culture

2. Clan Culture

3. The Adhocracy Culture

Hierarchy Culture

 This culture type is characterized by a structured, formal, and rule-based approach to

management. In a Hierarchy Culture, organizations are typically well-organized with clearly
defined roles and responsibilities, and decision-making is often centralized.

 This approach to organizational culture is widely adopted by companies whose main

objective is to generate an efficient, consistent and predictable output.

 Here, lines are clearly established between employees and departments in order to divide
responsibilities and authority.

 Often, a hierarchical culture values rules, authority, standardization and accountability above
all else.

Key Characteristics of Hierarchy Culture:

 Clear Organizational Structure: Hierarchy Culture organizations have a well-defined

organizational structure with distinct levels of authority and reporting relationships. Decision-
making typically follows a top-down approach.
  Formal Procedures: These organizations rely on formalized processes and procedures for most
activities, from decision-making to performance evaluations. Employees are expected to
adhere to established rules and protocols.

 Bureaucratic Systems: Hierarchy Culture organizations often have a bureaucratic and

hierarchical system in place. This system aims to create order, control, and predictability in
operations.

Advantages of Hierarchy Culture:

 Efficiency: The structured nature of Hierarchy Culture can lead to efficiency and consistency in
operations, making it easier to manage complex tasks.

 Control and Stability: Organizations with Hierarchy Culture are often better equipped to
maintain control over their operations and ensure stability.

 Risk Mitigation: The structured approach can help in risk mitigation, making organizations less
vulnerable to unforeseen issues.

 Clarity: Clearly defined roles and reporting lines reduce confusion and conflicts among
employees.

Examples of Industries with Hierarchy Culture:

 Government Organizations: Many government agencies operate with a strong Hierarchy

Culture due to the need for established rules, regulations, and structured procedures.

 Large Corporations: Some large corporations in traditional industries, such as manufacturing,

utilities, and finance, may have a pronounced Hierarchy Culture to ensure consistent and
controlled operations.

 Healthcare: In healthcare organizations, adherence to regulations, patient safety, and strict

protocols can lead to a Hierarchy Culture.

Key Features of Hierarchy Culture at McDonald's

 Standardization: McDonald's places a strong emphasis on standardization, ensuring that every

restaurant adheres to consistent menus, procedures, and quality standards.

 Franchise Model: McDonald's franchise system is an example of a well-structured hierarchy.

Franchisees follow standardized processes and operational guidelines set by the corporate
headquarters.

 Tight Control: The corporate office exerts tight control over menu items, marketing campaigns,
and supply chain management to maintain a consistent customer experience.
  Clear Training Programs: McDonald's offers detailed training programs to employees and
franchisees to ensure that everyone understands the standardized procedures and expectations.

Outcomes:

 McDonald's Hierarchy Culture has played a critical role in its global success.

 The company's ability to maintain consistency and quality across its vast network of restaurants
has been a significant competitive advantage.

 Its hierarchical structure ensures that franchisees adhere to the core values and practices
established by the corporate office, resulting in a uniform and recognizable brand worldwide.

Clan Culture

 Organizations that adopt a Clan Culture operate according to a set of shared values and act
based on a sense of “we-ness”.

 This type of work environment has a familial quality, which is in direct contrast to the
hierarchical culture described above.

 Typically, managers within these organizations strive to empower employees while also
establishing their commitment to the company through cross-collaboration and employee
involvement programs.

Case Study/Example: "Zappos" - A Clan Culture in Action

 Zappos, an online shoe and clothing retailer, is often cited as a prime example of an organization
with a Clan Culture.

 The company, founded by Tony Hsieh, has cultivated a work environment that prioritizes a
sense of community, shared values, and a strong focus on employee engagement. Here's how
Zappos exemplifies a Clan Culture:

 Employee Relationships: Zappos places a significant emphasis on creating close relationships

among employees. They encourage open communication, teamwork, and collaboration. New
employees go through an extensive training program that includes immersion in the company's
culture.

 Flat Hierarchy: The company has a relatively flat organizational structure, with fewer layers of
management. This structure fosters a sense of inclusion and accessibility for all employees.

