MANAGEMENT

LEADERSHIP.

LEADING= use influence to motivate employees to achieve their goals.

The attitudes and behaviours of leaders shape the conditions that determine how well
employees can do their job; thus, leaders play a tremendous role in the organisation’s success.

LEADERSHIP= is the ability to influence people toward the attainment of organisational goals.
Leaders are involved with other people in the achievement of goals. Leadership is reciprocal,
occurring among people, it is a people activity.

Management and leadership are both important for the organisation. The power of a leader is
build on the foundation of a well managed organisation. Effective managers have to be leaders.

Management and leadership reflects two different sets of qualities and skills that frequently
overlap within a single individual, a manager develops a balance of both manager and leader
qualities.

Management: promotes stability, order and problem solving, manager takes care of where you
are, helps the organisation meet currents commitments.
Leadership: promotes vision, creativity and change, a leader takes you to a new place, questions
the status quo and moves the organisation to the future.

LEVEL 5 LEADERSHIP: its key characteristic is an almost complete lack of ego coupled with a
fierce resolve to do what is best for the organisation. HUMILITY= means being unpretentious
and modest rather than arrogant and prideful. Level 5 leader build organisations based on solid
values that go far beyond just making money, with an unwavering resolve to do whatever is
needed to make the company successful over the long term.
The context in which leadership occurs influences what approach is most effective: technology,
economy, labour, society and culture all play a role.
A significant influence on leadership styles in recent years is the turbulence and uncertainty of
the environment, which has contributed to a shift in how we think about and practice leadership.
There are two main approaches in this turbulent period:

- SERVANT LEADERSHIP: transcends self-interest to serve others, the organisation, and society.
Servant leaders operate on two levels: for the fulfilment of their subordinates’ goals and
needs and for the realisation of the larger purpose or mission of their organisation. They give
things away and most of the time they work in the nonprofit world because it offers a natural
way to apply their leadership drive and skills to serve others. But also succeed in business.

- AUTHENTIC LEADERSHIP: refers to individuals who know and understand themselves, who
espouse and act consistent with higher order ethical values, and who empower and inspire
others with their openness and authenticity. To be authentic means being real, staying true to
one’s values and beliefs, and acting based on one’s true self.
BEHAVIOURAL APPROACHES= the inability to define effective leadership based solely on traits
led to an interest in looking at the behaviour of leaders and how it might contribute to
leadership success or failure. There are two main basic important leadership behaviour:

- TASK ORIENTED: what activities and operations need to be done to attain certain goals.
Initiating structure: is the degree of task behaviour, that is the extend to which the leader is
task oriented and directs subordinate work activities toward goal attainment. These leaders
provide instructions, and promote planning and deadline.

- PEOPLE ORIENTED: how to support wellbeing and motivate good work. Consideration= is
the extent to which the leader is mindful of subordinates, respects their ideas and feelings,
and establish mutual trust. These leaders are friendly, promote open communication and
teamwork, and are oriented to subordinate’s wellbeing.

Effective leaders may be high on consideration and low on initiating structure or the opposite,
depending on the situation.

EMPLOYEE CENTRED LEADERS= the most effective supervisors are those who establish high
performance goals and display supportive behaviour toward subordinates. (people oriented)

JOB CENTRED LEADERS= the less effective leaders, they tend to be more focused on meeting
schedules, keeping costs low, and achieving production efficiency. (task oriented)

The leadership grid: measures the leader’s concern about people and production.
CONTINGENCY APPROACHES= explore how the organisational situation influences leader
effectiveness.

- THE SITUATIONAL MODEL of Leadership: is an extensions of behavioural theories. This

approach focuses a great deal of attention on the characteristics of followers in determining
appropriate leadership behaviour. The subordinates vary in readiness that is willingness=
refers to a combination of confidence, commitment, and motivation, and a follower may be
high or low on any of the three variables, ability= refers to the amount of knowledge,
experience, and demonstrated skill that a subordinate brings to the task. Effective leaders
adapt their style according to the readiness level of the people they are managing. People
low in readiness need a different leadership style than those who are high in readiness.

LEADING CHANGE= how leadership can inspire and motivate people beyond their normal
levels of performance. Three types with a substantial impact:

- CHARISMATIC LEADERSHIP: the charismatic leader has the ability to inspire and motivate
people to do more than they would normally do, despite obstacles and personal sacrifice,
they have superior visions, the ability to understand and empathise, and to empower and trust
subordinates, skilled in the art of visionary leadership, promote an attractive ideal future.
Charismatic leaders are less predictable and create environment of change. The problem is
that a charismatic leader might be driven by self-interest or poor judgment, instead of
showcasing values that cherish other people’s wellbeing.
Examples: Madre Teresa, Hitler, Charles Manson, Martin Luther King.
- TRANSFORMATIONAL LEADERSHIP= transformational leaders are distinguished by their
spacial ability to bring about innovation and change by recognising followers’ need and
concerns, providing meaning, challenging people to look at old problems in a new ways, and
acting as role models for the new values and behaviours. They inspire others to believe in
their own potential, they have positive impact on followers. They are particularly effective
during crises.

