Principles for Management homework

Principles of Management

STUDY GUIDE v2.0

PRINCIPLES OF MANAGEMENT

Message to Student

Dear Kaplan Student,

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entrusting your educational investment with us.

It is Kaplan Singapore’s and the School of

Diploma Studies’ mission as your ‘private

education institution of choice’ to commit to

providing a fulfilling student journey and learning

experience for your development. The underlying

goal of Kaplan Singapore is to ensure that our

students are able to respond the demands of the

globalised economy set against a highly uncertain

and complex environment.

In the 21st Century it is important that your

educational experience provides with you with the

skills and competencies on HOW to think and not

just WHAT to think.

As such, the Kaplan Diplomas, which have a long

history of being recognised as equivalent to the

first year or more of undergraduate studies in high-

quality international universities, aim to prepare you

for work, further study, and lifelong learning.

“I encourage you to be an active learner, questioning and extending what you know in order to become a contributing participant

in the modern global economy.”

Your role as a Kaplan student is to participate, think

deeply on a topic and work with other students

and your Lecturers to broaden your knowledge. I

encourage you to be an active learner, questioning

and extending what you know in order to become

a contributing participant in the modern global

economy.

However, only you can embody these attributes. You

are the major determinant of your own academic

success and as adult learners you will receive both

the freedom and responsibility this entails. With that,

I wish you well in your learning and look forward to

seeing you succeed.

Krishna Rajulu

Academic Dean, Kaplan Singapore

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Kaplan Desired Graduate Attributes

Through the reading of this module, Kaplan

Singapore intends to:

• Instill in students the value of lifelong and self-

directed learning by stimulating intellectual

curiosity, creative and critical thinking and an

awareness of cultural diversity;

• Assist students in developing professional

attributes, ethical values, social skills and

strategies that will nurture success in both their

professional and personal lives;

• Foster integrity, commitment, responsibility and a

sense of service to the community;

• Prepare students to meet the ever-changing

needs of their communities both now and in the

future; and

• Promote innovative and effective teaching.

Culminating from these institutional values and

educational goals, Kaplan Singapore’s Desired

Graduate Attributes are:

Inquiry and criticality: Graduates will be able to

critically collect, evaluate and apply information and

data in order to make decisions in a wide variety of

professional situations. This attribute is demonstrated

when students:

• Undertake, evaluate and apply appropriate

research, theories, concepts and tools to

investigate problems and find solutions;

• Exercise critical thinking and independent

judgement to assess situations and determine

solutions; and

• Have an informed respect for the principles,

methods, values and boundaries of their profession

and the capacity to question these.

Ethicality and discernment: Graduates will be able to

assess situations and respond in an ethically, socially

and professionally responsible manner. This attributed

is demonstrated when students:

• Act responsibly, ethically and with integrity in their

profession;

• Hold personal values and beliefs and participate

in the broad discussion of these values and beliefs

while respecting the views of others;

• Understand the broad local and global economic,

political, social and environmental systems and

their impact as appropriate to their discipline and

profession; and

• Acknowledge personal responsibility for their own

judgments and behaviour

Ability to communicate well: Graduates will

recognise the importance and value of communication

in the learning and professional environment. This

attributed is demonstrated when students:

• Create and present knowledge, arguments and

ideas confidently and effectively using a variety of

methods and technologies;

• Recognise the wide range of possible audiences

for information and respond with communication

strategies appropriate to those audiences; and

• Work collaboratively with people from diverse

backgrounds and be aware of the different roles

of team members and to function within that team.

Independent and reflective practitioner

• Graduates will be able to work independently and

be self-directed learners with the capacity and

motivation for continued professional learning and

development; and

• They will be able to critically reflect on their own

practice and evaluate and understand current

capacity and further development needs

Embedded within the desired graduate attributes are

the following skills:

• Conduct research.

• Analyse, organise and present data and

information.

• Think and read critically.

• Make an oral presentation.

• Intellectual curiosity and awareness of culture and

diversity.

• Develop professional ethos and practice that will

foster success in career and life.

• Meet the ever changing needs of communities

now and in the future.

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Table of Contents

Message to Student i

Kaplan Desired Graduate Attributes ii

Table of Contents iii

About this module iv

Instructions to Students v

Scheme of Work vi

Assessment Matters viii

Topic 1

Overview and Evolution of Management 1

Topic 2

Managing the Environment of Business 9

Topic 3

Implementing Ethics and Corporate Social Responsibility 19

Topic 4

Planning & Decision-Making Strategies 29

Topic 5

Creating a Corporate Culture and Change 36

Topic 6

Designing Organizational Structures 45

Topic 7

Managing Human Resources and Employee Diversity 55

Topic 8

Leading and Motivating Employees 65

Topic 9

Managing & Leading Teams 75

Topic 10

Monitoring and Controlling 85

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About this module

Management is the study of how organisations set in place people, structures, and processes to utilise resources efficiently and effectively to accomplish desired goals and objectives. This is particularly important as competition, globalisation, and demographic and cultural changes become more prevalent. As future managers, students need to be able to carry out the four primary functions of planning, organising, leading and controlling.

In this module, students will examine how organisations function, as well as, managers’ decision-making in order lead and motivate their teams toward achieving organisational goals in a range of industries such as Accounting/Banking/ Finance, Business Management/Marketing, Logistics, Human Resources, Hospitality/ Tourism/Events, Legal, Communications/Media, Information Technology, Health Services, and Sports Science.

Module Learning Outcomes

Upon successful completion of this module, the

student should be able to:

• Explain the roles and functions of a manager in relation to the achievement of organisational

goals.

• Analyse the internal and external environments of a business for the purpose of informed

decision-making.

• Explain the importance of ethics and corporate social responsibility in management.

• Explain the roles of systems and processes in the organisational control.

• Explain the effectiveness of a leader’s skill in change management, decision-making and

motivating employees and teams.

• Develop strategic plans, along with associated organisational culture and structure, that are

aligned to achieving organisational goals

Overview of Learning Resources

Recommended reading:

Gomez-Mejia, L & Balkin, D. (2011) Management:

International Edition. Pearson Education Inc.

Robbins, P. S., & DeCenzo, A. D., & Coulter, M.

(2011). Fundamentals of Management: Global

Edition. Pearson Education Inc.

Bartol, K., & Tein, M., & Metthews, G., & Sharma,

B,. & Scott-Ladd, B. (2011). Management: A

Pacific Rim Focus 6e. Australia. McGraw Hill Pty

Ltd

Other sources:

See Proquest and Newslink databases linked

to your Elearn LMS homepage. The National

Library Board on North Bridge Road (databases

are for Singaporean/PR only)

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Instructions to Students

How to use this study guide

This study guide consists of written notes that

form the main treatise of the subject matter of

this module. You are strongly advised to study

these notes carefully and thoroughly, as well

as, examine the sources that have been cited.

Written quiz and examination will not test beyond

the scope of the contents found in the study guide.

However, in order to fully address the

assessment requirements of the assignment, you

will need to research beyond the confines of the

study guide. Nevertheless, the materials herein

are still a sound basis from which to build the

assignment.

Further supporting materials

The study guide is supplemented by the following:

• Reproduced PowerPoint slides used by the

lecturers

• Activity sheets

PowerPoint Slides

The PowerPoint slides are meant for the lecturers

to signpost the flow of the lesson and for you to

have a visual focus when in class. Outside of

class, they can also serve to help you recall the

activities that took place during the respective

lessons so that you might be reminded of key

learning points.

However, the PowerPoint slides must NOT

replace the need for you to read the written

notes in the study guide. The slides alone are

INSUFFICIENT for you to gain the necessary

understanding of the subject matter. As such,

they will NOT prepare you adequately for the

various summative assessment components.

Activity Sheets

It is imperative that you sincerely attempt all the

activities in class and document your responses

faithfully. These activity sheets are specially

designed to scaffold your learning; working

through the tasks is an integral part of

developing the desired skills.

Also, by making your thinking visible through the

activity sheets, it is then possible for your lecturer

to provide you with growth producing feedback

so that you may improve your performance or

have your doubts clarified.

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Scheme of Work

LESSON TOPICS

1 01 Overview and Evolution of Management

• Tell who managers are and where they work.

• Explain why managers are important to organisations.

• Describe the functions, roles, and skills of managers.

• Develop your skill at being politically aware.

• Describe the factors that are reshaping and redefining the manager’s job.

• Explain the value of studying management.

2 02 Managing the Environment of Business

• Understand what open systems are.

• Comprehend the internal and external environment.

• Why the environment affects organizations.

• Perform PESTEL analysis (external environment).

• Perform Porter’s 5 forces analysis (external environment).

• Perform SWOT analysis (internal and external environment).

3 03 Implementing Ethics and Corporate Social Responsibility

• Understand ethics and business ethics.

• Review ethical issues in business.

• Apply the four key ethical criteria that managers and employees should use

when making business decisions.

• Recognize morally challenging situations where ethical decisions should be

made.

• Identify important categories of stakeholders for approaches to corporate

social responsibility.

• Review benefits and challenges of corporate social responsibility.

4 04 Planning & Decision-Making Strategies

• Analyse the planning process

• Distinguish between formal and informal planning.

• Recognize the features of well-designed objectives.

• Identify the various types of action plans that managers can use to

accomplish stated objectives.

• Utilize the six steps of decision-making

• Apply the criteria of quality and acceptance to a decision.

5 05 Creating a Corporate Culture and Change

• Understand culture and corporate culture and differences of culture

• Explain the three major aspects of organizational culture.

• Identify the process through which it can be developed & sustained.

• Use classification systems to identify various types of organizational culture.

• Identify the sources of resistance to change.

• Understanding the nature of culture and tools for change

6 06 Designing Organizational Structures

• Understand what is organizing.

• Review what is differentiation and integration in organizing.

• Identify the vertical and horizontal dimensions of organizational structure.

• Apply 5 aspects of the vertical dimensions in organizing.

• Apply the three basic approaches – functional, divisional, and matrix to

departmentalization.

• Develop an awareness of strategic events that are likely to trigger a change

in the structure and design of an organization.

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7 Quiz

8 07 Managing Human Resources and Employee Diversity

• Understand what is human resource management (HRM) and its importance

to organisations.

• Understand the role of strategic HR planning as the main purpose of

managing employees.

• Review the six HR tactics of the HRM process.

• Explain the meaning of workforce diversity, its components and benefits of

employee diversity.

• Develop an awareness of the unique perspectives, problems, and issues of

diverse employee groups.

• Describe the various approaches that managers may use in diversity

management initiatives.

9 08 Leading and Motivating Employees

• Distinguish between leaders, leadership and management/leadership.

• Ascertain how leaders use different power bases to exercise influence.

• Apply basic approaches of leadership theories to influence employee

behaviour.

• Understand employee motivation and become aware of the role of needs in

employee motivation.

• Distinguish between intrinsic and extrinsic motivation.

• Apply basic approaches of motivational theories to affect employee

behaviour.

10 Assignment Consultation

11 09 Managing & Leading Teams

• Understand teams and its benefits.

• Identify the different types of teams

• Track the stages of team development that occur over the life of a project and

help the team perform effectively.

• Recognize key roles that team members and team leaders must play to

ensure high performance.

• Master the skills to detect and control team performance problems.

• Review characteristics of effective teams

12 10 Monitoring and Controlling

• Explain the nature and importance of control.

• Distinguish the link between planning and controlling.

• Describe the 4 steps in the control process.

• Understand the role of control in organizations.

• Recognize key common organizational controls.

• Review the characteristics organization controls.

13 Module Consolidation

14

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Assessment Matters

Assessment Overview

Assessment 1: Quiz

Weightage: 20% (40 marks)

Duration: 1.5 hours

Date: Lesson 7

Format: 20 MCQ & 2 Short Structured Questions

Assessment 2: Individual Assignment

Weightage: 40% (80 marks)

Word Limit: 2000 words

Date: Lesson 11

Citation Format: APA

References: You are required to consult and

correctly reference a MINIMUM of 10 different

sources of information.

Assessment 3: Examination

Weightage: 40% (80 marks)

Duration: 2 hours

Date: To be advised

Format: 8 Structured Questions

Important Policies

Penalties for Plagiarism

Plagiarism in any form is not tolerated by

Kaplan Singapore. That said, direct quotations

and general similarities of common terms and

language mean the E-Learn LMS will often pick

up every small similarity so the likelihood of a

Turnitin Similarity report recording a result of 0%

is unrealistic. After all, no technology is perfect

and there is the need for some direct quotation

(provided you reference using APA guidelines,

of course) and to use commonly accepted terms

and language.

TOP TIP:

The surest way to succeed is to ensure all work

is correctly referenced. Keep a copy of the

Kaplan Singapore Academic Works and

APA Guide handy when you are typing your

assignments and use it to guide you as to

correct referencing, citation and other aspects of

academic writing.

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Penalties for late submissions

Kaplan Singapore prepares students for the

realities of the workforce and further education by

requiring students to meet deadlines and submit

all work on time. As such, students are required

to seek approval and penalties will be imposed

on late assignment submissions in accordance

with the table below and cited in the Programme

Handbook:

No of days late Penalty

1 – 5 days 10% deduction per day from the

marks attained by students.

After 5 days Assignments that are submitted

more than 5 days after the due

date will not be accepted and it

will be deemed as “No Submis-

sion”. Student will be required to

re-module.

Assignments and Kaplan Learning Management

System

Kaplan Singapore School of Diploma

Studies requires you to submit Assignments

through the Learning Management System (E-

Learn LMS). When submitted, your

assignment is checked for plagiarism by

software called Turnitin linked to the E-Learn

LMS. The software is intended to provide one

more tool to improve the quality of academic

writing and as such will be compulsory for use.

It is important to note that this is merely one of

many tools available to you and that final

decisions about the quality of your work rest

with your lecturer.

Assigment Submission: How to Use E-Learn

LMS for Assignment Submission

1. You will be enrolled by the School of

Diploma Studies Programme Management

into the E-Learn LMS system only after your

fee payment is confirmed.

2. You will be sent your USER NAME and

PASSWORD via email.

3. Reset your password as prompted.

4. Enter the site at the following address:

https://elearn-diploma.kaplan.com.sg

5. To submit assignment please refer to the

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Please refer to your Student Handbook for more

details on Penalties for Plagiarism, Misconduct,

Examinations Rules and Regulations. Should

you have any queries, please contact

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Topic 01 – Overview and Evolution of Management

Lesson Learning Outcomes

• Tell who managers are and where they work.

• Explain why managers are important to organizations.

• Describe the functions, roles, and skills of managers.

• Develop your skill at being politically aware.

• Describe the factors that are reshaping and redefining the manager’s job.

• Explain the value of studying management.

Guiding Questions

• Who are managers and why are they important in organizations?

• What are organizations and why managing them is important?

Who is a Manager and what are their levels?

Managers run large corporations, medium‐sized businesses, and entrepreneurial start‐ups.

They are found in government departments, hospitals, small businesses, not‐for‐profit

agencies, museums, schools etc. A manager is someone who coordinates and oversees the

work of other people so that organizational goals can be accomplished. (Robbins & Coulter,

2017).

Every organization must have 3 levels of manager, which are:

1. Strategic Managers – Top level managers, responsible for making organization‐wide

decisions and establishing the plans and goals that affect the entire organization.

They typically have titles such as CEO, CFO, President, Vice‐president, Managing

Director etc. (Gomez‐Mejia & Balkin, 2012).

2. Tactical Managers ‐ Middle level managers responsible the work of operational

managers and can be found between the lowest and top levels of the organization.

They may have titles such as R&D manager, Purchasing manager, Engineering

manager, Manufacturing manager, Marketing manager, Finance manager, Regional

manager, or Division manager (Gomez‐Mejia & Balkin, 2012).

3. Operational Managers ‐ Lower level of managers who manage the work of non‐

managerial employees who typically are involved with producing the organization’s

products or servicing the organization’s customers. Operational managers may be

called Supervisors or even Shift managers, or Office managers (Gomez‐Mejia &

Balkin, 2012).

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What is an Organization and its characteristics?

An organization is a social unit of people that is structured and managed to meet a need or

to pursue collective goals. All organizations have a management structure that determines

relationships between the different activities and the members, and subdivides and assigns

roles, responsibilities, and authority to carry out different tasks (Webfinance, 2018).

There are 3 characteristics of an organization:

1. Purpose ‐ Have a distinct purpose, i.e. goals or objectives to be achieved

2. People ‐ Are composed of people, i.e. managers and employees (non‐managers)

3. Structure – Have a deliberate structure, i.e. organised in terms of roles and responsibilities (Emaze Presentations, 2018)

What is Management and what does success mean to an organization?

Management is the process of working with and through others to effectively achieve the

goals of the organization, so that they can be successful year after year (Management Study

Guide, 2018).

To be successful, every organizations must be:

1. Efficient ‐ Efficiency means doing things right. Efficiency refers to getting the most

output from the least amount of inputs or resources. Managers deal with scarce

resources—including people, money, and equipment—and must use those resources

efficiently (Robbins & Coulter, 2017).

2. Effective ‐ Effectiveness is often described as “doing the right things,” that is, doing

those work activities that will result in achieving goals. For example, achieving a

company’s product quality or service quality (Robbins & Coulter, 2017).

Four Management Functions – based on Henri Fayol

Henri Fayol, a French businessman, proposed organizations perform 4 functions, i.e.

planning, organizing, leading, and controlling to be efficient and effective

1. Planning ‐ Planning is deciding in advance ‐ what to do, when to do & how to do. It

bridges the gap from where we are & where we want to be. A plan is a future course

of actions. It is an exercise in problem solving & decision making for an

organization’s future (Management Study Guide, 2018).

2. Organising ‐ It is the process of bringing together physical, financial and human

resources for achievement of organizational goals. To organize a business is to provide it with everything useful or its functioning i.e. raw material, tools, capital and personnel’s (Management Study Guide, 2018).

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3. Leading ‐ Leading is personnel aspect of management which deals directly with

influencing, guiding, supervising, motivating subordinates for the achievement of

organizational goals defined in planning (Management Study Guide, 2018).

4. Controlling ‐ Controlling is the measurement of performance activities of

subordinates or the entire organization in order to make sure that the organizations

are always on the right tract in achieving goals (Management Study Guide, 2018).

Managerial Roles – based on Henry Mintzberg

Henry Mintzberg identified three major roles that managers need to perform:

Thus, a successful manager must be able to perform the 3 managerial roles, i.e.

interpersonal, informational and decisional in order to perform the 4 managerial functions

effectively, i.e. planning, organising, leading and controlling (Gomez‐Mejia & Balkin, 2012).

