LECTURE OUTLINE
1. What is an Organisation?
2. Who Are Managers?
Chapter

1

Introduction to
Management and
Organizations

3. What Is Management?
4. What Do Managers Do?
5. Evolution of Management
6. Why study Management?
1

What Is An Organization?

2

Characteristics of Organizations

• An Organization Defined
–A deliberate arrangement of people to accomplish some specific purpose (that individuals independently could not accomplish alone). 3

Who Are Managers?

4

Classifying Managers

• Manager
–Someone who coordinates and oversees the work of other people so that organizational goals can be accomplished. • First-line Managers
– Individuals who manage the work of non-managerial employees. • Middle Managers
– Individuals who manage the work of first-line managers. • Top Managers
– Individuals who are responsible for making organization-wide decisions and establishing plans and goals that affect the entire organization.
5

6

What Is Management?

Classifying Managers

• Managerial Concerns
–Efficiency
• “Doing things right”
–Getting the most output for the least inputs
–Effectiveness
• “Doing the right things”
–Attaining organizational goals
7

8

What Do Managers Do?

Exhibit 1–2 Effectiveness and Efficiency in Management

9

Managerial Roles

10

What Managers Actually Do
• Interaction
– with others
– with the organization
– with the external context of the organization • Reflection
– thoughtful thinking
• Action
– practical doing

• Management Roles Approach (Mintzberg)
– Interpersonal roles
• Figurehead, leader, liaison
– Informational roles
• Monitor,
• Disseminator,
• Spokesperson
– Decisional roles
• Disturbance handler, resource allocator, negotiator 11

12

Key managerial skills

Key managerial skills

– Technical skills
• Knowledge and proficiency in a specific field – Human skills
• The ability to work well with other people
– Conceptual skills
• The ability to think and conceptualize about abstract and complex situations concerning the organization
13

Why Study Management?

Evolution of Management Thought

• The Value of Studying Management

• Classical approach (scientific, administrative management)
• Behavioral approach (people focus)
• Quantitative approach
• Systems perspective
• Contingency approach (situational)

– The universality of management
• Good management is needed in all organizations.

– The reality of work
• Employees either manage or are managed.

– Rewards and challenges of being a manager
• Management offers challenging, exciting and creative opportunities for meaningful and fulfilling work. • Successful managers receive significant monetary rewards for their efforts.

14

15

16

LECTURE OUTLINE
1.The Manager: Omnipotent or Symbolic
Chapter

3& 5

2.External Environment: General vs
Specific

Organizational
Environment
Social Responsibility
Management Ethics

3.Internal Environment: The Culture
4.Social Responsibility
5.Managerial Ethics
1

2

The Manager: Omnipotent or
Symbolic?

The Manager: Omnipotent or
Symbolic?

• Symbolic View of Management

• Omnipotent View of Management

– Much of an organization’s success or failure is due to external forces outside of managers’ control. – Managers are directly responsible for an organization’s success or failure.

– The quality of the organization is determined by the quality of its managers.

– The ability of managers to affect outcomes is influenced and constrained by external factors. – Managers are held accountable for an organization’s performance yet it is difficult to attribute good or poor performance directly to their influence on the organization.

– Managers symbolize control and influence through their action.
3

The Manager: Omnipotent or
Symbolic?

4

External Environment

• In reality, managers are neither helpless nor all powerful.

• External Environment
– Those factors and forces outside the organization that affect the organization’s performance.

• Managers can and do influence their organization’s culture and environment

• Components of the External Environment
– Specific environment: external forces that have a direct and immediate impact on the organization.
– General environment: broad economic, sociocultural, political/legal, demographic, technological, and global conditions that may affect the organization.
(S.T.E.P.i)
5

6

How the Environment Affects
Managers

Exhibit 3–9 The External Environment

• Environmental Uncertainty

– The extent to which managers have knowledge of and are able to predict change their organization’s external environment is affected by:

• Complexity of the environment: the number of components in an organization’s external environment. • Degree of change in environmental components: how dynamic or stable the external environment is.
7

8

Where does culture come from?

INTERNAL ENVIRONMENT:
Organization’s Culture

• Sources of Organizational Culture

• What is an Organizational Culture?
– A system of shared meanings and common beliefs held by organizational members that determines, in a large degree, how they act towards each other.
– “The way we do things around here.”
• Values, symbols, rituals, myths, and practices

– The organization’s founder
• Vision and mission
– Past practices of the organization
• The way things have been done
– The behavior of top management
• Continuation of the Organizational Culture
– Recruitment of like-minded employees who “fit”
– Socialization of new employees to help them adapt to the culture

9

10

3–9

How Employees Learn Culture

How Culture Affects Managers
Exhibit 3–5 How an Organization’s Culture Is Established and
Maintained

• Stories
– Narratives of significant events or actions of people that convey the spirit of the organization
• Rituals
– Repetitive sequences of activities that express and reinforce the values of the organization
• Material Symbols
– Physical assets distinguishing the organization
• Language: Acronyms and jargon of terms, phrases, and word meanings specific to an organization
11

Stakeholder Relationships

Managing Stakeholder
Relationships

• Stakeholders

1. Identify the organization’s external stakeholders. – Any constituencies in the organization’s environment that are affected by the organization’s decisions and actions

2. Determine the particular interests and concerns of the external stakeholders.

• Why Manage Stakeholder Relationships?

3. Decide how critical each external stakeholder is to the organization.

– It can lead to improved organizational performance. – It’s the “right” thing to do given the interdependence of the organization and its external stakeholders.

12

4. Determine how to manage each individual external stakeholder relationship.
13

14

Exhibit 3–12

Social responsibility and
Managerial Ethics

Organizational Stakeholders

Exhibit 5–1

To Whom is Management Responsible?

15

From Obligation to
Responsiveness to Responsibility

16

Exhibit 5–3
Social Responsibility versus
Social Responsiveness
Social Responsibility

• Social Obligation
– The obligation of a business to meet its economic and legal responsibilities and nothing more.
• Social Responsiveness
– When a firm engages in social actions in response to some popular social need.
• Social Responsibility
– A business’s intention, beyond its legal and economic obligations, to do the right things and act in ways that are good for society.

Social Responsiveness

Major consideration

Ethical

Pragmatic

Focus

Ends

Means

Emphasis

Obligation

Responses

Decision framework

Long term

Medium and short term

17

18

Managerial Ethics
• Ethics Defined
– Principles, values, and beliefs that define what is right and wrong behavior.

Chapter

6
19

Decision making:
The essence of the
Manager’s job
1

Decision making

LECTURE OUTLINE
1.
2.
3.
4.

• Decision

– Making a choice from two or more alternatives.

The decision making process
Decision making approaches
Decision making conditions
Decision making bias and errors

• The Decision-Making Process
– Identifying a problem and decision criteria and allocating weights to the criteria.
– Developing, analyzing, and selecting an alternative that can resolve the problem.
– Implementing the selected alternative.
– Evaluating the decision’s effectiveness.
2

3

Decision making process

Decision making process

• Step 1: Identifying the problem
Identifying
the problem Identification of decision criteria Allocation weights to criteria Developing alternatives – Problem: A discrepancy between an existing and desired state of affairs.

• Step 2: Identifying Decision Criteria
Evaluating the decision’s effectiveness

Implementing the alternative

Selecting an alternative

Analyzing alternatives – Decision criteria are factors that are important
(relevant) to resolving the problem.

• Step 3: Allocating Weights to the Criteria
– Decision criteria are not of equal importance.