- TRANSACTIONAL LEADERSHIP= transactional leaders clarify the role and task requirements
of subordinates, initiate structure, provide appropriate rewards, and try to be considerate and
meet the social needs of subordinates. The leader has to give something to followers in
exchange for performing the tasks. They excel in management functions.
Example: Bill Gates.

Transformational leadership can be complementary to the effectiveness of transactional

leadership rather than a replacement for it.

charismatic: inspire and motivate people, visionary leadership that is superior vision for the
future ( hitler about the arian race) ability to emphatise that is understand the followers.

transformational: bring innovation, they see the big picture, they are seen as a role model,
positive impact on followers. martin luted king

Transactional: punishment and reward bill gates.

charismatic less predictable of transitional

 MANAGING HUMAN RESOURCES.

Human resource management: is the design and application of formal systems to ensure the
effective and efficient use of human talent to accomplish organisational goals.

HRM include the activities undertaken to attract, develop and maintain an effective workforce,
managers have to find the right people for the right position, that is where they can be more
effective, and develop them so they contribute to the company success.

Employees are the company, if they don’t perform well, the company doesn’t stand a chance of
succeeding. Human capital refers to the economic value of the combined knowledge,
experiences, skills, and capabilities of employees.

Where in the organisation structure the HMR is positioned:

It is from tactical level concerning the short term and departmental HR issues, to the strategic
level concerning long term and corporate HR issues.

The strategic approach: the HR departments supports strategic objectives and actively pursue
and ongoing , integrated plan for furthering the organisation’s performance.

Employees are the assets of a company that provide competitive advantage, firms succeed in
their strategy if employees:
- Make innovation possible.
- Improve quality and customer service.
- Succeed in merger and acquisition.
- Apply new technology.

MOTIVATION: employees motivation affects productivity and organisational performance,

managers enhance motivation in order to achieve organisational goals, so it is necessary to
understand and try to satisfy the different needs of different people, their approaches to work,
and their expected rewards.
Content perspective: if managers understand employees needs, they can design appropriate
reward systems: needs motivate people, needs translate into an internal drive that motivates
behaviour.

People are motivated by multiple needs that exits in hierarchical order: low order take priority in
order to activate the higher order needs. Needs are satisfied in sequence.

MASLOW’S HIERARCHY OF NEEDS THEORY

Managers should be aware lower needs to be fulfilled before higher needs become important
and go back to lower levels and repair when necessary.

HERZBERG’S TWO FACTORS THEORY.

Work characteristics associated with dissatisfaction are different from those pertaining to
satisfaction: two factors influence motivation.

Managers should remove dissatisfies to satisfy basic needs and promote motivators to meet
higher level needs.

1. MOTIVATORS: factors that influence job satisfactions based on fulfilment of high level needs
such as achievement, recognition, responsibility and opportunity for growth.
- when motivators are absent, workers are neutral toward work.

2. HYGIENE FACTORS: factors that involve the presence or absence of job dissatisfaction,
including working conditions, pay, company policies, and interpersonal relationships.
- good hygiene factors only remove dissatisfaction, they do not lead to satisfaction.

Managers should:
- Provide hygiene factors that will eliminate dissatisfaction, hygiene factors do not motivate.
- Provide motivators to enhance high satisfaction.

Process perspective: it takes into account two theory that explain how people select behavioural
actions to meet their needs and determine whether their choices were successful.

GOAL SETTING THEORY.

Specific, challenging targets that are accepted as valid by

subordinates significantly enhance people’s motivation
and performance, if managers help them track progress.

- Specific goals that are concrete and unambiguous.

- Difficult goals more motivating than easier ones.

- Goal acceptance by the employees.

- Feedback progress report.

EQUITY THEORY.

- Focuses on individual perceptions of how fairly they are treated.

- People are motivated to seek social equity in reward they expect for performance.

- People evaluate equity by a ratio of inputs ( education, experience, effort, ability ) to outcomes
( pay, recognitions, benefits, promotions ) . They compare their ratio to another’s ratio , or to
some perceived average.

- The state of inequity can be positive or negative ( a person that is overpaid also feels a state of
inequity ) .

Reinforcement perspective: employee learning of desired work behaviours.

REINFORCEMENT THEORY.

A motivation theory based on the relationship between a given behaviour and its consequences.

Law of effect: behaviour that is positively reinforced tends to be repeated.

