Contemporary Management

Contemporary Management
1. Introduction
Contemporary Management
Contemporary Management
 Road Map
1. Discussing basic concepts in modern management.
2. Explaining management levels.
3. Explaining managerial functions, roles and skills.
4. Discussing management challenges.
5. Detailing the evaluation of management science.

Contemporary Management
 Management
Academic
Science

Practicing

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Science Makes Business
Thinking
Processing
Knowledge Analysis
Theories Understanding
Models Making a concept
Examples

Plans
Models
Actions
Decisions
Solutions

Contemporary Management
Science Makes Business

Knowledge
Theories
Models
Examples

Knowledge

Contemporary Management
 Management Key Concepts
• Organizations: People working together and coordinating
their actions to achieve specific goals.
• Goal: A desired future condition that the organization seeks to
achieve.
• Management: The process of using organizational resources
to achieve the organization’s goals by...
Planning, Organizing, Leading, and Controlling

Contemporary Management
 Additional Key Concepts
• Resources: are organizational assets , they include:
• People,
• Skills,
• Raw materials,
• Information,
• Machinery,
• Financial capital….

• Managers are those people responsible for supervising the use of an

organization’s resources to meet its goals.
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 Intellectual Capital
• The collective brainpower or shared knowledge of a workforce
that can be used to create value.

• Creating and implementing intellectual capital concept in business

organization helps in achieving unique and significant results.

• Some expert believes that intellectual capital is an important

competitive edge to their organizations.

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Three Levels of Management

Top Managers

Middle Managers

First-line
Managers

Non-management

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 Management Levels
:Organizations often have 3 levels of managers •
Top Managers: Responsible for the performance of all
departments and have cross-departmental
responsibility. They establish organizational
.strategies, goals and monitor middle managers
Middle Managers: Supervise first-line managers. They
are also responsible translating general goals and
plans developed by strategic mangers into specific
.objectives and activities
First-line Managers: responsible for day-to-day
operation. They superviseManagement
Contemporary the people performing
.the activities required to make the good or service
 Managerial Functions
• Henri Fayol was the first to describe the four managerial functions
when he was the CEO of a large mining company in the later 1800’s.
• Fayol noted managers at all levels, operating in a for profit or not for
profit organizations, must perform each of the functions of:
– Planning,

– Organizing,
– Leading,
– Controlling.
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Functions of Management
Planning
Choose Goals

Controlling Organizing
Monitor & measure Working together

Leading
Coordinate & Motivate

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 Managerial Roles
A role is a set of specific tasks a person performs because of the position •
.they hold
.Roles are directed inside as well as outside the organization •

:There are 3 broad role categories •

Interpersonal .1
Informational .2
Decisional .3

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 Interpersonal Roles
Managers engage in a great deal of interactions and communicating with •
.people from inside and outside the organization
Figurehead role: representing the organization and what it is –
.trying to achieve
Leader role: hire, train, counsel, mentor and encourage high –
.employee performance
Liaison role: link and coordinate/connect the organization –
and people outside the organization to help achieve goals
.(building and maintaining relationships)

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 Informational Roles
• Associated with the tasks needed to obtain and transmit information for
management of the organization.
– Monitor role: analyzes information from both the internal and external
environment.
– Disseminator role: manager transmits/communicates potentially
useful information to his team.
– Spokesperson role: use of information to positively influence the way
people in and out of the organization respond to it (transmitting info. to
outsiders).

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 Decisional Roles
• Associated with the methods managers use to plan strategy and utilize
resources to achieve goals.
– Entrepreneur role: deciding upon new projects or programs to
initiate and invest.
– Disturbance handler role: assume responsibility for handling an
unexpected event or crisis.
– Negotiator role: seeks to negotiate solutions between other
managers, unions, customers, or shareholders.
– Resource allocator role: assign resources between functions and
divisions, set budgets of lower managers.

Contemporary Management
 Managerial Skills
There are three skill sets that managers need to
.perform effectively
Conceptual skills: the ability to analyze and diagnose .1
.a situation and find the cause and effect
Human skills: the ability to understand, alter, lead, .2
.and control people’s behavior
Technical skills: the job-specific knowledge required .3
to perform a task. Common examples include
.marketing, accounting, and manufacturing

All three skills are enhanced through formal training,

.reading, and practice
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Skills Type Needed by Manager
Level

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 ?What Do Managers Do
1. Providing direction
• Develop a vision for the future.
• Gain commitment and provide leadership.
• Provide governance – comply with values, ethical and legal frameworks and manage risks in
line with shared goals.
2. Facilitating change
• Lead innovations.
• Manage change.
3. Achieving results
• Lead the business to achieve goals and objectives.
• Lead operations to achieve specific results.
• Lead projects to achieve specified results.