Managerial Skills ‐ – based on Robert Katz

In order to perform the 4 functions of management, Robert Katz identified 3 managerial

skills that are essential to successful management:

1. Technical skills ‐ give the manager’s knowledge and ability to use different

techniques to achieve what they want to achieve. Technical skills are not related

only for machines, production tools or other equipment, but also, they are skills that

will be required to increase sales, design different types of products and services,

market the products and services, etc. (ManagementMania, 2016).

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2. Conceptual Skills – Skills that managers can predict the future of the business or department as a whole. The conceptual skills will help managers to look outside their department’s goals. So, they will make decisions that will satisfy overall business goals (ManagementMania, 2016).

3. Human Skills ‐ Human or interpersonal management skills present a manager’s

knowledge and ability to work with people. One of the most critical management tasks is to work with people. Without people, there will not be a need for the existence of management and managers (ManagementMania, 2016).

Managerial Skills needed for managers

The 3 skills needed by managers differ based on management levels as follows:

Technical skills ‐ More important, particularly for operational managers (Sutevski, 2018). As

we go through from the bottom to higher levels, the technical skills lose their importance.

Conceptual skills ‐ competencies with a substantial importance, particularly for strategic

managers (Sutevski, 2018). As we go from a bottom to the top, the importance of these

skills will rise.

Human skills ‐ competencies needed for all levels of management because communications

occur between all management levels and also stakeholders internally and externally

(Sutevski, 2018).

Employee’s Role in Management

The role of employee in management is to be an active contributor rather than a passive employee. The following are qualities of an active employee (Bateman et al. 2018).

1. Be both a specialist and generalist. A specialist means employee must be an expert

in something. A generalist is to know enough about a variety of business or technical

disciplines so that employee can understand and work with different perspectives.

2. Be self‐reliant. Take full responsibility, actions, and career 3. Actively manage relationship with employer and organization.

4. Survive and thrive. Execute action plans and take responsibility for decisions

Employee to Supervisor to Manager – Why study management

The reason for studying management is the reality that for most of you, once you graduate

from the diploma program and begin your career, you will either manage or be managed.

For those who plan to be managers, an understanding of management forms the

foundation upon which to build your management knowledge and skills (Robbins & Coulter,

2017).

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Universal Need for Management

Effective management is universally needed in all organizations, therefore it’s important to

find ways to improve the way organizations are managed. Why? Because we interact with

organizations every single day (Bayt, 2018).

Changes and Challenges facing Managers

There are many challenges to being a manager. It can be a tough and often thankless job.

The following are some changes and challenges facing managers:

1. Managing change –Change can occur in an organization in many ways – strategic,

leadership, or technological changes. Ultimately, people fear the unknown. Setting a

standard for change early on and maintaining consistency can help create a more

adaptable and innovative workplace (Clear Spider, 2018).

2. Customer service ‐ Without customers, most organizations would cease to exist.

Consistent, high‐quality customer service is essential for organizations to maintain

and keep customer’s buying organizations products and services (Robbins & Coulter,

2017).

3. Ethics ‐ The reputation of a business in the surrounding community, other businesses

and individual investors is paramount in determining whether a company is a

worthwhile investment. If a company is perceived to not operate ethically, investors

are less inclined to buy stock or otherwise support its operations (Melissa, 2018).

4. Technology ‐ Managers must get employees on board with new technology. In

recent years, companies are seeing change management play an important role

during the implementation of new technology in order to remain competitive in the

marketplace (Smith, 2018).

5. Social media ‐ Today, the new frontier is social media, forms of electronic communication through which users create online communities to share ideas, information, personal messages, and other content. That’s why managers need to understand and manage the power and peril of social media (Smith, 2018).

6. Sustainability ‐ From a business perspective, sustainability has been defined as a

company’s ability to achieve its business goals and increase long‐term shareholder

value by integrating economic, environmental, and social opportunities into its

business strategies (Robbins & Coulter, 2017).

7. Employee ‐ Progressive companies recognize the importance of treating employees

well not only because it’s simply the right thing to do, but also because it is good

business. Well‐treated employees are more likely to go the extra mile when

performing their job (Smith, 2018).

8. Competition ‐ Many factors and forces, including technical, social, economic and

generational changes, can create competition and cause disruption (Robbins &

Coulter, 2017). Thus, it will be essential for any company to create a competitive

advantage as all company’s do have competitors. 5 ways companies can create a

competitive advantage are; innovation, quality, service, speed and cost

competitiveness (discussed in the next section).

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Managing for a Competitive Advantage

Five (5) ways companies can manage a competitive advantage:

1. Innovation keeps you ahead of competitors. Innovation is the introduction of new

goods and services. Innovation comes from people; it must be a strategic goal; and

managed properly.(Bateman et al. 2018).

2. Quality is the excellence of a product, including its attractiveness, lack of defects,

reliability, and long‐term dependability, performance, conformance to standards,

durability, and aesthetics.(Bateman et al. 2018).

3. Service means giving customers what they want or need, when they want it. An

important dimension of service quality is making it easy and enjoyable for customers

to experience a service or to buy and use products.(Bateman et al. 2018).

4. Speed involves rapid execution, response, and delivery of results. It often separates

the winners from the losers. For some companies, speed is a strategic imperative

(Bateman et al. 2018).

5. Cost competitiveness ‐ Costs that need to be managed carefully Eg. Raw material,

Equipment, Capital, Manufacturing, Marketing, Delivery, Labour etc. (Bateman et al.

2018).

Evolution of Management – (History of Management)

Management evaluated based on the timeline as explained below:

Classical Approach ‐ Late 1800s to early 1900s

Frederick W. Taylor defined the scientific method to determine the “one best way” for a job to be done. Taylor’s work in improving efficiency (Gomez‐Mejia & Balkin, 2012). Taylor created a mental revolution among both workers and managers by defining clear guidelines for improving production efficiency.

Henri Fayol was the managing director of a large French coal‐mining firm. Fayol focused on

activities common to all managers. He stated 14 principles of management to manage

companies to complete tasks (Gomez‐Mejia & Balkin, 2012).

Max Weber was a German sociologist developed a theory of authority structures and described organizational activity based on authority relations (Gomez‐Mejia & Balkin, 2012). He described organization as a bureaucracy of division of labour, a clearly defined hierarchy, detailed rules and regulations for organizations to succeed.

Behavioral Approach ‐ 1900‐1930s

The Hawthorne Studies conducted at Western Electric Co. by Harvard professor Elton Mayo and his associates looked at redesigning jobs by making changes in workday and workweek length, introduce rest periods, etc. (Bateman et al. 2018). The conclusion was that social norms or group standards were key determinants to improve individual work behaviour.

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Systems (Quantitative) Approach ‐ 1940s – 1950s

1940s ‐ The quantitative approach to management sometimes known as operations

research. This approach includes applications of statistics, optimization models, information

models, and computer simulations. Ford Motors in the mid‐1940s used quantitative

methods to improve decision making (Gomez‐Mejia & Balkin, 2012).

1950s ‐ Total Quality Management (TQM) is a philosophy of management that is driven by continual improvement and response to customer needs and expectations. TQM was inspired by W. Edwards Deming. (Bateman et al. 2018) TQM represents the basic way to increase quality in products and work processes.

Contingency (Contemporary) Approach – 1960s – 1990s

1960s ‐ The contingency approach recognizes that different organizations require different ways of managing. The contingency approach to management is a view that the organization recognizes and responds to situational variables as they arise and organizations adapting to the environment (Gomez‐Mejia & Balkin, 2012).

1980s and beyond ‐ Technology and information are the obvious drivers for management

change today (Bateman et al. 2018). From wired to wireless, the impact of computing

resources has changed how managers and employees relate to each other and to the

organization.

Beyond 2000s

The Modular Organization – Organizations that concentrate what they are good at doing

(core competence) and functions that are not considered crucial are outsourced or

contracted to an independent organization (Bateman et al. 2018).

The Intangible Organization ‐ Businesses are shifting their resources from tangible to

intangible investments. In this new organization, ideas, information, and relationships are

valued more than production machinery, physical products, and structured jobs (Bateman

et al. 2018).

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Reference List

Bateman, T., Snell, S. and Konopaske, R. (2018). M: Management. (5th ed.). New York:

McGraw‐Hill Education.

Bayt. (2018). Explain the universality of management concept. Does it still hold true in

today’s world? Why or why not? Retrieved from: https://www.bayt.com/en/specialties/q/83381/explain‐the‐universality‐of‐ management‐concept‐does‐it‐still‐hold‐true‐in‐today‐s‐world‐why‐or‐why‐not/

Clear Spider. (2018). Understanding the Importance of Change Management. Retrieved

from: https://www.clearspider.com/blog‐importance‐change‐management/

Emaze Presentations. (2018). Common characteristics of organizations. Retrieved from:

https://www.emaze.com/@ATQFQRZO/Untitled

Gomez‐Mejia, L. R. and Balkin, D.B. (2012). Management– People, Performance, Change.

New Jersey: Pearson Education.

ManagementMania. (2016). Managerial skills according to Katz. Retrieved from:

https://managementmania.com/en/managerial‐skills‐according‐to‐katz

Management Study Guide. (2018). What is Management?. Retrieved from:

https://www.managementstudyguide.com/what_is_management.htm

Melissa, H. (2018). Why is business ethics important? Retrieved from:

https://www.investopedia.com/ask/answers/040815/why‐are‐business‐ethics‐

important.asp

Robbins, S.P. and Coulter, M.A. (2017). Management, Global Edition. (14th ed.). New Jersey:

Pearson Education.

Smith, S. (2018). The Biggest Threats To Your Business. Retrieved from:

https://www.forbes.com/sites/forbescommunicationscouncil/2018/02/26/the‐ biggest‐

threats‐to‐your‐business/#42bcabe94b85

Sutevski, D. (2018). Managerial Skills – 3 Types of Skills Each Manager Will Need. Retrieved

from: https://www.entrepreneurshipinabox.com/202/managerial‐skills/

Webfinance Inc. (2018). Organization definition. Retrieved from:

http://www.businessdictionary.com/definition/organization.html

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Topic 02 – Managing the Environment of Business

Lesson Learning Outcomes

• Understand what open systems are.

• Comprehend the internal and external environment.

• Why the environment affects organizations.

• Perform PESTEL analysis (external environment).

• Perform Porter’s 5 forces analysis (external environment).

• Perform SWOT analysis (internal and external environment).

Guiding Questions

• What is the external environment and it affects an organization?

• How can an organization conduct an analysis on the external environment?

Open systems theory

Open systems theory is a way of thinking about dynamic systems, or systems that interact

with their environments. All businesses are dynamic systems, evolving and changing in

response to feedback. Open systems theory is useful for businesses because it provides a

framework for thinking about processes such as change — a regular part of running a

business (Gartenstein, 2017).

(Bateman et al. 2018).

All organizations are open systems because:

1. Receive financial, human, material and information resources etc. from the

environment, called inputs

2. Transform or process the resources from the inputs through their employees into

finished goods and services

3. Send outputs back into the environment, i.e. customer buying an organization’s products and services.

(Bateman et al. 2018).

When input resources change, environment influences the organization and when outputs

differ, organization influences the environment. Thus, it is very important for companies to

analyse the environment where they operate.

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Tools for analysing the environment.

3 common tools that organization may use to analyse the external environment are:

1. PESTEL analysis

2. Porter’s 5 forces

3. SWOT analysis

1. PESTEL Analysis

PESTEL stands for:

• Political

• Economic

• Social

• Technological

• Environmental

• Legal

Political Factors:

These factors are all about how and to what degree a government intervenes in the

economy or a certain industry. Basically, all the influences that a government has on your

business could be classified here. This can include government policy, political stability or

instability, corruption, foreign trade policy, tax policy, labour law, environmental law and

trade restrictions. Furthermore, the government may have a profound impact on a nation’s

education system, infrastructure and health regulations. These are all factors that need to

be considered when assessing the attractiveness of a potential market (B2U, 2016).

Economic Factors:

Economic factors are determinants of a certain economy’s performance. Factors include

economic growth, exchange rates, inflation rates, interest rates, disposable income of

consumers and unemployment rates. These factors may have a direct or indirect long‐term

impact on a company since it affects the purchasing power of consumers and could possibly

change demand/supply models in the economy. Consequently, it also affects the way

companies price their products and services (B2U, 2016).

Social Factors:

This dimension of the general environment represents the demographic characteristics,

norms, customs and values of the population within which the organization operates. This

includes population trends such as the population growth rate, age distribution, income

distribution, career attitudes, safety emphasis, health consciousness, lifestyle attitudes and

cultural barriers. These factors are especially important for marketers when targeting

certain customers. In addition, it also says something about the local workforce and its

willingness to work under certain conditions (B2U, 2016).

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Technological Factors:

These factors pertain to innovations in technology that may affect the operations of the

industry and the market favourably or unfavourably. This refers to technology incentives,

the level of innovation, automation, research and development (R&D) activity, technological

change and the amount of technological awareness that a market possesses. These factors

may influence decisions to enter or not enter certain industries, to launch or not launch

certain products or to outsource production activities abroad (B2U, 2016).

Environmental Factors:

Environmental factors have come to the forefront only relatively recently. They have

become important due to the increasing scarcity of raw materials, pollution targets and

carbon footprint targets set by governments. These factors include ecological and

environmental aspects such as weather, climate, environmental offsets and climate change

which may especially affect industries such as tourism, farming, agriculture and insurance

(B2U, 2016).

Legal Factors:

Although these factors may have some overlap with the political factors, they include more

specific laws such as discrimination laws, antitrust laws, employment laws, consumer

protection laws, copyright and patent laws, and health and safety laws. It is clear that

companies need to know what is and what is not legal in order to trade successfully and

ethically. If an organization trades globally this becomes especially tricky since each country

has its own set of rules and regulations (B2U, 2016).

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PESTEL Analysis example ‐ Nike

(Allassignmenthelp, n.d.)

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2. Porter’s 5 Forces Analysis

Porter’s Five Forces analysis is a framework that helps analysing the level of competition

within a certain industry. It is especially useful when starting a new business or when

entering a new industry sector. According to this framework, competitiveness does not only

come from competitors (Hanlon, 2018). Competition in an industry depends on five basic

forces:

(Wordpress, 2014)

Competitive rivalry among existing competitors

Competitive rivalry is determined by the number of existing competitors and what each

competitor is capable of doing in the industry. Rivalry is high when there are a lot of

competitors that are roughly equal in size and power, when the industry is growing slowly

and when consumers can easily switch to a competitors offering for little cost. When rivalry

is high, competitors are likely to actively engage in advertising and price wars, which can

hurt a business’s bottom line (B2U, 2016).

Threat of new entrants

Threat of new entrants in an industry bring new capacity and the desire to gain market

share. The seriousness of the threat depends on the barriers to enter a certain industry. The

higher these barriers to entry, the smaller the threat for existing players. Examples of

barriers to entry are the need for economies of scale, high customer loyalty for existing

brands, large capital requirements (e.g. large investments in marketing or R&D), the need

for cumulative experience, government policies, and limited access to distribution channels

(B2U, 2016).

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Threat of substitute products or services

Threat of substitutes are similar products or services that are branded differently by

competitors. Instead, every product that serves a similar need for customers should be

taken into account. Energy drink like Redbull for instance is usually not considered a

competitor of coffee brands such as Nespresso or Starbucks. However, since both coffee

and energy drink fulfil a similar need (i.e. staying awake/getting energy), customers might

be willing to switch from one to another if they feel that prices increase too much in either

coffee or energy drinks (B2U, 2016).

Bargaining power of suppliers

This force analyses how much power and control a company’s supplier (also known as the

market of inputs) has over the potential to raise its prices or to reduce the quality of

purchased goods or services, which in turn would lower an industry’s profitability potential.

The concentration of suppliers and the availability of substitute suppliers are important

factors in determining supplier power. The fewer there are, the more power they have.

Businesses are in a better position when there are a multitude of suppliers. Sources of

supplier power also include the switching costs of companies in the industry (B2U, 2016).

Bargaining power of customers

This force analyses to what extent the customers are able to put the company under

pressure, which also affects the customer’s sensitivity to price changes. The customers have

a lot of power when there aren’t many of them and when the customers have many

alternatives to buy from. Moreover, it should be easy for them to switch from one company

to another. Buying power is low however when customers purchase products in small

amounts, act independently and when the seller’s product is very different from any of its

competitors (B2U, 2016).

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Porter’s Five Forces example ‐ Nike

(Shazeeye, 2016)

Nike's 5 forces show that overall, it's an attractive industry for Nike with three of the five

forces in favour for Nike ‐ supplier power, threat of new entrants and buyer power.

3. SWOT Analysis

Strengths

Strengths describe the positive attributes, tangible and intangible, internal to your

organization. They are within your control. What do you do well? What resources do you

have? What advantages do you have over your competition?

Strengths also include tangible assets such as available capital, equipment, established

customers, information and processing systems, and other valuable resources within the

organization.

Strengths capture the positive aspects internal to your business that add value. This is your

opportunity to remind yourself and your team of the value existing within your organization

(Godwin, 2014).

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Weaknesses

Weaknesses are factors that are within your control that detract from your ability to obtain or maintain a competitive edge. Which areas might you improve? What do we not do well?

Weaknesses might include lack of expertise, limited resources, lack of access to skills or technology, inferior service, or the poor location of your offices. These are factors that are under your control, but for a variety of reasons, are in need of improvement to effectively accomplish your objectives.

Weaknesses capture the negative aspects internal to your organization that detract from

the value you offer or place you at a competitive disadvantage. These are areas you need to

enhance in order to improve your performance. The more accurately you identify your

weaknesses, the more valuable the SWOT will be for your assessment (Godwin, 2014).

Opportunities

Opportunities assess the external attractive factors that represent the reason for your

organization to exist. These are external to your organization. What opportunities exist in

your customer base, work processes, or in the environment, from which you hope to gain

benefit?

These opportunities reflect the potential you can realize through implementing your

strategies. Opportunities may be the result of customer need, growth, resolution of

problems associated with current situations, perceptions about your organization, or the

ability to offer greater value that will create a demand for your services. If it is relevant,

place timeframes around the opportunities. Does it represent an ongoing opportunity, or is

it a window of opportunity? How critical is your timing?

Opportunities are external to your business. If you have identified “opportunities” that are

internal to the organization and within your control, you will want to classify them as

strengths (Godwin, 2014).

Threats

What factors are potential threats or vulnerability to your organization? Threats include

factors beyond your control that could place your strategy, or the organization itself, at risk.

These are also external – you have no control over them, but you may benefit by having

contingency plans to address them if they should occur. In Florida, natural disasters always

make our list.

