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ipptchap006.pptxPart 3
Managing for Quality and Competitiveness
© 2015 McGraw-Hill Education.
Part 3 of your textbook is: Managing for Quality and Competitiveness.
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| CHAPTER 6 | The Nature of Management |
| CHAPTER 7 | Organization, Teamwork, and Communication |
| CHAPTER 8 | Managing Service and Manufacturing Operations |
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The Nature of Management is the subject of Chapter 6.
Any organization, small or large, public or private, needs managers to plan, organize, staff, direct and control the work that goes on. In short, managers help the organization achieve its objectives.
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Learning Objectives
LO 6-1 Define management and explain its role in the achievement of organizational objectives.
LO 6-2 Describe the major functions of management.
LO 6-3 Distinguish among three levels of management and the concerns of managers at each level.
LO 6-4 Specify the skills managers must have to be successful.
LO 6-5 Describe the different types of leaders and how leadership can be used to empower employees.
LO 6-6 Summarize the systematic approach to decision making used by many business managers.
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The learning objectives for Chapter 6 are laid out here and in your textbook.
First we will introduce the field of management.
Next, we examine and survey the various functions, levels, and areas of management in business.
Finally, we discuss the skills managers need for success and the steps that lead to effective decision making.
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The Importance of Management
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Management is a process designed to achieve an organization’s objectives by using its resources effectively and efficiently in a changing environment. Effectively means having the intended results; efficiently means accomplishing the objectives with a minimum of resources.
Managers make decisions about the use of the organization’s resources and are concerned with planning, organizing, staffing, directing and controlling activities to reach the organization’s objectives.
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Management
A process designed to achieve an organization’s objectives by using its resources effectively and efficiently in a changing environment
Managers
Those individuals in organizations who make decisions about the use of resources and who are concerned with planning, organizing, staffing, directing and controlling the organization’s activities to reach its objectives
Management Functions
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To harmonize the use of resources so the business can develop, produce and sell products, managers engage in a series of activities:
Planning
Organizing
Staffing
Directing
Controlling
As we discuss these functions, remember they are interrelated and managers may perform two or more functions at a time.
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Management Functions
Planning is the process of determining the organization’s objectives and deciding how to accomplish them; the first function of management
Planning is the process of determining the organization’s objectives and deciding how to accomplish them; the first function of management.
Planning is a crucial activity as it lays the groundwork for the other functions to follow.
But before an organization can plan a course of action, it must first determine what it wants to achieve. It does this through a mission statement, goals and objectives.
A mission or mission statement, is an organization’s fundamental purpose and basic philosophy. It seeks to answer the question: “What business are we in?”
Goals are the results the company wants to achieve. A company often has multiple goals. A goal has three key components: an attribute sought; a target to achieve; and a time frame.
Objectives are measurable statements on common issues such as profit, competitive advantage, efficiency and growth.
The principal difference between goals and objectives is that objectives are stated in a measurable way.
Plans specify what should be done, by whom, where, when and how.
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Planning
Mission is the statement of an organization’s fundamental purpose and basic philosophy
Goals are the results the company wants to achieve
Objectives are measurable statements on common issues such as profit, competitive advantage, efficiency and growth
Plans specify what should be done, by whom, where, when and how
Management Functions
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There are three general types of plans for meeting objectives.
Strategic plans are plans that establish the long-range objectives and overall strategy or course of action by which a firm fulfills its mission.
Generally cover periods of one year or longer and may include plans to add products, purchase companies, issue stock or move into international markets.
Tactical plans are short-range plans designed to implement the activities and objectives specified in the strategic plan.
Usually cover a period of one year or less. Management must periodically review and update these plans as the business environment changes.
Operational plans are very short-term plans that specify what actions individuals, work groups, or departments need to accomplish in order to achieve the tactical plan and ultimately the strategic plan.
Apply to details in activities in one month, a week or even a day.
Crisis management or Contingency planning is an element of planning that deals with potential disasters such as product tampering, oil spills, fire, earthquake, computer virus or airplane crash.
Businesses that have a well thought-out contingency plan tend to respond more effectively when problems occur than businesses who lack such planning.
