Certification Study Group

Principles and Theories of Management October 11, 2005

Management


Management is a set of activities directed at an organization s resources with the aim of achieving organizational goals in an efficient and effective manner

Management


Activities include the four functions of management

Planning (and decision making)  Organizing  Leading  Controlling


Management


Resources include:
Human  Financial  Physical  Information


Management in Organizations
Planning and decision making Inputs from the environment Human resources Financial resources Physical resources Information resources Controlling Leading Organizing

Goals attained Efficiently Effectively

Important Definitions
   

Top Managers Middle Managers First-line Managers Operative Employees

The Management Process

Planning and Decision Making
Setting the organizations goals and deciding how best to achieve them

Organizing
Determining how best to group activities and resources

Controlling Monitoring
and correcting ongoing activities to facilitate goal attainment

Leading
Motivating members of the organization to work in the best interests of the organization

Figure 1.2

The Basic Functions of Management A Circular Process

Planning and Decision Making

Controlling

Organizing

Leading

Skills and the Manager

Fundamental Management Skills



Management Skill Mixes at Different Organizational Levels

Classical Management Perspective



Scientific Management
  

Frederick Taylor The Gilbreths Henry Gantt

Steps in Scientific Management

1 Develop a science for each element of the job to replace old rule-of-thumb methods 2 Scientifically select employees and then train them to do the job as described in step 1 3 Supervise employees to make sure they follow the prescribed methods for performing their jobs 4 Continue to plan the work, but use workers to get the work done

Figure 1.3

The Classical Management Perspective



Administrative Management focuses on managing the total organization

  

Henry Fayol Lyndal Urwick Max Weber

Weber s Theory of Bureaucracy

 Division of labor  Reliance on rules and regulations  Hierarchy of authority  Employment based on expertise  Inflexible  Rigid  Impersonal

The Behavioral Management Perspective



Placed much more emphasis on individual attitudes and behaviors and on group processes in organizations. Recognized the importance of behavioral processes in organizations
  

Hugo Munsterberg Mary Parker Follet Elton Mayo

Behavioral Management Perspective

 Elton Mayo
 

Hawthorne Studies

Illumination study Group study

Human Relations Movement

 

Grew out of the Hawthorne studies. Proposed that workers respond primarily to the social context of work, including social conditioning, group norms, and interpersonal dynamics. Assumed that the manager s concern for workers would lead to increased worker satisfaction and improved worker performance.

Behavioral Management Perspective



Abraham Maslow


Advanced a theory that employees are motivated by a hierarchy of needs that they seek to satisfy. Proposed Theory X and Theory Y concepts of managerial beliefs about people and work.

Douglas McGregor


Maslow s Hierarchy of Needs



Five levels  Physiological hunger, thirst, shelter, sex  Safety security and protection  Social affection, interpersonal relationships  Esteem self-respect, achievement status  Self-actualization achieving full potential Usually thought in the form of a pyramid

Maslow s Hierarchy of Needs

SA Esteem Needs Social Needs Security Needs Physiological Needs

Theory X and Theory Y



Theory X Assumptions
 

People do not like work and try to avoid it. Managers have to control, direct, coerce, and threaten employees to get them to work toward organizational goals. People prefer to be directed, to avoid responsibility, and to want security; they have little ambition.

Source: Douglas McGregor, The Human Side of Enterprise, Copyright 1960 by McGraw-Hill. Reprinted by permission of The McGraw-Hill Companies.

Theory X and Theory Y



Theory Y Assumptions


People do not dislike work; work is a natural part of their lives. People are internally motivated to reach objectives to which they are committed. People are committed to goals to the degree that they receive rewards when they reach their objectives.

Source: Douglas McGregor, The Human Side of Enterprise, Copyright 1960 by McGraw-Hill. Reprinted by permission of The McGraw-Hill Companies.

Theory X and Theory Y



Theory Y Assumptions


People seek both seek responsibility and accept responsibility under favorable conditions. People can be innovative in solving problems. People are bright, but under most organizational conditions their potentials are underutilized.

Source: Douglas McGregor, The Human Side of Enterprise, Copyright 1960 by McGraw-Hill. Reprinted by permission of The McGraw-Hill Companies.

Theory X

Theory Y

Think of these theories as a continuum

Theory X

Theory Y

Employees fall somewhere in between the two ends

The Behavioral Management Perspective



Contemporary behavioral science in management emerged because of the too simplistic descriptions of work behavior by the human relations theorists. Organizational behavior takes a holistic view of behavior, including individual, group, and organization processes

Organizational Behavior


Important topics in organizational behavior research:

    

Job satisfaction and job stress Motivation and leadership Group dynamics and organizational politics Interpersonal conflict The structure and design of organizations

The Quantitative Management Perspective



Focuses on decision making, economic effectiveness, mathematical models, and the use of computers in organizations
 

Management science Operations management

The Quantitative Management Perspective



Contributions


Developed sophisticated quantitative techniques to assist decision making Models have increased our awareness of complex organizational processes and have aided in the planning and controlling processes Cannot fully explain or predict behavior Mathematical sophistication may come at the expense of other important skills Models may require unrealistic or unfounded assumptions

Limitations
 

Contemporary Management Theory



The Systems Perspective



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

 

Inputs (material and/or human resources) Transformation processes (technical and managerial processes) Outputs (products and services) Feedback (reactions from the environment)

The Integrated Systems Model

Inputs
From the environment:
Human Material Financial Information

Processing
Transformation process:
Technology Operating systems Administrative systems Control systems

Outputs
Into the environment
Product Services Profit/loss Employee behavior Information

Feedback

Systems Perspective
 Synergy


Subsystems are more successful working together than working alone. The whole, working together, is greater than the sum of its parts.