A threat is a challenge created by an unfavourable trend or development that may lead to

decreased performance. Competition – existing or potential – is always a threat. Other

threats may include intolerable price increases by suppliers, regulations, economic

downturns, devastating media coverage, a shift in consumer behaviour, or the introduction

of a technology that may make your products, equipment, or services obsolete. What

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situations might threaten your efforts? Get your worst fears on the table. Part of this list may be speculative in nature, and still add value to your SWOT analysis.

The better you are at identifying potential threats, the more likely you can position yourself

to proactively plan for and respond to them. You will be looking back at these threats when

you consider your contingency plans (Godwin, 2014).

SWOT Analysis example

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Reference List

Allassignmenthelp. (n.d.) Best and Practical Pestle Analysis Examples to Know. Retrieved

from: https://www.allassignmenthelp.com/blog/5‐best‐and‐practical‐pestle‐ analysis‐

examples‐to‐know/#PAE2

B2U. (2016). Scanning the Environment: PESTEL Analysis. Retrieved from: https://www.business‐

to‐you.com/scanning‐the‐environment‐pestel‐analysis/

Bateman, T., Snell, S. and Konopaske, R. (2018). M: Management. (5th ed.). New York:

McGraw‐Hill Education.

Gartenstein, D. (2017). Open Systems Theory in Business. Retrieved from:

https://bizfluent.com/info‐8039547‐open‐systems‐theory‐business.html

Godwin, C. (2014). Determine Your Position (SWOT Analysis). Retrieved from:

https://ileadiserve.wordpress.com/2014/05/01/ileadiserve‐determine‐your‐ position‐swot‐

analysis/

Hanlon, A. (2018). How to use Porter’s five Forces. Retrieved from:

https://www.smartinsights.com/marketing‐planning/marketing‐models/porters‐ five‐

forces/

Shazeeye. (2016). Useful framework to drive your business strategy. Retrieved from:

http://shazeeye.com/useful‐frameworks‐to‐drive‐your‐business‐strategy‐part‐2‐of‐2

Wordpress. (2014). Flat design: porter’s five forces. Retrieved from:

http://www.audioslavemusic.com/28853/18/admin/porters‐five‐forces‐ template.html/flat‐porters‐five‐forces‐powerpoint‐template‐slidemodel‐inside‐ porter039s‐ five‐forces‐template

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Topic 03 – Implementing Ethics and Corporate Social Responsibility

Lesson Learning Outcomes

• Understand ethics and business ethics.

• Review ethical issues in business.

• Apply the four key ethical criteria that managers and employees should use when

making business decisions.

• Recognize morally challenging situations where ethical decisions should be made.

• Identify important categories of stakeholders for approaches to corporate social

responsibility.

• Review benefits and challenges of corporate social responsibility.

Guiding Questions

• What is ethics and CSR and why it is important for an organization?

• How can an organization implement ethics and CSR as part of their business

processes.

Ethics & Business Ethics

Ethics are the principles that explain what is good and right and what is bad and wrong and that prescribe a code of behaviour based in these definitions.

Ethics help us to decide what is ‘right’ or ‘wrong’ in a particular social context according to a

specific moral code

1. Absolute right and wrongs (Absolutists) 2. Ethical positions depend on the circumstances, the culture, the consequences of the

action and so on (Relativists)

Ethics operate as rules or principles that guide individuals’ conduct

Business ethics are standards or guidelines for the conduct and decision making of

employees and managers. Codes of ethics encourage consensus on ethical principles.

Unethical conduct can occur between an employer and employee, company and customer,

company and shareholder, and company and community (Gomez‐Mejia & Balkin, 2012).

Ethical Issues in Business

1. The story of Enron Corp. is the story of a company that reached dramatic heights,

only to face a dizzying fall. Its collapse affected thousands of employees and shook

Wall Street to its core. At Enron's peak, its shares were worth $90.75; when it

declared bankruptcy on December 2, 2001, they were trading at $0.26. To this day,

many wonder how such a powerful business, at the time one of the largest

companies in the U.S, disintegrated almost overnight and how it managed to fool

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the regulators with fake holdings and off‐the‐books accounting for so long (Segal, 2018).

2. Sixteen infants in China’s Gansu Province were diagnosed with kidney stones. All of

them had been fed milk powder that was later found to have been adulterated with

a toxic industrial compound called melamine. Four months later, an estimated

300,000 babies in China were sick from the contaminated milk, and the kidney

damage led to six fatalities. The Sanlu Group, one of the largest dairy producers in

China, was identified as the chief culprit. But as the scandal unfolded, more Chinese

dairy firms became implicated (Huang, 2014).

3. Nike is one of the business world’s shining examples of how to clean up an image: In

the 1990s, the company was plagued by reports that it used sweatshops and child

labor. Pressure grew until 1998, when Nike cofounder Phil Knight publicly committed

to changing the company’s practices, and Nike spent the next decade doing just that

(Bain, 2017).

4. “Right now, millions of mice, rats, rabbits, primates, cats, dogs, and other animals

are locked inside cold, barren cages in laboratories across the country. They languish

in pain, ache with loneliness, and long to roam free and use their minds. Instead, all

they can do is sit and wait in fear of the next terrifying and painful procedure that

will be performed on them.” – PETA (Caffeine and Fairydust, 2014).

Ethics Approaches

There are 4 approaches that may guide companies in ethical decision making:

1. Utilitarianism

Decisions are made solely on the basis of their outcomes or consequences. Business

mainly follows utilitarianism because it is consistent with maximising business goals,

i.e. efficiencies, productivity, and profits. Managers who use utilitarianism make

decisions based on what is good for the greatest number of people (Gomez‐Mejia &

Balkin, 2012).

An example of act utilitarianism is a pharmaceutical company releasing a drug that has been governmentally approved with known side effects because the drug is able to help more people than are bothered by the minor side effects. Act utilitarianism often shows “the end justifies the means” mentality (Futureofworking, n.d.).

The main limitation to utilitarian ethics is that it is difficult to achieve in the

workplace. People are taught to focus on self before others, making it difficult to

practice utilitarianism. However, with hard work and perseverance, you can create

the type of work atmosphere that you desire for yourself and those around you

(Futureofworking, n.d.).

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2. Individualism

Managers who use individualism believe that personal self‐interests should be promoted as long as they do not harm others.

This approach values personal goals, autonomy, and privacy over group loyalty,

commitment to group norms, involvement in collective activities, social

cohesiveness, and intense socialization (Gomez‐Mejia & Balkin, 2012).

Individualism considers personal benefit to be the most important factor when

making a decision. For example, a company that promotes individualism might

encourage employees to secure personal benefit by finding ways to outperform co‐

workers (Mack, 2018).

3. Rights Approach

Rights ‐ Decisions are concerned with respecting and protecting individual liberties

and privileges. Managers who use the rights approach believe that fundamental

human rights including freedom of speech, privacy, and due process when charged

should be respected and protected (Gomez‐Mejia & Balkin, 2012).

For example, along with the radical development of globalization and outsourcing,

multinational corporates in developed countries integrated and transformed the

production from homeland to developing countries with lower production cost. Nike

and child labour in Pakistan has been considered as the remarked case, which

manager of Nike or local contractors in developing countries seriously violate local

country's law and challenge society norms and moral (UKEssays, 2018).

4. Justice Approach

Justice ‐ Decision makers seek to impose and enforce rules fairly and impartially and

do so by following legal rules and regulations. Managers who use the justice

approach make decisions with the goal of treating all people fairly and consistently.

a. Distributive justice examines the fairness of rewards, punishments, and outcomes in an organization

b. Procedural justice involves the fair and consistent application of rules and procedures.

(Mejia & Balkin, 2011).

Justice becomes a legal issue if it involves people's civil rights, physical or sexual

harassment and other incidents of illegal discrimination. For example, the financial

accounting cheating and dishonesty Enron, considered as unfair and unethical

behaviour, makes Enron take the advantages beyond other companies (UKEssays,

2018).

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In conclusion, utilitarianism and individualism concentrate on the positive result for the

whole society and self‐interests. However, moral‐rights and justice view incline to focus on

the equality, freedom and fairness during the process of action.

Business Transmission of Ethics

1. Codes of Ethics ‐ Companies can create a standardized approach to ethics via a code

of ethics which is a statement of ethics and values that is designed to guide

employee conduct in a variety of business situations (Davidpol, n.d.)

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2. Corporate Credos ‐ A corporate credo is a formal statement focusing on principles

and beliefs, indicating the company’s responsibility to its stakeholders. It provides

direction in ethically challenging situations.

(Johnson & Johnson, 1943).

3. Ethical Policy Statements ‐ Ethical policy statements are formal guidelines that

provide specific formulas for employees’ ethical conduct.

(SHRM, 2014).

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Managing Ethics

Some organizations try to influence the way employees behave by establishing a corporate culture that emphasizes ethical behaviour.

1. Ethics training is a means of providing employees and managers practice in handling

ethical dilemmas that they are likely to experience.

2. Ethical Structures ‐ The procedures and the division or department within a company

that promotes and advocates ethical behaviour is known as ethical structure.

Organizations can implement the approach through ethics officers or ethics

committees.

3. Whistleblower policies encourage employees to disclose illegal, immoral, or

illegitimate practices by their employers by protecting the individuals from

retaliation by executives or co‐workers whose practices have been exposed.

(Mejia & Balkin, 2011).

It is important to allow time to reflect on alternative actions when faced with an ethical dilemma. It can be helpful to get feedback from a trusted friend or colleague before acting.

Corporate Social Responsibility

Corporate Social Responsibility (CSR) is the continuing commitment by business to behave

ethically and contribute to economic development while improving the quality of life of the

workforce and their families as well as of the local community and society at large.

Edward Freeman’s stakeholders approach suggest the issue of stakeholder identification,

the interplay between the different stakeholders, and the dynamic relationship between

specific stakeholders and particular areas of the corporation, are of paramount importance

for the application of the stakeholder approach to business in deciding CSR.

Business Stakeholders: Internal and External

A stakeholder is an individual or group that has a legitimate interest in a company.

Internal stakeholders are entities within a business (e.g., employees, managers, the board of

directors, investors). Employees want to earn money and stay employed. Owners are

interested in maximizing the profit the business makes. Investors are concerned about

earning income from their investment (Lumen, 2018).

External stakeholders are entities not within a business itself but who care about or are

affected by its performance (e.g., consumers, regulators, investors, suppliers). The

government wants the business to pay taxes, employ more people, follow laws, and

truthfully report its financial conditions. Customers want the business to provide high‐

quality goods or services at low cost. Suppliers want the business to continue to purchase

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from them. Creditors want to be repaid on time and in full. The community wants the business to contribute positively to its local environment and population (Lumen, 2018).

Benefits of CSR

Corporate Social Responsibility has many benefits that can be applied to any business, in any region, and at a minimal cost.

1. Improved financial performance: A recent longitudinal Harvard University study has

found that “stakeholder balanced” companies showed four times the growth rate

and eight times employment growth when compared to companies that focused

only on shareholders and profit maximization.

2. Enhanced brand image & reputation: A company considered socially responsible can

benefit ‐both by its enhanced reputation with the public, as well as its reputation

within the business community, increasing a company’s ability to attract capital and

trading partners. For example, a 1997 study by two Boston College management

professors found that excellent employee, customer and community relations are

more important than strong shareholder returns in earning corporations a place an

Fortune magazine’s annual “Most Admired Companies” list.

3. Increased sales and customer loyalty: A number of studies have suggested a large

and growing market for the products and services of companies perceived to be

socially responsible. While businesses must first satisfy customers’ key buying

criteria – such as price, quality, appearance, taste, availability, safety and

convenience.

4. Increased ability to attract and retain employees: Companies perceived to have

strong CSR commitments often find it easier to recruit employees, particularly in

tight labour markets. Retention levels may be higher too, resulting in a reduction in

turnover and associated recruitment and training costs. Tight labor markets as well

the trend toward multiple jobs for shorter periods of time are challenging companies

to develop ways to generate a return on the consideration resources invested in

recruiting, hiring, and training.

5. Easier access to capital: The Social Investment Forum reports that, in the U.S. in

1999, there is more than $2 trillion in assets under management in portfolios that

use screens linked to ethics, the environment, and corporate social responsibility. It

is clear that companies addressing ethical, social, and environmental responsibilities

have rapidly growing access to capital that might not otherwise have been available.

(A Z Global Group Company, 2018)

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Challenges of CSR

1. It requires higher costs: One known disadvantage of CSR policy is that its costs

generally fall disproportionally, especially on small companies. While big

corporations are able to afford allocating a budget to CSR reporting, smaller

businesses that employ between 10 and 200 employees usually face difficulties with

such investment.

2. It can create shareholder resistance: While some investors do seek to acquire stocks

in companies that are socially responsible, most of them would make such an

investment with the expectations of turning a profit. Also, while some companies

have generated substantial profit from corporate social responsibility, others that

adopted such a policy often prove as likely to lose money.

3. It promotes greenwashing: According to some critics, corporate social responsibility

can be a practice that will result in futility, arguing that it can lead to greenwashing.

Greenwashing is the practice of making an unsubstantiated or misleading claim

about the environmental benefits of a product, service, technology or company

practice. Greenwashing can make a company appear to be more environmentally

friendly than it really is.

(Lombardo, 2016)

Approaches to CSR

1. Confrontation ‐ When stakeholders are perceived to be a threat to company

performance, the organization may choose to use a confrontation strategy in which

the firm uses the courts, engages in public regulations, or lobbies against legislation.

2. Damage Control ‐ Companies use a damage control strategy when they decide they

have made mistakes and want to improve relationships with stakeholders and raise

their public image.

3. Accommodation ‐ When managers decide to accept social responsibility for business

decisions after facing pressure by stakeholders they are using the accommodation

strategy.

4. Proactive ‐ When a firm decides to go beyond stakeholder expectations it is using a

proactive strategy. Under the strategy the firm forms a partnership with

stakeholders that allow the firm to predict and control the stakeholder environment.

(Bateman et al. 2018).

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Reference List

A Z Global Group Company. (2018). Benefits of CSR. Retrieved from:

http://one4allcsr.com/csr‐consultants/benefits‐of‐csr/

Bain, M. (2017). Nike is facing a new wave of anti‐sweatshop protests. Retrieved from:

https://qz.com/1042298/nike‐is‐facing‐a‐new‐wave‐of‐anti‐sweatshop‐protests/

Bateman, T., Snell, S. and Konopaske, R. (2018). M: Management. (5th ed.). New York:

McGraw‐Hill Education.

Caffeine and Fairydust. (2014). Animal Testing – Does The Cost To The Animal Justify The

Research? Make An Informed Decision. Retrieved from:

https://caffeineandfairydust.wordpress.com/2014/11/08/animal‐testing‐does‐the‐

cost‐to‐the‐animal‐justify‐the‐research‐make‐an‐informed‐decision/

Davidpol. (n.d.). Principles of Nursing Practice. Retrieved from:

https://www.cheatography.com/davidpol/cheat‐sheets/principles‐of‐nursing‐

practice/

Futureofworking. (n.d.). Workplace Example of Utilitarianism Ethics. Retrieved from:

https://futureofworking.com/workplace‐example‐of‐utilitarianism‐ethics/

Gomez‐Mejia, L. R. and Balkin, D.B. (2012). Management– People, Performance, Change.

New Jersey: Pearson Education.

Huang, Y. Z. (2014). The 2008 Milk Scandal Revisited. Retrieved from:

https://www.forbes.com/sites/yanzhonghuang/2014/07/16/the‐2008‐milk‐scandal‐

revisited/#2f1e41e54105

Johnson & Johnson. (1943). Johnson & Johnson, Our Story. Retrieved from:

https://ourstory.jnj.com/our‐credo

Lumen. (2018). Business Stakeholders: Internal and External. Retrieved from:

https://courses.lumenlearning.com/boundless‐accounting/chapter/overview‐of‐key‐

elements‐of‐the‐business/

Lombardo, C. (2016). Pros and Cons of Corporate Social Responsibility. Retrieved from:

http://visionlaunch.com/pros‐and‐cons‐of‐corporate‐social‐responsibility/

Mack, S. (2018). Individualism and Ethical Decision Making. Retrieved from:

https://smallbusiness.chron.com/individualism‐ethical‐decision‐making‐56240.html

Segal, T. (2018). Enron Scandal: The Fall of a Wall Street Darling. Retrieved from:

https://www.investopedia.com/updates/enron‐scandal‐summary

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SHRM. (2014). Code of Ethics Policy Statement. Retrieved from:

https://www.shrm.org/resourcesandtools/tools‐and‐

samples/policies/pages/cms_000585

UKEssays. (2018). Evaluation of Four Views of Ethical Behavior. Retrieved from:

https://www.ukessays.com/essays/business/evaluation‐of‐four‐views‐of‐ethical‐ behavior‐

business‐essay.php

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Topic 04 – Planning & Decision Making Strategies

Lesson Learning Outcomes

• Analyse the planning process

• Distinguish between formal and informal planning.

• Recognize the features of well‐designed objectives.

• Identify the various types of action plans that managers can use to accomplish stated objectives.

• Utilize the six steps of decision‐making

• Apply the criteria of quality and acceptance to a decision.

Guiding Questions

• What is planning and how can organizations formulate their plans?

• How can an organizations make informed decision making?

Formal Planning and Opportunistic Planning

There are two types of planning that can coexist in an organization and make the planning

process more successful.

1. Formal planning is designed to identify objectives and structure the major tasks of

the organization to accomplish them.

2. Opportunistic planning involves programmatic actions triggered by unforeseen

circumstances.

Firms that over‐rely on formal planning can become too rigid, while firms that emphasize

opportunistic planning will be constantly reacting to external forces and lack a clear sense of

direction (Gomez‐Mejia & Balkin, 2012).

Key Elements to a Plan

There are four elements to a plan

1. Objectives – goals or targets the firms wants to reach within a stated period of time.

2. Actions – specific steps the firm intends to take to achieve the desired objectives.

3. Resources – resource allocation determines where the resources will come from and

how the resources will be deployed to achieved objectives.

4. Implementation – implementation guidelines show how the intended actions will be

carried out. (Slideplayer, 2018)

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1. Objectives

• Objectives are more general at the top and become more specific at the lower level

• Overall objectives of the organization reflect its mission

• Objectives should be defined in terms of :

Specific state exactly what the company want to achieve (Who, what, where, why)

Measurable how will the company demonstrate and evaluate the extent to which the goal has been met

Attainable Stretch the challenging goals within the ability to achieve company outcome. What is the action‐oriented verb

Relevant How does the goal tie into the company’s key responsibilities? How is it aligned to objectives

Time‐bound Set 1 or more target dates, by when the company intend to achieve successful and timely completion of the goals (include specific deadline)

(Gravalese, 2018)

A common planning technique for firms is Management by Objectives (MBO) which allows firms to combine planning and control.

A typical MBO cycle has four steps.

