Copyright © 2003 by South-Western. All Rights Reserved. CHAPTER EIGHT MANAGEMENT, LEADERSHIP, AND THE INTERNAL ORGANIZATION Text by Profs. Gene Boone & David Kurtz Multimedia Presentation by Prof. Milton Pressley The University of New Orleans
Copyright © 2003 by South-Western. All Rights Reserved. Define management and three types of skills necessary for managerial success Define management and three types of skills necessary for managerial success Explain the role of vision in business success Explain the role of vision in business success Summarize the major benefits of planning and distinguish among strategic planning, tactical planning, and operational planning Summarize the major benefits of planning and distinguish among strategic planning, tactical planning, and operational planning Describe the strategic planning process Describe the strategic planning process Distinguish major types of business decisions and list the steps in the decision- making process Distinguish major types of business decisions and list the steps in the decision- making process LEARNING GOALS
Copyright © 2003 by South-Western. All Rights Reserved. Define leadership and compare different leadership styles Define leadership and compare different leadership styles Discuss the meaning and importance of corporate culture Discuss the meaning and importance of corporate culture Describe the purposes of an organizational structure Describe the purposes of an organizational structure Explain the five major forms of departmentalization and the four main types of organization structures Explain the five major forms of departmentalization and the four main types of organization structures LEARNING GOALS
Copyright © 2003 by South-Western. All Rights Reserved. © PhotoDisc CHAPTER OVERVIEW Examine how successful organizations use management to turn visions into reality Examine how successful organizations use management to turn visions into reality Describe the levels of management, the skills that managers at all levels in the organization need, and the functions that managers perform Describe the levels of management, the skills that managers at all levels in the organization need, and the functions that managers perform Discuss how planning helps managers to meet the challenges of a rapidly changing business environment Discuss how planning helps managers to meet the challenges of a rapidly changing business environment Explore the types of decisions that managers make, the role of managers as leaders, and the importance of corporate culture Explore the types of decisions that managers make, the role of managers as leaders, and the importance of corporate culture Discuss organizing Discuss organizing
Copyright © 2003 by South-Western. All Rights Reserved. WHAT IS MANAGEMENT? Management: process of achieving organizational objectives through people and other resources Management: process of achieving organizational objectives through people and other resources © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Figure 8.1 The Management Hierarchy
Copyright © 2003 by South-Western. All Rights Reserved. The Management Hierarchy Top management: the highest level of management -- includes such positions as chief executive officer, chief financial officer, and executive vice president Top management: the highest level of management -- includes such positions as chief executive officer, chief financial officer, and executive vice president Devote most of their time to developing long- range plans Devote most of their time to developing long- range plans Make decisions regarding new product introduction, the purchase of other companies, or entry into new geographic markets Make decisions regarding new product introduction, the purchase of other companies, or entry into new geographic markets Set a direction for their organization and inspire the company’s employees to achieve their vision Set a direction for their organization and inspire the company’s employees to achieve their vision © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Glass ceiling: invisible barrier that resists the efforts of women in moving up the corporate hierarchy beyond a certain point Glass ceiling: invisible barrier that resists the efforts of women in moving up the corporate hierarchy beyond a certain point The Management Hierarchy © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Middle management: second tier in the management hierarchy – includes positions like general managers, plant managers, division managers, and branch managers Middle management: second tier in the management hierarchy – includes positions like general managers, plant managers, division managers, and branch managers Attention focuses on specific operations, products, or customer groups within an organization Attention focuses on specific operations, products, or customer groups within an organization The Management Hierarchy © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Supervisory management: first- line management – includes positions such as supervisor, line manager, and group or team leader Supervisory management: first- line management – includes positions such as supervisor, line manager, and group or team leader Directly responsible for assigning nonmanagerial employees to specific jobs and evaluating their performance every day Directly responsible for assigning nonmanagerial employees to specific jobs and evaluating their performance every day The Management Hierarchy © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Skills Needed for Managerial Success Technical skills: ability to understand and apply the