Contemporary Management
 ?What Do Managers Do
4. Working with people
• Build relationships.
• Develop networks and partnerships.
• Manage people.
5. Managing using resources
• Manage financial resources.
• Manage physical resources and technology.
• Manage information and knowledge.
6. Managing self and personal skills
• Manage own contribution.
• Develop own knowledge, skills and competence.
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 Business Acumen
• The ability to take a ‘big picture’ view of the business, to weigh it up
quickly, make a logical, sound decision confidently, and influence
others to agree with you in order to have a positive impact towards
achieving the objectives of the organization.
• Is a combination of knowledge and skill informed by experience:
knowledge about key business issues, the skill to apply that knowledge,
and the confidence to take action informed by past experiences.
• Simply, business acumen is understanding how a company makes
money and achieves its goals and objectives.
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 Business Acumen
• It expresses the capabilities with a certain mix of awareness &
knowledge:
• Business field/Industry
• Marketing Awareness
• Organizational knowledge
• Stakeholder Awareness 
• Financial Awareness

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 Organizational Performance
• Measures how efficiently and effectively managers use resources to satisfy
customers and achieve goals.
 Effectiveness:
- A measure of the appropriateness of the goals chosen (are these the
right goals?), and the degree to which they are achieved.
- Organizations are more effective when managers choose the
correct/convenient goals and then achieve them.

 Efficiency:
- A measure of how well resources are used to achieve a goal.
- Usually, managers must try to minimize the input of resources to
attain the same goal.
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Efficiency/Effectiveness Matrix

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Management Challenges

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Historical View

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Scientific Management Theory
Modern management began in the late 19th •
.century
Organizations were seeking ways to better satisfy –
.customer needs
Machinery was changing the way goods were –
.produced
Managers had to increase the efficiency of the –
.worker-task mix

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 Job Specialization
Adam Smith, 18th century economist, found firms •
:manufactured pins in two ways
.Craft: each worker did all steps –
.Factory: each worker specialized in one step –

Smith found that the factory method had much higher •

.productivity
Each worker became very skilled at one, specific –
.task
Breaking down the total job allowed for the division of •
.labor
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 Evolution of Management Theory
Org. Environment

Management Science

Behavioral Management

Administrative Management

Scientific Management

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 Scientific Management
.Defined by Frederick Taylor, late 1800’s •
The systematic study of the relationships between •
people and tasks to redesign the work for higher
.efficiency
Taylor sought to reduce the time a worker spent –
on each task by optimizing the way the task was
.done

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 Challenges of S. Management
• Managers often implemented only the increased output side of
Taylor’s plan.
– They did not allow workers to share in increased output.
– Specialized jobs became very boring, dull.
– Workers ended up distrusting Scientific Management.
• Workers could purposely “under-perform”
• Management responded with increased use of machines.

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 The Gilbreths
• Frank and Lillian Gilbreth refined Taylor’s methods.
– Made many improvements to time and motion (process) studies.
• Time and motion studies:
– 1. Break down each action into components.
– 2. Find better ways to perform it.
– 3. Reorganize each action to be more efficient.

• Gilbreths also studied fatigue problems, lighting, heating and other

worker issues.

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 Administrative Management
• Seeks to create an organization that leads to both efficiency and
effectiveness.
• Max Weber developed the concept of Bureaucracy
A formal system of organization and administration using
impersonal rules and procedures for decision making to ensure
.effectiveness and efficiency

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 Bureaucratic Principles
Written rules
“Communication ,
records…”

A Bureaucracy Hierarchy of
System of task
should have Authority
relationships Specialization

Fair evaluation
and reward
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 Key Points of Bureaucracy
• Authority is the power to hold people accountable for their actions.
• Positions in the firm should be held based on performance not social
contacts.
• Position duties are clearly identified: People should know what is
expected of them.
• Lines of authority should be clearly identified. Workers know who reports
to who.
• Rules, Standard Operating Procedures (SOPs), & Norms used to
determine how the firm operates.
• Sometimes, these lead to “red-tape” and other problems.

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”Red-Tape“

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Key Points of Ideal Bureaucracy

• Specialization of labor.

• Formal rules and procedures.

• Impersonality (objective not subjective).

• Well defined hierarchy.
• Career advancement based on merit.

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”Red-Tape“

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 Fayol’s Principles
• Henri Fayol, provided practical guidelines for effective management
based on his administrative experience.
• He focused on managers and executives responsible for coordinating
activities of diverse groups and units across the entire the organization.
• He developed a set of 14 principles.