1. Establish mutually agreed upon objectives between employee and supervisor.

2. Develop action plan to accomplish objectives.

3. Monitor progress toward achievement of objectives.

4. Formally evaluate the extent to which objectives were met or exceeded.

Feedback for an MBO cycle comes in a performance appraisal form. MBO can encourage

managers to select easier‐to‐reach targets and discourage decisions to change priorities

even when change makes sense. MBO can also encourage unethical behaviour as

employees try to reach challenging targets. Successful MBO systems are flexible and allow

for subjective judgments as to whether a target has been met (Gomez‐Mejia & Balkin,

2012).

2. Actions

Strategic plan and sets specific long‐term actions and plans, usually by company strategic

managers. The tactical planning horizon is shorter than the strategic plan horizon. If the

strategic plan is for five years, tactical plans might be for a period of one to three years, or

even less, depending on what kind of market the business serves and the pace of change.

Operational plans are much shorter than tactical with a smaller scope of the organization

(Gomez‐Mejia & Balkin, 2012).

Strategic action plans – establish long‐term corporate‐wide action programs to accomplish

stated objectives to accomplish the company’s mission.

Effective strategic action plans should meet the following criteria

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• Proactivity – the degree to which the strategic action plan takes a long‐term view

of the future and actively moves the company in the desired direction.

• Congruency‐ the extent to which the strategic action plan fits with organizational

characteristics and the external environment.

• Synergy – the integration of the efforts of various organizational subunits to better accomplish corporate‐wide business objectives.

(Gomez‐Mejia & Balkin, 2012).

Tactical action plan – specify the activities that must be performed, when they must be

completed, and the resources a division or department will need to complete the portions

of the strategic action plan under its purview (Gomez‐Mejia & Balkin, 2012).

Two important aspects of tactical action are:

• Division of labour – the formal assignment of authority and responsibility to job holders

• Budgeting – controlling and allocating the firm’s funds.

Operational action plan – created by managers and employees directly responsible for

carrying out certain tasks or activities. The main challenge of operational planning is using

resources efficiently. Operational planning gives firms the opportunity to use feedback for

continued learning, the ability to visualize alternative ways to use resources to create a

product or service, the ability to predict the effects of modifications on the efficiency of the

operations, and the ability to evaluate the effectiveness of operations (Gomez‐Mejia &

Balkin, 2012).

3. Resources

Resource allocation involves determining the following to be allocated at company level or

department level or individual level in organizations if needed:

1. Financial – Monies if needed

2. People – employees if needed

3. Equipment / Tools . Machineries

4. Implementation

Implementation involves defining tasks to be accomplished, assigning individual

responsibilities for the tasks, and managing individuals to ensure that the tasks are

completed. The means of implementation – inducing people to take the necessary steps to

accomplish actions. Firms can use four approaches

• Authority – formal power. • Persuasion – convince employees of the merits of a plan.

• Policy ‐ define appropriate and inappropriate behaviour.

• Feedback – determines the extent to which a plan is being carried out as expected.

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Decision Making

Managers today operate in a world filled with risk and uncertainty. The decisions they make will contribute the success or failure of their organization.

Decision making is the process of identifying problems and opportunities and resolving them.

Stages of Decision Making ‐ When abundant information is available to decision makers,

they can use a rational process to make decisions. The decision making process involves six

steps:

Steps of Decision Making

Step 1: Identifying and diagnosing the problem or opportunity Step 2: Generating alternative solutions

Step 3: Evaluating alternatives

Step 4: Choosing the best alternative

Step 5: Implementing the decision

Step 6: Evaluating the results

(Wordpress, 2018)

Step 1

Identifying and Diagnosing the Problem or Opportunity ‐ The first step in decision making is identifying and diagnosing a problem (occurs when performance is below expected or desired levels) or an opportunity (a special type of problem that requires the commitment of resources).

To avoid implementing a “wrong” solution, managers need to accurately diagnose problems

before trying to solve them.

(Wordpress, 2018)

Step 2

Generating Alternative Solutions ‐ The second step in the decision making process is generating possible solutions to the problem based on the perceived causes.

This step can involve both programmed solutions and non‐programmed solutions. Many

firms use groups to generate solutions to allow for a broader interpretation of the problem

and generate more innovative solutions.

(Wordpress, 2018)

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Step 3

Evaluating Alternatives ‐ The third stage of decision making involves evaluating alternative solutions using a set of decision criteria.

• Decision quality is based on facts such as costs, revenues, and product design

specifications.

• Decision acceptance is based on people’s feelings. It occurs when people who are

affected by a decision agree with what is to be done.

(Lumen, 2018).

Decisions that require both high acceptance and high quality are the most difficult.

Managers can use a decision tree to evaluate different alternatives.

The decision tree requires a decision to meet three criteria 1. Feasibility – is it practical to make the decision

2. Quality

3. Acceptance

(Lumen, 2018).

Step 4

Choosing the Best Alternative ‐ During the fourth stage of decision making, the best

alternative is selected using either optimizing or satisficing.

• Optimizing involves selecting the best alternative from among multiple criteria.

• Satisficing involves selecting the first alternative solution that meets a minimum criterion. This is used when complete information is not available or is too expensive.

(Lumen, 2018).

Step 5

Implementing the Decision ‐ The fifth step of the decision making process is implementing

the decision. This step requires the support and cooperation of executives, managers, and

employees. To make this stage more successful, organizations can

• Provide the necessary resources.

• Exercise leadership to ensure the process moves forward.

• Develop communication and information systems to provide feedback about

the process.

• Reward individuals who successfully implement the decision.

(Studyguide and strategies, 2017).

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Step 6

Evaluating the results ‐ The final stage of the decision making process involves evaluating

the results. Accurate and timely information and feedback is needed at this stage, and

managers need to allow enough time for the decision to take effect (Desjardins, 2018).

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Reference List

Bateman, T., Snell, S. and Konopaske, R. (2018). M: Management. (5th ed.). New York:

McGraw‐Hill Education.

Desjardins. (2018). Evaluate the results. Retrieved from:

https://www.desjardins.com/ca/business/projects/manage‐business‐ growth/evaluate‐

results/index.jsp

Gomez‐Mejia, L. R. and Balkin, D.B. (2012). Management– People, Performance, Change.

New Jersey: Pearson Education.

Gravalese, S. (2018). Setting S.M.A.R.T. Goals. Retrieved from:

https://firecider.com/blogs/news/setting‐s‐m‐a‐r‐t‐goals

Lumen. (2018). The Consumer Decision Process. Retrieved from:

https://courses.lumenlearning.com/boundless‐marketing/chapter/the‐consumer‐ decision‐

process/

Slideplayer. (2018). Managing the Planning Process. Retrieved from:

https://slideplayer.com/slide/5014492/

Studyguide and strategies. (2017). Implementing decisions. Retrieved from:

http://www.studygs.net/problem/problemsolvingv3.htm

Wordpress. (2018). The Six Step Problem Solving Model. Retrieved from: http://www.free‐

management‐ebooks.com/news/six‐step‐problem‐solving‐model/

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Topic 05 – Creating a Corporate Culture and Change

Lesson Learning Outcomes

• Understand culture and corporate culture and differences of culture

• Explain the three major aspects of organizational culture.

• Identify the process through which it can be developed & sustained.

• Use classification systems to identify various types of organizational culture.

• Identify the sources of resistance to change.

• Understanding the nature of culture and tools for change

Guiding Questions

• What is culture and how organizations create a strong culture?

• How can an organizations make changes if required?

What is culture ?

The attitude, traits and behavioural patterns which govern the way an individual interacts

with others is termed as culture. Culture is something which one inherits from his ancestors

and it helps in distinguishing one individual from the other (Management Study Guide,

2018).

What is organization culture ?

Every human being has certain personality traits which help them stand apart from the

crowd. No two individuals behave in a similar way. In the same way organizations have

certain values, policies, rules and guidelines which help them create an image of their own.

Organization culture refers to the beliefs and principles of a particular organization. The

culture followed by the organization has a deep impact on the employees and their

relationship amongst themselves.

Every organization has a unique culture making it different from the other and giving it a

sense of direction. It is essential for the employees to understand the culture of their

workplace to adjust well (Gomez‐Mejia & Balkin, 2012).

Organization A ‐ In organization A, the employees are not at all disciplined and are least

bothered about the rules and regulations. They reach their office at their own sweet time

and spend their maximum time gossiping and loitering around.

Organization B ‐ This organization follows employee friendly policies and it is mandatory for

all to adhere to them. It is important for the employees to reach their workplace on time

and no one is allowed to unnecessarily roam around or spread rumours.

Which organization do you feel would perform better ? — Obviously organization B

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The employees follow a certain culture in organization B making it more successful than

organization A.

No two organizations can have the same culture. The values or policies of a non‐profit

organization would be different from that of a profit making entity or employees working in

a restaurant would follow a different culture as compared to those associated with

education industry or a manufacturing industry (Gomez‐Mejia & Balkin, 2012).

Broadly there are two types of organization culture:

Strong Organization Culture: Strong organizational culture refers to a situation where the

employees adjust well, respect the organization’s policies and adhere to the guidelines. In

such a culture people enjoy working and take every assignment as a new learning and try to

gain as much as they can. They accept their roles and responsibilities willingly (Management

Study Guide, 2018).

Weak Organization Culture: In such a culture individuals accept their responsibilities out of

fear of superiors and harsh policies. The employees in such a situation do things out of

compulsion. They just treat their organization as a mere source of earning money and never

get attached to it (Management Study Guide, 2018).

3 Aspects of a Company culture

There are three aspects of organizational culture:

Visible culture includes the aspects of culture than an observer can hear, feel, or see.

Espoused values are the aspects of a company’s culture that are not readily observed, but

can be perceived from the way managers explain and justify their actions and decisions.

Core values are a firm’s principles that are widely shared, that operate unconsciously, and

that are considered to be non‐negotiable (Gomez‐Mejia & Balkin, 2012).

Sources of Organizational Culture

It is important for senior level managers to continually assess a company’s culture to ensure that it is not so strong that employees resist change, or that new hires feel like outsiders.

Senior management also needs to ensure that the culture is strong enough that it supports

the firm’s strategic efforts.

The general environment consists of the economic, political, social, and technological

conditions that can affect the management of organizations.

The extent of influence of the general environment is less direct than that of the specific environment but also difficult to predict. Some general environmental factors, such as a

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severe economic recession, can lead to far‐reaching effects on the organization (Gomez‐ Mejia & Balkin, 2012).

The organization culture however will generally stem from the following sources:

• • beliefs, values, and assumptions of founders

• • learning experiences of group members

• • new beliefs, values, and assumptions brought by new members

Organizational culture can be a more important determinant of the commitment and loyalty

of employees than pay, and can be a factor in the overall competitiveness of a company

(Gomez‐Mejia & Balkin, 2012).

Key Effects of Organizational Culture

1. Self‐management ‐ Managers can use organizational culture to encourage

employees to behave in certain ways even in the absence of close supervision or formal control mechanisms. Failure to follow established norms can result in ostracism or ridicule from other employees .

2. Stability ‐ Corporate culture can provide employees with a sense of stability and

continuity in times of rapid change and intense competition. Corporate culture can

also create a common ground that brings people together into a cohesive whole.

3. Socialization ‐ Organizational culture teaches employees how to fit in. Socialization is

the process of internalizing or taking organizational values as one’s own.

4. Implementation of Organizational strategy ‐ Organizational culture may contribute

to firm performance by supporting implementation of the organization’s strategy

and desired changes in that strategy

(Neufeld, 2015).

Tips on Using Organizational Culture as a Business Tool

These are the options available to a manager or HR team to indoctrinate new staff into the

organizations culture. Although all organizations have cultures, they differ on the strength

of their cultures.

Strong cultures are found in organizations where key values are intensely held and widely

shared. Whether an organization’s culture is strong, weak, or somewhere in between will

depend on organizational factors such as size, age, employee turnover rate, and intensity of

original culture (Harrison, 2014).

Most organizations have moderate to strong cultures. There’s high agreement on what is

important, what defines ‘good’ employee behaviour, and so forth.

One study found that employees in firms with strong cultures were more committed to

their firm than employees in firms with weak cultures.

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Organizations with strong cultures also used their recruitment efforts and socialisation

practices to build employee commitment. And an increasing body of research suggests that

strong cultures are associated with high organizational performance (Harrison, 2014).

Managing Cultural Processes

The following are 6 ways in which a company can manage a cultural process:

1. Cultural Symbols ‐ are the icons and objects including flags, uniforms, and logos that

communicate organizational values. Cultural symbols convey and sustain shared

meaning among employees. Dress attire, size of office, company cars, car parking are

all examples of material symbols. They say something about the organization and

the people in it. These material symbols convey to employees, who are important,

what is important, the degree of egalitarianism and the kind of behaviour that is

expected and appropriate. Many employees actually view these material symbols as

something to strive for.

2. Company Rituals and Ceremonies ‐ Companies use ceremonies to convey

organizational values and celebrate outstanding performances. Rituals are repetitive

sequences of activities that express and reinforce the key values of the organization.

These can take many forms including award ceremonies

3. Company Heroes ‐ To encourage certain types of behaviour, companies identify

individuals whose actions and accomplishments represent what the company

believes in. The more heroes a company has the better – it means employees are

‘buying into’ the culture.

4. Stories ‐ The telling of stories and legends can help communicate and reinforce

corporate values. Organizational culture is maintained and reinforced deliberately

through mechanisms including cultural symbols or rituals and ceremonies. It can also

be nurtured unconsciously through stories, language, and perceptions of leadership

style. They may be stories about individuals such as their founders or about

organizational achievements. These stories anchor the present in the past and

provide both legitimacy and explanations for current practice and exemplify what is

important to the organization.

5. Language ‐ encourage both positive and negative values. Firms can also use slogans

to express cultural values. All organizations develop their own ‘language; unique

terms to describe aspects of their business. New employees are usually

overwhelmed by the acronyms and jargon of their new workplace but once

assimilated this language acts to unite people.

6. Leadership ‐ provide daily examples of what is important to the organization, and

articulate a vision that generates excitement and commitment among employees.

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Managing Organizational Change

Organizational change occurs when a company makes a transition from its current state to

some desired future state. Managing organizational change is the process of planning and

implementing change in organizations in such a way as to minimize employee resistance

and cost to the organization while simultaneously maximizing the effectiveness of the

change effort.

Today's business environment requires companies to undergo changes almost constantly if

they are to remain competitive. Factors such as globalization of markets and rapidly

evolving technology force businesses to respond in order to survive. Such changes may be

relatively minor—as in the case of installing a new software program—or quite major—as in

the case of refocusing an overall marketing strategy, fighting off a hostile takeover, or

transforming a company in the face of persistent foreign competition.

Organizational change initiatives often arise out of problems faced by a company. In some

cases, however, companies change under the impetus of enlightened leaders who first

recognize and then exploit new potentials dormant in the organization or its circumstances.

Some observers, more soberly, label this a "performance gap" which able management is

inspired to close.

(Saporito, n.d.).

Types of Change

Change can be planned or unplanned:

• Planned change can be anticipated and advance preparation can take place.

• Unplanned change is not anticipated and does not allow for advanced

preparation.

Some organizations resist the need for either type of change.

There are many causes of change in an organization including environmental forces and

internal forces.

• Environmental forces include relationships with customers, suppliers, and

employees as well as changes in technology, market forces, social trends, and

political and regulatory forces.

• Internal forces originate within the company. They can come from top executives

and work down through an organization or come from front line employees or

labour unions and work up.

(Gomez‐Mejia & Balkin, 2012).

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Resistance to Change

We, as human beings, have always resisted or rejected anything that seems new or

unfamiliar. As a general rule, it is not the proposed changes that people resist, but the

impact that the changes will consequently have on them, personally (VComply, 2018).

Generally, when change occurs, there is some resistance from employees or managers. Resistance to change can occur for several reasons including:

1. Self‐interest – people fear losing something they value.

2. A lack of understanding and trust – employees may not trust or understand the

intention behind a change.

3. Uncertainty – people fear the negative consequences of change. 4. Different perspectives and goals – employees do not like change that could diminish

the welfare of the unit in which they work regardless of whether the change is

beneficial to the company as a whole.

5. Cultures that value tradition – some organizations value traditional ways of doing

things and are not supportive of new ideas.

Firms that can respond to change successfully have a competitive advantage over those that do not

(VComply, 2018).

Overcoming resistance to change

There are two approaches to effectively implement change and handle problems and

resistance:

1. Lewin’s 3 Step Model 2. Force field Analysis Model

Lewin’s 3 Step Model

If you have a large cube of ice but realize that what you want is a cone of ice, what do you

do? First you must melt the ice to make it amenable to change (unfreeze). Then you must

mould the iced water into the shape you want (change). Finally, you must solidify the new

shape (refreeze) (Mindtools, 2018)

Unfreeze, Change, Refreeze

Source: (Mindtools, 2018)

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1. Unfreeze ‐ The ‘Unfreeze’ stage is about creating the motivation to change.

Motivation is intrinsic to an individual. I cannot motivate you. You cannot motivate

me. But I can create the conditions, messages, and environment that may influence

you to want to change. In this stage, Lewin asks us to examine the “way things are

done around here” (assumptions) and challenge the status quo.

2. Change ‐ The 'Change' stage has a focus on the solution ‐ new ways of working. It

begins with new approaches to problems. With new approaches comes new learning

and it takes place here:

• Goals are established.

• Smaller, acceptable changes that reinforce and support change are instituted.

• Management structures are developed.

• Open, two‐way communication (dialogue) is maintained.

This stage requires active stakeholder participation (particularly, with those

impacted by the change).

3. Refreeze ‐ The ‘Refreeze’ stage calls for “institutionalizing” these new ways of acting

and working. New attitudes, values, and behaviours are established as the new

status quo. Staff will begin to feel confident and comfortable in this new world. Until

the next cycle, that is.

(Daniel Lock Consulting, 2017)

Force field Analysis Model

The force‐field analysis model – states that two sets of opposing forces are at equilibrium

before a change takes place and put at disequilibrium to make change come about – the

forces are driving forces (push for change) and restraining forces (oppose change) – for

change to occur, driving forces must be increased, restraining forces must be decreased, or

both (LinkedIn Slideshare, 2018).

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Implementing Organizational Change

There are 3 ways for implementing organizational change:

1. Top‐down change is change that is initiated by managers. This type of change is

common in a crisis.

2. Change agents are people who act as catalysts and manage changes.

3. Bottom‐up change comes from employees. It is slower to implement than top‐down change.

(Bateman et. al. 2018).

Tactics for Introducing Change

There are many tactics to achieve organizational change

1. Communication and education is important so employees understand why the

change is needed.

2. Employee involvement helps people become more committed to change. 3. Negotiation and making concessions could increase the chance that change will be

successful.

