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Principles of Management. Management: Definitions, Roles & Skills. Management: Definitions.

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Management: Definitions, Roles & Skills

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Management definitions roles skills

Principles of Management

Management: Definitions, Roles & Skills

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Management definitions roles skills

Management: Definitions

  • “Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aim(s) viz. to create a surplus(s).” ….Weihrich & Koontz

  • “Management is not an absolute; rather it is socially and culturally determined. Across all cultures and in all societies, people coming together to perform certain collective acts encounter common problems having to do with establishing direction, coordination and motivation. Culture affects how these problems are perceived and resolved.” …The Art of Japanese Management by R. Pascale & A. Athos .

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Management definitions roles skills

Management: Definition …ctd.

  • Applies to and throughany kind of organization

  • Applies to Managers at all levels

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

    • Effectiveness: Achievement of objectives (Right Things);

    • Efficiency: Achieving those objectives with least amount/ sacrifice of resources (Things Right);

    • Continuous Improvement: in creating increasing ‘surplus’ (at all times);

      • “Improve or die” = survival of the fittest

      • “what gets measured, gets managed and improved” e.g. Productivity=Output / Input ratio

  • Collective, cohesive and consistent human effort towards accomplishing a common objective.

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Management definitions roles skills

Management: Definition …ctd.

Political

Regulatory

Economic

Organization

Societal

Globalization

Technological

Additionally, Managers need to factor in external environmental forces:

For maximum benefit to the organization

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Management definitions roles skills

Management: Roles & Skills

  • Management - what managers do:

    • Fredrick Taylor’s path-breaking “scientific approach”

    • Henri Fayol’s classical definition of ‘functions’, now modified to:

      • Plan -- Organize -- Lead(Command&Coordinate) -- Control

    • Mintzberg’s map of managerial ‘roles’:

      • Interpersonal + Informational + Decisional

    • Katz’s interpretation of ‘skills’:

      • Technical / Human / Conceptual

  • Management – ‘get things done through others’:

    • Leadership: “The ability to influence a group towards achievement of goals”.

    • Motivation: “The willingness to exert high level of effort towards goals”

    • Communication:”The transference and understanding of meaning”

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Management definitions roles skills

Management: roles & skills …ctd.

Managerial Roles (Mintzberg)

  • RoleDescriptionExamples

  • Interpersonal

  • Figureheadsymbolic head; required to showCeremonial,

  • ‘face’ in social & legal conditions.Civic etc.

  • LeaderMotivating & directing subordinatesproject plan

  • LiaisonNetworking outside for informationIndustry -

  • & favoursgroup meets

  • Informational

  • Monitornerve centre and interpretatorReports

  • Disseminatornetworking within the organizationMeetings etc.

  • SpokespersonTransmit intent to outsiders; expertBoard Meets

  • Decisional

  • EntrepreneurOpportunity finding& reactingStrategy Plan

  • Trouble shooterHandling unexpected disturbanceContingency

  • Resource allocatorInitiating/approving changesBudgeting

  • NegotiatorGetting best deal for OrganizationContracts

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Management definitions roles skills

Management: roles & skills

Board

Conceptual

Exec.

HUMAN

Mgr.

Technical

Supr.

Managerial Skills(Katz & others)

  • Technical Skills:

    Application of specialized knowledge or expertise acquired though formal training & its use.

  • Human Skills:

    Ability to work with people, understand and motivate groups & individuals.

  • Conceptual Skills:

    Mental ability to recognize, analyze, diagnose and think through complex situations.

Skills Needed

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Principles of management 2

Principles of Management 2

Management: A Systems Approach

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Management definitions roles skills

ENVIRONMENT

input

Transformation

process

output

Feedback (Reenergizing the system)

System Boundary

Systems approach to Management

Organization as a System receives Input, transforms it through a Process for Output and Operates in an Environment (economic, regulatory and other forces)

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Management definitions roles skills

Systems approach to Management …ctd.

Systems Concepts

  • System Boundariesand Subsystems

    • > Systems often consist of numerous subsystems.