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 Fayol’s Principles
1. Division of Labor: allows for job specialization. Fayol noted firms can have too
much specialization leading to poor quality and worker involvement.
2. Authority and Responsibility: Fayol included both formal and informal authority
resulting from special expertise.
3. Unity of Command: Employees should have only one boss.
4. Line of Authority: a clear chain from top to bottom of the firm.
5. Centralization: the degree to which authority rests at the very top.

Contemporary Management
 Fayol’s Principles
6. Unity of Direction: One plan of action to guide the organization.
7. Equity: Treat all employees fairly in justice and respect.
8. Order: Each employee is put where they have the most value.
9. Initiative: Encourage innovation.
10. Discipline: obedient, applied, respectful employees needed.

Contemporary Management
 Fayol’s Principles
11. Remuneration of Personnel: The payment system contributes to success.
12. Stability of Tenure: Long-term employment is important.
13. General interest over individual interest: The organization takes
precedence over the individual.
14. Esprit de corps: Share enthusiasm or devotion to the organization.

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 Behavioral Management
• Focuses on the way a manager should personally manage to motivate
employees.
• Mary Parker Follett: an influential leader in early managerial theory.

– Suggested workers help in analyzing their jobs for improvements.

– The worker knows the best way to improve the job.
– If workers have the knowledge of the task, then they should control the task.

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 The Hawthorne Studies
• Study of worker efficiency at the Hawthorne Works of the Western
Electric Co. during 1924-1932.

– Worker productivity was measured at various levels of light illumination.

– Researchers found that regardless of whether the light levels were raised or
lowered, productivity rose.

• Actually, it appears that the workers enjoyed the attention they received
as part of the study and were more productive.

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 Theory X and Y
• Douglas McGregor proposed the two different sets of worker
assumptions.

 Theory X: Assumes the average worker is lazy, dislikes work and will do
as little as possible.
• Managers must closely supervise and control through reward and
punishment.

 Theory Y: Assumes workers are not lazy, want to do a good job and the
job itself will determine if the worker likes the work.
• Managers should allow the worker great latitude, and create an
organization to stimulate the worker.
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 Theory X v. Theory Y
Theory X Theory Y

Employee is lazy Employee is not

lazy
Managers must
closely supervise Must create work
setting to build
Create strict rules initiative
& defined rewards
Provide authority
to workers

Contemporary Management
 Theory Z
• William Ouchi researched the cultural differences between Japan
and USA.
– USA culture emphasizes the individual, and managers tend to feel workers follow
the Theory X model.
– Japan culture expects worker committed to the organization first and thus behave
differently than USA workers.
• Theory Z combines parts of both the USA and Japan structure.
– Managers stress long-term employment, work-group, and organizational focus.

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 Management Science
• Uses rigorous quantitative techniques to maximize resources.
 Quantitative management: utilizes linear programming, modeling,
simulation systems.
 Operations management: techniques to analyze all aspects of the
production system.
 Total Quality Management (TQM): focuses on improved quality.
 Management Information Systems (MIS): provides information about
the organization.

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 Org. Environment Theory
• Considers relationships inside and outside the organization.
– The environment consists of forces, conditions, and influences
outside the organization.
• Systems theory considers the impact of stages:
 Input: acquire external resources.
 Conversion: inputs are processed into goods and services.
 Output: finished goods are released into the environment.

Contemporary Management
 Systems Considerations
• An open system interacts with the environment. A closed system is self-
contained.
– Closed systems often undergo entropy and lose the ability to
control itself, and fails.

• Synergy: performance gains of the whole surpass the components.

– Synergy is only possible in a coordinated system.

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The Org. as an Open System

Input Stage Conversion Output

Stage Stage
Raw
Materials Machines Goods
Human skills Services

Sales of outputs
Firm can then buy inputs
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 Contingency Theory
• Assumes there is no one best way to manage.
– The environment impacts the organization and managers must
be flexible to react to environmental changes.
– The way the organization is designed, control systems selected,
depend on the environment.
• Technological environments change rapidly, so must managers.

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 Structures
• Mechanistic: Authority is centralized at the top. (Theory X)
–Employees closely monitored and managed.
– Very efficient in a stable environment.

• Organic: Authority is decentralized throughout employees. (Theory

Y)
– Much looser control than mechanistic.
– Managers can react quickly to changing environment.

Contemporary Management
 Road Map
1. Discussing basic concepts in modern management.
2. Explaining management levels.
3. Explaining managerial functions, roles and skills.
4. Discussing management challenges.
5. Detailing the evaluation of management science.

Contemporary Management
Contemporary Management