4. Firms can use coercion to force employees to change or risk job losses or rewards.

5. Support from top management can be effective in implementing change because it signals that the change is important.

(Bateman et. al. 2018).

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Reference List

Bateman, T., Snell, S. and Konopaske, R. (2018). M: Management. (5th ed.). New York:

McGraw‐Hill Education.

Daniel Lock Consulting. (2017). Kurt Lewin’s Change Model. Retrieved from:

http://daniellock.com/kurt‐lewin‐change‐model/

Gomez‐Mejia, L. R. and Balkin, D.B. (2012). Management– People, Performance, Change.

New Jersey: Pearson Education.

Harrison, K. (2014). 4 Tips To Improve Corporate Culture. Retrieved from:

https://www.forbes.com/sites/kateharrison/2014/08/20/4‐tips‐to‐improve‐ corporate‐

culture/#77254eca78b0

LinkedIn Slideshare. (2018). Solution Validation & Assessments ‐ A practical Approach.

Retrieved from: https://www.slideshare.net/julenmohanty/solution‐validation‐

assessments‐final

Management Study Guide. (2018). Understanding Organization and Organization Culture?.

Retrieved from: https://www.managementstudyguide.com/organization‐ culture.htm

Neufeld, R. (2015). The Benefits of a Strong Corporate Culture. Retrieved from:

https://www.linkedin.com/pulse/benefits‐strong‐corporate‐culture‐rebecca‐neufeld

Saporito, B. (n.d.). Managing Organizational Change. Retrieved from:

https://www.inc.com/encyclopedia/managing‐organizational‐change.html

VComply. (2018). How to Overcome Resistance to Change in Organizations. Retrieved from:

https://blog.v‐comply.com/overcome‐resistance‐change‐organizations/

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Topic 06 – Designing Organizational Structures

Lesson Learning Outcomes

• Understand what is organizing.

• Review what is differentiation and integration in organizing.

• Identify the vertical and horizontal dimensions of organizational structure.

• Apply 5 aspects of the vertical dimensions in organizing.

• Apply the three basic approaches – functional, divisional, and matrix to

departmentalization.

• Develop an awareness of strategic events that are likely to trigger a change in the

structure and design of an organization.

Guiding Questions

• What is organizing and why organizing is important?

• How can an organizations organize themselves in order to achieve goals.

What is organizing ?

Managers need to establish structural designs that will best support and allow employees to

do their work effectively and efficiently. Several important terms must be defined in order

to understand the elements of organizational structure and design.

Organizing ‐ arranging and structuring work to accomplish the organization’s goals. It is the

deployment of resources to achieve strategic goals. It determines how the firm’s resources

are arranged and coordinated. Strategy indicates what needs to be done, while organizing

shows how to do it (Caveo Learning, 2015).

Organizational structure ‐ the formal arrangement of jobs within an organization. It is a

formal system of relationships that determines lines of authority and the tasks assigned to

individuals and units.

1. The division of labour that forms jobs and departments.

2. Formal lines of authority. 3. Mechanisms for coordination.

Businesses need structure in order to function and grow. Without structure, there’s very

little clarity and focus; nobody knows whom to report to and responsibilities are passed

around like a hot potato. Structure is the reason why we refer to businesses as

“organizations.” (Alton, 2017). If your business doesn’t have a formal organizational

structure, you’re asking for trouble. However, the good news is that it’s simpler than ever to

create organizational charts that can be shared and viewed for enhanced clarity throughout

the company. But before you do so, you need to carefully analyse your business and

consider where you stand (Alton, 2017).

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Vertical and Horizontal Dimensions in organizing

Organization needs to be organized based on two dimensions:

• The vertical dimension indicates who has the authority to make decisions and

who is expected to supervise which subordinates.

• The horizontal dimension is the basis for dividing work into specific jobs and

tasks and assigning those jobs into units.

(Gomez‐Mejia & Balkin, 2012).

Vertical Dimension

There are five (5) decisions that companies need to make when organizing in vertical dimensions:

1. Unity of Command

2. Centralisation and Decentralisation

3. Span of control

4. Formalisation

5. Authority, Responsibility and Accountability

1. Unity of Command

Under the unity of command a subordinate has only one direct supervisor. This avoids

conflicting instructions or goals for employees. If the unity of command is to be violated for

some reason, it is important for both managers involved to coordinate goals and priorities.

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This principle advocates that only one boss should give order to an individual so that he can

understand what to do and can perform systematically with greater efficiency. If more than

one boss will instruct an individual, he will certainly get confused about his responsibility

and will not be able to perform even a single activity because he faces the dilemma of

“whom should he follow?” (Pathak, 2018).

2. Centralisation and Decentralisation

Centralization and Decentralization are the two types of structures, that can be found in the

organization, government, management and even in purchasing. Centralization of authority

means the power of planning and decision making are exclusively in the hands of top

management. It alludes to the concentration of all the powers at the apex level.

On the other hand, Decentralization refers to the dissemination of powers by the top management to the middle or low‐level management. It is the delegation of authority, at all the levels of management (Surbhi, 2015). Decentralization has become more popular in recent years because it makes better use of the abilities of managers and allows the firm to better respond to customer needs. This can be more effective in rapidly changing environments. This can spur innovation and risk taking (Bateman et. al. 2018).

3. Span of control

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An organization’s span of control outlines the number of subordinates who report to a

manager, the number of managers, and the layers of management within the organization.

• In firms with many layers, managers usually have small spans of control (and a small

number of subordinates to monitor). This forms a tall organization structure with

many management levels.

• Larger spans of control (and more employees to monitor) are associated with fewer

management levels. This forms a wide organization structure with less management

levels.

(Bateman et. al. 2018).

4. Formalisation

The degree of written documentation that is used to direct and control employees is the level of formalization in an organization.

• In organizations with high formalization employees are provided with documents identifying the “right way” to do things.

• In organizations with low formalization there are few rules and regulations and employees are encouraged to improvise.

(Webster, 2017)

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5. Authority, Responsibility and Accountability

Authority, Responsibility, and Accountability ‐ The formal right of a manager to make decisions, give orders, and expect those orders to be carried out is known as authority.

Authority starts at the top of an organization and flows down. Positions at the top of the

hierarchy have more power than those lower down.

The duty to perform assigned tasks is responsibility. Managers can delegate responsibility to a subordinate.

Accountability means that a manager must be able to justify results to a manager at a higher

level. Firms use performance appraisals to hold managers accountable for the performance

of their units (Vision Consultants, 2015).

There are two types of authority:

• Line authority ‐ the manager’s ability to control subordinates by hiring, discharging,

evaluating, and rewarding them. The relationship between superiors and

subordinates is called the chain of command. Line managers are individuals who

contribute directly to the strategic goals of the organization.

• Staff authority – involves advising, recommending, and counselling line managers.

Staff managers assist line managers in achieving bottom‐line results.

(Naidu, 2011).

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Horizontal Dimension

The Horizontal Dimension of Organization Structure ‐ provides the horizontal basis for organizing job units in an organization.

There are three basic approaches to departmentalization:

1. Functional

2. Divisional

3. Matrix

(Gomez‐Mejia & Balkin, 2012).

1. Functional Structure

Functional Structure ‐ places similar jobs into departments. Employees working in the specific department have clear roles and responsibility. These people are supervised by a functional manager with expertise in the same field. This approach works best in small to medium‐sized companies operating in a stable environment (Usmani, 2018).

This structure is advantageous because decision making is centralised, employees develop

expertise in their areas and not only become more efficient, but they also advance their

professional identity within the business function (Gomez‐Mejia & Balkin, 2012).

Disadvantages of this approach include communications barriers and conflicts between

departments, coordination problems that can result in not meeting the needs of customers,

and identification with unit goals rather than corporate goals or customer needs (Gomez‐

Mejia & Balkin, 2012).

2. Divisional Structure

The divisional approach organizes employees into units based on common products,

services, or markets etc. This approach is used when the firm produces many products or

sells to different types of markets that require specialized knowledge and is best suited to

medium to large‐sized firms with a variety of products in an environment with moderately

high levels of uncertainty (Businessmate, 2010).

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The division approach is advantageous because it allows for coordination among different

business functions, allows for better and faster service, has accountability, and helps

managers develop skills (Gomez‐Mejia & Balkin, 2012).

Disadvantages of the division approach include duplication of resources, reduced

specialization in skills, and competition among divisions (Gomez‐Mejia & Balkin, 2012).

Divisional Structure ‐ Variations

There are a number of options for organization to structure in this manner:

• Product‐based divisions – allows organizations to focus on specialised products while

defining roles & responsibilities very clearly for employees

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• Geographic‐based divisions – allow organizations to focus on customer needs that

may vary by geographic region or market.

• Customer‐based divisions – allow organizations to focus on specific types of

customer needs.

• Conglomerate‐based divisions – are made up of unrelated businesses where each

business is run independently from the other businesses.

(Gomez‐Mejia & Balkin, 2012).

3. Matrix Structure

Matrix Approach ‐ superimposes a divisional structure over a functional structure in order to

combine the efficiency of the functional approach with the flexibility and responsiveness to

change of the divisional approach. In a matrix structure, individuals work across teams and

projects as well as within their own department or function. There are dual lines of

authority ‐ employees report to two bosses (Riley, 2017).

The matrix approach is advantageous because it fosters efficient utilization of scarce,

expensive specialists, its flexibility facilitates starting new projects and ventures quickly, it

allows employees to develop cross‐functional skills, and employees are more involved in

decision making (Gomez‐Mejia & Balkin, 2012).

Disadvantages of the matrix approach include problems associated with the dual line of

command, conflict between product and functional managers, and too much focus on

coordination decisions and conflict resolution (Gomez‐Mejia & Balkin, 2012).

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Organization Design

Organization Design ‐ the selection of the organization structure that best fits the strategic goals of a business. Factors that affect the choice of organization design include:

• Organization capabilities – peripheral activities are likely to be contracted out.

• Technology – firms consider the type of technology (manufacturing, service,

digital) when choosing the organization design.

• Organization size – large organizations need more coordinating mechanisms as

compared to smaller companies.

• Environmental turbulence – decentralized structures are used in turbulent

environments, and more centralized structures are used in stable, predictable

environments.

(CIPD, 2018)

There are three basic organization designs:

Mechanistic Organizations ‐ (also known as a bureaucratic design) emphasizes vertical

control with rigid hierarchical relationships, top‐down “command and control”

communication channels, centralized decision authority, highly formalized work rules and

policies, and specialized, narrowly defined jobs.

This type of structure works well in a stable, predictable environment and is common in

government agencies, labour unions, and family businesses (Bateman et. al. 2018).

Organic Organizations ‐ focused on change and flexibility, emphasizing horizontal

relationships that involve teams, departments, divisions, and provisions to coordinate the

lateral units.

This type of design works in turbulent, uncertain environments and is beneficial for firms

that want to nurture creativity and innovation. It is common in high tech, entertainment

and media, financial services, and consumer goods companies (Bateman et. al. 2018).

Some companies choose a hybrid design in which both the mechanistic and the organic design exist in different parts of the company.

Boundaryless Organizations ‐ eliminates internal and external structural boundaries that

inhibit employees from collaborating with each other or that inhibit firms from collaborating

with customers, suppliers, or competitors.

This type of structure allows a firm to overlap with other organizations in cooperative

arrangements like joint ventures.

This structure has become more popular in response to changing technologies and the

increase in strategic alliances between firms (Bateman et. al. 2018)

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Reference List

Alton, R. (2017). Common Types of Organizational Structures. Retrieved from:

https://www.allbusiness.com/4‐common‐types‐organizational‐structures‐103745‐

1.html

Bateman, T., Snell, S. and Konopaske, R. (2018). M: Management. (5th ed.). New York:

McGraw‐Hill Education.

Businessmate. (2010). Divisional Organization Structure. Retrieved from:

http://www.businessmate.org/Article.php?ArtikelId=185

Caveo Learning. (2015). 4 Keys to Optimizing Learning Organization Structure. Retrieved

from: https://www.caveolearning.com/blog/4‐keys‐to‐optimizing‐learning‐

organization‐structure

CIPD. (2018). Organization Design. Retrieved from:

https://www.cipd.asia/knowledge/factsheets/organizational‐design

Gomez‐Mejia, L. R. and Balkin, D.B. (2018). Management– People, Performance, Change.

New Jersey: Pearson Education.

Management Study Guide. (2018). Understanding Organization and Organization Culture?.

Retrieved from: https://www.managementstudyguide.com/organization‐ culture.htm

Naidu, D. (2011). Line & Staff – a contentious relationship. Retrieved from:

https://dilipnaidu.wordpress.com/2011/11/19/line‐staff‐a‐contentious‐relationship/

Pathak, R. (2018). Principle: Unity Of Command. Retrieved from:

https://mgtdiary.blogspot.com/2012/08/principle‐unity‐of‐command.html

Riley, J. (2017). Matrix structures. Retrieved from:

https://www.tutor2u.net/business/reference/matrix‐structures

Surbhi, S. (2015). Difference Between Centralization and Decentralization. Retrieved from:

https://keydifferences.com/difference‐between‐centralization‐and‐

decentralization.html

Usmani, F. (2018). What is a Functional Organization Structure? Retrieved from:

https://pmstudycircle.com/2012/08/what‐is‐a‐functional‐organization‐structure/

Vision Consultants. (2015). Responsibility and authority (& Accountability). Retrieved from:

http://www.conimas.com/responsibilities.html

Webster, A. L. (2017). Formalization of an Organizational Structure. Retrieved from:

https://bizfluent.com/info‐8235460‐formalization‐organizational‐structure.html

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Topic 07 – Managing Human Resources and Employee Diversity

Lesson Learning Outcomes

• Understand what is human resource management (HRM) and its importance to

organizations.

• Understand the role of strategic HR planning as the main purpose of managing

employees.

• Review the six HR tactics of the HRM process.

• Explain the meaning of workforce diversity, its components and benefits of

employee diversity.

• Develop an awareness of the unique perspectives, problems, and issues of

diverse employee groups.

• Describe the various approaches that managers may use in diversity

management initiatives.

Guiding Questions

• What is HRM, its important and how to manage employees?

• What is workforce and why it’s important?

What is HRM?

Human Resource Management is the process of recruiting, selecting, inducting employees,

providing orientation, imparting training and development, appraising the performance of

employees, deciding compensation and providing benefits, motivating employees,

maintaining proper relations with employees and their trade unions, ensuring employees

safety, welfare and health measures in compliance with labour laws of the country

(Johnson, 2018)

“Our progress as a nation can be no swifter than our progress in education. The human mind is our fundamental resource.” ‐ John F. Kennedy (35th President of the United States).

"You must treat your employees with respect and dignity because in the most automated

factory in the world, you need the power of human mind. That is what brings in innovation.

If you want high quality minds to work for you, then you must protect the respect and

dignity. " ‐‐‐Mr N.R. Narayana Murthy, Chairman Emeritus, Infosys Ltd .

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The Importance of Human Resource Management

Whether or not an organization has a formal HR department, all managers are involved with

human resource decisions in their area. Traditionally, managers had responsibilities for

personnel administration; now the strategic importance of the HRM function is becoming

evident.

Human resources decisions are important at every level in an organization. The HR

department plays a supporting role for managers as they carry out HR decisions. The HR

department is involved in the identifying salary ranges, communicating information about

employment laws, developing employee evaluation forms, and determining whether

applicants meet minimum requirements.

Managers are responsible for making final decisions on salaries, ensuring that there is

compliance with laws, evaluating performance, and making hiring decisions (Gomez‐Mejia &

Balkin, 2012).

The Human Resource Management Process

The Human Resource Management Process consists of organizations developing effective

Strategic HR planning (SHRP), i.e. the development of a vision about where the company

wants to be and how it can use human resources to get there.

Followed by carrying out HR tactics, i.e. the implementation of human resource programs to

achieve the firm’s vision (Gomez‐Mejia & Balkin, 2012).

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Strategic HR planning (SHRP)

The goal of SHRP is to create a sustained competitive advantage.

Contingency theory suggests that there is no one “best way” to manage and organize an

organization because situational characteristics called contingencies differ. This approach

argues that fit can lead to better performance.

Human Resource Planning ‐ used to ensure that the firm has the right number and the right kinds of people to meet output or service goals.

1. The first step in the process is forecasting labour demand – how many and what type

of workers the organization will need in the future.

2. The second step is estimating labour supply‐ the availability of workers with the required skills to meet the firm’s labour demand (Gomez‐Mejia & Balkin, 2012).

1. Staffing Process

a. Recruitment ‐ Recruitment can be defined as searching for and obtaining a pool of

potential candidates with the desired knowledge, skills and experience to allow an

organization to select the most appropriate people to fill job vacancies against

defined position descriptions and specifications. The purpose of the recruitment

process is to find the widest pool of applicants to provide the greatest opportunity to

select the best people for the required roles in an organization (Australian HR

Institute, 2018).

b. Selection ‐ Once a pool of candidates has been identified through the recruitment

process the most appropriate candidate, or candidates are identified through a

selection process including but not limited to interviewing, reference checking and

testing. The purpose of the selection process is to ensure that the best person or

people are appointed to the role or roles using effective, fair and equitable

assessment activities. The selection process ends with choosing a best and right

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candidate to be placed as on employee in the organization (Australian HR Institute, 2018).

2. Orientation

Employee orientation is the process of introducing employees to their new jobs and work

environments. Orientation provides an opportunity for new employees to become

acclimated to their new company, department, colleagues and work expectations. Effective

orientations provide many benefits for employers and employees, and can ensure a smooth

transition into the new workplace for all involved. Employee orientation benefits the

organization by providing an opportunity to introduce employees to the fundamentals of

the company and their jobs from an administrative standpoint. Employees benefit from

learning the important rules and details of the job and position (Richards, 2018).

3. Training Employees

Employee Training ‐ a planned effort to provide employees with specific skills to improve their performance. Effective training programs consist of three phases:

1. A needs assessment phase to determine whether training is needed

2. The development and conduct of training phase to ensure training will solve an organizational problem or need.

a. On‐the‐job‐training takes place in the actual work setting under the guidance of

an experienced worker, supervisor, or trainer.

b. Off‐the‐job training takes place away from the employment site and can involve

formal courses, simulations, or role playing.

3. An evaluation phase to re‐examine whether training is providing the expected

benefits and meeting the identified needs.

(Gomez‐Mejia & Balkin, 2012).

4. Career Development

Career Development ‐ helps employees reach their full potential. There are three major

phases in career development.

1. The assessment phase – employees are helped to choose personally fitting career

paths that are realistically attainable and determine any obstacles they need to

overcome to succeed.

