Principles of Mgt Jun10 Edn 2

8/4/2019 Principles of Mgt Jun10 Edn 2

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July 2010 _edn 1

Principles & Practice of Management

Reference Text: “Essentials of Management – aglobal perspective” Wiehrich & Koontz (7th Edn; Tata Mcgraw Hill)

Course Facilitator: Bijoy S Guha



July 2010 _edn 1

About the facilitator… ► Joined Philips India as a Management Trainee (1969)

► After O-J-T of 18 months, became a Section In-charge in a factory► 18 months later, become Shop In-charge

► 24 months later, took over as I/C Engineering & Customer Support

► 18 months later, Project 2nd I/C for new Factory

► 18 months later, Manager Quality Control

► 42months later, Manager Innovation Group► 42 months later seconded to Philips Germany

► 24 months later returned as Factory Manager, Luminaire Centre/Calcutta

► 36 months later took over as Plant Manager, Kalwa Lamp Factories/ Thane the largest Philips Production complex – first Indian Manager

► 54 months later took over as SBU head- Professional Lighting/India► 36 months later took over as Head, Corporate Purchasing/India for 12

months;

► Started (1998) up a joint-

venture between Tata AutoComp & YazakiCorp/Japan for Auto EDCS (C.E.O, Tata-Yazaki ) and steered it for 60

months;► Retired from Tata-Yazaki to start a second career as a Teacher. (2003)



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►Lectures duration is 60 minutes gross i.e. 50-55

minutes net: Please be on time to maximize utilization;

late coming disturbs the lecture flow – and is a serious

breach of management etiquette. Let us practice to be„Managers‟!

Only one person talks at a time – lecturer or questioner/commenter/answerer!

The last 5 minutes are for summarization/ discussion.Please participate to learn and share: no individual(including me) is expected to

know everything!

Questions show interest not ignorance!

Ground Rules



July 2010 _edn 1

► At the end of section (4/5 lectures), discussion topics willbe given in advance as home assignment, to be prepared

for a class discussion: Individuals will be selected at random to answer/explain

questions - these being recorded for Internal Marks , so bekeen to participate!

You need to use all acquired knowledge to be a Manager. Don‟tforget what you have learnt in earlier years; build on it byenquiring – interact, question & challenge!

►Standard internal tests (MCQ & written) will also be held,

with little notice – be prepared! Don‟t worry about a missedtest, if your absence is authorized.

Have fun, enjoy

your learning experience – only then will marks follow in abundance!



July 2010 _edn 1

PPM 1Management: Definitions, Roles &

Skills



July 2010 _edn 1

Management: definitions by the Class

► Get jobs done by others:

Motivate/Lead/Direct/Coach/Guide etc. Sharing in a group to achieve objective

Empower

► Structured approach to get goal: 5 W‟s & 1H

Rules, regulations, processes etc.

► Making Profits & growing Meeting Budgets and Targets

Increasing firm‟s value

Resource & cost controls► Innovate & compete for Business

► Planning Organizing Staffing Directing: forachieving results

► …



July 2010 _edn 1

Management: Definitions

► “Management is the process of designing and

maintaining an environment in which individuals,working together in groups, efficiently accomplish selected aim(s) viz. to create a surplus(s).” …. Weihrich & Koontz

► “Management is not an absolute; rather it is socially and culturally determined. Across all cultures and in all societies, people coming together to perform certain collective acts encounter common problems

having to do with establishing direction,coordination and motivation. Culture affects how these problems are perceived and resolved.” …The Art of Japanese Management by R. Pascale & A. Athos .



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Management: Definition …ctd . Applies to and through any kind of organization:

collective, cohesive and consistent human effort towardsaccomplishing a common objective.

Applies to people at all levels

Concerned with “Doing the right things right at all times” :

1. Effectiveness: Achievement of objectives (Right Things );2. Efficiency: Achieving those objectives with least amount/

sacrifice of resources (Things Right );

3. Continuous Improvement: in creating increasing „surplus‟

(at all times ); – “Improve or die” = survival of the fittest

– “what gets measured , gets managed and improved” e.g.

Productivity= Output / Input ratio



July 2010 _edn 1

Management: Definition …ctd.

ORGANIZATION

Economic

Political

Regulatory

Societal

Technological

Globalization

Doing „right things right‟ is affected by forces

of environment:

For creating a „surplus‟



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Management: The Art & Science

►Evolution of “Management”- Two dominant trends: from

►Agriculture Manufacturing Services

►Local National Multi-National Global

Industrial Revolution & Factory System

Information Technology & societal maturity

Breaking-down of barriers: “Global Village”

From “inside-out” to “outside-in”

Impact of speed: “24x7” mindset



July 2010 _edn 1

Management: The Art & Science

►Contribution of Dominant Personalities (20th

Century): F.W.Taylor & the “scientists” (20‟s)

Fayol/Peter Drucker & the rationalists (40‟s)

Maslow/Herzberg & the Humanists (50‟s)

Demming & the Quality crusaders (60‟s)

Hofsteed & the Culture club (70‟s)

Tom Peters & the „excellence‟ brigade (80‟s)

Michael Porter & the „value‟ drivers (80‟s) Prahalad/Reis & the „focus‟ specialists (90‟s)

Hammer & the „change and reengineer‟dynamos (00‟s)



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►Management – Approach, Roles & Skills:

Fredrick Taylor‟s path-breaking “scientific approach ”

Henri Fayol‟s classical definition of „functions‟ ,

and process:►Plan Organize Lead Control

Mintzberg‟s map of managerial „roles‟ :

►Interpersonal + Informational + Decisional Katz‟s interpretation of „skills‟ :

►Technical / Human / Conceptual

Management: The Art & Science …c‟td



July 2010 _edn 1

►Management – Approach, Roles & Skills:

Human – „get things done through others‟:

►Leadership: “The ability to influence a group towards

achievement of goals” (works of Fielder, Blanchard et al)

►Motivation: “The willingness to exert high level of

effort towards goals” (works of Maslow, Herzberg, Mayo

etc.)

