Certification Study Group 1224361754157160 9

8/3/2019 Certification Study Group 1224361754157160 9

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Certification Study Group

Principles and Theories of

ManagementOctober 11, 2005


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Management Management is a set of activities

directed at an organizationsresources with the aim ofachieving organizational goals in

an efficient and effective manner


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Management

Activities include the four

functions of management Planning (and decision making)

Organizing

Leading

Controlling


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Management

Resources include:

Human Financial

Physical

Information


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Management in Organizations

Inputs from the environment

Human resources

Financial resources

Physical resources

Information resources

Planning

and decision

making

Leading

Organizing

Controlling

Goals attained

Efficiently

Effectively


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Important Definitions

Top Managers

Middle Managers

First-line Managers

Operative Employees


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The Management ProcessOrganizing

Determining howbest to group

activities andresources

ControllingMonitoring

and correctingongoing activitiesto facilitate goal

attainment

Planning andDecision Making

Setting the organiza-tions goals and

deciding how bestto achieve them

Leading

Motivating membersof the organizationto work in the best

interests of theorganization

Figure 1.2


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The Basic Functions of Management

A Circular ProcessPlanning and Decision Making

Organizing

Leading

Controlling


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Skills and

theManager


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Fundamental Management

Skills Management Skill Mixes at Different

Organizational Levels


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Classical Management

Perspective Scientific Management

Frederick Taylor

The Gilbreths

Henry Gantt


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Steps in Scientific

Management

Develop a sciencefor each element of

the job to replace old

rule-of-thumb methods

Scientifically selectemployees and then

train them to do the job

as described in step 1

Supervise employees

to make sure they

follow the prescribed

methods for performing

their jobs

Continue to planthe work, but use

workers to get the

work done

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Figure 1.3


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The Classical Management

Perspective

Administrative Management focuses

on managing the total organization Henry Fayol

Lyndal Urwick

Max Weber


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Webers Theory of

Bureaucracy

Division of labor

Reliance on rules and regulations Hierarchy of authority

Employment based on expertise

Inflexible Rigid

Impersonal


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The Behavioral Management

Perspective

Placed much more emphasis on individual

attitudes and behaviors and on groupprocesses in organizations.

Recognized the importance of behavioralprocesses in organizations Hugo Munsterberg

Mary Parker Follet

Elton Mayo


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Behavioral Management

Perspective Elton Mayo Hawthorne Studies

Illumination study

Group study


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Human Relations

Movement Grew out of the Hawthorne studies.

Proposed that workers respond primarily

to the social context of work, includingsocial conditioning, group norms,and interpersonal dynamics.

Assumed that the managersconcern for workers would lead toincreased worker satisfaction andimproved worker performance.


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Behavioral Management

PerspectiveAbraham Maslow

Advanced a theory that employees are

motivated by a hierarchy of needs that theyseek to satisfy.

Douglas McGregor

Proposed Theory X and Theory Y conceptsof managerial beliefs about peopleand work.


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Maslows Hierarchy of Needs Five levels

Physiological hunger, thirst, shelter, sex

Safety security and protection

Social affection, interpersonal relationships

Esteem self-respect, achievement status

Self-actualization

achieving full potential

Usually thought in the form of a pyramid


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Maslows Hierarchy of Needs

SA

Esteem Needs

Social Needs

Security Needs

Physiological Needs


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Theory X and Theory Y Theory X Assumptions

People do not like work and try to avoid it.

Managers have to control, direct, coerce,and threaten employees to get them towork toward organizational goals.

People prefer to be directed,to avoid responsibility, andto want security; they havelittle ambition.

Source: Douglas McGregor, The Human Side of Enterprise, Copyright 1960

by McGraw-Hill. Reprinted by permission of The McGraw-Hill Companies.


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Theory X and Theory Y Theory Y Assumptions

People do not dislike work; work is anatural part of their lives.

People are internally motivated to reachobjectives to which they are committed.

People are committed to goals to thedegree that they receive rewards whenthey reach their objectives.




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Theory X and Theory Y Theory Y Assumptions

People seek both seek responsibility andaccept responsibility under favorableconditions.