    • > Each subsystem has elements, interactions with other subsystems, and objectives.

    • > Subsystems perform specialized tasks for the overall system.

  • Subsystem Interfaces and Interface Problems

Sub-System 1

Sub-System 2

Sub-System 3

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Management definitions roles skills

Systems approach to Management …ctd.

Outputs and Inputs

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

  • Outputs of one subsystem become inputs to another subsystem.

  • Outputs must adhere to standards to be useful or acceptable to the next subsystem.

System Environment

  • Environment consists of people, organizations and other systems that supply data to or that receive data from the system

  • Managers at different levels perceive ‘Environment” differently

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Management definitions roles skills

Systems approach to Management …ctd.

“Inputs”: 5 Ms of Management

  • Inputs or the resources managers deal with are:

    • Man: human resources, both inside and connected with an organization;

    • Materials: goods (hard & software, processed or semi-finished) and services required to create the sellable end product;

    • Machines: technology and expertise deployed towards the transformation process;

    • Methods: systems, procedures and processes seamlessly put together for the transformation;

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

  • “Money” is required for generating all theses Ms – managers need to acquire, deploy, generate and distribute money as a primary need for business!

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Management definitions roles skills

Systems approach to Management …ctd.

Output for “Stake-holders” in Business:

“Stake”: Something wagered or risked;

an interest in an enterprise with contingent gain or loss …Webster ‘s dictionary

“Holders” who have stake in Business:

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

  • Society: includes the State, provincial and local governments for the improvement of ‘quality of life’ of its citizens;

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Management definitions roles skills

Systems approach to Management …ctd.

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

  • Suppliers: continuity of their enterprise depends on the success of the customer enterprise;

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

  • Employees: livelihood depends on the progress and success of the employing enterprise;

  • There is a “freedom of choice” (for association) between each of these stake-holders and the enterprise in the longer term:

    • But they sink or swim together in the shorter term

    • Length of term definition varies with individuals!

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    Management definitions roles skills

    Systems approach to Management …ctd.

    Management as a system transforms inputs:

    • by theprocess of

      • Planning

        • + Organizing

          • + Staffing

            • + Leading

            • + Controlling

              to accomplish certainpre-determined,(as derived from stakeholder needs) goals or objectives

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    Management definitions roles skills

    Systems approach to Management …ctd.

    Stakeholders

    Shareholders;

    Society; Customers;

    Employees; Suppliers

    Man, Machine

    Material,

    Method,

    Measurement

    Product/Services,

    Profits,Customer &

    Societal satisfaction,

    Other Long-term Goals

    Organizing

    Inputs

    (Goal

    Oriented)

    Outputs

    (External

    To

    Orgnzn.)

    Planning

    Staffing

    Controlling

    Leading

    Stake holder Feedback (reenergizing the system)

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    EXTERNAL ENVIRONMENT(Opportunities, Constraints)


    Principles of management 3

    Principles of Management 3

    Management Process

    First Step: Planning

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    Planning

    Planning

    • Planning involves selecting objectives or goals and the course of actions to achieve them:

      • Provides the bridge to take us from where we are to where we want to go;

      • Is a rational approach to achieving pre-selected objectives - based on innovation, knowledge and purpose;

      • Decision making in choosing the best from alternative courses of action and is integral to planning;

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    Plans as foundation of management

    What kind of resources needed?

    What kind of people

    & org. structure

    to have?

    Plans

    How to lead them

    to reach planned

    goals?

    How to control in

    case of deviation

    from plan ?

    Plans as foundation of Management

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    The primacy of Planning


    Types of plans

    Types of Plans

    • Mission / Purpose

      • The basic function or ‘reason for existence’ of an enterprise/ organization

    Case in point:Mission of Indira Institute

    “To train our students to become the best business minds and entrepreneurs today, who will lead their companies successfully into the future tomorrow , locally, nationally and globally.”

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    Type of plans cont d

    Type of Plans (Cont’d)

    • Objectives/ Goals

      • The end towards which activity of an organization is aimed, e.g.