2. The direction phase – the steps employees must take to reach their career goals are

determined. The career path refers to the steps for advancement to a career goal

and a plausible time frame for accomplishing them. Firms can use various

approaches to help employees in this phase including promotability forecasts,

succession planning, individual career counselling, job posting systems, and career

resource centres.

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3. The development phase – actions to help the employee grow and learn the necessary skills to move along the desired career path are designed. This can be achieved by for example providing employees with tuition assisted programs, mentoring, coaching etc.

(Gomez‐Mejia & Balkin, 2012).

5. Performance Appraisal

The process by which a manager or consultant examines and evaluates an employee's work behaviour by comparing it with pre‐set standards, documents the results of the comparison, and uses the results to provide feedback to the employee to show where improvements are needed and why (WebFinance Inc. 2018).

The 3 objectives of performance are:

1. They open two‐way communications channels between employers and employees.

2. They provide constructive feedback to employees so that steps can be taken to

capitalize on strengths and minimize weaknesses.

3. They help managers identify who should be paid more.

(WebFinance Inc. 2018).

6. Compensation and Benefits

Compensation includes not only salary, but also the direct and indirect rewards and benefits

the employee is provided with in return for their contribution to the organization.

To determine compensation, organizations should develop a compensation and rewards

program. This type of program outlines an equitable process for compensating employees.

A well‐structured program with a good balance of wages, benefits and rewards will support

an organization to remain competitive in today's labour market and ensure sustainability in

the future (HR Council.ca, 2017).

Compensation is made up of three components

1. Base compensation is the fixed amount of money the employee expects to receive in a weekly or monthly paycheck or as an hourly wage.

2. Pay incentives rewards employees for good performance including variable pay and merit pay.

3. Benefits or indirect compensation includes health insurance, pension plans,

unemployment insurance, vacations, and sick leave. It accounts for about 40 percent

of a typical compensation package.

(Gomez‐Mejia & Balkin, 2012).

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Workforce Diversity

The Meaning of Diversity ‐ the wide spectrum of individual and group differences. Some

characteristics that people share with others like gender are not controlled by individuals,

but others like religion are a conscious choice.

The current philosophy of management today suggests that organizations should support,

nurture, and utilize people’s differences in a way that both respects employees’ unique

perspectives and promotes a shared vision.

When thinking of diversity, it is important to note that the differences between groups are

smaller than the differences within groups. Only a relatively small amount of employee

diversity is explained by group membership.

(Bateman et. al. 2018)

Components of Workforce Diversity

Major components of diversity that exist in organization today are:

1. Gender, i.e. Males and females

2. Age, i.e. younger to older employees

3. Race, i.e. Chinese, Malays, Indians, Other races etc. 4. Immigrants or nationalities, i.e. employees from different countries

5. Physically & mentally disabled people, i.e. people on wheelchairs, visually/hearing

impaired etc.

(Gomez‐Mejia & Balkin, 2012).

There are other components of diversity as shown below:

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Advantages of Employee Diversity

Organizations can derive many benefits from a diverse workforce including

1. Better market access – organizations can gain a competitive advantage by pursuing

markets with diverse needs. Employees of similar backgrounds can help the firm

reach out to these groups.

2. International competitiveness – organizations with diversity in their home offices will

be better able to relate to people in different cultures.

3. Multiple viewpoints (Greater creativity) – people from a variety of backgrounds bring

different perspectives to the table which helps the firm look at things from different

angles and develop better solutions and ideas.

4. Improved team performance – diversity minimizes groupthink. Groupthink is a

psychological phenomenon that occurs within a group of people in which the desire

for harmony or conformity in the group results in an irrational or dysfunctional

decision‐making outcome. Thus with employee diversity, team members try to

minimize conflict and reach a consensus decision without critical evaluation of

alternative viewpoints.

(Gomez‐Mejia & Balkin, 2012).

Challenges of Employee Diversity

Increasing diversity in an organization can result in:

1. Pressure toward homogenization – as employee diversity increases, there is a

tendency for individuals to segregate themselves into groups of similar people.

Dissimilar people may feel pressured to leave the firm creating a monoculture..

Segregated groups can also lead to segregated communication where the flows of

information within the firm are far greater within groups than between groups.

2. Lower cohesiveness – diversity can lead to a fragmented workforce with little

cohesion. Cohesiveness is the emotional closeness group members feel toward each

other and how supportive they are of each other.

3. Interpersonal conflict and tension – mistrust, lack of understanding, and lack of

mutual respect can lead to conflict and tension.

4. Confusing employee diversity with affirmative action – a program that requires

corporations to provide opportunities to women and members of minority groups

who traditionally have been excluded from good jobs. This can result in reverse

discrimination.

(Gomez‐Mejia & Balkin, 2012).

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Diversity Management Initiatives

1. Complying to legal & best practices aspect of workforce diversity.

The fact is that government laws have contributed to some of the social change we’ve

seen over the last 50‐plus years. Failure to comply with government laws, can be costly

and damaging to an organization’s bottom line and reputation. It’s important that

managers know what they can and cannot do legally and ensure that all employees

understand as well.

However, effectively managing workplace diversity needs to be more than

understanding and complying with government laws. Organizations that are successful

at managing diversity use additional diversity initiatives and programs.

(Robbins & Coulter, 2017).

In Singapore TAFEP (Tripartite Alliance on Fair Employment Practices), also provides

guidelines and best practices that companies may adopt to manage diverse employees.

Thus organizations need not formulate their own practices but may simply adopt

TAFEP’s guidelines.

2. Mentoring

A sustainable diversity and inclusion strategy must play a central role in decision‐making at the highest leadership level and filter down to every level of the company.

Mentoring is a process whereby an experienced organizational member (a mentor)

provides advice and guidance to a less‐experienced member (a protégé). Mentors

usually provide two unique forms of mentoring functions: career development and

social support.

A good mentoring program would be aimed at all employees with high potential to

move up the organization’s career ladder.

(Robbins & Coulter, 2017).

3. Diversity skills training

Our human nature is to not accept or approach anyone who is different from us. But it

doesn’t make discrimination of any type or form acceptable. And we live and work in a

multicultural context. So the challenge for organizations is to find ways for employees to

be effective in dealing with others who aren’t like them. That’s where diversity skills

training, specialized training to educate employees about the importance of diversity

and teach them skills for working in a diverse workplace, comes in.

Most diversity skills training programs start with diversity awareness training. During

this type of training, employees are made aware of the assumptions and biases they

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may have. Once we recognize that, we can look at increasing our sensitivity and openness to those who are different from us.

(Robbins & Coulter, 2017).

4. Employee resource groups

Employee resource groups are made up of employees connected by some common dimension of diversity. Such groups typically are formed by the employees themselves, not the organizations. However, it’s important for organizations to recognize and support these groups.

Why are they so prevalent? The main reason is that diverse groups have the opportunity

to see that their existence is acknowledged and that they have the support of people

within and outside the group. Individuals in a minority often feel invisible and not

important in the overall organizational scheme of things. Employee resource groups

provide an opportunity for those individuals to have a voice.

(Robbins & Coulter, 2017).

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Reference List

Australian HR Institute. (2018). Recruitment And Selection. Retrieved from:

https://www.ahri.com.au/assist/recruitment‐and‐selection

Bateman, T., Snell, S. and Konopaske, R. (2018). M: Management. (5th ed.). New York:

McGraw‐Hill Education.

Gomez‐Mejia, L. R. and Balkin, D.B. (2012). Management– People, Performance, Change.

New Jersey: Pearson Education.

HR Council.ca. (2017). Compensation & Benefits. Retrieved from: http://hrcouncil.ca/hr‐

toolkit/compensation‐overview.cfm

Johnson, R. S. (2018). Human Resource Management. Retrieved from:

http://www.whatishumanresource.com/human‐resource‐management

Management Study Guide. (2018). Understanding Organization and Organization Culture?.

Retrieved from: https://www.managementstudyguide.com/organization‐ culture.htm

Richards, L. (2018). What Are the Benefits of New Employee Orientation Programs?.

Retrieved from: https://smallbusiness.chron.com/benefits‐new‐employee‐

orientation‐programs‐1281.html

Robbins, S.P. and Coulter, M.A. (2017). Management, Global Edition. (14th ed.). New Jersey:

Pearson Education.

WebFinance Inc. (2018). Performance appraisal. Retrieved from:

http://www.businessdictionary.com/definition/performance‐appraisal.html

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Topic 08 – Leading and Motivating Employees

Lesson Learning Outcomes

• Distinguish between leaders, leadership and management/leadership.

• Ascertain how leaders use different power bases to exercise influence.

• Apply basic approaches of leadership theories to influence employee behaviour.

• Understand employee motivation and become aware of the role of needs in

employee motivation.

• Distinguish between intrinsic and extrinsic motivation.

• Apply basic approaches of motivational theories to affect employee behaviour.

Guiding Questions

• What is leading, and why is it important in organizations?

• What is motivation, and why is it important in organizations?

What is Leading?

Leading is a process by which an executive can direct, guide and influence the behaviour

and work of others towards accomplishment of specific goals in a given situation. Leading is

the ability of a manager to induce the subordinates to work with confidence (Management

Study Guide, 2018).

Leading is the potential to influence behaviour of others. It is also defined as the capacity to

influence a group towards the realization of a goal. Leaders are required to develop future

visions, and to motivate the organizational members to want to achieve the visions

(Management Study Guide, 2018).

According to Keith Davis, “Leading is the ability to persuade others to seek defined

objectives enthusiastically. It is the human factor which binds a group together and

motivates it towards goals.” (Management Study Guide, 2018).

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Leader & Leadership

Leader ‐ someone who can influence others and who has managerial authority ‐ leading is one of the four management functions, ideally all managers should be leaders.

Leadership ‐ the process of influencing a group to achieve goals ‐ most people agree that the ability to influence people is essential to effective leadership.

Exactly what constitutes effective leadership is a subject of debate. Some people suggest that effective leadership involves charisma, perseverance, and strong communications skills. Others believe that the fit between an individual and a situation are the key to effective leadership (Gomez‐Mejia & Balkin, 2012).

Management versus Leadership ‐ Not all leaders are managers and not all managers are

leaders. Managers provide formal decision making while leaders influence others in a less

formal, less structured way. Leadership is considered by many to include aspects of strategy,

long‐term vision, and a focus of the external aspects of the company or on aspects to deliver

goals and objectives. Management tends to be seen as a more internal focus on efficient

and effective use of resources. However, another view pints is simply – leaders and

managers do share many of the same position within organization – however, managers

have subordinates and leaders have followers (Gomez‐Mejia & Balkin, 2012).

Power and Leadership

J. French and B. Raven contend managers can use more than one source of power at a time:

Coercive power is the power a leader may punish or control. Followers react to this power

out of fear of the negative results that might occur if they don’t comply. Examples include to

suspend or demote employees or to assign them work they find unpleasant or undesirable.

Reward power is the power to give positive rewards. A reward can be anything a person

values such as money, favorable performance appraisals, promotions, interesting work

assignments, friendly colleagues, and preferred work shifts or sales territories.

Legitimate power and authority are the same. Legitimate power represents the power a

leader has as a result of his or her position in the organization. Legitimate power is the legal

or formal authority to make decisions subject to certain constraints.

Expert power is a power based on expertise, special skills, or knowledge. If an employee has

skills, knowledge, or expertise that’s critical to a work group, that person’s expert power is

enhanced.

Referent power is the power that arises because of a person’s desirable resources or

personal traits or sense of influence over others. Referent power develops out of respect

and admiration of another and a desire to be like that person.

(Robbins & Coulter, 2017).

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Power and Leadership – Consequences

Power is the opportunity to develop and nudge history in different locations. Positive power

in an organization involves encouraging efficiency. This includes giving employees the power

to make decisions, rewarding workers for strong performance and appointing employees

who perform strongly to control other employees.

Positive power builds employee confidence and encourages workforce to work harder. It also results in those in higher‐level positions gaining power through worker respect and communication, rather than coercive efforts. Employee withholding rates are high when employees are given the power to express concerns and work together in an organization.

When leaders in an organization do not have the admiration of the employees under them,

they have a negative power. This type of leader stimulate employees to perform by

intimidating them with job loss and other punishments or shows partiality to certain

employees rather than recognizing the hard work of multiple workers. Not only does the

quality of work produced reduce under this type of power, but it leads to higher turnover

rates in an organization.

Power, and the struggle over it, describes the core of the political process. Kotter (1979)

documented that the open seeking of power is broadly considered a symbol of awful

management.

Civil Service India (2016).

Traditional Leadership Theories

1. Trait theories ‐ Trait theories of leadership identify the specific personality traits that

distinguish leaders from non‐leaders. They are based on the premise that leaders are 'born, not made' (i.e., that leadership is largely innate, rather than being developed through learning) (University of Leicester, 2018).

Certain traits increase the likelihood of becoming a leader including ambition, energy, the motivation or desire to lead, intelligence, integrity, self‐confidence, flexibility, and the ability to grasp large amounts of information. Most of these traits can be learned (Gomez‐Mejia & Balkin, 2012).

2. Behavioural theories ‐ map out the behavioural dimensions of leadership or describe

leadership styles. Two dimensions summarize how subordinates describe most

leadership styles.

• Employee‐oriented behaviours – refers to the concern that the leader has for the

feelings, needs, personal interest, problems, and well‐being of followers.

• Production‐oriented behaviours – refers to activities designed to accomplish group goals, including organizing tasks, assigning responsibilities, and establishing performance standards.

(LinkedIn Slideshare, 2018).

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3. Leadership Style Theories

a. Autocratic leadership: Autocratic leadership is also called as authoritarian leadership.

In this style, a leader is fully liable to take all the decisions related to company and

receive little or no input from the group members. In this type, a leader makes a

decision on the basis of their perceptions and judgments.

b. Democratic leadership: In this leadership style, manager or leader invites input or

suggestions from its employees in all decision making of the company (Fullan, 2014).

The staffs are provided with significant information regarding company’s issue and a

majority of votes will determine the course of action that the company will take. In

this style, employees are free to give their views and suggestions.

c. Laissez‐faire leadership: In this style, workers are given full rights and power to make

decisions. This leadership style was first described by Levin, Lappet and White in

1983 (Harmon, 2015). This style leads to increase in efficiency and motivation among

the workers.

(Locus, 2018)

4. Contingency Theories ‐ suggest that the “one‐best‐way” approach of the behavioural

theories may be too limiting and argue that an “it depends” approach might be a more

realistic perspective of what makes a good leader. According to contingency theory the

most important notion is the fit between a leader’s behaviour and decision‐making style

and the situation at hand (Bateman et. al. 2018).

Contemporary Perspectives on Leadership

1. Charismatic Leadership ‐ A charismatic leader is a leader who can engender a strong

emotional attachment from followers. Charisma is associated with admiration, trust, and

a willingness to believe what the leader says.

While charismatic leaders are able to obtain high levels of employee performance in

times of significant change, they can be a liability during more stable times when they

are unable to listen to others (Gomez‐Mejia & Balkin, 2012).

2. Transactional vs. Transformational Leadership

a. Transactional Leadership

• Leadership is responsible

• Works within the organizational culture

• Transactional leaders make employees achieve organizational objectives

through rewards and punishment

• Motivates followers by appealing to their own self-interest

b. Transformational Leadership

• Leadership is proactive

• Work to change the organizational culture by implementing new ideas

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• Transformational leaders motivate and empower employees to achieve company's objectives by appealing to higher ideals and moral values

• Motivates followers by encouraging them to transcend their own interests for those of the group or unit

3. Level 5 Leadership ‐ Level 5 leaders display a powerful mixture of personal humility and

indomitable will. They're incredibly ambitious, but their ambition is first and foremost

for the cause, for the organization and its purpose, not themselves. While Level 5

leaders can come in many personality packages, they are often self‐effacing, quiet,

reserved, and even shy. Every good‐to‐great transition in our research began with a

Level 5 leader who motivated the enterprise more with inspired standards than inspiring

personality (Collins, 2018)

4. Self‐Leadership ‐ ‐ stresses the individual responsibility of employees to develop their

own work priorities aligned with organizational goals.

• Managers are facilitators who enhance the leadership capabilities of

subordinates, encouraging them to develop self‐control skills.

• This is a decentralized leadership approach where managers serve as the

example of behaviours they would like employees to emulate.

(Gomez‐Mejia & Balkin, 2012).

5. Team Leadership ‐ Because leadership is increasingly taking place within a team context

and more organizations are using work teams, the role of the leader in guiding team

members has become increasingly important. The role of team leader is different from

the traditional leadership role.

A more meaningful way to describe the team leader’s job is to focus on two priorities:

• managing the team’s external boundary and,

• facilitating the team process.

(Robbins & Coulter, 2017).

6. Leader‐Member Exchange ‐ Relationships between Leaders and Followers ‐ This

perspective suggests that the relationship between each follower and the leader is

unique.

• Those that are part of the “in‐group” have a relationship that could involve trust,

commitment, loyalty, and strong liking.

• Those that are part of the “out group” may have a more distant, impersonal

relationship in which the leader is more directive and controlling. Those in the

“out group” tend to be less satisfied and have lower performance than those in

the “in group.”

(Gomez‐Mejia & Balkin, 2012).

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Motivating Employees

Motivation is the driving force which causes employees to achieve goals. A reward always

work in motivating personnel. However sometimes its not just rewards that motivate

employees.

Employees may have all the expertise in the world but, if they're not motivated, it's unlikely

that they'll achieve their true potential. On the other hand, work seems easy when people

are motivated.

Motivated people have a positive outlook, they're excited about what they're doing, and

they know that they're investing their time in something that's truly worthwhile. In short,

motivated people enjoy their jobs and perform well.

All effective leaders want their organizations to be filled with people in this state of mind.

That's why it's vital that you, as a leader and manager, keep your team feeling motivated

and inspired. But of course, this can be easier said than done!

(Mindtools, 2018).

Types of Motivation

There are two main types of motivation – extrinsic and intrinsic.

Extrinsic motivation is when you use external factors to encourage your team to do what

you want. Pay raises, time off, bonus checks, and the threat of job loss are all extrinsic

motivators – some positive, some less so.

Intrinsic motivation is internal. It's about having a personal desire to overcome a challenge, to produce high‐quality work, or to interact with team members you like and trust.

Intrinsically motivated people get a great deal of satisfaction and enjoyment from what they do.

Every team member is different, and will likely have different motivators. So, it's important

to get to know your people, discover what motivates them, and find a good mixture of

extrinsic and intrinsic motivators, so that you can motivate them successfully.

(Mindtools, 2018).

Why is employee motivation important?