 Values and Culture: Zappos has a well-defined set of core values, which are not just words on
paper but actively practiced. These values include being customer-focused, embracing change,
and creating fun and a little weirdness. Employees are encouraged to embody these values in
their daily work.
  Innovation and Employee Empowerment: Zappos encourages employees to take ownership of
their work and to innovate freely. They have a unique practice where employees can
experiment with their roles and even change departments if they believe they can contribute
more effectively in another area.

 Employee Well-being: The company has a strong commitment to employee well-being. They
offer various perks, including free snacks and lunches, on-site wellness programs, and a fun,
vibrant office space to create a more enjoyable work environment.

 Celebration of Individuality: Zappos celebrates individuality and encourages employees to

express their unique personalities. The organization is known for its relaxed dress code and the
freedom for employees to be themselves.

 Commitment to Learning: Zappos invests heavily in employee development and continuous

learning. They have programs designed to help employees grow both personally and
professionally.

 The Clan Culture at Zappos has contributed to its reputation as a fun, innovative, and customer-
focused company. It's an excellent example of how a Clan Culture can foster a close-knit,
supportive work environment where employees feel like they are part of a big family. This, in
turn, has helped Zappos achieve exceptional customer service and maintain a strong brand
identity.

The Adhocracy Culture

 This type of organization is the most responsive to the hyper turbulent

 Unlike hierarchical organizations, adhocracies do not have centralized power or authoritative

relationships.

 Instead, power flows from individual to individual or from task team to task team, depending on
what problem is being addressed.

Clearly, each type of culture strives to promote a different kind of employee output - and therefore
requires a distinctive office design.

 This type of culture is characterized by flexibility, innovation, and adaptability.

 In an Adhocracy Culture, organizations encourage risk-taking, creativity, and experimentation.

 Example: Facebook is a prototypical adhocracy organization, based on CEO Mark Zuckerberg’s

famous admonition to, “Move fast and break things – unless you are breaking stuff, you are not
moving fast enough.”

Example: Google - An Adhocracy Culture in Action

  Google, a multinational technology company, is often cited as a prime example of an
organization with an Adhocracy Culture.

 The company's core values and work environment are built around fostering innovation,
experimentation, and a flexible approach to problem-solving.

 Here's how Google exemplifies an Adhocracy Culture:

 1: Innovation and Risk-Taking: Google has a strong emphasis on innovation and encourages its
employees to explore new ideas. They allocate a portion of their employees' time (often
referred to as "20% time") for personal projects that may or may not relate directly to their job.

 This policy has led to the development of some of Google's most successful products, including
Gmail and Google News.

 2: Flat Organizational Structure: Google has a relatively flat organizational structure that allows
for open communication and collaboration. This structure empowers employees to share ideas
and take initiatives.

 3: Entrepreneurial Spirit: Google's founders, Larry Page and Sergey Brin, established a culture
that reflects their entrepreneurial spirit. The company supports small, agile teams working on a
wide range of projects, promoting a sense of autonomy and creativity.

 4: Encouragement of Creativity: Google provides a conducive environment for creativity, with

colorful, unconventional office spaces, casual dress codes, and a sense of playfulness. It's not
uncommon to see employees using scooters to move around the office or engaging in playful
activities to spark creative thinking.

 5: Embracing Failure: Google embraces a culture of learning from failure. The company is known
for allowing and even celebrating failed projects as valuable learning experiences. This
encourages employees to take calculated risks and innovate without fear of retribution.

 6: Lack of Bureaucracy: Google minimizes bureaucracy, fostering a culture where decisions can
be made quickly and efficiently. This lack of red tape allows for faster implementation of new
ideas.

 7: Continuous Learning: The company invests in continuous learning and development. Google
encourages its employees to engage in ongoing training and education, enabling them to stay at
the forefront of their fields.