4

Decision making process

5

4

Decision making process

• Step 4: Developing Alternatives

• Step 8: Evaluating the Decision’s Effectiveness

– Alternatives are listed (without evaluation) that can resolve the problem.

– The soundness of the decision is judged by its outcomes. • Step 5: Analyzing Alternatives

• How effectively was the problem resolved by outcomes resulting from the chosen alternatives?

- An alternative’s appraisal is based on its ability to resolve the issues identified in steps 2 and 3.

• If the problem was not resolved, what went wrong?

• Step 6: Selecting an Alternative
- The alternative with the highest total weight is chosen. • Step 7: Implementing the Alternative
– Putting the chosen alternative into action.
6

7

Decision making approaches

Decision making approaches

• Bounded Rationality

• Rationality

– Managers make consistent, value-maximizing choices with specified constraints

– Managers make decisions rationally, but are limited
(bounded) by their ability to process information.
– Assumptions are that decision makers:
• Will not seek out or have knowledge of all alternatives
• Will satisfice—choose the first alternative encountered that satisfactorily solves the problem—rather than maximize the outcome of their decision by considering all alternatives and choosing the best.

– Influence on decision making
• Escalation of commitment: an increased commitment to a previous decision despite evidence that it may have been wrong. 8

9

Types of Problems and Decisions

Decision making approaches
• Intuitive decision making

• Structured Problems
– Involve goals that clear.

– Making decisions on the basis of experience, feelings, and accumulated judgment.

– Are familiar (have occurred before).

– Are easily and completely defined—information about the problem is available and complete.

• Programmed Decision
– A repetitive decision that can be handled by a routine approach. 10

Types of Programmed Decisions

11

Types of Problems and Decisions

• Policy

• Unstructured Problems

– A general guideline for making a decision about a structured problem.

– Problems that are new or unusual and for which information is ambiguous or incomplete.

• Procedure
– A series of interrelated steps that a manager can use to respond (applying a policy) to a structured problem.

– Problems that will require custom-made solutions.

• Nonprogrammed Decisions
– Decisions that are unique and nonrecurring.

• Rule

– Decisions that generate unique responses.

– An explicit statement that limits what a manager or employee can or cannot do.
12

13

Decision-Making Conditions

Exhibit 6–13 Common Decision-Making Errors and Biases

• Certainty
– A situation in which a manager can make an accurate decision because the outcome of every alternative choice is known.
• Risk
– A situation in which the manager is able to estimate the likelihood (probability) of outcomes that result from the choice of particular alternatives.
• Uncertainty

– Limited information prevents estimation of outcome probabilities for alternatives associated with the problem and may force managers to rely on intuition, hunches, and “gut feelings”.
14

Decision-Making Biases and Errors

Decision-Making Biases and Errors
• Anchoring Effect

• Heuristics

– Fixating on initial information and ignoring subsequent information.

– Using “rules of thumb” to simplify decision making. • Selective Perception Bias

– Selecting organizing and interpreting events based on the decision maker’s biased perceptions. • Overconfidence Bias
– Holding unrealistically positive views of one’s self and one’s performance.

• Confirmation Bias
– Seeking out information that reaffirms past choices and discounting contradictory information. • Immediate Gratification Bias
– Choosing alternatives that offer immediate rewards and that to avoid immediate costs.

15

16

Decision-Making Biases and Errors
• Framing Bias
– Selecting and highlighting certain aspects of a situation while ignoring other aspects.
• Availability Bias
– Losing decision-making objectivity by focusing on the most recent events.
• Representation Bias
– Drawing analogies and seeing identical situations when none exist.
• Randomness Bias
– Creating unfounded meaning out of random events. 18

17

Decision-Making Biases and Errors
• Sunk Costs Errors
– Forgetting that current actions cannot influence past events and relate only to future consequences. • Self-Serving Bias
– Taking quick credit for successes and blaming outside factors for failures.
• Hindsight Bias
– Mistakenly believing that an event could have been predicted accurately once the actual outcome is known (after-the-fact).
19

Characteristics of an Effective
Decision-Making Process
• It focuses on what is important.
• It is logical and consistent.
• It acknowledges both subjective and objective thinking and blends analytical with intuitive thinking.

Chapter

• It requires only as much information and analysis as is necessary to resolve a particular dilemma.
• It encourages and guides the gathering of relevant information and informed opinion.

7

Foundation of
Planning

• It is straightforward, reliable, easy to use, and flexible. 20

1

What is Planning

LECTURE OUTLINE
1.
2.
3.
4.

What Is Planning?
How Do Managers Plan?
Establishing Goals and Developing Plans
Planning Tools and Techniques

• Planning
– A primary managerial activity that involves:
• Defining the organization’s goals
• Establishing an overall strategy for achieving those goals • Developing plans for organizational work activities.

– Types of planning
• Informal: not written down, short-term focus; specific to an organizational unit.
• Formal: written, specific, and long-term focus, involves shared goals for the organization.
2

3

Planning and Performance

Why Do Managers Plan?

• The Relationship Between Planning And
Performance

• Purposes of Planning
– Provides direction
– Reduces uncertainty
– Minimizes waste and redundancy
– Sets the standards for controlling

– Formal planning is associated with:
• Higher profits and returns on assets.

• Positive financial results.

– The quality of planning and implementation affects performance more than the extent of planning.
– The external environment can reduce the impact of planning on performance,
– Formal planning must be used for several years before planning begins to affect performance.
4

5

THE PLANNING PROCESS

Mission

Goals

Plans

Elements of Planning

Goal attainment
(organisational
efficiency
& effectiveness)

– Mission: the firm’s reason for being
– Goals (also Objectives)
• Desired outcomes for individuals, groups, or entire organizations • Provide direction and evaluation performance criteria – Plans
• Documents that outline how goals are to be accomplished • Describe how resources are to be allocated and establish activity schedules

6

Types of goals

7

Types of Plans

• Financial Goals
– Are related to the expected internal financial performance of the organization.

• Strategic Goals
– Are related to the performance of the firm relative to factors in its external environment (e.g., competitors).

• Stated Goals versus Real Goals
– Broadly-worded official statements of the organization
(intended for public consumption) that may be irrelevant to its real goals (what actually goes on in the organization).
8

Types of Plans

9

Types of Plans
• Long-Term Plans

• Strategic Plans

– Plans with time frames extending beyond three years

– Apply to the entire organization.
– Establish the organization’s overall goals.
– Seek to position the organization in terms of its environment. – Cover extended periods of time.

• Short-Term Plans
– Plans with time frames on one year or less

• Specific Plans
– Plans that are clearly defined and leave no room for interpretation • Operational Plans
– Specify the details of how the overall goals are to be achieved. – Cover short time period.

• Directional Plans
– Flexible plans that set out general guidelines, provide focus, yet allow discretion in implementation.
10

11

Establishing Goals

Types of Plans
• Single-Use Plan
– A one-time plan specifically designed to meet the need of a unique situation.

• Standing Plans
– Ongoing plans that provide guidance for activities performed repeatedly.