People can be innovative in solving

problems. People are bright, but under most

organizational conditions their potentialsare underutilized.




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Theory X

Theory Y

Think of these theories as a continuum

Theory X Theory Y

Employees fall somewhere in between the two ends


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The Behavioral Management

Perspective Contemporary behavioral science in

management emerged because of the

too simplistic descriptions of workbehavior by the human relationstheorists.

Organizational behavior takes a holisticview of behavior, including individual,group, and organization processes


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Organizational Behavior Important topics in organizational

behavior research:

Job satisfaction and job stress

Motivation and leadership

Group dynamics and organizational politics

Interpersonal conflict The structure and design of organizations


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The Quantitative Management

Perspective

Focuses on decision making, economic

effectiveness, mathematical models, andthe use of computers in organizations

Management science

Operations management


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The Quantitative Management

Perspective Contributions

Developed sophisticated quantitative techniques to assistdecision making

Models have increased our awareness of complex organizationalprocesses and have aided in the planning and controllingprocesses

Limitations Cannot fully explain or predict behavior

Mathematical sophistication may come at the expense of otherimportant skills

Models may require unrealistic or unfounded assumptions


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Contemporary Management

Theory The Systems Perspective

A system is an interrelated set of elementsfunctioning as a whole. An organization as asystem is composed of four elements:

Inputs (material and/or human resources)

Transformation processes (technical andmanagerial processes)

Outputs (products and services)

Feedback (reactions from the environment)


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The Integrated Systems Model

FeedbackFeedback

InputsInputsFrom theFrom theenvironment:environment:HumanHuman

MaterialMaterial

FinancialFinancial

InformationInformation

ProcessingProcessingTransformationTransformationprocess:process:TechnologyTechnology

Operating systemsOperating systems

AdministrativeAdministrative

systemssystemsControl systemsControl systems

OutputsOutputsInto theInto theenvironmentenvironmentProductProduct

ServicesServices

Profit/lossProfit/loss

Employee behaviorEmployee behaviorInformationInformation


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Systems Perspective Synergy

Subsystems are more successful working

together than working alone. The whole,

working together, is greater than the sum

of its parts.

Entropy

A natural process leading to system decline

which can be avoided through

organizational change and renewal.


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Contemporary Management

Issues & Challenges Downsizing

Diversity and the New Workforce

Information Technology

New Ways of Managing

Globalization Ethics and Social Responsibility

Managing for Quality

Service Economy


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The Functions of Management


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The Functions of Management

A Circular ProcessPlanning

Organizing/Staffing

Leading/Directing

Controlling


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Plans

Strategic

Tactical

Operational

Mission Statement


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Written explanation of company aims

What goods and services the company will offer

What market the company will serve

Company belief vision

Statement about employee treatment may beincluded

Mission Statement & Objectives

Objectives - The ends or results desired by the organizationand are derived from the organizations mission.


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Plans Are Classified on Their

Scope

Strategic

Tactical

Operational

Plans becomemore specific as

they movefrom strategic to

operational Contingency


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Top

Middle

SupervisorySupervisory

Strategic

Tactical

Operational

Management & Planning Levels


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Decision Making


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Managers As Decision Makers Decision making the process of

recognizing a problem or opportunity

and creating a solution

A decision is a choicebetween alternatives


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Steps in the Decision

Making Process

Recognize and

define the

decision situation

Develop

options

Analyze

options

Implement

the decision

Monitor the

consequences

Select the

best option


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Steps in the Rational

Decision-Making ProcessStep Detail Example

1. Recognizing anddefining the decision

situation

Some stimulus indicatesthat a decision must be

made. The stimulus may bepositive or negative.

A plant manager sees thatemployee turnover has

increased by 5 percent.

2. Identifying alterna-tives

Both obvious and creativealternatives are desired. Ingeneral, the more importantthe decision, the more

alternatives should beconsidered.

The plant manager canincrease wages, increasebenefits, or change hiringstandards.

3. Evaluating alterna-tives

Each alternative is evalu-ated to determine itsfeasibility, itssatisfactoriness, and itsconsequences.

Increasing benefits may notbe feasible. Increasingwages and changing hiringstandards may satisfy allconditions.