techniques, knowledge, and tools and equipment of a specific discipline or department Technical skills: ability to understand and apply the techniques, knowledge, and tools and equipment of a specific discipline or department © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Skills Needed for Managerial Success Human skills: interpersonal skills that enable a manager to work effectively with and through people Human skills: interpersonal skills that enable a manager to work effectively with and through people © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Skills Needed for Managerial Success Conceptual skills: ability to see the organization as a unified whole and to understand how each part of the overall organization interacts with other parts Conceptual skills: ability to see the organization as a unified whole and to understand how each part of the overall organization interacts with other parts © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Special Skills for Overseas Managers Must learn local languages, cultural customs, and practices and expectations of foreign business environments Must learn local languages, cultural customs, and practices and expectations of foreign business environments Awareness of differences among cultures Awareness of differences among cultures Able to handle culture shock Able to handle culture shock © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Managerial Functions Planning: process of anticipating future events and conditions and determining courses of action for achieving organizational objectives Planning: process of anticipating future events and conditions and determining courses of action for achieving organizational objectives © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Managerial Functions Organizing: means by which managers blend human and material resources through a formal structure of tasks and authority Organizing: means by which managers blend human and material resources through a formal structure of tasks and authority Directing: guiding and motivating employees to accomplish organizational objectives Directing: guiding and motivating employees to accomplish organizational objectives © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Managerial Functions Controlling: evaluating an organization’s performance and determining whether it is accomplishing its objectives Controlling: evaluating an organization’s performance and determining whether it is accomplishing its objectives © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. THE NEED FOR VISION Vision: perception of marketplace needs and the methods an organization can use to satisfy them Vision: perception of marketplace needs and the methods an organization can use to satisfy them Helps to direct the company toward opportunities... and differentiates it from competitors Helps to direct the company toward opportunities... and differentiates it from competitors Helps unify the actions of far-flung divisions, keep customers satisfied, and sustains growth Helps unify the actions of far-flung divisions, keep customers satisfied, and sustains growth © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. THE IMPORTANCE OF PLANNING Business plan: takes the firm’s objectives and specifies the activities and resources required to achieve them Business plan: takes the firm’s objectives and specifies the activities and resources required to achieve them Includes details about: Includes details about: The markets in which the firm plans to compete The markets in which the firm plans to compete Its financial resources Its financial resources Competitive situation facing each of its products Competitive situation facing each of its products © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Types of Planning Planning can be categorized by scope or breadth Planning can be categorized by scope or breadth © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved.
Types of Planning Strategic planning: process of determining the primary objectives of an organization and adopting courses of action in allocating resources to achieve these objectives Strategic planning: process of determining the primary objectives of an organization and adopting courses of action in allocating resources to achieve these objectives STRATEGIC © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Types of Planning Tactical planning: involves implementing the activities specified by strategic plans Tactical planning: involves implementing the activities specified by strategic plans Guides the current and near-term activities required to implement overall strategies Guides the current and near-term activities required to implement overall strategies STRATEGIC TACTICAL © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. © PhotoDisc Types of Planning Operational planning: creates the detailed standards that guide implementation of tactical plans Operational planning: creates the detailed standards that guide implementation of tactical plans Involves choosing specific work targets and assigning employees and teams to carry out plans Involves choosing specific work targets and assigning employees and teams to carry out plans STRATEGIC TACTICAL OPERATIONAL
Copyright © 2003 by South-Western. All Rights Reserved. Types of Planning Adaptive planning: developing courses of action that are fluid and forward-looking enough to adapt to changes in the business environment Adaptive planning: developing courses of action that are fluid and forward-looking enough to adapt to changes in the business environment Emphasizes focus and flexibility Emphasizes focus and flexibility STRATEGIC TACTICAL OPERATIONAL ADAPTIVE © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Figure 8.2 Adaptive Planning for Flexible Business Needs Figure 8.2 Adaptive Planning for Flexible Business Needs