►Communication:”The transference and

understanding of meaning”

Will be done in detail in Organizational Behaviour

Management: The Art & Science …c‟td



July 2010 _edn 1

Managerial Roles - 10 (Mintzberg)

Role Description ExamplesInterpersonal •Figurehead symbolic head; required to show Ceremonial,

„face‟ in social & legal conditions. Civic etc.•Leader Motivating & directing subordinates project plan

•Liaison Networking outside for information Industry -& favours group meetsInformational •Monitor nerve centre and interpretator Reports•Disseminator networking within the organization Meetings etc.•Spokesperson Transmit intent to outsiders; expert Board Meets

Decisional •Entrepreneur Opportunity finding& reacting Strategy Plan•Trouble shooter Handling unexpected disturbance Contingency•Resource allocator Initiating/approving changes Budgeting

•Negotiator Getting best deal for Organization Contracts

Management: The Art & Science …ctd



July 2010 _edn 1

Managerial Skills(Katz & others)

► Technical Skills:

Application of specializedknowledge or expertiseacquired though formal

training & its use.

► Human Skills:

Ability to work with people,understand and motivate

groups & individuals.► Conceptual Skills:

Mental ability to recognize,analyze, diagnose and thinkthrough complex situations.

Skills Needed

Board

Exec.

Mgr.

Supr.




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SYSTEMS

MAN

MONEY

“HARD” “SOFT”

H R ToolsMarketing Tools

LawsMethod Study

Etc.

RelationshipMotivation

Goal CongruenceBrandEtc.

AccountingOprn. Research

Portfolio ManagementFin. Management

Etc.

Investment Decisions

Stakeholder RelationsInternational Business

Etc.

Analytical Judgmental



July 2010 _edn 1


“Different Doors” to Management

Cooperative Social Systems

Group/InterpersonalBehaviour

7-S Framework

Total Quality Management

Applied SystemsTheory

Socio-technicalTheory

Reengineering

Contingency/Situational Theory

Rational choice/Decision Theory

Mathematical Modeling

SYSTEM

Approach



July 2010 _edn 1

Class Discussion 1

► Contributions to Management thought:

F.W.Taylor – father of Scientific Management

Henri Fayol – father of Systems Management

Deming – Quality Management

Maslow – Humanistic Approach

Drucker – the all time great



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Principles of

Management 2Management: A Systems

Approach



July 2010 _edn 1

Systems approach to Management

Organization as a System receives Input, Transforms itthrough a Process for Output and operates in anEnvironment (economic, regulatory and other forces)

Transformationprocess

input output

Feedback (Re-energizing/setting the system)

ENVIRONMENT

System Boundary



July 2010 _edn 1

Systems approach to Management …ctd.

Systems Concepts

System Boundaries and SubsystemsSystems often consist of numerous

subsystems.

Subsystems perform specialized tasks forthe overall system.

A subsystem has own activities, objectives

& interacts with other subsystems.

Sub-System 2e.g. Production

Sub-System 3e.g. Sales

Sub-System 1e.g. Purchasing



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“Stake”: Something wagered or risked; an interest in an

enterprise with contingent gain or loss …Webster „s dictionary

“Holders” who have stake in Business:

Shareholders: are the owners. They have put in their money inthe enterprise, expecting better returns from it than from other

ventures; Society: includes the State, provincial and local governmentsfor the improvement of „quality of life‟ of its citizens;

Suppliers: continuity of their enterprise depends on thesuccess of the customer enterprise;

Customers: require the goods and services provided by theenterprise, better than those from its competitors. Theenterprise is, in turn, a supplier to its customers;

Employees: livelihood depends on the health, progress andsuccess of the employing enterprise;

Output for “Stake-holders” in Business:



July 2010 _edn 1

Systems approach to Management …ctd. Outputs and Inputs

Systems produce Outputs from Inputs – i.e. theInputs are converted to Outputs.

Outputs of one subsystem become inputs to anothersubsystem.

Outputs must adhere to standards to be useful oracceptable to the next subsystem.

System Environment Environment consists of people, organizations and

other entities that supply data to or that receive datafrom the system

An “open” system interacts with the environment; a

“closed” system does not.



July 2010 _edn 1

Systems approach to Management …ctd. “Inputs”: 5 Ms of Management

Inputs or the resources managers deal with are:Man : human resources, both inside and outside, connected

with an organization;

Materials: goods (hard & software, processed or semi-

finished) and services required to create the sellable endproduct;

Machines: technology and expertise deployed towards thetransformation process;

Methods: systems, procedures and processes seamlesslyput together for the transformation;

Measurement: score-keeping and in-process monitoringcontinuously with due feedback to keep on-course on time.



July 2010 _edn 1


“Inputs”: 5 Ms of Management

“Money” is required for generating alltheses Ms – managers need to acquire,deploy, generate and distribute money as

a primary need for business!Money is the common measure or

language of Business: resources – converted to “costs”.

earnings – converted to “revenue”.

investments – converted to “assets”

surplus – expressed as “profit” & “cash flow”



July 2010 _edn 1


► There is a “freedom of choice” (for association)between each of these stake-holders and theenterprise in the longer term: But they sink or swim together in the shorter term

Length of term definition varies with individuals!

► They have varied interests in terms of specificoutcomes, e.g. Society in Ethics & Environment, andoften prioritize differently – even divergently, e.g.

Shareholder on higher Profit & Employees on higher Wages.► Managers need to balance different interests, fine-

tuning the Business Processes towards stakeholdersatisfaction.

Output for “Stake-holders” in Business …ctd.



July 2010 _edn 1


Business processA business process or business method is

a collection of related, structured and

sequenced activities or tasks thatproduce a specific service or product(serve a particular goal) for a particular

stakeholder. It often can be visualizedwith a flowchart (of activities) repeatedover time for same outcome.



July 2010 _edn 1


There are three types of business processes:

>Management processes, that govern the operationof a system. Typical management processes are

"Corporate Governance" & "Strategic Management".