Key Features of Adhocracy Culture at Spotify:

 Squad Structure: Spotify organizes its employees into small, autonomous teams known as
"squads." Each squad has a specific mission and is responsible for its product development and
innovation.
  Guilds and Chapters: To encourage knowledge sharing and innovation, Spotify establishes
"guilds" (groups of employees with similar expertise) and "chapters" (groups of employees from
different squads with the same role). This promotes cross-functional collaboration and the
sharing of best practices.

Spotify Hack Weeks: Spotify hosts "Hack Weeks" where employees have the freedom to work on
innovative projects of their choosing. This provides a dedicated time for experimenting with new ideas

Outcomes:

 Spotify's Adhocracy Culture, characterized by its Agile structure, has allowed the company to
respond rapidly to market changes and continuously innovate.

 The autonomous squads are empowered to make decisions and experiment, resulting in new
features and improvements to the platform.

 This flexibility and focus on innovation have contributed to Spotify's growth and success in the
highly competitive music streaming industry.

Organizational Culture

Organizational culture refers to a system of shared meaning held by members that distinguishes the
organization from other organizations.

Seven primary characteristics

1. Innovation & risk taking

2. Stability

3. Attention to detail

4. Outcome orientation

5. People orientation

6. Team orientation

7. Aggressiveness:

Innovation & risk taking: the degree to which employees are expected to be creative and take
risks.

Stability: degree to which activities focus on the status rather than change.

Example:
 Coca-Cola is a classic example of a production company with a culture of stability. It operates
with a clear hierarchy of command & control with CEOs that see their primary task as enforcing
policies. As a result every Coca-Cola produced everywhere in the world lives up to the same high
standards.

3: Attention to detail: Degree to which there is concern for precision and detail.

Example:

 Four Seasons hotels are dedicated to providing customers with exactly the service they prefer,
and they keep records on each guest’s experiences, preferences, and expectations. Employees
working for Four Seasons must have an eye for detail and thrive on keeping meticulous records

4: Outcome orientation: degree to which management emphasizes results.

5: People orientation: degree to which management decisions are sensitive to individual.

Example:

 Starbucks is an example of a people-oriented culture. The company pays employees above

minimum wage, offers health care and instruction repayment benefits to its part-time as well as
full-time employees, and has creative perks such as weekly free coffee for all associates. As a
result of these policies, the company benefits from a turnover rate lower than the industry
average.

6: Team orientation: degree to which work activities are organized around teams rather than
individuals.

 For example, Southwest Airlines facilitates a team-oriented culture by cross-training its

employees so that they are capable of helping one another when needed. The company also
emphasizes training intact work teams. In Southwest’s selection process, applicants who are not
viewed as team players are not hired as employees. In team-oriented organizations, members
tend to have more positive relationships with their coworkers and particularly with their
managers.

7: Aggressiveness: degree to which employees are expected to be competitive than easy going.

 For example: Microsoft is often recognized as a company with an aggressive culture

Do Organizations Have Uniform Cultures?

• Culture is a descriptive term: it may act as a substitute for formalization

• Dominant Culture

– Expresses the core values that are shared by a majority of the organization’s members
• Subcultures

– Minicultures within an organization, typically defined by department designations and

geographical separation

• Core Values

– The primary or dominant values that are accepted throughout the organization like
loyalty, passion, honesty, efficiency, reliability commitment.

• Strong Culture

– A culture in which the core values are intensely held and widely shared

What Do Cultures Do?

Culture’s Functions
 Defines the boundary between one organization and others

 Conveys a sense of identity for its members

 Facilitates the generation of commitment to something larger than self-interest

 Enhances the stability of the social system

 Serves as a sense-making and control mechanism for fitting employees in the

organization

Culture as a Liability
• Barrier to change

– Occurs when culture’s values are not aligned with the values necessary for rapid
change

• Barrier to diversity

– Strong cultures put considerable pressure on employees to conform (follow),

which may lead to institutionalized bias ( unfairness)

• Barrier to acquisitions and mergers

– Incompatible cultures can destroy an otherwise successful merger

 Stages in the Socialization Process

• Prearrival

– The period of learning prior to a new employee joining the organization

• Encounter

– When the new employee sees what the organization is really like and confronts the
possibility that expectations and reality may diverge

• Metamorphosis

– When the new employee changes and adjusts to the work, work group, and
organization

Organizational structure:
 Organizational structure is the design of an organization in terms of its leadership and
management arrangements; selection, training, and compensation of its talent (people); shared
values and culture; and structure and style.