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Strategic Plans
Tactical Plans
Operational Plans
Crisis Management/Contingency Planning
Establish long-range objectives and overall strategy or course of action by which a firm fulfills its mission
Short-range plans designed to implement the activities and objectives specified in the strategic plan
Very short-term plans, specify actions individuals, work groups, or departments must accomplish to achieve the tactical plan and ultimately the strategic plan
An element in planning that deals with potential disasters
Management Functions
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Review plans and determine what is necessary to implement them
Divide work into small units and assign to specific individuals, groups or departments
Organizing is continuous because change is inevitable
Rarely are individuals in an organization able to achieve common goals without some form of structure.
Organizing is the structuring of resources and activities to accomplish objectives in an efficient and effective manner.
Managers organize by reviewing plans and determining what activities are necessary to implement those plans.
Then they divide the work into small units and assign them to specific individuals, groups or departments. As companies reorganize for efficiency, they are organizing work into teams to handle core processes such as new product development instead of the more traditional departments.
Organizing is continuous because change is inevitable.
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Organizing
The structuring of resources and activities to accomplish objectives in an efficient and effective manner
Management Functions
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Manager’s duties include
Recruiting
Determining what skills are needed for specific jobs
Motivating and training employees
Determining pay and benefits
Preparing employees for higher-level jobs
Once managers have determined what work is to be done and how it is to be organized, they must ensure the organization has enough employees with appropriate skills to do the work.
Staffing is hiring of people to carry out the work of the organization.
Beyond recruiting people for positions within the firm, managers must determine what skills are needed for specific jobs, how to motivate and train employees, how much to pay, what benefits to provide, and how to prepare employees for higher-level jobs in the firm at a later date. These elements of staffing will be covered in Chapters 9 and 10.
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Staffing
Hiring of people to carry out the work of the organization
Management Functions
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Some companies choose to recruit people through online job websites
Monster.com is one of the world’s largest employment website
Some companies choose to recruit new people through online job websites like Monster.com, one of the world’s largest.
Using Monster.com would fall under the staffing function of management.
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Management Functions
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Production, sales and technical positions can be outsourced to countries with lower labor costs
Downsizing has helped companies reduce costs quickly
However, this involves loss of jobs and lowered morale for remaining employees
An effective manger will promote optimism and positive thinking while minimizing criticism
Downsizing is the elimination of a significant number of employees from an organization.
Production, sales and technical positions can be outsourced to countries with lower labor costs.
Staffing itself can be outsourced to companies who focus on hiring and managing employees. Downsizing has helped companies reduce costs quickly but it comes with a price.
The biggest price is the loss of jobs and the lowered morale of the remaining employees.
An effective manager will promote optimism and positive thinking and minimize criticism.
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Downsizing
The elimination of a significant number of employees from an organization
Management Functions
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Tell employees what to do and when to do it using deadlines, then encourage them to do their work
Directing also involves determining and administering rewards and recognition
Managers may motivate by providing incentives but recognition and appreciation are often the best motivators
Once the organization has been staffed, management must direct the employees.
Directing is motivating and leading employees to achieve organizational objectives. Managers tell their employees what to do and when to do it using deadlines, then encourage them to do their work.
Directing also involves determining and administering rewards and recognition.
Managers may motivate by providing incentives but recognition and appreciation are often the best motivators. The motivation of employees is discussed in Chapter 9.
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Directing
Motivating and leading employees to achieve organizational objectives
Management Functions
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Control involves five activities
Measuring performance
Comparing performance with standards or objectives
Identifying deviations from the standards
Investigating the causes of deviations
Taking corrective action when necessary
Planning, organizing, staffing and directing are all important to the success of an organization, whether its objective is earning a profit or something else. But what happens when a firm fails to reach its goals despite a strong planning effort?
Controlling is the process of evaluating and correcting activities to keep the organization on course.
Control involves five activities
Measuring performance
Comparing performance with standards or objectives
Identifying deviations from the standards
Investigating the causes of deviations
Taking corrective action when necessary
Controlling and planning are closely linked. Planning establishes goals and standards, controlling ensures that operations meet requirements and are satisfactory to reach objectives.
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Controlling
The process of evaluating and correcting activities to keep the organization on course
Levels of Management
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All managers perform the five functions we just discussed but in a large company with more than one manager, responsibilities must be divided and delegated.