Copyright © 2003 by South-Western. All Rights Reserved. Types of Planning Contingency planning: allows a firm to resume operations as quickly and as smoothly as possible after a crisis while openly communicating with the public about what happened Contingency planning: allows a firm to resume operations as quickly and as smoothly as possible after a crisis while openly communicating with the public about what happened Usually designates a chain of command for crisis management Usually designates a chain of command for crisis management STRATEGIC TACTICAL OPERATIONAL ADAPTIVE CONTINGENCY © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Planning at Different Organizational Levels Total time spent and the type of planning done differ according to the level of management Total time spent and the type of planning done differ according to the level of management © PhotoDisc
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THE STRATEGIC PLANNING PROCESS Often makes the difference between an organization’s success and failure Often makes the difference between an organization’s success and failure Has formed the basis of many fundamental management decisions Has formed the basis of many fundamental management decisions Typically a six step process Typically a six step process
Copyright © 2003 by South-Western. All Rights Reserved. Figure 8.3 Steps in the Strategic Planning Process
Copyright © 2003 by South-Western. All Rights Reserved. Defining the Organization’s Mission Mission statement: written explanation of an organization’s business intentions and aims Mission statement: written explanation of an organization’s business intentions and aims Enduring statement of company’s purpose Enduring statement of company’s purpose Guides the actions of people inside the firm Guides the actions of people inside the firm Informs customers and stakeholders of the company’s underlying reason for existence Informs customers and stakeholders of the company’s underlying reason for existence © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Figure 8.4 A Symbol for a Mission Statement Figure 8.4 A Symbol for a Mission Statement
Copyright © 2003 by South-Western. All Rights Reserved. Assessing Competitive Position Involves an examination of the factors that may help or hinder the organization in the future Involves an examination of the factors that may help or hinder the organization in the future SWOT analysis: organized method of assessing a company’s internal strengths and weaknesses and its external opportunities and threats SWOT analysis: organized method of assessing a company’s internal strengths and weaknesses and its external opportunities and threats © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Figure 8.5 Elements of SWOT Analysis
Copyright © 2003 by South-Western. All Rights Reserved. Assessing Competitive Position Forecasting: process of estimating or predicting a company’s future sales or income Forecasting: process of estimating or predicting a company’s future sales or income Can focus on: Can focus on: Short-term (under one year) Short-term (under one year) Intermediate term (one to five years) Intermediate term (one to five years) Long-term (over five years) Long-term (over five years) © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Setting Objectives for the Organization Objectives: guideposts by which managers define the organization’s desired performance in such areas as profitability, customer service, growth, and employee satisfaction Objectives: guideposts by which managers define the organization’s desired performance in such areas as profitability, customer service, growth, and employee satisfaction © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Creating Strategies for Competitive Differentiation Competitive differentiation: unique combination of a company’s abilities and approaches to place it ahead of competitors Competitive differentiation: unique combination of a company’s abilities and approaches to place it ahead of competitors Sources of competitive differentiation include: Sources of competitive differentiation include: Human resources Human resources Product innovation Product innovation Technology Technology Financial management Financial management © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Figure 8.6 Sources of Competitive Advantage
Copyright © 2003 by South-Western. All Rights Reserved. Implementation: Turning Strategy Into Action Strategy put into action by identifying the specific methods and deploying the resources needed to implement the intended plans Strategy put into action by identifying the specific methods and deploying the resources needed to implement the intended plans Managers draw heavily on their human skills as they achieve objectives through the efforts of their employees Managers draw heavily on their human skills as they achieve objectives through the efforts of their employees © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Monitoring and Adapting Strategic Plans Closely linked to implementation Closely linked to implementation Involves establishing methods of securing feedback about actual performance Involves establishing methods of securing feedback about actual performance Ongoing use of such tools as SWOT analysis and forecasting can help management adapt objectives and functional plan as changes occur Ongoing use of such tools as SWOT analysis and forecasting can help