        • For a Business enterprise – profit, surplus creation;

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

    • Strategies

      • Determination of the long term objectives and adoption of a course of action

      • Gives a frame work for linked action-plans, communicated systematically to guide thinking and actions.

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    Types of plans cont d

    Types of Plans (cont’d)

    • Policies

      • “Plans” that are general directional statements (or understandings) that guide/help in decision making:

        • Repeat decisions taken ‘reflexively’;

        • Delegation of tasks without loss of control.

      • Some discretion is permissible depending on circumstances thus encouraging initiative within limits and situational adjustments;

      • Issues with “Policy”

        • Seldom documented in writing

        • Subject to interpretations

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    Types of plans cont d1

    Types of Plans (cont’d)

    • Procedures

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

      • Cuts across department boundaries (sub-systems) in an organization: e.g. customer complaint handling procedure;

      • Procedures and policies are inter related: e.g. authorization for paid leave

        • Policy governs quota, responsible authority etc.

        • Procedure governs application, grant and record-keeping.

    • Rules

      • Specific actions or non-actions allowing no discretion

        • Caution: rules (and procedures too) limit initiative!

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    Types of plans cont d2

    Types of Plans (cont’d)

    • Programs

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

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

        • Perfect coordination between supporting & primary programs essential to avoid delays, unnecessary costs and expected roll-out.

      • Programs are a complex of (sub)goals, policies, rules and other elements necessary for the course of action e.g. obtaining ISO certification.

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    Types of plans cont d3

    Types of Plans (cont’d)

    • Budgets

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

      • Budgets enforce precision in thinking:

        • Making a budget is ‘planning’ by itself;

        • Encourages innovation – a “different” way to work

      • Budgets serve for ‘Control’:

        • Enforces discipline in execution of plans;

        • Instills cost consciousness;

        • Makes people (constantly) plan!

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    Steps in planning

    Being aware of

    challenges

    Setting Goals/

    Objectives

    Planning premises

    Identifying

    alternatives

    Market, Customer’s

    wants, Competition,

    Own strengths

    & weakness

    What to accomplish

    & when

    Internal & external

    Environment/conditions

    Formulating

    Supporting

    plans

    Budgeting

    (Numberizing Plans)

    Comparing &

    choosing an

    alternative

    e.g., Sales budget

    Operational Expense budget,

    Capital expenditure budget

    e.g., plan to buy

    Equipment, recruit & train

    Employees, develop product etc

    Decision

    making

    Steps in Planning

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    The planning process

    The Planning Process

    • Planning Period:

      • Short range plans e.g. material procurement plan in a factory

      • Long range plans e.g. product development plan, plant/production facility installation;

      • “Urgent” drives out the “Important” – mismatch between short & long term plans!

    • Planning horizon must allow for actions to run their course – requiring ‘commitments’:

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

      • Long-term plans reap benefits of good short-term plans.

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    Steps in planning1

    Steps in Planning

    Being aware of

    Opportunity

    Setting Goals/

    Objectives

    Considering, Market,

    Competition, Customer’s

    wants, Own strengths

    &weakness

    What to accomplish

    & when

    Objective = Important end towards which activities

    are directed; therefore needs verification at the end

    of the plan period.

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    Hierarchy of objectives org levels

    Mission

    Overall

    Objectives &

    Key result areas.

    Divisional objectives

    Departmental objectives

    Individual objectives

    Hierarchy of Objectives& Org. Levels

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

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    Hierarchy of objectives org levels ctd

    Hierarchy of Objectives& Org. Levels …ctd.

    • The Organizational Objectives is deployed into the objectives of :

      • Divisions Departments  Individual objectives;

      • The ‘cascade’ principle: seamless flow;

    • Mutual support & interlocking of goals is essential

      • Managers must ensure that the components of the network fit each other;

      • Departments/divisions can be ‘blind-sided’.

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    Hierarchy of objectives org levels ctd1

    Top-down

    Approach

    Mission

    Overall

    Objectives &

    Key result areas.

    Bottom-up

    Response:

    The result

    Divisional objectives

    Departmental objectives

    Individual objectives

    Hierarchy of Objectives& Org. Levels …ctd.