• Traditional Goal Setting
– Broad goals are set at the top of the organization.
– Goals are then broken into subgoals for each organizational level.
– Assumes that top management knows best because they can see the “big picture.”
– Goals are intended to direct, guide, and constrain from above.
– Goals lose clarity and focus as lower-level managers attempt to interpret and define the goals for their areas of responsibility.
– Means–Ends Chain: Achievement of lower-level goals is the means by which to reach higher-level goals
(ends)

12

Exhibit 7–4

13

Establishing Goals

The Downside of Traditional Goal Setting

• Management By Objectives (MBO)
– Specific performance goals are jointly determined by employees and managers.
– Progress toward accomplishing goals is periodically reviewed.
– Rewards are allocated on the basis of progress towards the goals.
– Key elements of MBO:
• Goal specificity, participative decision making, an explicit performance/evaluation period, feedback
14

Exhibit 7–6 Characteristics of Well-Designed Goals
• Written in terms of outcomes, not actions
 Focuses on the ends, not the means.

• Measurable and quantifiable  Specifically defines how the outcome is to be measured and how much is expected.

• Clear as to time frame
 How long before measuring accomplishment. • Challenging yet attainable
 Low goals do not motivate.
 High goals motivate if they can be achieved.

• Written down

15

Developing plans
– Manager’s level in the organization
• Strategic plans at higher levels
• Operational plans at lower levels

– Degree of environmental uncertainty

 Focuses, defines, and makes goals visible.

• Stable environment: specific plans
• Dynamic environment: specific but flexible plans

• Communicated to all necessary organizational members – Length of future commitments
• Commitment Concept: current plans affecting future commitments must be sufficiently long-term to meet those commitments.

 Puts everybody “on the same page.”
16

17

Exhibit 7–7

Approaches to Planning

Planning in the Hierarchy of Organizations

• Establishing a formal planning department
– A group of planning specialists who help managers write organizational plans.
– Planning is a function of management; it should never become the sole responsibility of planners.

• Involving organizational members in the process
– Plans are developed by members of organizational units at various levels and then coordinated with other units across the organization.
18

Planning Tools and Techniques
• Gantt chart: Compares planned and actual progress • Milestone chart: Extends the Gantt chart by listing subactivities needed for major activities.

19

Planning Tools and Techniques
• Program Evaluation and Review
Technique (PERT)

20

Planning Tools and Techniques
Steps in Pert
 List activities and events needed to complete project.  Draw PERT network by linking activities in proper sequence.
 Estimate time for each activity.
 Calculate critical path (most time consuming sequence of events and activities).

21

Planning Tools and Techniques
• Pareto diagram:

22

23

Lecture outline
1. The Importance of Strategic
Management
Chapter

8

2. The Strategic Management Process

Strategic
Management

3. Types of Organizational Strategies
4. Strategic Management in Today’s
Environment

1

2

Why is Strategic Management
Important

Introduction
Strategies

1. It results in higher organizational performance.

• The decisions and actions that determine the long-run performance of an organization. 2. It requires that managers examine and adapt to business environment changes.

3. It coordinates diverse organizational units, helping them focus on organizational goals.

Strategic management
• What managers do to develop the organization’s strategies.

4. It is very much involved in the managerial decision-making process.

3

Strategic management process

4

Strategic management process
• Step 1: Identifying the organization’s current mission, goals, and strategies
– Mission: the firm’s reason for being
• The scope of its products and services

– Goals: Measurable performance targets

• Step 2: Doing an external analysis
– The environmental scanning of specific and general environments • Focuses on identifying opportunities and threats

5

6

Strategic management process

Strategic management process

• Step 3: Doing an internal analysis

• Step 4: Formulating strategies

– Assessing organizational resources, capabilities, and activities:

– Develop and evaluate strategic alternatives
– Select appropriate strategies for all levels in the organization that provide relative advantage over competitors • Strengths create value for the customer and strengthen the competitive position of the firm.
• Weaknesses can place the firm at a competitive disadvantage. – Match organizational strengths to environmental opportunities • Steps 2 and 3 combined are called a SWOT analysis. (Strengths, Weaknesses,
Opportunities, and Threats)

– Correct weaknesses and guard against threats

7

Levels of organizational strategies

8

Levels of organizational strategies
• Corporate Strategies
– Top management’s overall plan for the entire organization and its strategic business units

• Types of Corporate Strategies
– Growth: expansion into new products and markets
– Stability: maintenance of the status quo
– Renewal: redirection of the firm into new markets

9

10

Corporate strategies: Growth strategies Corporate strategies
• Growth Strategy

• Concentration

– Seeking to increase the organization’s business by expansion into new products and markets.

– Focusing on a primary line of business and increasing the number of products offered or markets served.

• Types of Growth Strategies

• Vertical Integration
– Backward vertical integration: attempting to gain control of inputs (become a self-supplier).

– Concentration
– Vertical integration

– Forward vertical integration: attempting to gain control of output through control of the distribution.

– Horizontal integration
– Diversification
11

12

Corporate strategies: Growth strategies Corporate strategies: Stability strategies • Horizontal Integration
– Combining operations with another competitor in the same industry to increase competitive strengths and lower competition among industry rivals.
• Related Diversification
– Expanding by combining with firms in different, but related industries that are “strategic fits.”
• Unrelated Diversification
– Growing by combining with firms in unrelated industries where higher financial returns are possible.

– A strategy that seeks to maintain the status quo to deal with the uncertainty of a dynamic environment, when the industry is experiencing slow- or no-growth conditions, or if the owners of the firm elect not to grow for personal reasons.

13

Corporate strategies: Renewal strategies 14

Corporate portfolio Analysis

• Renewal Strategies
– Developing strategies to counter organization weaknesses that are leading to performance declines.
• Retrenchment: focusing of eliminating non-critical weaknesses and restoring strengths to overcome current performance problems.
• Turnaround: addressing critical long-term performance problems through the use of strong cost elimination measures and large-scale organizational restructuring solutions.

• Managers manage portfolio (or collection) of businesses using a corporate portfolio matrix such as the BCG
Matrix.
• BCG Matrix
– Developed by the Boston Consulting Group

– Considers market share and industry growth rate
– Classifies firms as:
• Cash cows: low growth rate, high market share

• Stars: high growth rate, high market share
• Question marks: high growth rate, low market share

• What is the difference? Turnaround is bigger scale than Retrenchment

• Dogs: low growth rate, low market share

15

BCG Matrix

16

Competitive Advantage
• Competitive Advantage
– An organization’s distinctive competitive edge.

• Sustainable Competitive Advantage
– Continuing over time to effectively exploit resources and develop core competencies that enable an organization to keep its edge over its industry competitors.

17

18

Strategic management process
Five force analysis

Strategic management process
Five force analysis
• Threat of New Entrants

– The ease or difficulty with which new competitors can enter an industry.

• Threat of Substitutes

– The extent to which switching costs and brand loyalty affect the likelihood of customers adopting substitutes products and services.

• Bargaining Power of Buyers

– The degree to which buyers have the market strength to hold sway over and influence competitors in an industry. 19

Strategic management process
Five force analysis

20

Business strategies
• A strategy focused on how an organization should compete in each of its SBUs
(strategic business units).

• Bargaining Power of Suppliers
– The relative number of buyers to suppliers and threats from substitutes and new entrants affect the buyer-supplier relationship.

• Current Rivalry
– Intensity among rivals increases when industry growth rates slow, demand falls, and product prices descend. 21

22

• Cost Leadership Strategy
– Seeking to attain the lowest total overall costs relative to other industry competitors.
• Differentiation Strategy
– Attempting to create a unique and distinctive product or service for which customers will pay a premium.
• Focus Strategy (cost leadership/differentiation)
– Using a cost or differentiation advantage to exploit a particular market segment rather a larger market.
• Best cost strategy
– Combine a strategic emphasis on low-cost with a strategic emphasis on differentiation
– Make an upscale product at a lower cost
– Give customers more value for the money
23

24

Business strategies

The Rule of three

Strategic Management Today

• Similar to Porter’s generic competitive strategies
– The competitive forces in an industry will create a situation where three companies (full-line generalists) will dominate a market.
– Some firms in the market become “super niche players” and while others end up as “ditch dwellers.”