Many organizations have multiple levels of management – top management, middle management and first-line, or supervisory management.
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Levels of Management
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Importance of Management Functions to Managers in Each Level
Managers at all three levels perform all five management functions but the time spent on each function varies.
This slide shows the weight of importance of each function differing with each level of management.
For Top Managers, the most important management function is planning.
Middle Managers most consuming function is organizing while First-Line Managers spend most of their time controlling.
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Levels of Management
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In publically owned corporations, the CEO’s boss is the board of directors
Compensation committees work with boards of directors and CEOs to try and keep pay in line with performance
Workforce diversity is good for workers and for the bottom line
Top managers are presidents and other top executives of a business, such as the chief executive officer (CEO), chief financial officer (CFO), and chief operations office (COO), who have overall responsibility for the organization.
In publically owned corporations, the CEO’s boss is the board of directors.
With CEO salaries in the news, compensation committees are increasingly working with boards of directors and CEOs to try and keep pay in line with performance.
Workforce diversity is an important issue in today’s corporations and effective managers have found that diversity is good for workers and for the bottom line.
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Top Managers
The president and other top executives of a business, such as the chief executive officer (CEO), chief financial officer (CFO), and chief operations officer (COO), who have overall responsibility for the organization
Levels of Management
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Mark Zuckerberg is a CEO that does not receive high annual compensation
In 2012 he announced he would go from a salary of $600,000 to an annual pay of just $1
Facebook’s Mark Zuckerberg is a CEO who does not receive high annual compensation. In 2012 it was announced he would go from his current salary of $600,000 to an annual pay of just $1.
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Levels of Management
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Middle managers have more focused responsibilities and spend more time organizing than other managers
In business, plant managers, division mangers and department mangers make up middle management
The ranks of middle managers have been shrinking as more companies downsize to be more productive
Middle managers are members of an organization responsible for the tactical planning that implements the general guidelines established by top management.
Middle managers have more focused responsibilities and spend more time organizing than other managers.
In business, plant managers, division managers and department managers make up middle management.
The ranks of middle managers have been shrinking as more companies downsize to be more productive.
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Middle Managers
Those members of an organization responsible for the tactical planning that implements the general guidelines established by top management
Levels of Management
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Responsible for implementing plans established by middle management and directing workers’ daily performance
Spend most of their time directing and controlling
Commonly called foreman, supervisor and office service manager
First-line managers are those who supervise both workers and the daily operations of an organization.
First-line managers are responsible for implementing plans established by middle management and directing workers’ daily performance.
They spend most of their time directing and controlling.
First-line managers are commonly called foreman, supervisor and office service manager.
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First-Line Managers
Those who supervise both workers and the daily operations of an organization
Areas of Management
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At each level, managers specialize in: finance, production and operations, human resources, marketing and administration
Projecting income and expenses; determining financing needs
Investing extra funds
Protecting and monitoring the money flow
At each level of management, managers specialize in the areas of: finance, production and operations, human resources, marketing and administration.
Financial managers focus on obtaining needed funds for the successful operation of an organization and using those funds to further organizational goals.
Duties of a financial manager include:
Projecting income and expenses over a specified period
Determining short and long-term financing needs
Identifying and selecting appropriate ways to invest extra funds
Monitoring and protecting the flow of financial resources
This management position is of the utmost importance.
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Financial Managers
Focus on obtaining needed funds for the successful operation of an organization and using those funds to further organizational goals
Areas of Management
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Typically involved in
Planning and designing production facilities
Purchasing raw materials and supplies and managing inventory
Scheduling processes to meet demand
Ensuring products meet quality standards
Productions and operations mangers develop and administer the activities involved in transforming resources into goods, services and ideas ready for the marketplace.