There are several reasons why employee motivation is important. Mainly because it allows

management to meet the company’s goals. Without a motivated workplace, companies

could be placed in a very risky position. Motivated employees can lead to increased

productivity and allow an organization to achieve higher levels of output. Imagine having an

employee who is not motivated at work. They will probably use the time at their desk

surfing the internet for personal pleasure or even looking for another job. This is a waste of

your time and resources (6Q, 2018)

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Maslow’s Hierarchy of Needs

Abraham Maslow is well renowned for proposing the Hierarchy of Needs Theory in 1943.

This theory is a classical depiction of human motivation. This theory is based on the

assumption that there is a hierarchy of five needs within each individual. The urgency of

these needs varies. These five needs are as follows‐

1. Physiological needs‐ These are the basic needs of air, water, food, clothing and

shelter. In other words, physiological needs are the needs for basic amenities of life.

2. Safety needs‐ Safety needs include physical, environmental and emotional safety

and protection. For instance‐ Job security, financial security, protection from

animals, family security, health security, etc.

3. Social needs‐ Social needs include the need for love, affection, care, belongingness,

and friendship.

4. Esteem needs‐ Esteem needs are of two types: internal esteem needs (self‐ respect,

confidence, competence, achievement and freedom) and external esteem needs

(recognition, power, status, attention and admiration).

5. Self‐actualization need‐ This include the urge to become what you are capable of

becoming / what you have the potential to become. It includes the need for growth

and self‐contentment. It also includes desire for gaining more knowledge, social‐

service, creativity and being aesthetic.

(Management Study Guide, 2018).

Implications of Maslow’s Hierarchy of Needs Theory for Managers

1. As far as the physiological needs are concerned, the managers should give

employees appropriate salaries to purchase the basic necessities of life. Breaks and

eating opportunities should be given to employees.

2. As far as the safety needs are concerned, the managers should provide the

employees job security, safe and hygienic work environment, and retirement

benefits so as to retain them.

3. As far as social needs are concerned, the management should encourage teamwork

and organize social events.

4. As far as esteem needs are concerned, the managers can appreciate and reward

employees on accomplishing and exceeding their targets. The management can give

the deserved employee higher job rank / position in the organization.

5. As far as self‐actualization needs are concerned, the managers can give the

employees challenging jobs in which the employees’ skills and competencies are

fully utilized. Moreover, growth opportunities can be given to them so that they can

reach the peak.

(Management Study Guide, 2018).

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B. F. Skinner’s Reinforcement theory

Reinforcement theory of motivation was proposed by BF Skinner and his associates. This theory is a strong tool for analyzing controlling mechanism for individual’s behaviour.

However, it does not focus on the causes of individual’s behaviour.

1. Positive Reinforcement‐ This implies giving a positive response when an individual

shows positive and required behaviour. For example ‐ Immediately praising an

employee for coming early for job. This will increase probability of outstanding

behaviour occurring again.

2. Negative Reinforcement‐ This implies rewarding an employee by removing negative

/ undesirable consequences. Both positive and negative reinforcement can be used

for increasing desirable / required behaviour. For example, eliminating strict

company policies.

3. Extinction‐ It implies absence of reinforcements. In other words, extinction implies

lowering the probability of undesired behaviour by removing reward for that kind of

behaviour. For instance ‐ if an employee no longer receives praise and admiration for

his good work, he may feel that his behaviour is generating no fruitful consequence.

4. Punishment‐ It implies removing positive consequences so as to lower the

probability of repeating undesirable behaviour in future. In other words, punishment

means applying undesirable consequence for showing undesirable behaviour. For

instance ‐ Suspending an employee for breaking the organizational rules.

(Bateman et. al. 2018).

Implications of Reinforcement Theory

Reinforcement theory explains in detail how an individual learns behaviour. Managers who

are making attempt to motivate the employees must ensure that they do not reward all

employees simultaneously. They must tell the employees what they are not doing correct.

They must tell the employees how they can achieve positive reinforcement (Management

Study Guide, 2018).

McGregor’s Theory X, and Theory Y

Douglass McGregor developed a human relations perspective on motivation to explain how

supervisors influence motivation by the way they deal with employees. McGregor proposed

that managers take one of two perspectives of employees (Gomez‐Mejia & Balkin, 2012).

• Managers who rely on Theory X have a negative perspective on human behaviour.

Employees have little ambition and will try to avoid work if they can. employees

dislike work, are lazy, avoid responsibility and must be coerced to perform

• Managers who rely on Theory Y have a positive perspective on human behaviour.

Rely on participative decision making, offer employees challenging, but reasonable

assignments, and treat people with respect. The assumption that employees are

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creative, enjoy work, seek responsibility and can exercise self‐direction. no evidence to confirm that either set of assumptions is valid.

(Gomez‐Mejia & Balkin, 2012).

Implications of Theory X and Theory Y

Quite a few organizations use Theory X today. Theory X encourages use of tight control and

supervision. It implies that employees are reluctant to organizational changes. Thus, it does

not encourage innovation (Management Study Guide, 2018).

Many organizations are using Theory Y techniques. Theory Y implies that the managers

should create and encourage a work environment which provides opportunities to

employees to take initiative and self‐direction (Management Study Guide, 2018).

Quality of Work Life programs (QWL)

Quality of work life is a concept that focus on employee as a person rather than just the

work done by him/her. QWL ensures the holistic well‐being of an employee instead of just

focusing on work‐related aspects. Examples of providing quality of work life includes:

1. Providing Job Security: If an employee is confident that his job is secure, they are much

more relaxed and can perform better. It gives them a confidence that even if something

goes wrong by mistake, their job will not be at stake

2. Rewards and recognition: If an employee is awarded for a good performance, its helps

them to perform even better. Rewards includes higher salaries, bonuses, promotions etc.

3. Flexible work timings: Flexibility during working hours is something which is appreciated

by employees. This gives employees a chance to do their work and also work on certain

important personal commitments.

4. Increased employee participation and engagement: Involving employees in discussions,

strategies & feedback is something which helps increase the employees QWL & contribution

towards a particular role.

5. Open communication: Transparency between management and employees gives them

confidence as they are updated with the business and also feel at ease being approachable

6. Career growth plans: Discussing the future of the employee in the company, interesting aspects of the job, career development etc are all appreciated by employees

7. Job enrichment: Companies which are able to enrich the job with new tasks, better learning & training, more opportunities etc are more likely to keep employees happy at work. It also includes empowering employees to make decisions on company’s behalf. (MBASkool, 2018)

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Reference List

6Q. (2018). Importance of Employee Motivation. Retrieved from: https://inside.6q.io/employee‐

motivation‐important/

Bateman, T., Snell, S. and Konopaske, R. (2018). M: Management. (5th ed.). New York:

McGraw‐Hill Education.

Civil Service India. (2016). The individual processes: Power and Politics (Organizational

Behaviour and Design). Retrieved from:

https://www.civilserviceindia.com/subject/Management/notes/the‐individual‐

processes‐power‐and‐politics.html

Collins, J. (2018). Level 5 Leadership. Retrieved from: https://www.jimcollins.com/concepts/level‐

five‐leadership.html

Gomez‐Mejia, L. R. and Balkin, D.B. (2012). Management– People, Performance, Change.

New Jersey: Pearson Education.

LinkedIn Slideshare. (2018). Basic Approaches to Leadership Organizational Behaviour.

Retrieved from: https://www.slideshare.net/KnowlittleMatharu/ob11‐11st

Locus. (2018). The impact of different leadership styles in motivation within the period of

change. Retrieved from: https://www.locusassignments.com/solution/unit‐3‐

organizational‐behaviour‐assignment‐capco‐tesco

Management Study Guide. (2018). What is Leadership? Retrieved from:

https://managementstudyguide.com/role_of_a_leader.htm

MBASkool. (2018). Quality of Work Life (QWL). Retrieved from:

https://www.mbaskool.com/business‐concepts/human‐resources‐hr‐terms/2390‐ quality‐of‐

work‐life‐qwl.html

Mindtools. (2018). Motivation ‐ Energizing Your People to Achieve Good Things. Retrieved

from: https://www.mindtools.com/pages/article/motivating‐your‐team.htm

University of Leicester. (2018). Trait Theories. Retrieved from:

https://www.le.ac.uk/oerresources/psychology/organizing/page_06.htm

Robbins, S.P. and Coulter, M.A. (2017). Management, Global Edition. (14th ed.). New Jersey:

Pearson Education.

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Topic 09 – Managing & Leading Teams

Lesson Learning Outcomes

• Understand teams and its benefits.

• Identify the different types of teams

• Track the stages of team development that occur over the life of a project and

help the team perform effectively.

• Recognize key roles that team members and team leaders must play to ensure high

performance.

• Master the skills to detect and control team performance problems.

• Review characteristics of effective teams

Guiding Questions

• What is teams, and why do employees work in teams in organizations?

• How to create high performance teams that is motivated?

Understanding Teams

Let us first go through a simple real life situation.

John was working as a key accounts head with a leading advertising firm. He had four

members reporting to him. Unfortunately he always under estimated his team members

and fought with them constantly. He could never trust them and always thought they were

incapable of doing good work. One fine day, he got some major assignment from one of his

clients which was to be submitted within two working days. He decided to do it all alone as

he thought nobody else could do it apart from him. John could never submit his assignment

on the required day and received good criticism from his superiors. His organization also lost

one of their major and prestigious clients.

Why do you think John failed ? Why could he not complete his assignment on time ?

Here comes the importance of a team. Had John taken the help of his team members, he

would have finished his assignment on time and everyone would have appreciated him

(Management Study Guide, 2018).

Teams

An individual cannot perform all tasks on his own. He needs the support as well as guidance

of others to be excellent in whatever he does. Complex goals can easily be accomplished if

individuals work together as a team (Management Study Guide, 2018).

A small number of people with complementary skills who are committed to a common

purpose, a set of performance goals, and an approach for which they hold themselves

mutually accountable (Gomez‐Gomez‐Mejia & Balkin, 2012).

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Workgroups

Members of a workgroup are held accountable for individual work, but they are not responsible for the output of the entire work group (Gomez‐Mejia & Balkin, 2012).

Teams Vs Workgroups

Traditional work groups and teams are identified by how they relate to performance results.

The working group’s performance is a function of what its members do as individuals, which

does not require integration and coordination to perform the tasks (Luthans, 2011). Work

groups interact primarily to share information and make decisions to help one another

perform within each member’s area of responsibility.

Luthans (2011) identifies the following characteristics of a work group:

• It has a strong, clearly focused leader.

• It has individual accountability.

• Its purpose is the same as that of the organization.

• It has individual work products.

• It holds efficient meetings.

• It measures effectiveness indirectly, for example, the financial performance of the

overall business.

• The work group discusses, decides and delegates tasks.

Teams can be identified by applying the opposite of the characteristics identified above. A

team can be defined as two or more individuals who interact (face to face or virtually)

socially; possess one or more common goals; are brought together to perform

organizationally relevant tasks; exhibit interdependencies with respect to workflow, goals

and outcomes; have different roles and responsibilities; and are together embedded in an

encompassing organizational system (Kozlowski & Bell, 2003). A team’s performance also

includes both the individual and collective efforts of team members to achieve a specific

goal (Luthans, 2011).

A team has the following characteristics (Luthans, 2011):

• It has shared leadership roles.

• It has individual and mutual accountability.

• It has a specific purpose.

• It has collective work products.

• The team encourages open‐ended, active problem‐solving meetings.

• The team measures performance directly by assessing collective work products.

• The team discusses, decides and does real work.

In addition, Robbins, Judge, Odendaal and Roodt (2003, p. 201), distinguish the following differences between teams and work groups:

(Mark, 2018)

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(Mark, 2018)

What is Team Leading and Managing

Team leading and management refers to the various activities which bind a team together by bringing the team members closer to achieve the set targets. For the team members, their team must be their priority and everything else should take a back seat. They should be very focused on their goals (Management Study Guide, 2018).

Let understand Team Leading Management with the help of a real life situation.

Maria was representing the training and development vertical of a leading firm. Joe, Kathy,

Sandra and Tim were reporting to Maria and helped her in designing the various training

programs. Maria left no stone unturned to ensure that all her team members were satisfied

with their job responsibilities. The workload was shared equally among four of them. Ideas

were discussed on an open forum and each of them contributed to his level best. They went

out for movies and stayed in touch even after work (Management Study Guide, 2018).

Maria being the team leader was actually responsible for bringing her team members closer

so that none of them feels left out and all are motivated to deliver their level best. With the

help of the team management activities, she managed to create a positive ambience at the

workplace and promoted healthy competition in her team (Management Study Guide,

2018).

Benefits of Teams

The Benefits of Teams ‐ As tasks have become more complex in today’s highly competitive

environment, teams have become an essential component in most organizations. The

effectiveness of teams has a direct effect on the success of the company.

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1. Costs and Productivity ‐ When management responsibilities are delegated to teams,

fewer supervisors are needed. Companies can also use cross‐training to expand the

capabilities of team members and reduce the total number of employees needed.

2. Quality Improvements ‐ Companies that have delegated management

responsibilities to the team have a “do it right the first time” approach rather than

having a supervisor evaluate performance after the fact. This approach saves money

on raw materials and reduces the number of quality specialists needed. W. Edwards

Deming championed the use of teams and continuous quality improvements

(Robbins & Coulter, 2017).

3. Speed ‐ important for responding to customers and for developing new products. A

business process is a value‐adding, value‐creating activity such as product

development or order fulfilment. When teams are organized around business

processes, the time to complete the process can be reduced.

4. Innovation ‐ Teams facilitate the development of new products and services. Being

first to market can be an important competitive advantage. Cross‐ functional teams

can reduce the cycle for new product development (Gomez‐Mejia & Balkin, 2012).

Types of Teams

There are four common types of teams in companies:

1. Project Teams ‐ works on a specific project that has a beginning and an end. The

team is together for the duration of the project and then is disbanded. Project teams are composed of members from different functional areas and are judged according to their ability to meet or exceed deadlines (Gomez‐Mejia & Balkin, 2012).

2. Parallel Teams ‐ also called problem‐solving teams or special purpose teams, are

groups that focus on a problem or issue that requires only part‐time commitment

from team members. Parallel teams are disbanded once the problem is resolved.

There are many types of parallel teams including suggestion teams, safety teams,

selection committees, and grievance committees (Gomez‐Mejia & Balkin, 2012).

3. Transnational/Virtual Teams – Global team that uses interactive computer

technologies such as the Internet, groupware, or video‐conferencing to work

together regardless of distance. By bringing together individuals who would

otherwise not work together, virtual teams can give an organization a competitive

advantage. Firms can cross organizational boundaries using virtual teams and bring

together customers, suppliers, and business partners (Robbins and Coulter, 2017).

4. Self‐Managed Teams ‐ also called a process team, is responsible for producing an

entire product, component, or service. This type of team is a formal part of the company’s organization structure and employees are assigned to the team on a full‐ time basis. SMTs have the authority to make decisions that are often made by

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supervisors or managers such as who to hire or which work method to use (Robbins and Coulter, 2017).

Stages of Team Development

Stages of Team Development ‐ there are five stages of development in a team:

1. Forming – team members meet for the first time to get acquainted and discuss

expectations. Forming is the first stage in group development during which people

join the group and then define the group’s purpose, structure, and leadership.

Forming is a stage characterised by much uncertainty. This stage is complete when

members begin to think of themselves as part of a group.

2. Storming – team members voice differences about team goals and procedures.

Coalitions may form and compete for dominance. Storming is the second stage of group development characterised by intergroup conflict. When this stage is complete, members will agree upon the leadership hierarchy and group direction.

3. Norming – characterized by resolution of conflict and agreement over team goals

and values. Norming is the third stage of group development, characterised by close

relationships and cohesiveness.

4. Performing – characterized by a focus on the performance and tasks delegated to

the team. Synergies between members emerge. Performing is the fourth stage in

group development when the group is fully functional.

5. Adjourning – teams complete their work and disband if designed to do so. The

successful completion of the task may be celebrated. Adjourning is the final stage in group development for temporary groups. It is characterised by concern with wrapping up activities rather than with task performance.

(DTU, 2016)

Role of Team Members

Roles are expectations regarding how team members should act in given situations (Gomez‐ Mejia & Balkin, 2012). There are two roles that are needed:

1. The task‐facilitating role – places a priority on helping the team accomplish its task

goals. It can include

• Direction giving ‐ identifying ways to achieve goals.

• Information seeking – asking questions, identifying knowledge gaps,

• and seeking members’ opinions.

• Information giving – providing facts and data, offering judgments.

• Summarizing – combining ideas made by members and drawing

• conclusions.

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(Gomez‐Mejia & Balkin, 2012).

2. The relationship‐building role focuses on sustaining harmony between team

members. It involves

• Supporting – praising member contributions and ideas.

• Harmonizing – mediating differences between members and identifying

• compromises.

• Tension relieving ‐ using humour to put others at ease.

• Energizing – using enthusiasm and good spirits to motivate members.

• Facilitating – smoothing interactions between members who have

• difficulty communicating with each other.

(Gomez‐Mejia & Balkin, 2012).

A team can only be successful if both the task‐facilitating role and the relationship‐ building role are filled (Jworldannapolis, 2018).

Role of Team Leader

The Role of the Team Leader ‐ Leaders help teams balance task‐facilitating and relationship‐

building roles, and deal with people who create problems. Self‐managed teams typically

have leaders who are selected from the ranks, while parallel and project teams often have

leaders who are also managers or supervisors (Gigli, 2018).

Three main roles of team leader are:

1. Provide feedback to team members – always keeping team members in the loop on

problems in the work being performed, changes in customer requirements etc.

2. Support team members – always providing resources for example financials, more

teams members if they are overworked and equipment, tools and machineries.

3. Express shared vision – always ensuring all team members are heading in the right

direction in order to meet the teams and organization goals.

(Bateman et. al. 2018)

Behavioural Dimensions

Members of effective teams are:

1. Cohesive with each other – the degree of team cohesiveness refers to the extent to

which team members feel a high degree of camaraderie, team spirit, and sense of

unity. To encourage team cohesiveness, all team members must be provided

opportunities for members to interact and a voice in determining team goals.

2. Norms – shared beliefs that regulate the behaviour of team members are referred to

as team norms. Teams with high performance norms are more likely to be effective

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and have less tolerance for poor performance. Team norms are enforced via rewards and sanctions.

3. Cooperativeness – the willingness to share information and help others reflects the

level of cooperation in a team. Cooperative behaviours can be at odds with

competitive behaviours (behaviour that views other people as rivals for a limited

pool of resources and focuses on individual goals, non‐collaboration, and the

withholding of information).

4. Trust one another – the willingness of one person to increase his or her vulnerability

to the actions of another person whose behaviour he or she cannot control is trust.

Trust among team members can be created by communicating openly, sharing credit

and information with others avoiding acting purely out of self‐interest.