> Operational processes: constitute the corebusiness and create the primary value stream.Typical operational processes are Purchasing,Manufacturing, Marketing & Sales.

> Supporting processes, which support the coreprocesses. E.g. Accounting, Recruitment, Technicalsupport.

http://en.wikipedia.org/wiki/Corporate_Governance

http://en.wikipedia.org/wiki/Strategic_Management

http://en.wikipedia.org/wiki/Core_business


http://en.wikipedia.org/wiki/Purchasing

http://en.wikipedia.org/wiki/Manufacturing

http://en.wikipedia.org/wiki/Marketing

http://en.wikipedia.org/wiki/Sales

http://en.wikipedia.org/wiki/Accounting

http://en.wikipedia.org/wiki/Recruitment

http://en.wikipedia.org/wiki/Technical_support




http://en.wikipedia.org/wiki/Recruitment

http://en.wikipedia.org/wiki/Accounting

http://en.wikipedia.org/wiki/Sales

http://en.wikipedia.org/wiki/Marketing

http://en.wikipedia.org/wiki/Manufacturing

http://en.wikipedia.org/wiki/Purchasing



http://en.wikipedia.org/wiki/Strategic_Management

http://en.wikipedia.org/wiki/Corporate_Governance



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Planning (What, where & when to do?)

+ Organizing (How to do?)

+ Staffing (who to do?)

+ Leading (same direction?)

+ Controlling (OK?)

to accomplish certain pre-determined, (as derived from stakeholder needs) goals orobjectives i.e. outcomes


Management as a system transforms inputs as a

whole & in each type of Business Process by:

Systems approach to Management ctd



July 2010 _edn 1

Inputs(Goal

Oriented)

Outputs(External

ToOrgnzn.)

P l a nni n g

O r g a ni z i n g

S t a f f i n g

L e a d i n g

C o n t r o l l i n g

Product/Services,Profits, Customer &Societal satisfaction,

Other Long-term Goals

Man, MachineMaterial,Methods,

Measurement

Stake holder Feedback (reenergizing the system)

EXTERNAL ENVIRONMENT(Opportunities, Constraints)

Stakeholders

Shareholders;Society; Customers;Employees; Suppliers

Systems approach to Management …ctd. A Flowchart

Mgt

Core

Sup



July 2010 _edn 1

Principles of

Management 3Management Process

First Step: Planning



July 2010 _edn 1

Planning

►Planning involves selecting objectives orgoals and defining the course of actions toachieve them:

Provides the road-map to take us fromwhere we are to where we want to go;

Is a rational approach to achieving pre-selected objectives - based on innovation,

knowledge and purpose; Decision making in choosing the best from

alternative courses of action is integral toplanning;



July 2010 _edn 1

Plans as foundation of Management

Planningrequires asking& answering:

Where to?

Seeing & living the future – but

not fortune telling! • “Dreams” backed by clear actions to

achieve them (Ws & Hs)• People must know what they are expected to accomplish, to make the

group effort effective.• without a plan any road leads you to nowhere! • Finally, the „plan‟ serves as the basis

for control.

What kind of resources needed?

?

What kind of people

& org. structure to have?

?

How & Who to lead them to reach planned goals?

?

How & when to control in case of Deviation from plan?

?



July 2010 _edn 1

Types of Plans

►Mission / Purpose The basic function or „reason for existence‟ of

an enterprise/ organization, e.g.

Wal-Mart : "To give ordinary folk the chance to buy

the same thing as rich people."

Mary Kay Cosmetics : "To give unlimited

opportunity to women."

Merck : "To preserve and improve human life."

Walt Disney : "To make people happy."



July 2010 _edn 1

Type of Plans (Cont‟d)

►Objectives/ Goals The end towards which activity of anorganization is aimed, e.g.

►For a Business enterprise – profit, surplus creation;

►For a Management Institute: The number of employable/useful trainees;

►Strategies Determination of the long term objectives and

adoption of a course of action Gives a frame work for linked action-plans,

communicated systematically to guidethinking and actions.

Objectives: more precise;

Goals: open ended e.g.

Pepsi‟s “Beat Coke”

T f Pl ( t‟d)



July 2010 _edn 1

Types of Plans (cont‟d)

►

Business Policies “Plans” that are general directional statements(or understandings) that guide/help in decisionmaking:

►Repeat decisions taken „reflexively‟; ►Delegation of tasks without loss of control.

Some discretion is permissible depending oncircumstances thus encouraging initiative withinlimits and situational adjustments;

► Difficulty: Subject to (personal) interpretations

T f Pl ( t‟d)



July 2010 _edn 1


►Procedures

Plans that are chronological sequences of required actions: task-oriented in nature;

Cuts across department boundaries (sub-

systems) in an organization. Procedures and policies are inter related: e.g.

authorization for paid leave►Policy governs quota, responsible authority etc.

►Procedure governs application, grant and record-keeping.

►Rules: Specific actions or non-actions allowing no discretion

►Caution: rules and procedures limit initiative!



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Types of Plans (cont‟d) ►Programs

Action plans (mainly non-routine or for changedactivities) including, task assignments, steps tobe taken, resources to be deployed etc. toachieve a (new/renewed) goal;

►Primary program may require supporting programs,spreading across the enterprise;

►Perfect coordination between supporting & primaryprograms essential to avoid delays, unnecessary costs

and expected roll-out. Programs can be a complex of (sub)goals,

policies, rules and other elements necessary forthe course of action e.g. obtaining ISO

certification.



July 2010 _edn 1


►Budgets

A statement of expected results expressed in “Numerical terms” e.g. financial operatingbudget = “profit plan”;

Budgets enforce precision in thinking:►Making a budget is „planning‟ by itself;

►Encourages innovation – a “different” way to work

Budgets serve for „Control‟:

►Enforces discipline in execution of plans;

►Instills cost consciousness;

►Makes people (constantly) plan!



July 2010 _edn 1

► By Planning Period:

Short range plans e.g. material procurementplan in a factory

Long range plans e.g. product development

plan, plant/production facility installation;► “Urgent” drives out the “Important” – mismatch

between short & long term plans!