    While setting Objectives, ideally, Top Management should get information / ‘buy-in’ from lower levels to set realistic goals for a good result.

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    Key result areas kra

    Key Result Areas (KRA)

    • Are areas in which performance is essential for the success of an enterprise

    • Examples of ‘generic KRA’s:

      • Market share

      • Return on Investment (ROI)

      • Service level

      • Customer satisfaction

    • Peter Drucker recommends: Market standing, innovation, productivity, physical & financial resource, profitability, managerial performance & development, worker performance & attitude and public responsibility.

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    Management by objectives mbo

    Management By Objectives (MBO)

    • A comprehensive managerial system that integrates many key managerial activities in a systematic manner and that is consciously directed towards the effective and efficient achievement of organizations’ and individual objectives:

      • Set-out by Peter Drucker in 1954;

      • Integrated to personal performance appraisal by Douglas McGregor in 1957;

      • Has formed the basis for many theories on motivation;

      • Has been criticized for introducing a short-term focus and undesirable behaviour;

      • Currently viewed as a ‘way of managing’ – not a specific tool.

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    Weaknesses of mbo

    Weaknesses of MBO

    • Emphasis on:

      • short term at the expense of long term

      • “Results” over “Process”

      • Individual over collective effort

    • Failure to grasp and deploy the concept of “seamless cascade”

    • Difficulty in setting agreed, harmonized goals

    • Danger of inflexibility

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    Planning premises strategies

    Planning Premises & Strategies

    Setting Goals/

    Objectives

    Planning premises

    Identifying

    alternatives

    Comparing &

    choosing an

    alternative

    What to accomplish

    & when

    Decision

    making

    Internal & external

    environment

    Strategic Planning Process

    Strategy= determination of the purpose / the basic long-term

    objectives; the adoption of courses of action and

    allocation of resources required to achieve the aims.

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    Planning premises strategies ctd

    Stakeholder

    Wishes &

    Shareholder

    demands

    Current

    External

    situation

    External

    Opportunity

    & Threat

    Forecast

    External

    situation

    Management

    Orientation

    Enterprise

    Profile

    Key success factors &

    Alternative Strategies

    Purpose &

    Major objectives

    of enterprise

    Current

    resource

    situation

    Internal

    Strengths &

    Weakness

    Strategic

    choice

    Planning Premises & Strategies …ctd.

    The Strategic Planning Process

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    Planning premises

    Planning Premises

    Porter’s Five Forces : an

    Model for analysis of the

    Externals environment.

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    Planning premises forecast of demand

    Planning Premises: forecast of demand

    • Estimate of future demand is made by qualitative methods, time-series methods and/or causal methods:

      • Qualitative relies on judgement of experts to translate to quantities;

      • Time-series  statistically interpolate demand on historical data;

      • Causal method  seek co-relation on cause and effect basis between two (or more) variables to quantify demand;

      • However, all forecasting methods are limited by:

        • Handling of un-quantifiable factors e.g. national pride

        • Unrealistic assumptions fuelled by a desire to succeed

        • Excessive data required (often unobtainable) to make accurate forecasts

        • Uncertainty with environmental changes: Technology, Govt. Policy, International alignments, New materials/sources, Climate etc.

      • Coping with uncertainties require:

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

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

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    Generic strategy

    Customer

    Relationship

    Company

    B’marking

    Partnering

    Supplier

    Competitor

    Lean Management

    Generic Strategy

    • Competitive Advantage

    • Cost Leadership:

    • To continually work reducing

    • the cost prices of products.

    • Supplier Q-C-D has very high

    • priority.

    • Differentiation:

    • To constantly offer innovative

    • and unique solutions. Supplier

    • technology & quality has focus.

    • Customization:

    • To offer required services in the

    • required manner is the focus.

    • Speed and flexibility important.

    Ultimate competitive position:

    - position w.r.t major Customers

    - K.S.Fs of Competitors

    - leveraging of suppliers

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    Generic strategy bcg matrix red marketing perspective blue financial perspective

    Cash Source

    Hi

    Lo

    Hi

    Hi

    STAR

    ???