 MANAGING CHANGE AND INNOVATION

Organisational change: is the adoption of new idea or behaviour by an organisation, sometimes

change and innovation are spurred by forces outside the organisation, for example when a
supplier goes out of business. If organisations don’t successfully change and innovate, they die.

Many people prefer the status quo and tend to resist change, the reasons why people resist
change are lack of understanding and trust, uncertainty, and different assessments goals, and
the fear of personal loss.

DISRUPTIVE INNOVATION= refers to innovations in products or services that typically start small
and end up completely replacing an existing product or service technology for producer and
consumers. innovations in products, services or processes that radically change competition in
an industry, such as the advent of streaming video or iPhones.

AMBIDEXTROUS APPROACH= incorporating structures and processes that are appropriate for
both the creative impulse and for the systematic implementation of innovation. Managers
encourage flexibility and freedom to innovate, propose new ideas with creative departments.

One vital area of innovation is the introduction of new products, services, and technologies. A
product change is a change in the organisation’s product or service outputs. A technology
change is a change in the organisation’s production process, how organisation does its work,
these changes redesigned to make the production of a product or service more efficient.

- EXPLORATION: involves designing the organisation to encourage creativity and the initiation
of new ideas.

Creativity refers to the generation of novel ideas that might meet perceived needs or respond to
opportunities for the organisation. Creative people often are known for their originality, open
mindedness, and receptiveness to new ideas whereas creativity spread in the whole
organisation is risky and experimental.
Bottom-up approach which means encouraging the flow of new ideas from lower levels and
making sure that they heard and acted upon by top executives.

Idea incubator a program that provides a safe harbour where employees can generate and
develop ideas without interference from company bureaucracy or politics.

Embrace failure: fosters trust needed to offer creative ideas.

- COOPERATION: refers to creating conditions and systems to facilitate internal and external
coordination and knowledge sharing.

Internal coordination, successful innovation requires expertise from several departments

simultaneously and sequentially. Horizontal linkage mode simultaneously contribute to new
products and technologies.

External coordination, includes customers, partners and suppliers. Open innovation

commercialisation of ideas beyond the boundaries of the organisation, even the industry.

Coordination model for innovation.

- INNOVATION ROLES: means that managers put in place processes and structures to ensure
that new ideas are carried forward for acceptance and implementation.

Managers should support entrepreneurship activities and foster ideas champions, energy and
effort is required to promote a new idea. Sponsors approve and protect ideas when critics
challenge the concept.

Resistance to change:

- Schemas: guide the perception and the interpretation of stimuli, and may prevent us from
recognising opportunities of change.

SCHEMA THEORY.
- Cognitive dissonance with old ways might can be produced when embracing a new method
of activity.

- Tolerance for ambiguity is different among individuals when changes involve uncertainty.

- Economic uncertainty, fear and habits are involved in the resistance to change.

Social and organisational barriers:

- Regulations and procedures may limit the flexibility to try new approaches.

- Group norms / organisational culture may prescribe the status quo.

- Institutional memory or prior failures might prevent new change efforts.

TWO MODELS TO OVERCOME BARRIERS TO ORGANISATIONAL CHANGE.

Lewis, three stage models.

1. Unfreeze process, level in which people need to know that something is going to change,
and they are dealing with emotions such as denial, impatience, uncertainty and doubt.
Managers must fully comunicate the state of affairs and explain why a change process is put
into force. There has to be a clear communication, employees are more willing to accept to
the new change of direction and let go the old customs. Advisable to involve employees so
they can take part actively and positively.

2. Change stage, it is crucial importance that the change is implemented within a short time.
The longer the change process takes, the more employees are inclined to revert to using old
schemas, enacting old habits.

3. Refreeze stage, is about solidifying the change. After the change has been implemented in
the change stage, employees are inclined to revert to the old habits. Advisable to make
arrangements to carry out evaluations, monitor and make adjustments when necessary.

Kotters eight step model.

1. Establish a sense of urgency.

2. Create a guiding coalition.
3. Develop a vision and strategy.
4. Communicate the change vision.
5. Empowers others to act on the vision.
6. Generate short terms wins.
7. Consolidate improvements and produce more change.
8. Anchor new approach to the culture.

Emphasise the importance of counteracting barriers to change through communicating not only
the need for change but also the vision of the change will accomplish.

Highlight the role of the leader to share the reason behind and potential benefits of change in
order to create a feeling of urgency and necessity.
 MANAGING ETHICS AND SOCIAL RESPONSIBILITY

Ethics: is a system of moral principles, that is, what is right and wrong, bad and good, these
principles affect how people make decisions and lead their lives.

Business / Corporate ethics: it is a form of applied ethics, that examine ethical principles and
moral or ethical problems that can arise in a business environment. It applies to all aspects of
business conduct of individuals and entire organisations.

