Using Management Skills to Build Business Relationships Chapter 7

Chapter 7 Learning Goals 1.W 1.What is the role of management? 2.W 2.What are the four types of planning? 3.W 3.What are the primary responsibilities of managers in organizing activities? 4.H 4.How do leadership styles influence a corporate culture? 5.H 5.How do organizations control activities?

Chapter 7 Learning Goals (cont’d.) 6.W 6.What roles do managers take on in different organizational settings? 7.W 7.What set of managerial skills is necessary for managerial success? 8.W 8.What trends will affect management in the future?

Learning Goal 1 WWhat is the role of management? –Management is the Process of guiding development, maintenance, and allocation of resources to attain organizational goals –Managers are Responsible for developing and carrying out this management process –Primary functions of Managers Planning Organizing Leading Controlling

Management: The process of guiding the development, maintenance, and allocation of resources to attain organizational goals

Quality of Management Ratings made by Fortune magazine: Most admired Most admired quality of management: –Philip Morris –General Electric –Cisco Systems Leastadmired : Least admired quality of management: –Oxford Health Plans –Cabletron Systems –Trump Hotels & Casinos Source: Fortune, Mar. 1, 1999, p. 70.

Four Activities of Management Planning Organizing Leading Controlling

Learning Goal 2 WWhat are the four types of planning? –Strategic planning Creating long-range (one to five years), broad goals Determining necessary resources to accomplish goals –Tactical planning Has a shorter time frame (less than one year) Specific objectives that support the broader strategic goals –Operational planning Creates specific standards, methods, policies, and procedures used in specific functional areas of organization –Contingency plans Identify alternative courses of action for unusual or crisis situations

Four Types of Planning Strategic Planning Tactical Planning Operational Planning Contingency Planning Planning long-range, broad goals to implement a strategic plan; shorter term and more specific creating very specific policies and procedures alternative actions for unusual or crisis situations

Contingency Planning Some types of contingency planning that were used in preparation for the Year 200 computer bug: stocked gasoline & diesel fuel –Cities stocked gasoline & diesel fuel for emergency vehicles stocked food & water –Hotel chains stocked food & water for guests if needed paper & pen backups –Stores devised paper & pen backups for credit card processing Disaster Operations Center –The Red Cross set up a national Disaster Operations Center

Learning Goal 3 WWhat are the primary responsibilities of managers in organizing activities? –Organizing involves Coordinating and allocating a firm’s resources in order to carry out its plans Developing a structure for the people, positions, departments, and activities within the firm by: division of labor –Dividing up tasks (division of labor) departmentalization –Grouping jobs and employees (departmentalization) delegation –Assigning authority and responsibilities (delegation)

Levels of Management Organizing Top Management Middle Management Supervisory Management CEO Vice President Division Heads, Regional Managers Supervisors, Team Leaders, Foremen Strategic Plans Tactical Plans Operational Plans

Sources of Power for Leaders: Leading Type of Power:Derived from: Legitimate 1. Legitimate position in organization Reward 2. Reward control over rewards Coercive 3. Coercive control over punishments Expert 4. Expert extensive knowledge Referent 5. Referent charisma, respect, admiration

–95% of nurses in a research study were willing to follow doctors’ orders to administer a clearly unsafe dosage of medicine to patients (Source: Hofling et al., 1966, Journal of Nervous and Mental Disease, v. 143, pp ) –46% of nurses in another study admitted to a time that they complied with a doctor’s order that they thought was unsafe (Source: Krackow & Blass, 1995, Journal of Social Behavior and Personality, v. 10, pp ) Automatic Deference to Expert & Legitimate Power can be Harmful

Learning Goal 4 HHow do leadership styles influence a corporate culture –Corporate culture –Corporate culture is the set of attitudes, values, and standards of behavior that distinguishes one organization from another Evolves over time Based on the accumulated history of the organization, including the vision of the founders Dominant leadership style within the organization also determines corporate culture

Leadership Styles Autocratic 1. Autocratic directive, controlling Participative 2. Participative democratic, consensual, consultive Free-rein 3. Free-rein (Laissez-Faire) members have freedom, leaders give ideas and information Leading

Learning Goal 5 HHow do organizations control activities? –Controlling is the process of assessing the organization’s progress toward accomplishing its goals by: Setting performance standards (goals) Measuring performance Comparing actual performance to established performance standards Taking corrective action, if necessary Using information gained from the process to set future performance standards

5-stage Cycle of Controlling Set performance standards Measure performance Compare performance to standards Take corrective action, if needed Use information gathered to set future performance standards Controlling

Measuring Performance Federal Express uses 3 quantitative measures of performance: Service Quality Index measurements made on every shipment Customer Satisfaction Index customer ratings Process Quality Indicators measures taken on individual operating units (ex., delivery truck performance) Controlling Source: Neff & Citrin: Lessons from the Top, 1999, pp

Learning Goal 6 WWhat roles do managers take on in different organizational settings? –Informational role Manager may act as an information gatherer, an information distributor, or a spokesperson for the company –Interpersonal role Manager may need to act as a figurehead, a company leader, or a liaison –Decisional role Manager may have to think like an entrepreneur, make decisions about resource allocation, help resolve conflicts, or negotiate compromises

Managerial Roles Type of role:Activities: Informational 1. Informational information gathering, disseminating, spokesperson Interpersonal 2. Interpersonal figurehead, leader, liaison Decisional 3. Decisional entrepreneur, resource allocation, resolve conflicts, negotiate

The Interpersonal Role 60% or moreJack Welch, CEO of GE, estimates he spends 60% or more of his time on ‘people stuff’ ( Source: Neff & Citrin: Lessons from the Top, 1999, p. 345).

The Decision-Making Process 1. Define the problem 2. Search for solutions 3. Select one or more alternatives 4. Put plan into action to see if problem is solved 5. Follow up

Learning Goal 7 WWhat set of managerial skills is necessary for managerial success? –Technical skills Specialized areas of knowledge and expertise Ability to apply knowledge –Human Relations skills Understand human behavior Communicate effectively with others Motivate individuals to accomplish their objectives –Conceptual skills Ability to view the organization as a whole Understand how the various parts are interdependent Assess how the organization relates to its external environment

Managerial Skills Technical Skills specialized knowledge and expertise Human Relations Skills interpersonal skills Conceptual Skills understanding the big picture Global Management Skills ability to operate in diverse environments

Learning Goal 8 WWhat trends will affect management in the future? –Increasing employee empowerment Increased autonomy and discretion to make their own decisions Control of the resources needed to implement decisions –Increasing use of information technology Managers can make quicker, better-informed decisions Keeps organization members connected –Growing need for global management skills Managers must –adapt to a new culture –learn a new language –manage a diverse workforce –operate in a foreign economic system

Trends in Management  Increased employee empowerment  Increased role of information technology  Increase in global management

Empowering Employees Things needed to empower employees, according to Don Fites, CEO of Caterpillar: decision-making authorityGive them decision-making authority culture & climateDevelop a culture & climate that support it OrganizeOrganize the business to support it RewardReward employees based on performance Source: Neff & Citrin: Lessons from the Top, 1999, pp