    “Hold”

    “Build”

    Market Growth rate

    Cash Use

    Cash Cow

    DOGS

    “Divest”

    “Harvest”

    Lo

    Lo

    Lo

    Hi

    Relative Market Share

    Generic Strategy: BCG MatrixRed: Marketing Perspective; Blue: Financial Perspective

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    Planning premises strategies ctd1

    Comparing &

    choosing an

    alternative

    Decision

    making

    Deployment (MBO etc.)

    Formulating

    Supporting

    plans

    Budgeting

    ( Numberizing Plans)

    Say, Sales budget

    Operational Expense budget,

    Capital expenditure budget

    Say, plan to buy

    Equipment, recruit & train

    Employees, develop product etc

    Planning Premises & Strategies …ctd.

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

    does not come into being unless a ‘decision’ i.e. certain

    commitments of resources, managerial time and money

    are made and risks are taken.

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

    “Analysis Paralysis”.

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    Decision making

    Decision Making

    • Decision making is a ‘rational choice’ process, bounded by:

      • Limitations: time, information and ‘logic’;

      • Behaviour: Risk averseness and biases.

    • A key step in the process is to identify those limiting factors, ‘road-blocks’ to each effective (‘right thing’) alternative – then finding a ‘solution’ with least sacrifice of resources (‘thing right’):

      • Factors: quantitative, qualitative/intangible;

      • Finding solutions:

        • marginal analyses – benefits with incremental inputs;

        • cost-effectiveness – assessment of benefits over costs.

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    Decision making ctd

    “Experience”: good teacher and useful when

    routine/repeat situations arise under similar

    circumstances. Without due analysis of the

    conditions, mistakes tend to repeat or a poor

    fit results.

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

    understanding the problem (‘half the solution’!),

    then finding relations between various factors

    which hinder or foster goal attainment. This is a

    structured, analytical approach quantitative or

    otherwise.

    “Experimentation”: arguably, the best technique

    to use, particularly when either experience or

    rationale is lacking/limited. However is expensive

    and ‘success/failures’ are magnified, results are

    subject to interpretational errors.

    Decision Making…ctd.

    How to select

    Amongst the

    Alternatives ?

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    Decision making ctd1

    Decision Making…ctd.

    • Decision making takes place under varying degrees of uncertain conditions and risks. Techniques used to aid the process are:

      • Risk analysis: every decision is based on interactions amongst different factors/variables – each of which have their own probabilities (towards ‘success’). Analysis of these probabilities yield a risk profile for each alternative path. In the absence of defined probabilities, estimates can be used.

      • Decision trees: the outcome (measure pre-decided e.g. cost or time) of every step in the decision is charted and a course selected on the most favourable outcome. Very much like making a trip, navigating by using a road-map (refer example in W & K, “Management – a global perspective/10th edn. Pg. 209)

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    Decision making ctd2

    Decision Making…ctd.

    • Flow Charts: as a process-guide to taking a decision and helps as a check-list of key variables, the sequence in which they fall and the interrelations. Key to making a choice or re-examining the path taken are also indicated as risk-reduction devices.

      (refer example in W & K, “Management – a global perspective/10th edn. Figure 8-5)

    • Decision Support Systems: a wide variety of (proprietary) computer based programs are available for managers to use their time more effectively for decision making of semi-structured tasks – by providing alternative evaluations. They focus on the process of decision making, taking data provide by the management information systems in enterprises.

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    Management definitions roles skills

    Principles of Management 4

    Management Process:

    Organizing for results

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    Nature of organizing

    Nature of Organizing

    • Organizing may be broadly defined as:

      • The identification and classification of required activities;

      • The grouping of those activities towards attaining their set objectives;

      • The assignment of those groupings to a responsible manager, duly empowered;

      • The provision for coordination among, within and across the groups in the organization.