Planning horizon must allow for actions to runtheir course – requiring „commitments‟:

►Thus “decisions today” are key to good plans;

►Long-term plans reap benefits of good short-term

plans.




July 2010 _edn 1

Top levelManagers

Middle levelManagers

Supervisors

P l anni n g

Or g ani z

i n g

L e a d i n

g

C on t r ol l i n g

Time spent in Managerial functions

at different levels of organization

Directional;Strategic

Operational;

Tactical

Short-term;

Routine

Plans as foundation of Management …ctd



July 2010 _edn 1

Hierarchy of Objectives & Org. Levels

Mission

OverallObjectives & Key result areas.

Divisional objectives

Departmental objectives

Individual objectives

Board of Directors

CEO

DivisionHead

Product X

DivisionHead

Product Y

Sales & MktgDept

Production Dept

Sales Manager A Sales Manager B

Objectives set end results – they need to be supported by a hierarchy ofsub-objectives, duly networked through the organization to avoid discord andwasted effort.

Management must ensure that the components of the network fit each

other. This is the “Cascade Principle”.

K R l A (KRA)



July 2010 _edn 1

Key Result Areas (KRA)

► Are areas in which performance is essential for the

success of an enterprise

► Examples of „generic KRA‟s:

Market share

Return on Investment (ROI) Service level

Customer satisfaction

► Peter Drucker recommends: Market standing,

innovation, productivity, physical & financialresource, profitability, managerial performance & development, worker performance & attitude andpublic responsibility.

St i (B i ) Pl i



July 2010 _edn 1

Evaluationand Control

and ControlStrategyFormulation

StrategyImplementation

Mission

Objectives

Strategies

Policies

Feedback/Learning

Environmental

Scanning

Societal

Environment

General Forces

TaskEnvironment

Industry Analysis

Structure

Chain of Command

Resources

Assets, Skills

Competencies,

Knowledge

Culture

Beliefs, Expectations,

Values

Reason for

existence

What

results toget & when

Plan toachieve the

mission &

objectives

Programs

Activities

needed to

accomplish

a plan

Budgets

Cost of theprograms Procedures

Sequence

of stepsneeded todo the job

Process to checkperformance &take appropriateaction: corrective

& preventive.

Performance

External

Internal

Evaluationand Control

Broad guideto decisionmaking

A Contemporary Model:

Steps in (Business) Planning

Environment Scan



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Environment Scan

Environmental Scanning: External



July 2010 _edn 1

External Environment

Environmental Scanning: External P.E.S.T

Analysis

Porter‟s 5-

Force model

for Task

environ.

T k E i t I d t A l i



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Task Environment: Industry Analysis

Porter‟s Five Forces : anModel for analysis of the

External environment.

The forecast of external factors



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The forecast of external factorsForecasting Techniques:

►

Extrapolation Time-series statistically project demand analyzing

historical data;

Causal method seek co-relation on cause and effect

basis between two (or more) variables to quantify

demand;

► Statistical modeling

► Brainstorming

► Expert opinion

► Scenario writing:

Coping with uncertainties

► Sensitivity analysis & “What if” scenarios (trust instinct!);

► Planning for contingencies – with defined cut-in milestones.

• Un-quantifiable factors e.g. national pride• Quality of assumptions

•Excessive data required (often unobtainable) to

make accurate forecasts

• Environmental changes: Technology, Gov. Policy,

Global alignments, New materials/sources etc.



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► Corporate Governance: relationship betweenvarious stakeholders influencing goals/mission;

► Responsibilities of Business: Model (Carroll) of Corporate Performance.

Internal Analysis



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Internal Analysis …ctd

Internal Strategic Factors:Critical Strengths and Weaknesses that are likely todetermine if the firm will be able to takeadvantage of opportunities while avoiding threats.

Resources: A resource is an asset, competency, process, skill or

knowledge controlled by the corporation. A resource is:

a strength if it provides a firm with competitiveadvantage;

a weakness if it is something the company is notsufficiently endowed with respect to the competitors

Th SWOT l i & St t f l ti



July 2010 _edn 1

The SWOT analysis & Strategy formulation

W/T Strategy(mini-mini)

take cover for both

weaknesses & threats

S/T Strategy(maxi-mini)

using strengths to avoid

or overcome threats

Threatse.g. competition, new

entrants, reduction of

protection etc.

W/O Strategy(mini-maxi)

overcoming weakness

to leverage opportunity

S/O Strategy(maxi-maxi)

using strengths to

leverage opportunities

Opportunitiese.g. economic

upturns, political/

social changes etc.

Weaknesses

e.g. areas not

showing up in

„strengths‟ box

Strengths

e.g. strengths in

R&D, knowledge,

finance etc.

Internal Factors

External Factors

Generic Strategy



July 2010 _edn 1

Generic Strategy

Relationship

B‟marking Partnering

Company

Customer

Competitor Supplier

Ultimate competitive position:- position w.r.t major Customers

- K.S.Fs of Competitors

- leveraging of suppliers

Competitive Advantage

1. Cost Leadership: To continually work reducing

the cost prices of products.Supplier Q-C-D has very highpriority.

2. Differentiation: To constantly offer innovativeand unique solutions. Suppliertechnology & quality has focus.

3. Customization: To offer required services in therequired manner is the focus.

Speed and flexibility important.

Strategy Formulation: Choice & Fit



July 2010 _edn 1

Strategy Formulation: Choice & Fit

Decision Making = is the core of the planning process; a plan

does not come into being unless a „decision‟ i.e. certain commitments of resources, managerial time and moneyare made and risks are taken.

Caution: A “Plan” is not intentions and should not suffer from

“Analysis Paralysis”.

Comparing & choosing analternative

Decisionmaking

Budgeting( Numberizing Plans)

Say, Sales budgetOperational Expense budget,

Capital expenditure budget

FormulatingSupporting

plans

Say, plan to buyEquipment, recruit & train

Employees, develop product etc

Deployment (MBO etc.)