• Strategic Flexibility
 the ability to recognize major external environmental changes to quickly commit resources and recognize when the strategic option isn’t working.

– Firms unable to develop either a cost or differentiation advantage become “stuck in the middle” and lack prospects for long-term success.
– A few firms successfully pursue both differentiation and cost advantages.
25

26

Lecture outline
1. Defining organizational structure
2. Organizational Design Decisions
Chapter

10

Organizing:
Organizational
Structure and Design

3. Common organizational Designs

1

Organizational Structure

2

Organizational Design

• Organizational Structure

• Work Specialization

– The formal arrangement of jobs within an organization. • Organizational Design
– A process involving decisions about six key elements:

– The degree to which tasks in the organization are divided into separate jobs with each step completed by a different person.

• Work specialization
• Departmentalization
• Chain of command
• Span of control
• Centralization and decentralization
• Formalization
3

4

Organizational Design

Organizational Design

Departmentalization
• Functional
– Grouping jobs by functions performed
• Product
– Grouping jobs by product line
• Process
– Grouping jobs on the basis of product or customer flow
• Customer
– Grouping jobs by type of customer and needs
• Geographical
– Grouping jobs on the basis of territory or geography

• Chain of Command
– The continuous line of authority that extends from upper levels of an organization to the lowest levels of the organization and clarifies who reports to who.

5

Organizational Design

6

Organizational Design
• Span of Control

Chain of command
• Authority

– The number of employees who can be effectively and efficiently supervised by a manager.

– The rights inherent in a managerial position to tell people what to do and to expect them to do it.
– Manager  employees

– Width of span is affected by:
• Skills and abilities of the manager

• Responsibility

– The obligation or expectation to perform.
– Employees: do the assigned duties

• Employee characteristics

– The concept that a person should have one boss and should report only to that person.

• Complexity of tasks

• Characteristics of the work being done

• Unity of Command

• Similarity of tasks
• Physical proximity of subordinates
• Standardization of tasks
7

8

Organizational Design

Organizational Design

• Centralization
– The degree to which decision-making is concentrated at a single point in the organizations.

• Decentralization
– Organizations in which decision-making is pushed down to the managers who are closest to the action.

• Employee Empowerment
– Increasing the decision-making authority (power) of employees. 9

10

Organizational Design Decisions

Organizational Design

• Mechanistic Organization

• Organic Organization

– A rigid and tightly controlled structure

• Formalization
– The degree to which jobs within the organization are standardized and the extent to which employee behavior is guided by rules and procedures.

– Highly flexible and adaptable structure

• High specialization

• Non-standardized jobs

• Rigid departmentalization

• Fluid team-based structure

• Narrow spans of control

• Little direct supervision

• High formalization

• Minimal formal rules

• Limited information network (downward)

• Open communication network • Low decision participation • Empowered employees

11

Selection of organizational structures •
•
•
•

12

Selection of organizational structures • Strategy Frameworks:

Overall strategy of the organization
Size of the organization
Technology use by the organization
Degree of environmental uncertainty

– Innovation
• Pursuing competitive advantage through meaningful and unique innovations favors an organic structuring.
– Cost minimization
• Focusing on tightly controlling costs requires a mechanistic structure for the organization.
– Imitation
• Minimizing risks and maximizing profitability by copying market leaders requires both organic and mechanistic elements in the organization’s structure. 13

Selection of organizational structures 14

Selection of organizational structures • Size and Structure

• Technology and Structure
– Organizations adapt their structures to their technology. – As an organization grows larger, its structure tends to change from organic to mechanistic with increased specialization, departmentalization, centralization, and rules and regulations.

– Woodward’s classification of firms based on the complexity of the technology employed:
• Unit production of single units or small batches
• Mass production of large batches of output

• Process production in continuous process of outputs

– Routine technology = mechanistic organizations
– Non-routine technology = organic organizations
15

16

Selection of organizational structures Common organizational Designs
Traditional Designs

• Environmental Uncertainty and Structure
– Mechanistic organizational structures tend to be most effective in stable and simple environments.

– The flexibility of organic organizational structures is better suited for dynamic and complex environments.

• Simple structure
• Low departmentalization, wide spans of control, centralized authority, little formalization
– Functional structure
• Departmentalization by function

– Operations, finance, human resources, and product research and development
– Divisional structure
• Composed of separate business units or divisions with limited autonomy under the coordination and control the parent corporation.
17

Common organizational Designs

18

Common organizational Designs

• Contemporary Designs

– Matrix and project structures

– Team structures
• The entire organization is made up of work groups or self-managed teams of empowered employees.

• Specialists from different functional departments are assigned to work on projects led by project managers. 19

Matrix structures

20

Common organizational Designs
– Boundaryless Organization
• An flexible and unstructured organizational design that is intended to break down external barriers between the organization and its customers and suppliers. 21

22

Today’s Organizational Design
Challenges

Common organizational Designs
• Virtual Organization
– An organization that consists of a small core of fulltime employees and that temporarily hires specialists to work on opportunities that arise.
• Network Organization
– A small core organization that outsources its major business functions (e.g., manufacturing) in order to concentrate what it does best.
• Modular Organization
– A manufacturing organization that uses outside suppliers to provide product components for its final assembly operations.

• Keeping Employees Connected
– Widely dispersed and mobile employees
• Building a Learning Organization

– An organization that has developed the capacity to continuously learn, adapt, and change through the practice of knowledge management by employees.

23

24

Lecture outline
1. Communication: types and functions
2. Communication Process

Communication
15 Understanding groups and teams

Chapter

11&

3. Organizational Communication
4. Group development stages
5. Group work Behavior

1

2

Four Functions of Communication

Introduction
• Communication
– The transfer and understanding of meaning.
• Transfer means the message was received in a form that can be interpreted by the receiver.
• Understanding the message is not the same as the receiver agreeing with the message.

Control

Motivation

Functions of
Communication

– Interpersonal Communication
• Communication between two or more people

– Organizational Communication
• All the patterns, network, and systems of communications within an organization

Information

3

Emotional
Expression

4

Interpersonal Communication
Process

Communication functions
• Control

– Formal and informal communications act to control individuals’ behaviors in organizations.

• Motivation

– Communications clarify for employees what is to done, how well they have done it, and what can be done to improve performance.

• Emotional Expression

– Social interaction in the form of work group communications provides a way for employees to express themselves.

• Information

– Individuals and work groups need information to make decisions or to do their work.
5

6

Interpersonal Communication
Process

Interpersonal Communication
Methods
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•

• Message

– Source: sender’s intended meaning

• Encoding

– The message converted to symbolic form

• Channel

– The medium through which the message travels

• Decoding

– The receiver’s retranslation of the message

• Noise

– Disturbances that interfere with communications

Face-to-face
Telephone
Group meetings
Formal presentations
Memos
Traditional Mail
Fax machines
Employee publications
Bulletin boards
Audio- and videotapes Hotlines
E-mail
Computer conferencing
Voice mail
Teleconferences
Videoconferences

7

8

Interpersonal Communication Barriers

Interpersonal Communication
• Nonverbal Communication

National
Culture

– Communication that is transmitted without words.