These managers are typically involved in:
-planning and designing production facilities
-purchasing raw materials and supplies
-managing inventory
-scheduling processes to meet demand
-ensuring products meet quality standards
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Productions and Operations Managers
Develop and administer the activities involved in transforming resources into goods, services and ideas ready for the marketplace
Managing Automation and Robots in the Workplace
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As digital technology and automation came to the forefront in business operations, many thought the managerial function would no longer be necessary—however, the opposite has proven to be true
Technical and leadership skills are valued more highly among today’s managers as their former roles of overseeing employees on a production line have declined
These duties are now delegated to the employees who oversee the operations of the machines on the production lines
SOURCE: Lauren Webber. “Robots Need Managers, Too”. www.wsj.com. August 7, 2013. http://online.wsj.com/article/SB10001424127887323838204578654283064415830.html. (September 24, 2013).
Managing automation and robots in the workplace
As digital technology and automation came to the forefront in business operations, many thought the managerial function would no longer be necessary. However, the opposite has proven to be true. Managers are still necessary, but their activities have changed. Technical and leadership skills are valued more highly among today’s managers as their former roles of overseeing employees on a production line have declined. These duties are now delegated to the employees who oversee the operations of the machines on the production lines.
SOURCE: Lauren Webber. “Robots Need Managers, Too”. www.wsj.com. August 7, 2013. http://online.wsj.com/article/SB10001424127887323838204578654283064415830.html. (September 24, 2013).
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Areas of Management
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Determine the human resource needs
Recruit and hire new employees
Develop and administer employee benefits, training and performance appraisal programs
Deal with government regulations
Human resources managers handle the staffing function and deal with employees in a formalized manner
These managers:
-Determine the human resource needs
-Recruit and hire new employees
-Develop and administer employee benefits, training and performance appraisal programs
-Deal with government regulations
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Human Resources Managers
Handle the staffing function and deal with employees in a formalized manner
Areas of Management
6-24
Specific jobs are found in areas such as
Marketing research
Advertising
Personal selling
Retailing
Digital marketing
Marketing managers are responsible for planning, pricing, and promoting products and making them available to customers.
Specific jobs are found in areas such as:
-Marketing research
-Advertising
-Personal selling
-Retailing
-Digital marketing
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Marketing Managers
Responsible for planning, pricing, and promoting products and making them available to customers
Areas of Management
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IT managers are tasked with
Securing computer systems
Protecting the systems’ data
Staff training and support
Information technology (IT) managers are responsible for implementing, maintaining, and controlling technology applications in business, such as computer networks.
IT managers are tasked with:
-securing computer systems from unauthorized users while keeping ease of use for employees and authorized users
-protecting the systems’ data, even during a disaster
-teaching and helping employees use technology efficiently through training and support
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Information Technology (IT) Managers
Responsible for implementing, maintaining, and controlling technology applications in business, such as computer networks
Areas of Management
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Often called general managers because their responsibilities are so broad
Administrative managers manage an entire business or a major segment of a business; they are not specialists but coordinate the activities of specialized managers.
Administrative managers have very broad responsibilities are sometimes called general managers.
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Administrative Mangers
Manage an entire business or a major segment of a business; they are not specialists but coordinate the activities of specialized managers
Skills Needed by Managers
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Managers are typically evaluated on how effective and efficient they are. Managers must have certain skills such as:
-leadership
-technical expertise
-conceptual skills
-analytical skills
-human relations skills
This table describes some of the roles managers may fulfill, putting their skills to work.
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Skills Needed by Managers
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Autocratic leaders make all the decisions then tell employees what must be done and how to do it
Democratic leaders involve their employees in decisions
Free-rein leaders let their employees work without much interference; setting performance standards and letting employees find their own way to meet them
Leadership is the ability to influence employees to work toward organizational goals.
Managers can be classified into three types based on their leadership style.
Autocratic leaders make all the decisions then tell employees what must be done and how to do it.
Democratic leaders involve their employees in decisions.
Free-rein leaders let their employees work without much interference; setting performance standards and letting employees find their own way to meet them.
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Leadership
The ability to influence employees to work toward organizational goals
Skills Needed by Managers
6-29
Technical expertise is the specialized knowledge and training needed to perform jobs that are related to particular areas of management.
This knowledge is needed most by first-line managers and least critical to top-level managers.
Conceptual skills are the ability to think in abstract terms and to see how parts fit together to form the whole.
These skills are need most by top level managers.