Strategy Implementation: Deployment



July 2010 _edn 1

Mission

OverallObjectives & Key result areas.

Divisional objectives

Departmental objectives

Individual objectives

Board of Directors

CEO

DivisionHead

Product X

DivisionHead

Product Y

Sales & MktgDept

Production Dept

Sales Manager A Sales Manager B

This is the “Cascade Principle”, discussed earlier.

While setting Objectives, ideally, Top Management should getinformation / „buy-in‟ from lower levels to set tough but

achievable goals for a good result.

Bottom-up

ResponseTop-downApproach

Strategy Implementation: Deployment

Management By Objectives (MBO)



July 2010 _edn 1

Management By Objectives (MBO)► A comprehensive managerial system that integrates

many key managerial activities in a systematicmanner and that is consciously directed towards the

effective and efficient achievement of organizations‟

and individual objectives:

Set-out by Peter Drucker in 1954; integrated to personal

performance appraisal by Douglas McGregor in 1957;

Has formed the basis for many theories on motivation;

Has been criticized for introducing a short-term focus andundesirable (individualistic) behaviour;

Currently viewed as a „way of managing‟ (deployment

cascade) – not a specific tool.

D i i M ki



July 2010 _edn 1

► Decision making is a „rational choice‟ process,

bounded by: Limitations: time, information and „logic‟;

Behaviour: Risk averseness and biases.

► A key step in the process is to identify those limiting

factors, „road-blocks‟ to each effective („right thing‟)alternative – then finding a „solution‟ with leastsacrifice of resources („thing right‟):

Factors: quantitative, qualitative/intangible;

Nature: structured/unstructured

Finding solutions:►marginal analyses – benefits with incremental inputs;

►cost-effectiveness – assessment of benefits over costs;

► Intuitive/judgmental – making „connections‟ that are not

obvious

Decision Making

Decision Making ctd



July 2010 _edn 1

Top level

Managers

Middle levelManagers

Supervisors

Non- programmed

Decisions

Programmed Decisions

Decision Making…ctd. Nature of decision making in Organizations

Non Programmed decisions: used for unstructured, novel and ill-

defined situations of non-recurring natureProgrammed decision: is applied to structured or routine problems; veryoften recurring maybe under varying circumstances

Decision Making ctd



July 2010 _edn 1

Decision Making…ctd.

How to select Amongst the

Alternatives ?

“Experience”: good teacher and useful when

routine/repeat situations arise under similarcircumstances. Without due analysis of theconditions, mistakes tend to repeat or a poorfit results.

“Research & analysis”: the approach is in at first

understanding the problem („half the solution‟!), then finding relations between various factorswhich hinder or foster goal attainment. This is astructured, analytical approach quantitative orotherwise.

“Experimentation”: arguably, the best techniqueto use, particularly when either experience orrationale is lacking/limited. However is expensiveand „success/failures‟ are magnified, results are subject to interpretational errors.

Decision Making ctd



July 2010 _edn 1


► Decision making takes place under varying degreesof uncertain conditions and risks. Techniques usedto aid the process are:

Risk analysis: every decision is based on interactionsamongst different factors/variables – each of which havetheir own probabilities (towards „success‟). Analysis of these probabilities yield a risk profile for each alternativepath. In the absence of defined probabilities, estimatescan be used.

Decision trees: the outcome (measure pre-decided e.g.

cost or time) of every step in the decision is charted anda course selected on the most favourable outcome. Verymuch like making a trip, navigating by using a road-map(refer example in W & K, “Management – a global perspective/10 th edn. Pg. 209)

Decision Making ctd



July 2010 _edn 1


Flow Charts: as a process-guide to taking a decision and

helps as a check-list of key variables, the sequence inwhich they fall and the interrelations. Key to making achoice or re-examining the path taken are also indicatedas risk-reduction devices.

(refer example in W & K, “Management – a global perspective/10 th

edn. Figure 8-5)

Decision Support Systems: a wide variety of (proprietary)computer based programs are available for managers touse their time more effectively for decision making of

semi-structured tasks – by providing alternativeevaluations. They focus on the process of decisionmaking, taking data provide by the managementinformation systems in enterprises.



July 2010 _edn 1

Principles of

Management 4Management Process:

Organizing for results

Nature of Organizing



July 2010 _edn 1

Nature of Organizing► Organizing may be broadly defined as:

1. The identification and classification of requiredactivities;

2. The grouping of those activities towards attainingtheir set objectives;

3. The assignment of those groupings to a responsible

manager, duly empowered;4. The provision for coordination among, within and

across the groups in the organization.

► Organization structures are designed to:

Clarify tasks & responsibilities, Remove obstacles,

Furnish decision making & communication network

Support attainment of enterprise objectives

Nature of Organizing …ctd.



July 2010 _edn 1

g g

The Business Organization Model: “Value Chain” (Porter,1985)

Firm Infrastructure

Human Resource Management

Technology Development

Procurement

Inbound

LogisticsOperations

Outbound

Logistics

Marketing

& SalesService

Primary Activities

The margin reflects the reward for the risks run by the company.

All activities together need to generate ‘value’ greater than the sum of its costs.




July 2010 _edn 1

g g

Inbound Logistics: relate to receiving, storing and disseminatinginputs;

Operations: associated with transformation of inputs into finalproduct form;

Outbound Logistics: relate to collecting, storing and physicallydistributing the products to buyers;

Marketing & Sales: relate to advertising, Promotion, sales,distribution-channel selection & management and Pricing;

Service: associated with enhancement or maintenance of

product value over life;

The Value Chain: “Primary Activities”




July 2010 _edn 1

g g

Procurement: relates to the function of purchasing inputs usedacross the firm‟s primary and support activities;

Technology Development: relates to know-how, processes &

procedures, „technology‟ embodied in the product design anddelivery. Most activities have their own sub-set of technology;

Human Resource Management: directed at recruiting, training,

developing and compensating all personnel;

Firm Infrastructure: associated with serving and supporting thefirm as a whole, with the company as its customer eg. Finance &

accounting, Quality;

The Value Chain: “Support Activities”

Nature of Organizing ctd



July 2010 _edn 1

► Most practicing mangers would translate this “value

chain” to imply an organization as:

“ a formalized, intentional structure of roles and positions”

Thus „formal organization‟ implies the intentionalstructure of roles in an enterprise.