5. Interdependence – the extent to which members depend on each other for

resources, information, assistance, or mutual support to accomplish their tasks is the degree of interdependence. In simple terms how team members are dependent in each other in performing tasks.

(Gomez‐Mejia & Balkin, 2012).

Team Performance Problems

Team Performance Problems ‐ There are several problems teams can expect to encounter

including the following three:

1. Free Riders ‐ Individuals who find it rational to withhold effort and provide minimum

input to the team in exchange for a full share of the rewards are known as free

riders. This type of behaviour is also known as social loafing or shirking and usually

has a negative impact on team performance (Gomez‐Mejia & Balkin, 2012). To make

free riding difficult, team members should have control over recruitment and

selection of new members and a voice in performance evaluation and discipline

decisions. In addition, high performance norms should be established early on.

2. The Nonconforming High Performer ‐ team members who are individualistic and

whose presence is disruptive to the team. These individuals are better suited to

problem‐solving teams, virtual teams, and project teams where there is less intense

team interaction as compared to self‐managed teams (Gomez‐Mejia & Balkin, 2012).

Other team members should put their voice forward in order to contribute and not

allow a nonconforming high performer

3. Lack of Rewards for Teamwork ‐ Many organizations reward individual performance,

but not team performance. When employees are competing for merit pay, their

performance in a team setting may be compromised. Organizations that depend on

teams need to reward team efforts (Gomez‐Mejia & Balkin, 2012). Many

organizations in order to avoid demotivated teams due to lack of rewards, are linking

rewards to team performance, thus with higher performance, teams are rewarded

higher.

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Characteristics of Effective Teams

Characteristics of an effective team includes:

1. We have a clear sense of purpose

This unifies the group. Everyone knows why the group exists. In addition to being clear, it should also be important. Cool is better yet.

2. We have measurable objectives

Goals are the fuel which drive each member’s effort. They know there is work to do, and they strive to get it done.

3. Our purpose supports the larger organization’s purpose

Each team represents the use of scarce resources. People are expensive. They should

only be deployed doing something that helps advance the larger organization.

4. We know how the team will be evaluated

People want to win. The trouble with many teams is that winning hasn’t been

defined. If you don’t know what good looks like, how do you know you’ve achieved

it?

5. We understand our customers’ expectations

Each team serves others. These could be internal or external customers. To succeed

in this task requires that the team knows what those customers expect.

6. Groups and individuals that support us understand our expectations

In most organizations, a team’s success depends on the support they get from

others. To be well‐supported, those people need to know how best to provide that

support.

7. We agree on the process for completing our work

There are many ways to get the work done. Efficiency usually requires a shared

process. When this characteristic is missing, chaos reigns.

8. We each do our “fair share” of the work

This has to happen to prevent the all‐too‐common fight that begins when team

members begin to think I’m working way harder than her.

9. We have access to the resources we need

This could be experts, data, tools, equipment, or decision authority.

10. We effectively make decisions

Teamwork requires decisions. Lots of decisions. Getting good at making those

decisions quickly separates strong teams from weak teams.

11. We communicate openly on the team

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Almost all teamwork problems can be traced back to a team’s inability to effectively communicate. Assertiveness and candor are necessary teamwork ingredients.

12. We communicate openly with interested parties outside of the team

Your team might be doing good work, but if nobody else knows it, you have a

problem.

13. We effectively resolve conflicts

All teams have conflicts, which in themselves are not problems. They only become a

problem when they go unresolved or people are bloodied in the process of resolving

them.

14. We quickly address problems that are hurting the team

When the inevitable problems arise, good teams notice, raise the concern, and go

into problem‐solving mode. They certainly don’t struggle with an “elephant in the

room.”

15. We each understand what is expected of us

A team is a collection of individuals. Each person has to know what he is supposed to do to be an effective team member.

16. We support one another

A bunch of individuals all doing their own thing in isolation from co‐workers is not a

team. Effective teams are collaborative and supportive entities.

17. We continuously monitor our performance

Doing this assessment is an example of monitoring performance. You can’t fix what

you don’t notice. Ask the questions.

18. We work at continuously improving our performance

Effective teams recognize there are many improvement opportunities. They are all

about growing better together.

19. Our team achieves (will achieve) its goals and objectives

The bottom‐line is always the results. Working well together means very little if the team can’t deliver.

20. We each feel good about being a part of this team

Results without connection to teammates doesn’t work either. At the end of the day, people are glad they are a member of this team.

(LaForce, 2018)

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Reference List

Bateman, T., Snell, S. and Konopaske, R. (2018). M: Management. (5th ed.). New York:

McGraw‐Hill Education.

DTU, Inc. (2016). How to successfully go through the Five Stages of Team Development.

Retrieved from:

http://apppm.man.dtu.dk/index.php/How_to_successfully_go_through_the_Five_St

ages_of_Team_Development

Gigli, M. (2018). What Is a Team Leader? ‐ Description, Role & Responsibilities. Retrieved

from: https://study.com/academy/lesson/what‐is‐a‐team‐leader‐description‐role‐

responsibilities.html

Gomez‐Mejia, L. R. and Balkin, D.B. (2012). Management– People, Performance, Change.

New Jersey: Pearson Education.

Jworldannapolis. (2018). World Team Building Programs. Retrieved from:

http://jworldannapolis.com/j‐world‐team‐building‐programs/

LaForce, T. (2018). 20 Characteristics of Effective Teams. Retrieved from:

https://tomlaforce.com/20‐characteristics‐of‐effective‐teams/

LinkedIn Slidehare. (2018). Basic Approaches to Leadership Organizational Behavior.

Retrieved from: https://www.slideshare.net/KnowlittleMatharu/ob11‐11st

Management Study Guide. (2018). What is Leadership? Retrieved from:

https://managementstudyguide.com/role_of_a_leader.htm

Mark, G. (2018). The difference between Teams and traditional work groups. Retrieved

from: https://www.pmway.co.za/sandbox/team.html

Robbins, S.P. and Coulter, M.A. (2017). Management, Global Edition. (14th ed.). New Jersey:

Pearson Education.

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Topic 10 – Monitoring and Controlling

Lesson Learning Outcomes

• Explain the nature and importance of control.

• Distinguish the link between planning and controlling.

• Describe the 4 steps in the control process.

• Understand the role of control in organizations.

• Recognize key common organizational controls.

• Review the characteristics organization controls.

Guiding Questions

• What is organization control ?

• How to implement control system in organizations.

What is Monitoring and Controlling

It’s the process of monitoring, comparing, and correcting work performance. All managers

should control even if their units are performing as planned because they can’t really know

that unless they’ve evaluated what activities have been done and compared actual

performance against the desired standard (Robbins & Coulter, 2017).

Effective controls ensure that activities are completed in ways that lead to the attainment of

goals. Whether controls are effective, then, is determined by how well they help employees

and managers achieve their goals (Robbins & Coulter, 2017).

Management Control

Control is the process of comparing performance to standards and taking corrective action. Using control, managers can ensure that performance objectives are being measured.

Written guidelines ensure that everyone is on the same page.

Careful and accurately controlling the performance of an organization requires timely and

accurate data on key operations variables and outcomes.

Control is the final step in the POLC module, and it is central to ensuring the organization is

moving correctly towards achieving the objectives set in the planning phase and also

ensuring any external variables are monitored ensuring the objectives are still valid.

Management Control process ‐ a formal control approach involving a cycle of four steps (Gomez‐

Mejia & Balkin, 2012).

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Planning‐Controlling Link

(Management Study Guide, 2018).

Controlling provides a critical link back to planning. If managers didn’t control, they’d have

no way of knowing whether their goals and plans were being achieved and what future

actions to take (Robbins & Coulter, 2017).

Planning and controlling are two separate functions of management, yet they are closely

related. The scope of activities if both are overlapping to each other. Without the basis of

planning, controlling activities becomes baseless and without controlling, planning becomes

a meaningless exercise (Management Study Guide, 2018).

In the present dynamic environment which affects the organization, the strong relationship

between the two is very critical and important. In the present day environment, it is quite

likely that planning fails due to some unforeseen events (Management Study Guide, 2018).

There controlling comes to the rescue. Once controlling is done effectively, it give us

stimulus to make better plans.

Therefore, planning and controlling are in‐separate functions of a business enterprise (Management Study Guide, 2018).

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Step 1 ‐ Set performance standards

Setting performance standards and objectives – involves setting benchmarks that managers

can use to measure performance. Standards can be developed by managers and

disseminated down through training, informal meetings, or written guidelines or they can

be developed by employees and communicated upward.

The expected standards and performance will be part of the organizations overall strategic

plan. Managers will define objectives for departments in specific operational terms that

include standards of performance to compare with organizational activities.

There are two types of standards:

1. Output standards – measure performance results in terms of the outcomes such as

quality, quantity, costs, and time to achieve result, ‐ measures include percentages

or error, dollar deviation, units produced, customers served in a period etc.

2. Input standards – measure the effort in terms of the amount of work to achieve the

result. This is used when the output is difficult to measure. Measures include

efficiency of resources, work attendance, conformity to rules etc.

(Gomez‐Mejia & Balkin, 2012).

Step 2 ‐ Measure actual performance

Measuring actual performance ‐ against standards – the goal of this step is to measure the

output and / or input standards. In most instances, quantitative standards are easier to

measure than qualitative standards (Gomez‐Mejia & Balkin, 2012).

It is an important step to ensure the measurement is sufficiently accurate enough to discover any variances between actual and planned performance (Bateman et. al. 2018)

Managers will prepare formal reports of performance measures to be reviewed regularly.

The measure against the report made must be in line with those set in the first step

(Bateman et. al. 2018)

Step 3 ‐ Comparing actual performance with standards

Comparing actual performance with objectives and standards – involves comparing actual

performance with established standards. Some deviations may be considered “normal.”

(Management Study Guide, 2018).

The basic equation for this step is:

Need for action = actual performance – desired performance

(Management Study Guide, 2018).

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There are three different way to determine this equation:

1. Historical – use past performance as a benchmark for current performance

2. Relative – use performance outcomes from other staff, division, teams as a standard

to measure current performance against

3. Engineering – uses standards set by scientific measurements methods to measure

current performance.

(Gomez‐Mejia & Balkin, 2012).

Step 4 ‐ Reinforce success or taking corrective action

Reinforce success if organizations are on the right track in achieving their objectives. Here

employees are lauded, thus creating motivation so that they continue in achieving the

objectives (Robbins & Coulter, 2017).

Taking corrective action – Taking action when a discrepancy exists between desired and

actual performance. If a standard is considered achievable, but has not been met, managers

need to address the situation and make changes where appropriate.

The equation calculated in step 3 provided the basis for the level of urgency for action. If

there is a large difference between actual vs. desired, then the need for corrective action is

also high (Gomez‐Mejia & Balkin, 2012).

Management by exception ‐ the practise of giving management attention to situation

showing the greatest need. This allows resources to be utilised for issues of greatest need,

and potentially greatest return on achievement of strategic objectives (Gomez‐Mejia &

Balkin, 2012).

Two types of exceptions can be encountered:

1. Problem situation – the actual is below the expected, therefore the reason for the

deficiency must be understood and actions taken to correct the problems.

2. Opportunity situation – the actual is above the expected, therefore the reasons must

be understood and action taken to continue this performance (Robbins & Coulter,

2017).

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The Role of Control in Organizations

There are three basic types of bureaucratic control. Each is important at different phases of

the operations cycle. Each offers opportunities for actions to be taken to improve

performance, and organization learning to take place.

1. Feedforward control – (also called preliminary control) they are undertaken before

any work activity begins. They ensure objectives are clear and directions are

established. At this stage checks can be taken to ensure all resources are available.

This stage addresses problems before they occur using written rules and procedures.

This stage is designed to elimination or reduce problems later in the process which

are generally harder and more costly to fix.

At this phase the question is asked – what needs to be done, before we begin.:

2. Concurrent Control ‐ (also called steering controls) monitor progress as the activities

are underway to ensure they are being carried out according to plan. Ideally,

concurrent controls identifies problems and allows corrective action to be taken at

the same time that work is being carried and importantly before it is completed.

This step can reduce waste and dissatisfied customers from inferior products.

Problems are generally identified using random quality checks.

At this phase the question is asked – what can we do to improve things before we

finish.

3. Feedback Control ‐ (also called post action control) the least useful type of control

because it is used after the process is completed. The focus is on the end result and

not the input, or the process as done in the other two steps of control.

The results of this stage are useful to improve future operations, and the results are

documented proof for any performance related rewards.

At this phase the question is asked – now it’s finished, how did we do

Common Organizational Controls

1. Compensation and Benefits ‐ base pay will attract top performing employees.

However to ensure a maximum ongoing level of performance it is common for

organization to use incentive payment systems. Theses stems add to base pay and

are tied to reaching certain set targets – this is part of manage by objective (MBO)

the use of these pay for performance systems is closely tied also to the concept of

motivation (SAGE Publications, 2018).

The prevalence of pay for performance systems is so high that may employees now calculate these into the overall package offered by perspective employers.

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2. Employee discipline systems ‐ the act of influencing behaviour through reprimand.

Discipline that is applied fairly, consistently, and systematically provides useful

control. For discipline to be affective it must be immediate, directed toward actions

not personality, be consistently applied, be informative and support realistic rules.

The other major aspect to the correct use of discipline is the manager must conduct

the discipline in a supportive setting.

Progressive discipline ties reprimands to the severity and frequency of the

employee’s infractions. Progressive discipline seeks to achieve compliance with the

least extreme reprimand possible (The University of British Columbia, 2018).

3. Information & Financial ‐ Information and Financial – the use of financial information

to measure the efficient and effective use of resources. All managers should have a

level of skill and awareness of the following common financial based information

about performance (WebFinance Inc., 2018).

• Liquidity ‐ The ability to generate cash to pay bills.

• Leverage ‐ The ability to earn more in returns than the cost of debt.

• Asset management ‐ The ability to use resources efficiently and operate at

minimum cost.

• Profitability ‐ The ability to earn revenues greater than costs.

• Break‐even analysis ‐ Determination of the point at which sales revenues are sufficient to cover costs. Break‐Even Point = Fixed Costs / (Price – Variable Costs). Used in evaluating new products, and new program initiatives.

This financial information can be assessed using a variety of financial ratios and be

compared to other areas of the business, historical data on the same or similar areas

or even external sources using benchmarking (WebFinance Inc., 2018).

4. Purchasing Control ‐ all organization must be concerned about how much they pay,

for the resources being used. To achieve efficiency, many organization are

centralising buying to seek discounts for bulk purchases and have professional

purchasing staff conduct the buying and locating of resources. Organization also

commit to a small number of suppliers to gain preferred service and quality

assurances (Accounting Management, 2018).

5. Inventory control ‐ the amount of resources held in storage for future use. The aim is

to keep sufficient levels of resources to achieve performance and meet objective

while keeping costs of holding resources at a minimum.

Economic Order Quantity (EOQ) – purchase a fixed number of items when holdings

fall below a certain point. The number ordered will replenish stocks while balancing

holding costs – this is generally automatically achieved via computer ordering

systems (Pontius, 2018).

A just‐in‐time (JIT) system focuses on creating the firm’s product in the least amount of time. Under the system, production steps are performed just as subsequent steps

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require them, and inventory levels are kept at the lowest level possible. JIT systems save on warehouse costs, and help identify production errors (Pontius, 2018).

6. Statistical quality control ‐ quality control involves checking processes, materials,

products, and services to ensure that they meet high standards. The processes takes

random samples and is undertaken at all stages of the product development.

Samples are measured and using statistical analysis and the results must be within a

pre‐ determined variance. If any errors are found, the process is halted and

corrective actions taken to ensure compliance (IISE Training Centre, 2018).

7. Organization Performance Control – Simple Balanced Scorecard KPI Organization

Dashboard – Professional presentation featuring a Balanced Scorecard Dashboard

with four Key Performance Indicators in each of the four main perspectives. The

Organization Dashboard layout is constructed with a four quadrants matrix. Each of

the quadrants describe with a text placeholder the objective that the area will

measure (Slidemodel, 2018)

The strategic objectives areas featured are:

• Financial.

• Customer.

• Learning and Growth.

• Internal Process.

(Slidemodel, 2018)

8. Management By Objectives (MBO) ‐ Management by Objectives is often represented

as a cycle with five stages:

• Review the organizational context. This is often seen as the weak point of

MBO, as this is sometimes poorly understood. Drucker, himself, has said:

‘Management by objectives works if you know the objectives: 90% of the

time you don’t.’

• Reflect the organization’s objectives in those you set to your team members.

Within the context of the objectives they are set, staff become self‐directing,

hence Packard’s distinction between MBO and control.

• Monitor people’s performance against the objectives you have set, and give

regular, effective feedback. Ideally, provide rapid feedback mechanisms, so

that each staff member can assess their performance constantly.

• Assess performance against objectives, and then be sure to…

• Recognise and reward good performance.

(Clayton, 2011).

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Reference List

Accounting Management. (2018). Concept And Meaning Of Purchasing And Purchase

Control. Retrieved from: https://accountlearning.blogspot.com/2010/05/purchasing‐

and‐purchase‐control.html

Bateman, T., Snell, S. and Konopaske, R. (2018). M: Management. (5th ed.). New York:

McGraw‐Hill Education.

Clayton, M. (2011). Peter Drucker: Management By Objectives. Retrieved from:

https://www.pocketbook.co.uk/blog/2011/08/02/management‐by‐objectives/

Gomez‐Mejia, L. R. and Balkin, D.B. (2012). Management– People, Performance, Change.

New Jersey: Pearson Education.

IISE Training Centre. (2018). Statistical Quality Control. Retrieved from:

http://www.iise.org/TrainingCenter/CourseDetail/?EventCode=SQC

Management Study Guide. (2018). What is Leadership? Retrieved from:

https://managementstudyguide.com/role_of_a_leader.htm

Pontius, N. (2018). What Is Inventory Control? Retrieved from:

https://www.camcode.com/asset‐tags/what‐is‐inventory‐control/

Robbins, S.P. and Coulter, M.A. (2017). Management, Global Edition. (14th ed.). New Jersey:

Pearson Education.

SAGE Publications. (2018). Compensation & Benefits Review. Retrieved from:

http://journals.sagepub.com/home/cbr

Slidemodel. (2018). Simple Balanced Scorecard KPI Organization Dashboard. Retrieved from:

https://slidemodel.com/templates/simple‐balanced‐scorecard‐kpi‐powerpoint‐

dashboard/

The University of British Columbia. (2018). Discipline in the Workplace. Retrieved from:

http://www.hr.ubc.ca/administrators/employee‐relations/discipline‐in‐the‐

workplace/

WebFinance Inc. (2018). Financial information. Retrieved from:

http://www.businessdictionary.com/definition/financial‐information.html