Filtering
Emotions

• Sounds with specific meanings or warnings
• Images that control or encourage behaviors
• Situational behaviors that convey meanings

Language

• Clothing and physical surroundings that imply status

Interpersonal
Communication

Information
Overload

– Body language: gestures, facial expressions, and other body movements that convey meaning.
– Verbal intonation: emphasis that a speaker gives to certain words or phrases that conveys meaning.

Defensiveness

9

10

Overcoming the barriers
•
•
•
•
•

Use Feedback
Simplify Language
Listen Actively
Constrain Emotions
Watch Nonverbal Cues

11

Types of organizational communication 12

Direction of communication flow
• Downward

• Formal Communication
– Communication that follows the official chain of command or is part of the communication required to do one’s job.

• Informal Communication

– Communications that flow from managers to employees to inform, direct, coordinate, and evaluate employees.

• Upward

– Communication that is not defined by the organization’s hierarchy.
• Permits employees to satisfy their need for social interaction.
• Can improve an organization’s performance by creating faster and more effective channels of communication.

– Communications that flow from employees up to managers to keep them aware of employee needs and how things can be improved to create a climate of trust and respect.

13

Direction of communication flow
• Lateral (Horizontal) Communication

14

Types of communication network
• Chain Network
– Communication flows according to the formal chain of command, both upward and downward.

– Communication that takes place among employees on the same level in the organization to save time and facilitate coordination. • Wheel Network
– All communication flows in and out through the group leader (hub) to others in the group.

• Diagonal Communication
– Communication that cuts across both work areas and organizational levels in the interest of efficiency and speed.
15

• All-Channel Network
– Communications flow freely among all members of the work team.

16

The grapevine
• An informal organizational communication network that is active in almost every organization. – Provides a channel for issues not suitable for formal communication channels.
– The impact of information passed along the grapevine can be countered by open and honest communication with employees.
17

18

Group development stages

Understanding groups and teams
• Group
– Two or more interacting and interdependent individuals who come together to achieve specific goals.

• Work Team
– A group whose members work intensely on a specific common goal using their positive synergy, individual and mutual accountability, and complementary skills.
19

Group development stages
• Forming
– Members join and begin the process of defining the group’s purpose, structure, and leadership.
• Storming
– Intragroup conflict occurs as individuals resist control by the group and disagree over leadership.
• Norming
– Close relationships develop as the group becomes cohesive and establishes its norms for acceptable behavior. • Performing
– A fully functional group structure allows the group to focus on performing the task at hand.
• Adjourning
– The group prepares to disband and is no longer
21
concerned with high levels of performance.

20

Group Behavior model

22

Group Behavior model

Group Behavior model

• External (Organizational) Conditions

• Internal Group
Variables

– Overall strategy
– Authority structures

– Individual competencies and traits of members

– Formal regulations

– Group structure

– Available organizational resources

– Size of the group

– Employee selection criteria

– Cohesiveness and the level of intragroup conflict

– Performance management (appraisal) system

– Internal pressures on members to conform o the group’s norms

– Organizational culture
– General physical layout
23

24

Group Processes: Group Decision
Making
• Advantages

• Disadvantages

– Generates more complete information and knowledge.

– Time consuming
– Minority domination

Chapter

– Generates more diverse alternatives.

– Pressures to conform

12

– Increases acceptance of a solution.

– Ambiguous responsibility Human Resource
Management

– Increases legitimacy of decision. 25

Lecture outline

1

The importance of HRM
• As a necessary part of the organizing function of management 1. The importance of HRM
2. HRM Process

– Selecting, training, and evaluating the work force

• As an important strategic tool

3. Human Resource Planning

– HRM helps establish an organization’s sustainable competitive advantage.

4. Current issues in HRM

• Adds value to the firm
– High performance work practices lead to both high individual and high organizational performance.
2

3

HRM Process

HRM process
Recruitment
/
Decruitment

HRM
Planning

Career
Development

Compensation and Benefit

Retain
Competent
employees

Selection

Performance management Orientation

• Employee Labor Union
• Governmental Laws and Regulations
• Demographic Trends

Training

External
Environment
4

HR Planning

5

Current Assessment
• Human Resource Inventory

• Human Resource (HR) Planning
– The process by which managers ensure that they have the right number and kinds of people in the right places, and at the right times, who are capable of effectively and efficiently performing their tasks.
– Helps avoid sudden talent shortages and surpluses.
– Steps in HR planning:

– A review of the current make-up of the organization’s current resource status

– Job Analysis
• An assessment that defines a job and the behaviors necessary to perform the job
– Knowledge, skills, and abilities (KSAs)

• Assessing current human resources

• Requires conducting interviews, engaging in direct observation, and collecting the self-reports of employees and their managers.

• Assessing future needs for human resources
• Developing a program to meet those future needs
6

7

Meeting Future Human
Resource Needs

Current Assessment
• Job Description

Supply of Employees

– A written statement of what the job holder does, how it is done, and why it is done.

Demand for Employees

• Job Specification
– A written statement of the minimum qualifications that a person must possess to perform a given job successfully.

Factors Affecting Staffing
Strategic Goals
Forecast demand for products and services
Availability of knowledge, skills, and abilities

8

9

Recruitment and Decruitment

Selection Decision Outcomes

• Recruitment
– The process of locating, identifying, and attracting capable applicants to an organization

• Decruitment
– The process of reducing a surplus of employees in the workforce of an organization

• E-recruiting
– Recruitment of employees through the Internet
• Organizational web sites
• Online recruiters
10

11

Validity and Reliability

Selection Devices

• Validity (of Prediction)
– A proven relationship between the selection device used and some relevant criterion for successful performance in an organization.
• High tests scores equate to high job performance; low scores to poor performance.

• Reliability (of Prediction)
– The degree of consistency with which a selection device measures the same thing.

•
•
•
•
•
•

Application Forms
Written Tests
Performance Simulations
Interviews
Background Investigations
Physical examinations

• Individual test scores obtained with a selection device are consistent over multiple testing instances.
12

Written tests

Selection Devices

• Types of Tests
–
–
–
–
–

13

• Interviews
– Although used almost universally, managers need to approach interviews carefully.

Intelligence: how smart are you?
Aptitude: can you learn to do it?
Attitude: how do you feel about it?
Ability: can you do it now?
Interest: do you want to do it?

• Background Investigations
– Verification of application data
– Reference checks:

• Legal Challenges to Tests

• Physical Examinations

– Lack of job-relatedness of test items or interview questions to job requirements
– Discrimination in equal employment opportunity against members of protected classes

– Useful for physical requirements and for insurance purposes related to pre-existing conditions.
14

15

Employee performance management Orientation
• Transitioning a new employee into the organization. • Performance Management System
– A process of establishing performance standards and appraising employee performance in order to arrive at objective HR decisions and to provide documentation in support of those decisions. – Work-unit orientation
• Familiarizes new employee with work-unit goals
• Clarifies how his or her job contributes to unit goals
• Introduces he or she to his or her coworkers

– Organization orientation
• Informs new employee about the organization’s objectives, history, philosophy, procedures, and rules.
• Includes a tour of the entire facility
16

Compensation and Benefits

Career Development
• Career Defined

• Benefits of a Fair, Effective, and Appropriate
Compensation System
– Helps attract and retain high-performance employees
– Impacts on the strategic performance of the firm

– The sequence of positions held by a person during his or her lifetime.
– The Way It Was
• Career Development

• Types of Compensation
–
–
–
–
–

17

– Provided for information, assessment, and training
– Helped attract and retain highly talented people

Base wage or salary
Wage and salary add-ons
Incentive payments
Skill-based pay
Variable pay

• Now
– Individuals—not the organization—are responsible for designing, guiding, and developing their own careers.