► However, in an enterprise „informal organization‟

will form, not necessarily bad and is:“ a network of personal and social relations not established

or required by formal organizations but arising spontaneously as people associate with each other”.


e.g. a Footballteam

e.g. “Senior” Players

Nature of Organizing ctd



July 2010 _edn 1


*

*

Hierarchical levels(6)

#

*

*

Span of Management(8)

Informal OrganizationOffice Golf team

Car Pool to/from work

*C

C C C

The building block of an organization

is the Department: a group charged

with independent task & responsibility.

Sales Gr1

NCR

G‟oan

Car Prod

Assembly

Test

Manuf.

G Fy




July 2010 _edn 1

► Grouping activities & people into departments makes

it conceptually possible to expand organizations toan infinite degree.

► Different patterns have been successfully used to

group activities: By simple nos. is a simple method – works well for the

lowest levels where work is routine, uniform and non-specialized; time-grouping is an extension of this methodwhere shift-working is required;

By enterprise functions – embodies what enterprisestypically do e.g. Production, Engineering, Sales etc. Thismethod, defined by F.W.Taylor, is arguably the mostprevalent method still used.

g g “Departmentation”

“Departmentation” …ctd.



July 2010 _edn 1

By territory or geography – is very common when thegeographical spread is wide. It was a device introduced to

speed up management in similar units for easy and swiftcommunication e.g. Sales: N/E/W/S; Fire Brigade: Camp,Hinjewadi, Aundh etc.

By Customer/Account orientation – reflecting the primary

interest in nature of markets/business/customer e.g.Banks: Institutional banking, Small Savings etc.

By Process groups – encountered primarily in specialized/manufacturing operations where processes are vital e.g. Advertising: Copy-writing, Creative etc.; Manufacturing:Steel Melting, Wire-drawing etc.

By Product Lines – has evolved with enterprises becoming “multi-line” with „function‟ needing adaptation/integrationto suit specific products e.g. Tata Motors: Passenger

Vehicles / Commercial vehicles

Departmentation …ctd.




July 2010 _edn 1


Most commonly encountered Organization structures in largeorganizations are:

Functional: Developed as a consequence of Taylor‟s concept of division of labour on specialization , leading to efficiencies. Atthe working end, departamentation is mainly functional. At higherlevels, this is challenged since:

Outputs are not discreetly attributable to functions, Speed of decision-making and need for a „wholistic view‟,

Rapid shifts in relative needs of specialization, Creation of „barriers to communication‟ (Silos).

Business Units: Developed to negate the ills and focuses on“lines of Business” comprehensively i.e. “Coy within a Coy”, with

some limitations to autonomy, leading to “closeness to Market”. Generally, speed and effectiveness outweigh the cons of some

redundancies and lower functional excellence.




July 2010 _edn 1


Allow for maximum flexibility and freedom of operations,

especially when the products/businesses are unconnected e.g.General Electric. Generally, SBU‟s have:

- Their own Missions, Goals and Strategies;

- Distinct and definable set of competitors;- Deploy and manage resources in key areas;

- A reasonable „size‟.

Matrix: Currently in vouge for larger organizations to capture theadvantages of both systems i.e. Functional excellence and theEffectiveness BU‟s. Thus, organizations can:

Avail of relevant (skill & experience) functional staff Drive for higher levels of functional excellence (Value Chain) Meet rapid shifts in relative needs of specialization,

Without sacrificing the nimbleness of BU operations.




July 2010 _edn 1

C.E.O

Finance Qual. HRM BU 1 BU 2

I.R.M

Recr.

T&D

G/H.R

Plant 1

G/H.R

Ind.

Sin.

I.S.O

Departmentation …ctd. Example of “Grid Control” & S.B.U‟s




July 2010 _edn 1

Organizing for Projects

Pure Project e.g.Construction

C.E.O

Housing PortsRoads

PM 1

PM 2

PM 1

PM 2

PM 1

Contractor Pool

Project Team e.g. Automobile

Director

Design Markt.Manf.

Mgr 1

Mgr 2

Mgr 1

Mgr 2

Mgr 1

Mgr 2

PM

„Rafting‟ or Matrix Structure





July 2010 _edn 1

The purpose of organizing is to make human cooperationeffective and is limited by:

the number of persons a manager can „supervise‟ effectively andefficiently;

while the total number is dictated by the quantum of work/

nature of task/spread etc. Thus the two dimensions, “Level” (depth) and “Span of control” (width) are interrelated .

The reason for creating Levels of organization is the limitation inthe span of control. “Effective span” is influenced by:

Training/skill of subordinates and personal contact required;

Clarity of delegation of authority;

Clarity of plans, use of objective standards and communicationtechniques;

Rate of change;

Maturity and experience of the manager and organization.

Span-of-Management

Span-of-Management …ctd.



July 2010 _edn 1

Levels, per se, are not desireable:

They are expensive – as they increase, both infrastructure costsand staffing tends to increase;

Real work is accomplished at the „gemba‟ (Japanese: workplace )where the actual value-addition/transformation takes place. Thecontribution of levels on top are not directly co- relatable, thus

best avoided;

Communication become complicated – omissions, filterationsand misinterpretations lead to wasted and misdirected effort;

Planning and control become tortuous, requiring complicated

coordination and alignment between levels. Studies reveal that between 8 to 10 people at „higher‟ levels

and upto 15 at lower levels is a good “span”. Increasingly,enterprises are attempting to cut back levels to 5 or less.

Span of Management …ctd.



July 2010 _edn 1

Principles of


Staffing

Staffing: Human Resources



July 2010 _edn 1

Staffing: Human Resources

►Staffing seeks to: Put “the Right people in the Right Job at the

Right time ”

Further, the process needs to ensure that these

right people are retained and enabled to perform

And prepared for the right job since thesechange with the operating environment.