 How organization delivers its results

 The talent consists of the people, often called employees, of an organization.

 The shared values and corporate culture are the guiding concepts and meanings that the
members of an organization share.

 The structure of a firm is its formal arrangement of functions and activities.

Types Organizational structure

1) Centralized Organizational Structure
 The authority to make important decisions is retained by top level managers.

 Few real-life examples of such organizations are Army, companies like Flipkart, Apple,
McDonald’s, etc.

 where the power of decision- making is held at the top level and there is a wide chain or
hierarchy of managers and subordinates.
  Thus, the centralized structure has a top-down approach for decision flow.

 In this type of organizational structure, all decisions, as well as processes, are defined; and
handled by the top management.

 Employees and managers are responsible for the successful implementation of decisions and
have to follow them.

 The employees low in the chain of command play a minimal role in the process of decision-
making.

Examples of Centralized organizations

 Dictatorship: Dictatorships are usually ruled by a single powerful figure, the easy-to-spot sign of
a centralized organization.

 If you can stop the leader, you can destroy the entire group. •

 Military: Traditionally, the military has been the classic example of top-down or hierarchical
management. The General orders the Captain who orders the Lieutenant who orders the rest of
the team

 Government: Governments are classic top-down structures lead by the President or Prime
Minister, followed by Senators or Ministers who each have a team below them. Right at the
bottom are the voters who get to have their say with a single vote every couple of years. •

 Television: TV shows are created by centralized organizations that decide what we watch and
when we watch it. And, if think literally about it, one message is sent down the airwaves for us
to watch at the other end.

Decentralized Organizational Structure

 The authority to make important decisions is delegated to mangers at levels in the hierarchy
  In such type of organizations, day-to-day tasks and the decision-making processes are delegated
to the supervisors at the middle and lower level by the top management for fast and effective
decisions and to improve efficiency

Example;

 Mark, the HR Manager at ABC Company, has to finalize a deal with a vendor at a job portal for
hiring and, for this, he negotiates best prices with discounts to close the deal. If his organization
is a centralized one, then he will first seek senior management permission to finalize the deal
and wait for their approval. If there is a delay rendered by the management part, he might lose
the deal. However, if his company is decentralized, then, he has authority to close the deal all by
himself with the vendor without seeking any approval from the management which, in turn,
results in finalizing cost-effective and quick decision-making.

Advantages and Disadvantages

Organic organizations

An organic organization is a type of organizational structure that emphasizes flexibility,

adaptability, and collaboration among its members. It tends to have a decentralized
authority, with fluid communication channels and dynamic roles. Decision-making is
often distributed across the organization, allowing for quick responses to changes in the
environment.

Example: A small tech startup with a flat hierarchy, where team members collaborate
openly, share responsibilities, and adapt rapidly to changing market conditions, is an
example of an organic organization.
 Nine elements of an organization
1. Mission and Vision:
 Mission: Defines the fundamental purpose and reason for the organization's
existence.
 Vision: Describes the desired future state or long-term goal the organization aims
to achieve.
2. Goals and Objectives:
 Goals: Broad, overarching achievements an organization aims for.
 Objectives: Specific, measurable steps taken to reach the goals.
3. Strategy:
 The overall plan outlining how the organization will achieve its goals and
objectives.
4. Capabilities and Resources:
 Identifying and utilizing the skills, competencies, and resources (financial, human,
technological, etc.) necessary to execute the strategy.
5. Processes and Procedures:
 Establishing and documenting the systematic series of actions that transform
inputs into outputs, ensuring efficiency and consistency.
6. Talent:
 Attracting, developing, and retaining skilled and motivated individuals who
contribute to the organization's success.
7. Leadership Team and Management:
 The group responsible for guiding and overseeing the organization, making
strategic decisions, and ensuring effective day-to-day operations.
8. Shared Values and Culture:
 The set of beliefs, principles, and behaviors that shape the organization's identity
and guide the actions of its members.
9. Structure and Style:
 Organizational structure defines the hierarchy, roles, and relationships within the
organization.
 Leadership style refers to the manner in which leaders guide and motivate their
teams.
Remember This
 The chain of command is an unbroken line of authority that links all individuals in the
organization and specifies who reports to whom.
 Authority is the formal and legitimate right of a manager to make decisions, issue orders, and
allocate resources to achieve outcomes desired by the organization.