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Steps in the Rational

Decision-Making ProcessStep Detail Example

4. Selecting the bestalternative

Consider all situationalfactors, and choose the

alternative that best fits themanagers situation.

Changing hiring standards willtake an extended period of time

to cut turnover, so increasewages.

5. Implementing thechosenalternative

The chosen alternative isimplemented into theorganizational system.

The plant manager may needpermission from corporateheadquarters. The humanresource department establishesa new wage structure.

6. Following up andevaluating theresults

At some time in the future,the manager should ascertainthe extent to which thealternative chosen in step 4and implemented in step 5has worked.

The plant manager notes that, sixmonths later, turnover hasdropped to its previous level.


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Evaluating Alternatives in the

Decision-Making ProcessIs the alternative

feasible?

Eliminate from

consideration

Is the alternative

satisfactory?

Are the alternatives

consequences

affordable?

Retain for further

considerationYes Yes Yes

Eliminate from

consideration

Eliminate from

consideration

No No No

Figure 4.3


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Rational Decision-making Process StepsThe Classical Model

1

2

3

4

5

6A Circular Process


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Types of Decisions Programmed Decisions

A structured decision or one that occurs frequently

Have well established and understood solutions

Nonprogrammed Decisions

An unstructured decision, which occurs lessfrequently than a programmed decision

Involves complex, important, and nonroutineproblems or opportunities


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Decision-Making Conditions

Level of ambiguity and chances of making a bad decision

Lower Higher Moderate

Certainty UncertaintyRisk

The decision

maker faces

conditions of...


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Distinguishing Between

Decision Making Conditions

Source: Barney, Jay B. and Ricky W. Griffin. The Management of Organizations. Copyright 1992 by Houghton Mifflin Company. Used with permissions.

There are different kinds of conditions in which to make a decision.


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Decision-Making Conditions Decision Making Under Certainty

Decision Making Under Risk

Decision Making Under Uncertainty


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Rational Perspectives on

Decision Making

The Classical Model of Decision Making The Classical Model of Decision Making

When faced with a

decision situation,

managers should . . .

. . . and end up with

a decision that best

serves the interests

of the organization.

obtain complete

and perfect information

eliminate uncertainty

evaluate everything

rationally and logically


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Behavioral Aspects of Decision

Making

The Administrative Model of Decision MakingThe Administrative Model of Decision Making

When faced with a

decision situation

managers actually

. . . and end up with a

decision that may or may

not serve the interests

of the organization.

use incomplete and

imperfect information

are constrained by

bounded rationality

tend to satisfice


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Bounded rationality Satisficing

Coalition

Intuition Escalation of Commitment

Risk Propensity

The Administrative Model

Important Behavioral Concepts


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Ethics and Decision Making Components of managerial ethics:

Relationships of the firm to employees

Employees to the firm

The firm to other economic agents


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Group and Team Decision

Making in Organizations The most common method of group

and team decision making are:

Interacting groups

Delphi groups

Nominal groups.


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Group Decision MakingAdvantages

More information &

knowledge are availableMore alternatives arelikely to be generated

More acceptance of thefinal decision is likely

Enhanced communicationof the decision may result

Better decisions

DisadvantagesThe process takes

longer, so it is morecostly

Compromise decisionsdue to indecisiveness

may emergeOne person maydominate the group

Groupthink may occur


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Groupthink

Source: Gregory Moorhead, Group &

Organizations Studies (Vol. 7, No. 4), pp.

429-444. Copyright 1982 by Sage

Publications, Inc. Reprinted by permission

of Sage Publications, Inc.

A situation that occurswhen a group or teamsdesire for consensus andcohesiveness overwhelmsits desire to reach the best

possible decision.


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Managing Group and Team

Decision-Making Processes

Be aware of the pros andcons of having a groupor team make a decision.

Set deadlines for whendecisions must be made.

Avoid problems withdominance by managinggroup membership.

Hold a follow-up meetingto recheck the decision.

Have each groupmember individually andcritically evaluate allalternatives.

As a manager, do not

make your positionknown too early.

Appoint a group memberto be a devilsadvocate.

Promoting the Effectiveness of Group andTeam Decision Making:

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