CHAPTER 1 MANAGERS AND MANAGING. To understand the importance of management

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1 CHAPTER 1 MANAGERS AND MANAGING LEARNING OBJECTIVES To understand the importance of management To describe what management is. Differentiate among planning, organizing, leading, controlling. Differentiate among the three levels of management. Identify managerial roles. 2 1

2 1. Definitions Management refers to the planning, organizing, leading and controlling of human and other resources to achieve organizational goals effectively and efficiently. Managers firstly work in organizations and second they are responsible to supervise the use of an organizations resources. Resources include assets, machinery, raw materials, computers, capital and people. Organizations are collections of people who work together and coordinate their actions to achieve a various goals. Organizational performance is a measure of how efficiently and effectively a manager uses resources to satisfy customers and achieve organizational goals. Organizational Performance increases in direct proportion to increases in efficiency and effectiveness. Figure 1.1 Efficiency is a measure of how well or productively resources are used to achieve a goal. In other words doing things right. i.e. When managers minimize the amount of input resources while maintaining the same or higher level of output. Effectiveness is a measure of the appropriateness of the goals an organization is pursuing and of the degree to which the organization achieves those goals. i.e. McDonald s and introduction of breakfast service. In other words setting the right goals and achieving them. 3 4 Figure 1.1 2

3 2. Why study management? Because of how society works and how it creates wealth. Society>scarce resources>effective and efficient use> greater prosperity of people > mgrs are those who decide how to employ those valuable resources. Interaction with bosses and co-workers. Daily contact with bosses and co-workers > helps people to deal with them > increase performance Competition for a well-paying job and satisfying career. competition mgt is a path to achieve this goal and move higher in the organizational structure > develop management skills and become promotable Essential Managerial Tasks (or Functions of Management) Managers at all levels in all organizations perform each of the four essential managerial tasks of planning, organizing, leading, and controlling A. Planning Refers to the process of identifying and selecting appropriate goals: 1. Decide which goals 2. Decide actions to be used 3. Decide allocation of resources Planning Fig 1.2 The arrows linking these functions suggest the sequence in which managers typically perform these functions. 1. Set goal > Increase sales by 10% 2. How to achieve the set goal(s)? > Use different promotional techniques, promote product differently?? 3. How to allocate resources to achieve the goals? > Buy labour and resources?? The outcome of planning is strategy Strategy refers to a set of decisions dealing with what organizational goals to pursue, what actions to take, and how to use resources to achieve goals. (Chapters 7,8, & 9) 6 3

4 3. Essential Managerial Tasks (or Functions of Management) B. Organizing Oga g A process used by managers to create a structure of working relationships that allow organizational members to work together to achieve organizational goals. Organizing > into departments, set lines of authority, allocate and arrange resources The outcome of organizing is the organizational structure. Organizational Structure refers to a formal system of task and reporting relationships that coordinates and motivates employees in order to work together to achieve organizational goals. We will deal with organizing in detail in chapter Essential Managerial Tasks (or Functions of Management) C. Leading The process through which managers communicate a clear vision and energize and enable employees in such a way in order to understand the part they play in achieving organizational goals. Leaders influence and motivate others to work toward goals. Leadership depends on the use of power, influence, vision, persuasion, and communication skills to coordinate the behaviours of individuals. We will deal with leading in detail in chapters 12, 13, 14, &

5 3. Essential Managerial Tasks (or Functions of Management) D. Controlling The process through which managers evaluate how well an organization is achieving its goals and take the appropriate actions to maintain or improve performance in order to achieve their goals. Managers monitor the performance of individuals, departments, and the organization as a whole to see whether they are meeting the standards d (goals). If not, mgrs take action to improve performance. Chapter 11 9 Four Tasks of Management Figure

6 4. Managerial Roles Henry Mintzberg, by following managers around and observing what they actually do, determined 10 specific roles that are employed by effective managers. (Shown on Table 1.1) Mintzberg grouped the 10 roles into 3 broad categories: decisional, informational, and interpersonal Managerial roles refer to the specific tasks that a person is expected to perform because of the position he holds in an organization. Decisional Interpersonal Informational Entrepreneur Figurehead Monitor Disturbance Handler Leader Disseminator Resource Allocator Liaison Spokesperson Negotiator 11 Decisional Roles Roles associated with methods managers use in planning strategy and utilizing resources. Entrepreneur deciding which new projects or programs to initiate and to invest resources in. Disturbance handler managing an unexpected event or crisis. Resource allocator assigning resources between functions and divisions, setting the budgets of lower managers. Negotiator reaching agreements between other managers, unions, customers, or shareholders. 12 6