– Boundaryless Career
• A career in which individuals, not organizations, define career progression and organizational loyalty
18

Current Issues in HRM

19

Current Issues in HRM
• Sexual Harassment

• Managing Downsizing

– An unwanted activity of a sexual nature that affects an individual’s employment.

– The planned elimination of jobs in an organization
• Provide open and honest communication.
• Provide assistance to employees being downsized.
• Reassure and counseling to surviving employees.

• Unwanted sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature when submission or rejection of this conduct explicitly or implicitly affects an individual’s employment.

• Managing Work Force Diversity

– An offensive or hostile environment

– Widen the recruitment net for diversity
– Ensure selection without discrimination
– Provide orientation and training that is effective

• An environment in which a person is affected by elements of a sexual nature.

• Workplace Romances

– Potential liability for harassment

20

21

Current Issues in HRM

Current Issues in HRM
• Controlling HR Costs

• Work-Life Balance
– Employees have personal lives that they don’t leave behind when they come to work.
– Organizations have become more attuned to their employees by offering family-friendly benefits:
•
•
•
•
•
•

– Employee health-care
• Encouraging healthy lifestyles
– Financial incentives
– Wellness programs
– Charging employees with poor health habits more for benefits On-site child care
Summer day camps
Flextime
Job sharing
Leave for personal matters
Flexible job hours

– Employee pension plans
• Reducing pension benefits
• No longer providing pension plans
22

23

Lecture outline
1. What is motivation?
2. Early theories of motivation
Chapter

16

Motivating
Employees

3. Contemporary theories of motivation
4. Current issues in motivation

1

What is motivation

2

Early Theories of Motivation

• Motivation

• Maslow’s Hierarchy of Needs

– Is the result of an interaction between the person and a situation; it is not a personal trait.

• MacGregor’s Theories X and Y

– Is the process by which a person’s efforts are energized, directed, and sustained towards attaining a goal.

• Herzberg’s Two-Factor Theory

• Energy: a measure of intensity or drive.
• Direction: toward organizational goals
• Persistence: exerting effort to achieve goals.

– Motivation works best when individual needs are compatible with organizational goals.
3

4

Hierarchy of Needs Theory

Early Theories of Motivation
• Maslow’s Hierarchy of Needs Theory
– Needs were categorized as five levels of lower- to higher-order needs.
• Individuals must satisfy lower-order needs before they can satisfy higher order needs.
• Satisfied needs will no longer motivate.
• Motivating a person depends on knowing at what level that person is on the hierarchy.

– Hierarchy of needs
• Lower-order (external): physiological, safety
• Higher-order (internal): social, esteem, self-actualization
5

Early Theories of Motivation

6

Early Theories of Motivation

• McGregor’s Theory X and Theory Y

• Herzberg’s Motivation-Hygiene Theory

– Theory X

– Job satisfaction and job dissatisfaction are created by different factors.

• Assumes that workers have little ambition, dislike work, avoid responsibility, and require close supervision. • Hygiene factors: extrinsic (environmental) factors that create job dissatisfaction.

– Theory Y

• Motivators: intrinsic (psychological) factors that create job satisfaction. • Assumes that workers can exercise self-direction, desire responsibility, and like to work.

– Attempted to explain why job satisfaction does not result in increased performance.

– Assumption:

• Motivation is maximized by participative decision making, interesting jobs, and good group relations.

• The opposite of satisfaction is not dissatisfaction, but rather no satisfaction.

7

8

9

10

Contemporary Theories of
Motivation

Contemporary Theories of
Motivation
• Three-Needs Theory (McClelland)

• Three-Needs Theory

– There are three major acquired needs that are major motives in work.

• Goal-Setting Theory
• Reinforcement Theory

• Need for achievement (nAch)
– The drive to excel and succeed

• Designing Motivating Jobs

• Need for power (nPow)

• Equity Theory

– The need to influence the behavior of others

• Need of affiliation (nAff)

• Expectancy Theory

– The desire for interpersonal relationships
11

Contemporary Theories of
Motivation

12

Contemporary Theories of
Motivation

• Goal-Setting Theory

• Reinforcement Theory

– Proposes that setting goals that are accepted, specific, and challenging yet achievable will result in higher performance than having no or easy goals.

– Assumes that a desired behavior is a function of its consequences, is externally caused, and if reinforced, is likely to be repeated.

• Benefits of Participation in Goal-Setting

• Positive reinforcement is preferred for its longterm effects on performance

– Increases the acceptance of goals.
– Fosters commitment to difficult, public goals.
– Provides for self-feedback (internal locus of control) that guides behavior and motivates performance (selfefficacy).

• Ignoring undesired behavior is better than punishment which may create additional dysfunctional behaviors.

13

Contemporary Theories of
Motivation

14

Contemporary Theories of
Motivation
• Job Characteristics Model (JCM)

• Job Design

– A conceptual framework for designing motivating jobs that create meaningful work experiences that satisfy employees’ growth needs.

– The way into which tasks can be combined to form complete jobs.
– Factors influencing job design:

– Five primary job characteristics:

• Changing organizational environment/structure
• The organization’s technology
• Employees’ skill, abilities, and preferences

• Skill variety: how many skills and talents are needed?
• Task identity: does the job produce a complete work?

– Job enlargement

• Task significance: how important is the job?

• Increasing the job’s scope (number and frequency of tasks)

• Autonomy: how much independence does the jobholder have? – Job enrichment

• Feedback: do workers know how well they are doing?

• Increasing responsibility and autonomy (depth) in a job.
15

16

17

18

Contemporary Theories of
Motivation

Job Characteristics Model (JCM)
• Suggestions for Using the JCM

• Equity Theory

– Combine tasks (job enlargement) to create more meaningful work.
– Create natural work units to make employees’ work important and whole.
– Establish external and internal client relationships to provide feedback.
– Expand jobs vertically (job enrichment) by giving employees more autonomy.
– Open feedback channels to let employees know how well they are doing.

– Proposes that employees perceive what they get from a job situation (outcomes) in relation to what they put in (inputs) and then compare their inputs-outcomes ratio with the inputs-outcomes ratios of relevant others. • If the ratios are perceived as equal then a state of equity
(fairness) exists.
• If the ratios are perceived as unequal, inequity exists and the person feels under- or over-rewarded.
• When inequities occur, employees will attempt to do something to rebalance the ratios (seek justice).

19

Contemporary Theories of
Motivation

20

Contemporary Theories of
Motivation
• Expectancy Relationships

• Expectancy Theory (Vroom)
– States that an individual tends to act in a certain way based on the expectation that the act will be followed by a given outcome and on the attractiveness of that outcome to the individual.
– Key to the theory is understanding and managing employee goals and the linkages among and between effort, performance and rewards.
• Effort: employee abilities and training/development

– Expectancy (effort-performance linkage)

• The perceived probability that an individual’s effort will result in a certain level of performance.

– Instrumentality (performance-reward linkage)
• The perception that a particular level of performance will result in the attaining a desired outcome (reward).

– Valence (attractiveness of reward)

• Performance: valid appraisal systems

• The attractiveness/importance of the performance reward (outcome) to the individual.