management adapt objectives and functional plan as changes occur © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. MANAGERS AS DECISION MAKERS Decision making: process of recognizing a problem or opportunity, evaluating alternative solutions, selecting and implementing an alternative, and assessing the results Decision making: process of recognizing a problem or opportunity, evaluating alternative solutions, selecting and implementing an alternative, and assessing the results Programmed decision: involves simple, common, and frequently occurring problems for which solutions have already been determined Programmed decision: involves simple, common, and frequently occurring problems for which solutions have already been determined Nonprogrammed decision: involves a complex and unique problem or opportunity with important consequences for the organization Nonprogrammed decision: involves a complex and unique problem or opportunity with important consequences for the organization © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. How Managers Make Decisions Many rely on intuition when they lack enough information to determine the probable outcome of a decision Many rely on intuition when they lack enough information to determine the probable outcome of a decision Narrowly, decision making involves choosing among two or more alternatives Narrowly, decision making involves choosing among two or more alternatives More broadly, decision making involves a systematic, step-by-step process that helps managers make effective choices More broadly, decision making involves a systematic, step-by-step process that helps managers make effective choices Making good decisions involves taking risks Making good decisions involves taking risks © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Figure 8.7 Steps in the Decision-Making Process
Copyright © 2003 by South-Western. All Rights Reserved. MANAGERS AS LEADERS Leadership: ability to direct or inspire people to attain organizational goals Leadership: ability to direct or inspire people to attain organizational goals Characteristics of a good leader often mentioned: Characteristics of a good leader often mentioned: Empathy Empathy Self-awareness Self-awareness Objectivity Objectivity © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Other traits of a good leader may include: Other traits of a good leader may include: Courage Courage Ability to inspire Ability to inspire Passion Passion Commitment Commitment Flexibility Flexibility Innovation Innovation Willingness to experiment Willingness to experiment MANAGERS AS LEADERS © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Leadership Styles Autocratic leadership: boss makes decisions on their own without consulting employees Autocratic leadership: boss makes decisions on their own without consulting employees Democratic leadership: involves subordinates in making decisions Democratic leadership: involves subordinates in making decisions Free-reign leadership: leader believes in minimal supervision, leaving most decisions to subordinates Free-reign leadership: leader believes in minimal supervision, leaving most decisions to subordinates © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Figure 8.8 Comparison of Leadership Styles
Copyright © 2003 by South-Western. All Rights Reserved. Leadership Styles Empowerment: practice in which managers lead employees by sharing power, responsibility, and decision making with them Empowerment: practice in which managers lead employees by sharing power, responsibility, and decision making with them © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Which Leadership Style is Best? Depends on function of the leader, subordinates, and situation Depends on function of the leader, subordinates, and situation Some leaders can’t work well with high participation of subordinates Some leaders can’t work well with high participation of subordinates Some employees lack the ability or desire to assume responsibility Some employees lack the ability or desire to assume responsibility Participative decision making may be better when time pressure is not acute Participative decision making may be better when time pressure is not acute © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. CORPORATE CULTURE Corporate culture: organization’s system of principles, beliefs, and values Corporate culture: organization’s system of principles, beliefs, and values © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. STRUCTURE IN ORGANIZATIONS Organization: structured grouping of people working together to achieve common goals Organization: structured grouping of people working together to achieve common goals © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Figure 8.9 Steps in the Organizing Process
Copyright © 2003 by South-Western. All Rights Reserved. STRUCTURE IN ORGANIZATIONS Organization chart: visual representation of a firm’s structure that illustrates job positions and functions Organization chart: visual representation of a firm’s structure that illustrates job positions and functions
Copyright © 2003 by South-Western. All Rights Reserved. Figure 8.10 A Sample Organization Chart
Copyright © 2003 by South-Western. All Rights Reserved. DepartmentalizationDepartmentalization : process of dividing work activities into units within the organization Departmentalization: process of dividing work activities into units within the organization Major forms of departmentalization subdivide work by: Major forms of departmentalization subdivide work by: Product Product Geographic Area Geographic Area Customer Customer Function Function Process Process © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Product departmentalization: Organizes work units based on the goods and services offered Product departmentalization: Organizes work units based on the goods and services offered Product DepartmentalizationDepartmentalization