KOHLBERG’S 6 STAGES OF MORAL DEVELOPMENT.

Level 1: Pre - Conventional.

Right and wrong based on authority, rules, and outcomes,
external control.

- Stage 1: obedience and avoid punishment.

- Stage 2: self interest, individualism and exchange.

Level 2: Conventional.
Right and wrong based on personal and societal
relationships, relational control.

- Stage 3: good interpersonal relationships, conformity.

- Stage 4: authority and social order maintenance.

Level 3: Post - Conventional.

Right and wrong based on values, beliefs, internal control.

- Stage 5: social contract, mutual benefit.

- Stage 6: universal ethical principles, principled conscience, autonomous.

MAJOR ETHICAL PERSPECTIVE.

- Mill’s Utilitarianism: do the greatest good for the greatest number (outcomes). Utilitarianism
emphasises not rules but results, an action is generally considered good if maximises
happiness or pleasure throughout society.
Judges the actions as moral or immoral by their consequences:
- Utility, extent to which action produce happiness.
- Moral action, produce net happiness, Immoral action, produce net unhappiness.
- The ends justify the means.
What matter is the amount of happiness and suffering created by your actions, maximise
happiness and minimise suffering around you, the rules can be broken due to this.

- Kant’s categorical imperative: do what’s right no matter what the consequences are.
According to Kant what is right for one is right for all, if the decision taken can be applied to
everyone, it is a good one. It is about principles and rules, rather than the results and actions,
your actions should be motivated by proper universal principles, principles that should not to
be broken.
- Aristotle virtue ethics: focus on character and virtue in how one conduct’s one’s life over a
broad range of situations. Acting rightly involves developing and demonstrating virtues
( courage, compassion, wisdom ) and avoiding vices ( jealousy, greed )

TRIPLE BOTTOM LINE: it broadens the business focus on the financial bottom line to include
social and environmental considerations. A TBL measures a company’s degree of social
responsibility, its economic value and its environmental impact.

Pursuing TBL leads to a business model that is

bearable, equitable, viable and sustainable.

Why do companies engage in Corporate Social Responsibility? (CSR)

Consumers increasingly expect firms to address social issue.
CSR: refers to the obligation of organisational managers to make choices and take actions that
will enhance the welfare and interests of society, as well as the organisation, that is, how firms
take responsibility for the social and environmental impact of their business operations.
From this perspective, firm should strive to make a profit, obey the law, be ethical and be good
corporate citizens.

Stakeholders: any group or person within or outside

the organisation that has some type of investment
or interest in the organisation’s performance,
that is, any group or individual who can affect or
is affected by the achievement of the
organisation’s objectives.
- The stakeholders approach: to understanding the firm intends to broaden management’s
vision of its roles and responsibilities beyond the profit maximisation function to include
interests and claims of non-stockholding groups.
- The stakeholders theory: which groups are stakeholders which deserve or require
management attention, and which are not?

Fringe Stakeholders: stakeholders that are not typical, known, powerful, human.
- Divergent
- Adversarial
- Non-legitimate
- Isolated
- Non-human
- Disinterested
- Illiterate
- Weak
- Poor
Why engage fringe stakeholders? Generate competitive imagination.
May hold knowledge and perspectives that are key both to anticipating potential future sources
of problems and to identifying innovative opportunities and business model for the future.

Radical Transaction.
- Networking from the core to the periphery: develop boundary spanners to identify and
network with fringe stakeholders to understand their concerns.
- Putting the last first: identify business contexts that are the reverse of current contexts; create
an inventory of potential sites and contexts where learning can take place for generating
ideas for new products and business models.
- Generating complex interactions: have close interactions with fringe stakeholders to generate
new product ideas and business innovations, and to transfer tacit knowledge; generates
competitive imagination for future growth of the firm.
- Reconciling contradictions: incubating, operationalising, and implementing radical
innovations and new business models.
Framework on how managers prioritise stakeholders.
- Stakeholders power to influence the firm.
A stakeholder has power to the extent that it can actually or potentially impose its will in a
relationship with a firm.

- Legitimacy of the stakeholders’s claim on the firm.

Legitimacy is a generalised perception or assumption that the actions of an entity are desirable,
proper, or appropriate in society. An entity may have legitimate standing in society, or it may
have a legitimate claim on the firm, but unless it has either power to enforce its will in the
relationship or a perception that its claim is urgent, it will not achieve salience for the firm's
managers. Legitimacy + Power = Authority

- Urgency of the stakeholders’s claim on the firm.

Time sensitivity is the degree to which managerial delay in attending to the claim or relationship
is unacceptable to the stakeholder, criticality is the importance of the claim or the relationship to
the stakeholder. The degree to which stakeholder claims call for immediate attention.