• Rewards (goals): understanding employee needs
21

22

Current issues in motivation

Current issues in motivation

• Cross-Cultural Challenges
– Motivational programs are most applicable in cultures where individualism and quality of life are cultural characteristics • Uncertainty avoidance of some cultures inverts Maslow’s needs hierarchy.
• The need for achievement (nAch) is lacking in other cultures.
• Collectivist cultures view rewards as “entitlements” to be distributed based on individual needs, not individual performance. – Cross-Cultural Consistencies

• Interesting work is widely desired, as is growth, achievement, and responsibility.

• Flexible Work/Job schedules
– Compressed work week
• Longer daily hours, but fewer days

– Flexible work hours (flextime)
• Specific weekly hours with varying arrival, departure, lunch and break times around certain core hours during which all employees must be present.

– Job Sharing
• Two or more people split a full-time job.

– Telecommuting
• Employees work from home using computer links.

23

Current issues in motivation

24

Current issues in motivation

• Motivating Professionals
– Characteristics of professionals
• Strong and long-term commitment to their field of expertise. • Loyalty is to their profession, not to the employer.
• Have the need to regularly update their knowledge.
• Don’t define their workweek as 8:00 am to 5:00 pm. – Motivators for professionals
• Job challenge
• Organizational support of their work

• Motivating Contingent Workers
– Opportunity to become a permanent employee – Opportunity for training
– Equity in compensation and benefits

• Motivating Low-Skilled, Minimum-Wage
Employees
– Employee recognition programs
– Provision of sincere praise

25

Current issues in motivation

26

Current issues in motivation

• Designing Appropriate Rewards Programs

• Stock option programs

– Open-book management
• Involving employees in workplace decision by opening up the financial statements of the employer.

– Employee recognition programs
• Giving personal attention and expressing interest, approval, and appreciation for a job well done.

– Using financial instruments (in lieu of monetary compensation) that give employees the right to purchase shares of company stock at a set (option) price. – Options have value if the stock price rises above the option price; they become worthless if the stock price falls below the option price.

– Pay-for-performance
• Variable compensation plans that reward employees on the basis of their performance:
– Piece rates, wage incentives, profit-sharing, and lump-sum bonuses 27

28

Lecture outline
1. Who Are Leaders and What Is Leadership
2. Early Leadership Theories
Chapter

17

3. Contingency Theories of Leadership

Leadership

4. Contemporary Views on Leadership
5. Leadership Issues in the Twenty-First Century

1

Leaders an leadership

2

Power of leaders

• Leader – Someone who can influence others and who has managerial authority
• Leadership – What leaders do; the process of influencing a group to achieve goals

• Ideally, all managers should be leaders

– Legitimate power

• The power a leader has as a result of his or her position.

– Coercive power

• The power a leader has to punish or control.

– Reward power

• The power to give positive benefits or rewards.

– Expert power

• Although groups may have informal leaders who emerge, those are not the leaders we’re studying

• The influence a leader can exert as a result of his or her expertise, skills, or knowledge.

– Referent power

• The power of a leader that arise because of a person’s desirable resources or admired personal traits.

Leadership research has tried to answer: What is an effective leader?
3

Early Leadership Theories

4

Early Leadership Theories
• Behavioral Theories – How leaders interact with group members?

• Trait Theories (1920s-30s) – who are leaders?
– Research focused on identifying personal characteristics that differentiated leaders from nonleaders was unsuccessful.

– University of Iowa Studies (Kurt Lewin)
• Identified three leadership styles:

– Later research on the leadership process identified seven traits associated with successful leadership:

– Autocratic style: centralized authority, low participation
– Democratic style: involvement, high participation, feedback • Drive, the desire to lead, honesty and integrity, selfconfidence, intelligence, job-relevant knowledge, and extraversion. – Laissez faire style: hands-off management (giving group freedom to make decisions and complete work)

• Research findings: mixed results
5

6

Early Leadership Theories

Early Leadership Theories

• Behavioral Theories (cont’d)

• University of Michigan Studies

– Ohio State Studies

– Identified two dimensions of leader behavior

• Identified two dimensions of leader behavior

• Employee oriented: emphasizing personal relationships

– Initiating structure: the role of the leader in defining his or her role and the roles of group members
– Consideration: the leader’s mutual trust and respect for group members’ ideas and feelings.

• Research findings: mixed results

• Production oriented: emphasizing task accomplishment

– Research findings:
• Leaders who are employee oriented are strongly associated with high group productivity and high job satisfaction.

– High-high leaders generally, but not always, achieved high group task performance and satisfaction.
– Evidence indicated that situational factors appeared to strongly influence leadership effectiveness.
7

Contingency Theories of
Leadership

8

Contingency Theories of
Leadership

• Managerial Grid

• The Fiedler Model (cont’d)

– Appraises leadership styles using two dimensions:

– Proposes that effective group performance depends upon the proper match between the leader’s style of interacting with followers and the degree to which the situation allows the leader to control and influence.

• Concern for people
• Concern for production

– Places managerial styles in five categories:
Impoverished management

– Assumptions:

• Task management

• Middle-of-the-road management

• A certain leadership style should be most effective in different types of situations.

• Country club management

• Leaders do not readily change leadership styles.

• Team management

– Matching the leader to the situation or changing the situation to make it favorable to the leader is required.
9

Contingency Theories of
Leadership

10

Contingency Theories of
Leadership

• Hersey and Blanchard’s Situational Leadership Theory
(SLT)
– Argues that successful leadership is achieved by selecting the right leadership style which is contingent on the level of the followers’ readiness.

• Creates four specific leadership styles incorporating Fiedler’s two leadership dimensions: – Telling: high task-low relationship leadership
– Selling: high task-high relationship leadership

• Acceptance: leadership effectiveness depends on whether followers accept or reject a leader.
• Readiness: the extent to which followers have the ability and willingness to accomplish a specific task.

– Participating: low task-high relationship leadership

– Delegating: low task-low relationship leadership

– Leaders must relinquish control over and contact with followers as they become more competent
11

12

Contingency Theories of
Leadership

Contingency Theories of
Leadership
• Path-Goal Model

• Leader Participation Model (Vroom and Yetton)
– Posits that leader behavior must be adjusted to reflect the task structure—whether it is routine, nonroutine, or in between—based on a sequential set of rules
(contingencies) for determining the form and amount of follower participation in decision making in a given situation. – States that the leader’s job is to assist his or her followers in attaining their goals and to provide direction or support to ensure their goals are compatible with organizational goals.
– Leaders assume different leadership styles at different times depending on the situation:
• Directive leader: provide specific guidance
• Supportive leader: friendly and shows concern
• Participative leader: consult and give suggestions
• Achievement oriented leader: set challenging goals and expects highest performance

13

14

Contemporary Views on
Leadership
• Transactional Leadership
– Leaders who guide or motivate their followers in the direction of established goals by clarifying role and task requirements.

• Transformational Leadership
– Leaders who inspire followers to transcend their own self-interests for the good of the organization by clarifying role and task requirements.
– Leaders who also are capable of having a profound and extraordinary effect on their followers.
15

Contemporary Views on
Leadership

16

Contemporary Views on
Leadership
• Visionary Leadership

• Charismatic Leadership

– An enthusiastic, self-confident leader whose personality and actions influence people to behave in certain ways.

– A leader who creates and articulates a realistic, credible, and attractive vision of the future that improves upon the present situation.