 Responsibility is the flip side of the authority coin; it refers to the duty to perform the task or
activity that one has been assigned.

 Accountability means that people with authority and responsibility are subject to reporting
and justifying task outcomes to those above them in the chain of command.

 When managers transfer authority and responsibility to positions below them in the
hierarchy, it is called delegation.

 Managers may have line authority, which refers to the formal power to direct and control
immediate subordinates, or staff authority, which refers to the right to advise, counsel, and
recommend in the manager’s area of expertise.

 Decentralization means that decision authority is pushed down to lower organization levels.

 Centralization means that decision authority is located near top organization levels.

MANAGEMENT – the function that coordinates the efforts of people to accomplish

goals and objectives by using available resources efficiently and effectively

ORGANIZATION – an organized body of people with a particular purpose, especially a

business, society, association, etc.

THEORIES – a set of interrelated propositions that organizes and explains a set of

observed phenomenon

There are different theories of organization to predict and explain the process and also
behavior patterns in an organizational setting.

There are three different types of organizational theory:

1. Classical Organization Theory,

2. Neo-Classical Organizational Theory,

3. and Modern Organizational Theory.

 Classical Organization Theory,
In classical theory we have different approaches like

1. Scientific management approach

2. ADMINISTRATIVE THEORY

3. WEBER’S BUREAUCRATIC APPROACH

SCIENTIFIC MANAGEMENT APPROACH –

Scientific management approach was developed by Frederick W. Taylor in the late 19th
century.

The scientific management approach is based on the concept of planning of work to

achieve efficiency, standardization, specialization and simplification.

The approach to increased productivity is through mutual trust between management

and workers. Taylor (1947.

Scientific management and four core principles

Scientific management has at its heart four core principles that also apply to
organizations today. They include the following:

1. Look at each job or task scientifically to determine the “one best way” to perform the
job. This is a change from the previous “rule of thumb” method where workers devised
their own ways to do the job.

2. Hire the right workers for each job, and train them to work at maximum efficiency.

3. Monitor worker performance and provide instruction and training when needed.

4. Divide the work between management and labor so that management can plan and
train, and workers can execute the task efficiently.

Key principles of scientific management include:

 Time and Motion Studies: Analyzing and optimizing every task for maximum efficiency.

 Standardization: Implementing consistent work methods.

 Task Specialization: Assigning employees to specific tasks based on their skills.

a: Time and Motion Studies:

 Taylor conducted detailed time and motion studies to break down work processes into
individual tasks.

 He aimed to determine the most efficient way to perform each task and then establish standard
times for completion.

 For example, in a manufacturing context, he meticulously analyzed the movements of workers

to eliminate unnecessary motions and reduce production time.

B: Task Specialization:
 Taylor advocated the division of labor, whereby workers are assigned to specific tasks based on
their skills.

 This specialization was meant to increase efficiency, as workers could become highly skilled in
their designated roles.

 In industries like assembly-line manufacturing, task specialization is evident, with different

workers responsible for specific parts of the production process

C: Standardization:
 Taylor believed in developing standardized processes and procedures.

 This involved creating clear, documented procedures for performing tasks.

 These standards were intended to be universally applied across the organization to ensure
consistency and efficiency.

ADMINISTRATIVE THEORY –
 The administrative theory is given by Henri Fayol,

 Based on several principles of management which is planning, organizing, training,

commanding and coordinating function

 Administrative management theory attempts to find a rational way to design an organization.

Definition:
 The Administrative Theory is based on the concept of departmentalization, which means the
different activities to be performed for achieving the common purpose of the organization
should be identified and be classified into different groups or departments, such that the task
can be accomplished effectively.