Copyright © 2003 by South-Western. All Rights Reserved. Geographic departmentalization: units organized by geographic region within a country Geographic departmentalization: units organized by geographic region within a country For a multinational firm, units organized by regions throughout the world For a multinational firm, units organized by regions throughout the world Product DepartmentalizationDepartmentalization Geographic
Copyright © 2003 by South-Western. All Rights Reserved. Customer departmentalization: organization that offers a variety of goods and services targeted to different types of customers might structure itself based on customers served Customer departmentalization: organization that offers a variety of goods and services targeted to different types of customers might structure itself based on customers served Product DepartmentalizationDepartmentalization Geographic Customer
Copyright © 2003 by South-Western. All Rights Reserved. Functional departmentalization: work units organized according to business functions such as finance, marketing, human resources, and production Functional departmentalization: work units organized according to business functions such as finance, marketing, human resources, and production Product DepartmentalizationDepartmentalization Geographic Customer Functional
Copyright © 2003 by South-Western. All Rights Reserved. Process departmentalization: units organized by work processes required to complete production of goods Process departmentalization: units organized by work processes required to complete production of goods Product DepartmentalizationDepartmentalization Geographic Customer Functional Process
Copyright © 2003 by South-Western. All Rights Reserved. Figure 8.11 Different Forms of Departmentalization within One Company
Copyright © 2003 by South-Western. All Rights Reserved. Delegating Work Assignments Delegation: act of assigning activities to subordinates Delegation: act of assigning activities to subordinates Span of management (span of control): number of subordinates a manager can supervise effectively Span of management (span of control): number of subordinates a manager can supervise effectively © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Delegating Work Assignments Centralization: retains decision-making at the top of the management hierarchy Centralization: retains decision-making at the top of the management hierarchy Decentralization: locates decision-making at lower levels Decentralization: locates decision-making at lower levels © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Types of Organization Structures Line organization: establishes a direct flow of authority from the chief executive to subordinates Line organization: establishes a direct flow of authority from the chief executive to subordinates Chain of command: set of relationships that indicates who directs which activities and who reports to whom Chain of command: set of relationships that indicates who directs which activities and who reports to whom © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Line-and-staff organization: combines the direct flow of authority of a line organization with staff departments that serve, advise, and support the line departments Line-and-staff organization: combines the direct flow of authority of a line organization with staff departments that serve, advise, and support the line departments Types of Organization Structures © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Figure 8.12 The Line-and-Staff Organization
Copyright © 2003 by South-Western. All Rights Reserved. Line manager: interacts directly with the functions of production, finance, or marketing – the functions needed to produce and market goods and services Line manager: interacts directly with the functions of production, finance, or marketing – the functions needed to produce and market goods and services Staff manager: provides information, advice, or technical assistance to aid line managers Staff manager: provides information, advice, or technical assistance to aid line managers Types of Organization Structures © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Types of Organization Structures Committee organization: structure that places authority and responsibility jointly in the hands of a group of individuals rather than a single manager Committee organization: structure that places authority and responsibility jointly in the hands of a group of individuals rather than a single manager Matrix, or project management, structure: links employees from different parts of the organization to work together on specific projects Matrix, or project management, structure: links employees from different parts of the organization to work together on specific projects © PhotoDisc
Copyright © 2003 by South-Western. All Rights Reserved. Figure 8.13 The Matrix Organization
Copyright © 2003 by South-Western. All Rights Reserved.
WHAT’S AHEAD An examination of how firms recruit, select, train, evaluate, and compensate employees An examination of how firms recruit, select, train, evaluate, and compensate employees An explanation of motivation An explanation of motivation A discussion of how human resource managers apply theories of motivation A discussion of how human resource managers apply theories of motivation © PhotoDisc