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Technical Expertise
The specialized knowledge and training needed to perform jobs that are related to particular areas of management
Needed most by first-line managers and least critical to top-level managers
Conceptual Skills
The ability to think in abstract terms and to see how parts fit together to form the whole
Needed most by top level managers
Skills Needed by Managers
6-30
Analytical skills are the ability to identify relevant issues, recognize their importance, understand the relationships between them and perceive the underlying causes of a situation.
Analytical skills are most important to the success of top level managers.
Human relation skills are the ability to deal with people, both inside and outside the organization.
These skills are especially important in organizations that provide services, such as hospitals, airlines and banks.
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Analytical Skills
The ability to identify relevant issues, recognize their importance, understand the relationships between them and perceive the underlying causes of a situation
Most important to the success of top level managers
Human Relation Skills
The ability to deal with people, both inside and outside the organization
Especially important in organizations that provide services, such as hospitals, airlines and banks
Skills Needed by Managers
6-31
Flight attendant David Holmes became a YouTube sensation by rapping passenger instructions
Southwest Airlines’ managers and employees are well-known for their excellent human relations skills
A YouTube video, showing Southwest Airline’s David Holmes rapping passenger instructions, became a sensation.
Southwest Airlines’ managers and employees are well-known for their excellent human relations skills and making the workplace fun.
Every new Southwest employee attends “You, Southwest and Success,” a day-long class designed to teach employees about the airline and its reputation for impeccable customer service.
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Where Do Managers Come From?
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Organizations acquire managers in three ways:
Promoting employees from within
Tends to increase motivation
Hiring managers from other organizations
Expensive to relocate people
Hiring managers straight out of universities
Look for people who are trainable and a good fit with their corporate culture
Where do organizations get their managers?
There are three ways to acquire managers:
-Promote from within, which tends to increase motivation for all employees
-Hire managers from other organizations. It can be expensive to relocate the new managers and it may cause resentment with employees.
Hire straight from universities. Companies look for people who are trainable and will be a good fit with their corporate culture.
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Decision Making
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Steps in the Decision Making Process
Managers make many different kinds of decisions. Decision making is important in all management functions and at all levels, whether the decisions are strategic, tactical or operational.
A systematic approach using the following six steps usually leads to more effective decision making:
Recognizing and defining the decision situation
Developing options to resolve the situation
Analyzing the options
Selecting the best option
Implementing the decision
Monitoring the consequences of the decision
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Decision Making
6-34
Recognizing and Defining the Decision Situation
Situations may be positive or negative
Situations calling for small-scale decisions occur without warning
Large-scale decisions generally occur after some warning signs; managers must recognize those signs
Once a situation is recognized, management must define it
The first step in the decision making process is recognizing and defining the decision situation.
Situations may be positive (an opportunity to increase sales) or negative (huge losses on a particular product).
While situations calling for small-scale decisions occur without warning, most large-scale decisions generally occur after some warning signs, such as declining profits. Managers must pay attention to such signals.
Once a situation is recognized, management must define it. A manager may define declining profits as changes in customer preferences.
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Decision Making
6-35
Developing options is the second step in the decision making process
A list of possible courses of action should include both standard and creative plans
Analyzing options is the next step
Management must look at the practicality and appropriateness of each option
Selecting the best option is step four
Often a subjective procedure
The second step in the decision making process is Developing Options.
A list of possible courses of action should include both standard and creative plans.
After developing a list of possible courses of action, management should analyze the practicality and appropriateness of each option.
When analyzing the consequences of an option, managers should consider its impact on the current situation and on the organization as a whole.
Step four is selecting the best option. This is often a subjective procedure because many situations do not lend themselves to quantitative analysis.
It may be possible to select and use a combination of several options.
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Decision Making
6-36
Step five is Implementing the Decision
This step can be fairly simple, or very complex and no matter how well planned the implementation is, unforeseen problems will arise
Monitoring the Consequences is the final step
Has the implementation of the decision accomplished the desired result?
Is yes, then the decision was sound
If no, then more analysis is warranted
To deal with the situation at hand, the selected option must be put into action. Implementation is step five in the process.
This step can be fairly simple or very complex depending on the nature of the decision. No matter how well planned the implementation is, unforeseen problems will arise.
The final step of the decision making process is monitoring the consequences.