Entropy


A natural process leading to system decline which can be avoided through organizational change and renewal.

Contemporary Management Issues & Challenges

       

Downsizing Diversity and the New Workforce Information Technology New Ways of Managing Globalization Ethics and Social Responsibility Managing for Quality Service Economy

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The Functions of Management

The Functions of Management A Circular Process

Planning

Controlling

Organizing/ Staffing

Leading/Directing

Plans
Mission Statement Strategic Tactical
Operational

Mission Statement & Objectives

Written explanation of company aims What goods and services the company will offer What market the company will serve Company belief vision Statement about employee treatment may be included
Objectives - The ends or results desired by the organization and are derived from the organization s mission.

Plans Are Classified on Their Scope

Strategic Tactical
Plans become more specific as they move from strategic to operational Operational
Contingency

Management & Planning Levels

Top Tactical

Strategic

Middle

Supervisory

Operational

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Decision Making

Managers As Decision Makers



Decision making the process of recognizing a problem or opportunity and creating a solution

A decision is a choice between alternatives

Steps in the Decision Making Process

Recognize and define the decision situation

Develop options

Analyze options

Select the best option

Implement the decision

Monitor the consequences

Decision Making Process

Recognizing Evaluate Identifying Alternatives

Implement decision

Evaluate Alternatives Select Alternative

Steps in the Rational Decision-Making Process

Step 1. Recognizing and defining the decision situation 2. Identifying alternatives Detail Some stimulus indicates that a decision must be made. The stimulus may be positive or negative. Both obvious and creative alternatives are desired. In general, the more important the decision, the more alternatives should be considered. Each alternative is evaluated to determine its feasibility, its satisfactoriness, and its consequences. Example A plant manager sees that employee turnover has increased by 5 percent. The plant manager can increase wages, increase benefits, or change hiring standards.

3. Evaluating alternatives

Increasing benefits may not be feasible. Increasing wages and changing hiring standards may satisfy all conditions.

Steps in the Rational Decision-Making Process

Step 4. Selecting the best alternative Detail Consider all situational factors, and choose the alternative that best fits the managers situation. The chosen alternative is implemented into the organizational system. Example Changing hiring standards will take an extended period of time to cut turnover, so increase wages. The plant manager may need permission from corporate headquarters. The human resource department establishes a new wage structure. The plant manager notes that, six months later, turnover has dropped to its previous level.

5. Implementing the chosen alternative

6. Following up and evaluating the results

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

Evaluating Alternatives in the Decision-Making Process

Is the alternative feasible? Yes Is the alternative satisfactory? Yes Are the alternatives consequences affordable? Yes Retain for further consideration

No

No

No

Eliminate from consideration

Eliminate from consideration

Eliminate from consideration

Figure 4.3

The Classical Model

Rational Decision-making Process Steps
A Circular Process 6 2 1

5 3 4

Types of Decisions
 Programmed Decisions  A structured decision or one that occurs frequently  Have well established and understood solutions  Nonprogrammed Decisions  An unstructured decision, which occurs less frequently than a programmed decision  Involves complex, important, and nonroutine problems or opportunities

Decision-Making Conditions
The decision maker faces conditions of...

Certainty

Risk

Uncertainty

Level of ambiguity and chances of making a bad decision

Lower

Moderate

Higher

Distinguishing Between Decision Making Conditions

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

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

Decision-Making Conditions
  

Decision Making Under Certainty Decision Making Under Risk Decision Making Under Uncertainty

Rational Perspectives on Decision Making



The Classical Model of Decision Making

obtain complete When faced with a decision situation, managers should . . . and perfect information eliminate uncertainty evaluate everything rationally and logically . . . and end up with a decision that best serves the interests of the organization.

Behavioral Aspects of Decision Making

The Administrative Model of Decision Making

use incomplete and When faced with a decision situation managers actually imperfect information are constrained by bounded rationality tend to satisfice . . . and end up with a decision that may or may not serve the interests of the organization.

The Administrative Model

Important Behavioral Concepts
 Bounded rationality  Satisficing
   

Coalition Intuition Escalation of Commitment Risk Propensity

Ethics and Decision Making



Components of managerial ethics:

  

Relationships of the firm to employees Employees to the firm The firm to other economic agents

Group and Team Decision Making in Organizations



The most common method of group and team decision making are:
  

Interacting groups Delphi groups Nominal groups.

Group Decision Making

Advantages
More information & knowledge are available More alternatives are likely to be generated More acceptance of the final decision is likely Enhanced communication of the decision may result Better decisions

Disadvantages
The process takes longer, so it is more costly Compromise decisions due to indecisiveness may emerge One person may dominate the group Groupthink may occur

Groupthink


A situation that occurs when a group or team s desire for consensus and cohesiveness overwhelms its desire to reach the best possible decision.

Source: Gregory Moorhead, Group & Organizations Studies (Vol. 7, No. 4), pp. 429-444. Copyright 1982 by Sage Publications, Inc. Reprinted by permission of Sage Publications, Inc.

Managing Group and Team Decision-Making Processes

Promoting the Effectiveness of Group and Team Decision Making:


Be aware of the pros and cons of having a group or team make a decision. Set deadlines for when decisions must be made. Avoid problems with dominance by managing group membership. Hold a follow-up meeting to recheck the decision.

Have each group member individually and critically evaluate all alternatives. As a manager, do not make your position known too early. Appoint a group member to be a devil s advocate.