    • Organization structures are designed to:

      • Clarify tasks & responsibilities,

      • Remove obstacles,

      • Furnish decision making & communication network

      • Support attainment of enterprise objectives

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    Nature of organizing ctd

    Firm Infrastructure

    Human Resource Management

    Margin

    Support Activities

    Technology Development

    Procurement

    Inbound

    Logistics

    Outbound

    Logistics

    Marketing

    & Sales

    Operations

    Service

    Margin

    Primary Activities

    Nature of Organizing …ctd.

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

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

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


    Nature of organizing ctd1

    Nature of Organizing …ctd.

    The Value Chain: “Primary Activities”

    • Inbound Logistics:relate to receiving, storing and disseminating inputs;

    • Operations:associated with transformation of inputs into final product form;

    • Outbound Logistics:relate to collecting, storing and physically distributing the products to buyers;

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

    • Service:associated with enhancement or maintenance of product value over life;

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    Nature of organizing ctd2

    Nature of Organizing …ctd.

    The Value Chain: “Support Activities”

    • Procurement: relates to the function of purchasing inputs used across the firm’s primary and support activities;

    • Technology Development: relates to know-how, processes & procedures, ‘technology’ embodied in the product design and delivery. Most activities have their own sub-set of technology;

    • Human Resource Management: directed at recruiting, training, developing and compensating all personnel;

    • Firm Infrastructure: associated with serving and supporting the firm as a whole, with the company as its customer eg. Finance & accounting, Quality;

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    Nature of organizing ctd3

    Nature of Organizing …ctd.

    • Most practicing mangers would translate this “value chain” to imply an organization as:

      “ a formalized, intentional structure of roles and positions”

      • Thus ‘formal organization’ implies the intentional structure of roles in an enterprise.

      • However, in an enterprise ‘informal organization’ will form, not necessarily bad and is:

        “ a network of personal and social relations not established or required by formal organizations but arising spontaneously as people associate with each other”.

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    Nature of organizing ctd4

    Hierarchical levels

    #

    #

    $

    $

    $

    #

    Span of control

    # Office Bridge Team

    $ Car pool

    #

    Nature of Organizing …ctd.

    The building block of an organization

    is the Department: a group charged

    with independent task & responsibility.

    #

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    Nature of organizing ctd departmentation

    Nature of Organizing …ctd.“Departmentation”

    • Grouping activities & people into departments makes it conceptually possible to expand organizations to an infinite degree.

    • Different patterns have been successfully used to group activities:

      • By simple nos. is a simple method – works well for the lowest levels where work is routine, uniform and non-specialized; time-grouping is an extension of this method where shift-working is required;

      • By enterprise functions – embodies what enterprises typically do e.g. Production, Engineering, Sales etc. This method, defined by F.W.Taylor, is arguably the most prevalent method still used.

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    Departmentation ctd

    “Departmentation” …ctd.

    • By territory or geography – is very common when the geographical spread is wide. It was a device introduced to speed up management in similar units for easy and swift communication e.g. Sales: N/E/W/S; Fire Brigade: Camp, Hinjewadi, Aundh etc.

    • By Customer/Account orientation – reflecting the primary interest in nature of markets/business/customer e.g. Banks: Institutional banking, Small Savings etc.

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

    • By Product Lines – has evolved with enterprises becoming “multi-line” with ‘function’ needing adaptation/integration to suit specific products e.g. Tata Motors: Passenger Vehicles / Commercial vehicles

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    Departmentation ctd1

    “Departmentation” …ctd.

    • By ‘grid’ control – in essence combining the ‘functional’ and the ‘product-line’ patterns to best effect. Functional excellence is not subjugated to Operational ease. In ‘projects’, this serves to bring together the diversity of skills required into one team.

    • The Strategic Business Unit: companies today are organizing themselves as ‘companies within a company’ to allow for maximum flexibility and freedom of operations, especially when the products/businesses are unconnected e.g. General Electric. Generally, SBU’s have:

      • Their own Missions, Goals and Strategies;

      • Distinct and definable set of competitors;

      • Deploy and manage resources in key areas;

      • A reasonable ‘size’.