►i.e. management of Human Resources.



July 2010 _edn 1

Staffing: Human Resources (cont‟d)

What is H.R.M?►The Michigan State Univ. Model:

Looks at employees as a means to achieving the

organization‟s Strategy:

►as a „resource‟ that is used in a calculative and mainly

rational manner,

►as a means towards competitive success;



July 2010 _edn 1

What is HRM? (cont‟d)

This „hard‟ model thus proposes that increasingproductivity and competitiveness is the principal

reason for H.R.M:

►Therefore, a framework in which the needs of the

organization are paramount;

► And Organizations exist to accomplish a mission or

achieve an objective, leading to 3 inter-connected

issues:



July 2010 _edn 1

The Michigan Model (cont‟d)

Mission & Strategy

Orgn. Structure HR Management

PoliticalForces

EconomicForces

CulturalForces



July 2010 _edn 1

The Michigan Model: Human Resource Cycle

Rewards

Development

Selection Performance Appraisal

HRM th O ti i t



July 2010 _edn 1

HRM – the Operating environment

HR Strategy• Recruitment• Training• Pay

• Empl. Relations• Flexibility etc.

HR Management

National Culture

Orgn: Size & Culture

Sector

CorporateStrategy

Behaviour

Performance



July 2010 _edn 1

A HRM Process Model

Input Transformation Output

Feedback

• Challenges • Resources

• Education

• skills

• Management • Recruiting • Selection • Training & Dev.

• Contributions • Capable staff • Motivated employees



July 2010 _edn 1

HRM Systems: Preparation & Selection

Job-analysis & DesignBased on HR information systemwhich collates needs and „fits‟.

Human Resource Planning Matching organization‟s future objectives dynamically with needs.

RecruitmentBalancing organization‟s policies &

plans with capability/costs/supply.

SelectionSeries of steps leading to a “hire”; Testing,interviewing & validation.

HRM Systems: Selection



July 2010 _edn 1

► The process of choosing the „right ones‟ involves a series of

steps with multiple evaluation points which adds time andcomplexity to the hiring process:

Frustration among candidates/applicants,and

Among managers who need the job openings filled!

But hiring is a long-term decision for the firm, whereas it is at best

a mid-term engagement for the applicant and the hiring Manager.► The step-wise progression in the selection process is :

HRM Systems: Selection

# 6: Supervisory Interview

# 7: Realistic job preview

# 8:Hiring Decision

# 1: Reception of applications

# 2: Employment tests

# 3: Selection Interviews

# 4: references & background checks

# 5: Medical Evaluation



July 2010 _edn 1

HRM Systems: Development & Evaluation

When a new employee is hired or present employee isreassigned, orientation / placement should follow;new job-holders need to be trained to do their present

jobs & developed to handle future tasks/responsibilities.

The success of the individual and of the HR process/dept.depends on the feedback about performance; through aperformance appraisal, the employee evaluates the degreeof success.

Employers offer career planning to further encourage thedevelopment of employees.



July 2010 _edn 1

Development & Evaluation: T & D …cont‟d.

A usual step-by-step approach to preparing T&D is:

Needs

assessment

T & D

Objectives

Program

content

Learning

principles

Actual

Program

Skills,Knowledge &

ability

Evaluation

Evaluationcriteria

Development & Evaluation: Performance



July 2010 _edn 1

p Appraisal

► The basis for Appraisal must be job related standards of performance; if performance standards are not jobrelated, evaluation can be biased.

► The approach must: Identify performance related standards;

Measure those criteria; Give feedback to the employee

Keep HR Dept. informed for follow-up.

Performance Appraisal Feedback

MeasuresStandardsRecords

Interventions



July 2010 _edn 1

Employees must be compensated for their efforts;

But this more than salaries : it may include

incentives, benefits and services as a totalpackage for financial and other security;

This forms the key concern of HR department‟s

efforts to obtain, maintain and retain an effective

work force; the role this plays in employee (future

& current) well-being .

HRM Systems: Compensation & Protection

Compensation & Protection:…cont‟d.



July 2010 _edn 1

► The major phases of compensation management are: Job-analysis comprising Position description, Job description &

job standards i.e. Identify and study jobs

Job-evaluation comprising Job ranking/job grading through

Factor comparisons or Point systems i.e. Define internal equity

Wages & salaries surveys Labour directorate, Employerassociations, Professional associations & (self) commissioned

surveys i.e. Establish external equity Pricing Jobs Match job evaluation worth with employment

market worth; i.e Match external and internal worth

► Challenges affecting compensation are:

Market forces forcing pay to be more than the relative worth;

Union interventions/interference;

Government constraints & legislation;

International wage/compensation rates: offshore challenge;

Productivity & cost constraints;

Social constraints.

p



July 2010 _edn 1

Principles of


Controlling & Leading

Controlling



July 2010 _edn 1

g

Control Device

Controlled Entity

Detector: Information ofWhat is happening.

Effector: BehaviourAlteration, if needed.

Assessor: Comparison(With standard)

Detector: or a sensor that measures what is actually happening in theProcess being controlled.

Assessor: a device that determines the significance of what is actualsituation in comparison with some standard or expectation.

Effector: a device (often called „feedback‟) that alters behaviour if the Assesor indicates the need to do so.

+ a communication network that transmits information

Elements of Control

Controlling … cntd.



July 2010 _edn 1

Management Control Focuses primarily on Strategy Implementation.Three distinct systems/activities that require planning and control can be

defined:

StrategyFormulation

Goals, Strategies, Policies

ManagementControl Implementation of Strategies

Task

Control Performance of specific Tasks

Planning

Coordinating

Communicating

Evaluating

Deciding

Influencing

• Management control does not necessarily require that all actions are perthe previously determined Plan;

• It, however, requires inducing people to act in pursuit of own goals in ways

that organization‟s goal are also met: Goal Congruence.




July 2010 _edn 1

Management control hinges on the ability to influence

human behaviour towards achievement of the StrategicObjective, i.e.