7 Interpersonal Roles Roles that managers assume to provide direction and supervision to both employees and the organization as a whole. Figurehead symbolizing the organization s mission and what it is seeking to achieve. Leader training, counseling, and mentoring high employee performance. Liaison linking and coordinating the activities of people and groups both inside and outside the organization. 13 Informational Roles Roles associated with the tasks needed to obtain and transmit information in the process of managing the organization. Monitor analyzing information from both the internal and external environment. Disseminator transmitting information to influence the attitudes and behavior of employees. Spokesperson using information to positively influence the way people in and out of the organization respond to it. 14 7

8 5. Levels of Management Department refers to a group of people who work together and possess similar skills or use the same knowledge, tools, or techniques to perform their jobs. All levels of management (examined next) can be found within each department. Levels of Managers (Fig. 1.3,) a) First-line manager is the manager who is responsible for the daily supervision of nonmanagerial employees. First-line managers are often called supervisors ie. The supervisor of a work team in a manufacturing department (foreman) b) Middle Manager refers to the manager who supervises first-line managers and is responsible for finding the best way to use resources to achieve organizational goals. Middle managers are responsible for the performance of one department ie. Production manager. They find ways to better utilize resources, to improve customer service, to develop skill and know-how of employees etc. (Division managers, regional etc) c) Top Manager refers to the manager who sets organizational goals, decides how departments should interact, and monitors the performance of middle managers. Top managers ae are responsible for the performance of all departments. Which goods the company should produce? They are ultimately responsible for the success or failure of an organization. (Director general, President, etc) d) Top-management team refers to a group composed of the CEO (Chief Executive Officer), the COO (Chief Operating Officer), the president, and the heads of the most important departments. The amount of time that mgrs spend on each of the four functions of management depends on the manager s position in the managerial hierarchy. See Figure Managerial Skills Research has shown that education and experience help managers acquire three principal p types of skills. The level of these skills that managers need depend on their level in the managerial hierarchy. Conceptual skills are present in the ability to analyze and diagnose a situation and to distinguish between cause and effect. (Top managers need them most) Planning and organizing > business training and the study of management > continuing education and training Human skills include the ability to understand, communicate, coordinate, motivate people & to mold individuals into a team. learned education & training, experience Technical skills refer to job-specific knowledge and techniques that are required to perform an organizational role. example a manager s specific accounting and IT skills. The array of skills needed depends on their positions in the organization. Core competence, is a term used to refer to the specific set of departmental skills, knowledge, and experience that allows one organization to outperform its competitors. In other words, departmental skills that create a core competency give an organization a competitive advantage. 16 8

9 7. Recent Developments in Managerial Hierarchies Restructuring is a method used by managers to downsize an organization by eliminating the jobs of large numbers of top, middle, and first-line managers and nonmanagerial employees. Why? Lower costs, better use of resources. The changes that have been going on during the last few years with respect to the responsibilities of managers at different levels are mostly due to (a) global competition and (b) advance in IT and the development of e-commerce. Restructuring for example, IT allows for fewer employees to perform a task. Outsourcing involves contracting with another company, usually abroad, to have it perform an activity the organization previously performed itself. Empowerment refers to expanding employees knowledge, tasks and decision-making responsibilities. Self-managed teams are groups of employees who supervise their own activities and monitor the quality of the goods they provide. Empowerment and Self-managed teams are some of the changes taking place at the level of first-line managers. Now first-line managers act as coaches or mentors whose job is to provide advice and guidance and help teams to become more efficient Building a Competitive Advantage What are managers trying to achieve through the effective and efficient use of organizational resources? The answer is to build a competitive advantage. Competitive advantage refers to the ability of one organization to outperform other organizations because it produces desired goods more efficiently and effectively than they do. The four building blocks of competitive advantage are superior efficiency (through the reduction of resources used to produce a certain output), quality (quality improvements through the use of quality-enhancement techniques known as TQM), innovation (including speed, and flexibility), and responsiveness to customers (specially for services). You can see the building blocks of competitive advantage on Fig.1.6. Review Questions 1. Define the term management and briefly explain the four functions of management using examples where appropriate to support your answer. 2. Define the decisional, interpersonal, and informational roles of management. 18 9

10 Building Blocks of Competitive Advantage Figure