Has the implementation of the decision accomplished the desire result? Is so, then the decision was probably sound.
If not, then more analysis is warranted. Management may find that the situation was incorrectly defined from the beginning and must start the process over.
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Factors that Affect Decision Making
6-37
The use of intuition is usually a result of years of experience in a specific situation or environment
The manager will recognize patterns or similarities between the current situation and previous ones and use that information to make decisions
Stress and emotion can also influence decisions negatively
Defensiveness, overreaction, and obsession are indicators that stress and emotion are being factored into the decision making process
How the problem or situation is framed will determine the final decision, whether it is negative or positive
Managers need to ensure that they are seeing the situation objectively
Finally, confidence and risk propensity are delicate factors in decision making
Both attributes must be kept in balance if decisions are to be reasonable and effective
SOURCE: Robert D. Gatewood, Robert R. Taylor, and O.C. Ferrell. Management: Comprehension, Analysis, and Application. Austen Press: Homewood, IL. 1995. Pages 311-316.
Factors that affect decision making
It is just as important for managers to make decisions as it is for them to understand the factors that affect decision making. The use of intuition is usually a result of years of experience in a specific situation or environment. The manager will recognize patterns or similarities between the current situation and previous ones and use that information to make decisions. Stress and emotion can also influence decisions negatively. Defensiveness, overreaction, and obsession are indicators that stress and emotion are being factored into the decision making process. How the problem or situation is framed will determine the final decision, whether it is negative or positive. Managers need to ensure that they are seeing the situation objectively. Sometimes bad decisions are reinforced by escalation of commitment, where the manager is committed to a certain activity and yet continues to fail. The more failure occurs, the stronger the commitment becomes. Finally, confidence and risk propensity are delicate factors in decision making. Both attributes must be kept in balance if decisions are to be reasonable and effective.
SOURCE: Robert D. Gatewood, Robert R. Taylor, and O.C. Ferrell. Management: Comprehension, Analysis, and Application. Austen Press: Homewood, IL. 1995. Pages 311-316.
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The Reality of Management
6-38
Managers spend a lot of time establishing and updating an agenda of goals and plans for carrying out their responsibilities
Management is not a cut-and-dried process. Managers spend as much as 75 percent of their time working with others.
Managers spend a lot of time establishing and updating an agenda of goals and plans for carrying out their responsibilities.
An agenda is a calendar, containing both specific and vague items, that covers short-term goals and long-term objectives.
Managers also spend a lot of time networking which is the building of relationships and sharing information with colleagues who can help managers achieve the items on their agenda.
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Agenda
A calendar containing both specific and vague items, that covers short-term goals and long-term objectives
Networking
The building of relationships and sharing of information with colleagues who can help managers achieve the items on their agenda
The Reality of Management
6-39
Websites like LinkedIn are helping managers and employees network with one another to achieve their professional goals
Websites like LinkedIn are helping managers and employees network with one another to achieve their professional goals.
It is only through creativity and imagination that managers can make effective decisions that benefit their organizations.
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Discussion
Name the five functions of management and briefly describe each function.
What skills do managers need? Give examples of how managers use these skills to do their jobs.
6-40
Name the five functions of management and briefly describe each function.
The five functions of management include planning, organizing, staffing, directing, and controlling. Planning is the process of selecting a course of action to achieve organizational objectives. Organizing consists of structuring all resources and activities to accomplish objectives in an efficient and effective manner. Staffing is hiring people to carry out the work of the organization. Directing is motivating and leading employees to achieve organizational objectives. Controlling is evaluating and correcting activities to keep the organization on course.
What skills do managers need? Give examples of how managers use these skills to do their jobs.
Skills needed by managers include leadership, technical expertise, conceptual skills, analytical skills, and human relations skills. Leadership is the ability to influence and motivate employees to work toward the achievement of organizational goals. Technical expertise is the specialized knowledge needed to perform a job, such as managing an auto production line. Conceptual skills are the ability to think in abstract terms so that a manager can fit parts together to form a whole perspective of a business operation. Analytical skills are the ability to identify relevant issues and recognize their importance, understand the relationships between them, and perceive their underlying causes. Human relations skills involve dealing with people both inside and outside the organization.
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