 The theory generally calls for a formalized administrative structure, a clear division of labor, and
delegation of power and authority to administrators relevant to their areas of responsibilities.

Five Functions of Management:

 Henri Fayol's Administrative Management addressed the broader aspects

of managing organizations. Fayol's work laid the foundation for modern
management principles, including::

 Fayol proposed that there are five key functions of management: planning,
organizing, commanding, coordinating, and controlling.

 Planning: This involves setting objectives and developing strategies to

achieve them.

 Organizing: Organizing resources and tasks to carry out the plan effectively.

 Commanding: Giving orders and instructions to employees.

 Coordinating: Ensuring that various activities and efforts are harmonized to

achieve the organization's goals.

 Controlling: Monitoring performance to ensure that everything is on track.

Difference b/w Scientific management approach and administrative

theory:
Unlike the scientific management theory of Taylor where more emphasis was on
improving the worker’s efficiency and minimizing the task time, here the main focus is
on how the management of the organization is structured and how well the individuals
therein are organized to accomplish the tasks given to them.

 WEBER’S BUREAUCRATIC APPROACH –

  Considers the organization as a part of broader society

 Max Weber, a German scientist, defines bureaucracy as a highly structured,

formalized, and also an impersonal organization

 Weber's theory of bureaucratic management also has two essential

elements.

 First, it entails structuring an organization into a hierarchy.

 Secondly, the organization and its members are governed by clearly defined
rational-legal decision-making rules.

 Each element helps an organization to achieve its goals.

 He also instituted the belief that an organization must have a defined

hierarchical structure and clear rules, regulations, and lines
of authority which govern it.

Max Weber bureaucracy ideally has the following

characteristics:

Max Weber, a German sociologist, is well-known for his theory of bureaucracy, which he
outlined in his work "Economy and Society" published in the early 20th century.
According to Weber, an ideal bureaucracy exhibits the following characteristics:

1. Specialization of Labor: Employees within a bureaucratic organization have specific,

well-defined roles and tasks based on their expertise. Specialization allows for efficiency
and expertise in specific areas.
2. Formal Set of Rules and Regulations: Bureaucracies rely on a system of formal rules
and procedures that govern the conduct and actions of individuals within the
organization. These rules provide consistency, predictability, and fairness in decision-
making.
3. Well-Defined Hierarchy: There is a clear and defined hierarchy of authority within a
bureaucratic structure. Each level of the hierarchy has its own set of responsibilities and
powers. Authority flows from the top down, and communication follows a chain of
command.
4. Impersonality in the Application of Rules: Decisions and actions within a bureaucracy
are based on the organization's rules and not on personal relationships or preferences.
This helps ensure fairness and equal treatment of individuals within the organization.

Max Weber’s Bureaucratic Form – 6 Major Principles

 Max Weber listed six major principles of the bureaucratic form as follows:

 A formal hierarchical structure – In a bureaucratic organization, each level controls the level
below it. Also, the level above it controls it. A formal hierarchy is the basis of central planning
and centralized decision-making.

 Rules-based Management – The organization uses rules to exert control. Therefore, the lower
levels seamlessly execute the decisions made at higher levels.

 Functional Specialty organization – Specialists do the work. Also, the organization divides
employees into units based on the type of work they do or the skills they possess.

 Up-focused or In-focused Mission – If the mission of the organization is to serve the

stockholders, board, or any other agency that empowered it, then it is up-focused. On the other
hand, if the mission is to serve the organization itself and those within it (like generating profits,
etc.), then it is in-focused.

 Impersonal – Bureaucratic organizations treat all employees equally. They also treat all
customers equally and do not allow individual differences to influence them.

 Employment-based on Technical Qualifications – Selection as well as the promotion of

employees is based on technical qualifications and skills.

Neoclassical organization theory

 The theory emphasizes individual or group behavior and human relations in determining
productivity

 The Neoclassical Theory is the extended version of the classical theory in which the behavioral
sciences gets included into the management.