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    Management definitions roles skills

    “Departmentation” …ctd.

    Example of “Grid Control” & S.B.U’s

    C.E.O

    Qual.

    HRM

    BU 1

    BU 2

    Finance

    G/H.R

    G/H.R

    I.R.M

    I.S.O

    Plant 1

    Ind.

    Recr.

    Sin.

    T&D

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    Management definitions roles skills

    Nature of Organizing …ctd.

    Span-of-Management

    • The purpose of organizing is to make human cooperation effective and is limited by:

      • the number of persons a manager can ‘supervise’ effectively and efficiently;

      • while the total number is dictated by the quantum of work/ nature of task/spread etc. Thus the two dimensions, “Level” (depth) and “Span of control” (width) are interrelated .

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

        • Training/skill of subordinates and personal contact required;

        • Clarity of delegation of authority;

        • Clarity of plans, use of objective standards and communication techniques;

        • Rate of change;

        • Maturity and experience of the manager and organization.

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    Management definitions roles skills

    Span-of-Management …ctd.

    • Levels, per se, are not desireable:

      • They are expensive – as they increase, both infrastructure costs and staffing tends to increase;

      • Real work is accomplished at the ‘gemba’ (Japanese: workplace) where the actual value-addition/transformation takes place. The contribution of levels on top are not directly co- relatable, thus best avoided;

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

      • Planning and control become tortuous, requiring complicated coordination and alignment between levels.

    • Studies reveal that between 8 to 10 people at ‘higher’ levels and upto 15 at lower levels is a good “span”. Increasingly, enterprises are attempting to cut back levels to 5 or less.

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    Management principles

    Management Principles

    • Developed by Henri Fayol: 

      1. DIVISION OF WORK: Work should be divided among individuals and groups to ensure  that effort and attention are focused on special portions of the task. Fayol presented work specialization as the best way to use the human resources of the organization.

      2. AUTHORITY: The concepts of Authority and responsibility are closely related. Authority was defined by Fayol as the right to give orders and the power to exact obedience. Responsibility involves being accountable, and is therefore naturally associated with authority. Whoever assumes authority also assumes responsibility.                                                              

      3. DISCIPLINE: A successful organization requires the common effort of workers. Penalties should be applied judiciously to encourage this common effort.

      4. UNITY OF COMMAND: Workers should receive orders from only one manager.

      5. UNITY OF DIRECTION: The entire organization should be moving towards a common objective in a common direction.

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    Management principles ctd

    Management Principles (ctd)

    6. SUBORDINATION OF INDIVIDUAL INTERESTS TO THE GENERAL INTERESTS: The interests of one person should not take priority over the interests of the organization as a whole.

    7. REMUNERATION: Many variables, such as cost of living, supply of qualified personnel, general business conditions, and success of the business, should be considered in determining a worker’s rate of pay.

    8. CENTRALIZATION: Fayol defined centralization as lowering the importance of the subordinate role. Decentralization is increasing the importance. The degree to which centralization or decentralization should be adopted depends on the specific organization in which the manager is working.

    9. SCALAR CHAIN: Managers in hierarchies are part of a chain like authority scale. Each manager, from the first line supervisor to the president, possess certain amounts of authority. The President possesses the most authority; the first line supervisor the least. Lower level managers should always keep upper level managers informed of their work activities. The existence of a scalar chain and adherence to it are necessary if the organization is to be successful.                                                                                                    

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    Management principles ctd1

    Management Principles (ctd)

    10. ORDER: For the sake of efficiency and coordination, all materials and people related to a specific kind of work should be treated as equally as possible.                                                                          

    11. EQUITY: All employees should be treated as equally as possible.

    12. STABILITY OF TENURE OF PERSONNEL: Retaining productive employees should always be a high priority of management. Recruitment and Selection Costs, as well as increased product-reject rates are usually associated with hiring new workers.

    13. INITIATIVE: Management should take steps to encourage worker initiative, which is defined as new or additional work activity undertaken through self direction.                                                    

    14. ESPIRIT DE CORPS: Management should encourage harmony and general good feelings among employees.

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