What actions do control initiatives motivate people to take in

their own self interest?

Are these actions in the best interest of the Organization? Goal Congruence: implies that actions people are led to take

in their perceived self-interest are also in the interest of the

firm:

Both Formal and Informal processes influence human behaviour

in organizations;

Informal processes need to be recognized since they are ill-

defined and are both intrinsic and extrinsic to an Organization.




July 2010 _edn 1

Organization

Structure

(Management)Controls

Culture

H. R.

Management S t r a

t e g y

P er f o

r m an c e

Implementation Mechanism

• Org. Structure specifies roles, reporting relationships, responsibilities that shape

decision making;

• Culture refers to the set of common beliefs, attitudes that guide management actions

• HR Management is related to activities which enable people to execute strategy;

Controlling … cntd. F l S t



July 2010 _edn 1

► Policies & Rules:

Organograms, protocols and defined communication structure;

Written instructions/Code of Conduct/Manuals etc.;

ISO and allied systems – down to task control level;

Physical controls e.g. Access cards, locked stores etc.

► The Process:

Formal System

Analysis/ Actions

OK?

NRevision

Y

“Reward”

Strategic

Planning

Goals &

Strategies

Other

Info.

BudgetingDepartment

Performance

“Rules” •Task Control

•Safeguards

Reports:

“A vs P”

Measurement




July 2010 _edn 1

Management control process is the process by

which managers at all levels ensure that people they supervise implement their intended strategies:

Unlike the simpler systems, thestandard is not pre-set;

Control is not automatic;Requires coordination amongst

individuals;The link between „need for action‟ and

determining the action is not alwaysclear;

Much of control is self control.

Leading: Nature



July 2010 _edn 1

Leading: Nature

Leadership: The ability to influence a group towards the

achievement of goal, objective or target. Not all Leaders

are Managers and not all Managers are Leaders !!

Kotter: Management is about coping with complexity,

Leadership is about coping with change;

Zalenznik: Managers adopt impersonal and passive

attitude to goals, Leaders take an active, personal

attitude towards goals.

► Trait theories seek to explain „leadership‟ in terms of personality, social, physical and/or intellectual traits todifferentiate between leaders & others.

► Behavioral theories propose that specific behaviorsdifferentiate leaders from non-leaders.

Leading: Nature cntd



July 2010 _edn 1

Leading: Nature …cntd.

Contingency Model (Fiedler) effective group performance

depends on the proper match between leader‟s style of interaction with subordinates & the degree to which thesituation control and influence to the leader: concept of Task& Relationship (“position/power”) orientation.

Task Behavior: The extent to which leaders are likely to

organize and define the role of group members, to explain

5W+1H of assigned tasks – characterized by well defined

structures, channels and way of working;

Relationship Behavior: The extent to which leaders are likely

to maintain personal relationships with group members,opening up channels of communication, providing

“psychological strokes” and facilitating behaviors.

Hersey & Blanchard‟s Situational Theory a contingency

theory, focusing on the followers‟ readiness.

Hersey & Blanchard‟s Situational Theory



July 2010 _edn 1

L

Delegating “Able& willing”

Participating “Able & unwilling”

R e l a t i o n

s h i p

B e h a v i o r

Task Behavior

H

HL

Selling “Unable & willing”

Telling “Unable & unwilling”

Follower Readiness

Mature Immature

Leading: Nature …cntd.



July 2010 _edn 1

Path – Goal Theory a leader‟s behavior is acceptable tosubordinates in so far as they view it as a source of either

immediate or future satisfaction. The underlying premise isthat effective leaders clarify the path to help their followersachieve of work goals, making the journey easier by reducingroad-blocks & pitfalls: directing / supporting / participating ororienting.

Performance&

Satisfaction

Environment•Task structure •Formal Orgn.

•Work group

Subordinates•Locus of control •Experience •Perceived ability

Directive more satisfying when tasks are

ambiguous/stressful;

Supportive leads to higher satisfaction &

performance with structured tasks;

Achievement orientation increases

effort for performance in ambiguity;

Participative gives satisfaction to

members with “internal” Locus of control.

Perceived as controlled by

Leading: Power & Politics



July 2010 _edn 1

► Power: capacity of an individual (or group) to influence thebehavior of other(s), implying: a potential that need not becashed-in for effecting change & dependence as a basis of relationship. In organizations, there are 5 sources of power:

►Coercive Power that is based on fear;►Reward compliance based on ability to distribute largess;►Legitimate derived from (formal) hierarchical position;

►Expert influence based on special skills or knowledge;►Referent influenced by possession of desirable objects;

► Where does Power lie: Organo-grams do not always give theimplicit picture; „where‟ can be assessed as an answer to:

►How many people at the top have come from a dept./divn. etc?

►How well is the dept./divn represented in Key teams/committees?►Salary/other quality level of Senior Mangers in the dept/divn?►Location, facilities and „perquisites‟ extended; ►Staffing strength/resource allocation, promotions extended;►Symbolic perquisites to individuals: „first among equals‟.

Leading: Power & Politics …cntd.



July 2010 _edn 1

► Power Tactics: is the way in which individuals translatepower bases into specific actions:

Reason use of data to make logical/rational presentation;

Friendliness Use of emotions (flattery, humility etc.) in

preparation;

Coalition getting or inducing group support to the issue;

Bargaining negotiating exchange of benefits and/orfavors;

Assertiveness forcing (demands, reminders, orders etc.) often

using rules and formal structures; Higher authority gaining support before acting;

Sanctions use of organizationally derived reward/punishment.





► Politics = Power in action: Political behavior comprisethose activities that are not required as a part of one‟s

formal role , but influence the distribution of

advantages/disadvantages within organizations:

“legitimate” political behavior normal everyday influencingtactics acceptable as routine to get work done;

“illegitimate” political behavior in violation of the “rules of the

game”: e.g. „whistle-blowing‟, sabotage, mass leaves etc.

Politics is a fact of life in any organizations. There will continueto be „forces‟ for grabbing a share of the (limited) resource pie.

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