 According to this theory, the organization is the social system, and its performance does get
affected by the human actions.
  Examples:

 While manipulating conditions in the work environment (e.g., intensity of lighting), it can have a
positive impact on productivity.

 The act of paying attention to employees in a friendly and nonthreatening way was sufficient by
itself to increase output.

PRINCIPLES OF NEOCLASSICAL APPROACH

▪ Individual : This principle recognizes the significance of individual needs, attitudes,
and behaviors in the workplace. It suggests that understanding and addressing
the unique characteristics of each employee is essential for effective
management.

▪ Work Group : The Human Relations Movement emphasizes the social aspects of
work. It suggests that employees are not just isolated individuals but are part of
work groups or teams. Building positive relationships within these groups can
enhance job satisfaction and productivity.

▪ Participative Management : This principle promotes the idea that involving

employees in decision-making processes can lead to increased job satisfaction
and motivation. It recognizes the value of employees' input and ideas, fostering a
sense of ownership and commitment to organizational goals.

▪ This approach is often referred to as “behavioral theory of organization” or “human

relations” approach in organizations

Modern Management Theories

 It is based on the concept that the organization is an adaptive system which must adjust
changes in its environment.

 Characteristics of modern approaches to the organization:

 Systems Viewpoint:
 Explanation: Modern organizational theories adopt a systems perspective,
viewing the organization as a complex and interconnected system. This means
recognizing that various components within an organization (such as
departments, teams, and individuals) are interrelated and influence each other.
 Dynamic Process of Interaction:
 Explanation: Organizations are seen as dynamic entities characterized by ongoing
processes and interactions. Change is considered a natural part of organizational
life, and the focus is on understanding how these dynamic processes influence
the organization's functioning and adaptation to the environment.
 Multileveled and Multidimensional:
 Explanation: Modern approaches recognize that organizations operate on
multiple levels (individual, group, organizational) and have various dimensions
(technical, social, cultural). Analyzing and understanding these multiple levels and
dimensions is crucial for effective organizational management.
 Multi-motivated:
 Explanation: This characteristic acknowledges that individuals within an
organization are motivated by a variety of factors. While traditional theories often
focused on economic motives, modern approaches consider a broader range of
motivations, including social, psychological, and personal development factors.
 Multi-variable:
 Explanation: Modern organizational theories consider a multitude of variables
and factors that influence organizational behavior and outcomes. This includes
variables such as leadership styles, organizational culture, technology, external
environmental factors, and more.

Modern structural organization theory

SYSTEMS APPROACH – considers the organization as a system composed of a set of
interrelated and thus mutually dependent sub-system.

SOCIO-TECHNICAL APPROACH – considers the organization as composed of social

system, technical system and its environment.

CONTINGENGY / SITUATIONAL APPROACH –recognizes that organizational systems are

inter- related with their environment and different environments required different
organizational relationships for effective working.
 Contingency Theory:
 This theory posits that there is no one-size-fits-all management approach.

 The effectiveness of management practices depends on the specific situation or context.

 For example, a leadership style that works in one industry may not be suitable for another.

Key Concepts of Contingency Theory:

 1: Contingency: At the core of this theory is the concept of "contingency," which refers
to the idea that there is no single best way to manage an organization. The approach
that works best in one situation may not be effective in another.

 2: Fit: Contingency theory emphasizes the importance of achieving a "fit" or alignment

between an organization's structure, leadership style, and management practices and
the specific demands of its environment.

 This alignment ensures that the organization can effectively respond to the challenges it
faces.

 Situational Factors: The theory acknowledges that situational factors play a critical role
in determining the appropriate management approach. These situational factors can
include the organization's size, industry, culture, technology, and the external
environment.

 Management Style: Contingency theory suggests that effective management practices

should be contingent on the circumstances. For example, in a rapidly changing and
uncertain environment, a more flexible and adaptive management style might be
required, whereas in a stable and predictable setting, a more structured and hierarchical
approach could work.

 Research-Based Approach: Contingency theory relies on practical research to identify

which management practices work best in various situations. Researchers examine real-
world cases to determine which strategies are most effective under specific conditions.