• Visionary leaders have the ability to:

– Characteristics of charismatic leaders:

– Explain the vision to others.

• Have a vision.

– Express the vision not just verbally but through behavior. • Are able to articulate the vision.
• Are willing to take risks to achieve the vision.

– Extend or apply the vision to different leadership contexts. • Are sensitive to the environment and follower needs.
• Exhibit behaviors that are out of the ordinary
17

18

Leadership Issues in the 21st
Century

Leadership Issues in the 21st
Century

• Credibility (of a Leader)

Provide ethical leadership

• Ethics are part of leadership when leaders attempt to:

– The assessment of a leader’s honesty, competence, and ability to inspire by his or her followers

– Foster moral virtue through changes in attitudes and behaviors. – Use their charisma in socially constructive ways.
– Promote ethical behavior by exhibiting their personal traits of honesty and integrity.

• Trust
– Is the belief of followers and others in the integrity, character, and ability of a leader.
• Dimensions of trust: integrity, competence, consistency, loyalty, and openness.

• Moral Leadership

– Involves addressing the means that a leader uses to achieve goals as well as the moral content of those goals. – Is related to increases in job performance, organizational citizenship behaviors, job satisfaction, and organization commitment.
19

Leadership Issues in the 21st
Century

20

Leadership Issues in the 21st
Century

• Empowerment

Cross cultural leadership

– Involves increasing the decision-making discretion of workers such that teams can make key operating decisions in develop budgets, scheduling workloads, controlling inventories, and solving quality problems.

– Why empower employees?
• Quicker responses problems and faster decisions.
• Addresses the problem of increased spans of control in relieving managers to work on other problems. • Universal Elements of Effective Leadership
– Vision

– Foresight
– Providing encouragement
– Trustworthiness

– Dynamism
– Positiveness
– Proactiveness

21

Leadership Issues in the 21st
Century

22

Leadership Can Be Irrelevant!
• Substitutes for Leadership

Gender differences

– Follower characteristics

• Males and females use different styles:
• Women tend to adopt a more democratic or participative style unless in a male-dominated job.
• Women tend to use transformational leadership.

• Experience, training, professional orientation, or the need for independence

– Job characteristics
• Routine, unambiguous, and satisfying jobs

• Men tend to use transactional leadership.

– Organization characteristics
• Explicit formalized goals, rigid rules and procedures, or cohesive work groups
23

24

Lecture outline
1. Why is control important?
2. The control process
Chapter

18

3. Tools for organizational performance

Foundation of
Controls

4. Controlling organizational performance

1

What is control?

2

Designing Control Systems
• Market Control

• Controlling

– Emphasizes the use of external market mechanisms to establish the standards used in the control system.

– The process of monitoring activities to ensure that they are being accomplished as planned and of correcting any significant deviations.

• External measures: price competition and relative market share (Profit-centered)

• Bureaucratic Control

• The Purpose of Control

– Emphasizes organizational authority and relies on rules, regulations, procedures, and policies.

– To ensure that activities are completed in ways that lead to accomplishment of organizational goals.

• Clan Control
– Regulates behavior by shared values, norms, traditions, rituals, and beliefs of the firm’s culture.
3

4

5

6

Why Is Control Important?
• As the final link in management functions:
– Planning

• Controls let managers know whether their goals and plans are on target and what future actions to take. – Empowering employees

• Control systems provide managers with information and feedback on employee performance. – Protecting the workplace

• Controls enhance physical security (assets) and help minimize workplace disruptions.

Measuring: How and What We
Measure

Control Process

• Sources of
Information (How)

• Control Criteria
(What)

– Personal observation – Employees
• Satisfaction

– Statistical reports

• Turnover

– Oral reports

• Absenteeism

– Written reports

– Budgets
• Costs

• Output
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• Sales

Taking managerial actions

Comparing

• Courses of Action
– “Doing nothing”

• Determining the degree of variation between actual performance and the standard. • Only if deviation is judged to be insignificant.

– Correcting actual (current) performance

• Immediate corrective action to correct the problem at once.
• Basic corrective action to locate and to correct the source of the deviation.
• Corrective Actions

– Significance of variation is determined by:
• The acceptable range of variation from the standard (forecast or budget).

– Change strategy, structure, compensation scheme, or training programs; redesign jobs; or fire employees

– Revising the standard

• The size (large or small) and direction (over or under) of the variation from the standard (forecast or budget).

• Examining the standard to ascertain whether or not the standard is realistic, fair, and achievable.
– Upholding the validity of the standard.

– Resetting goals that were initially set too low or too high.
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Controlling for Organizational
Performance

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Organizational Performance
Measures
• Organizational Productivity

• What Is Performance?
– The end result of an activity

– Productivity: the overall output of goods and/or services divided by the inputs needed to generate that output.

• What Is Organizational
Performance?  What can make high
Organization Performance?

• Output: sales revenues

– The accumulated end results of all of the organization’s work processes and activities

• Inputs: costs of resources (materials, labor expense, and facilities)

• Designing strategies, work processes, and work activities.

– Ultimately, productivity is a measure of how efficiently employees do their work.

• Coordinating the work of employees.
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Organizational Performance
Measures

Tools for Controlling Organizational
Performance

• Organizational Effectiveness
– Measuring how appropriate organizational goals are and how well the organization is achieving its goals.
• Systems resource model
– The ability of the organization to exploit its environment in acquiring scarce and valued resources.

• The process model
– The efficiency of an organization’s transformation process in converting inputs to outputs.

• The multiple constituencies model
– The effectiveness of the organization in meeting the need of each constituency in the organization (customers, suppliers, security analysts…)
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Tools for Controlling Organizational
Performance

Tools for Controlling Organizational
Performance

• Feedforward Control

• Feedback Control

– A control that prevents anticipated problems before actual occurrences of the problem.

– A control that takes place after an activity is done. • Building in quality through design.
• Requiring suppliers conform to ISO 9002.

• Corrective action is after-the-fact, when the problem has already occurred.

• Concurrent Control

– A control that takes place while the monitored activity is in progress.
• Direct supervision: management by walking around. – Advantages of feedback controls:
• Provide managers with information on the effectiveness of their planning efforts.
• Enhance employee motivation by providing them with information on how well they are doing.

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Tools for Controlling Organizational
Performance: Financial Controls
• Traditional Controls
– Ratio analysis
Liquidity
• Leverage
• Activity
• Profitability

– Budget Analysis
• Quantitative standards
• Deviations

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Controlling Organizational
Performance
• Balanced Scorecard

• Other Measures

– Is a measurement tool that uses goals set by managers in four areas to measure a company’s performance: – Economic Value
Added (EVA) – over capital investments made on assets

• Financial
• Customer

– Market Value Added
(MVA) – over company’s market value on stocks

• Internal processes

• People/innovation/growth assets

– Is intended to emphasize that all of these areas are important to an organization’s success and that there should be a balance among them.
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Controlling Organizational
Performance

Controlling Organizational
Performance

• Purposes of Information Controls

• Benchmark

– As a tool to help managers control other organizational activities.

– The standard of excellence against which to measure and compare.

• Managers need the right information at the right time and in the right amount.

• Benchmarking

– As an organizational area that managers need to control. • Managers must have comprehensive and secure controls in place to protect the organization’s important information.

• Management Information Systems (MIS)

– Is the search for the best practices among competitors or non-competitors that lead to their superior performance.
– Is a control tool for identifying and measuring specific performance gaps and areas for improvement.

– A system used to provide management with needed information on a regular basis.
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